He went West and came back with a bagful. He went East and returned with a Joint Statement. We celebrated both - the tangible, of which we made a unilateral announcement; and the intangible that was inked by both parties. Both are like promissory notes, except one is fully in the public domain and the other is not.
Did one promise fish while the other offered the fishing rod?
The joint communique issued in Beijing is worded as such statements always are - recalling old ties, stressing a common worldview, and promising more deepened relations. But this one has more, much more, despite some thinking of it as no more than 'boilerplate diplomatic language'. It responds, in our view unequivocally, to our real needs. Efforts to nickel-and-dime it are entirely misplaced.
It is never easy traipsing around the dense verbiage that communiques typically consist of. Sifting real stuff from diplomatic chaff is what bureaucratic careers are built on - and our friendly Caspers can always be counted upon to remove confusion by coming up with something even more obtuse. But that should not dissuade ordinary mortals like us from rushing in, in search of the real stuff.
For us the major takeaway is the unambiguous focus on 'livelihoods'; built into CPEC projects as well as the larger context of industrial collaboration. Poverty alleviation lessons will be a lot of waffle unless development strategies are pivoted in greater and better employment opportunities.
But you can't actualize opportunities if you are not good enough. You can create your ten million jobs but how will you man them if you don't have people with the requisite skills? To this end, we find commitment to 'technical and vocational training to develop skilled manpower for employment in CPEC projects' most reassuring. By furthering it through collaboration in science and technology and higher education, and more Pakistani scholars in Chinese Universities, the Chinese are proposing to address our greatest weakness: human resource base.
And if there is one sure way to provide better livelihoods it is in the promise to 'boost Pakistan's industrial capacity in priority areas, relocation of labour- intensive industry and SMEs collaboration'. Unless we are missing something this translates into a more competitive, a more diversified, export base as well.
Then there is Agriculture. We have an unenviable record of low productivity and high water wastage. God knows, we need all the help in the world that we can get. If it means greater food supplies to the Chinese we say hurrah to that.
Now how does IMF factor in?
The sums don't add up. Despite the assurances of the Finance Minister - backed by Saudi largesse (doesn't matter if time-bound and uncertain - withdrawable at short notice) and helpful noises from elsewhere - our balance of payments gate remains wide open. The currency swap arrangement with China (already there for some time now) will help, but nowhere near enough. IMF is inevitable.
If something becomes inevitable relax and enjoy it, said the Chinese sage Confucius.
Apparently for the government the real fear is that dalliance with the IMF will shake the legs off its pro-poor platform. The consequent cost of living spike, and lackluster growth (impacting job creation), will corrode its credibility.
We are afraid that's going to happen, regardless. Government just doesn't have the fiscal space to absorb subsidies that will be required to keep inflation under control, or afford the kind of stimulus that will be necessary to promote growth. Its well-intentioned ambition of a sturdy social protection floor will have to wait another day.
What the government needs to do is moderate its narrative. Prepare people to trade a harsh today for a better tomorrow - on a sustained basis. Not quite 'offer them death and they will accept fever', but something close.
Government will have to make difficult choices. Getting back the looted wealth will be a bounty but not a substitute for a more intelligent tax effort. It will be great building five million houses but a massive upgradation of katchi abadis may be more cost-effective. No one wants to see people thrown out of jobs but much larger numbers should not be made to bear the cost of restoring State Enterprises to good health. Dams may be important but they won't pay optimal dividends until you have water pricing right. You can pin your hopes on doubtful dollar savings through import substitution but the real dollar earnings can come only through exports.
Policies vying for middle ground rarely succeed.
If the government is clear about its policy choices it will have less to fear from the IMF dispensation. It will find a lot of common ground. It just has to accept, and tell the people, that it is not in it for short-term returns. It will take more than five years for the real dividends to start flowing in. The sooner the government does that the less heavy the political cost of doing so.
Clearly, 'all options on the table' come with conditionalities of one kind or the other. We will have to pay a price for each option, today or tomorrow. We have no idea what is in it for the Saudis but do know it is not for the love of it. Chinese offerings - even if only a roadmap so far, with the possibility of trading in Yuan/Rupee thrown in (with our 18 billion dollar bilateral trade it is not something to be scoffed at) - are not going to be for free either.
Then there are the foreign policy issues that have a strong bearing on our economic rescue operations. India, Afghanistan, China, Iran, the Middle East - and Uncle Sam more than keeping a baleful eye on each theatre -make for a heady cocktail. It is a game of drones - you dodge one to risk getting hit by another. You just can't divorce your economic management from the dicey real politik of the region. It appears the powers that be understand that. Explains why Foreign and Finance Ministers had to do a joint press conference?
At the end of the day, it is better the devil you know than the devil you don't. IMF is the devil we know. And Pakistan is the devil IMF knows. That should make for some pillow talk!
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