A Surging Pakistan? | Dr Niaz Murtaza

GLOBAL reviews about Pakistan, eg by credit rating companies and Washington Post, have suddenly become rosier after years of gloomy predictions. Pakistan is even included in the Next-11 club of 11 countries supposedly poised to achieve economic greatness.

Ironically, foreign predictions about Pakistan, positive or negative, have never materialised, being based on casual, rather than serious social science, analysis. The pre-1947 British/Congress and 2007-2011 predictions about eminent collapse never materialised.

But neither did the 1960s and mid-2000s predictions about imminent economic take-off. So, one must assess current rosy reviews dispassionately using social science tools.

Using such tools, I had predicted when I started writing in Dawn in 2010 that the situation will start improving in three to five years, despite Pakistan’s dire situation then. This prediction stands vindicated. Similar analysis is needed going forward.

Pakistan is seen as having made tremendous gains in controlling terrorism recently. In reality, it has made steady gains against terrorists ever since democracy’s return in 2008 from a situation where terrorists had captured large parts of Fata and KP under Musharraf.

Swat’s liberation in 2009, South Waziristan’s in 2010 and North Waziristan’s now have all occurred under democracy. Thus, for those who ask what democracy has delivered, the simple answer is huge gains against terrorism.

This claim seemingly contradicts the undeniable fact that it is the army which is boldly leading the fight, while politicians plod along sheepishly. But why did the army not act boldly under its own rule when the problem was smaller and it enjoyed complete powers? Just like politicians, the army too develops political compulsions when in power.

Musharraf hesitated to act in Karachi and the north given his political compulsions to keep the MMA and MQM happy. The army has acted boldly only once freed of these political compulsions by democracy.

Politicians, not the army, are now left to handle the operation’s political costs and other political problems, helping artificially inflate the army’s standing.

Credit for appointing a battle-ready COAS goes to politicians. As several articles preceding his appointment had revealed, the government saw Gen Raheel Sharif as the best choice then, he being the author of the army’s anti-terrorism strategy.

Thus, the way forward is not army takeover or even Gen Sharif’s extension, but simply the appointment of a likeminded successor COAS by politicians.

While weakened greatly, terrorists will unlikely be completely destroyed soon. Occasional attacks may continue immediately, given the follies of both the army and politicians.

By allegedly continuing to support the Afghan Taliban, the security establishment contributes to Afghanistan’s instability. This makes it easier for Pakistani terrorists to find sanctuaries there. The politicians contri­bute by inadequately controlling societal extremism.

Economically too, there has been some improvement, but mainly on risk factors, ie high inflation, low foreign reserves. Even these gains have mainly occurred due to falling oil prices and questionable policies which increased indirect rather than direct taxes.

But performance on growth factors, eg industrial and export revitalisation, remains anaemic. This undermines both the government’s claims of economic wizardry and the value of IMF’s structural adjustment policies.

Countries develop rapidly when their dominant circuits of economic logic (CELs) increasingly consist of high productivity, advanced technology and highly profitable outputs. Unfortunately, five very different CELs hog the bulk of our economic resources.

Firstly, there is the military CEL whose un­­derlying logic is using enormous resources for economically unproductive defence pur­­poses.

Se­­con­dly, there is the political patronage CEL whose un­­der­­lying logic is wasting re­­sour­ces on economically questionable schemes (e.g., the latest farmer scheme) to buy votes.

Thirdly, there is the traditional business CEL, whose underlying logic is producing low-end products and gaining profitability by breaking tax, labour, and environmental rules. The military also maintains large corporations which thrive more on official support rather than economic dynamism.

Finally, there are two inter-related CELs controlled by terrorists and criminals whose underlying logic is undermining other CELs.

Only a small secondary CEL includes high productivity and advanced technology. To make this CEL dominant will require an unlikely tidal wave of foreign investment far beyond CPEC’s scale.

Secondly, it will require good governance of a level which neither de­­mocracy nor spurious alternatives can deliver immediately. Thus, Pakistan’s economic deve­lopment may be a slow and laborious process.

In essence, neither collapse nor precipitous development seemingly appear on Pakistan’s medium-range horizon. Thus, Pakistan resembles Ghalib’s apt description of life as a slow-burning flicker which neither bursts into a flame nor extinguishes to become smoke.

The writer is a political and development economist.

Published in Dawn October 1st, 2015