Calculated Risk
The President’s proposal to hold a referendum seeking public opinion for remaining President after October 2002 was approved by the Cabinet and the National Security Council on April 3, 2002. Preliminary indications are that the referendum will be held on May 6, by the time this goes into the print the President will have announced the date during his address to the nation. The purpose of the exercise is to determine whether the people of Pakistan approve of the President or not, and more importantly, would they want him to continue post-October 2002? Most of the major political parties, among them PML, PPP, JI, JUI and JUP, oppose the referendum on the plea that referendums are only meant to solicit public opinion on matters of great national importance and are not to be used as an election tool. On the other hand the President’s idea has received the support of quite a few smaller parties, among them PML(Q), PTI etc.
Surely, with the past record the political parties of total mis-governance and making a hash of the nation’s affairs, General Pervez Musharraf should have no problem getting the people’s vote of confidence. Political parties in Pakistan long ago lost the trust of a majority of the people, having been given numerous opportunities in the past at governance at which they failed miserably. Now they should have no locus standi. Yet being persistent, they must cry themselves hoarse at every opportunity to justify their “democratic” existence. The proposed exercise should be in fact a unique opportunity for the people to indicate whether their confidence in the political parties has been restored? The onus of credibility acquisition should be on the political parties, that should be the real referendum. If it were left to me, instead of asking whether the people want General Pervez Musharraf, the referendum would ask the question “if you think the President should not continue as President after October 2002, then vote “NO”! The political parties are proclaiming to high heaven that the President does not have the people’s support, on the contrary the masses support the political parties. As such they should have no problems in getting people to come out of their homes to vote NO, after all during general elections they usually spend a fortune from their ill-gotten gains on providing transportation, meals, etc for the voters on Election Day. If the Referendum had adopted this route, those in favour of General Pervez Musharraf would have stayed home. If the negative vote was more than 50% of the electorate that normally vote in any election ie. 36% vote in the last National Assembly Elections would mean 18% of the electorate in the Referendum, we would know the people are not with the President but with the political parties. However if “the great silent majority” voted with their feet and stayed home, we would have had confirmation that Pakistani people approve of the President. But give the President credit for not following this “negative” route when he could easily have done so. Knowing that Gen Zia’s referendum hurt the credibility of the exercise, he has the absolute courage to test the nation’s resolve by putting his own credibility on the line.
Loan Default
The State Bank of Pakistan (SBP) had to invoke on short notice little-used sections of the Banking Ordinance to change the management of United Bank Limited (UBL). Great fanfare had been made about UBL being privatised. Government of Pakistan (GoP) had already accepted an offer from Saudi Basharahill, a little known company owned by Saudi magnate Dr. Basharahill, capitalised at ú 2000 in an off-shore UK tax haven. For reasons suspected but not really known, the UBL privatisation deal seems to be in doldrums and SBP’s drastic action, ostensibly on behalf of GoP, seems to be a desperate move not only to shore up UBL’s defences against depositors’ run on the bank that was gathering momentum but also to divert attention from the privatisation debacle. Despite UBL being systematically looted by its own managers and by its powerful Union over the years, the strong foundation and inherent strength of the bank had ensured that the bank remained profitable till 1993. With the advent of the Ms Benazir regime, a sustained campaign began to induct only “loyalists” into the UBL hierarchy without any thought given to their integrity and competence or its adverse effect on UBL’s credibility as a financial institution. The appointed functionaries started dishing out questionable loans that far exceeded mismanagement and malfeasance (M&M) pre-1993. Haemorrhaging badly, UBL was put on the auction block for privatisation in what really amounted to be a rather motivated fire sale. That the whole edifice of cards was bound to come down on detailed scrutiny was a foregone conclusion that only the most optimist of GoP’s decision-makers could have been hoping to camouflage and/or avoid.
Pakistan’s Nationalised Commercial Banks (PNCBs) and Development Finance Institution (DFIs) are suffering from chronic bank default. If UBL is seen as an offender, it is only because privatisation has brought it into focus. Default has been taking place for over two decades. Probably the worst case of financial bungling may be in Habib Bank Limited (HBL) where excesses by banking executives, both professional and non-professional, reached such alarming proportions that in comparison Younus Habib (remember him) seems to be a petty thief. Once this scribe himself approached VA Jafarey to intercede in what was clearly an outrageous scam by the present bank management, Younus Dalia included. VA Jafarey, PM’s Advisor on Finance replied he could only advise the Pakistan Banking Council (PBC) to look into it but was powerless to take any action himself. With such toothless tigers in charge of financial monitoring, what does one expect? Put VA Jafarey out to pasture and/or put him out of his misery. One hopes that the saying “the bigger they are, the harder the fall”, does not come true for Pakistan’s biggest retail bank. National Bank of Pakistan (NBP) seems to be in a healthy state but figures (like appearances) can be deceptive, only time will tell whether NBP is doing as spectacularly as M B Abbasi is professing or whether the media projections are just another window-dressing for poor banking practices that may have fooled all (including this scribe) into glorifying him personally. As far as the DFIs are concerned, the lesser said the better, almost all of them are in trouble of some kind or the other due to loan default. Some like the NIT, ICP and NDFC are facing a liquidity crunch in being caught up themselves in the share market whirlpool or in trying to bolster a sagging share market on behalf of GoP.