Daily Times

On 25th April, 2020 PM Imran tweeted “….24 years ago today, PTI embarked on our mission of achieving our Quaid Jinnah’s vision for Pakistan as a modern Islamic welfare state.

1. To achieve this we had to achieve the following: Rule of Law where all are equal before the law & the powerful are brought under the law.

2. Break the stranglehold of the elite capture of our state & of our nation’s resources; & redistribute these resources more equitably in order to lift our poor out of poverty…..”

It is difficult to disagree with him, especially the second part, unless, of course, one belongs to the “Elite”. Its also important to have a common understanding of what constitutes elite capture before we embark on this journey.

George Stiglar, the famous economist says. “… as a rule, regulation is acquired by the industry and is designed and operated primarily for its benefit… We propose the general hypothesis: every industry or occupation that has enough political power to utilize the state will seek to control entry.- The Theory of Economic Regulation, George Stigler, 1971

In more detailed terms another definition states that….

“Regulatory capture (also client politics) is a corruption of authority that occurs when a political entity, policymaker, or regulatory agency is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group. When regulatory capture occurs, a special interest is prioritized over the general interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called “captured agencies…..client politics “occurs when most or all of the benefits of a program go to some single, reasonably small interest (e.g., industry, profession, or locality) but most or all of the costs will be borne by a large number of people (for example, all taxpayers).

In its most obvious form elite capture occurs as a consequence of what is called the “revolving door” phenomenon between government and industry, not necessarily because of an evil intent to capture regulation and policy making but to ensure an equitable playing field or to ensure that weaker segments of society also share the benefits.

To do this the governments recruit private sector professionals because of their knowledge and expertise, from the very sector they are attempting to regulate, to enable it to make policies which reflect the needs of a particular sector as well as ensure that the sector does not rake in all the benefits, to the exclusion of other weaker segments.

However the results in more cases than not are to the contrary because in turn the private sector employs recently retired government officials to gain access to policy making and regulation in their specific sector, hoping to, usually successfully, to gain an inside track on government decisions, policies and regulations, resulting in policies and regulations highly favorable to them.

Razzaq Dawood, Nadeem Babar, Malik Riaz, Mian Mansha, to name a few, are visible examples of this phenomenon in our current times.

The argument therefore goes, that the more a government tries to regulate, assuming that its being done to achieve a twofold objective of supporting industrial and sectoral growth and at the same time safeguarding the needs of the less powerful and privileged, the greater the opportunity and desire by special interest groups to capture that policy making. In Pakistan the recent insights into the sugar, wheat and IPP issues are evidence of how it happens.

However elite capture is a universal phenomenon, visible quite prominently in the developed economies like Japan, USA, UK, France, Australia, etc.

It’s called “lobbying”.

Here former state functionaries work with special interest groups to ensure favourable policies and regulations. They also “buy” out legislators and public representatives through a form of political bribery called “election donations” etc. However, with a relatively powerful and free media, perhaps not as free as we think, a fairly robust democracy and stronger accountability processes, the impact and influence of such powerful lobbies and special interest groups is not as devastating as it is in countries like Pakistan with extremely weak and dysfunctional public sector institutions.

Pakistan and countries like ours are in a state of what is called “Deep State Capture” where most if not all state institutions are at the mercy of self-centred special interest groups. These groups have been able to capture Pakistan’s electoral processes, our legislatures, National and Provincial Assemblies and the Senate, the executive, the judiciary and the media, amongst others

Pakistan and countries like ours are in a state of what is called “Deep State Capture” where most if not all state institutions are at the mercy of self-centred special interest groups. These groups have been able to capture Pakistan’s electoral processes, our legislatures, National and Provincial Assemblies and the Senate, the executive, the judiciary and the media, amongst others.

It is corruption of the highest form, where the entire state is captured by the elite and at its mercy. And the beauty or tragedy, is that it’s very difficult to apportion guilt to those who have perpetuated this terrible evil on Pakistan, because everything they do has the sanctity of either the law or the constitution or legally passed policies and regulations. The IPP policy, stated earlier is the most current example of this.

Today we have no better example of this phenomenon of “State Capture” than the administrations of Nawaz Sharif and Asif Zardari or the PPP government in Sind, where the entire power and might of the executive, the bureaucracy, the legislatures, the judiciary, state regulators and large parts of the media, (odd exceptions aside) were and are in their control and at their mercy.

With the entire state in their vice, the subverting of state institutions to weaken them was the logical next steps, which they did by appointing corrupt people to positions of authority and policy making. The only institution which managed to save itself from complete destruction was the Military, something I will address next week.

So, this is the Pakistan that PM Imran inherited in August 2018. A country in the grip of complete, deep, state capture. And despite his earlier insistence on “clean legislators” and resistance to the “status quo” he also had to compromise, after roaming in the wilderness of lonely, unsuccessful politics for 15 years till he realized in 2011 that the only path to power was to use the same forces he wants to eliminate!

o several questions.

How did this state of elite capture happen in Pakistan?

Is PM Imran a continuation of the same phenomenon of state capture?

Can he successfully remove this stranglehold?

If yes, then how?

Till next week, then!

Haider Mehdi is a Geo political commentator / blogger on National and International affairs. Formerly a media anchor, corporate leader, management consultant, start up entrepreneur and military officer, he tweets @HaiderKonsult and blogs on shrmehdi.com