Changing paradigms in Pakistan’s evolution — II

 

Under the Zia paradigm, the aristocracy was helped back to power over the economy, enabling it to create huge private wealth by bleeding state enterprises and banks. Meanwhile, the restive masses were fed with an excessive dose of religion, whose baneful effects need no further elaboration. The Pakistani economy struggled on, kept afloat by US aid in return for cannon fodder in Afghanistan. Victory was just around the corner in Afghanistan that would unlock untold riches, solving all of Pakistan’s woes. There is no doubt that the Soviet adventure played a significant role in helping General Zia cement his Islamisation agenda with generous help from Saudi Arabia. But these were circumstances that helped an existing paradigm take hold. They did not create the paradigm.

 
As with the first paradigm, the second too has run out of steam after having been in force for the last 40-45 years. The contradictions it developed in its application over the last 40 odd years are obvious. Nevertheless, it is instructive to see how these contradictions will be resolved and the direction that the Pakistani polity will take after a new paradigm takes hold. One thing is clear though. The new paradigm that shapes the next 50 years of Pakistan will come into being in the next three to five years. What will it be?
Two things stand out from the first two paradigms that guided Pakistan’s first 100 [so to speak] years of formation and existence. Firstly, in fashioning both, the intellectuals chose to give primacy to the interests of the aristocracy over those of ordinary people. Very few societies can sustain such oppressive policies for so long. Therefore, in terms of Kondratieff’s idea of alternation between two successive paradigms, one would expect the new paradigm to begin dismantling the pernicious hold of the Punjabi aristocracy over Pakistan’s polity. What shape such dismantling will take is something hard to predict and the process need not be benign. Secondly, given that the second paradigm favoured preservation of power over economic growth, the new paradigm will strain at the leash to establish an environment that favours growth over preserving the existing order.
Both these run counter to conventional wisdom that says Pakistan is headed for the rocky reefs. Indeed that may well happen. All we can say is that the need to give primacy to economic growth over preserving the status quo, and the need to fashion a more people-friendly and decentralised regime, will receive much greater attention as Pakistan goes about establishing its new paradigm for the next 50 years.

 
It might help clarify the nature of the stark choice that Pakistan faces in case it decides to preserve the primacy of the existing principals at the expense of growth. First, the Pakistani state is internally insolvent. Its domestic debt can no longer be serviced from internal revenue, which takes one-third of total revenues while the military pre-empts another third, leaving just a third for salaries and establishment expenses, including police and internal security. The state subsists on very expensive internal loans generated by giving the pensioners special savings schemes at extremely high interest. These high cost funds are like a Ponzi scheme that can come unstuck at any time leading to a run on the banks. These funds today constitute about 20 percent of all debt raised by the government. There are absolutely no other internal sources of funds, taxes or borrowing, left to fund the government’s local currency expenditure. And Pakistan’s middle class is in no mood to pay more taxes.

 
On the external front, Pakistan has a low debt to GDP ratio of 60 percent. However, its borrowing options are limited to the IMF since its political risk is perceived to be unacceptable in the bond market. Pakistan raises about 20 percent of all its external financing through remittances from its overseas labour that could prove vulnerable in a crisis. In effect, Pakistan needs somebody to pay the salaries of its government employees and must find such funds abroad.

 
Therefore, there is no real alternative to giving primacy to growth over all else in the new paradigm. It is unlikely that China, Saudi Arabia or others will foot the bill for Pakistan’s militarised aristocracy for long. There is some airy-fairy talk of Pakistan coming into untold riches in Afghanistan after the US leaves. This is complete nonsense and nothing more than a fool’s tale for mass consumption. As the US found out in Iraq, access to raw material is one thing but the price is market-driven. Even if Pakistan were to stabilise Afghanistan as per its wishes, the Taliban are not going to be gifting away their wealth to Pakistan, as was the case with hapless Balochistan. Note that the Sui gas reserves run out in 2012. So Pakistan’s aristocracy, old and new, will have to earn their keep. Can it be done?

 
Meanwhile, neglect of the masses has turned them even more virulently in favour of ethnic identities. Balochistan, Sindh, and even FATA show the baneful effects of no local development. The perception that the military and the Punjabi aristocracy continue to pre-empt national resources persists. Further neglect of the masses risks an ethnic implosion that no amount of military power can stop. So Pakistan’s new paradigm must not only find resources to pay current bills but must also find money for development in the provinces and devolve sufficient power to them to pre-empt a repeat of East Pakistan. In short, not only must development have primacy but must be accompanied by distributive justice leading to the second alternation in the paradigm — the masses over the ‘classes’.

 
Given the centrality of economic growth to sustaining the bloated Pakistani military machine and the state, does Pakistan have the wherewithal, at least in theory, to generate economic growth that can sustain it and leave something over for poverty alleviation and development?

 
Pakistan has fabulous agricultural assets, lots of semi-skilled and skilled cheap labour, adequate water and the ready markets for all the food it can grow in the Middle East and China. More than India, it has the capacity to build distribution in these markets for what it produces. Agricultural exports at current prices are highly lucrative and prices are expected to increase by another 50 percent over the next 10 years. This alone can pull Pakistan out of its current mess in a matter of 5-10 years that will be necessary to put the systems in place to support such an agenda.

 
Note this needs only marginal change in the current rhetoric. Islamisation will naturally get toned down as the masses busy themselves with bettering their lives. The rest of the correctives can come through education. Likewise, the military can tone down its infatuation with toys knowing that its nukes guarantee Pakistan’s security. Education can also give it the space to wind down the jihadi machine. Much of the unsustainability of Pakistan’s current profile comes from its expansionist agenda whether in Afghanistan or India. Both can be safely given up without putting essential Pakistani security in jeopardy.

 
Pakistan is currently in a political ferment and one can see the economic argument for change finding a voice from a few quarters. This is being countered by the deep state, which in effect is saying, but for the dishonesty of politicians, all is well. One can expect this debate to sharpen. It would be tragic if the case for primacy of growth, and devolution of power, does not attract more powerful political backing going forward.

(Concluded)

The writer is a trader. She can be reached at sonali.ranade@hotmail.com or @SonaliRanade on Twitter