On Pakistan's Economic and Security Situation: Dr. Kaiser Bengali

 

Pakistan's Unending Debt Enslavement

Dr. Ikramul Haq in The Friday Times

Nearing 76 years of independence, our leaders in power want to celebrate liberation from colonial rule after pushing the country into a deep debt trap. This paradox depicts what Zulfikar Ali Bhutto highlighted in his masterpiece, Myth of Independence. What makes the situation more painful is the fact that every time a new loan is obtained, those in power express jubilation as if an extraordinary goal has been achieved.

The signing of a nine month US$ 3 billion standby arrangement (SBA) with International Monetary Fund (IMF) on June 29, 2023, was commemorated like August 14, 1947 by Premier Shehbaz Sharif and Finance Minister Muhammad Ishaq Dar et al. The same was the practice in all earlier governments and mindset of previous rulers. This indeed is the worst possible manifestation of our subjugated ruling elites—tragically all governments, civil and military alike, have forced the nation to remain incarcerated in the debt prison.

In 2016, I brought up the burning issue of debt enslavement of Pakistan and the callous attitude of our ruling elites. In 2023, the situation is no different, rather worse. All the six budgets presented by the PML- N government from 2013-2018, four by the Pakistan Tehreek-i-Insaf (PTI) from 2018 to 2022 and two by Pakistan Democratic Movement (PDM) from 2022 to 2023 have common characteristics, with the main emphasis on ensuring economic enslavement through burgeoning debts. The PDM with their fourth-time Finance Minister Ishaq Dar heading the economy has finally obeyed all of IMF’s commands in a revised budget 2023-24, as he did when PML-N obtained a US$ 6.6 billion bailout package in 2013.

Our history of IMF programs is old and seemingly never ending. On December 19, 2019, as per a statement issued by IMF, its Executive Board completed the first review of Pakistan’s economic performance under the Extended Fund Facility (EFF). Completion of the review allowed Pakistan to draw Special Drawing Rights (SDR) 328 million (about US$ 452.4 million), bringing total disbursements to SDR 1,044 million (about US$ 1,440 million). It may be remembered that IMF Executive Board approved the 39-month, SDR 4,268 million (about $6 billion at the time of approval of the arrangement, or 210 percent of quota) Extended Fund Facility (EFF) for Pakistan on July 3, 2019. It was later extended to June 30, 2023, but as in the past ended unsuccessfully with new short term 8-month US$ 3 billion SBA for which complete credit is given by Ishaq Dar to Premier Shehbaz Sharif. 

For the coalition government of PTI claiming prior to elections that “we will never beg” obtaining IMF’s US$6 billion bailout was a great “achievement,” though the conditions imposed by the lender of the last resort were the most stringent in our history of getting such packages since 1958.

It is a matter of record that the PTI coalition government secured over US$13 billion in foreign loans in the fiscal year 2019-20 alone! It was the second highest amount in history. Making things more painful was the reality that we started borrowing just “to repay maturing external debt and cushion the shrinking foreign exchange reserves.” During the fiscal year 2017-18, we received gross loans of $13.2 billion from bilateral and multilateral lenders including, IMF and commercial creditors, according to a report, quoting data compiled by the Ministry of Economic Affairs.

Pakistan received $29.2 billion in foreign loans from 2017-2019 that included US$26.2 billion by the PTI government since August 2018. Out of this, US$19.2 billion was used just to repay maturing external debt and the remaining was added to “external public and publicly guaranteed debt.” The resultant increase in debt-servicing as repayments contracted as new foreign loans, increased substantially. For the fiscal year 2020-21, the cost of external debt servicing was estimated at Rs. 315 billion though we had secured over US$300 million or about Rs. 50 billion temporary relief from the G20 group’s moratorium on debt servicing.

In fiscal year 2018-19, Pakistan borrowed US$16 billion, including balance of payments support from Gulf countries, and returned US$9.1 billion worth of loans. In fiscal year 2019-20, gross foreign loans stood at US$13.2 billion and repayments amounted to slightly above US$10 billion. The Ministry of Finance said we did not have any option but “to borrow to repay maturing loans and stabilize foreign currency reserves that dipped below $10 billion in May 2020 after the outflow of hot foreign money of over $3 billion”.

According to a press report, “the withdrawal of hot foreign money, on the one hand, exposed the State Bank of Pakistan’s (SBP) ill planning and on the other highlighted the fragility of foreign exchange reserves that were built on the back of foreign borrowing. The dip in foreign exchange reserves triggered panic borrowing by the economic managers of the PTI government.” Resultantly, the government “started borrowing from the commercial, bilateral and multilateral creditors exceeded the budgetary target due to the dip in SBP’s foreign currency reserves, low inflows under the Saudi oil facility and the decision not to float Eurobonds valuing at $3 billion. The PTI government, like its predecessor, has also been unable to fully capitalize on non-debt creating inflows like exports, remittances and foreign direct investment”, the report added. 

Like the previous PML-N government, the PTI also relied on short-term foreign commercial loans. Against the budgetary estimate of $2 billion, it took $3.4 billion in foreign commercial loans. Commercial loans are always considered expensive due to their short maturity period and relatively higher interest rates compared with the official bilateral and multilateral credit. Two Chinese financial institutions, China Development Bank ($1.7 billion) and Bank of China ($500 million), provided about two-thirds or $2.2 billion of total foreign commercial loans. Dubai Bank extended $564 million, Ajman Bank $300 million, Citibank $148 million, Standard Chartered $27 million and Suisse Bank AG $205 million.

The PTI government also sought US$15 billion in gross foreign loans in 2020-21 for debt servicing and building foreign currency reserves in the absence of non-debt creating inflows. Out of the estimated external borrowing of US$15 billion, nearly US$10 billion, or two-thirds, were used to return the maturing loans, excluding interest payments. The pattern under the PDM has not changed, rather assumed further accentuation.

Decades of dependence of local and foreign debts has made Pakistan a weak and vulnerable state—though every government keeps on harping the mantra of having nukes and an unparallel ‘strategic location.’ Now Ishaq Dar after inking fresh SBA with IMF, while terming it a “great success” proudly claimed: “… the government convinced the IMF that it would be very unfair if $ 2.5 billion balance amount of the concluding program was not given to Pakistan… only potential of the mines sector of the country is six thousand billion dollars. Pakistan possesses substantial assets amounting to $3000 billion… We need to make efforts to free our economy from foreign aid.”

