Articles Regarding Pakistan

Kashmir: A pilfered state: 26 Mar, 2019 "The Nation"

While Pakistan came to be conveniently impugned for the Pulwama attack, what barely gets acknowledged by the Indian Government is its ferocious hegemonic posturing in occupied Kashmir that resulted in the attack on CRPF soldiers in Pulwama. Instead what we witness is an attempt to further delude the violent reality at hand, which is manifested in India’s hasty decision to not conduct state elections in occupied Kashmir, apparently dreading that elections might further allow occupied Kashmir to garner immense global attention especially after Pulwama attack. The physics of violence and armed aggression divulges that it is cyclical in nature, it never ceases, it never ends .It only inflates the coercive tendencies of the parties involved. Ravaging not only the land and the region, but with victory then defined in terms of the spillage of innocent blood and the losses of human lives, violence and armed conflict only wrecks man’s very faith in humanity itself. It is ghastly, it is horrific and it is appalling.

Ironically, the Pulwama attack itself is a microcosmic manifestation of the angst and generational trauma that armed conflicts end up germinating. Nestled in the breathtakingly beautiful Himalayan range, the Valley of Kashmir reeks of stench of Indian violence against Kashmiris legitimate call for the grant and exercise of their right to self-determination. For decades the Kashmiris have borne the brunt of unparalleled monstrosity at the hands of the Indian forces. The entire family structure has witnessed an inexplicable pilferage. Thousands of half widows are unaware of the fact whether their husbands are alive or they died succumbing to Indian brutality. Since 1990, around 100, 000 Kashmiri have been mercilessly killed. Women are raped and often gang raped, their honour mutilated.

The worst victims of the conflict are the children and the youth of Kashmir. Numerous come to be tied to army vehicles and dragged on the streets, many coerced to draw lines in dirt with their noses, while others shot with metal pellets blinding them usually in one or both eyes. Graca Marcel, the former wife of Nelson Mandela, released a UN report titled “the Impact of War on Children” in 1996 aiming to highlight the psychological impaction armed conflicts breed in young children. Marcel reported that violence and armed conflict not only “shatters their world” but also “breaks down their trust in adults”. The Kashmir pandemonium has birthed such a generation of psychologically affected and pilfered children. What happens when a young child experiences not only the demise of his parents, but his siblings or his accomplices? What happens when he becomes an immediate witness to the goriness that consumed them? And what happens when he fails to process this grave loss? His world shatters. His aspirations expire. His sense of security gets breached, whereby he comes to fear everyone else, perceiving them to be a constant threat to his young self. This is what essentially defines the cognitive scape of the innocent little children of Kashmir, who are much entwined to the conflict.

The younger generation of Kashmir is well cognizant with the dynamics of freedom. For them freedom a blessing is more than a catchphrase. It is blood, toil and tears for this is what they have experienced either through a firsthand exposure to punitive violence by the Indian forces in Kashmir or through harrowing ancestral tales of such state sponsored atrocities, that they have grown up listening to, and which now defines their collective unconscious. At a tender age, these children realize that freedom is not guaranteed, it is fought for, claimed over. An act of assertion against an administrative system of coercive oppression, it is essentially a proclamation of right against wrong, the victory of good against evil. For the Kashmiri children, the “ceremony of innocence” as Irish poet William Butler Yeats puts it, has certainly drowned. Today as they march for freedom, for a secure homeland, their expectant gazes lighting up their cadaverous and tired countenances deceive their numerical ages, manifesting a resilient resolve to fight against the hegemonic subservience they are being subjected to at the hands of the Indian forces.

The Indian government exigently needs to realize that hysterically sounding the war bugle against Pakistan to obscure the grotesque realities of state sponsored terrorism conducted in Kashmir would not distract attention from the Kashmir pandemonium. Similarly neither will the decision to not conduct elections in occupied Kashmir and deny the Kashmiris their legitimate democratic right to assert their voice by casting vote, hamper their resolve. The only manner to allow peace to burgeon in the region is through an effective settlement of the Kashmir conflict that integrally and inevitably involves honouring the wishes of the Kashmiri populace by granting them their exigent right of self-determination.

The best the world community can do in this regard is to effectively condemn Indian impunity in Kashmir and support the resolve of Kashmiris leading to a practical settlement of the pandemonium itself. This will not only restore Kashmiris faith in humanity but will also allow them to witness the ultimate triumph of good over evil. Our collective failure to do so will scar another generations hope, which will carry untold tales of repression into the future. It will be another stain on the collective memory of the region, a traumatic baggage that the future generation’s will never come to terms with. It is time we earnestly ponder upon it.

