• Home
• Video
• Books by Ikram Sehgal
• About

Anatomy of a democratic year

With apologies for misquoting Mark Twain, the rumours of the demise of democracy in Pakistan have been greatly exaggerated. The moderately pessimistic amongst us expected that given the multifarious complications of State inherited by Ms Benazir Bhutto, she would have upped and headed for greener pastures in a few months, or at the most one year. Unlike Cory Aquino, Ms Benazir has not been beset by problems from the men in uniform, prophesied as the most obvious threat, to keep that media “prediction” going “coup” canards have been occasionally floated. Sometimes if you cannot find sensational stories, one has to invent them. Though one must say that tanks in the streets of Karachi did send a message of sorts.

Even her most ardent supporters were apprehensive as a confident Benazir led her political party, the Pakistan People’s Party (PPP) into government. A political vacuum had existed for eight years till Mr Junejo was installed as Prime Minister on the strength of partyless elections in 1985, in a democracy of sorts. By May 1988, Gen Zia had had enough of this experiment in democracy and dismissed the recalcitrant Mr Junejo. With Zia’s death in August 1988, a whole new world of opportunities opened up in Pakistan, in all fairness to the military (exemplified by General Mirza Aslam Beg, the Chief of Army Staff), they deserve plaudits for shunning adventurism (and temptation) by taking the constitutional route, the rest is democratic history, symbolised by a charismatic young woman of proven intellect, determination and raw courage.

Ms Benazir came to power riding on a wave of expectations, while the intelligentsia appreciated her impending difficulties, the masses for the most part tended to take it for granted that material benefits were just around the corner. Given the vacuum of a decade-long autocratic ride, the sudden exposure to democracy had raised unreal aspirations, in fairness to Ms Benazir, on the election trail she had always promised a hard road to an era of milk and honey, not that it would start being served on a platter beginning Dec 3, 1988, a day after she was sworn in as Muslim World’s first woman Prime Minister.

Ms Benazir has had to contend with the ghosts of two dominant former rulers in the corridors of administration, that of her late father Zulfikar Ali Bhutto and the lately assassinated Gen Zia. While her late father’s supporters noisily crowded into power along with her ascent, Gen Zia’s followers had spent a decade being deeply entrenched in the bureaucracy, some of the die-hard believers in the General had to be side-lined till their antecedents (loyalties?) were checked out. The Pakistan bureaucracy may be vast but a fair majority has changed step quite smartly thus living upto its pragmatic reputation. The only disquieting note has been persistent internecine conflict perpetuated by the revenge specialists in her own coterie of Advisors, some of whom had had bones to pick for a myriad number of reasons, some real, mostly perceived. This has hampered her dynamic style to a great extent. She could perhaps have delayed the shuffling of bureaucrats early in her term of office. The loyalty of some bureaucrats is always suspect. Always servile towards the government in power, the consummate bureaucrat, at least those who matter in policy-making positions, surreptitiously keeps lines of communications open to the potential powers-that-be in the Opposition. The PPP regime is being harried by sensitive information leaks, Ms Benazir would do well to distinguish between friend and foe. She was ill-advised into debilitating conflict with the President about assorted issues like the Sirohey affair, the Judges tangle, etc. For the past few months the advice to her has been much more modulated and sound.

