There is no pure economics for a state; it is always a political economy. Whilst examining the effect of the present and past crises that have beset Pakistan’s economy, I looked into the history of political development of India and the role of our past colonial rulers.
The study reveals that whatever is happening is not unusual. It is a logical consequence of events which were bound to happen. In a classical book Churchill and the Islamic World: Orientalism, Empire and Diplomacy in the Middle East by Warren Dockter of Cambridge University printed by I B Taurus, there are certain observations that need to be examined to understand the underlying political economy of Pakistan.
On page 254 of the book, the author quotes Alex von Tunzelmann’s book Indian Summer: The Secret History of the End of an Empire:
“There can be no doubt that Churchill’s public championing of the Muslim League cause in the House of Commons throughout 1946 and 1947, and of Pakistan thereafter, was crucial both to the creation of Pakistan and to the British Government’s support for its interest over the years to come. If Jinnah is regarded as Father of Pakistan, Churchill must qualify as its uncle; and therefore as a pivotal figure the resurgence of political Islam”
The aforesaid paragraph needs to be read with another part referred to on page 243 of the same book.
“Churchill was fearful of American sympathies with the Hindu opinion, so he sought to ‘let them see the Muslim side of the picture’. He wrote to Roosevelt on 4th March 1942 that the British Cabinet was considering the Dominion status for India but was wary that such a step towards self governance would alienate the Princes, the Untouchables and the Moslem of whom Churchill said he was not willing to break with for two reasons.
The first was that the Moslems ‘represent 100 million people’, the implication being that Churchill did not want to deny them a government that would represent their community. The second reason, which was purely strategic, was that Muslims make up ‘the main army element on which we must rely for immediate fighting’.
On the same page the author quotes from a letter of Mr Jinnah as under:
“If the British Government is stampeded into the trap laid for them, Moslem India would be sacrificed, with most disastrous consequences, especially with regard to war efforts”
Common Pakistanis without reading the other point of view and relying on the history written post-Partition of the subcontinent that inherently lacked objectivity (to put it mildly) and ignored the following four elements deep down in the foundation of Pakistan:
1- The first was hatred against Hindus despite the fact that a very substantial number of Muslims did not inhabit areas that were to be in Pakistan;
2- The second was the concept of ‘political Islam’ as dealt by the British during and after the two World Wars. The creation of Pakistan through partition of subcontinent and the creation of Israel, Saudi Arabia, Lebanon and Syria by destroying the Ottoman power;
3- The third was the reward, recognition and role of the ‘martial races’ who helped the British Empire in their two wars;
4- Fourth, the inclination of the Americans towards Hindus as the Americans thought that these people were more inclined towards Jeffersonian democracy and its values than Muslims.
This was the status in 1947. In 2023, however, the position is exactly the same as nothing has changed. The politico-economic problems of Pakistan are:
1- Relationship with India;
2- Relationship with Saudi Arabia and Israel;
3- Role, recognition and reward of Army in political affairs; and
4- Inclination of the US towards India to our chagrin.
The aforesaid discussion appears to be political, however, it has to be clearly understood that Pakistan as a state since 1947 has been completely dependent on financial support from the West. Why it was so has been explained by the historical events described above. Those who created us were also responsible for our survival. In my view they have been performing their role in one way or the other.
What was decided by the West for the region has however changed after the fall of the Berlin Wall. After the fall of the Berlin Wall and the breakup of the USSR, the US emerged as the sole super power. We provided adequate and timely services in that endeavour and were duly rewarded for our efforts. However, the quantum and the manner may be disputed.
There are many people who consider China as an alternative. From a purely economic point of view, it is an illusion for the reason that China is our supplier whereas the USA and the West are our customers and we immediately need greenbacks.
The new economic order was laid down by President Clinton. It is to be considered that imperialists and protectors of neo-colonialism do not project on a short term basis; they go from one century to another. The post-Clinton policy of the US is very clear and Pakistan has to accept the same. The short policy statement is as under:
Local Conflicts can have Global Consequences. The Purpose of Peacemaking, Whether by Diplomacy or Force, Must be to Resolve Conflicts Before They Escalate and Harm Our Vital Interests.
In a global age, arguments for peacemaking are even stronger: to defuse conflicts before they escalate and harm our interests. America’s dominant power is more likely to be accepted if it is harnessed to the cause of peace.
• Middle East: Brought parties together at the Camp David for first high level discussions of all permanent status issues. Helped forge agreements that led to the Declaration of Principles in September 1993 and the Interim Agreement on Palestinian self-rule in September 1995.
Brokered the Wye agreement in October 1998, revitalising the peace process after years of stagnation. Helped broker the Sharm el-Sheikh Memorandum against terrorism in September 1999, and the peace treaty between Jordan and Israel in October 1994.
• India and Pakistan: Helped them move from the brink of what might have been a catastrophic war in July 1999.
We all know the role of Clinton in our politics at that time. On the economic side, the vehicle created is the International Monetary Fund (IMF). What is IMF and what it is supposed to do and on whose instructions? The answers to these questions must be very clear to common Pakistanis.
“The International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its 190 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being. The IMF is governed by and accountable to its member countries.
The IMF has three critical missions: furthering international monetary cooperation, encouraging the expansion of trade and economic growth, and discouraging policies that would harm prosperity. To fulfil these missions, IMF member countries work collaboratively with each other and with other international bodies.
Unlike development banks, the IMF does not lend for specific projects. Instead, the IMF provides financial support to countries hit by crises to create breathing room as they implement policies that restore economic stability and growth. It also provides precautionary financing to help prevent crises. IMF lending is continuously refined to meet countries’ changing needs.
The IMF, in principle, cannot go against the internationally accepted practices. This may include diversion for trade policies laid down under the World Trade Organization. This therefore means that once a country is in an IMF programme it has to improve itself within the framework of the international system as deviations are not allowed.
Pakistan is not improving for the primary reason that Pakistan’s economy has somehow been established on a system where the IMF recipe is not a cure.
The best example is the state-sponsored system of promotion of non- documentation. In simple words, the IMF requires the loanee or borrower to decrease the fiscal deficits which we do by increasing the rates for indirect taxes instead of collecting direct taxes from where they are due. Thus by adopting these recipes without adequate precautions we in fact aggravate the disease.
We are like a patient in a hospital who is not ready to take the medicine. It is to be ensured that once in a hospital a patient’s mobility is comes to an end. The owner of the hospital (IMF) is not a doctor; it can only refer to a doctor.
In 2023, Pakistan has to take some major decisions for its political and economic survival by addressing the following questions:
1- Can we afford to have an unsavoury relationship with our umbilical cord, the imperialists and their successors like the US?
2- Can we continue with the mindset that regional economic cooperation, trade with India and TAPI will be postponed for indefinite periods?
3- Is there any place for obscurantism in politics in today’s Pakistan when opposition to the spread of knowledge has taken a new shape in the form of religious terrorism?
4- Can Pakistan continue to live under the illusion that the IMF programme is a cure?
Copyright Business Recorder, 2023
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