Realism in foreign policy: 26 Mar, 2019 "The Nation"

Foreign policy to be effective must be solidly grounded in realities at national, regional and global levels. A foreign policy which is divorced from ground realities will not only fail to achieve its goals but may also inflict enormous damage upon the nation it is supposed to serve. Pakistan’s policy makers, in their misplaced zeal to achieve ambitious but impractical goals or simply to play to the gallery, historically have often ignored this fundamental principle of a sound foreign policy. In the process, the country grievously suffered politically, economically, diplomatically and militarily. The consequences of those blunders continue to haunt us even now. There are some signs that we may again be relapsing into this dangerous mode which may lead the nation to harmful results.

Our Kashmir and Afghanistan policies of the 1990’s are classic examples of a flawed approach to foreign policy formulation in pursuit of over-ambitious goals in disregard of ground realities at national, regional and global levels. The blunders committed by us in the formulation and execution of those policies caused incalculable damage to Pakistan’s security and economy through the waste of the country’s precious resources, encouraged religious extremism and intolerance, slowed Pakistan’s economic growth, and tarnished the country’ image isolating it internationally on the issue of terrorism. We are still trying to come to grips with the aftermath of those policies. The recent vote in the UN Security Council committee on terrorism, where out of 15 members only China supported our point of view while 14 others including even Indonesia and Kuwait voted against us, reflects the dangerously isolated position in which we have placed ourselves because of our flawed anti-terrorism policies. The earlier FATF decision to place us in the grey list should also drive home the conclusion that our policies are at variance with international trends.

The reported statement by Malaysian Prime Minister Mahathir Mohammad, a friend of Pakistan who was the guest of honour at the Pakistan Day parade, on the issue of terrorism and Pakistan-India relations at the press conference just before his departure from Islamabad should be an eye-opener for our leaders and policy makers. According to newspaper reports, the Malaysian Prime Minister said that in the event of a conflict between Pakistan and India, Malaysia won’t take sides with anyone. He was quoted to have said, “We cannot side with anyone. I think this, allowing terrorists to have this upper hand, is very dangerous. We must stop terrorists, both sides (Pakistan and India) must prevent acts of terrorism…….We don’t want to take sides with anyone but we appreciate the problems they face.”

We must ponder over the reasons why many members of the international community, including powerful countries of the world, continue to view with skepticism our policy in combatting terrorism despite the enormous loss in blood and treasure that we have suffered in eradicating this scourge from our society. Undoubtedly, there are ambiguities in our anti-terrorism policies that we need to clarify and there are shortcomings in them that we need to remove. The international pressure on us on the issue of terrorism will not cease until we take decisive action against terrorists in our society in whatever form they may be. It should be clear by now to the powers that be in the country that our half-baked explanations will not be acceptable to the international community and that we are in no position to face the growing international pressure on us on the issue of terrorism. In a nutshell, we should stop living in a dream world of our own which has no link with reality.

We are currently also the victim of wishful thinking in the management of Pakistan-US relations. We need to recognize the harsh reality of the growing strategic partnership between India and the US to counter the expansion of China’s power and influence in South Asia and the Indian Ocean region. The inexorable growth of Indo-US strategic partnership will inevitably push Pakistan and China into a closer strategic embrace because of the threat that it poses to their legitimate security and economic interests. In short, while India and the US are on a trajectory of growing strategic convergence, Pakistan-US relationship currently suffers from increasing strategic divergence. This fundamental strategic reality will define the future of Pakistan-US and Indo-US relations in the foreseeable future. There will be passing occasions and short-lived opportunities for transactional cooperation between Pakistan and the US, of which Pakistan must take full advantage. But we must recognize that they will not change the underlying trend towards growing strategic divergence between the two countries.

Washington’s current need for Pakistan to facilitate the withdrawal of the US-led troops from Afghanistan in an orderly manner and the commencement of an intra-Afghan dialogue for durable peace and stability in Afghanistan is one of those opportunities for Pakistan-US cooperation. Pakistan has rightly responded in a positive manner to American request for cooperation because there is convergence of the interests of the two countries on the restoration of durable peace and stability in Afghanistan through an intra-Afghan dialogue, withdrawal of the US-led troops from the country, and prevention of the use of Afghan territory for terrorist activities in other countries. However, the beneficial results of this cooperation for Pakistan-US relationship will be limited and short-lived.

Unfortunately, it appears that our leaders and policy makers are not fully cognizant of the limits of Pakistan-US friendship under the current strategic scenario. That is why even the hint of a friendly gesture from Washington leads to exaggerated expectations and the issuance of statements from responsible quarters in Islamabad about the dramatic improvement in Pakistan-US relations. The euphoria lasts till another statement critical of Pakistan is issued from Washington. The over-optimistic and misleading statements issued from Islamabad are obviously meant to impress the people in Pakistan. In fact, these simplistic statements reflect the naiveté of and woeful lack of understanding of international affairs by those issuing them.

