The fall and fall of Pakistan
Everything is rotten in the state of Pakistan. Late in February, Hizbul Mujahideen overlord and US-designated terrorist Syed Salahuddin led the funeral prayers of fellow killer Imtiyaz Alam aka Bashir Ahmad Peer. Alam was one of India’s Most Wanted. Salahuddin carries a bounty of $10 million, but that didn’t stop him from appearing in public. Significantly, the ceremony was held at the Pakistan Army burial ground in Rawalpindi and attended by ISI hot-shots, indicating the terrorist was treated by the Pakistan military as one of its own. In the same week was also buried Pakistan’s hope of a bailout from the International Monetary Fund (IMF). But the funeral is yet to be held.
It was a bad week for Prime Minister Shehbaz Sharif. Pakistan faced terrorist attacks, Imran Khan’s machinations, military squabbles, China’s financial blackmail, and violent unrest in PoK, Baluchistan and Khyber Pakhtunkhwa. The unkindest cut was PoK. Hungry Kashmiris took to the streets, railing against skyward prices and army land grab while its so-called President Barrister Sultan Mehmood Chaudhry left on a two-week jaunt to Turkey, the UK and Belgium at government expense.
In Gilgit and Baltistan, desperate citizens marched against the government demanding flour, pulses, electricity and jobs. Trucks carrying food items were looted by crowds, attacking markets in Khyber Pakhtunkhwa, Sindh and Baluchistan. The people of PoK and Baluchistan are comparing their situation to East Pakistan in 1971 and the creation of Bangladesh.
But who is responsible for Pakistan’s descent into hell? In 1958, the first military-dictator of Pakistan, General Ayub Khan, had a startling epiphany, which cannot be explained even by the best meteorologists. After he overthrew the government of Iskander Mirza, Ayub announced that democracy doesn’t function in hot climates like Pakistan’s and can flourish only in cold countries like Britain. With Sharif feeling the heat and Pakistan out in the cold because of its terror games, Ayub’s ghost will be feeling vindicated now. The country is broke. Its rupee fell to a historic low of 272 to the US dollar last month. Inflation hovers over 27 percent. Foreign reserves have shrunk to $3.2 billion. Public debt is a gigantic $270 billion, which exceeds government expenditure.
Pakistan’s moribund civic structure is also plagued by power cuts—in January, a nationwide blackout plunged the country into darkness for 24 hours. Most neighbourhoods aren’t safe; crimes like murder, kidnapping and theft are on the rise after the October 2022 floods drowned nine million people in poverty. The Ukraine war has compounded the crisis by forcing Sharif to enter a bidding war with other developing countries over ill-affordable liquid natural gas, which Pakistan needs to keep the lights burning at home. “They walked into the debt-trap situation with their eyes open, there were no major external and internal shocks. The Russia-Ukraine war and floods hastened the trajectory, but aren’t solely responsible,” says Sareen.
Because of the shortage of drugs like insulin, disprin and medical equipment, doctors are postponing surgeries. Without forex, the government cannot import medicines, which are held up at Karachi port. On February 16, arm-twisted by the IMF, Pak Finance Minister Ishaq Dar dropped what cynics call the “petrol bomb”, which hiked fuel prices to historic highs—consumers will have to cough up `170 billion more in taxes while the elite remains unaffected. “Power outages, wheat shortage and fuel crises can impact any economy, but in Pakistan, political instability, weak governance and institutional corruption—collective policy failure—have contributed to the current crisis,” says Nasir Iqbal, associate professor at Pakistan Institute of Development Economics.
This looks like political suicide since the country goes to polls in October. There is no money to hold elections, however. A spokesman of the Pakistan Democratic Movement, the ruling coalition, confessed that the government cannot pay salaries and pensions. But Pakistan’s upper class seems unaffected: Canadian coffee chain Tim Hortons opened in Lahore on February 10 and had people standing in line for hours; one coffee costs Rs 700.
Amid the economic nightmare, quacks are having a field day. The far-right Tehreek-e-Labbaik Pakistan (TLP) advised Sharif to pick up the Quran in one hand and the nuclear suitcase in the other, and order the world to fall at Pakistan’s feet. Journalist Naila Inayat reported that TLP founder Khadim Hussain Rizvi instructed the government to tell IMF that since interest is haram in Islam, it will pay the basic debt amount, but only when Pakistan has the money. A YouTube preacher’s bizarre suggestion was to start a $1-billion chit-fund with 57 Islamic countries, claim the first committee, and then stop depositing more money. “That way, Pakistan won’t need IMF,” he exulted.
