Pakistan’s Existential Threat Is Eminent: How To Escape This Quagmire? – OpEd


Pakistan is engulfed by a host of challenges both on internal and external fronts. The country is facing a devil and a deep blue-like situation: on the external front, it is sandwiched between two giants US and China whose rivalries have almost stalled all mega projects for decades, necessary for economic property and political stability in the country like IPI gas pipeline, Gawader deep sea port, TAPI gas pipeline, and CASA-1000 energy project and most importantly slow downed the CPEC.

Furthermore, the country is confronted with unfriendly India due to Kashmir and Afghanistan due to Durand line issues and facing unabated American pressure to weed out what it calls the infrastructure of terrorist and militant groups from Pakistan’s soil.

On the internal side, challenges like human and social development; eradication of corruption, nepotism, extremism, intolerance, radicalization, militancy, violence and terrorism from society, illiteracy and poverty, falling health indicators, decaying institutions, bad governance, ineffective and discriminatory justice system, absence of the rule of law, political instability, climate change and above all is the economic meltdown go a long way in pushing Pakistan toward a failing state.

Pakistan is in its tipping point crisis where it should decide to remain a laggard with 40 percent population living below the poverty line, Inflation is at record highs, the rupee has depreciated sharply and foreign exchange reserves remain at precariously low levels. High energy prices, debts ridden economy, under elite capture and policy decisions driven by strong vested interests of military, political, and business leaders or change course to take off for a brighter future.

Pakistan can learn from the good practices of various countries in recent history experiencing episodes of severe economic stress similar to what Pakistan is currently going through. These countries fell into debt repayment difficulties, Turkey in 1980 and 1994, Mexico in 1994, Russia’s rouble crisis in 1998, Argentina in 2001, Ireland, Iceland, Portugal, Greece circa 2009, Europe’s banking crisis of 2012, and Egypt.

Prof Dercon, a former chief economist for the UK government’s Department for International Development, cited the examples of India, Indonesia, and Bangladesh, which managed to turn around their economies despite facing challenges similar to Pakistan.

In the wake of severe economic challenges, the warnings and advice of the IMF Director and World Bank are more relevant guidelines for the economic managers of the country.

IMF Chief Kristalina Georgieva said after meeting caretaker Prime Minister Anwaar-ul-Haq Kakar on the sidelines of the UN General Assembly session. What we are asking in our program is, please collect more taxes from the wealthy and please protect the poor people of Pakistan.

It is time that Pakistan’s policymakers paid heed to what Ms Georgieva has been asking them to do for the country to be able to become a viable economy.

The World Bank has consistently argued that several major policy shifts are urgently required to unleash Pakistan’s enormous potential. First and foremost, Pakistan’s desperately low quality of basic services must be addressed. 
Second, fiscal management must be improved. Pakistan’s fiscal deficit has been persistently large and growing, driving debt to unsustainable levels, and constraining resources with which to protect human development, address economic challenges, and adapt to a changing climate. Third, improved living standards will require a more dynamic and open economy. Finally, policy failures and distortions in the critical agri-food and energy sectors must be addressed.

After the IMF and the World Bank, caretaker Finance Minister Dr. Shamshad Akhtar has also raised the alarm over the state of the economy, as she told a Senate Committee that the huge subsidies to the elite and the absence of taxes on real estate and retailers among the major reasons of the resource generation shortfall in the country.

Some reasons for hiccups in the economy 

For most Pakistanis, the prevailing economic conditions have unleashed unprecedented hardship. Steep power tariffs and high fuel costs have made everything expensive. Even the necessities are now beyond the reach of the public. Spending consistently more than earning has indebted the country to the core. We have mortgaged the future of even our grandchildren.

Red tape and corruption are discouraging foreign and even domestic investors from setting up industries in Pakistan. The constitution of the Special Investment Facilitation Council seems to be a step in the right direction. This civil-military initiative seeks to cut red tape and encourage investors to profit from Pakistan’s investment potential in IT, agriculture, energy, and mining provided implemented in order and with consistency.

Smuggling, theft in power sectors and the undocumented economy are grave problems facing the country.The burden of sizable fiscal deficits and accumulated public debt coupled with adhocracy and absence of meritocracy have hobbled the economy.   

Pakistan seems stuck in a time warp of when its strategic location earned it generous aid and loans from wealthy Western countries led by the US and Gulf countries for favors in the so-called Afghan Jihad against the former Soviet Union. It helped the country grow industries and infrastructure quickly but did not bring political and economic stability. The reliance on geo-strategic rents also had harmful effects like elite corruption, aid dependence, consumer economy, and loss of sovereignty.

The rentier state favored a consumption-led, import-intensive growth model that proved unsustainable. It trapped the country in a vicious cycle of fiscal deficits and perpetual borrowing from IMF and other international lenders. Elite capture impeded much-needed land and tax reforms vital to building a fairer economy and society. Donors supported fake stability under military rule instead of genuine democracy. It led to bad outcomes: lavish military aid gave  reliance on the Western bloc with limited foreign policy options.

The massive US aid did not bring about any change in the life of the common man though the country became a nuclear power but in economic terms, it filled the coffers of a few religious political, and military leaders. In return society has been weaponized; radicalized and corrupted. The country has lost more than ninety thousand civilians in terrorist violence so far and now the insurgents are roaming  again. We as a nation are reaping what we have sown.

Today, an undeniable reality is that the rentier era is over. The reform of the rentier state and economy is long overdue. Pakistan must make meaningful structural reforms in all sectors for the survival and progress of the country. The country has been under the IMF straightjacket almost continuously since the late 1980s. It has provided some macroeconomic stability but at the cost of increased inequality and economic contraction and stability. 