While the US looks to increased automobile sales and housing starts as economic indicators that the economy is booming, Pakistan has to rely on a basketful of statistics which are usually devoid of reality. One of the better indications that the Pakistan economy is in a sustained upturn has been the drastic increase in home remittances by expatriate Pakistanis, a sharp rise of more than 20% over the previous year. Pakistani blue and white collar workers in the Middle East are shrewd investors, obviously this inflow of foreign exchange has, other than making the balance of payments position slightly better, registered their confidence in the economy. Among all other factors this has been the most revealing and visible indicator of confidence in Benazir’s rule. However, this has started slowing down this year as the work compensation paid out by Saudi Arabia has peaked.
The Pakistan Prime Minister has till very recently avidly preached and practiced a tight fiscal policy. While the temptation to loosen controls must have been severe on a populist regime, it must be said to her credit that she has mostly gone along with the dogma of her experienced economic Advisors, VA Jaffery and AGN Kazi, in maintaining monetary discipline in contrast to popular demands of her party functionaries to dish out development funds, ostensibly to appease the masses, more to line their own pockets. Monetary expansion during 1988-89 has been about 5 per cent, less than half of the increase in the preceding year when Pakistan was merrily going down the garden path of economic apocalypse. By the end of 1988, the early throes of galloping inflation had been curbed with some sacrifice on administrative expenditures. This had resulted in the Budget deficit declining from 8.5 per cent of the GDP to slightly more than 7 per cent of GDP. On any economic scorecard, the reduction of the Budget deficit was quite an achievement. However the recent fuel hike, an additional tax, has been necessitated due to profligate spending by the Government’s Ministries and Departments, some of them as if there were no tomorrows, double digit inflation now stares us in the face. On the other hand, because of the cap on credit ceilings of commercial banks and IMF “advice”, the Government has had to resort to non-bank borrowing to make up the Budget deficit. Since non-bank borrowing is always more expensive than credits from banks, Pakistan is increasingly in the vortex of a high priced debt (to the tune of almost Rs 30 billion), redeemable in the future. Foreign aid has been diverted to make up budgetary shortfalls with the result that balance of payments deficit has climbed to about US$ 2 billion in the preceding year, the highest reliance on foreign debt for some time. This would be extremely worrying had it not been for increased domestic investor confidence.

Writing in the DAWN, one of Pakistan’s leading daily newspapers, US Ambassador Oakley comments, as recently as 20 Jan 1990, that “US firms are playing a significant role in achieving Pakistan’s foreign investment objectives. We want that role to increase. The Prime Minister’s progressive policy of encouraging economic development in the private sector and attracting foreign investment is essential to this effort. The President’s recent call for urgent measures to contain the country’s fiscal balance tells investors that Pakistan is serious about creating the right conditions for economic growth. During the past year, the representatives of several major US corporations, some of them visiting Pakistan for the first time, others returning after a period of absence — have visited the US Mission to learn more about investment opportunities in Pakistan. All of them have shown a keen interest in the investment opportunities offered here. Many of these visitors appreciated the improvements the new government has made in the investment sanctioning procedure, particularly the new Board of Investment. They and we look forward to further Government efforts to improve the climate for private investment since they must be intensified if Pakistan is to remain competitive in the international market place”. Case in point is the Hub River Xenel Project, delayed by bureaucratic fiat for over 3 years, has seen the light of day because of the express wishes of the Prime Minister who laid down a deadline and ensured that the Ministry of Water & Power adhered to it, because in her words, “every minute lost in bringing energy projects on-stream into the national economy should be accounted for as criminal economic neglect”. Power is fuel to the economy, merit and potential is the clear directive for early execution of projects given to the bureaucracy.

