Daily Times

Politics and economics are interconnected. Even if we do not go by the Marxist framework that emphasises on the primacy of economic determinants of social and political relations, the interconnections between the two cannot be denied. Politics creates conducive environment for viable and stable economy, which, in turn, helps politics to become less contentious. Stable and expanding economy helps to manage, if not eliminate, social and political conflicts. Major economic changes like industrialisation and expansion of labour or a large-scale mechanisation of agriculture create new socio-economic demands, which cause realignments in society and change the course of politics.

Greater responsibility for ensuring viable economy is that of political leadership (the government and the opposition) and societal elite. They create an environment within which the economy functions. An economy can run into trouble because of poor advice by economic and financial professionals. However, no professional advice can salvage the economy without a supportive political leadership that is willing to listen to professional advice and work towards creating the required political backup.

Pakistan is a good example of how politics and economy hurt each other and the inability of the political class to provide a strong backup for the hard decisions that are required to put Pakistan’s economic house in order. Inflation has been in double-digit for a long time, touching 22 percent in December 2010. If the current pattern of expenditure continues, Pakistan’s budget deficit is likely to cross six percent of the Gross Domestic Product (GDP) by the end of the current financial year. According to a statement of the governor of State Bank in the first week of January 2011, Pakistan’s total internal and external debt liability is Rs 10,196 trillion or 69.5 percent of the GDP. This includes external debt of Rs 4,658 trillion. In terms of dollar, Pakistan’s external debt amounted to over $ 54 billion at the end of June 2010.

Pakistan’s economy has also suffered a major setback due to the 2010 floods, internal security problems, especially terrorism, internally displaced people, electricity and gas shortages. The federal government’s efforts to secure more electricity through rental power projects and other means have generally been unsuccessful. The problem of foreign direct investment is acute. The economy is relying heavily on loans and grants by individual countries and international financial institutions and remittances from overseas Pakistanis.

Pakistan’s federal government is finding it difficult to address the economic problems because political considerations override professional imperatives. The government lacks the political capacity to implement difficult decisions that are needed to cope with the problems. This failure can be attributed partly to its political weaknesses and partly to poor governance, partisan use of state resources and corrupt financial and administrative practices. The provincial governments are not willing to play their role in coping with economic problems like price hike, poor management and use of state patronage on political grounds.

The other major political parties like the PML-N, the PML-Q, and the MQM talk about economic problems mainly to criticise the federal government or offer very generalised and open-ended solutions that have little to do with the operational difficulties in implementing them. No political party has offered clearly laid out and practical strategies to address these problems. To them, the basic problem lies with the ruling party because its leaders are corrupt, incompetent and partisan. The present rulers may be suffering from these ills, but there is no evidence available to suggest that other major parties are free from these failings.

Islamic parties do not demonstrate any understanding of the economic problems because they view everything as the function of religion. To them the solution of Pakistan’s political and economic problems lies in strict adherence to Islamic injunction as they interpret them. However, their denominational differences make it extremely difficult for them to agree on the details of a legal, constitutional and economic order.

The 10-point agenda by the PML-N and the 5-point agenda by the PML-Q are wish lists that would be acceptable to everybody. It is always easy to prepare a wish list, especially when the initiator is not its implementer. Since the demand-agenda comprises broad statements of objectives rather than precise ways and means to address the problems, its implementation is the real challenge. Soon, the PML-N and the PML-Q will use the non-implementation or partial implementation of the agenda as an additional reason to engage in another round of recriminations with the federal government.

Instead of scoring points in the name of better governance and economic development, the political and societal leaders have to think beyond deriving grudging satisfaction from the current economic predicament of the federal government. The major problem is not that the economic professionals do not know the solution of Pakistan’s economic problems. The problem is the lack of political determination on the part of the civilian leadership to implement economic discipline on themselves and others.

The federal or provincial governments cannot take tough decisions because other political parties are not willing to support them in their venture to adopt tough economic measures. The federal government cannot get rid of surplus human power. All the removed people will take to the street and the opposition parties would extend them support. Different political parties in power at different times are known to have secured appointments for their activists and allied people in state corporations and autonomous bodies like the Pakistan Steel Mills, PIA, Railways and WAPDA, to name a few.

If the state enterprises are meant to provide jobs to political favourites, how can these enterprises perform? If surplus people cannot be removed, no new tax is to be imposed and the government cannot play tough with the business and trading community on taxes, how would the state run?

The often repeated demands that Pakistanis should bring back their financial resources and investment from abroad are nothing more than political slogans. There is no law for repatriation of funds and investment from abroad. Nor is it practical in the present-day interdependent international system.

The major political parties like the PPP, PML-N, MQM, PML-Q, and ANP need to work together to make governance more efficient and cost-effective, generate more revenue and rationalise human power in government corporations and autonomous bodies.

Pakistan’s economic predicament will not only discredit the PPP-led coalition government but also undermine the prospects of the opposition to rule the country. All are going to lose if Pakistan’s economy cannot be salvaged.

The writer is a political and defence analyst