What next? Maryam Nawaz starting a kitty party and playing tombola? Michael Kugelman, deputy director of the Asia Programme at the Wilson Centre, told news site Intercept that India has made efforts to implement policies that move closer to things like universal education and access to healthcare, but in Pakistan, those with the power simply have disregarded the economic needs of the people.
The cornered Sharif has now reduced the allowances of ministers and officials. The government will no longer pay their phone, electricity, water and gas bills. All government luxury vehicles will be auctioned and no new ones can be purchased. No five-star hotels during foreign visits either; officials can fly only cattle class. Only tea and biscuits will be served at government functions. Its military though has no intention of cutting down spending—a key IMF precondition for aid.
Writing in Dawn newspaper, Pakistani lawyer Faisal Siddiqui divided the country’s main players into eight actors: coercive and surveillance power (army), executive and legislative power (politicians and bureaucrats), constitutional and legal power (judiciary), narrative power (media), political mobilisation power (middle class, especially youth and women), economic power (the moneyed elite), fatwa power (old and new religious leaders) and anarchic power (terrorists and secessionists). The executive and judiciary lack the will and clout to take on the generals; the National Corruption Perception Survey 2022 named the judiciary and police Pakistan’s most corrupt institutions.
The Pakistan Army’s obsession with India escalated after General Zia-ul-Haq overthrew Zulfikar Ali Bhutto and combined religion with power. He radicalised the army, and created a parallel Sharia judiciary—jurists versed in the nuances of law became secondary to anachronistic mullahs. Pakistan returned to the Medieval Age: adultery, fornication and blasphemy were new offences in the penal code; whipping, amputation and stoning to death became a part of jurisprudence. Un-Islamic material was dropped from textbooks and libraries. Rabid preachers became celebrities and the ulema became omniscient. Jinnah’s dream of a Muslim nation had morphed into an Islamist state. This zealotry is largely responsible for Pakistan’s economic chaos.
The CIA sent billions to Pakistan to fight the Soviets and subsequently terrorists. The West gave mountains of dollars in charity, but the money was gobbled up by the generals and politicians to enrich themselves and train terrorists to attack India. “Pakistan’s fundamentals are wonky.
During the US war in Afghanistan, they benefited from the largesse coming to their aid; money from Western sources was siphoned off—it has been their survival technique. The Pakistan civilian government sees the military as corrupt, and as a sanction for them to do the same,” says national security expert Bharat Karnad.
As Pakistan slowly slid into financial, social and political anarchy, its landlord millionaires, who politically control the country, tightened their grip. In 1959, when Ayub tried his hand at land reform, the furious aristocracy bribed the sectarian party Jamaat-e-Islami to protect the “sanctity of private property in Islam”. As of 2015, half of rural households in Pakistan owned no arable land, although two-thirds of farmland is held by 5 percent of the feudal aristocracy, who are just 1.1 percent of the population. Pakistan’s pro-elite taxation policy is crippling its economy since less than 1 percent of citizens pay direct income tax. Neither the rich landholders nor corporates, businessmen, politicians and bureaucrats pay direct taxes while indirect taxes burden Pakistan’s poor and middle class. Tax collectors stay away from multi-million property transactions by politicians, army officers and clerics. Capital flight of real estate profits to buy palatial mansions in Dubai, London and Toronto are widely known, but ignored.
A UN Development Programme (UNDP) report in 2021 calculated the treasury lost nearly $17.4 billion—6 percent of the economy—by pampering the elite. Nearly half the national income is in the hands of the richest 20 percent, while the poorest 20 percent get only 7 percent. IMF Managing Director Kristalina Georgieva scolded Pakistan: “It shouldn’t be that the wealthy benefit from subsidies; it should be the poor. And there the Fund is very clear. We want the poor to be protected.”
With the IMF insisting on defence cuts and taxing the elite, Sharif played a losing game. He cannot rein in army expenditure. The military operates the biggest business empire in Pakistan through the Fauji Foundation (FF), Shaheen Foundation, Bahria Foundation, Army Welfare Trust (AWT) and Defence Housing Authorities—“the largest conglomerate of business entities in Pakistan, besides being the country’s biggest real estate developer and manager, with wide-ranging involvement in the construction of public projects”, according to the investigative website Fact Focus.
The army way of life is both luxurious and criminal: even middle-level officers own luxury vehicles, live in mansions, grab land from small farmers and encroach on government property. No major commercial operation can happen without the nod of generals. The FF and AWT are into real estate, petrol pumps, advertising, import, distribution, arms export, petroleum products, fertiliser and cement manufacture (the army is the biggest fertiliser manufacturer in the country), bakeries, farms and even the film industry. AWT owns Askari Commercial Bank, an airline, a travel agency and even a stud farm. “Through its various economic enterprises and foundations, the Pak army is a substantial economic actor, responsible for almost 5-10 percent of GDP expenditure, and it’s non-taxable. From Peshawar to Karachi, it controls transportation, which is the lifeline of the country. With 30 percent of its productive economy not taxed, it’s an enormous blow to the country and its people, who are hit two ways as the army dominates the economic scene and monopolises the budget,” says Karnad.
