Islamabad has focused on the wrong causes in its analysis of what ails the state. The latest indicators of the Pakistani economy are proof of this fact. The growth rate continues to slump and the current rate at 4.5 per cent has only been made possible by a season of good crops. The manufacturing sector has actually grown at 1.6 per cent instead of the projected 5 per cent.
This means that there is no investment in the economy. In fact, investment has declined by 37 per cent since last year, which should make the government rethink the causes it assigned to the country’s economic decline. But there are no signs of a rethink and the government continues to read the signals wrong because the economy is not item number one on it’s agenda.
The government’s real agenda compels it to defy the world and to make concessions to retrograde elements within the country. This is done at the expense of the economy which seeks openings and linkages to the outside world with its exports entirely pegged to the European Union and the United States.
When the government retreated on the procedural amendment to the Blasphemy Law, and consigned the CTBT to the deepfreezer despite a consensus in the now-defunct parliament favouring its signing, it rejected international concerns. It also signalled a lack of will. This latter was seized upon by the religious right that pressed home the advantage by demanding a reiteration of the Shariah through the PCO, a retreat to Friday as the weekly holiday, and a tougher defiance of the international community. So while the government asserts state sovereignty with regard to a world that wishes to see Pakistan integrating with the global community, it is unable to establish the writ of the state viz a viz its challengers on the religious right. Where does this leave the economy which demands integration with the world?
When the leader of Pakistan’s trading community, Umar Sailya, links the misfortunes of his community to the presumed depredations of the IMF, he displays an opportumism that links up directly with the agenda of the religious right which sees the IMF as an agent of the anti-Islam West. The traders, like the maulvis, have drawn the conclusion that a generally retreating government can also be made to retreat on the documentation front. The interface between the traders and the religious parties has always been there but it now seems to have reached a decisive phase. The government perceived the linkage partially when it asserted that religious elements were being funded by out-of-work politicians. The PML’s opportunist decision to come out openly in support of the traders in their confrontation with the government is actually a reversion to the old bazaar-PML alliance in which the PML was funded by traders in return for immunity from taxation.
The government is responding shakily to the threat emerging from all the elements that seek its retreat. This is despite broad public support to the government’s drive to document the economy. Why does the government not draw strength from the majority opinion amongst the public? This opinion wants to see the nation state strengthened, its international isolation broken, and the economy integrated with the world. Is this at cross-purposes with the government’s real agenda? If it is not, then the government should demonstrate firmness in the face of opportunists and blackmailers. This is a crucial test of will for General Pervez Musharraf’s government.
Earlier, the test of will was flunked when the government did not enforce its decision to reform the seminaries by changing the syllabi taught there. The test of will was flunked when it postponed the day of reckoning for smugglers. Ditto with the Blasphemy Amendment and the CTBT issue. If the record is any indicator, the government will probably give up its recently announced intention of probing the jehadi militias as a non-issue.
It is fantasy to expect the economy to respond in such circumstances. If it is not placed above the national security agenda, the process of economic collapse which began with our nuclear tests in May 1998 will not be reversed. The international community has registered the effect of the submission of the government to the religious right. It now makes clear reference to the linkage of the Pakistani state with terrorism. It puts it diplomatically as a threat to Pakistan’s own security, but it is bracing for a possible decline of the country into an area of turmoil radiating threat to international security. The Central Asian States, Russia, the United States and China see Afghanistan as a region of chaos which recreates itself in areas contiguous to it. President Clinton is persuading Moscow to accept America’s National Missile Defence programme against “rogue” nuclear states. Who will qualify as such? Not India, which is perceived as an ally by the West. That leaves only Pakistan with its uncontrolled internal situation and its defiance of external advice.
When investors continue to respond negatively to Pakistan’s growing isolation and the rumour of war, not all the stimulants being offered by finance minister Shaukat Aziz can shore up the economy.