Despite the letter written by President Trump to PM Imran Khan seeking Pakistan’s help in bringing the Afghan Taliban to the negotiating table and facilitating the Afghan peace process, and Pakistan’s positive response, Islamabad’s unrealistic hopes of a dramatic improvement in Pakistan-US relations predictably have not been fulfilled. President Trump and Secretary of State Pompeo continue to criticize Pakistan for harbouring terrorists. The latest example is the statement made by Secretary Pompeo to an American radio broadcaster just last week accusing Pakistan once again of providing safe havens to terrorists and posing a nuclear proliferation risk. Significantly, he also sided with the Indian point of view that the recent conflict between Pakistan and India was caused by cross-border terrorism.

The moral is that our US policy must be based on the solid foundation of ground realities and emerging long-term strategic trends at regional and global levels. While continuing our efforts for strengthening friendly relations with the US, we should disabuse ourselves of the likelihood of a dramatic improvement in relations and a strategic partnership between the two countries in the foreseeable future. It is more likely that the growing strategic divergence will take its toll in determining the nature and direction of Pakistan-US relations. It is incumbent upon our leadership to prepare the country for this eventuality by adopting a mix of policy measures to safeguard Pakistan’s security and economic well-being in the face of the likely pressures which may be exerted upon us by Washington. Reduced economic and military dependence on the US should be prominent among the required policy changes.

Book review: ‘The Changing Global Geo-Political and Geo-strategic Dynamics: Challenges for Pakistan: Past and Present’ By Ambassador M. Alam Brohi: 26 Mar, 2019 "Daily Times"

Ambassador M. Alam Brohi having played his innings in the world of diplomacy to the brim and having successfully authored his first book -A Voice in the Wilderness: Memoirs and Reflections – has surprised me with his second so instantly. Writing ‘The Changing Global Geo-Political and Geo-strategic Dynamic: Challenges for Pakistan: Past and Present’, immediately after his first was indeed a very wise decision.

As a journalist for over 45 years, I have read many books on international relations and Pakistan’s foreign policy. No book on Pakistan foreign policy is possible without in-depth study of India-Pakistan relationship, contours of its history and various global, geo-strategic, regional and bilateral currents and cross currents. Ambassador Brohi being an insider of the Pakistan Foreign Service, who had access to records and having extensively researched too, his book is different from others. It is off the beaten track, more realistic and more practical than one could find other texts or books on Pakistan’s foreign policy written by well-known names. I would be absolutely right when I say his objectivity in facts, candidness in views may not be music for the ears of many security strategists.

Ambassador M. Alam Brohi has approached various global, regional and bilateral issues, currents and cross currents through the professional prism. Instead of archaic views, text book narrations, quotes-his is not a book. It is a well-written treatise, well researched, documented and anecdotal. He claims he has written this book for the benefit of students seeking their future through competitive examinations. Having read it objectively, I can say it with all seriousness that it is much more than that.

It comprehensively covers every aspect of Pakistan’s history, its roller-coaster politics, its socio-economic developments, extra-constitutional interventions, opportunistic role of judiciary and substitution of Pakistan’s social welfare and secular ideological moorings with that of a security state. The West Pakistan establishment in cahoots with the feudal vested interests supported by those religious parties that had opposed Pakistan waylaid the country away from its very clear and rational ideological path to a modern, secular and egalitarian democracy where all its citizens would be equal irrespective of caste, creed, colour and gender.

It is a well-written treatise, well researched, documented and anecdotal

Therefore, I am sure the book would be of great help to the students and teachers of international affairs. Its timing coincides well with the country’s decision to reframe Pakistan’s foreign policy in the light of US President Donald Trump’s diatribe against Pakistan and the need of the hour being new adjustments and realignments for facing emerging challenges.

Ambassador Brohi has dealt in detail Pakistan’s relations with the US. He has put a lot of labour in tracing history, difficulties, challenges and Pakistan’s abuse by Washington. To understand more Pakistan’s relations with the US -especially when they are at their lowest ebb today- one would like to refer to two extremely relevant books that represent a period when Pakistan was best of allies with Washington -President Mohammad Ayub Khan’s ‘Friends Not Masters’ and Zulfikar Ali Bhutto’s ‘Myth of Independence’. On the opening page of his book, Ayub Khan wrote that “People in developing countries seek assistance, but on the basis of mutual respect: they want to have friends not masters”.