It may be remembered that on concluding talks with IMF in 2018, the PML-N government proudly announced: “this is the first time we have successfully completed the program in 15 years and the sixth in its 58-year relationship with IMF.” The detail story of that sordid subjugation and what happened thereafter was highlighted here in 2019 and more recently on this paper’s pages.

IMF Agreements (1958-2023)

Since 1958, Pakistan has entered into 23 programs with the IMF. On December 8, 1958 the military government signed a one-year Standby Arrangement (SBA), which it terminated prematurely in nine months. The second SBA was signed on March 16, 1965 and concluded on March 15, 1966. Yet another one-year SBA completed on May 17, 1973. The fourth SBA, signed on August 11, 1973, ended on August 10, 1974. The fifth one was on November 11, 1974 and concluded on November 10, 1975. The sixth was signed on March 9, 1977—it was terminated exactly after one year. On November 24, 1980, an Extended Fund Facility (EFF) was concluded which lasted for three years—ended on November 23, 1983. After a gap of five years, two simultaneous programs, Structural Adjustment Facility (SAF) and SBA were signed on December 28, 1988. Both continued beyond the agreed timeframe and ended in 1990 and 1992, respectively.

The ninth program, again a one-year SBA, was signed on September 16, 1993 but was terminated prematurely on February 22, 1994. The 10th program comprised two separate facilities—SAF and EFF—signed on February 22, 1994 for a period of three years. However, both the facilities were terminated much before maturity—on December 13, 1995. The 11th SBA was signed on December 13, 1995. It ended on September 30, 1997. The 12th program was of two separate facilities, the Poverty Reduction Growth Facility (PRGF) and an EFF. Both were signed on October 20, 1997 and continued till October 19, 2000. Under the 13th program, another SBA was signed on November 29, 2000 and continued until September 30, 2001.

The 14th Extended Credit Facility/PRGF was signed on June 12, 2001 and terminated on May 12, 2004. A three-year SBA was signed on November 24, 2008 but was prematurely terminated on September 12, 2010 after Pakistan could not initiate tax and energy reforms. The PML-N signed an agreement in September 2013 and was successfully completed. The PTI government’s US$ 6 billion extended EEF ended unsuccessfully on June 30, 2023. Under the just concluded SBA, the IMF would give US $3 billion dollars within a period of nine months and the first tranche of the US$ 1.1 billion would be released after the IMF board meeting in mid July 2023.

Finding the right path 

Managing a high fiscal deficit coupled with massive debt burden is the toughest challenge faced by our economic managers. The obvious and undisputed solution is substantial increase in resources and drastic reduction in spending, but it is easier said than done. For the last many decades, Pakistan’s fiscal policy has remained under immense pressure owing to perpetual failure of underperformance of Federal Board of Revenue (FBR), continued security related outlays, rise in wasteful expenditure and greater than targeted subsidies, losses of State-owned Enterprises (SOEs) etc. Other alarming elements remained great fiscal deficit, sluggish exports and high imports.

The burgeoning fiscal deficit and ever-increasing debt burden are not isolated phenomena. These are related to lack of political will to undertake fundamental structural reforms, enforce fiscal discipline, crackdown on parallel economy, increase tax collection, abolish perks and benefits of the ruling elites, eliminate wasteful expenses, dismantle rent-seeking structures, ensure rule of law, and stop reckless borrowing and ruthless spending. The perpetual failure to tap the actual tax potential has forced successive governments to rely more and more on external and internal borrowings, pushing the country into a ‘debt prison.’ In the just ended fiscal year 2023, the FBR failed to meet even the original target of Rs. 7470 billion, what to speak of the revised figure of Rs. 7640 billion even after mini budget, levying additional oppressive taxes of more than Rs. 270 billion through the Finance (Supplementary) Act of 2023 and Tax Laws (Amendment) Act, 2023. 

Collection of below potential revenue of Rs. 7.15 trillion (provisional) by FBR has raised serious questions about the State’s ability to meet its needs, in fact to ensure its economic viability, Collection of Rs. 16 trillion at federal level alone is not possible without restructuring the entire tax system for enhancing revenues to decrease/eliminate the burgeoning fiscal deficit, which is estimated at Rs. 7.5 trillion in the federal budget of 2023-24 . Even in the revised budget of 2023-24 and Finance Act 2023 approved on June 21, 2023, there is nothing to tax the high net-worth rich and mighty sections of society through progressive direct taxation.

Taxes are byproduct of economic growth and the new federal and provincial governments after general elections 2023 should not impose further oppressive taxes even if suggested by IMF. New vistas of non-tax revenues should be explored by making locked assets productive, ending circular debt and losses in SOEs, and drastic cut in wasteful non-development expenditure. Efforts should be made to achieve high economic growth of over 7 percent for a sustainable period of at least one decade.

Are we ready to put our house in order through fundamental structural reforms? Nadeem Ul Haque, Vice-Chancellor of Pakistan Institute of Development Economics (PIDE) has very rightly pointed out: “The IMF or no donor or external friend can help us with putting our house in order. We have to build a modern state and a modern society that is responsible and ready to participate in the global economy of the 21^st century. Without that we will continue to bleed and require the IMF again and again.” 

Let us take the example of Finland, a small country of 5.56 million people with GDP of nearly US$ 300 billion in 2022 (Pakistan with population of 225 million has a GDP of around US$ 350 billion, it was US$ 348.3 billion in 2021). In 2022, Finland’s tax-to-GDP ratio was 43 percent and ours only 10.1 percent.

Unfair taxation is the biggest impediment in the way of economic and industrial growth. What a tragedy that the rich and mighty get VIP facilities, plots, perks and benefits at taxpayers’ expense. They are the beneficiaries of the state’s resources—generated mainly by the poor farmers, suppressed landless tillers and toiling industrial workers. Pakistan is not a poor country—the state’s kitty is empty because of unwillingness of the rich to pay due taxes, the colossal wastage of taxpayers’ money on unproductive expenses and non-exploitation of vital natural and human resources.

Absentee landlords, a list which now include mighty generals who have been allotted State lands under award and rewards, have been resisting proper personal taxation on their enormous income and wealth. This anti-people alliance of military-judicial-civil complex, corrupt and inefficient politicians and greedy businessmen controlling and enjoying at least 90% the State resources contribute less than 2% towards national revenue collection and nobody talks about it.

We can easily generate taxes of Rs. 16 trillion through FBR alone. The dire need in today’s Pakistan is rapid industrialization, especially promoting agro-based industries to provide employment to the poor rural population and ensure fair distribution of resources to reduce inequalities. The IMF or any other donor will not tell us how to achieve these goals. We will have to promote research to find our own solutions to become a modern and dynamic nation as pleaded by Dr. Nadeem Ul Haque and many others.

