Daily Times

The stronger the economy, the more muscle a country can flex in world politics. That is why the G-7(group of seven) comprising the U.S., UK, Germany, France, Japan, Italy, and Canada, decide the economic fate of the world. China is not a member but still, its thriving economy makes China a pillar of international order. After the devastation of World War II, those countries realized that without an economy, their survival was at stake. Europe was devastated and re-emerged from the Marshall Plan (European economic recovery program). But what rejuvenated those doomed economies so that they became powerful international actors? That was to survive and the most important realization among the leadership to introduce structural reforms and implementation of policies for inclusive economic growth steered them out of the crisis. Now they are the world’s leading economies because economic policies with clear long-term and short-term goals strengthened their economic security.

Pakistan’s economy has never been this low as it is today. This did not happen overnight, there has been consistent economic mismanagement, rampant corruption, poor governance, and undemocratic practices.

Pakistan was not a poor country even in the early years of its formation. It had sufficient power to survive and also thwarted threats to its national security. But certain policies led Pakistan into a dark abyss of debt. Pakistan got an opportunity to be a signatory to security pacts i.e., SEATO CENTO (1954,1955) and it helped with a significant amount of economic and military assistance. But instead of opportunity, it became an addiction. Pakistani governments always sought opportunities for more and more American economic and military assistance. Due to that, indigenization of research and development was forestalled. Instead of catching up with the rapid pace of technological advancement, democratization, and transparency, the country became stagnant in economic growth, backward in technological advancements, and diplomatically the least integrated. There was a need to introduce reforms in economic sectors but those reforms are still awaited. Feudalism remained deeply embedded in the society that could be remedied by instituting land reforms. Vast tracts of land, which could feed almost half of the population remained unirrigated. Unfortunately, no land reforms were introduced despite being an agriculture-based country. The era of the 1990s was ripe for joining the cooperation with rising economies to benefit from the fruits of globalization. That was the time when the North (rich and advanced countries) decided to reduce the gap between developed and underdeveloped countries. The New International Economic Order (NIEO) tried to end economic colonialism and improve interdependency. Pakistan even did not capitalize on that opportunity and there were efforts to re-Islamize an already Islamic country.

Globalization, throughout the 1990s, transformed the economies of Eurasia and that was the time when Asian Tigers (Singapore, South Korea, Hong Kong, and Taiwan) experienced remarkable economic growth due to an exceptionally high growth rate (more than 7 percent per year). Economic security was not actualized as a serious component of national security. Pakistan once again missed an opportunity that could make Pakistan a technologically advanced and economically vibrant state.

Pakistan’s eastern neighbor, India also experienced a balance of payment crisis in 1991, and that was the time when the Indian government realized the gravity of the situation and introduced a major reform package. Pakistan’s reliance on foreign assistance and loans crippled its will to rise economically. From the 1980s till today Pakistan has never been out of the clutches of foreign debtors (IMF, World Bank, and others). Instead of introducing reforms and taking hard decisions, Pakistani politicians and autocrats kept looking toward foreign assistance and loans. Even in the aftermath of 9/11, the U.S. exercised coercive diplomacy and Pakistan agreed on a single phone call to assist the U.S. in her war against terrorism. Unfortunately, some politicians termed that an opportunity for economic and military assistance. Pakistan’s sovereignty was badly compromised, Pakistan’s land was used to target fellow Pakistanis, and Pakistan became a victim of terrorism itself due to the influx of terrorists from Afghanistan. Pakistan’s rigid reliance on foreign economic assistance between 2001 till the U.S. withdrawal. There are several questions that must be pondered seriously because those neighboring countries who neither had the potential nor the resources, outpaced Pakistan in economic growth.

Iran has been under crushing sanctions by the United States since 1979, is Iran about to go bankrupt? India has established strategic partnerships with Japan, European countries, the U.S., UK, and Israel, using her economic potential. Investors prefer to invest in India, Bangladesh but not Pakistan. Nobody believes that approximately 6 million Chinese died as a result of famine (1959-1961)

A common man, familiar with the fundamentals of world politics, might ask a few questions himself: why couldn’t Pakistan balance out between Russia and the U.S. Pakistan’s trade with immediate neighbors has been the least compared to other trading partners. Pakistan’s foreign policy has always been limited to value relationships with the U.S. and brotherly China. Pakistan did not reach out to balance India in Eurasia and America. A comparative trade volume between India-US and Pakistan-US, India-China and Pakistan-China, is nothing more than an eye opener. India’s trade volume with the U.S. is $146.1 billion and China’s is $115.41 billion. Pakistan’s trade volume with the U.S. during 2019 was $6.6 billion(two-way). Covid-19 negatively impacted Pakistan’s economy but was later revived in 2021. Another major challenge for Pakistan was getting off the Financial Action Task Force (FATF) grey list.

Under such a circumstance, foreign investors may feel insecure about their capital when they think of investing in Pakistan. Pakistan’s economic condition is nearing default, but the government and opposition are not discussing measures that can salvage the economy, rather they are busy blaming each other and gaining political points.

An economic emergency is needed to put the country on the right track. The first and foremost step must be taken to curtail petroleum.

Among many possible measures, a few concrete measures can help the country avert economic default. According to the World Economic Forum 147 governments have defaulted on debts since the 1960s. Therefore, economic models of vibrant economies can be read and applied to Pakistan according to Pakistan’s circumstances. Society has become a consumer society which is why imports surpass exports. Indigenous production must be carried out, especially in special economic zones, those commodities which are imported must be produced. Solar and wind power must be prioritized for electricity generation, and solar and wind power should be tax-free.

Across the country, households must be provided the solar panels in installments (for the poor) so that their own needs can be fulfilled. and the remainder they can use from the government. Sometimes, the question by a foreigner makes us blush that you have nukes but no electricity. Political stability must be ensured, no matter if a democratically elected government is incompetent or corrupt, people may vote them out in the next elections. Democracy is a self-cleansing system. To curb corruption in the institutions, more transparency must be ensured. If an economic emergency is not imposed right away, then the economic revival of the country may be in jeopardy.