Pakistan’s Sinking Economy : From The Selected To A Rejected PM , Guilty Yet Not So Guilty Imran Khan

Pakistan’s Sinking Economy : From the Selected To A Rejected PM , Guilty Yet Not So Guilty,  Imran Khan

Rajiv Upadhyay

Pakistan’s sinking economy is no secret . We all know it has a debt of 100 billion dollar with annual exports of just 20 billion dollars and yearly remittances of another 20 billion dollars . Its annual imports are 55 billion dollars . So even if Imran Khan managed to raise six billion dollars loan from friendly Islamic countries and China it is just sufficient for a year . Next year no one will give it any loan again except IMF . Lately ,as an ultimate insult to its sovereignty,  an IMF employees Dr. Abdul Hafiz Sheikh has taken over as the finance minister . The trade gap has reportedly reduced by 20% . But the public, hurt by 50% devaluation of PKR and resultant 9- 10  % inflation( 25 % for poor) , is baying for Imran Khan’s blood as elsewhere, in Greece  etc where such austerity packages were implemented  . The Azadi March of 27 th October by Maulana  Fazlur Rehman , supported by PML(N)  is a reflection of his growing unpopularity .

Imran is being quietly asked to opt for a safe passage to foreign country of his choice . His ex wife Reham Khan has let out some dangerous information about foreign funding of PTI which will put him in same category as Nawaz and Zardari . His emotional speech in UNGA gave him some respite but public is so badly hit by inflation that is in no mood to tolerate him any more in spite of his honesty . In just eighteen months  Imran Khan ,a genuine patriot ,  has sadly become a become ‘ Rejected PM ‘from the earlier ‘Selected PM ‘ . It is well known Pak army made him PM in a largely rigged election to settle score with Zardari and Nawaz for challenging the writ of the army openly with Raheel Sharief  . Even docile Indian President Giani Zail Singh turned around after BOFORS . A self respecting honest PM can not be a rubber stamp of army but army want to treat PM  as a civilian employee .Noted economists like Dr. Ishrat Hussain should have briefed him properly so that he could sell the austerity package properly to public. India or decades gave just eight dollars as foreign travel allowance can Pakistan do it ?

But being a Pathan , Imran’s  ego and  genuine commitment to honesty and open admiration of Tipu Sultan over Bahadur Shah Zafar , is preventing him from seeking truce with Nawaz and Zardari the way Indian PM Narsimha Rao did with BJP’s Vajpyee to get his support for economic reforms . Imran is a novice in politics and has to learn that an optimum solution is never the ideal solution but is the best compromise. Like Hitler he has opened too many fronts . He should have given an honorable  safe passage to Nawaz and Zardari in the beginning thus getting a free Pakistan with only army as a challenge to his position . Now the army will force him to accept a safe passage or go to jail and lead rest of his life in ignonimity .

It is tragic for democracy because Imran’s removal will only make public look up to army for restoring some order . But unfortunately Imran is not using his charisma and limited trust left now in telling Pakistanis the real cause of economic problems . He must tell that Pakistan’s economic foundation was laid on false premises and it is only reaping now what it has sown for seventy years .

Pakistan economic problems started with Jinnah in 1947 .Pakistan with 17% revenue inherited 33% of Indian army .It was too huge for its size or need. Unlike Nehru , who had a clear vision of future of India , Jinnah depended on  an inflated idea about American need for Pakistan’s support against communism and  demanded $ one billion in aid . Americans were not interested in Pakistan and wanted to court India instead . With great reluctance they gave an aid of only $ 700000 in 1948 and increased it to $ 2.7 million in 1950. Jinnah died in 1948 . Americans remained disinterested till  John Forster Dulles joined Eisenhower team in 1953 . In 1953 Pakistan received USD 697 million as aid . General Ayub Khan impressed General Eisenhower so much during his visit to Pakistan in 1959  that Americans for the  gave highest  aid of $ 1572 million which increased to $ 2172 in 1962 as Pakistan became a member of Seato and Cento .In addition Pakistan got similar amount in military aid .

This aid along with world bank loans  and USD 5.2 billion  India gave for Indus water treaty helped Pakistan make Mangla and Tarbela dams and the great canal system . Fortunately green revolution had just ushered in that period and Pakistan achieved an annual growth rate of five percent and a much higher industrial growth rate due to demand for cement steel etc .

