Pakistan has been on the brink of failing for a protracted period of time. Pakistan’s economic woes, huge debt burden that can perhaps never be eased, caught in a bind woven by the Chinese Belt and Road Initiative (BRI), under scrutiny of the Financial Action Task Force (FATF) and a host of other factors are creating turmoil in Pakistan’s social fabric also this article is an extension of the author’s earlier articles; Pakistan a State Progressing From Failure to Fail and Naya Pakistan – Na Paisa, Na Tel, Na Pani but Shaheen Tested . The author’s article, based on both facts and his personal impressions, makes interesting reading.
Where is Pakistan Headed?
No one knows. Least of all Pakistan itself. However, the trend line indicates that the sands in Pakistan are shifting fast. New ground is breaking and with-it new challenges are emerging. Control of cost of breads-roti and naan by the government indicates that a food crisis is brewing. Pakistan is entering uncharted waters which are going to complicate the fragile situation the state is in. Both the internal and external parts of this story are evolving at a fast pace. If Pakistan cannot cope with the pace of events it will progress from being a state in perpetual failure to a failed state. The analysis of its weakness, fragility and failure potential have done earlier when seen in today’s light seems that Pakistan is nearing the abyss.
The US – Iran Spat
This new spat on the block between the USA and Iran spells trouble for Pakistan. If sucked into this imbroglio, it will have to choose sides between Iran and the Saudis as well as between Iran and the USA. In a larger sense, it will also have to balance out the Sino – US equations. Traditionally, it has been the ally of the USA and will do a lot to get back to that position. The Afghanistan situation and Trumps eagerness to pull out gives it an opportunity since Uncle Sam gives freebies. Uncle Chang gives high-interest loans only. However, the USA also considers Pakistan as an ally of China and sees it siding with China and Russia in the new international order.
In the immediate and long term, it must keep the Baluchistan factor in mind. After all, Iran is the immediate neighbour with a sizeable Baluch population. In the long term, it would have succeeded in having total enmity with all its neighbours if it goes against Iran. This will be further compounded by Iran inching closer to be a nuclear state. It will then lose the pre-eminence of being the only Islamic Nuclear State. Its borders will continue to be destabilised. New strategic calculations will emerge. Pakistan could get caught in a lot of crossfires. However, Pakistan’s larger than reality role of a frontline state will entice it to enter the strategic arena. This was indicative in the way their PM was preening around after his latest visit to the USA. In any eventuality, it will get hurt like a sacrificial frontline pawn.
The FATF review has not gone well recently. The indications are that Pakistan could be put on the blacklist in October if things do not improve. The indications are also that things will not improve since there is no ‘will’ to do so. If it continues to be on the grey list, it faces a USD 10 billion hit. If shifted to the blacklist, the IMF bailout will be put in jeopardy. Reports indicate that the IMF has asked Pakistan to show commitment against money laundering and terror financing. Pakistan must purge itself of being an international sponsor of terror. A very difficult ask from a nation which treats Jihadis as strategic assets. Post abrogation of Article 370 by India the FATF has limited its options in Jammu and Kashmir.
Qatar Bail out vis-a-vis IMF
Qatar is the latest in the list of countries to bail out Pakistan with its USD 3 billion loans. It follows loans from China, Saudi Arabia and UAE which have already totalled USD 8.6 billion. All this has happened in the past six months. The rate at which Pakistan is seeking loans from the Gulf countries, it appears a new set of cash-rich Gulf countries must emerge to satiate Pakistani requirements. Also, it appears that the IMF bailout is peanuts compared to all the largesse it is getting. Overall the debt trap is now firmly set. It is doubtful if Pakistan will ever pay back what it has taken as loans. From any perspective, there is a constant erosion of Pakistani sovereignty, which is irreversible.
This mega project touted as Pakistan’s ticket to the gateway of prosperity is showing its true economic colours. Analysts predict that CPEC power projects are set to churn out expensive power, based on imported fuel. The net emerging power scenario is overcapacity, inadequate distribution, high upfront costs, high-interest rates and poor environmental outcomes. This will be compounded by a circular debt cycle starting from consumers’ inability and refusal to pay bills to distributors, who are in turn indebted to power generators and on to fuel suppliers. This accumulated debt will have to be repaid ultimately by the Government. This is in addition to accumulating debt to China on infrastructure investment. This double whammy debt will only tighten the debt trap. In any case, there are reports that the CPEC is a failure. It is a matter of which Pakistani will have the gall to tell that to the Chinese.