Resource mobilization should be given priority to build infrastructure, facilitate growth of small and medium sized firms in the industrial sector and small farms in the agricultural sector for an employment intensive and equitable economic growth process. To end economic apartheid, large corporations, especially loss-bearing SOEs, with equity stakes for the poor can be established through public-private partnerships. This would set the stage for a structural change that could help achieve economic growth for the people and by the people, which is presently confined to the elites only.

The End of Imran Khan's Revolution

 

India v Pakistan History - Muzammil Shah

Indira Gandhi "The Indian Army wanted to finish off West Pakistan after the fall of East Pakistan"

 

Imran Khan Interview

 

‘Geopolitics’ and the IMF: Is Pakistan delusional or myopic?

Uzair M Younus in The Dawn


Despite the pronouncements coming out of Islamabad that the 9th review of the ongoing International Monetary Fund (IMF) programme is still a possibility, the fact of the matter is that successful completion of the review is a distant possibility.

This view is reinforced by the fact that the IMF’s own executive board calendar, which shows planned meetings through June 29, does not mention Pakistan. While these calendars can and do shift, recent developments would lead one to believe that if the Staff Level Agreement (SLA) has not happened yet, it is not happening in the next ten days or so.

The root cause of this failure, of course, is the hard-headedness of Pakistan’s finance minister who has refused to pay heed to common sense ever since returning to Pakistan and taking over the economy.

Whether it be the infamous Dar Peg – which angered the IMF and distorted the entire economy – or the strategy of negotiating through a staring contest, Dar has been lost at sea. As a result, Pakistan’s rock-bottom credibility in front of international creditors, key among them being the IMF, has further collapsed.

This view was summed up to me during the IMF’s 2023 spring meetings by a couple of bondholders who had gathered to listen to Pakistan’s central bank governor talk about the country’s economy. Following the discussion, these bondholders noted that the best way for Pakistan to gain its credibility and bring the IMF programme back on track was to do just one thing: get rid of Dar.

Alas, this has not happened and the prospects of the prime minister firing his family member are even slimmer than the resumption of the IMF programme.

As if keeping Dar in place was not enough, the government has also started to blame everyone but itself and its finance minister: Dar has been once again hinting at the fact that the programme is not moving forward due to geopolitics.

The truth of the matter is that everyone involved, including the United States and China, want Pakistan to remain economically stable.

But let’s assume that Dar is being truthful. This logic then leads one to question whether China and Saudi Arabia, two of Pakistan’s strategic partners, are in on the conspiracy.

After all, both these countries have made disbursement of their financial commitments to Pakistan contingent on successful completion of the 9th review.

So, if these countries were opposed to the geopolitics being played to punish Pakistan, as it has been alleged by the finance minister, then why is it that they have not yet released the additional funds they have promised to Islamabad?

This is why Islamabad’s apparent Plan B, to get additional deposits from friendly countries (like China and Saudi Arabia), also seems to be wishful thinking.

How and why these same countries would give additional funds to Pakistan when it fails to remain in the IMF programme is a question that Islamabad seems unwilling or unable to answer.

And while Dar and company continue to insist that all will be well, it is time for Pakistanis to recognise and accept that digging the economy out of this hole will be a Herculean task even in the best of circumstances. The challenge becomes that much more daunting if one were to look at the cast of characters across party lines that are potential contenders to be finance czars.

The recovery will first and foremost require rebuilding the country’s credibility, which can only be achieved by pushing through extremely painful short-term measures that help balance the books.

This would require major cuts to government spending, drastic measures to truly broaden the tax net – existing taxpayers are basically tapped out – and a structural reform agenda that is viewed positively by creditors. If this were to happen, then the recent budget put forth by the government would have to be tossed into the dustbin.

These would only be the easiest steps in a long journey.

According to data released by the IMF in September 2022, Pakistan has gross external financing needs in excess of $35 billion a year for the next three years. These needs would have to be fulfilled at a time when economic growth is down sharply, supply-chains have been distorted, investor confidence has been shattered, and the era where cheap capital was available in global markets has come to an end.

How ruling elites manage to meet these financing needs in the near future is a big question mark, and the next government will have its work cut out for it.

An alternative solution that is being discussed is debt restructuring. But this will be an even more painful process, especially for a sovereign that already has limited capacity to deal with the fallout of the IMF’s existing demands. In addition, external debt restructuring may also open the door for a conversation on domestic debt restructuring. This would stoke chaos in the country’s fragile banking sector which has binged on government debt over the last few years.

The prolonged process of debt restructuring would essentially mean that Pakistan has declared default. As a result, import of critical inputs would stall, leading to shortages of everything from fuel to imported pulses and palm oil.

As supply-chains would get distorted, prices of essential commodities would skyrocket. The value of the rupee would also collapse, leading to further inflation. Hospitals would run out of essential medicines, farmers would run out of essential inputs for the next harvest, and the entire economy would come to a grinding halt.

In short, this process would lead to near-term economic and political fallout that may be untenable for any government, let alone a coalition of status quo parties that is already deeply unpopular.

What the ruling elites in Pakistan have continuously failed to do is take a bit of a long-term view of the situation. After all, given where the politics of Pakistan is at this point in time, members of the existing coalition are likely to come back to power after general elections. This means that they will have to ultimately take charge of the situation and take measures that they are unwilling to take today.

Perhaps their rationale is that elections will provide them with a fresh mandate, but that logic is also flawed – after all, an election that leads some or all of the government’s existing members to form government in Islamabad will be seen as a continuation of the existing setup. This means that a new government will not be able to magically gain some new political capital that it can then utilise to push through painful reforms.

It appears the PML-N’s thinking is that since it will not be the senior member of a government come October, this will be someone else’s problem. There is some merit to this logic, but perhaps Pakistan’s ruling classes ought to do some deeper thinking.

After all, a country on the verge of default, where the ruling elites have run out of ideas and capacity to rescue the situation, is a problem for everyone that is part of the status quo elites.

The use of fear to persuade Pakistan

 

Has the US given up on Pakistan?

 

Will a desperate Pakistan initiate a new war?

 

Are smart people deliberately acting stupid? The Rise of the Anti-Intellectual

Nadeem Paracha in The Dawn
 


Across the 20th century, intellectuals played an important role in political parties and governments, both democratic and authoritarian. According to Richmond University’s Professor of Politics Eunice Goes, intellectuals perform several roles in the policy-making process.