How to get out of this debacle quagmire 

What we need at this critical juncture is a spirit of national unity in the face of a New surge in terrorist activities. As Sunday’s Mustang carnage in which 60 civilian lost their lives followed by Hangu attacks demonstrated yet again, economic challenges on the one hand and security issues on the other pose an existential threat to the country.

On an economic front, Pakistan has to transition to a new economic model. It must encourage technological advancement, sustainable infrastructure reforms and investment, and resource efficiency. Its primary focus must be strong, sustainable, balanced, and inclusive growth. Rebuilding investor confidence, boosting the economy. Debt restructuring, privatization, and defense spending reduction are ways to improve the financial health of the nation. 

Constant political instability, religious extremism, and terrorism drive away investors. The country must improve its image globally, offer a favorable tax regime, and ease of doing business to secure investments. Investors need financial incentives, good infrastructure, business friendly laws regime and investment protection that will ultimately attract FDI.

Circular debt is another big hole in the country’s treasury. The agreements negotiated with the IPPs are loaded against the interests of the people. All agreements must be renegotiated, including the recent ones, invoking force majeure. 
We should embrace austerity at all layers of the executive, legislature, and judiciary; privatize dysfunctional SOE, make policies, and improve the security situation that encourages domestic investors to put their money in industry rather than in real estate and provide conducive opportunities for foreign investors in the country.

Setting up new industries creates jobs, provides employment opportunities for the youths, and reduces poverty in the process. Expanding a business as an industrialist generates economic activity, excluding those who misuse the system to obtain subsidies. China has developed because it encouraged industrial and technological growth. At our end, the long-awaited Special Economic Zones should be constructed as a top priority.

Pakistan must address abysmal human development statistics, particularly for women’s education and literacy. Yet, with over 50 percent of the budget going towards debt servicing and national defense, there is little fiscal space for investment in infrastructure, health, and education.

The sufferings of Pakistan’s poor and less privileged classes will not end unless elitist structures are dismantled and the society is restructured on the principles of equity, fairness, and justice. The problem of Pakistan is not the scarcity of resources, but its unequal distribution as well as incompetence in exploring and managing them, lack of an effective judiciary, and socio-economic injustice.

Cosmetic changes to the system won’t address Pakistan’s dysfunction and far more serious challenges. Fresh ideas and a new direction need to replace the abundance of unrealistic rhetorics in the past. The Country needs a legitimate political authority elected through free, fair, and impartial elections that can redirect our national institutions toward the welfare of the masses. This central authority should be able to enforce the rule of law across the board and allow for the innovators, investors, and the skilled to show off their talent and make the nation prosperous.

The last but not the least, Pakistan must engage in diplomacy and dialogue and establish trade relations with India and Afghanistan despite their political differences and territorial disputes like China and India have been engaged in trade in the presence of their boundary issues. Pakistan can benefit from its geography only when it comes out of the economic quagmire that will enable Pakistan to keep equilibrium in its relations with both giants China and the US. Consequently, the stalled or slow-downed projects can be restored for the economic revival of the country.

I think that we have reached a stage in our national life where we must take stock of the challenges seriously, which are existential threats to our integrity and sovereignty. The state must learn from its history, it must use its brain instead of the muscle and think rationally and logically. It has to be thought that, as a state, its prime responsibility is the welfare of the whole public irrespective of their shade and color as enshrined in the constitution.

We as a nation must learn from the mistakes committed in the past and come up with a new Charter of Governance, so as, to ensure that such mistakes are not repeated in the future. I would propose that all stakeholders of the country including academics, media personnel, writers, poets, and scholars particularly top genuine parliamentary, the top judicial, the top executive leadership  including the military leadership and the intelligence agencies put their minds together in the spirit of truth and reconciliation initiating grand National dialogue and resolve all differences hampering the political, economic and social life of the nation. 

It is high time to discuss with open minds where the judiciary, the executive, and the legislature and the establishment have gone wrong and encourage each other domain in the past and try to resolve such issues through a mutually agreed course of action. In my humble opinion, there is no other way forward. Perhaps the time has come, when the country instead of security, should be a welfare state, replacing the rent-seeking national security state to free up resources to build a sustainable, inclusive and modern country.

Sher Khan Bazai

Sher Khan Bazai is a retired civil servant, and a former Secretary of Education in Balochistan, Pakistan. He can be reached at [email protected].

2 thoughts on “Pakistan’s Existential Threat Is Eminent: How To Escape This Quagmire? – OpEd

  • October 6, 2023 at 8:17 pm

    Good analysis. Your country was built in hatred filled and radicalized population, discriminatory constitution that promotes ethnic cleansing, your madrasas teaching jihad, your school books teaching wrong faceless history. So here is what is required for your country…

    1. Return illegally occupied j& Kashmir to India as per the wishes of Kashmiri, gilgit and baltistani citizens
    2. Return illegally occupied paktoonistan to Afghanistan
    3. Return illegally occupied Baluchistan to Baluchis according to their wishes
    4. Treat every Pakistani citizens be it Christians, ahmadis, hindus, Sikhs etc equally
    5. Introduce secular, democratic, fact based constitution.
    6. Introduce fact based history and international standards based education system.
    7. Teach your citizens to live in harmony with neighbors and peaceful coexistence.
    8. Afghans, Iranians and Indians are your blood brothers…your ancestors were Buddhists and Hindus,…teach your citizens to be proud of that history


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