The Road to Nowhere
Together the Imran Khan made ‘political calamity’ and the natural calamity – floods – have taken a heavy toll on the people of Pakistan. The country’s economy is going downhill and the people are suffering. They are tired, exhausted and tense. Tired of the political deadlock that does not seem to end; exhausted because despite huge promises, democracy has failed to deliver in Pakistan and tense because not many are sure what the future holds for them. In the coming days when the floods and the brewing political crisis in Islamabad will have reached their apogee, it will be time to ascertain the enormity of the economic cost.
Are the politicians on a mission to destroy the country’s economy? It seems so. The visits of the heads of states of Sri Lanka, the Maldives and China were cancelled due political unrest, which also forced an IMF delegation to postpone its visit. It is feared that the organization might delay the release of a tranche of $550 million to Pakistan.
Imran Khan has already warned the IMF and other financial institutions not to lend any money to the Nawaz government. He claimed that when – and if – the PTI government would come to power, it would not return the borrowed money. The World Bank is also apprehensive about its country partnership strategy with Pakistan worth $11 billion. Announced in April 2014, the program is structured to help achieve the twin goals of ‘poverty reduction and shared prosperity’. Already struggling under grave security threats, is it wise to create roadblocks that can bring the economy to its knees?
Imran Khan tried to use some ‘economic weapons’ to weaken the government. He exhorted the Pakistani expatriates to send their money through hundi and urged the local masses to observe civil disobedience. Instead of weakening the government, these demands have the potential to damage the state, especially at a time when political uncertainty has already shattered investors’ confidence while the state is battling a number of other pressing challenges – floods, terrorism, violence, persistent corruption and crime.
So far, the loss to Pakistan’s economy as estimated by the government stands at Rs.550 billion. Around 4.3 percent of this loss is attributed to the depreciation of Pakistani rupee against the U.S. dollar. The foreign currency reserves that stood at $13.962 also showed a downward trend. Add to that Rs.357 million, the expenses paid from the national exchequer to provide security to the protestors, and the picture becomes even grimmer. Exports have slowed down and the import of raw materials has declined. Economic experts believe that the continuity of this trend will put further strain on the country’s fragile economy.
The cancellation of the visit of the Chinese president was a huge blow for Pakistan. China is an economic giant that is successfully challenging the existing world order and is in the process of building a new one. Pakistan cannot afford to remain alienated from this development and it must do everything to be a part of it. However, a state cannot draw the benefits of any economic reforms no matter how crucial they are, unless it undertakes political reforms first.
While the Chinese president couldn’t visit Pakistan, he went to India. Setting aside its military rivalry with China, the Indian leadership
welcomed the Chinese guest. A Pew survey conducted earlier this year in India had shown that 56 percent of the Indians considered China as their number one threat. Yet, the long term Sino-Indian rivalry was set aside by the government of Prime Minister Narendra Modi to boost economic ties.
The Indians are moving ahead to forge a new relationship with China, acting on the agenda of promoting economic prosperity.
On the contrary, Pakistan’s relationship with India has been permanently marred by the Kashmir dispute, terrorism charges and skirmishes across the Line of Control. The last PML-N government that tried to apply a similar Sino-Indian framework of relationship to IndiaPakistan relations ended up paying a huge political price. This left many wondering whether a civilian government in Pakistan has the political freedom and authority to formulate and execute a foreign policy agenda not consistent with the foreign policy proposed by the military.
Can any civilian government in Pakistan attempt to change the matrix of Indo-Pak relations without annoying the army? Pakistan can receive economic and military aid from China, its time-tested friend, yet it will not move forward on the road of economic prosperity unless it repairs and mends its relationship with India.
Another significant roadblock to Pakistan’s economic progress is the element of corruption. Without an across the board accountability and anti-corruption mechanism, economic progress can never take place. An earnest effort is also required to initiate judicial reforms in the country so that laws can be applied to all citizens without any fear or favor.
One thing is certain – Pakistan is at a critical juncture of its history. It cannot afford the continuity of the politics of agitation and violence. This will spell economic doom for the country. The economic opportunities that knock at Pakistan’s door today will be lost if the country remains internally destabilized.
Never mind the ‘utopian land’ promised by the protesting leaders, a great fear is that those who may lose power as a result of the politics of protest may try to seek it back through similar means. If this happens, it is likely that the state will fall victim to absolute anarchism and it will become difficult to make any recovery – least of all economic.