Ambassador Brohi has discussed two different views and explanations rooted in history regarding the how and why of the initiation of Pakistan-American relationship. He says it in so many words and I believe that Pakistan was Anglo-American centric from its inception, and that to get allied with the United States was natural. It had at the Partition a British knighted Foreign Minister – very professional and one of the best in the world. He along with his British-centric Foreign Office hierarchy was very keen to have Pakistan affiliated with Washington. Thus, there was a bias when it came to diplomatic ties with two superpowers. Historically it has been proved that Moscow’s invitation to Prime Minister Liaqat Ali was subverted by the pro-Anglo-American bureaucrats manning the Foreign Office.

Late Bhutto as Pakistan’s Foreign Minister changed the direction of foreign policy and diversified defense procurement. He took Pakistan closest to China.

Ambassador Brohi has objectively discussed the Sino-Pakistan relations, its history and development to heights as termed ‘higher than Himalayas’ by Zulfikar Ali Bhutto. His appreciation of Chinese patience and consistency in sustaining relations with Pakistan, is noteworthy, and puts the entire gamut of Sino-Pakistan relationship in correct perspective dealing in detail with the latest “Game Changer CPEC”. However, one would like to dispel the impression that Chinese would rush their troops in aid of Pakistan in case of war with India. There is no precedence to show that China has done so in support of any friendly country. In our times their policy is manifested in the philosophy of economic growth as embodied in CPEC or One Belt One Road Initiative.

Pakistan’s foreign policy since its inception is India-centric. Bhutto developed nuclear bomb secretly and his daughter Benazir Bhutto clandestinely brought blueprints for the manufacture of nuclear-war head carrying missiles out of our fear of Indian aggression. Kashmir issue until resolved would remain a Damocles’ sword on our heads. Present leadership on both sides, shall have to rise to height of statesmanship shown by Bhutto and Indira Gandhi at Shimla in 1972. Finally, I believe fundamentals of any foreign policy are determined by geo-politics. Late Bhutto believed that Pakistan’s geo-strategic location shall keep it for all times as the key player in the region. However, first priority in relations has to be the neighbours. We sought friends nearly 10,000 miles away while fostering roller-coaster ties with immediate neighbours. Ambassador Brohi rightly places more emphasis on good relations with neighbours. Published by Royal Book Company

A way forward for Pakistan: 26 Mar, 2019 "Daily Times"

The United States reiterated assurance in a joint statement issued after the 9th round of the US-India Strategic Security Dialogue, held in Washington that US wants to build six nuclear power plants in India. The largest market and emerging power of South Asia is on driving seat between US-India relations. China is the main factor behind. Once Pakistan’s ally, the US is now in Indian trap. India was the founding member of the Non-Aligned Movement. It kept balance in relation with both US and Russia. A zigzag course was being followed. When India tilted more toward US, Russia played its card and joint military drills began with Pakistan. Russia also considered Pakistan a major player and party in Afghan conflict. Pakistan also invited by Russia at different forums (e.g. Moscow Afghan peace talks) to play its role for peace in Afghanistan. Russia is a cash starved economy. The only goods which it can export and earn foreign exchange besides natural gas are weapons and armaments. By signing billions of dollars S-400 defense system deal last year, without caring about CATSA Act (countering America adversaries through sanctions act), India restricted Russia’s move to develop more friendly relations with Pakistan.

India has also developed warm relations with major Muslim states. It has good ties with Saudi Arabia. The prime minister of India got red carpet welcome when he visited UAE. Despite US sanctions on Iran, India is a major buyer of oil. Recently, India was also invited as guest of honour in OIC foreign ministers’ meeting.

Despite the gross violation of human rights and mass killing of Kashmir’s in Indian-occupied Kashmir, the world community is silent. The reason behind is interest game. Thus, ideology is for the cannon fodder. At the top of international relations, realpolitik rules. India is trying to win diplomatic game at every platform. From SAARC to the UN, India is trying to humiliate Pakistan at every diplomatic front. Here the irony is the culprit (India) is blaming the preacher and defender of human rights of Kashmiris. The murderer of millions of the Muslims in Kashmir is being supported by the world.

For the last few decades, our politics has been confined to the streets. Our politicians only think to get votes. They only make policies how to be re-elected. They do not think how to take the country upwards. With a GDP of 2.848 trillion dollars, India is the sixth largest economy of the world. Its progress in IT and other sectors is commendable. It is also focus of many countries because of its enormous market with the population of over 1.30 billion. We have to accept the fact that India is an emerging power. The need of the hour is to make such policies and take some steps which could make us great. So that, we could compete with India.

Instead of indulging in conflicts of regional and international nature, we have to go ahead by focusing on peace, progress and prosperity

First of all, Pakistan has to fix its economy as soon as possible. Relations based on investment and money are firmer and more stable in this world and India is availing this. We need to focus on every sector (agricultural, industrial, tourist etc.) and provide more opportunities and security to foreign countries to invest in our homeland. After developing our economy, Pakistan would be able to invest in other countries. This would strengthen our relations.

