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Lessons from AJK

After days of unrest and agitation, the centre was forced to concede a Rs25 billion subsidy for AJK

By Rizwan Shehzad   |
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PUBLISHED May 20, 2024

Amid a tense atmosphere in Azad Jammu and Kashmir (AJK), an unusual sight caught the attention of some onlookers. Inside a government vehicle with a green number plate and blue hooter, a well-groomed dog was comfortably seated, seemingly oblivious to the turmoil around it.

Within moments, the scene was captured on smartphones and spread across social media, igniting public anger over the misuse of government resources. "Is this how our taxes are being utilised?" shouted one man, his voice tinged with frustration and disbelief. "While we struggle to feed our families, they transport pets in luxury." More and more people gathered around the vehicle, dragging the dog out and demanding answers about why a pet was being transported in a vehicle bought with taxpayers' money.

Another example of the lavish lifestyles of the elite and ‘unbridled corruption’ in public sector spending surfaced in AJK in June 2020. It was reported that the AJK government had decided to purchase a new luxury car — a Mercedes-Benz S500 4MATIC Sedan Long (RHD) — worth over Rs100 million for the AJK President. To add insult to injury, this decision was made even as the cabinet complained to the media about the "adverse impact" of budget cuts by Islamabad on health, education, and infrastructure development projects in AJK.

These incidents are just two examples amplifying discontent and fuelling a sense of injustice and neglect among the masses. Locals say that the recent violent protests against the government did not happen overnight or in isolation; tensions had been brewing for over a year.

The protests in AJK were unique in many ways. One of the most significant factors was that the widespread unrest was driven by discontent over the government's policies on basic amenities. Protesters demanded the provision of electricity at hydropower generation costs in AJK, subsidised wheat flour, and an end to the privileges of the elite class amid a general lack of development.

Although the turmoil in the territory was driven mainly by demands for wheat and electricity subsidies, it exposed the AJK and federal government’s old approach to tackle issues arising in areas controlled by Islamabad in a casual fashion.

For a moment, it seemed that the movement led by shopkeepers against the cash-strapped government could escalate into a civil disobedience movement, both within the region and beyond, amid deteriorating security concerns. However, the authorities quickly controlled the situation by offering financial concessions to the protestors, to prevent further unrest and counter incendiary comments from across the border. Nevertheless, the issue didn't end there. The decision to subsidise Rs23 billion to placate the protestors caught the attention of the International Monetary Fund (IMF), which reportedly questioned the move amid the country’s severe financial crisis and ongoing negotiations for a new deal just ahead of the budget.

Although the protest has ended, the movement continues to be a topic of discussion across various platforms. From national and provincial assemblies to social media, the protests are being hailed as a victory for the common people, who have been struggling with high inflation, exorbitant utility bills, fuel prices, and taxes. Following the spotlight on the situation in Azad Jammu and Kashmir (AJK), both citizens and lawmakers are using it as a precedent, threatening to use similar tactics to meet their demands against what they consider unjustified measures.

Among the bigwigs taunting the federal government was Khyber-Pakhtunkhwa Chief Minister Ali Amin Gandapur. He lambasted the leadership at the centre, claiming it lacked both the mandate and the public’s support, as evidenced by its handling of the recent protests in AJK. Gandapur, who served as the federal minister for Kashmir Affairs and Gilgit-Baltistan during the PTI tenure, highlighted two movements – one by the public and another by PTI – and questioned whether the federal government could control them if they took to the streets.

In a video circulating on social media of him speaking in the K-P assembly, Gandapur further rebuked the federal government, saying, "We have seen your authority... all your writ vanished in just a single day in Azad Kashmir." His comments were met with enthusiastic desk thumping throughout the assembly hall. Recalling his tenure as minister, he mentioned that people in Kashmir had expressed respect for Pashtuns due to their historical support in the fight for AJK's independence. "You couldn’t stand before the people whom Pashtuns supported in wars," Gandapur said. "What will happen to you if we come out; just think about it." He then urged the federal government to collaborate on resolving issues.

