It is no secret that there is serious tension, even a rift, between Imran Khan and the Miltablishment. But no one quite knows whether and when this will lead to regime change, what sort of regime will follow, whether it will try and last until 2023 or whether it will immediately dissolve the Assemblies and order fresh elections and when fresh elections will be held. The most important question of all hasn’t even been asked – whether the next elected government will tread the same beaten path of misgovernance and misplaced or opportunistic economic policies as in the past or whether it will embark on the path of radical political and economic reform to set Pakistan right. So here goes.
Since independence, Pakistan has been structured as a militaristic “National Security State”. This is mainly because the civil-military bureaucracy (CMB) inherited from undivided India was relatively over-developed in relation to the underdeveloped and inexperienced political parties and classes into whose lap Pakistan fell, thanks to the dogged efforts of Mohammad Ali Jinnah, the sole spokesman. Accordingly, this CMB promoted and nurtured a political structure that gave primacy to bare notions of “national security” over political representation and popular welfare. It established its hegemony over state and society by provoking four wars with India, it seized direct power three times while continuing to destabilise and undermine civilian regimes, even its own puppet ones when they threatened to acquire autonomy. It captured the commanding heights of the economy by allying with landed elites wedded to the rent-seeking status quo and business elites hooked on licences, protection and subsidies; it hogged the budgets, opposed popular attempts to cut its vested interests down to size; and it rented itself out to the US by conflating Washington’s “national security interest” with its own and living off the fat of its multi-billion dollar aid and loans. This state structuring and dependence on foreign rent-seeking has distorted the economy and devastated society.
Therefore, the crying need of the time is to reform the crippling elements of this inheritance. The starting point is to “normalize” the Pakistani state by transforming existing notions of “national security” into concepts of “national power”. This can only be done by giving primacy to economic strength and political representation over military might and hybrid regime-making. The first stone in this direction has been cast by the slogan “vote ko izzat do”. We need to see this movement to its logical end. A free and fair election that returns the legitimate winner to power rather than office could provide a necessary condition for national regeneration. But two other conditions need to be met for sufficiency.
The first is a critical review by the CMB of its failed political and economic policies that have led Pakistan into a dead end. That is not going to happen overnight or by fiat, nor without some delicate negotiation over a period of time by popularly elected leaders who are committed to good governance. Until now, this hasn’t happened either because such political leaders were absent or because they didn’t know how to run a good ship or negotiate properly with the CMB. But there is some scope for optimism now only because the options to experiment and usurp have run out. Both sides need to share vision and power less inequitably. More critically, both must now realise that tinkering with trickle-down economics is not going to pull the country out of this crisis.
An economic reform agenda must be based on broad political and philosophical agreements. First, if belts have to be tightened, then the “haves” must tighten them and not the “have-nots”. This means that military and development budgets must both be operationally rationalized; government subsidies or special exemptions to rent seeking public and private enterprises must end; public revenues must be substantially increased by reforming the FBR (if need be, by outsourcing elements of tax collection to foreign agencies with greater credibility and efficiency), by ending export incentives that have failed to deliver results (merely fattened some business elites), letting the sugar industry fend for itself (by freeing imports), enabling the market rather than support prices determine the pattern and output of agriculture, reforming the structure of land holding (ending paper partitions) and cultivation (share cropping/absentee landlordism) to end rent seeking on agricultural holdings, imposing progressive inheritance tax and death duties on the wealthy, demonetizing the 5000 rupee note to end tax-evading cash transactions; and so on. There are many more such measures that could be contemplated and implemented. The end result must be a quick doubling of tax revenues so that international loans can be paid back, currency stabilized, employment generated and inflation and poverty reduced.
To be sure, this agenda will meet with stiff resistance from the entrenched CMB and its elite allies who have captured the state of Pakistan. But without a serious attempt to take this path no government can hope to pull the country out of its cancerous malaise.
Meanwhile, a suitable social environment must be consciously created and nurtured to ensure that such radical measures bear fruit. The most important of these relate to curtailing population growth and radical religiosity. The first eats into the dividends of economic growth while the second destabilises the polity, alienates foreign investment and diminishes the prospects of benefiting from the fastest growing service sector of the global economy like tourism and hospitality – even the custodians of Islam like Saudi Arabia, UAE, etc., have recognized the enormous merits of this critical truth.
It’s a tall order. But a start has to be made. Reform is the need of the hour, if Pakistan is to be prevented from going down the slippery slope of state failure.
Diagnosis is picture perfect and it’s clearly laid out what needs to be done for getting us out of this downward spiral. However, cancerous entities have no ability to reflect and make amends. That is the nature of a cancer.
There is need for more open dialogue between various classes of society and social activism is needed.
Raising the Tax-GDP ratio hovering around 10 percent for the past 70 years, reducing indirect taxes from 60 percent of the tax collection to 30 percent, reducing the cost of doing business is linked to the survival of our state. Improving tax collection and reducing the defence budget is the way to go. As you mentioned it is easier said than done. How about establishing Special Economic Zone (SEZ) to gradually reduce the footprint of rent based economy and let a vibrant competitive sector emerge and expand. China, Singapore, and UAE are good examples. Is there any appetite for SEZ among our elites to escape complete collapse and chaos? Could you comment on this ‘path’ in your next editorial?
but, who will bell the cat?
demonetizing not only 5000/= Rupee note but also 1000/= rupee note should be and 500/= should be changed.
so that all the corruption and black money will be out and deposited in the banks one more proposal gov. charge 1% tax on each deposit in this way all public will be taxed and the amount will be white money in the bank