Luckily again , America decided to open up to China in 1971 . Gen Yahya Khan played an honest inter mediatory and enabled Dr. Kissienger to fly to Bejing incognito . Pakistan was again rewarded handsomely in US aid which fueled growth .

But this entire growth  was based on the American aid not due to any developmental initiative or effort by Pakistan . Pakistan had received US aid of 67 billion dollars by 2011( current prices) . By 1970s India had developed a firm industrial base and opened hundreds of engineering and medical colleges , had done its first nuclear explosion ( 1974) , launched its first indigenous  satellite Aryabhatt ( 1975) . It was making its locomotives , coaches wagons , tanks,  guns , Aircrafts etc.

History repeated itself when in 1980 Zia cut a deal with Americans on launching Mujahideen campaign in Afghanistan to oust Soviets . Till his death in 1988 and soviet departure in 1989 USA gave an aid of about one billion dollar annually of which 50- 60 percent was economic and rest military aid .Till date ISI has not submitted any account of money it received directly from USA.

Pakistan lost its importance to USA after Soviet withdrawl but aid continued in limited amount till scales again turned again in Pakistan’s favour in 2009 . Al Qaida attack on world trade centre in September 2009 filled Americans with revenge and anger . They again approached another military dictator General Musharraf who was eager to legitimize his coup and was even more forthcoming in assistance . He permitted use of Karachi port for logistic support and Pakistani airbases for drone attacks . But it involved duplicity and double crossing Americans as well as Talibans .Pakistan received coalition fund support too in dollars in addition to economic and military aid often unofficially quoted as ten billion dollars. Musharraf had a brilliant PM Shaukat Aziz who used aid wisely and Pakistan’s economy zoomed .

So the entire economic miracle of Pakistan was based on American aid . It made them addicted to easy money of aid rather than hard work and planning . As American aid started dwindling Pakistan lured  China in CPEC and attracted massive investment as debt but this aid had just too many strings . Chinese were far more cunning than Americans and trapped Pakistan in a debt trap . Imran realized it rightly and tried distancing Pakistan from CPEC . But it was too late . Pak army is sold to CPEC and now has taken full control which Nawaz had refused .Meanwhile exports dropped , imports went up and Pakistan landed in classic debt trap . On top, its monstrously large  army sucks fifty percent of the money left after debt servicing as defence budget . So the population suffers endlessly . Bangladesh on the other hand , with so little expenditure on defence,  is as safe is doing wonderfully economically .Bangladesh received only USD 167 million  US aid compared to 1167 million for Pakistan in 2014 ( US aid proposal ) and devised alternative growth strategy like India. Pakistan instead covered its balance of payment problem by foreign aid and suffered in the long run .

So from Jinnah till Imran, Pakistan never had a visionary Prime Minister and its monstrous army is living at the expense of its population .It is paying the price now . Imran should realize that no PM of Pakistan has completed its term and he cannot be an exception . He should at least tell the population the truth about economic crisis and damage large army is doing to Pakistan’s economy . Army cannot be in the driving seat in Pakistan if it wants to come out of this crisis like Bangladesh . Repositioning Pakistan is difficult but not impossible .

Pakistan’s debts are nothing compared to Greece and can be handled by a big economy . India alone can take Pakistan out of this mess but it has to settle Mumbai , insurgency and terror before hand .India never started any war with Pakistan . However  five years of tough import controls including curbing under and over invoicing of exports and imports will have to be tolerated . More over trust is the key . Americans , Chinese and British have started dealing with army directly in disgust . India on the other hand could trust all democratic civilian Prime Ministers but they were rendered helpless insultingly including shamelessly staging Mumbai  just to tame Zardari . PM Modi kept quiet on  Pathankot and Uri but replied forcefully on Pulwama and will reply even more forcefully on any Sri Lankan type attack. Imran was not a true civilian PM but a proxy to teach Zardari and Nawaz a lesson and hence he cannot enforce his ideas on army. But Imran can go to public now .

It will make Imran an Anwar Sadat for Pakistan may be with same fate  .

But is Anwar Sadat not a modern Tipu Sultan whom Imran admires so much ?

   foreign aid as % of gdp