Direct European colonial rule ended in the twentieth century. However, indirect colonization is now the order of the day. The primary instrument of indirect colonization is finance and trade. The world is now controlled by Western nations through the IMF, the World Bank, and the World Trade Organization and the Western countries own agreements and systems of tariffs and trade.
Countries that wish to prosper develop their trade of value-added goods with other countries. This generates employment and earns foreign exchange. Umar bin Khattab famously said that trade was one-third of leadership. Singapore’s legendary Prime Minister Lee Kuan Yew assumed power in Singapore after its independence from the British. He inherited an impoverished and backward nation, with very little to sustain itself. In his twenty-five-year rule, Prime Minister Lee Kuan Yew transformed Singapore into a developed nation. His key areas of focus were: promoting merit in the civil service; promoting national cohesion in the multi-ethnic nation; attracting foreign investment in the hi-tech sector; and pursuing sound macroeconomic policies. He demonstrated how to transition from rags to riches in a peaceful environment.
Compared to the Singaporean premier, Pakistan has had only destructive heads of state.
Zulfiqar Ali Bhutto, a malignant narcissist, destroyed the backbone of the economy, fanned the flames of ethnic hatred and broke the country into two. General Zia-ul-Haq destroyed the educational system and steered the nation into religious hypocrisy, bigotry and violent extremism. Then Benazir Bhutto, the daughter of ZAB assumed power as the Prime Minister making tall claims about democracy. Benazir Bhutto signed the Structural Adjustment Program (SAP) of the IMF shortly after assuming power. It is the IMF’s SAP conditionalities that are mainly responsible for the soaring inflation and imminent default we are facing now. Nawaz Sharif started the humiliating trend of begging for loans and aid from friendly nations. He took aid and loans from the nations that held us in high regard due to Pakistan’s standing and achievements in its early life. The Musharraf years from 1999-2008 brought prosperity to Pakistan and undid much of the damage done from the 1970s to the 1990s. However, Yusuf Raza Gillani wasted no time in undertaking unprecedented IMF loans. Gillani and Asif Zardari bankrupted Pakistan. Then Nawaz Sharif and Imran Khan continued the corruption momentum.
Umar bin Khattab famously said that trade was one-third of leadership.
When a head of state decides to knock on the doors of the IMF, he or she knows very well that he is approaching Shylock. Other nations avoid approaching the IMF but Pakistani politicians see the IMF as a reliable financier – at the cost of infinite pounds of flesh of the poor.
None of our leaders developed any sound trade policies, except Musharraf. The IT exports that the PTI government boasted about, were the delayed fruits of Musharraf’s policy measures. Bhutto, Zia, Benazir, Nawaz, Gillani, Zardari and Khan all failed to develop an economic base. They promoted hatred to divide and rule and they used religion to gain clout. The result of their policies is an intolerant, violent, impoverished, corrupt and heavily indebted nation.
These days a meme is commonly seen on social media which states that judges, generals, bureaucrats and politicians get free fuel and electricity at the expense of the poor of the nation. It is extremely naive to think that perks given to public servants have caused petrol prices to cross the 300 rupee mark or that the soaring electricity bills are due to this reason.
The Washington Consensus underpins loans taken from Washington D.C.-based institutions such as the World Bank, the IMF and the US Treasury. It is a set of ten economic policy prescriptions that constitute the standard reform package for crisis-wrecked developing countries. The Washington Consensus is officially termed as the IMF’s Structural Adjustment Programs (SAPs), which have debilitating consequences for the economy. SAPs lead to increased poverty and inequality, as they are the primary instruments of neo-colonialism.
SAPs require debtor nations to implement stringent austerity measures, in the field of social services. They advocate reducing government spending, cutting social programs, and increasing taxes. This cuts government spending on healthcare, education, and other essential services. SAPs promote privatizing these sectors, which is why we have seen a mushroom growth in private schools and hospitals and a sharp decline in state-run hospitals. SAPs also advocate trade liberalization. Trade liberalization means attracting Foreign Direct Investment (FDI). Foreign investment in a poor country struggling economically, only comes in the essential sectors of power and finance. K-Electric is one such example. Whereas state-owned power producers provide electricity at subsidized rates, private foreign power providers maximize profits and hence charge more. This makes electricity expensive for consumers. Trade liberalization also allows cheaper foreign goods to enter the country. This forces local manufacturers to compete with them. This weakens the domestic manufacturing sector, causing businesses to shut down, which causes high unemployment and poverty. To boost exports, SAP advocates currency devaluation. Only improving the quality and securing preferential trade agreements can lead to any real boost in exports. Hence the currency devaluation only raises fuel importation costs and makes it more expensive to pay payments and interest in foreign currency. High fuel cost causes increased inflation, reducing the purchasing power of individuals – further exacerbating poverty. This shrinks the middle class and pushes the poor below the poverty line.
SAPs hence cause tremendous human suffering.
In the absence of any real effort to make plans for an economic revival, Pakistan’s various heads of state have relied on foreign aid and IMF loans to run the country.
Benazir, Zardari and Nawaz additionally used state jobs and contracts as bribes to establish their power base. This weakened the state tremendously. On top of that, we have become a rentier economy. Pakistan’s financial elite secure subsidies from the state to maximize their profits. Pakistan finances all this by undertaking loans and using foreign aid to run the state. The Economic Affairs Ministry debt reports show that Pakistan now takes about 85 per cent of its total new foreign loans to pay back past loans.
Pakistan has now run out of creditors willing to give us loans or donors willing to give aid. Therefore, taxes have been raised on petrol and electricity. The general public is now buckling under the economic pressures they are facing.
This is not a tenable situation and default is hence imminent and unavoidable. To add to that, we have The TLP, TTP and BLA wreaking havoc. Manzoor Pishteen is threatening the army and Giglt Baltistan is threatening to march to Kargil and merge with India.
The political leadership scapegoats the military by shifting all blame on them. However, politicians must now understand that their decades-old evil strategies have reached a breaking point.
The writer is an independent researcher, author and columnist. She can be reached at [email protected]