Global conflicts, economic uncertainties

2024 emerged as a comparatively optimistic period in contrast to the challenging preceding years marked by Covid-19 pandemic. In its aftermath, global economy faced significant upheavals, with numerous businesses shutting down and both developed and underdeveloped nations grappling with inflationary pressures.

The geopolitical situation further exacerbated economic uncertainties, particularly with the eruption of Russia-Ukraine conflict that reverberated across the world, impacting economies of the European Union and the United States. Moreover, unresolved tensions stemming from Israel-Palestine conflict, in particular the devastating attack in October 2023 resulting in loss of thousands of lives, intensified global economic volatility.

The cumulative effect of these crises accentuated the fragility of global economic growth and heightened uncertainties regarding future trajectories.

In addition to global conflicts, 2024 is marked as election year in various countries. Alongside European Parliament Elections set for June 6-9, 2024, the United States and numerous other nations are gearing up for their electoral processes. Pakistan held its general elections, beyond the stipulated period provided in the Constitution, on February 8, 2024, resulting in a fragmented outcome where no party secured a clear majority to form a government. Consequently, a coalition government was formed by the two major political parties, Pakistan Muslim League-Nawaz (PML-N) and Pakistan People Party (PPP).

Despite allegations of electoral irregularities from opposition factions, a government has been formed and is now operational. The primary focus of the newly-formed government is on revitalizing the economy and addressing pressing socio-economic challenges. With the mandate to navigate the nation through difficult times, the coalition government faces the daunting task of fostering economic stability and fostering growth amid a complex geopolitical landscape.

Despite having been in power for approximately a month, the government has yet to propose innovative solutions to tackle prevailing economic difficulties. The Finance Minister’s apparent lack of direction in devising revenue generation strategies is quite concerning. There seems to be a reliance on judicial rulings to favour government taxation, potentially yielding around Rs 1700 billion.

However, this approach overlooks the reality that assessing officers often issue arbitrary and inconsistent orders. Dependency on legal outcomes highlights a broader issue of strategic planning and foresight within the finance ministry. It is imperative for the government to proactively explore comprehensive measures that go beyond litigation-dependent approaches, ensuring a more robust and sustainable economic trajectory.

Moreover, it is imperative for the Finance Minister to recognize that the government’s success rate in both High Court and Supreme Court is less than 5%. While the minister may possess commendable administrative experience, his educational background lacks expertise in economics, public policy, and public financial management.

Therefore, it would be prudent to consult with industry experts when formulating revenue generation measures. Collaborating with professionals well-versed in economic and financial matters can enrich the policymaking process and enhance the effectiveness of revenue generation strategies.

Consulting with experts can provide invaluable insights and ensure that policies are formed by a comprehensive understanding of economic principles and market dynamics. This approach can contribute to the development of more robust and pragmatic solutions tailored to address Pakistan’s economic challenges effectively.

Apart from Pakistan, the United States is gearing up for its own election on November 5, 2024. The Democratic candidate is expected to retain presidency, unless Donald J. Trump, representing the Republicans, is disqualified, or convicted by the courts. Trump faces multiple legal challenges, with his Hush money trial scheduled to commence on April 15, following a judge’s refusal to further postpone the case.

However, Trump’s legal team plans to file a motion alleging bias against Judge Juan Marchan, seeking his recusal due to his alleged Democratic affiliations. This motion stems from Marchan’s reported past contributions to Democratic campaigns and his daughter’s role as president of Authentic Campaigns, a prominent progressive political consulting firm in Chicago. Particularly, Authentic Campaigns has high-profile Republican clients, including Adam Schiff, who served as the lead prosecutor in Trump’s first impeachment trial, according to reports in the New York Post.

Furthermore, in our neighboring country India, a six-week election schedule starting on April 19, 2024, for the Lok Sabha polls has been announced. The election will be conducted in seven phases, with voting concluding on June 1, and the vote count is scheduled for June 4.

It is interesting to note that Indian Prime Minister Narendra Modi is seeking a third term after completing his second. However, his opponent has labeled his government as one of the most corrupt, alleging financial irregularities in highway projects. Furthermore, a significant scandal involving Modi concerns the alleged concealment of donations from businesses, adding to the political tension ahead of the elections.

According to Reuters, the Bharatiya Janata Party (BJP) has been the primary beneficiary of an opaque funding scheme since 2019. This scheme permits individuals and companies to make unlimited and anonymous donations to political parties. Reuters further revealed that BJP accounted for nearly half of the total bonds sold, amounting to 165 billion rupees ($1.98 billion), between January 2018 and February 2024.

The Washington Post’s recent story revealed a tumultuous scenario in Indian politics, with substantial donations traced back to under-investigation firms revealing that Jalan’s enterprises covertly contributed millions to the Indian Prime Minister’s party. This data leak provided unprecedented insight into the inner workings of Indian politics, uncovering a clandestine funneling of US$2 billion by Indian corporations to political entities since 2018.

Approximately half of these funds were directed towards the ruling BJP. These revelations sparked public outcry, particularly with national elections looming over the horizon, projected to be the world’s most expensive, surpassing even the anticipated costs of the 2024 U.S. presidential election.

Fascinatingly, the Supreme Court of India directed the central bank of India to reveal donor identities. Despite the bank’s plea for an extension, the court denied it, setting a deadline of March 12, 2024 for submission. Additionally, the court instructed the Election Commission to publish these details by March 15, 2024 by 5 pm.

In the backdrop of opposition protests, denouncing it as a major corruption scandal involving corporate donations, Financial Action Task Force (FATF) is set to release its mutual evaluation report for India during the upcoming June 2024 plenary, right after the Indian elections.

Beyond the bond controversy, India faces scrutiny from international bodies such as the UN, American Bar Association, and Amnesty International for human rights violations, weak control related to Money Laundering and Terrorist Financing. The evaluation will gauge how effectively the global watchdog rates the world’s second-largest country in terms of adhering to global standards in combating financial crimes.

(Huzaima Bukhari & Dr Ikramul Haq, lawyers and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE) and Abdul Rauf Shakoori is a corporate lawyer based in the USA and an expert in ‘White Collar Crimes and Sanctions Compliance’)

Copyright Business Recorder, 2024