They help politicians make sense of the world. They offer cause-effect explanations of political and economic phenomena, and diagnoses and prescriptions to policy puzzles. They also help political actors develop ideas and narratives that are consistent with their ideological traditions and political goals.

But in this century, politics has often witnessed a backlash against the presence of intellectuals in political parties and in governments. This is likely due to the strengthening of the parallel tradition of anti-intellectualism, which was always (and still is) active in various polities.

This tradition has been more active in right-wing groups. It was especially strengthened by the rise of populist politics in many countries in the 2010s. But mainstream political outfits in Europe and the US still induct the services of intellectuals, even though this ploy has greatly been eroded in the Republican Party in the US after it wholeheartedly embraced populism in 2016, and still seems to be engulfed by it. 

Since the 1930s, the Democratic Party in the US has always had the largest presence of intellectuals in it. This policy was initiated during the four presidential terms of the Democratic Party’s Franklin D. Roosevelt (1932-45), during which time a large number of intellectuals were inducted. Their role was to aid the government in bailing the US out of a tumultuous economic crisis, and to develop a narrative to neutralise the increasing appeal of organisations on the far right and the far left. This tradition of inducting intellectuals continued to be employed by the Democrats for decades.

Interestingly, even though the Republican Party has had an anti-intellectual dimension ever since the early 20th century, it carried with it intellectuals to counter intellectuals active in the Democratic Party. This was specifically true during the presidencies of the Republican Ronald Reagan (1981-88) who was, in fact, propelled to power by an intellectual movement led by conservatives and some former liberals. This movement evolved into becoming ‘neo-conservatism’ during the Reagan presidencies. Britain’s Labour Party and Conservative Party have carried with them intellectuals as well, especially the Labour Party.

Some totalitarian regimes too employed the services of intellectuals in the Soviet Union, Germany and Italy. The Soviet dictator Stalin was not very kind to intellectuals, though. But intellectuals played a major role in shaping Soviet communism. Hitler’s Nazi regime had the services of some of the period’s finest minds in Germany, such as the philosophers Carl Schmitt and Martin Heidegger, the logician Rudolf Carnap, and a host of others.

They helped Hitler mould Nazism into an all-encompassing ideology. Just how could some extremely intelligent men start to both romance as well as rationalise a brutal ideology is a topic that has often been investigated, but it is beyond the scope of this column.

In Pakistan, three governments banked heavily on intellectuals to formulate their respective ideologies, narratives and economics. The Ayub Khan dictatorship (1958-69) carried scholars who specialised in providing ‘modernist’ interpretations to various traditional aspects of Islam. This they did to aid Ayub’s modernisation project. The intellectuals included the rationalist Islamic scholars Fazalur Rahman Malik and Ghulam Ahmad Parwez, and, to a certain extent, the progressive novelist Mumtaz Mufti and Justice Javed Iqbal, the son of the poet-philosopher Muhammad Iqbal. The writer Qudrat Ullah Shahab was Ayub’s Principal Secretary.

Z.A. Bhutto’s Pakistan Peoples Party (PPP) was studded with intellectuals who remained active in the party during at least the first few years of Bhutto’s regime (1971-77). These included the Marxist theorist JA Rahim who (with Bhutto) wrote the party’s ‘Foundation Papers’ and then its first manifesto. He also served as a minister in the Bhutto regime till his acrimonious ouster in 1975.

Then there was Dr Mubashir Hassan, who was the main theorist behind PPP’s concept of a ‘planned economy’. He served as the Bhutto regime’s finance minister. The intellectuals Hanif Ramay and Safdar Mir wrote treatises to counter the ideologies of the Islamists. Ramay also formulated the party’s core ideology of ‘Islamic socialism’. The lawyer and constitutional expert Hafeez Pirzada too was a founding member of the party. He was one of the main authors of the 1973 Constitution.

The Ziaul Haq dictatorship adopted the Islamist theorist Abul Ala Maududi as the regime’s main ideologue. Maududi was also the chief of the Jamaat-i-Islami (JI). Zia, when he was a lieutenant general in the early 1970s, used to distribute books written by Maududi to his officers and soldiers. Maududi passed away in 1979, just two years after Zia overthrew the Bhutto regime. But Zia continued to apply Maududi’s ideas to his dictatorship’s ‘Islamisation’ project.

Zia also had the services of the prominent lawyers AK Brohi and Sharifuddin Pirzada. Brohi and Pirzada were instrumental in formulating the murder charges against Bhutto. In his book, Betrayals of Another Kind, Gen Faiz Ali Chisti wrote that Brohi and Pirzada encouraged Zia to hang Bhutto, which he did. Pirzada also wrote oaths for judges sworn in by Zia that omitted the commitment to protect the Constitution. He would go on to do the same for the Musharraf dictatorship (1999-2008). In fact, Sharifuddin Pirzada had also served the Ayub regime.

The rise of populist politics in the second decade of the 21st century has greatly diminished the role of intellectuals in political parties and governments. This is because populism is inherently anti-intellectual. It perceives intellectuals as being part of a detested elite. Therefore, for example, one never expected intellectuals of any kind in Imran Khan’s Pakistan Tehreek-i-Insaf (PTI). This is why the nature of this party’s narrative is ridiculously contradictory and even chaotic.

However, in a January 2022 essay for The Atlantic, David A. Graham wrote that it’s not that intellectuals have vanished from political parties. Rather, due to populism’s anti-intellectual disposition, they have purposely dumbed down their ideas.

According to Graham, “This is the age of smart politicians pretending to be stupid.” If stupidity can now attract votes and save the jobs of intellectuals in parties and governments, then smart folks can act stupid in the most convincing manner. Even more than those who are actually stupid.

Imran Khan alone is not to blame

Pervez Hoodbhoy in The Dawn

PAKISTAN’S mad rush towards the cliff edge and its evident proclivity for collective suicide deserves a diagnosis, followed by therapy. Contrary to what some may want to believe, this pathological condition is not one man’s fault and it didn’t develop suddenly. To help comprehend this, for a moment imagine the state as a vehicle with passengers. It is equipped with a steering mechanism, outer body, wheels, engine and fuel tank.

Politics is the steering mechanism. Whoever sits behind the wheel can choose the destination, speed up, or slow down. Choosing a driver from among the occupants requires civility, particularly when traveling along a dangerous ravine’s edge. If the language turns foul, and respect is replaced with anger and venom, animal emotions take over.

Imran Khan started the rot in 2014 when, perched atop his container, he hurled loaded abuse upon his political opponents. Following the Panama exposé of 2016, he accused them — quite plausibly in my opinion — of using their official positions for self-enrichment. How else could they explain their immense wealth? For years, he has had no names for them except chor and daku.