In another instance, PTI MNA from Swat, Saleem Rehman, addressed the finance minister on May 16, drawing attention to the unrepaired road infrastructure destroyed in last year's floods. He noted that the area heavily relies on tourism, yet instead of repairing roads, the federal government was planning to impose new taxes or withdraw previous ones. "If the tax is imposed, we will fully oppose it, and, God willing, the reaction will be stronger than what happened in [Azad] Kashmir," Rehman said.

This sentiment was echoed on social media, where people shared posters and messages urging the masses to stand up for their rights, similar to the AJK protests. One post read ‘Awami Hartal’ (public strike), stating that inflation and rising electricity bills were unacceptable, and that it would the people of Pakistan, not political parties, protesting in streets this time. "Electricity should be Rs8 per unit," it demanded, adding that protests would occur nationwide as governments take loans only for their luxuries.

Last week’s clashes erupted in AJK after the federal government increased electricity prices. Though the AJK government had previously made an agreement with protestors, its implementation was pending. Consequently, skirmishes erupted as traders and residents blocked roads in protest. Tensions escalated further on May 11 when police pre-emptively detained local leaders who scheduled a march to the AJK capital Muzaffarabad. This assertive action led to a serious crisis, resulting in three deaths, including that of a policeman, and several injuries.

Responding to the escalating situation, Prime Minister Shehbaz Sharif intervened by announcing a subsidy of Rs23 billion. This subsidy, diverted from funds allocated for emergencies, aims to provide wheat to AJK at Rs2,000 per 40 kilograms, compared to Rs3,900 in Pakistan. Interestingly, while the government approved additional subsidies for AJK consumers, it plans to raise electricity prices for 250 million people in Pakistan. The new rates for AJK residential consumers are Rs3 per unit for monthly consumption up to 100 units, Rs5 per unit for consumption between 101 to 300 units, and Rs6 per unit for usage exceeding 500 units.

Prime Minister Shehbaz also instructed the finance ministry to allocate funds in the upcoming budget to sustain subsidised electricity and wheat provision in the region. These protests against price hikes come at a time when Pakistan faces broader economic challenges, including a financial crisis, disrupted imports, surging inflation, and a sharp decline in the currency's value against the US dollar. Meanwhile, the decision to subsidise AJK coincides with the arrival of an IMF delegation to negotiate a long-term loan programme. Historically, the IMF has advised Pakistan to reduce subsidies and increase energy prices, leading to questions about the rationale behind subsidising AJK in the national interest.

Throughout the protest, the federal government has sought to downplay the situation, likely to prevent similar unrest elsewhere in the country and to portray normalcy in AJK. Notably, the interior minister suggested a 'foreign hand' behind the tensions in AJK, though experts disagree with this assessment. They attribute the crisis to the incompetence of both the AJK and federal governments, who only acted when the public took to the streets.

Raza Ahmad Rumi, a policy analyst and journalist, noted that the federal government has already approved additional funds for AJK despite the crunch. However, the analyst added, this intervention was late and “reflected the old policy of treating AJK and other federal territories in a cavalier manner.” AJK despite its autonomy is controlled by Islamabad, Rumi said, adding that “there is little accountability of them as they play as pawns of Pakistan’s major political parties and the military establishment.” Therefore, he said, there is resentment against them.

Rumi also noted that in this current crisis, the public criticism targeted the elites' lavish lifestyles and rampant corruption in the public sector, particularly amidst IMF-directed economic policies squeezing the middle and working classes. He emphasised that while the trigger may have been the cost of wheat, the underlying issue is the burden of structural adjustment policies on the people, which is increasingly unsustainable.

Renowned political expert Zaigham Khan highlighted a fundamental challenge concerning certain strategic and geographical areas in Pakistan, such as AJK, Gilgit-Baltistan (GB), former FATA and PATA (now Malakand), and Balochistan. Due their strategic importance, they are administered ‘differently’ and as a ‘separate economy’, which results in a ‘mismatch’ in economic and governance structures that in turn pose significant challenges for Pakistan.

In these areas, Khan explained, different laws, special exemptions, or sometimes no laws at all apply. For instance, there are exemptions for vehicle registration in G-B and Malakand, resulting in stolen vehicles from across the country being taken there without repercussions. This lax enforcement breeds criminal activity.

Similarly, tax exemptions are granted in areas like AJK, where customs duties have been waived but often misused. Some areas have special permissions for smuggling, a longstanding issue in FATA and Balochistan. Tax exemptions are also common in G-B and AJK, exacerbated by the lack of representation in the National Assembly, leading to the peculiar situation of "no taxation without representation."

