Ambassador Alam Brohi comments on the current
Imminent economic Pakistan: A sad betrayal meltdown the country is faced with is the sad consequence of the continuous wrong policy decisions, financial mismanagement, corruption and the ostentatious way of living by the elite. The Governments and in parallel the establishment remained addicted to foreign economic aid shying away from structural economic reforms or at least putting in place financial discipline at the federal and provincial levels capping the non-developmental expenditures and maintaining an equilibrium between our revenues and expenditures and exports and imports.
We have been seeking IMF bail-outs since 1958. The IMF loans and economic assistance from friendly countries were used as patchwork to overcome economic hardship without any course correction. The financial indiscipline and corruption remained endemic; the civilian governing structures including bureaucracy multiplied; the security establishment witnessed substantial growth with multiple demands on the meagre state resources; the public sector remained marked by lethargy, inefficiency, mismanagement and wastage of resources.
We received massive economic aid from the US-led western states and financial institutions and the affluent Muslim countries at least in three phases of our national history which we squandered without any productive use of it in terms of creating solid economic structures barring the decade-long rule of Ayub Khan. We were the ally of the US in the 1950s and 1960s against the communist bloc receiving generous economic and financial assistance. We could have revamped our security and economic strength.
The Ayub Khan rule patronised industrial development in the private sector. The World Bank loans were utilized for the construction of large dams and the creation of administrative and financial structures for industrial development and wealth generation. However, this development was lopsided and concentrated the national wealth into a few hands leaving the teeming millions on the crumbs. Even then, we remained obsessively concerned with the enhancement of our military prowess to the peril of the economy and the larger good of the people. This gave a fillip to our proclivity for bravado to challenge the military strength of our larger neighbour through an ill-conceived strategic plan of ‘Operation Gibraltar’ in 1965.
The second occasion that came our way for massive economic aid from the US and the Muslim countries was in the 1980s when we decided to become the frontline state in the US war against the erstwhile Soviet Union in Afghanistan. As put by Steve Coll in his Ghost Wars, we received sacks of dollars. The affluent Muslim countries including Saudi Arabia and other Gulf States had also generously loosened their purse strings. The economic aid was massive with overflowing and unhindered financial inflows for over a decade. We had the golden opportunity to divert these massive financial grants to founding a solid base for our chronically ailing economy. Not only did we miss the chance of doing so, but we also failed to stem the negative consequences of this cash inflow in terms of extravagance, corruption, weaponisation of society etc. According to the US leaders, we received over $15 billion in economic and military aid during this period.
The civilian governments that assumed power from 1988 to 1999 had to grapple with economic and financial hardships resorting to international financial institutions and affluent friendly countries for economic aid and financial assistance. Notwithstanding all the economic difficulties, our non-developmental expenditures kept skyrocketing with the erection of massive and elegant structures for state institutions, ever-growing sizes of cabinets and budgetary allocations for perks and privileges and subsidies of the ruling elite including the civil and military bureaucracy – preponderantly disproportionate to the state treasures.
On his first-ever visit to this country, a foreigner, standing on the Constitutional Avenue of Islamabad, must be struck with wonderment by the enormity, elegance and beauty of the Prime Minister’s Secretariat, the Prime Minister House, the Presidency, the Supreme Court Building, the Parliament and the Federal Secretariat. He would immediately feel disgusted and pity the apathy of the ruling elite if taken to the rural districts of the country to see the massive majority of the population reeling from poverty, social and economic asphyxia and helplessness. This apathy that has been the hallmark of our military and civilian leadership throughout has brought us to this pass where we have been cringing before the arrogant officials of IMF for a bail-out.
The geo-strategic conditions once again conspired to create the third occasion for massive economic aid for the country in the wake of the destruction of the Twin Towers. The military Government of General Pervez Musharraf conceded to the US pressure to become its ally in the counterterrorism war in October 2001. Notwithstanding its merits and demerits of it, the alliance brought us larger economic windfalls for a comparatively longer period from 2002-2013. The American leaders claim that over the period from 2002-2015, Pakistan received $34.2 billion, of which economic aid amounted to $11.3 billion, with another security-related $8.2 billion and Coalition Support Fund reimbursement amount of $14.6 billion to the establishment.
In addition, the European Union (EU) facilitated trade by reducing tariffs on our exports becoming the largest destiny of our commercial goods surpassing even the US. Our exports to the EU in 2021 were $7.85 billion as compared with our trade outflows to the US estimated at $6.08 billion. The West and the US allies were well disposed to extend more economic aid and trade facilities. In the excitement of this financial inflow, the dire necessity of economic course correction escaped our attention and we continued putting up with the disequilibrium in economic rehabilitation and enhancement of military strength with the consequence that today we have a disproportionately strong military power and an economy close to meltdown.
While facing this ugly situation, we are still shy of a massive reset of our national economic priorities. The IMF conditions we have been conceding will break the back of the common man without affecting the luxurious way of living of the ruling elite including the autocracy and the civil and military bureaucracy. How long our people can live in social and economic asphyxia is the moot question for our leadership. TW