Secondly, national action plan must be implemented in its true sense. The interiorministry should take strict actions against all groups who are involved in militant activities either in home or abroad. It would also prevent us to be on blacklist by FATF, which India is hastily campaigning for. It would be our significant win. Risk and uncertainty play a major role in decisions to invest even in peacetime.

Thirdly, India enjoys warm relation with Afghanistan. Giving face saving exit to the US from Afghanistan will not give the desire results since its tilt towards India would remain. Afghan solution would not prove trump card for Pakistan. Taliban are a political reality of Afghanistan but after withdrawal deal, it is uncertain who would come to power. Will people of Afghanistan show their confidence on Taliban is a question and will be answered in future. Thus, we have to develop relation with government of Afghanistan besides the Taliban. It would be more beneficial for Pakistan in economic terms.

Fourthly, the main cause of Pak-India bitter relation is Kashmir. Kashmir issue must be resolved for the peace, progress, prosperity and security of South Asia otherwise escalation between the two nuclear states may evolve into the world’s first nuclear war.Pakistan should launch a well-planned and funded campaign to counter Indian propaganda regarding Kashmir. It must mobilise the international community to find a fair, peaceful and durable solution to the the regional dispute.

The post-Pulwama attack developments showed the jingoistic and immature nature of the Indian government and media. While on the other hand, Pakistan behaved as a responsible and peace-loving state.It’s the way we have to follow. Instead of indulging in conflicts of regional and international nature, we have to go ahead by focusing on peace, progress and prosperity.

The Malaysian model: 26 Mar, 2019 "The News"

To me, the MOUs signed during visits by heads of states, heads of governments etc are only good if they are institutionally followed up. Otherwise, they are mere photo-ops.

I am optimistic about the MOUs signed between Pakistan and Saudi Arabia, because certain institutional mechanisms were agreed to follow up on them. Likewise, the MOUs signed between Pakistan and Malaysia will materialise, because the private sector on both sides is already engaged in the automobile sector (assembly of ‘proton’ car), halal meat export, and cooperation in the telecom sector. In a joint press conference, Malyasian President Dr Mahathir Mohamad showed optimism that trade and investment opportunities between the two countries would increase as, in his words, “we now have outlined the measures that we should take” (in this regard).

Pakistan is keen to learn from Malaysia on corruption control, tourism promotion and technological innovations. These things Pakistan can learn from many other countries. What we need to learn from Malaysia and from the life and policies of Dr Mahathir Mohamad is how he turned an ethnically, culturally and religiously fragmented population of Malaysia into one nation, and how he turned around the Malaysian economy.

It was the result of the inclusive policies of Mahathir’s vision 2020 (that he presented in 1991, when he was elected prime minister from 1981 to 2003) that all ethnicities and nationalities in Malaysia’s population – which comprises Malays (68 percent), Chinese (23.2 percent), Indians (7 percent) and other groups (one percent) – are living amicably. The followers of Islam (61 percent), Buddhism (19.8 percent), Christianity (9 percent), Hinduism (6.3 percent) and others find state policies conducive enough for them to live a life which is ranked as “very high” on the Human Development Index (HDI). Just to remind readers, Malaysia’s HDI score is 57 (among 189 countries).

Keeping their individual identities intact, the 32 million Malaysians have assimilated into a very productive workforce. With total workforce much less than Pakistan, Malaysian GDP is much higher than ours. The country is included in the list of emerging economies and is aiming to be a developed economy within the next six years (ie by 2025; Mahathir’s original vision was to be among developed economies by 2020. He says that corruption by some of his successors has delayed this journey by five years).

PM Khan has a desire to turn Pakistan into an Islamic welfare state. Here he can again learn a lot from Malaysia. Malaysia is one of the few developing countries where education and healthcare are heavily subsidised. Malaysian citizens are entitled to free public education up to the secondary level and public tertiary education fees for them are subsidised by up to 90 percent. According to Unesco, Malaysia has an adult literacy rate of 93.12 percent; male literacy rate is 95.43 percent while for females it is 90.75 percent.

In 2018, the Malaysian government set aside approximately $6.75 billion, or 10.4 percent of the annual national budget, for public healthcare. No wonder according to the ‘International Living Annual Global Retirement Index’, Malaysia, with a score of 95 out of 100, ranked first in the ‘Best Healthcare in the World’ category. There is universal health coverage in the country. Basic healthcare services at government-run clinics with prescription cost only one Malaysian ringgit 1 ($0.25). Disabled persons, senior citizens and public-school students are entitled to free healthcare. The UNDP called the Malaysian healthcare system “a model to (sic) other developing countries”.