Recently a grand reduction in the military budget was announced with much fanfare. The reality is far different. The Military has overshot the previous year’s budget by a huge margin and this reduction is being analysed only as an adjustment. In any case, it is only a budget estimate. The real spending figures will emerge later. The significant issue to note is that for the first time Pakistani analysts are criticising the military budgets through overseas publications.
Their contention – “The biggest source of spending after debt-servicing is the military which officially receives around 18 and 23 per cent of the budget every year. The funds the military receives from the state budget is in addition to the revenue it gets from its large business operations, which include over 50 commercial entities generating some $1.5 billion, annually. It just recently moved into the mining and oil and gas exploration sector, some of which was facilitated by Khan’s government. So, despite being rich itself, the Army continues to be a burden on the Pakistani economy and to get preferential treatment. At this point, there are no signs that this would change under the current government”. Will this criticism increase? Wait and watch Post 370.
Martial Law through a Selected PM
Imran Khan has been christened as the “Selected” Prime Minister by the opposition; indicating that he is a puppet of the Army. In any case that’s an international perception also. Further, the Army Chief is now a member of the newly constituted National Development Council to oversee Pakistan’s economic growth strategy. This implies that the military will be in pole position on any decision-making on the economy in the future and will also ensure that funds for the military are suitably channelled away from public glare. This is in addition to its complete sway on internal and external security and strategic affairs. We are seeing a new form of Martial Law – a selected PM who is a puppet of the Military, which has imposed Martial Law through backseat driving.
Historically judicial disquiet in Pakistan was always a confrontation between the Political Class and the Judiciary. Historically the Judiciary has been the B-team of the military. Historically, the Judiciary has given “legal justice impartially and independently but did not question the legitimacy of unconstitutional regimes or question their fundamental unconstitutional actions”. However, the recent statement by the Chief Justice of Pakistan – “Let us also discuss, without mincing words or feeling shy, the role of the armed forces and the intelligence agencies in the governance paradigm”, is significant.
An opinion piece in Dawn indicates that for the first time in Pakistani history tensions are surfacing between the judiciary and the military. Whether these tensions aggravate matters or not is a matter of conjecture. The issue is that all is not well on this front and is a major “First”. How this story progresses will indicate the level of failure of the state.
Intra Provincial Social Tensions
Editorials and opinion pieces have started appearing regarding instability breeding insecurity and causing behavioural changes in the populace. It is very amorphous, but it has found roots. Can a crisis of Intra Provincial Social Tensions surface and snowball into something big? People from the troubled areas of Baluchistan, Khyber Pakhtunkhwa, Gilgit and Baltistan feel discriminated. Educated youth from these areas and Sindh feel less empowered in society. We are already talking of Pakistan less Punjab! The majoritarian Punjabis feel that they are being culturally marginalized since they have sacrificed their cultural and ethnic identity.
Pakistan has always been frayed on the edges. Is it fraying in the center also? If petrol prices rise without a break, food prices gallop, 33 per cent currency devaluation takes place in a year and everyday life is too costly, something drastic will happen. Fraying at the center is only an indicator.
Failure an Inch Closer?
There is no doubt in my mind that Pakistan has inched closer to be a failed state. Its inability to respond in any significant manner to the Abrogation of Article 370 by India is a clear indicator that is much closer to failure than we think. As to when complete failure will occur is a matter of judgement and conjecture. One can contend with this statement of mine. However, some of the facts outlined above are indicators which have never been seen before in Pakistan. Consider this. There is an opinion in Pakistan that Pakistanis are not poor, but the State is poor. Should be true if one goes by advertisements, sale and promotional pitches for luxury and gated living communities.
The problem relates to the fact that Pakistanis do not pay taxes and the Pakistani government cannot collect taxes. That brings us to the moot point. If the state cannot enforce its writ to lay down taxes and collect them has it not already failed? It is hereafter only a matter of a greater degree of failure in other areas, forms of governance that one will have to look out for.
Lt Gen P R Shankar (Retd)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of BharatShakti.in)