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By Durdana Najam
Pakistan has been pursuing geopolitically-oriented policies because of its obsession with the idea of creating a strategic parity with India on the matter of national defense and security. This is done principally through arms buildup, aligning with a great power, acquisition of nuclear weapons, and brinkmanship with India to accomplish the Kashmir cause. All this was done at the expense of economic and political development, which led the country to become, what has been notoriously called, “the warrior state.”
Unfortunately, this security buildup neither resulted in a cohesive nation-state nor created national unity. In fact, it further polarized the country. Within the 25 years of its emergence, Pakistan lost its eastern wing to the secession war in which India played a decisive role. In current Pakistan, a number of subnational movements for independence have been actively engaged in creating a nebulous law and order situation.
By 2012, the state lost control of over 30 percent of the northwestern areas to the Taliban. The country was ripped apart by ubiquitous terror attacks until the horrendous murder of dozens, mostly children, in the Army Public School in Peshawar in December 2014.
The catastrophic event catapulted every pillar of the state to the realization that Pakistan is faced with an existential threat from within. In its aftermath, the law and order improved and homegrown terrorism was given a tough response. However, no serious effort was made for state building; a feat s achievable through a combination of democracy, welfare, and economic development via trade and investment, in order to provide benefits to its citizens.
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In fact, the truth is that Pakistan has been lacking in thoughtful state building measures, not even when the lack of it led to the breakup of Pakistan. However, things have now begun to unravel. Pakistan military’s decision to scale down on its interventionist policy of disrupting democratic processes coinciding with the launch of China’s Road and Belt initiative (BRI) – that links development with security and considers trade and infrastructure development sine qua non to peace and stability – has led to a shift in Pakistan’s orientation from a security to a development state.
When states replace over-militarization with development, they are expected to work on two parallels: Integration into the global economic order, and adoption of a development state strategy.
For the fulfillment of the first parallel, Pakistan has already taken a number of steps that include the unilateral decision to pull back from the belligerence that India had provoked in the aftermath of the Balakot attack, and releasing the captured Indian pilot, leaving the corridor open to allow the United Nations Security Council (UNSC) to brand Masood Azhar a global terrorist and reigning in the militant organizations, and providing full support to the US in its mediation with the Taliban to bring the Afghan war to a logical end. Measures such as introducing reforms in the erstwhile FATA to eliminate the chances of it becoming a terrorist haven once again, and realigning with Russia, Iran, and China to balance power in the region against the power nexus of the US and its allies, principally India are also a part of this equation.
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Since its inception in 1947 Pakistan has been lugging from one reform agenda to another. Two constitutions were terminated, while the consensus on the third was achieved with the intervention of foreign brokers.
Barring a handful of years when the World Bank-induced program for development was followed in letter and spirit (resulting in industrial development, water reforms, and agricultural boost), Pakistan has been victim of a debt trap that left its political elite with little incentive to improve the state’s economic resource base, reform its society and develop a workforce with diverse skills.
It seems that over the years, a tacit consensus had emerged among the political elite to rely on the funding agencies or oil-rich brotherly nations to refurbish the empty treasury.
Meanwhile, the private wealth of the leaders and of those in their association grew tremendously, while the state coffers were parched more often than naught.
The US has provided billions of dollars in military and economic aid. Since 2001 alone, the aid has amounted to over $15 billion. According to the IMF official website the country owes $4,153 million to the organization as of April 30th, 2019. Saudi Arabia has been relieving Pakistan of financial constraints by exporting oil on deferred payments, other than the occasional money transfers. Recently, China has pledged to invest over $50 billion in Pakistan for the infrastructural development required under the China Pakistan Economic Corridor- the pivotal project of the BRI.
Aid, says development literature, weakens public institutions and creates a distance between the government and its citizens. This leaves the recipient government with no interest to raise revenue through taxation or development with the result that recipient government becomes accountable to the foreign donors and not the citizens.
This is exactly what has happened in Pakistan.
The dysfunctional system of taxation has left the country with a moth-eaten governance structure and a lopsided service delivery system. The problem is that all the debt that Pakistan has been borrowing was never used to improve the socio-economic situation of Pakistan.
According to the latest report published in September 2018 by the Human Development Index, Pakistan ranked at 150 among 180 countries. This low ranking means that the citizens of Pakistan are not able to live a long and healthy life, do not have access to knowledge and are unable to achieve a global standard of living despite huge borrowings.
Imran Khan, the Prime Minister of Pakistan, has announced the establishment of high powered inquiry commission with a one-point agenda to investigate the whereabouts of all the accumulated debt Pakistan has taken so far. “I’m making a high-powered inquiry commission with a one-point agenda: how did they raise the debt to Rs. 24,000 billion in 10 years?”, the PM reiterated.
The PM has also announced the establishment of the National Development Council with the purpose to “formulate and tailor policies to achieve accelerated economic growth”. This seems to be a step towards fulfilling the second parallel in development: adopting a development state strategy.
To understand how likely Pakistan is to emerge as a developing country rather than a security state and why the economy of debt has been relied upon rather than creating wealth through indigenous means, Matrix reached out to an economic expert for their opinion.
Salam Shah – the former Minister for Finance and a leading economist said that the reason why Pakistan had become a debt economy was because it never strived to become an economy that vied for foreign investment.
He added that key indicators, such as the cost/ease of doing business, the competitive index, and the human development index have shown a negative return over the past several decades. On the top of it, he argued, Pakistan had been made a highly regulated country. Pakistan is not a market-based economy, but one where the government obsessively interferes in businesses and financial markets. The solution lies in allowing competition to manage the market and bringing about governance reforms, especially in the areas of taxation and the power sector.
“Who was responsible”, he jabbed, “for bringing the circular debt to Rs. 1,600 billion? It was the irresponsible leadership that did not focus on reforms, and allowed incompetence, violation of merit, judicial deformities, and an archaic bureaucratic system to prevail.”
“When the last IMF program ended in 2016, they handed a list of reforms to the government with a warning that if those reforms were not made, the country would again be asking for debt. Which is what exactly has happened,” claimed Shah.
Einstein defined insanity as doing the same thing over and over and expecting different results. Pakistan must realize that it has to do start doing things differently in order to escape this insanity.