While there are some glaring aberrations in the economy which must be rectified, the Board of Investment (BoI) has ensured a definite improvement in the investment climate. It still needs to shorten the vast credibility gap between the sanctioning of investment proposals and the availability of requisite funds. The ONE-WINDOW operation started by the BoI faces bureaucratic foot-dragging but it has become effective. The BoI set down to do three major tasks (1) open up 85% of the industrial sector to private enterprise i.e. almost 22 sectors previously considered sacred cows (2) obviate the need for government sanctions except for projects of (a) value more than Rs 1 billion (about US$ 50 million) (b) those that have foreign equity more than 50% and (3) provide for financing for sanctioned projects, services, etc under ONE-WINDOW. The result has been nothing less than spectacular, inasmuch as the sanctions from Dec 88 to Nov 89 exceeded Rs 43 billion (over US$ 1 billion) surpassing the Rs 36 billion in the four year period 1984-1988. During the last 3 months alone (Dec 89-Feb 90) it has exceeded Rs 23 billion, not taking into account 18 projects up for sanction on Feb 28, 1990. These figures do not truly reflect the achievement because of the raising of BoI threshold to Rs 1 billion as a lot of other projects of less value have been sanctioned which are not reflected in BoI figures. The BoI ensures the pillar to post runaround that the foreign investors had to endure at the hands of bureaucracy have lessened, if not altogether eradicated. Additional Secretary PM’s Secretariat Syed Mohibullah Shah who is also Secretary of the BoI and Chairman Investment Promotion Bureau (and, therefore, Benazir’s Point Man for encouraging investment) is upbeat on the progress made so far “an average of 15 projects, worth an investment of about Rs 15 billion is our monthly target, a US$ figure of 750 million or US$ 9 billion a year!” Mind boggling, perhaps but, achievable in the circumstances. Galvanising investment in spite of socialistic credentials is an enduring achievement of this government. The increasing investor confidence in the face of the many problems facing Pakistan internally and externally is a sound indicator of entrepreneurial support for the Benazir regime. The one great problem is that foreign investment is still relatively shy, mostly because of the Dr Jekyll-Mr Hyde image of our bureaucracy. There are signs that a proliferation of investment companies in the private sector may be sanctioned to support the various projects. Unless honest-to-goodness investment banks/companies can mobilise funds from the private sector, the sanctions will amount to mere paper plans. The nationalised commercial banks have not succeeded mobilising enough domestic resources, the national savings coming down by 1 per cent from 13 to 12 per cent. Poor management in the Development Finance Institutions (DFIs) has prompted the World Bank to temporarily refuse credit to two public sector DFIs in Pakistan, one of them is believed to be PICIC. The brightest spot since 1971 has been the rate of private sector investment in the last year which has overtaken public sector investment for the first time in the last two decades. While the previous regime’s economic planners may claim that it has been their policies that are taking effect now, a long-term residual performance, perceptions among knowledgeable economic circles is very different. One of the major reasons for giving credit to the PPP is the wholesale abandoning of their nationalisation programme, a platform that had spelled economic doldrums for the country in the 70s and retarded national growth during the whole of the last two decades. Ms Benazir Bhutto a la Thatcher has come out whole hog for privatisation in place of the proclaimed party plank of nationalisation. One of the factors to be careful about is that the party faithful may not try to buy out all the shares, mostly from ill-acquired money. Unbridled investment sanctions without availability of credit will create new problems, DFIs must have liquidity enough to invite investors to venture. The Prime Minister would be well advised to let a “hundred flowers bloom” by allowing proliferation of investment banks in the private sector but the sanctioning of permission has been very slow, resulting that the private sector funds have not been mobilised as they should have been.

The Pakistan experience only goes to show that while in certain areas the public sector is necessary to ensure equitable availability of supplies and services for the masses by keeping these out of the clutches of some very greedy (and vicious) robber barons, the bureaucratic elite (at least the dishonest among them) have become wealthier than most of them. Needless to say, the interested commercial circles are waiting anxiously for the first phase of privatisation. The targeted institutions like PIA, Sui Northern and Muslim Commercial Bank are well-selected but there has been inordinate delay in the whole process. Happy Minwalla, the PM’s ambassador-at-large and coordinator of disinvestment has been in touch with foreign financial consultants to work out a profitable solution but has hardly been setting any fires on the speed trail. While public funds will certainly be freed, small shareholder investment by the middle class creates its own dynamism. Pakistan’s middle class is more than keen to invest their savings safely for a better return than the fixed amount offered by the commercial banks. In the investment sector, the greater quantum of investment is the 20 per cent increase in small scale industries rather than in the medium or heavy manufacturing sectors. The services sector seemed to have taken the place of honour from the manufacturing sector, for the first time in Pakistan’s history. While not exactly a catastrophe for the economy, it is not a happy event as steady growth in the manufacturing base is badly needed for rejuvenating the economy. The Stock Exchange has also been performing well above par signifying commensurate investor confidence, another sound indicator of economic upturn. One of the effects of the squeezing of monetary expansion had been reduced inflation, in the face of spiralling costs in the first part of the year the curbing of price rise to an average of about 7% is some achievement. Now with the fuel hike, we are in for a period of force-multiplied inflation. One of the other effects of curbing inflation for some time was to reduce development expenditure in the public sector, this had a retarding effect which will continue in the ensuing years. An impressive growth rate of 5.2 per cent is well maintained, though in the face of 3.4 per cent population growth the gap of only 1.8 per cent cannot be considered better than average. An outstanding achievement has been the fresh Textile Accord with USA, a quantum jump of US$ 50 million. The personal credibility of Ms Benazir in the US Congress seems to be the deciding factor for breaking the logjam of many years.

