Elite capture is wrecking Pakistan

The world is an unfair place, even the richest countries in the world today have glaring inequalities. However, while rich countries have amassed sufficient wealth within this lopsided global economy to offer a modicum of support for the poor, the situation in poorer countries is much direr. The rich can still live luxurious lives in poorer countries, but the situation for the poor masses is becoming increasingly intolerable. Such is the situation in Pakistan today.

Pakistan is currently facing multiple problems including political, economic and security challenges, as well as major climate threats. However, the country is ill-prepared to deal with all these challenges because its elites, and the bilateral and multilateral agencies which back them have paid little heed to addressing the most basic needs of the country’s citizens. Consequently, most Pakistanis lack both the skills and the opportunities needed to improve their own lives, and those of their children.

According to the latest UN Human Development Report, Pakistan is placed in the lowest group of nations based on its accomplishments in providing basic health, education and income opportunities to its citizens. Having slipped a few notches from the preceding year, Pakistan is now ranked 164 out of 193 nations on the human development index (HDI).

Despite its recent economic meltdown, Sri Lanka is ranked 78^th on the HDI. The authoritarian Sheikh Hasina government has still managed to deliver enough prosperity to enable Bangladesh to be the 129^th in terms of its HDI score. With Modi’s embrace of ethno-majoritarianism and crony capitalism, India has managed to achieve giddying economic growth rates, but inequality remains a major problem since the top 10% of the population now owns 77% of the nation’s wealth. Thus, despite being the fastest growing economy in the world, India is placed 134^th on the HDI index, still considerably better than Pakistan. Only the heavily sanctioned Taliban regime in Afghanistan is doing worse than Pakistan.

The World Bank describes the current situation in Pakistan as a “human capital crisis”, however, this institution has been working hand-in-glove with the IMF to lend money to Pakistan for decades, without being able to alleviate rampant poverty. After the failure of the trickle-down theory, the World Bank began propagating adoption of market mechanisms to help bring widespread prosperity within the country. Yet, market mechanisms do not offer a level playing field to the rich and poor alike. Instead of delivering competition-based efficiencies, market processes are either distorted by local elites or by powerful multinational firms to maximise profit by exploiting disempowered labour within the formal and informal sectors.

The Pakistani state still uses colonial modes of authoritarian rule, which relies on patronage mechanisms to secure top-down support of electables, rather than enabling bottom-up representation of the masses. The military’s encroachment on the country’s political economy also shows no sign of weakening.

The vested interests of powerful nations such as China and the US to continue using Pakistan to pursue their strategic interests gives external lifelines to otherwise incapable rulers, who continue borrowing money to keep the country artificially afloat.

Pakistan’s debt-to-GDP ratio is above 70%. The current government is so indebted that it genuinely has scant resources left to spend on human development, after debt servicing and financing the military’s budget.

The pursuit of uneven development continues to sideline the poor; it stokes political polarisation, mistrust in state institutions and regional discontent. This situation is not sustainable. Moreover, climate threats are further exacerbating the country’s woes.

Pakistan is turning into an irredeemably sinking ship, and its elites, and its powerful military, will no longer be able to continue enjoying their privileged status, unless they seriously begin investing in the ordinary people who make up the bulk of the Pakistani nation.

Published in The Express Tribune, April 19^th, 2024.

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