But the shoe is now on the other foot and Khan’s enemies have turned out no less vindictive, abusive and unprincipled. They have recorded and made public his recent intimate conversations with a young female, dragged in the matter of his out-of-wedlock daughter, and exposed the shenanigans of his close supporters.

More seriously, they have presented plausible evidence that Mr Clean swindled billions in the Al Qadir and Toshakhana cases. Which is blacker: the pot or the kettle? Take your pick.

Everyone knows politics is dirty business everywhere. Just look at the antics of Silvio Berlusconi, Italy’s corrupt former prime minister. But if a vehicle’s occupants include calm, trustworthy adjudicators, the worst is still avoidable. Sadly Pakistan is not so blessed; its higher judiciary has split along partisan lines.

The outer body is the army, made for shielding occupants from what lies outside. But it has repeatedly intruded into the vehicle’s interior, seeking to pick the driver. Free-and-fair elections are not acceptable. Last November, months after the Army-Khan romance soured, outgoing army chief General Qamar Javed Bajwa confessed that for seven decades the army had “unconstitutionally interfered in politics”.

But a simple mea culpa isn’t enough. Running the economy or making DHAs is also not the army’s job. Officers are not trained for running airlines, sugar mills, fertiliser factories, or insurance and advertising companies. Special exemptions and loopholes have legalised tax evasion and put civilian competitors at a disadvantage.

A decisive role in national politics, whether covert or overt, was sought for personal enrichment of individuals. It had nothing to do with national security.

While Khan has focused solely on the army’s efforts to dislodge him, his violent supporters supplement these accusations by disputing its unearned privileges. When they stormed the GHQ in Rawalpindi, attacked an ISI facility in Pindi, and set ablaze the corps commander’s house in Lahore, they did the unimaginable. But, piquing everyone’s curiosity, no tanks confronted the enraged mobs. No self-defence was visible on social media videos. The bemused Baloch ask, ‘What if an army facility had been attacked in Quetta or Gwadar?’ Would there be carpet bombing? Artillery barrages?

The wheels that keep any economy going are business and trade. Pakistanis are generally very good at this. Their keen sense for profits leads them to excel in real-estate development, mining, retailing, hoteliering, and franchising fast-food chains. But this cleverness carries over to evading taxes, and so Pakistan has the lowest tax-to-GDP ratio among South Asian countries.

The law appears powerless to change this. When a trader routinely falsifies his income tax return, all guilt is quickly expiated by donating a dollop of cash to a madressah, mosque, or hospital. In February, the pious men of Markazi Tanzeem Tajiran (Central Organisation of Traders) threatened a countrywide protest movement to forestall any attempt to collect taxes. The government backed off.

The engine, of course, is what makes the wheels of an economy turn. Developing countries use available technologies for import substitution and for producing some exportables. A strong engine can climb mountains, pull through natural disasters such as the 2022 monster flood, or survive Covid-19 and events like the Ukraine war. A weak one relies on friends in the neighbourhood — China, Saudi Arabia, and UAE — to push it up the hill. By dialling three letters — I/M/F — it can summon a tow-truck company.

The weakness of the Pakistani engine is normally explained away by various excuses — inadequate infrastructure, insufficient investment, state-heavy enterprises, excessive bureaucracy, fiscal mismanagement, or whatever. But if truth be told, the poverty of our human resources is what really matters.

For proof, look at China in the 1980s, which had more problems than Pakistan but which had an educated, hard-working citizenry. Economists say that these qualities, especially within the Chinese diaspora of the 1990s, fuelled the Chinese miracle.

The fuel, finally, is the human brain. When appropriately educated and trained, it is voraciously consumed by every economic engine. Pakistan is at its very weakest here. Small resource allocation for education is just a tenth of the problem.

More importantly, draconian social control through schools and an ideology-centred curriculum cripples young minds at the very outset, crushing independent thought and reasoning abilities. Leaders of both PTI and PDM agree that this must never change. Hence Pakistani children have — and will continue to have — inferior skills and poorer learning attitudes compared to kids in China, Korea, or even India.

The prognosis: it is hard to see much good coming out of a screeching catfight between rapacious rivals thirsting for power and revenge. None have a positive agenda for the country.

While the much-feared second breakup of Pakistan is not going to happen, the downward descent will accelerate as the poor starve, cities become increasingly unlivable, and the rich flee westwards. Whether or not elections happen in October and Khan rises from the ashes doesn’t matter. To fix what has gone wrong over 75 years is what’s important.

Re-imagining Pakistan : Miftah Ismail

 

Prof Raja Sajjad talks about Kashmir history

 

How China changed the game for countries in default

Robin Wigglesworth and Sun Yu  in The FT

Zambia, struggling from an economic and financial crisis compounded by the Covid-19 pandemic, first missed an interest payment on its international bonds. Two and a half years later it remains in limbo, unable to resolve the default on most of its $31.6bn debts. 

That an impoverished and vulnerable country has for so long unsuccessfully laboured to reach a deal with creditors and move on from the crisis is an illustration of the messy process to deal with government bankruptcies, which some experts fear has now broken down completely. 

The consequences could be severe for the spate of countries that have recently defaulted on their debts, and the topic has been high on the agenda of this week’s spring meetings of the IMF and World Bank in Washington. 

In her opening remarks at those meetings, the IMF’s managing director Kristalina Georgieva noted that about 15 per cent of low-income countries were already in “debt distress” and almost half were in danger of falling into it. 

“This has raised concerns over a potential wave of debt restructuring requests—and how to handle them at a time when current restructuring cases are facing costly delays, Zambia being the most recent example,” she told attendees.  

While domestic laws and judges govern the bankruptcies of companies and individuals, there is no international law for insolvent countries — only a chaotic, ad hoc process that involves working through a hodgepodge of contractual clauses and tacit conventions, enduring tortuous negotiations and navigating geopolitical expediency. 

A decade ago, US-based hedge fund Elliott Management exploited that landscape to notch up several lucrative victories by suing defaulters for full repayment of their debts. But this fragile patchwork is now under threat of unravelling completely due to the emergence of a new, disruptive, opaque and powerful force in sovereign debt: China. 

Some experts say Beijing’s lending spree to developing countries and refusal to play by western-established rules represents the single greatest impediment to government debt workouts and threatens to leave some countries in debt limbo for years. 

But Yu Jie, a senior research fellow on China at think-tank Chatham House, believes Beijing’s stance “is less about economic rationalities and more about geopolitical competition”. 

