Pakistan’s ‘Johnny Bravo’ returns
Musharraf’s claims that he can bring economic prosperity and peace to Pakistan are nothing but politicking - like other leaders his policies were a result of foreign pressure.
Pervez Musharraf recently announced his intention to return to Pakistan and actively take part in politics. He still seems to enjoy strong support among the Pakistani elite and urban middle class, business community and some political stakeholders. There are expectations that he will bring back the policies of his era which will lead to peace and economic prosperity.
The following is intended as an analysis of his policies and reforms and the regions they benefited most.
Economy
Pakistan’s significant economic gains since 2002, which the Musharraf government takes credit for, were due to the impact of international post 9/11 developments.
After 9/11, Pakistan was granted a rare debt reschedule treatment by the Paris Club Donors. In December 2001, a total of $12.5 billion of debt was rescheduled (Economic Survey 2001-2002). Yet, recent State Bank reports show that by 2008, Pakistan’s total debt and liabilities increased substantially.
During Musharraf’s era, the economic situation only appeared to be improving because of favourable terms granted to Pakistan in the light of 9/11. These consisted of export incentives, like greater market access to the EU, debt rescheduling, and one-time incentives like U.S. grants and Saudi investments. Thus, the temporary relief was due to external factors that the Musharraf government knew would not exist in future years.
The growth of foreign remittances was also not great. It was due to the international crackdown on the Hawala network in the wake of 9/11, which resulted in direct transfers to Pakistan instead of rerouting from Dubai.
By 2008, the economic situation had worsened, implying that even with all the favourable terms Pakistan had received after 9/11, the Musharraf government did not use any of these opportunities to reform economic policy to ensure long term sustainability.
In 2002, the Musharraf government abolished wealth tax, which had been in effect since 1966 and was payable on assets which were not subjected to Zakat deduction. It was a tax act designed to tax the richest and hence was capable of bringing in considerable revenue, which could have been used towards disaster relief.
In 2001, on the orders of General Musharraf, military pensions were separated from the defence budget and allocated to the civilian budget, which then resulted in a decrease in overall defence spending. This pension bill has increased from Rs 26 billion in 2001 to 72 billion in 2010. It is, after all, politically advantageous for a military ruler to show a decline in defence spending.
Electricity
In 1999, Pakistan had surplus electricity. At the time, the economic growth rate was 2 per cent. When growth picked up in 2003, plans should have been put in place by the Musharraf government to provide electricity to a larger and rapidly expanding economy. But by 2005, there was a shortfall of electricity which has continued until today. Pakistan has always had electricity problems and Musharraf’s government is just as responsible for neglecting this issue as previous governments.
Terrorism
The present security situation in Pakistan’s cities is worse than two years ago when Musharraf resigned. But things have changed in the past two years; the US’s focus has shifted from Iraq to Afghanistan. If Musharraf came to power today, he would be forced to take the same course of action as the current government.
In 2008, the US’s priority was Iraq. Pakistan was strategically indispensible as the U.S. was measuring its success by the number of al Qaeda operatives caught by Pakistan. Musharraf was able to sign peace agreements with the Taliban at the cost of the locals in Fata and Waziristan, who the Taliban would rule. Today, a number of major military operations have taken place, which is the main cause of retaliatory attacks in Pakistani cities. The urban population is suffering from a situation similar to what locals in the northern areas suffered when the Musharraf government signed the so-called peace agreement.
India and Baluchistan
Ties with India have also followed a similar pattern. After 9/11, due to military engagements in Afghanistan, the US forced Musharraf’s government to allocate its military resources from the Indian front to the Afghanistan borders. Under US pressure, Musharraf had no choice but to normalise relations with India.
Musharraf has also now taken the traditional political approach of accusing India of supporting the insurgency in Balochistan. In fact, his policies played a major role in creating instability in Balochistan. But he insists on championing the absurd theory that India is operating over 20 embassies in Afghanistan and uses them to destabilise the Baluchistan region, when in fact India operates the same number of embassies as Pakistan: five.
Media
After 9/11, it became politically beneficial for Musharraf to allow the media some freedom. It was a way to show the world that Pakistan is one step closer to modernising and it certainly did impress the Western world. It is clear, however, that free speech was not part of Musharraf’s ideology, since it was only after 9/11 that he adopted this policy.
What this means
Musharraf’s claims that he can bring economic prosperity and peace to Pakistan are nothing short of politicking. Thus far, the analysis shows that Musharraf, like any other politician in Pakistan, took most initiatives either under foreign pressure, or for political gain. Before 9/11, Pakistan was going to default on its debt and was about to be declared a pariah state. The events of 9/11, as horrible as they were, turned out to favourable for Pakistan.
