No road to stability?

The political drama is reaching its climax. Multiple scenarios are possible; but perhaps none leads to a stable path. Outcomes are uncertain. The opposition’s no-confidence move has coincided with economic situation becoming fluid. The economy has been under stress in dealing with the global commodity super-cycle in the aftermath of COVID-19 and Russia’s invasion of Ukraine. And to take the economy out of the difficult state, political stability is warranted. Unfortunately, that is not the case.

Without delving into the opposition parties’ motives, the situation has reached a point where the economic situation can become even worse. The war between the PTI and almost all of the remaining political parties is keeping the tough and key economic decisions on the backburner. It can also be argued that the PTI government has been on a populist path much before its latest recent political troubles started – for instance, the expansionary federal budget announced in June 2021 deviated from what prudent economic management required at the time.

Right now, the country needs coherent efforts from the government, as the singular focus should be to bring economy out of the crisis. That economic focus is becoming a causality in the political mayhem. At this crossroads, no scenario is leading to stability. ‘Option-A’ is that IK stays on as PM and the vote of no-confidence fails. ‘Option-B’ is that the PTI government survives but IK has to leave – the so-called ‘minus-one formula’. That is highly unlikely, as IK is not known as a person who leaves the battle while PTI is (almost) nothing without him.

‘Option-C’ is that IK is ousted in a vote of no-confidence, but then no one else gets the magic number of 172 to get elected as PM, and in this case some form of an interim set-up (or a national government) is ushered in until the next elections. And the last scenario, ‘Option-D’ is that IK is ousted, the opposition’s candidate (most likely Shehbaz Sharif) becomes the PM, and all the opposition parties get to have ministerial portfolios. Will there be a return of ‘Dar-nomics’ in case Shehbaz became the premier?

It is hard to predict which way the cookie will crumble, for each new day brings new confrontations, with the balance of political power oscillating wildly. While IK tries to survive, the opposition parties and the mainstream media would keep on putting pressure. Mutual mud-slugging may continue. Such an environment would make it difficult for the government to function, leave alone pass any economic reforms. The government may fully turn on the election-mode and further populist decisions may be taken by the cabinet.

A trailer was shown late last month when the PM ordered cuts in POL prices and power tariff; he also promised to keep the prices/tariff frozen until next budget. No wonder the IMF is unhappy, which puts the 7thEFF program review in jeopardy. It would not be easy to continue with the IMF programme under these circumstances, and without the IMF, bridging the external financing gaps would be extremely challenging.

If IK is ousted and the opposition is able to form a government, there could still be multiple challenges. One immediate concern is of violence, as PTI hardcore followers are seemingly ready to go to any length, risking backlash from opposition camps. Then, the opposition’s unity will come into question, as today they are united under one banner to oust IK. But once he is shown the door, their own issues and differences could surface again, making it difficult to run a coalition government. The question is: how long can such a government of mixed political interests stay? And how would it deal with the IMF amid growing economic imbalances?

If in a scenario where IK is ousted and his rivals are unable to form a government due to absence of 172 votes, it will transport the country into a grey area. Will the invisible forces, which seem to be staying on the sidelines, intervene? What kind of an interim set-up can be formed? How long can such a government realistically stay in power? What public legitimacy can such a government have to deal with the IMF? There is clear uncertainty in this case. It is also unclear if this option will be acceptable to PTI or their rivals.

It’s a complete mess. The country needs to stay in the comfort zone that IMF provides. The talks should be focused on having a medium-term reform plan and to get an even bigger package from the IMF in the next programme. The foreign policy decisions are imperative for the future direction. The world is getting polarized, and Pakistan is repositioning itself. There are folks who argue that IK’s tone towards the US and the West is unnecessarily harsh, and there are folks who think his foreign policy stance is principled and courageous. Whatever the case, there is economic cost to pay for unnecessarily antagonizing the West.

In the end, what matters at this stage is continuity. Yes, there are governance issues in Punjab and overall economic management is weak. But there is no crisis as such that requires all the opposition to get under one umbrella and oust the government immediately. And as for powers that be, well, they also have a responsibility to urge caution and restraint to all sides, in the interest of navigating the current precarious economic situation. It is time for everyone to take a break from political brinksmanship — otherwise, the country’s economic interests can be (and are being) compromised in the process.

Copyright Business Recorder, 2022