“The multilateral financial institutions are run largely by Americans and Europeans. China had hoped to be able to shape the agenda of debt relief, not to have it dictated by the west,” she says. 

Jay Newman, the former Elliott fund manager who successfully sued Argentina for $2.4bn after its 2001 debt restructuring, says the emergence of China as a significant player has left the entire system in uncharted waters. “You now have one big state creditor with the power to dictate terms and the patience not to make a deal if it doesn’t suit them. It has completely changed the game.” 

The new landscape 

In a grim sign of the times, Alvarez & Marsal — one of the world’s biggest corporate bankruptcy advisers — this year set up a sovereign practice for the first time. Underscoring its expectations for the business, it hired Reza Baqir, a former senior IMF official and governor of Pakistan’s central bank, to lead the new unit. 

The potential is clear. The latest IMF data from the end of February indicates that nine poorer countries — such as Mozambique, Zambia and Grenada — are already in what it terms “debt distress”, while another 27 countries are at “high risk” of falling into it. A further 26 more are on the watchlist. Baqir points out that there are also a lot of struggling state-controlled companies in these countries that will need help as a result. 

“The timing was right” for A&M to set up a sovereign advisory unit, he says. “Given that there are more than 50 countries in various stages of debt distress there is an opportunity for a more holistic approach.” 

Baqir is among those that say the debt restructuring process is broken, largely because it was primarily designed for a bygone era, when creditors were overwhelmingly western countries and western banks. 

Decades ago, the Paris Club was formed to co-ordinate between government creditors, while bankers formed the London Club to restructure their debts. Broadly speaking, western governments drove the process, and occasionally leaned on banks to accept painful settlements. It was largely improvised and often slow, but it mostly worked. 

But the decline of bank lending and the growth of the bond market shook things up in the spate of sovereign defaults that started in the early 1990s. Creditor co-ordination became trickier with myriad bondholders trading claims around the world, rather than just a handful of banks. 

Argentina’s default on $80bn of bonds in 2001 led to years of fights between Buenos Aires and investors such as Elliott, which refused to accept the terms agreed by other creditors. At one point the hedge fund famously seized an Argentine naval vessel when it docked in Ghana. Its reputation became such that bondholders would sometimes invoke the mere spectre of Elliott to scare countries contemplating a default, while policymakers used it as prima facie evidence of the sovereign debt restructuring system’s weaknesses. 

In the wake of the Argentine debacle the IMF responded by attempting to set up a kind of bankruptcy court for countries with itself as judge. But the sovereign debt restructuring mechanism foundered after attracting little support from the IMF’s biggest shareholders. Instead, the US championed the insertion of “collective action clauses” into bonds, which compel recalcitrant creditors to accept a restructuring agreement made by a majority. After Greece’s debt restructuring in 2012 these CACs were beefed up further. 

However, many bonds still lack these clauses. Moreover, they can only help ease a restructuring agreement once it is struck. Many experts point out that they do nothing to solve the biggest fundamental problem: countries are far too slow to seek a debt restructuring as they are wary of a messy process with the potential of worsening an economic crisis and the inevitable political humiliation of defaulting. 

“If I was a finance minister, I’d find it hard to tell my prime minister that we have a clean framework to work with,” says Baqir. 

When they are finally forced into a debt restructuring, the financial relief that countries secure is often too little to ensure a durable upswing. In the few cases where it does clean up their balance sheet, it sometimes only leads to another debt binge. 

This flawed process has now been further complicated — some say wrecked — by China’s vast lending programme across the developing world over the past decade. Many of these loans are opaque in size, terms, nature and sometimes even existence. 

The overall size of the lending programmes is hard to judge, given that China does not report most of it to the likes of the IMF, OECD or Bank for International Settlements. But AidData, a development think-tank based at William & Mary’s Global Research Institute, estimates that the loans amount to about $843bn. China is not a member of the Paris Club, and in most cases the loans are made by its myriad state-owned or merely state-controlled banks, muddling things further. 

It’s like the international financial policy community spent the past decade trying to clean up around the street light, oblivious to the mounds of rubbish piling up unseen around the rest of the darkened street, says Anna Gelpern, a professor of law and international finance at Georgetown University. 

“We spent 20 years focusing on contractual tweaks, assuming that bonds were the problem,” she says. “The problem is the state of global politics, and the fate of low-income countries just isn’t a big priority anywhere.” 

Life in default 

Zambia is a prime example. Of the roughly $20bn of external debt that the IMF tallied when forming its programme in 2022, $2.7bn was lent by international development banks, $1.3bn comes from various western governments, bank loans come to $1.6bn, local kwacha-denominated bonds held by non-residents are $3.3bn and international dollar-denominated bonds account for $3.3bn. But the biggest chunk is nearly $6bn owed to China. 

The IMF has reached a support agreement with Zambia that is conditional on its debt burden becoming sustainable. But other bondholders do not want any relief they offer to simply go towards paying off China. Beijing has in principle agreed to accept a “haircut” on its debts, but experts say it appears to not want anything it offers to go towards improving the recovery of private creditors, leading to the impasse. 

In the meantime, Zambia says it has accumulated about $1.2bn in arrears since its default. Including missed payments to various government contractors, the IMF has estimated that the arrears are actually nearly $3bn. 

Highlighting how China also appears to be leveraging these situations to undermine the western-designed global financial architecture, in January it called for international organisations such as the IMF and World Bank to participate in the debt restructuring. This would overturn half a century of convention that these organisations are “super-senior” creditors exempt from debt restructurings, as participating would imperil their ability to lend to other countries. 

One senior adviser to the Chinese government says that “there is no law that requires World Bank loans to be prioritised” and that the country was “not happy” with a practice that originated in an era when western countries were generally the only creditors. “If we allow the World Bank to take precedence over us, we need to have bigger voting rights and take larger stakes at the bank. China’s duty doesn’t match its rights in development finance.” 

Another increasingly common wrinkle in debt restructuring is what to do with domestic bonds, which local banks and financial companies have often gorged upon. Here too, Zambia is a good example. 

The $3.3bn of local currency bonds held by non-residents have also been cordoned off from the debt restructuring. Lusaka fears that reducing the value of kwacha bonds could wreck its banking industry and do more damage than they are worth. But some holders of other international bonds argue that they should also be included in the restructuring. 

“In the sovereign debt restructuring business we didn’t really think much about local debts,” says Lee Buchheit, a leading lawyer in the field. “There often wasn’t much of it, and we always assumed that the sovereign has a much broader palate of mechanisms it can use to deal with domestic debt.” 

