Economic letter – Of economic bondage
Every political party has one expressed aim, a better way of life for the masses. Economics dominates the expressed manifesto of all political aspirations and any of the promises are made in the pursuance of the singular objective of bettering one’s economic conditions, as individuals and as a nation. In a sense, all roads lead to Rome, Rome in this particular variation being the equivalent of Economic Valhalla. All party manifestos are festooned with altruistic intonations of a better life, you vote us into power, they say, and we will give you what you ardently desire, food, clothing, medicine, education, forgetting that these are basic needs, not objects of desire, and are embodied in our own religion as being essentials to be guaranteed by the State. That the State has failed miserably to provide them is a result of natural and man-made disasters and cannot be blamed on any one regime. To their credit both the PPP and the present regime in Pakistan have attempted to ameliorate the general condition of the masses and you do find some substance once the trimmings of self-praise are removed. The Junejo Government with its Five-point programme has brought about a variation of the PPP’s Roti, Kapra aur Makan. Bottlenecks aside, the fact remains that they are serious about their efforts. Natural calamities notwithstanding, the Third World has generally been afflicted with charismatic but ineffectual and corrupt leaders, long on promises and short on deliverance. These leaders are the ultimate calamities visited on an adoring population, raising mass expectations to giddy heights, only to have them frustrated by inefficient administration, outright corruption and downright nepotism. Joseph Marie de Maistre said, early in the nineteenth century, that “every nation has the Government that it deserves.”
As the hapless population of Third World countries have discovered to their detriment, freedom and democracy do not translate into square meals and adequate shelters. More often than not, foreign oppression is replaced by an even more virulent domestic oppression, one form substituted by another, manifold times more cruel, serenaded and couched in socialistic jargon. All this plays very well to liberal ears in western countries but try feeding slogans to the masses, it does not take much time for the real hunger to emerge, in all its anarchic garbs, leading to complete breakdown of social order and to an unstable era dominated by criminals, their cronies and violence reminiscent of the savage law of the jungle.
More than anything our Religion is a way of life and in being a way of life a complete guide for the machinery of the State. If we can honestly provide the linkage between State and Religion to be truly what it should be in an ideological State, a balanced process meant to better the life-standard of a populace, while providing for the basic essentials of living, then we can define the form of politics that we can live with. Rhetoric aside, how can we in this twentieth century really equate the need to improve the quality of life of our people with the overriding desire for liberal aspirations in political life without effecting and sustaining revolutionary changes in the system ?
Freedom is usually straitjacketed in Third World countries under any number of patriotic and catchy slogans. The first freedom should be freedom to form one’s own opinion and having formed it to have the inherent ability to do as one pleases, particularly in the form of self-employment. That in essence is the theory and practice of sound economic process. If an economy is allowed to run unfettered in utter freedom the results will justify that freedom. The problem is that the fear of allowing freedom of economic expression is synonymous to the bureaucrats with sanctioning things to run amok and constrains them from giving any running room to potential entrepreneurs. The nett result is an economic bondage born out of bureaucratic apathy that spells doom for incentive and progress.
That we are in economic thrall no one should doubt, what is of concern to us is that we are not taking any fundamental steps to correct the situation. Our policy makers are mostly long on rhetoric on the burning issues but their actions seem to be malafide, dictated out of vested, not common interests. As a symbol of economic duplicity and servitude there can be no greater example than the Barters with the COMECON countries particularly Czechoslavakia, Hungary, Poland, Bulgaria, etc and the SUKAB (Sweden) and KEMIRA (Finland) barters. Barter is a sovereign trade between two nations, the idea being that instead of purchasing essential machinery items in hard cash from the developed countries of the NORTH, we pay for it in the form of our goods and commodities. This is a straight country to country swap and in order to sweeten the pill we pay a premium to the Barter partners to make our produce more competitive. This fact is far from actual reality. Our intelligence is insulted by expecting us to believe that Palm Oil is produced in Bulgaria, Hungary etc. Without the bat of an eyelash, we purchase Palm Oil and DAP fertiliser on these Barters, whereas Palm Oil actually comes from Malaysia and DAP fertiliser mostly from USA ; our Barter partners are blessed with a premium of 10-17% by our Ministries of Finance and Commerce for the privilege of selling to us these commodities from third countries. On the other hand when we export our raw cotton, textiles, textile made-ups, naphtha, molasses etc, hardly any of these goes to the Barter countries themselves but end up in our traditional markets competing against our own direct sales with a competitive discount given by us to our erstwhile Barter partners because of the premiums. This is the most ridiculous situation one can ever imagine. This is like handing over a razor to a murderer so that he can slit your throat. Why not call these Barters Countertrade or better still why not have Countertrades like other countries are having, with multinationals? If one has to have Barters or Special Trading Agreements, these have to be truly sovereign, like in the cases of China, Bangladesh, Sri Lanka, Iran, etc. One can challenge the Ministry of Commerce to show us figures which would substantiate that due to Barter trade our raw cotton does not go to Manchester, textiles to Japan and USA, and molasses to Europe, etc.
Strange as it may seem we are not so much a captive of western financial centres as much as subservient to our COMECON and Swedish/Finnish Barter partners. The reasons are not hard to find because these have been in place for nearly two decades and thus have long standing established connections in the corridors of real power. Most of the bureaucrats dealing with Barter files have a long association with them and as such their particular files rush along the corridors of Islamabad speeded by a fair helping of corner grease. Politicians may come and politicians may go, but the bureaucrats go on forever. In the words of Emile Capouya, “Government will always misuse the machinery of the law as far as the public state of public opinion permits.” On the other hand we can well ask whatever happened to the five Countertrade agreements signed with Multi-nationals (MNCs) from France, USA, W. Germany, Japan and Turkey. Not only are some of them non-starters but at least two multi-nationals have bolted from the pack and have given up after two years of bureaucratic ineptitude, leaving for greener pastures. Almost nine months ago the Federal Minister for Commerce and Planning, Dr Mahbubul Haq, had a detailed meeting with the MNCs concerned, promised them quick action and then went ahead and annointed afresh the Barter Agreements, leaving these CTAs to twist slowly in limbo and to expire out of sheer benign neglect. If the FACC or the PM’s Inspection Commission has to investigate a genuine scam, it should investigate the Barter Agreements, the CTAs and their implementation upto date.
All these translate into problems for the economy down the line. The pressure of prices on exports runs into millions of US dollars while our imports become more expensive because of the premiums. The Trading Corporation of Pakistan (TCP) is an institution formed specially to run Special Trading Agreements, Countertrade Agreements, etc. It is unimaginable that in the presence of the TCP, the Barters are still handled directly by the Ministry of Commerce. Ministries are meant to create policy on behalf of the political Government, it is the Corporations that must implement them. The denial of effective distribution of work is motivated and should be corrected forthwith. It should be expected that the veteran present Chairman of TCP, with 39 years of public servitude behind him, will aspire to leave his mark in the 79 days left to his retirement with an enthusiastic presentation to the “powers that be” to get the Barters to be controlled by TCP rather than the Ministry of Commerce.
Economic bondage is born out of a combination of motivated interests and bureaucratic apathy, the former taking advantage of the latter. This is a deadly combination for any Third World economy and has to be eliminated before the economy can be given any chance. The present political Government has taken some steps gingerly down this line, the need is for greater movement, forgetting the vagaries visited upon us in the past.
In the words of John F. Kennedy on his assumption of the Presidency of the USA, “Our task now is not to fix the blame for the past, but to fix the course for the future.”
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