Imran Khan’s
inaugural address
Rashed Rahman
Prime Minister (PM)
Imran Khan delivered his inaugural address to the nation on August 19, 2018,
one day after taking oath of office. Given the occasion, this is perhaps not a
day for regurgitating the whole saga surrounding these controversial elections
that paved the way for his long held ambition to ascend to power. Instead, in
the long cherished tradition of responsible journalism, let us examine what the
new PM said, the obstacles in his path, and the difficult task of managing the
runaway expectations from him and his government, fuelled and fed as they are
by his lofty (acerbic against political rivals) rhetoric.
First and
foremost, a toast to the return to good sense and a demeanour that becomes the
PM. Unlike his first address immediately after the elections when he sounded
positively statesmanlike, Imran Khan lost his cool in reaction to the protest in
the first session of the National Assembly by the PML-N and other opposition
parties (not the PPP, let it be noted) regarding alleged rigging in the
elections. Imran Khan the statesman gave way to Imran Khan the
agitator-on-top-of-a-container. If he has cooled down and good sense has
returned, as evidenced by his eschewing his trademark attacks on political opponents
in his inaugural address, the result is the best proof of the best course for
him: sounding positively prime ministerial.
As to the
content of his inaugural address, it tries to be all things to all men, but the
constraints on well intentioned reforms in various fields and therefore the
need to prioritise tasks in order to allocate scarce resources optimally, i.e.
a plan, appears conspicuous by its absence. To be fair though, some challenges
automatically promote themselves to the top of the new government’s to-do list.
Amongst these
frontline contenders, the economy and foreign relations (and the relationship
between the two) assumes pride of place. Foreign debt has soared, according to
the new PM, from Rs 6,000 billion in 2008 to Rs 28,000 billion in 2018. So much
so that according to the PM, the interest on this debt cannot be paid without
more borrowing. This is a classic debt trap, in which the borrowing country is
unable to service its debt liabilities without further loans. Debt in this
situation therefore is more likely to go up exponentially rather than be incrementally
retired. While PM Imran Khan and his government go searching for short term
solutions, whether through bilateral loans from China and Saudi Arabia or
Eurobonds to attract expatriate Pakistanis or (horror of horrors!) returning to
the IMF for another bailout, they also need to revisit the structural
constraints that condemn the economy because of the model of development being
followed to a perpetual and ever increasing debt mountain. Pakistan’s economy
at a glance betrays a mixed and somewhat stagnant picture. Agriculture chugs
along, with or without incentives. The services sector is the new attraction
for some years now, but its contribution to GDP or employment is limited at
best. The real crisis is in the industrial sector.
Existing industry,
with its leading light textiles leading the debacle, is on the verge of
collapse. Apart from lack of incentives (export-oriented amongst them), energy
shortages, terrorism and related security issues, and lack of ease in doing
business have ensured that both foreign and domestic investors turn away from
Pakistan as a destination of choice. In today’s world, the received mantra is
private capital providing the engine of the economy. But in Pakistan (and
similar developing countries), what do you do when private capital is shy as a
whole or in particular, critical, but relatively lower-return-on-capital
sectors?
To illustrate
the conundrum, with all the reservations and critique of Zulfikar Ali Bhutto’s nationalisation
of the commanding heights of the economy in the 1970s and its debacle at the
hands of the bureaucrats in whose hands Bhutto erroneously transferred the
responsibility of running these commanding heights instead of competent
professionals, the fact remains that that the steel mill came on line then, investment
in heavy engineering as the base of an economy no longer dependent on plant and
machinery imports was initiated. This thrust was correct but the bureaucrats
ran the industries and commercial entities entrusted in their care into the
ground. The fault lay not with them, untrained as they were for the task, but
with the authors of nationalisation who made little or no effort to replace
dyed-in-the-wool bureaucrats with competent and efficient professionals.
Learning from
that experience and global developments, there are few if any economies where
the private and state sector both do not have a role. Where private capital is
shy, the state steps in with investment in critical sectors. This argument has
to be placed in the context of the solution to Pakistan’s underdevelopment. No
successful economic transformation since WWII has taken place in any
underdeveloped country without industrialisation. The nationalisation-privatisation
debate and the other constraints referred to above have virtually brought a
halt to green shoots (fresh) industrial investment in Pakistan. This should be
the long term priority of the new government after getting over the immediate
hiccups of external account deficits and foreign debt servicing if the PTI
government’s ambitious agenda of (10 million) jobs creation is to have any
chance.
Foreign policy
presents tricky ground. The US has finally taken off its soft mask since 9/11
to turn off the financial tap. Without visible progress in restraining if not
exporting the Afghan Taliban and Haqqani Network fighters on Pakistani soil,
don’t hold your breath for any respite from Washington. This cannot be
accomplished without bringing the military on board. This represents one of the
most difficult of foreign policy challenges for the PM and Foreign Minister
(for the second time) Shah Mahmood Qureshi. The PM’s expressed desire for
normalisation of relations with India has received a fillip from Indian PM
Narendra Modi’s invitation to a dialogue conveyed to PM Imran Khan on August
20, 2018. The track record shows however, that elected governments in the past
ran into trouble if they deviated from, or attempted to leap ahead of, the
military’s policy in these two areas. PM Imran Khan and his team therefore have
their task cut out for them in this regard. Settling the Afghan war and opening
at least a dialogue with India would reap dividends in reducing US hostility
and reopening the financial taps.
The rest of PM
Imran Khan’s agenda is focused on the social sector (health, education) and the
ruthless eradication of corruption. While there are few quibbles with the
former, the latter actually needs to be across the board (including the
military and judiciary sacred cows), politically non-partisan, and imbued with
the understanding that corruption at the top is the tip of a very large iceberg
that afflicts the system from top to bottom. It may take a considerable period
of time and effort informed by a holistic reform of the governmental system to
dent this endemic affliction.
Pakistan and the
world is watching. Time for PM Imran Khan to put his money where his mouth is
and perform to meet at least partially the high expectations from his government.
rashed-rahman.blogspot.com
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