The federal minister for religious affairs, Mr Mahmud Ali, is given to provocative statements on sensitive issues. We have refrained from commenting in the hope that better sense might prevail in the larger national interest. But that hasn’t happened. In fact, Mr Ali recently said something that subverts General Pervez Musharraf’s heroic efforts to persuade foreign investors to rescue Pakistan’s ailing economy.
“Pakistan owes a debt of US$ 31 billion in foreign loans on which it has so far paid US$ 32 billion as interest, meaning thereby that it has cleared the capital borrowed and also paid one billion in excess…the country should therefore refuse to pay back the interest and demand that one billion dollars should be returned to it”, said Mr Ali. He pointed out that “interest was prohibited in Islam” but “an interest-based economy had been imposed on Pakistanis”. Mr Ali then exhorted the military government to take “a daring decision by refusing to pay any interest to foreign donors”.
Well, well, well. We wonder what finance minister Shaukat Aziz has to say on the same subject. Indeed, how is he going to “clarify” Mr Ali’s pearls of wisdom to the directors of the IMF, the World Bank and the Paris and London Clubs to whom Pakistan owes billions of dollars? How might various groups of foreign investors, who are being toasted by no less a personage than the Chief Executive of Pakistan, react when they hear about the proposed fate of their money in Pakistan?
We are reminded of a similar situation in 1991-92 when Mr Sartaj Aziz was finance minister of Pakistan. Following a judgment by the Federal Shariat Court outlawing interest and ordering the government of Nawaz Sharif to comply with its decision within six months, Mr Aziz was distinctly uncomfortable when he had to explain the meaning and implication of the judgment to frowning members of the Aid to Pakistan Consortium in Paris who had assembled to deliberate a US$ 3 billion aid package (on interest) to Pakistan even as he sought to assure them that his government would challenge the judgment and safeguard their financial stakes in Pakistan.
If Mr Aziz was as good as his word, it was only to a limited extent. The Sharif government, which had only some months earlier amended the constitution to pass the Hadood laws and make “shariah” the supreme law of the land, opposed the FSC judgment in the Appellate Islamic Bench of the Supreme Court of Pakistan. But interestingly enough, the government obtained an indefinite freeze on the proceedings rather than a decision against the judgment. When Benazir Bhutto ascended the throne in 1993, she decided not to touch the matter and there were no protests from the FSC or the SC. Then Nawaz Sharif returned with a vengeance in 1997 and set about becoming an Amir ul Momineen. Among the more meaningful appointments of the time was that of a confirmed fundamentalist, Justice Khalil ur Rehman, as head of the Supreme Court’s Appellate Bench dealing with the issue of interest or riba. Mr Sharif also ordered the government to withdraw its earlier opposition to the FSC judgment. The route was now clear for Justice Rehman to deliver his earth-shattering judgment confirming the earlier FSC decision to outlaw interest because it was “riba”. Is it any wonder then that Mr Mahmud Ali should think himself on firm ground when he exhorts his boss, General Pervez Musharraf, to tell all foreign donors to go fly a kite because Pakistan has no intention of repaying an outstanding debt of US$ 32 billion?
The irony of the situation should not be missed. Last year, when Nawaz Sharif was prime minister, the notorious Senator Saif ur Rehman asked the Lahore High Court to waive the accumulated interest on his Rs 930 crore defaulted loan to United Bank Ltd. The senator’s lawyers relied on the argument that “interest was un-Islamic”. Subsequently, Mian Sharif, Shahbaz Sharif and Abbas Sharif jointly approached a Sessions Court in Lahore to grant them a “stay” order against a judgment of the London High Court ordering them to pay US$ 32 million in principal and interest on a loan they had taken from a Middle-East bank. Their argument was much the same as the senator’s: interest had been declared un-Islamic in Pakistan and they were not obliged to pay it.
When the Pakistani court granted them their wish, we editorialised on the hypocrisy of the ruling party thus: “If every Pakistani businessman or financial institution in this country with international obligations were to resort to the same irresponsible tactics, no foreigner would ever lend a sou to Pakistan. In fact the whole basis of the international law of contract would be knocked out, with Pakistan’s sovereign credit ratings suffering unmitigated and irrevocable damage… Have the Sharifs and Senator Saif gone mad? How can they blithely jeopardise the national interest by setting such ruinous legal and financial precedents in the country?” Need we repeat ourselves vis a vis the honourable minister for religious affairs in the venerable government of General Pervez Musharraf?