To know how Malaysia, which got its independence 10 years after us, and was facing all sort of challenges that Pakistan is facing today, turned around its economy and society under the first stint of Mahathir Mohamad, we need to understand Mahathir’s vision 2020.

In 1991, Malaysia adopted an export-oriented economic strategy. Under this strategy, the country pursued a policy of industrialisation to increase the productivity and quality of its exports. It also pursued policies of privatisation and corporatisation.

To do the needful, Mahathir was very clear that Malaysia was not only in need of financial capital but also human capital, which is why he invested in people. He envisaged nine challenges (which he turned into opportunities) to his Vision 2020.

His first challenge was to create a united Malaysia. The second was to create free individuals who were progressive, calm, self-confident, and possessed a national pride that would be respected by others. The third was to create and develop a stable democratic society that would become a model for other developing nations. The fourth was to create a moral and ethical society.

The fifth challenge was to create a liberal and tolerant society where all Malaysians could practise their own beliefs but remain loyal to their nation. The sixth was to create a scientific and progressive society that not only used technology but also contributed to technological development. The seventh was to create a caring society and caring culture. The eighth was to create a just society through equal distribution of income. And the ninth and last challenge was to create a prosperous society that had a competitive, dynamic and stable economy.

It is evident that of these nine challenges, the first to the fifth, and the seventh, focused on mental aspects and social values, while the sixth emphasized science and technology, and the eighth and ninth addressed the economy. Thus in terms of focus, Vision 2020 primarily emphasised the human aspects of development.

The Malaysian model may not be a perfect one and may have its loopholes. However, looking at where Malaysia was in the 1990s and where it has reached today, it is very clear that investing in human development, a shared narrative (mental aspects) and social values pays off.

The Malaysian model reminds us that for nations and societies to develop, financial capital is not the only prerequisite. In fact, what matters in this case are social and societal values. If PM Khan is serious in turning Pakistan into a welfare state then he needs to focus on a creating a ‘United Pakistan’ where progressive, calm, self-confident Pakistanis with national pride can be the role model for other nations through their moral, ethical, and tolerant values. Doing this would not require billions of dollars but a change management for behavioural change that may turn the 220 million inhabitants of this country to a one nation with shared values.

Challenges first till fifth, and the seventh, in Malaysia’s Vision 2020 did not require any IMF bailout package, nor any external assistance but a realisation from within. However, Mahathir had to lead it from the front. The same thing one expects from PM Khan, who calls Mahathir one of his role-models. Let’s hope he follows in his ideal’s footsteps.

Economic reforms: Part - XLVII: 26 Mar, 2019 "The News"

We now turn to the main features of the 7th NFC Award. After agreeing to a set of issues that the NFC were to consider, working groups were constituted to make recommendations for their resolution.

Some of these matters have already been covered in the last part of this series (March 20, 2019). The major issues that required resolution were: vertical distribution between federation and provinces, and horizontal distribution among provinces. Then there was the question of benchmarking revenue requirements based on expenditure projections.

Historically, the exercise of expenditure requirements has been controversial because every unit would attempt to overstate its requirements in the hope to secure a larger share. It is therefore not surprising that, despite carrying out this exercise, the distribution of resources was only tangentially concerned with expenditure projections. There were projections of revenues, expenditures and borrowing but those were not the basis of vertical transfers. How it was arrived at, we will see shortly.

The first meeting of the commission was held on August 27-28, 2009 in Islamabad and then it moved to all the provincial capitals and finally it held its sixth meeting in Lahore, for four long days on December 9-12, 2009. Provincial chief ministers also joined the negotiations. In a dramatic development, a record note was signed by the members, duly endorsed by CMs, announcing the agreement on the Award. It was only the 108th day since the first meeting. No previous democratic government since 1991 had reached an agreement on the Award. [The 1997 Award, which was reached in less than 100 days, was given by an interim government]. As we see, if the federal government is willing to concede provincial governments’ demands, reaching an Award is not a challenge.

In a radical departure from the approaches of past awards, the 7th NFC set the following principles to determine the Award:

“The approach adopted by the seventh NFC is rooted on the premise that most of the development work needs to be initiated at the provincial level to ensure results at the grass roots level. Furthermore, the responsibility of providing social sectors services also rest with the provincial governments. As such the needs of the provinces must be addressed first.

“The commission was also of the unanimous opinion that the vertical programs of the federal government were not providing the desired results and should be thus reduced. Instead greater resources should be placed at the disposal of the provincial governments. The commission was also of the view that there is a duplication of functions ie the same functions were being performed by departments of the federal and provincial governments resulting in wastage of government resources.