The UNDP’s National Human Development Report for Pakistan concluded that “the country’s powerful military, which has directly ruled Pakistan for roughly half of its 75-year history, was found to receive $1.7 billion in privileges, mainly in the form of preferential access to land, capital and infrastructure, as well as tax exemptions”. A popular joke is that Pak generals are Crore Commanders, not Corps Commanders.
Credit Suisse released details of Swiss accounts of wealthy Pakistanis, including former ISI head General Akhtar Abdul Rahman Khan. When Fact Focus posted unaccounted financial details of former army chief General Javed Bajwa and family, the government chose to investigate the leak rather than the general whose wealth had bloated to $47 million by the time he retired. The expose was a brave move by the Pak media; 43 journalists have been murdered in the last four years for doing their job. Abductions, beatings and warnings by ISI and the Army are routine for them.
For decades, the army and ISI have been running unchallenged the biggest criminal enterprise in the subcontinental history—the drug trade in the Golden Crescent. Pakistan’s former PM Nawaz Sharif told the Washington Post in 1994 that then army chief Gen. Aslam Beg and ISI boss Gen. Asad Durrani showed him a “detailed blueprint” for selling heroin to fund covert military operations in Kashmir. A 2022 NATO report of the Defence Education Enhancement Programme, titled Narco-Insecurity, Inc., pointed at the ISI’s role in drug production and smuggling in Afghanistan and Pakistan. At last, the corruption has come home to roost. A police officer, who didn’t wish to be named, said, “ISI has no money to fund its operations and so China has stepped in.” Field commanders complained last week that there is no money to feed its soldiers even twice a day. “Pakistan can’t afford such a huge military for security challenges of its own making. The mercenary game it played to big powers isn’t affordable anymore,” says Sareen.
To stir the boiling cauldron, Imran Khan is back with his recipe of mass disruption. Assassination attempts can create heroes, and he is behaving like one for now. This week, the chairman of Pakistan Tehreek-e-Insaf (PTI) went to Islamabad to appear in four cases—one of the courts issued a non-bailable arrest warrant against him in the Toshakhana case for his repeated failure to appear—flanked by his supporters. This was his first public appearance since he was shot in the leg last November near Lahore during a march he led demanding snap polls.
A leaked video showed him blaming the ISI and army for plotting to “murder Pakistan’s most popular leader”—him. He accused former president Asif Ali Zardari of hiring Tehreek-e-Taliban Pakistan (TTP) mercenaries for the hit.
At present, the Zardari-Bhutto and Sharif clans lead a coalition government boosted by PTI defectors. Imran somewhat alarmed the government by winning all eight national assembly seats in the byelections in October 2022. PTI also launched the ‘Jail Bharo Tehreek’ movement which started from Lahore’s Mall Road on February 22, and has been suspended after the Supreme Court ordered polls in the Punjab and Khyber Pakhtunkhwa provinces.
For Imran, the timing of protests couldn’t have been more perfect. But then the sporting genius has always been a master of it. General Zia had offered him a ministry in 1988 when Imran was still a celebrity cricketer. Concerned by the foxy general’s sacking of PM Muhammed Khan Junejo—who disapproved of the dictator radicalising Pakistan—Imran didn’t want to be a puppet. But in 1996, timing dictated that he join politics as a captain of the generals. He won the 2018 election promising ‘Naya Pakistan’ but was the first Pak PM to fall to a no-confidence vote.
Amid the havoc, Islamabad is losing the confidence of its allies. And respect, too. Turkey is furious at Pakistan for reportedly repackaging Turkish relief material sent to help victims of the 2022 floods, and returning it as its own for earthquake relief. An official visit of Sharif and his foreign minister Bilawal Bhutto Zardari to Turkey was postponed.
The Pak government is helpless to protect Chinese workers engaged in the $65-billion China-Pakistan Economic Corridor projects. Delays due to massive corruption and terrorism have jeopardised Xi Jinping’s hopes to connect China to the Arabian Sea through roads, railways, pipelines and ports in Pakistan. “China has given loans, and not a grant, at high interest rates, and it may continue to twist and turn Pakistan. Also some projects Pakistan has signed up for are grey rhinos (till they really come close, you don’t see the danger). The country went for much more than it could take,” says Barua. Now Beijing is refusing to renegotiate the $87-billion loan to Pakistan which owes $1.1 billion to independent Chinese power companies. If the money isn’t repaid, Pakistan will have to surrender more territory and assets to China; the contested Shaksgam valley and Gwadar port are already in Chinese hands as foreclosures.
