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Archive for January 10th, 2011

Below, Tariq Tufail, based in Karachi, discusses what he calls the country’s “most clear and present danger” – Pakistan’s economic viability (or lack thereof):

Governor Salman Taseer was murdered in cold blood, [see this powerful piece for the NYT by his daughter, Shehrbano Taseer]. What followed will send a chill down the spine of every liberal Pakistani. The murderer has been showered with rose petals, kissed by lawyers, massive rallies supporting him have been held, and the so called “silent majority” is conspicuously absent. The society has decisively taken a turn towards radicalism and intolerance and even political bigwigs are helpless; this is very well highlighted by the fact that interior minister Rehman Malik has asked Sherry Rehman to leave the country, instead of assuring her full scale protection and helping her speak out.

But this post is not about these dire happenings. The clear and present danger to Pakistan as a country lies elsewhere. To sum it up: Pakistan is simply not economically viable. This has nothing to do with patriotism, national pride, Islam, Indian or Jewish conspiracies. It is simply a question of mathematics.

The country is insolvent and the situation is worsening by the day. For  example, Pakistan’s total debt and liabilities of the GDPis 69.5% , i.e. the amount of money spent by the state is far in excess of tax receipts. Pakistan is  kept afloat by repeated infusions of aid from the International Monetary Fund (IMF) and the U.S. and these infusions are under threat: Pakistan is unable to carry out any reform prescription of IMF — the implementation of the Reformed General Sales Tax (RGST) and the fuel price hike has been put off indefinitely, and as a result the release of IMF money has been delayed as well. As far as the United States is concerned,  U.S. aid is likely to come with increasing demands such as carrying out military  operations in North Waziristan. Moreover, there is a great risk that any terror attack in the U.S., if traced to Pakistan will invite military and economic retaliation.

The greatest short term dangers lie in uncontrolled inflation and massive spike in food prices during the summer. If one more natural calamity strikes, it will push the country over the edge. This state of Pakistan’s economy is unlikely to change unless there is a massive restructuring of the economy. However, the social forces unleashed in Pakistan is likely to leave no room for such a restructuring to happen.

It is instructive to study the Asian financial crisis of 1997, especially in South Korea. Overnight, the restructuring of the banks led to about a tenth of the population losing their jobs. However, because they were guided by a strong sense of national purpose, Koreans pledged their gold to the banks, worked harder, saved more and emerged as one of the World’s economic powerhouses. In contrast, in Pakistan the national obsession with religion and of the “other” (India, US, Israel, Ahmadis, Shias) has left no room for a sense of national purpose rooted in economic well-being. Any harsh economic measures needed to shore up the economy will quickly be spun as either an international conspiracy (Like the protests agaist Kerry-Lugar bill) or as an “elite liberals-vs-Conservative economic lower class” struggle (like how Salman Taseer’s assassination is being spun in some quarters).

The time for a grand national and international bargain is now. Pakistan needs a decade of unimpeded growth, political stability, an end to dabbling in terror as a state policy, peace with its neighbors, rational decisions and policy. Something that has never been achieved since the country’s Independence. Only a miracle can make it happen now.

The contribution is the sole opinion of the author and does not necessarily represent the opinion of CHUP. If you would like to contribute a piece to CHUP, please email Kalsoom at changinguppakistan[at]gmail[dot]com. Pieces should be no longer than 800 words please. For past contributions, click here.

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