“Thus, instead of determining the expenditures requirement of the federal and provincial governments simultaneously, in the first instance the requirements of the provincial governments would be assessed and worked out, and the share of the provinces in the divisible pool Taxes net [sic] would then be determined. After setting aside the provincial shares, the federal expenditures would be adjusted to maintain the borrowing level at an acceptable level”.

Clearly, there was an abdication of federal responsibility in terms of its constitutional responsibilities. In fact, it was an indictment of the federal government’s role in fiscal affairs. The primacy of provincial expenditures or abandonment of federal space of responsibility was unprecedented. An Award is reached when a unanimous recommendation is made by the commission, which is binding on the president to implement. Unless this happens, no Award is possible. Thus, there was no compulsion for the federal government to accept such vast amendment in fiscal responsibilities in favour of the provinces. However, the stage was set to transfer a major share of divisible pool, which was as broadly defined as in the case of the 1997 and 2006 awards.

Based on the above principles, the federal government voluntarily made an offer to increase the share of provinces to 55 percent in the divisible pool. However, on the insistence of the provinces, it was agreed that in the first year of NFC ie 2010-11, the provincial share would be 56 percent and for the remaining years the share would be increased to 57.5 percent. In another remarkable development, the federal government agreed to reduce the cost of collection from 5 percent to 1 percent, thereby enhancing the divisible pool by another 4 percent. Additionally, it was agreed that one percent of the divisible pool would be set-aside for (the then) NWFP as cost of war. Interestingly, this subject was not part of the terms of reference issued by the president for the commission.

There were many more deductions from the meagre share that the federal government was left with. First, as we had already noted in the last part of this series, a GDS liability of Rs10 billion was to be paid over a five year period. Second, there was an outstanding arbitral tribunal award of Rs110 billion against Wapda on account of net hydel profit, which was also agreed to be paid by the federal government, Rs10 billion immediately, and Rs100 billion to be paid over a next four years. [In the 1991 NFC, it was decided that this was the liability of the generating company].Third, the Sindh government was given an additional grant of 0.66 percent of its share in the divisible pool. Fourth, the Balochistan government was given an exceptional treatment by assuring a fixed amount of transfer irrespective of actual tax collections, the difference to be made up by the federal government.

It may be recalled that the Musharraf Award of 2006 had already pushed the share of provinces from 37.5 percent to 41.5 percent in 2006-07 and which was to gradually increase to 46.5 percent in 2010-11, the last year of the Award. In sharp contrast, the 7th Award gave a ten percentage point increase in provincial share in the first year and then added another one and half percentage to take it to 57.5 percent. Note that this is not the share out of the divisible pool of the past.

The pool was increased by 4 percent by reduced cost of collection besides additional deductions from the remaining share of the federal government. This Award would leave the federal government hugely handicapped to run its finances from its share in revenues.


Lower growth and higher inflation: 26 Mar, 2019 "The News"

The debate on how the economy should be run began way, way before the election. As early as the middle of 2017, one aspect of the anti-Nawaz Sharif narrative that a number of quack economists had successfully hustled to the establishment was the unsustainability of Pakistan’s debt.

The mantra of too much external debt is one of those easy to insert into the national discourse half-truths. It’s true enough to survive the scrutiny of airhead television anchors but has no real roots in any rigorous analysis of the economy.

Debt numbers, and especially external debt numbers, are always more accurately viewed through the lens of what they represent as a percentage of GDP. When the PML-N took office in 2013, the external debt-to-GDP ratio was 27 percent. It fell to 27.4 percent in June 2017. Perhaps the greatest indictment of the previous government was not its performance during its first four years, but what it left behind for the caretaker government. In June 2018, right before the election, the caretakers had to contend with an external debt-to-GDP ratio of 33.7 percent, Pakistan’s highest level since June 2010.

So how has the external borrowing of this new, patriotic, on-the-same-page-as-Pindi government impacted the external debt-to-GDP ratio? In December 2018, the State Bank reported that it had climbed further to 35.8 percent. Since then, new loans from China, Saudi Arabia and the UAE have all come online.

One measure of how bad the news is would be to consider what the good news is. Apparently, after wasting almost three full quarters, the government will finally enter into a substantial IMF programme that will offer something close to $12 billion, and extract, in return, a series of typical neoliberal monetarist policy measures that have failed in this country on almost two dozen previous occasions. Luckily for the IMF, every banker there gets paid in US dollars. Unluckily for Careem drivers in Hyderabad, nurses at private hospitals in Bahawalpur, farmers in Nowshera, and dry fruit vendors in Chaman, everyone here gets paid in rupees. It is hard to imagine a scenario in the fall of 2019 in which there is not significant inflation, in which provincial harmony has not been disrupted by very strong disagreements about the NFC award, in which the pressure of pensions on public-sector organisations exacts dramatic measures including straight up sales of assets, and in which the country’s external debt-to-GDP ratio does not begin to push upwards of 40 percent.