China is Pakistan’s single largest creditor since its banks hold 30 percent of its external debt; diabolically, Beijing has agreed to lend $700 million more. This will plunge its flailing economy into deeper debt and Pakistan could be the next Sri Lanka. The significant difference is that Sri Lanka eliminated terrorism while Pakistan funds it. “Unlike Sri Lanka though, Pakistan has not defaulted on debt yet, because it has friends owing to its strategic location,” says Barua.
As an established sponsor of world terror, Pakistan’s relationship with its poisonous progeny, the Taliban, is complicated. Islamabad, which outmanoeuvred New Delhi to bring the Taliban back to power in Kabul, is now at war with TTP, which is backed by the Afghan government with money and weapons. TTP faction Jamaat-ul-Ahrar claimed responsibility for the Peshawar suicide attack in January, which killed more than 100 in a police mosque.
How it all came tumbling down 1958-68: General Ayub’s non-liberal policies of the capitalist model increases income inequality 1970s: During Zulfiqar Ali Bhutto’s reign, there was a recession in exports, the partition of East Pakistan, the floods of 1974 and locust attacks. His nationalisation policies became the major reason for the loss of industrial units and private investment 1998: Pakistan tests its first successful nuclear device, resulting in G-8 imposing economic sanctions 2007-08: Affected by the internal crisis, the growth rate starts shrinking by 37% 2010: The country is hit by floods, resulting in inflation, spiralling FDI and increase in the tax-to-GDP ratio 2013-18: Hike in public debt and decline in exports continues during PML-N’s government In 2013, 2016 and 2018, Pakistan seeks financial aid from International Monetary Fund, UAE and China 2021: Pakistan’s public external debt touches $86.4 billion, with over 25 per cent to China. Rollout of China- Pakistan Economic Corridor also increases the debt burden 2022: Floods affect 33 million people, resulting in damages worth over $30 billion. Exports decline by over 16 per cent and World Bank pegs GDP growth at just 2 per cent 2023: At 27.55 per cent, inflation is at a 48-year-high as thousands of containers of food items, raw materials and equipment are stuck in ports The Pakistani rupee falls 9.6 per cent against the dollar on January 26—the biggest single-day drop in Forex reserves held by Pak’s central bank are $3.2 billion, just enough for a few weeks’ worths of imports |
A few weeks later, TTP attacked a Karachi police station and killed cops. Demoralised policemen staged a demonstration soon after, asking for government protection, which is in no condition to give it. TTP has warned security forces to keep away from its war on the government to avoid reprisals. The Afghan Taliban’s acting foreign minister Amir Khan Muttaqi said, “Had terrorism originated from Afghanistan, it would have spread to China, Tajikistan, Uzbekistan, Turkmenistan and Iran as well... Afghanistan is not a centre of terrorism. The problem is within Pakistan.”
Brown University’s Watson Institute for International and Public Affairs counted 23,372 Pakistani civilians and 8,832 security personnel killed in the highly publicised War on Terror. Meanwhile, carpe diem happens to be India’s motto. In January, New Delhi issued a notice to Islamabad to amend the 1960 Indus Water Treaty which gives river water from Indus, Jhelum and Chenab to Pakistan and from Ravi, Beas and Sutlej to India. In November 2016, PM Narendra Modi vowed not to let even a drop of water reach Pakistan. India has planned to build projects on all the rivers passing through its territory which could parch Pakistan. Modi has a rising fan base among many Pakistanis who are on video wishing he would lead their country. “Pakistan has made it difficult for us to care for them, but the spillover effect of a nuclear state disintegrating will affect India. Pakistan is a sizeable neighbour India can’t choose to ignore,” says Karnad, adding that they are eminently co-optable and India should make an offer they can’t refuse.
But Modi is unlikely to step in and save Islamabad’s bacon. Iran and Turkmenistan are its only guardian angels currently. From March onwards, Russia is supposed to sell discounted oil to Pakistan for unspecified “currencies of friendly countries”, which according to Pakistan energy experts like Samiullah Tariq could “partially” help the country. It seems the Islamic republic has dug its own grave. In a dusty corner of Lahore stands the Shehr-e-Khamoshan, a new $1.2-million graveyard, built and owned by the Government of Pakistan. It has freezers imported from Germany to keep the corpses fresh; 22 cameras live-stream funerals for mourners who can't make it. The ‘model graveyard is laid out beautifully, with broad walkways and green lawns. Pakistan is desperately trying to convince donors with dollars that its pastures are still green. But anyone who sees beyond the make-believe freshness will see that it is still a graveyard of aspirations.