Economy is the victim

Economic stability is dependent upon political and social stability. While only economic stability is the major element that can give to any society, social sturdiness. No economy can be stable without political stability. Hence, politics, economics and social well-being are deeply intertwined. These three factors must operate in tandem for any nation to achieve progress. The existence of a fault line in any of these three pillars will alter and impede progress; it will render a state of confusion that will impact upon all these factors.

Our blessed Country in a few months’ time will soon be celebrating its 75th anniversary of independence from the British Raj. Independence relates to removing all dependencies upon others, whether it be political, economic or social. Seen in this context, the Nation has to ask itself, have we truly achieved independence in all three critical fronts? Nay, is the quickest, short and truthful answer. We, like all other third world countries, who were for hundreds of years, subjects of colonial powers of Europe and United Kingdom, have achieved only limited political independence.

Economies of the most countries are pledged and mortgaged, or more appropriately, are hostage to economically powerful nations, coupled with the multi-lateral financial institutions, which are instruments, influenced heavily, by these very countries. Hence economic independence is a far cry. The whole notion is far-fetched.

A controversial, but highly intelligent politician of our country had written in the seventies, in his book that political independence has close to zero value, if there is no economic independence. Independence is a hogwash, where the economy of a country is in subjugation of overseas powers, countries and institutions. Today’s world is a global village. We live in a world of amazing inter-connectedness that makes all nations/countries, in some manner or the other heavily dependent upon each other.

If China has today come to be recognised as the ‘Factory of the World’, it is because, there is demand for its goods and services, outside its geographic boundaries. In fact, major corporates/industries of US, UK, and the continent have moved their own factories/production facilities to China and other newly industrialised countries of North and South East Asia, for a variety of reasons, the major being lower cost of labour.

Vietnam is a classic case in point of progress...A third world country, embarked upon a program of export led economic growth, in imitation of what had already been done and achieved by Malaysia, Singapore, South Korea., etc.

In 2010, Vietnam’s exports were $72 billion; today they stand at US$336 billion. The total foreign trade turnover stands at US$ 668.5 billion. The production of surplus goods and services did create major employment opportunities, which peaked the per capita income to US$ 3400/- and also led to better life style of the average Vietnamese. The income levels increased and so did the consumption in the local economy. The point to note is that the export earnings, are held as foreign exchange reserves, in the US dollar (largely) - and all US dollars fly to New York.

The US dollar is still the safest currency, hence most countries maintain a substantial portion of their reserves in it. Economic growth is possible (permitted!), but economic independence shall remain a myth for Vietnam and all Third World countries. The world viewed shockingly, how blatantly, Afghanistan was deprived of its foreign exchange reserves held overseas.

Economic growth allows for social progress. That it needs to be backed with focus on education and vocational training is critical. Most of the newly independent countries of say last 60-70 years, retain in some form, format or other through other manifestations, the feudal structure of their societies.

Feudalism does not favour either education or independent thought. Consequently, those countries, who following the riddance of the colonial powers, decided to pursue the Westminster type of democracy, have actually delivered to the feudals and the capitalists, the power to decide, who can make it to the parliament....they are known as “Electables”; these are never from the middle class. As a result we have witnessed the emergence of dynastic democracies (sham is a better word) in Pakistan, India, Indonesia, Sri Lanka, Bangladesh, Philippines, etc.

The removal of colonial fetters of enslavement have been replaced by the demands of the local feudal lords and the capitalists. For the common man, there hasn’t been a major shift in their lives, either economically or socially. Politically the populace, prime facie is independent but economically enslaved, both, by the local powerful and the overseas powers who supervise economic colonialism.

Pakistan, during the period 1947-1958, saw only political upheavals and related economic instability. The nascent nation state was desperate to find its bearings - the struggle was who does the country keep happy, Washington or Moscow? Our immature political leadership, coupled with political expediency as a major driver, made a mess of both, the foreign policy and the economy.

The period between 1958-1968, referred by admirers of President Ayub Khan, as the “decade of development”, saw Pakistan embark on rapid industrialisation. The benefits of economic growth began to reach to the masses. This economic growth happened due to political stability; and the economic well-being of the common man gave semblance of having achieved some degree of social stability. We became the envy of the neighbourhood. South Korea is believed to have borrowed and implemented the blue print of our economic program.