Would any of this make the PTI government worthy of being declared a failure, a short one year into its first ever opportunity to govern the country? This is a tricky question because just like it was unfair to ignore the growth of the economy whilst railing against Ishaq Dar’s borrow and burn policies, it will be unfair to judge this government on only the metric of external debt, or high inflation, or even low growth. All three are conditions that Pakistan can survive, indeed will survive. But this cost has to be able to deliver something important.

High debt, high inflation and low growth are not inevitable outcomes for Pakistan. With a sustained demographic dividend that will surpass the 2040s and vast regional economic trade potential, Pakistan should be a growth juggernaut.

So the big hit that Pakistan is taking right now, in terms of higher debt, lower growth and higher inflation is almost like a detour. So too is the more worrying austerity that the government has adopted, cutting development spending willy-nilly, across all social sectors. All of this represents a set of avoidable costs. Why was this path taken? What is the pay off?

There really can only be one answer to this question: a fully transformed and altered fiscal reality in Pakistan, in which the super-rich pay their fair share in taxes. The prime minister has repeated on several occasions that economic pain is coming. The payoff from this pain, he has also repeatedly stated, is a permanent solution to this country’s fiscal crisis. Sadly, the early signs, as we approach the home stretch before the budget for fiscal year 2019-2020 becomes a reality, are not good.

The FBR is back to old tricks, squeezing every accessible source of revenue instead of finding new ones. The IMF terms will almost invariably be rife with rhetoric about widening the tax net, but with actual, specific measures that essentially only deepen the knife wounds that are inflicted on existing taxpayers – including the poor and the vulnerable through the decidedly regressive GST and the oft-corrosive application of the withholding tax.

Meanwhile, there is a lot of saccharine discourse around the importance of job creation and big businesses. This is a seventy-year-old game that the business elite in this country has perfected. The subsidies and SRO raj under which so-called titans of industry have been able to protect their globally embarrassing but locally intimidating riches seems like it will survive.

When the cabinet positions were announced, it had three striking features. The first was that Jahangir Tareen, who was, is, and will remain, the chief operating officer of the PTI – was not a minister. This was no surprise given his legal troubles. The second was the massive overpopulation in the cabinet of men older than sixty. This was surprising, given how much emphasis the prime minister has laid on the youth. The third was the under population in the cabinet of what one might call PTI Ideological – the old guard of the PTI that are real and genuine believers in a very different version of the country that they are now supposedly running.

Tareen’s omission due to legal issues was among the most damaging for the party because he is literally the only person in the party that could have credibly married the two divergent strands of PTI circa 2019: the ideological firebrands that believe in reform with the pragmatic horse-traders and establishment-plants. Short of his presence in the cabinet, there is no one Imran Khan can trust to keep the peace. This has had a profound impact in three places. First, it has meant that the PM’s own team lacks the wow factor it may have had with a fully functional Tareen doing his thing. Second, a disheartened Tareen has allowed governance in Punjab to descend to a gong show. Third, it has pitted PTI versus PTI inside the cabinet, making coherent and quick economic decision-making nearly impossible.

Finance Minister Asad Umar has thus been left having to try to manage three very critical constituencies. He has had to try to establish a veneer of consistency with the ‘Imran Khan Economic Doctrine’ which is a moveable feast at the best of times. He has had to work to bring in busloads of dollar-denominated cash, which has been as much of a foreign policy and national security function, as an economic management one. Finally, he has had to try to be accommodative with Tareen’s approach to governance, including trying to survive attacks from within the Tareen camp.

All of this has meant that this government has spent too much time deciding on the IMF loan, and not enough time on agreeing on a model of fiscal normalisation and fiscal federalism. The budget debate will take place in the holy month of Ramazan this year. Traditional food price inflation may be combined with a debilitating heatwave and power breakdowns. This represents a trifecta of threats that the PTI is wholly unprepared for. The velvet-gloved treatment of this government has already begun to be replaced with a harsher lens. It can get a lot worse, very fast.

A lot of the preparation for the summer of 2019 should have happened in cabinet meetings from September 2018 onwards. Instead, the government is now hurtling towards a one-year anniversary that will end with lower growth, higher external debt, higher inflation and a fiscal regime that looks exactly like any other in Pakistan’s ugly fiscal past.

If the super-rich in Pakistan manage to escape the clutches of rational, coherent public policy (read: their fair share of taxes) this summer, the entire reforms agenda of the prime minister will be dead on arrival. One year into tabdeeli sarkar, this government will risk sounding as hollow and dishonest as all its predecessors.