The winds of change sweeping Europe will affect Pakistan economically and politically. In economic terms, Pakistan must be prepared for a drastic reduction in western aid, it is a drug Pakistan has become addicted to whose suspension will cause severe withdrawal symptoms. The western countries (and Japan) with USA in the forefront are gearing up a new version of the MARSHALL PLAN for Eastern Europe, the THIRD WORLD will shortly become last in the list of would-be western donors. Down the financial road Pakistan will have to learn to live within its means, not a bad thing in itself. Among all the third world countries, Pakistan is perhaps the most fortunate, it has hidden economic strength which is the envy of others. With its inherent food autarky, a well-trained manpower pool and vast reserves of raw material necessary for an even economic growth, Pakistan has great economic possibilities. The question is how to exploit this excellent potential in a sophisticated manner. While some of Pakistan’s economic planners may be in a state of utter panic because of what they perceive to be impending economic apocalypse, PM Benazir has been confident that shrugging off the yoke of foreign debt and economic emancipation (living within one’s resources) is good for the country. For the short term there will be severe constraints on the economic situation, even a negative growth perhaps, in the longer run Pakistan will be that much better off in self-reliance.

Our Foreign Trade index has shown an 8 per cent decline as the volume and cost of imports have steadily risen without commensurate rise in exports. Because of devastating floods and post-election uncertainties, the growth in exports was stunted. However on balance, this has been a better than average performance, the PPP comes out better in comparison on a pro-rata basis to the previous year when considering all possible intangibles. Ms Benazir is more than likely to attract foreign investment with her charisma and international credibility than anyone else presently on the political scene. She has shown great pragmatism in changing/choosing her professional aides with courage and far-sightedness. The Pakistani PM went to the extent of holding (during the last month of her pregnancy) marathon sessions with her ministerial colleagues reviewing the performance of each ministry in some detail. Taking incisive action, cutting through the smokescreen that the bureaucrats are capable of manipulating to cover their misdeeds and shortcomings, she has instilled a measure of accountability, performance-oriented maybe but a start nevertheless.

Her major problem is tackling rampant corruption for which she must take concrete steps. The perception exists that while she may be sincere in her efforts she is reluctant to move against known cases of malfeasance among her partymen, she has had to deny corruption stories with her immediate family something Zulfikar Ali Bhutto was never tainted with. She must exercise greater political judgement in avoiding granting permissions for things like parallel Duty Free Shops, her opponents have sharpened their knows and are busy collecting documents to show that this will be used as a smuggling centre. They even predict that to facilitate “legal smuggling”, luxury items will be banned in the next budget while raising personal exemption limit for expatriates returning home. Very few people get the opportunity that she has got early in her political life, the dynamics that she creates has great potential for Pakistan. The greatest tragedy would be the erosion of her personal credibility, both within and without the country, she (and Pakistan) needs a Marco-image as much as anyone needs two left feet. Ms Benazir has made some moves to deal with corruption and establish accountability in her government, but not enough. It speaks much for her that given all the accusations hurled, no one has ever actually accused her personally of being corrupt, with inaction on her part she will invite this retribution also. The PM has to translate her great credibility into clean government down the line, her people expect it of her, anything less would amount to demeaning the admiration that the masses have for her.

Political factions in Pakistan are agreed on the need to persevere with the essence of democracy, allowing democratic institutions to flourish. Positions based on constitutional sleight of hand invites third force intervention, entirely unwelcome to the masses unless the situation slides from bad to worse. To their credit the political leaders have seldom tried in the past year to bend laws deliberately, unfortunately their political and administrative underlings tend to pursue their own personal and criminal vendettas, misusing their positions of authority at will as if there are no tomorrows.