Whether it was accommodative economic incentives or geopolitical concessions, Musharraf was smart enough to use it for his own gain but was no less shrewd than his predecessors. In the current environment, his policies would be unsustainable, as the US is heavily engaged in Afghanistan, so no peace agreements can bring about relief. Similarly, the current economic situation is also different; none of Musharraf’s policies are sustainable, as excessive spending and a lack of infrastructural investment during his era have worsened past problems.
The following is intended as an analysis of his policies and reforms and the regions they benefited most.
Economy
Pakistan’s significant economic gains since 2002, which the Musharraf government takes credit for, were due to the impact of international post 9/11 developments.
After 9/11, Pakistan was granted a rare debt reschedule treatment by the Paris Club Donors. In December 2001, a total of $12.5 billion of debt was rescheduled (Economic Survey 2001-2002). Yet, recent State Bank reports show that by 2008, Pakistan’s total debt and liabilities increased substantially.
During Musharraf’s era, the economic situation only appeared to be improving because of favourable terms granted to Pakistan in the light of 9/11. These consisted of export incentives, like greater market access to the EU, debt rescheduling, and one-time incentives like U.S. grants and Saudi investments. Thus, the temporary relief was due to external factors that the Musharraf government knew would not exist in future years.
The growth of foreign remittances was also not great. It was due to the international crackdown on the Hawala network in the wake of 9/11, which resulted in direct transfers to Pakistan instead of rerouting from Dubai.
By 2008, the economic situation had worsened, implying that even with all the favourable terms Pakistan had received after 9/11, the Musharraf government did not use any of these opportunities to reform economic policy to ensure long term sustainability.
In 2002, the Musharraf government abolished wealth tax, which had been in effect since 1966 and was payable on assets which were not subjected to Zakat deduction. It was a tax act designed to tax the richest and hence was capable of bringing in considerable revenue, which could have been used towards disaster relief.
In 2001, on the orders of General Musharraf, military pensions were separated from the defence budget and allocated to the civilian budget, which then resulted in a decrease in overall defence spending. This pension bill has increased from Rs 26 billion in 2001 to 72 billion in 2010. It is, after all, politically advantageous for a military ruler to show a decline in defence spending.
Electricity
In 1999, Pakistan had surplus electricity. At the time, the economic growth rate was 2 per cent. When growth picked up in 2003, plans should have been put in place by the Musharraf government to provide electricity to a larger and rapidly expanding economy. But by 2005, there was a shortfall of electricity which has continued until today. Pakistan has always had electricity problems and Musharraf’s government is just as responsible for neglecting this issue as previous governments.
Terrorism
The present security situation in Pakistan’s cities is worse than two years ago when Musharraf resigned. But things have changed in the past two years; the US’s focus has shifted from Iraq to Afghanistan. If Musharraf came to power today, he would be forced to take the same course of action as the current government.
In 2008, the US’s priority was Iraq. Pakistan was strategically indispensible as the U.S. was measuring its success by the number of al Qaeda operatives caught by Pakistan. Musharraf was able to sign peace agreements with the Taliban at the cost of the locals in Fata and Waziristan, who the Taliban would rule. Today, a number of major military operations have taken place, which is the main cause of retaliatory attacks in Pakistani cities. The urban population is suffering from a situation similar to what locals in the northern areas suffered when the Musharraf government signed the so-called peace agreement.
India and Baluchistan
Ties with India have also followed a similar pattern. After 9/11, due to military engagements in Afghanistan, the US forced Musharraf’s government to allocate its military resources from the Indian front to the Afghanistan borders. Under US pressure, Musharraf had no choice but to normalise relations with India.
Musharraf has also now taken the traditional political approach of accusing India of supporting the insurgency in Balochistan. In fact, his policies played a major role in creating instability in Balochistan. But he insists on championing the absurd theory that India is operating over 20 embassies in Afghanistan and uses them to destabilise the Baluchistan region, when in fact India operates the same number of embassies as Pakistan: five.
Media
After 9/11, it became politically beneficial for Musharraf to allow the media some freedom. It was a way to show the world that Pakistan is one step closer to modernising and it certainly did impress the Western world. It is clear, however, that free speech was not part of Musharraf’s ideology, since it was only after 9/11 that he adopted this policy.
What this means
Musharraf’s claims that he can bring economic prosperity and peace to Pakistan are nothing short of politicking. Thus far, the analysis shows that Musharraf, like any other politician in Pakistan, took most initiatives either under foreign pressure, or for political gain. Before 9/11, Pakistan was going to default on its debt and was about to be declared a pariah state. The events of 9/11, as horrible as they were, turned out to favourable for Pakistan.
Whether it was accommodative economic incentives or geopolitical concessions, Musharraf was smart enough to use it for his own gain but was no less shrewd than his predecessors. In the current environment, his policies would be unsustainable, as the US is heavily engaged in Afghanistan, so no peace agreements can bring about relief. Similarly, the current economic situation is also different; none of Musharraf’s policies are sustainable, as excessive spending and a lack of infrastructural investment during his era have worsened past problems.