But what to do about Zambia’s Chinese loans remains the thorniest issue and has risen to the highest levels in Washington and Beijing. US Treasury secretary Janet Yellen this year raised the stand-off with Chinese president Xi Jinping’s economic adviser Liu He, and said that it had “taken far too long already to resolve this matter” when she visited Lusaka in January. 

China’s exceptionalism? 

For the most part, experts say China seems mostly content with rolling its debts rather than restructuring them, handing out new loans to ensure that its domestic banks can be repaid in full. But it prefers to act alone, at its own pace, and feels no need for transparency. 

A recent paper by several economists, including Harvard University’s Carmen Reinhart, estimated that China has made 128 bailout loans worth $240bn to 20 distressed countries between 2000 and 2021. About $185bn was extended over the last five years of the study, and more than $100bn in 2019-21. 

Reinhart says that China’s lending stands out for its “extreme” opacity but stresses that its overall behaviour is not as unusual as some people say. “China is really playing hardball because it is a major creditor. US commercial banks also played hardball back in the 1980s,” she says. Baqir agrees, saying: “Whatever the colour or creed of a creditor, creditors think like creditors.” 

The Chinese government adviser also points to factors such as the country’s relative inexperience with debt workouts. “China is still at an early stage in coming up with its debt relief programme,” he says. 

Incomplete domestic financial reforms have also made it harder to offer debt relief to overseas creditors, while some Chinese banks are also struggling with big hits from the country’s wilting real estate sector. 

“We need co-ordination from the top level, which now has other priorities,” the adviser says. He also points out that the pressure on developing countries has intensified following a series of US interest rate rises, and that as a result Washington “should be responsible for the debt trap”. 

But whatever the root cause, most agree on the end result. “All of this [creditor] fragmentation is leading to paralysis,” says Sean Hagan, a former general counsel at the IMF who now teaches international law at Georgetown. 

 There are few solutions being floated around. The IMF in February announced a new Global Sovereign Debt Roundtable to bring together the full gamut of creditors and debtors, and hopefully thrash out ways to “facilitate the debt resolution process”. It is an initiative that few experts harbour much hope for. 

Buchheit likens the impact of an assertive new player on an already fault-riddled debt restructuring system to someone having a bad cold that a doctor struggles to treat, who is then impaled by a spear. “The cold hasn’t gone away, but the doctor is likely to focus more on the spear,” he says. 

Ironically, both Buchheit and Newman — who clashed many times over the years as the leading lawyer for and suer of bankrupt countries — advocate for the same basic approach: countries should restructure the debts they can, remain in default to China, and the IMF should drop its “kumbaya” approach and accept semi-permanent arrears to its biggest shareholders. 

But most expect Zambia-like debt limbo to be the likeliest outcome for a lot of countries. “I suspect this is going to be a recurring problem,” says Reinhart. “And the longer these countries are in the [debt] netherworld . . . the [more the] fabric of the country is affected.”  

"Suella Braverman is right on Pakistani Punjabi Men"

 

Democracy in Pakistan: Of the elite, for the elite, by the elite

 Civilians and the military have taken turns to rule Pakistan, but the system, arguably, has remained the same, ‘unscathed’ by democracy writes Touqir Hussain in The Dawn  

One of the most perplexing debates around is on the subject of democracy, where it is easy to confuse concept with practice, form with substance and illusion with reality.

There is another problem. Countries at varying stages of democratic evolution are all called a democracy, which adds to the confusion, as we, in our mind, expect all these models to be equally responsive in meeting the needs of society. That makes us tolerate and endure a system that is not quite democratic and may never become so.

In Pakistan, democracy remains both illusive and elusive. What we have is something that looks like democracy, but does not work like one. Democracy is a dynamic, not static, process but Pakistan’s “democracy” is stuck.

If any “good” has come out of the current crisis, it is hopefully the realisation that the conventional wisdom that Pakistan’s problems are due to a lack of civilian supremacy, or because the “democratic system” has faced repeated interruptions by the military rule, or that elected governments have not been allowed to complete their full term may not be quite true.

Has the current crisis — and the way politicians’ brazen preoccupation with the struggle for power is ripping the country apart while it burns — left any doubt that the “democracy” we have has been part of the problem, not the solution? In fact, it is this very “democracy” that has provided legitimacy to bad governance, produced weak governments opposed to reforms for fear of losing elections, and has kept recycling. Above all, it has lacked substance.

Form and substance

True democracy has both form and substance. The form manifests itself in electoral democracy, sustained by a process of free and fair elections, and peaceful and orderly change of governments. But the form must embody good governance to empower people, and it can do so only by resting on free and representative institutions, constitutional liberalism or any other value-based system, strong rule of law, and a just and equitable social order. That is the substance. Without substance, democracy remains hollow. It has no soul.

The intelligentsia in Pakistan, especially the liberal/secularist segment, is most passionate about the Western liberal model focusing on freedom of choice, free speech, civil liberties, independent judiciary, and of course elections.

Much of this class lives emotionally disconnected from the rest of the population and their harsh challenges of survival and means to cope with them. It feels that all you need is elections, free media, independent judiciary, and the Constitution.

Voila! You have democracy — and it will take care of the nation’s problems, including those of the poor.

Democracy and progress

The secular/liberal class as a whole, and Western-oriented sections of it in particular, are right in seeing a causal connection between democracy and progress in advanced industrialised countries. They are, therefore, justified in emulating a similar democratic political system and having high expectations from it.

Where they are at fault is that they do not grasp the full picture. Most of them forget that democracy, which ostensibly brought progress in the West, was more than a political system. It was also a society’s organising idea, whose substance was equality of opportunity, fairness, rule of law, accountability, safeguarding of basic human rights and freedoms, gender equality and protection of minorities.

In sum, democracy’s core idea was humanism. And the whole objective of giving people the right to choose who will govern them on their behalf was to ensure the implementation of this very ideal.

Otherwise, what is the purpose of self governance? Given the chance to self govern, would people like to bring themselves to grief with their own policies? Certainly this was not the intent.

Unless a nation shows this fundamental understanding of democracy and takes steps to put itself on the road to democracy, it will never get there. It will keep moving in circles or going backwards.

The poor cannot ‘feed’ on democracy

For much of the liberal class in Pakistan, especially its more affluent stratum, the form is the substance. It looks at democracy as simply black and white — there can be no gradation. 

Pakistan’s “democracy” is advanced enough to satisfy the liberals’ love of liberty and enjoyment of certain human freedoms, but regressed enough to be exploited by the elite for their purposes at the expense of the people.

