The writer is Distinguished Professor of Economics at Forman Christian College University and Beaconhouse National University
On the economic front, it is clear that the pressures on Pakistan’s exchange rate will push the country back into the lap of the IMF. This time, they will front-end load their conditionality clauses, which effectively mean economic contraction. The issue here is negotiating a balance between the imperative of controlling the budget deficit and the need to accelerate the GDP growth. It is not the level of the budget deficit but its composition that matters. What is required is to drastically reduce the non-productive expenditure and substantially increase development expenditure to release the constraints to growth, such as electricity generation and transmission, ports and transportation infrastructure and skilling and educating the youth.
Pakistan has shifted from a water surplus to a water deficit country. Yet, we are profligate in water use: irrigation efficiency in terms of the percentage of irrigation water reaching the farm gate is down to only 33 per cent, water use efficiency in terms of GDP per unit of water used is only one-seventh that of countries such as Brazil and China. Not pricing a crucial scarce resource such as water is a spectacular example of the economic irrationality of public policy. It results in large farmers flooding their farms at cropping time, the urban elite using hosepipes rather than wet rags to wash their cars and city governments decorating roadside spaces with grass which has intensive water requirements.
The withdrawal of ISAF forces from Afghanistan will create a grave security threat for Pakistan. With the Taliban on the Pakistan side pursuing the same agenda as the Afghan Taliban (who are seeking to establish a Caliphate) through tactical alliances on both sides of the Durand line, the Afghan-Pakistan border for all practical purposes may cease to exist. This may create a negative “strategic depth”: instead of Pakistan getting strategic depth in Afghanistan, a Taliban-infested Afghanistan may get strategic depth in Pakistan. The post-election government will need to play this new round of the “Great game” with immaculate skill to prevent a widening of the geographic base of the Taliban eastwards, far beyond Fata.
Then there is the issue of “negotiating” with the “Pakistani Taliban” as most of Pakistan’s main political parties appear to have decided. The question is, negotiate what? In this case, the protagonist seeks to establish its version of the Shariah with disregard to Pakistan’s Constitution as it stands. It would be unrealistic to expect them to give up during negotiations their right to armed struggle in the pursuit of an aim which they believe is sanctioned by religion. Therefore, the new government will have to be quite clear about the objective they wish to achieve through negotiations and the concessions they are willing to make. Is the government prepared to cede territory to the Taliban in Fata and beyond? Will the government and the opposition be willing to amend the Constitution in line with the demands of the Taliban?
The Indian Ocean and coastlines along it are emerging as a new hub of trade in a globalised economy and, at the same time, provide the world’s energy routes. As Robert Kaplan in his important book (Monsoon) has argued, this region is also the centre of critical issues such as climate change, water scarcity, sea level rise and extremism. One may add that population displacement due to adverse climate change effects in South Asia is expected to be greater than in any other part of the world. Therefore, this area will be the focus of military, political and economic contention by the major powers. Pakistan’s security and the welfare of its people will have to be pursued in this changing geostrategic context.
Published in The Express Tribune, March 4th, 2013.
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Dcotor Sahib,
I agree with much of what you say so eloquently.
A small point: the budget deficit should be reduced to a level that stops debt from rising, keeps inflation down and the external deficit in check -- meaning that it can be financed.
Most of Pakistan's present problems can be solved by effective sales of condoms. We must drop below 2% pop-growth for at least 10 years. Alternatively, we might want to kill our children and increase our wealth. Regretfully, we have IMF/ World Bank and America to do that. The unholy nexus between these organizations and our economists has kept us enslaved for decades with a steady rhetoric of "catastrophic scenarios". I was amazed that even the foreign writers (at the LLF) prefer to analyse political and economic situations in terms of personalities only. The IMF is run by the great Satan and little men with black beanies. So to utilize it effectively we must understand the murky area where an organization like the IMF stops being an organization and becomes an instrument for a group. For example now-a-days its the "pipeline group" vs the "CNG group" and we are at the receiving end of it all. We are paying a Jazia to the Arabs in the form of fuel costs even though no Arab army has ever entered our territory (excluding the bearded ones). I believe instead of listing the Post-election challenges as 1. 2. 3, the honourable author should show us (less-enlightened ones) the way forward and stop the steady catastrophic rhetoric . How do we negate the evil influences on our well-being (aka economy) within the framework established by the Satan.? That would mean something.