President Ayub, experimented with revisions to the fundamentals of democracy, by introducing basic democracies. It fell flat.

Lethally it boomeranged. The simmering resentment against dictatorship led to calls for return to full democracy. Here again, the victim was the Economy.

The period 1969-1972 was catastrophic for the country. The nation stood dismembered, the economy was in doldrums and the society in shambles. The political unrest in very quick time undid all the economic gains of the sixties. The victim being the economy, yet again.

Between 1972-1977, in the truncated Pakistan, an apparently democratic government damaged irrevocably the economy by nationalising key industries, inclusive of Banking and Shipping. Private capital got scared and fled by the first flight. The concentration of wealth that had taken place during the sixties was undone through the acquisition by the state of all major industrial franchises, through ownership and management. The economy suffered the most.

The darkest political era starting July, 1977, ended eleven long years later in August, 1988. The GDP growth rate was in excess of 6% p.a., but it was largely due to funding that passed through Pakistan for the US fight against Russian intervention in Afghanistan. Nothing was done to halt the development of serious fissures, both in the economy and the society. Corruption, drug and arms culture got deeply insulated into our political and social fabric.

The economy which apparently was growing took a nosedive later. When the FCY accounts were frozen, the exchequer was almost bankrupt. The decade of the 1990’s presented Pakistan with its worst political and economic conditions. It was a nightmare.

The military takeover in 1999, due to the foolishness of the politicians, brought relief to the economy and put a temporary lid on the musical chairs that was being played out at Islamabad for the entire decade of the 90’s, by the politicians. At least, the first three years were better, economy was being managed, good governance was under sharp focus, but this was short lived.

The downslide under the “able” nose of the imported Finance minister, who later became prime minister, took Pakistan into the shifting sands of economic gloom and doom. The fundamentals of economics were cold stored, and instead the economy was being managed by administration, where both the rupee value and interest rates were artificially protected .From year 2008 to till date, each successive government hasn’t been allowed by the opposition to concentrate on the economy.

Essentially the macro economic conditions are in a state of stagnation and decay.

The malaise is continuing, which significantly is hurting the economy most. The current account deficit continues to widen; trade is tilted, with imports out stepping exports.

For the last three and a half years, the government of Imran Khan has been held hostage by political forces, and with its focus on accountability and corruption, it has delivered almost nothing on the economic front. The begging bowl is tossed between the Middle East and China. Regrettably, coupled with the unabated offensive of the opposition against the government, it is also the dubiously incompetent cabinet and army of advisors, who have let the PM, down badly.

For the last six weeks, the major victim has been the economy, which is at a standstill. All eyes are on the outcome of the vote of no confidence motion against PM, Khan. Regardless, whether it is carried or defeated, one thing is certain, that the economy has been the single most important casualty of this political circus.

The highly politicised bureaucracy goes into hibernation, on such occasions and all work comes to a grinding halt. Japan, with over 47 Prime Ministers, since the end of WW-II, has emerged as a strong economy - the lesson here is let the bureaucracy run the machinery of the government, with no political interference. The administration in Japan, Germany, Italy, France and in all other war ravaged countries emerged as an instrument of Fair Play and unquestionable integrity.

Until political influence is not expunged from all institutions of the state, regrettably economic and social stability will remain a far cry. It was, I recall George Bush Sr. or Bill Clinton, who had famously remarked, read my lips...it’s the economy stupid. So apt is our condition today. While industrialisation is a dire need, Pakistan has neglected the Agriculture sector, which is by far the most important sector of the economy. We have also failed to harness our water resources; the land of Five rivers, had serious water shortages.

Local investors will certainly come forward only if there is political, economic and social stability. By accepting aid from foreign donors, the country unfortunately presumes that we were using the goodwill of the donors, instead it has yielded to us only ill-will.

Nothing can be more sacrosanct for any government than its people, who desperately need social and economic betterment.

Freedom comes with responsibility and to think that freedom will not attract responsibility is a utopia.

(The writer is a Senior Banker & free-lance contributor)

Copyright Business Recorder, 2022