Khan emphasised that such tax-free zones create economic problems. Regarding AJK, he noted the government's practice of purchasing electricity at a subsidised rate of Rs2.5 per unit and then selling it at a higher price. He criticised the generalised subsidy approach, stating that subsidies should target those who need them most. Drawing parallels, he mentioned the blanket subsidy on petrol, where both motorcyclists and Mercedes drivers enjoy the same benefit regardless of their vastly different financial circumstances. Khan underscored that such indiscriminate subsidies, including those on wheat and electricity in AJK, can be counterproductive.

According to Khan, the movement led by shopkeepers to maintain and potentially expand the ongoing subsidy began due to the government's failure to address it adequately for nearly a year. He noted that the government only took action when the situation became uncontrollable, as any turmoil in AJK reflects poorly on the federal government, particularly in the eyes of India. Additionally, dissatisfaction with the non-representative AJK government fuelled the protests, and despite their conclusion, the situation remains challenging.

Regarding the Rs23 billion subsidies allocated for AJK, Khan criticised it as wasteful spending exacerbating governance issues. He highlighted a significant consequence: a decline in steel stocks following the government's concession, attributing it to steel mills in FATA benefiting from free electricity, giving them an unfair competitive advantage. Despite hopes for crackdowns on electricity theft, the public fears that the government's capitulation in AJK sets a precedent for other strategic regions.

Discussing the role of social and digital media, Khan acknowledged their role in catalysing protests but dismissed claims of foreign interference, attributing the unrest to governmental incompetence. He also pointed out the unequal distribution of benefits, with elites, both local and national, reaping the rewards while the common man sees little benefit. Khan highlighted disparities, such as extreme wealth and poverty in FATA and other areas, emphasising collusion among elites, industrialists, and government officials to exploit the system for personal gain. He cited instances like mid-route opening of trucks in the Afghan Transit Trade, indicating widespread profiteering that must be addressed.

Political expert Majid Nizami addressed the multifaceted nature of the issue, emphasising the need for the AJK government to bolster its revenues to mitigate strikes and protests. Currently, he noted, the majority of AJK's budget comes from Pakistan due to its low revenue generation. He also mentioned that AJK relies on subsidised wheat sourced from other provinces, as it does not produce wheat locally.

Nizami highlighted that while significant projects like the Neelum Jhelum and Mangla dams were situated in AJK, they have been funded by taxes from across the country. Therefore, he argued that providing subsidies or relief solely to AJK might not be justified, urging the AJK government to explore avenues for revenue growth. He dismissed concerns about similar protests erupting in other parts of the country, suggesting that the circumstances leading to the AJK protests were specific to that region and remained localised.

The expert warned that measures like redirecting money earmarked for calamities and emergencies to subsidies should be avoided, especially, when the government is busy negotiating a fresh deal with the IMF under financial circumstances that are not good at all. “The government should keep all these circumstances in mind while taking such decisions,” Nizami said.

Regarding claims of foreign interference in the protests, he dismissed them as political rhetoric, advocating instead for introspection and rectification of mistakes. “More focus should be on correcting one’s own mistakes,” he said

Regarding the role of social media, Nizami expressed concern about the spread of fake news during protests, underscoring the need for fact-checking mechanisms to prevent further deterioration of the situation.

Sohail Rasheed, an Islamabad-based journalist hailing from AJK, offered insights into the situation in the region. He noted that what made the recent protest unique was its non-alignment with any political party, signifying a realisation among the people that they must take matters into their own hands to achieve their goals. Rasheed observed a growing disassociation from political leaders who abandoned the populace during the protests, suggesting the emergence of a new leadership in the region. Many of those who usually surface during elections, he noted, remained in Islamabad since the onset of the protests.

Rasheed explained that grassroots committees had been forming at the street and community levels, preparing for protests for several months. He identified a lack of respect for the public mandate and the successive installation of non-representative governments in AJK as key factors driving the protests. Dismissing claims of foreign involvement, he asserted that the political landscape in AJK had undergone significant changes, with the recent movement serving as a wake-up call not only for governments but also for people in other parts of the country.