The lethal combination of an unsettling government, terrorism and a crashing economy
Pakistan suffered from a multidimensional governance crisis of a very serious nature. The Pakistani state was not performing as expected and the political system was fragile. Notwithstanding the fact that Pakistan was a nuclear power, the country was weakened from within because of continued political and economic crisis of immense magnitude.
(From Islamabad) PAKISTAN WAS ONCE AGAIN a frontline state and heightened security concerns stemming from the nation’s role in the Global war on Terror had created great instability. It was threatened from within as increasing insurgencies were draining the resolve of the Pakistani military and civilian leadership. The military was getting exhausted by the war on terror being fought within Pakistan.
With India increasingly hostile after the Mumbai terror incident las November in which more than 170 people died, including nine terrorists, India suspects that Laskar-e Taiba was involved. Earlier on, Manmohan Singh and his Pakistani counterpart Yousaf Raza Gilani had met on the sidelines of the NAM summit in Egypt. India had been pressurizing Pakistan to act against the terrorist infrastructure. Meanwhile, the resumption of the composite dialogue process had become a victim of the strained relationship between India and Pakistan since that past November.
In Afghanistan the global war on terror had resulted in a weakened state unable to perform its basic functions. With no end in sight to the turmoil in the country, the resultant instability was seriously affecting neighboring Pakistan in a variety of ways. There could not be peace in Pakistan without peace in neighboring Afghanistan. The reverse of this was also obviously true. The situation was certainly bad in both countries notwithstanding the claims of the governments concerned and things were not improving as desired in either country as they failed to resolve their multidimensional governance crisis. The future was seemingly bleak. As a result, greater uncertainty was looming over the horizon.
“The political goodwill received by Zardari was wasted as he was not able to get his act together to lead the country out of the current political and economic crisis and had simply failed to deliver the leadership that was expected from him.”
The performance of the Zardari government has been lousy. The Pakistan Peoples Party had achieved a remarkable election victory in the last national polls because of the sympathy vote resulting from Benazir’s assassination. The political goodwill received by Zardari was wasted as he was not able to get his act together to lead the country out of the current political and economic crisis and had simply failed to deliver the leadership that was expected from him. But there were more issues to come in other areas.
We must first consider the economy. Since the beginning of 2008, Pakistan’s economic outlook had steadily worsened. Economic growth in the previous 5 year average was a solid 7 percent. Today, as a result of the current economic crisis, growth was merely 3.5-4 percent. The population of Pakistan is now 175 million and there is still massive poverty in the country, considering half of the people in Pakistan live on $2 or less a day. The percentage of the population living below the poverty line is still a very high 35 percent and the Country’s Human Development Index still remains abysmally low. Given the fact that Pakistan was one of the world’s strongest military powers, this was not only shocking but intolerable, to say the least.
“The EIU estimates that inflation should drop back to single digits in 2010, and that growth should pick up to over 5% per annum by 2011.”
PAKISTAN FACES A SERIOUS ECONOMIC CRISIS
Inflation remained the biggest threat to the economy, jumping to more than 9 percent in 2005 before easing to 7.9 percent in 2006. In 2008, following the surge in global oil prices inflation in Pakistan had reached as high as 25.0 percent. Pakistan had suffered from a growing current account deficit that was mainly driven by a widening trade gap as import growth outstripped export expansion. There was a decline in FDI from a height of approximately $8 billion to $3.5billion for the current fiscal year.
The dismal political situation had forced massive capital flight from Pakistan to the Gulf. Pakistan’s economy had been shocked from gaping trade deficits, high inflation and a crash in the value of the Rupee, which had fallen from 60-1 USD to over 80-1 USD in a few months. For the first time in years, it had to seek external funding as Balance of Payments support. The IMF was approached for a possible bailout. However, there was also some good news for Pakistan. The EIU estimates that inflation should drop back to single digits in 2010, and that growth should pick up to over 5% per annum by 2011.
“Many of the country’s political parties had been demanding the granting of provincial autonomy for quite some time with no visible signs that there demands were being considered by the Zardari government.”
The country was also faced with lingering political disputes left unsettled for so long. Pakistan’s federation suffered from a serious structural flaw: four provinces only. Punjab, 60 percent of the country, the other three provinces put together only the remaining 40 percent. There was an obvious unbalance in this structure. No other country of any importance suffered this anomaly. The country inherited this structure from the British Raj in 1947
However, in Pakistan this structure was held sacred for unexplained reasons. It would be better for Pakistan to be demarcated into at least ten provinces or so. The beginning should be obviously from Punjab which may be conveniently split into at least three parts – north, central and south Punjab. This was long over due but the ruling elite were not capable to take the decision. This restructuring of the federation should be accompanied by granting the provinces substantial autonomy on the lines of Canada or Germany. The minority provinces (the three, other than Punjab) resented Islamabad’s political, administrative and economic control over them. This was a bone of contention now and the political issue needed to be resolved. Again the lack of political imagination, the sheer callousness and the couldn’t-care-less attitude of the Zardari government was responsible for this state of affairs.
Many of the country’s political parties had been demanding the granting of provincial autonomy for quite some time with no visible signs that there demands were being considered by the Zardari government. This apathy of the Zardari government would cost Pakistan dearly in the future. It was expected that the Zardari government would rise up to the occasion and lead Pakistan out of the worst economic and political crisis since independence.
But then, are we really expecting too much from the Zardari government. The present leadership of Pakistan seemingly does not have the capacity to deliver. At least, the record of their rule indicates this. Only time will tell. Meanwhile, we can only hope for the best. The people have learned to lower their expectations from their rulers. This has resulted from repeated failures at providing good governance to the hapless people of Pakistan. The record of Pakistani rulers, including the current one, is shameful indeed.