In her book, ‘Thieves of State’, Sarah Chayes focuses on corruption in Afghanistan. Sarah, who spent a decade in Kandahar, concludes that the concerns of most people did not have much to do with democracy. Pakistan is, of course, no Afghanistan but the book has a message that applies here as well.

Democracy is no doubt the best form of government but go and ask the masses in societies that are grappling with serious state and nation-building challenges what is most important in their lives. What is important for them, they will tell you, is social and economic justice, human security and dignity and the hope for a better future. And they will like any government that provides this kind of life.

A USAID official once asked me what the people of Pakistan want. Development or democracy? Prompt came my reply — if democracy brings development, they want democracy; if it does not, they want development.

Basically, you need a democracy that satisfies the human aspirations for freedom as well as improves the quality of life for citizens at large. 

Pakistan’s ‘democracy’ a political tool for power

In Pakistan’s case, “democracy” is just a political tool for the dominant social groups to maintain their wealth and status. The other instrument is military rule.

But the beneficiaries are roughly the same in both models — the whole panoply of power comprising the top tier of politicians, bureaucrats, the military and judiciary, “business folk and the landed”, who among them monopolise the country’s economic resources.

The civil and military leaderships may compete for power, but eventually cooperate to maintain the status quo. Both use each other — the military using the failure of the politicians as a pretext to come to power or to dominate it, and politicians using the alibi of military interruption or dominance for their own failure. They are allies as well as rivals.

In Why Nations Fail, Daron Acemoglu and James Robinson trace the evolution of political and economic institutions around the globe and argue that nations are not destined to succeed or fail due to geography or culture, but because of the emergence of extractive or inclusive institutions within them.

They write:

“Extractive political institutions concentrate power in the hands of a narrow elite and place few constraints on the exercise of this power. Economic institutions are then often structured by this elite to extract resources from the rest of the society. Extractive economic institutions thus naturally accompany extractive political institutions. In fact, they must inherently depend on extractive political institutions for their survival … political institutions enable elites controlling political power to choose economic institutions with few constraints of opposing forces. They also enable the elites to structure future political institutions and their evolution.”

In light of their thesis, we can see how powerful groups or institutions have long dominated Pakistan’s body politic by taking advantage of its security issues, place of religion in its national makeup and its feudal social structure. The political system that emerges from this body politic is designed to empower only the powerful and privileged and does little to foster the rule of law.

Musical chairs

Civilians and the military have taken turns to rule Pakistan, but the system, arguably, has remained the same, ‘unscathed’ by democracy. There was no fear of accountability, and no obstacle to electability. They did not need the people, so they did very little for them. And neither of them faced the full wrath of the public as each deflected the blame on to the other.

When the cost of maintaining a “democracy” led by civilians would become unbearable, we would tolerate the army’s intervention to help us get rid of them. But instead of returning to the barracks, the military would stay on. Then we’d long for democracy, which would let us down yet again. The fact is that no institution is solely responsible for democracy’s misfortunes in Pakistan. They all provided opportunity to each other to come to power and supported the system.

In the civilian edition that now comprises the ruling coalition, politicians may be divided into political parties but are united by the elites. Henceforth, whichever party comes to power when the ongoing bloody struggle for power is over, it will likely be no different from others in being invested in the system. It may disrupt the system, but will not threaten it.

Liberty and order

Even if Pakistan had a fully functional Western liberal democracy, it was not going to solve the country’s fundamental challenges. The fact is the Western liberal democratic model has become too competitive. In their book, ‘Intelligent Governance for the 21st Century’, Nicolas Berggruen and Nathan Gardels challenge the view that the liberal democratic model is intrinsic to good governance. Examining this in relation to widely varying political and cultural contexts, especially the Chinese system, the authors advocate a mix of order and liberty.

When asked once on the Charlie Rose Show what he thought of Western democracy, Lee Kuan Yew — the inaugural prime minister of Singapore — replied that the system had become so competitive and combative that in order to come to power, the opposition spent all its time planning to undermine the incumbent government by misrepresenting or distorting issues and thus misleading the public. “It would be a sad day when this kind of democracy comes to Singapore,” he said.

In his classic, The Future of Freedom, Fareed Zakaria states that Singapore follows its own brand of liberal constitutionalism, where there are limits on political freedoms — and it happens to be one of the most self-content countries in the world.

It boggles one’s mind that we in Pakistan tolerate the civil-military led political and governance structure, which is rigged in favour of the elite, while using the full freedom of a democratic system to play the game of politics at people’s expense. We put up with it as if this behaviour is an acceptable price to be a “democracy”, which incidentally does not quite happen to be a democracy. Indeed, there are institutions that one finds in a democratic system, but they lack autonomy and integrity. They have failed in the moral strength to serve the people, but not in the capacity to sustain the system.

You can see how millions of good Pakistanis are glued to TV or their phones every day following the comings and goings of politicians as if they were going to solve the country’s problems. We forget that their fights are about themselves, among themselves.

Democratisation is a revolutionary struggle

You cannot change what you do not know. The creation of a true democracy is a revolutionary struggle. And it must begin with the realisation that the “democracy” we have will not solve our problems regardless of who is in power. We cannot also bank on this “democracy” to become democracy by itself.

Countries change not because they have become democratic. They become democratic because they have changed. In many ways, democratisation is a painstaking struggle, indistinguishable from state and nation-building. Progressive movements and the civil rights campaign in America, political and social movements in Europe and the Meiji Restoration in Japan are a few such instances.

How will this change occur in Pakistan?

That is the subject of a much wider and complex debate. Briefly, one can say the following: Pakistan has enormous strengths — remarkable resilience, faith-based optimism, a sense of exceptionalism, a vibrant media and a promising civil society.

There is enormous talent available within the country — academics, journalists, authors (many of them internationally acclaimed), political activists, retired public servants — both civil and military — who all have shown extraordinary knowledge and commitment to Pakistan. They can inspire and mobilise the young generation yearning for true change that could provide stimulus and critical mass for social movements.

That will be the purpose of social movements — to remove the obstacles to a genuine democracy in Pakistan. These include a misplaced focus on faith that has fostered extremism and hindered openness and tolerance, and a feudal dominance that has inhibited education, gender equality, openness to modern ideas and a credible political process.

Not to mention the military’s pre-eminence that has led to the dominance of security over development. The latter has skewed national priorities and resource allocation. All this is hardly a life-supporting environment for democracy.

Can Pakistan truly become democratic? Yes, it can. Whether it will; remains to be seen.