The political feud between PPP and IJI rages unabated. Essentially the PPP has become a Centrist party rather than left of Centre whereas IJI is a conglomeration of parties generally Right of Centre. While confrontation between political parties is a natural happenstance, the PPP-IJI confrontation has taken on the overtones of a blood feud between Benazir and Nawaz Sharif, both young leaders. This has caused a debilitating Centre-Provinces rift, the more serious being confrontation between the Federal Government and Punjab Province. In an amazing show of unity both the parties United in Parliament (National Assembly) over the question of Kashmir and then parted company soon after. While both the sides insist that opposition to each other is based on principles, it seems to be more of a personality clash, the ideologies proposed by both the parties are strikingly similar in concept and substance. Without real intent, the IJI has succeeded in keeping Pakistan democratic by providing a genuine opposition, since that coincides with Benazir’s democratic aspirations for Pakistan, the balancing has been good for democracy in the country. Nawaz Sharif is a PPP creation, by attacking him endlessly they have made him a symbol of the whole opposition. The fact remains that he has managed to do exceedingly well in Punjab. Some of her older political aides, remnants of her father’s time, are bent on the politics of revenge and are responsible for the continuing quarrel. She has even resurrected the old Punjabi battleship Mustafa Khar from mothballs to down Nawaz Sharif. Nawaz Sharif may not last (Achilles-like) a possible fall of Bhutto from power, on the other hand Benazir is a known and potent political force, she has lasted in the cold once and can do so again. Instead of trying to consign Nawaz Sharif to oblivious, the PPP must come to an understanding of sorts, to live and let live. The constant tribulation is bad for Pakistani hearts.

The Afghan war spread over most of Zia’s reign. With the advent of refugees across the porous international frontier into Pakistan came drugs and weapons, the “Heroin and Kalashnikov” culture was born. When 3 million people are camped within your borders and have freedom of movement they tend to carry their commerce along, which in this case was mostly drugs and smuggling. Needing sustenance to maintain the guerilla war besides their own plain economic survival and lacking commercial means other than world-wide aid, even individuals or groups who were normally law abiding turned to easy money, the AK-47 (Kalashnikov) became a symbol of the enforcer. As time passed the guests passed on this culture to their Pakistani hosts, soon the major cities of Pakistan functioned as transit points for heroin smuggling, Karachi became the main staging port and still is. The Bhutto Government has taken more positive steps than the previous regime in controlling drug smuggling, though the menace remains and the law enforcement agencies have undergone continued frustration at missed opportunities with known drug smugglers going free on legal technicalities. In the control of smuggling and drug eradication, we find the translation of Ms Benazir’s serious commitment in contrast to the previous lip-service, statistics clearly show a 25% increase in seizures, arrests and convictions. One known and powerful drug smuggler, an unextraditable, has even been extradited to the US. Though the Russian troops are out of Afghanistan, the guerilla war continues, there has been a substanted coup. The basic position of the Pakistani Government that Najib must step down has not changed. With enhanced credibility as a democratic government, various world forums have been used to further isolate Afghanistan in the comity of nations. Despite the setback due to the premature Jalalabad offensive and the internecine quarrels between Afghan factions, progress has been made in forcing Najib eventually out of power. The basic policy remains the same as under Zia, only the dynamics of change in priorities are reflected in the policies.

Karachi remains a festering problem, created out of the discord with MQM. Between them the PPP and MQM managed a clean sweep of Parliamentary seats in Sindh Province in a ratio of almost 3.1, but more importantly (and perhaps tragically divisive in the circumstances), the PPP took all the rural areas, the MQM the major cities of Karachi and Hyderabad. While normally this would be a cause for concern, the polarisation between urban and rural areas becomes serious when one sees the geographical position of the two cities, both plumb on the economic lifeline of Pakistan, in fact shutting down of Karachi may bring economic apocalypse for Pakistan, it being Pakistan’s only port city. While MQM has till recently been showing remarkable discipline, of late it has got to flexing its muscles in a manner reminiscent of authoritarian regimes. Maybe it had provocation enough but its call for the Feb 7 strike was ill-conceived for many reasons, among them that (1) the whole nation was looking for unity because of Kashmir and (2) statesmanship could have avoided a confrontation where loss of lives was a foregone conclusion. The MQM may still be a potent force, in the eyes of the rest of the country, whatever one’s political creed, the atrocity of torturing and burning of bodies of PPP activists, some of them of Punjab and Pathan origin, have brought a wave of revulsion in the country, this is a backlash that bodes ill for future MQM omnipotency even in its own strongholds, for the first time it has lost genuine public sympathy. While a democratically elected party can hardly be called a terrorist organisation, the MQM leadership has to distance itself from the fascist methods that are being increasingly employed by their cadres. The recent fast of Altaf Hussain was a desperate political play, while one understands the desperation and extreme frustration at being denied metropolitan rule as well as being made targets of terrorists, such extreme methods must not be employed as it creates more issues than settle any. The PPP has also got to drastically rein in some of its cohorts, particularly its students wing which has left violence in its wake, inviting reaction from the MQM cadres. Justice must be fair, 150 or so Kalashnikov wielding students in Aga Khan Hospital keeping vigil over the late stricken Najib was not a conducive sight for healthy democracy. The PM is hampered by indifferent leadership at the Provincial level, being Benazir’s power base this situation cannot remain static without causing her political grievance at the Federal level. Karachi is not just a Sindhi subject, because of its commercial, industrial and only port status, it is of vital economic and strategic interest to Pakistan. To add to the woes of the business community, Karachi has been hit by a spate of kidnappings, some carried out by Sindhi dacoits, others by local lads getting into the act. Generally the situation is much better than the peak it reached in September 1989. In Karachi, the rumours of influential hands behind most of the crimes persist, the business community is up in arms.

