The proposals for a GST, an agricultural incomes tax and credible anti-smuggling measures have all been mooted for a long time. But nothing ever got off the ground because democratic governments were vulnerable to blackmail by vested interests. Thus Rs 200 billion in desperately needed revenues was lost every year, which is about equal to our annual foreign debt payments.
When General Pervez Musharraf rolled in, however, we were assured the day of reckoning had arrived. So we rejoiced in the expectation that necessary economic decisions would be swiftly taken in the national interest. Alas. The tax proposals were postponed for nine months, the “whitener” schemes were continuously extended, the agricultural income tax was banished to the committee room and the smugglers made bold to hawk their wares with impunity.
Last month, Gen (Retd) Moinuddin Haider, muttered “enough is enough” and bared his fangs. But the much flaunted “anti-weaponisation” drive soon petered out into an “anti-display” sop. The smugglers then engineered a “compromise” and the businessmen bamboozled an extension of the tax amnesty scheme. When will this hide-and-seek end?
Some people say the government must not open “too many fronts”, especially with the prickly business community whose shutter-clout has been the bane of many past governments. This argument is buttressed by economists who claim that attempts to raise additional tax revenues or cut government expenditures or downsize the public sector when the economy is barely limping along is bad economic policy and worse political management. Is this good advice?
In principle, of course, no government should open more adversarial fronts than it can safely handle at any time. So it is worrying that the government is battling the politicians, the businessmen, the smugglers, India and the regional and international community all at the same time. But more alarming is the fact that some people are advising General Musharraf to be soft where he should be tough and brazen where he should be circumspect. Which wicket should he choose to play on?
Third world governments — civil or military — derive their legitimacy and longevity from the support, understanding and encouragement of two basic sources of power: ordinary people at home (workers, peasants and the middle-classes) and extra-ordinary people abroad (the foreign diplomatic community and the independent international media). If ordinary people at home are with you but the international community is against you, as in Iraq, you are doomed. And if the international community is with you but ordinary people turn against you, as in Indonesia, you cannot be saved. Variations of this theme make the world go round or stop it in its tracks from time to time. What is our government’s situation?
On October 12 the international community was aghast at the military intervention. But ordinary Pakistanis were all for it. This dangerous imbalance had to be corrected forthwith: the support of ordinary people had to be consolidated and the potential hostility of the international community had to be quashed. How could this be done?
Pakistanis wanted swift accountability of corrupt people. A military government was ideally placed to provide this. But it couldn’t get its act together and amazingly found itself trapped in a web of bureaucratic and legal formalities. Then it lost credibility by excluding a swathe of corrupt people from the ambit of accountability.
Pakistanis wanted economic revival and self-reliant growth. This entailed raising revenues, cutting wasteful expenditures, privatising state white-elephants, retiring debt, and increasing the development budget. Instead, tough action against vested interests (tax evaders, loan defaulters, smugglers) to raise revenues was postponed. Military expenditures were increased. Development outlays were slashed. Accordingly, there were no buyers for state assets, borrowings had to increase and we were back begging before the international community.
Pakistanis wanted political stability and certainty. This meant that anti-people politicians like Nawaz Sharif should have been sorted out once and for all and as quickly as possible. It also required a definite timetable and roadmap for restoration of representative institutions. But the first task has been so mishandled that the second has been jeopardised.
On the other side, the international community, far from backing the military government, is threatening all sorts of sanctions and roadblocks. Its concerns over regional tensions and the rise of extremist religious mafias were spurned when our government legalised the export of jehad as an instrument of our foreign policy. Its hope for an early signature on the CTBT was dashed when the government opened up the emotional subject for irrational comment and partisan outrage. And its pleas for a swift timetable for democracy went by the board when the government sank deeper into the economic and political quagmire at home.
General Pervez Musharraf should reverse his priorities. There is a gaping hole in his government’s relationship with the international community where there was only a potential fissure to begin with. And the active support of Pakistanis for his government is fast becoming a baleful irritability. The good general should therefore salvage the situation by taking off his gloves against the thugs at home while allaying the fears of our friends abroad. There is no time to be lost.