While Ms Benazir faces quite a few challenges, none is greater than the resolving of the Kashmir question favourably for Pakistan. On the one hand, Kashmir touches an emotional chord among almost all Pakistanis while on the other an intractable India refuses even to consider it an international dispute. With militancy inside Kashmir rising with the hour, Indians have responded by brutal suppression, starting a blood cycle that has a life in itself for perpetuating armed struggle. Within hours of the first disturbances, India was laying the blame on Pakistan. Ms Benazir, still in the hospital having had a second child, a daughter named Bakhtawar, was beset on one side with India unjustly accusing Pakistan of interference and on the other by the Combined Opposition claiming that she was “soft” on India and was intent on sidelining the issue. Needless to say while Pakistan was as surprised by the events in Kashmir as India, Ms Benazir has come out in strong support of the Kashmir struggle while at the same time asking for a bilateral dialogue, thus avoiding putting her Government (and the country) on a possible collision course with India. Being a smaller country, Pakistan would certainly wish to avoid war with India but on the other hand will never accept Indian tutelage. A democratic Pakistan, headed by a young charismatic woman Prime Minister will be a formidable foe for Indian credibility in international circles. Indians will find that the Joan of Arc image tends to stick to Benazir naturally. The Indians know also that the Pakistan Armed Forces will be a different kettle of fish than what they have been used to in the region.

The most salient point of Benazir’s rule has been that generally, till recently, the rule of law has prevailed, that is the democratic way. A case in point has been the eloquence of one of Ms Benazir’s better political appointees, the Kennedyesque Aitzaz Ahsan, who has been making passionate explanations about the “Reference Points” that led to the disintegration of the rule of law during the last decade. The appointment of a practicing, successful (and credible) civil rights lawyer as the Minister of Interior was an important milestone in any third world country as it brought the state’s police apparatus under seemingly legal aegis, unfortunately the police-state apparatchik have a hydra-headed monster’s aptitude to resurface and blight all promises made, the roots of malfeasance runs deep causing grief and resentment.

The fundamental premise of Benazir’s democracy is that while it involves accountability it is also based on meaningful debate, reason and logic are used for making convincing arguments rather than turning to the use of force. Ms Benazir’s sincerity of purpose has been appreciated till very recently by the “Great Silent Majority” among the masses. In contrast to the guile and hypocrisy the country has been witnessing, there seems to be a genuine commitment on her part to the amelioration of the lot of the unfortunate millions on her part. Except for the blind spot about handling corruption, she has performed admirably. Frankly, some of her Cabinet colleagues are much less believable. Evaluating the past year we have made considerable progress in the democratic process, the survivability of an elected government is a definite plus point for the nation. It is inconsequential who were the rulers, that the rule was democratic is a great success for Pakistan. Freedom of the Press has not only been guaranteed on paper, despite bureaucratic machinations, press candour is accepted. Essentially Ms Benazir’s problem remains that while people believe in her, they do not seem to have the same confidence in her party, a matter of the singer not the song syndrome. She manages to carry the masses along by her own charisma. This is a credibility gap that the Prime Minister is trying to close by widening her political base. Obviously she meets resistance from within her party as well as die-hard political opponents not open to compromise of any kind. She is young and confident, as the last year has shown she has matured in office. The incumbent Prime Minister of Pakistan, Ms Benazir deserves laurels for being “man” enough to go through a very tough year with dignity.

Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.