Tuesday, June 28, 2022

Business Recorder Column June 28, 2022

New pink wave in Latin America

 

Rashed Rahman

 

Gustav Petro, a former M-19 guerrilla, was elected the first left-wing President in Colombia’s history on June 19, 2022 in a run-off that gave him 50.5 percent of the votes as against his right-wing rival Rodolfo Hernandez’s 47.2 percent. Long before another, better known guerrilla movement, the Revolutionary Armed Forces of Colombia (FARC) signed a peace agreement with the government in 2016, M-19 gave up armed struggle in 1990 and became a political party that helped rewrite the country’s Constitution. Eventually, Gustav Petro became a forceful opposition leader known for denouncing human rights abuses and corruption. He rose to become the capital Bogota’s mayor and is currently a Senator.

Petro’s victory has evoked a wave of joy and celebration amongst fellow Latin American Leftist leaders. The continent is currently in the midst of a second swing to the Left, dubbed a ‘second pink wave’. The ‘pink’ in that description refers to a left-wing trend that has some significant Latin American countries in its fold. Even though these left-wing governments are seen as more populist than ideological, social democratic rather than militantly revolutionary, they represent the second pink wave in the continent’s modern history. The countries that have moved to the left in their last elections are Argentina, Peru, Chile, Mexico, Bolivia and Honduras. Argentinian President Alberto Fernandez, Chilean President Gabriel Boric, Peru’s Pedro Castillo, Bolivia’s Luis Arce have all felicitated Gustav Petro on his victory. Mexico’s President Manuel Lopez Obrador has expressed the hope that Petro’s victory will help heal the wounds in a country where political assassinations have been rife. A 10-year Colombian civil war followed the 1948 assassination of Leftist presidential candidate Jorge Eliecer Gaitan, which proved to be a precursor of the six-decade armed conflict between the state and the leftist guerrillas of FARC and M-19. But Colombia was not alone in suffering these wounds.

During the Cold War, the US supported and facilitated ‘Operation Condor’ to subdue left-wing rebellions by guerrilla groups almost throughout Latin America. This operation, carried out by US-trained and -supplied Latin American armies in a continent swamped by military coups during the 1950s to the 1970s (with Washington’s blessing) yielded some 60,000 deaths due to assassinations carried out by the military and security services, 30,000 of these in Argentina alone. According to the Archives of Terror, 50,000 were killed, 30,000 disappeared, 400,000 were imprisoned. Cross-border operations (according to a 2002 source) resulted in 402 killed. Those in exile for fear of their lives were kidnapped, tortured and killed in US-allied countries or transferred to their home countries to be executed. Hundreds or thousands (the figures are difficult to pin down) were abducted, tortured and murdered. They included dissidents, leftists, union and peasant leaders, priests, nuns, students, teachers, intellectuals and suspected guerrillas. Their targets included guerrilla movements such as MIR, the Montoneros (ERP), Tupamaros, etc. But the bloody drive was expanded wholesale against all political opponents, their families and others by these military juntas. A short list of Leftist governments elected in Latin America and overthrown by US-sponsored or -supported military coups includes Guatemala 1954, Brazil 1964, Chile 1973 and Argentina 1976.

The pattern is clear. The poverty, deprivation and misery of the people of Latin America found expression in left-wing movements coming to power through the ballot box and being overthrown by military coups backed by Washington in the modern-day version of the Monroe Doctrine. This pattern had exceptions in the shape of left-wing guerrilla movements that challenged the military dictatorships during the 1960s and 1970s. Most were inspired by the Cuban revolution of 1959, but displayed a wide variety of strategies, including peasant-based guerrilla struggles and urban guerrilla struggles. Operation Condor was aimed at ensuring Washington’s imperialist hegemony in Latin America.

In the aftermath of the defeat of most if not all these guerrilla movements by the 1980s, the first pink tide emerged at the start of the 21stcentury. Countries that elected left-of-centre, left-leaning, radical social-democratic governments were dubbed ‘pink tide’ nations and the trend as ‘post-neoliberalism’ or ‘socialism of the 21stcentury’. The leftist governments of Argentina, Brazil and Venezuela were characterised as ‘anti-American’ (i.e. the US), ‘populist’ for their rejection of the neoliberal Washington Consensus, and ‘authoritarian’ (particularly Nicaragua and Venezuela).

This first pink tide was followed by a conservative, right-wing wave in the early 2010s as a direct reaction to the pink tide. Some have argued that this first pink tide was in fact two tides, the first from the late 1990s to the early 2000s and the second from the late 2010s to the early 2020s. This latter trend of the resurgence of a pink wave included Mexico 2018, Argentina 2019, Bolivia 2020, Chile, Honduras and Peru 2021, and now Colombia 2022.

Given the history of US hegemony over Latin America, the current pink tide has its task cut out for it, precisely because its attempts to wield its hold on power in favour of the poor, dispossessed and indigenous peoples will inevitably trigger US conspiracies to defeat and overthrow these left-wing governments. The only problem today however is that military coups are no longer in ‘fashion’. The abortive campaign to overthrow President Nicolas Maduro of Venezuela through parliament and via the ballot box failed, whereas the electoral defeat of Daniel Ortega in Nicaragua was transformed into electoral victory at the next election.

The US also has lost its ability to build a successful reactionary coalition of its Latin American allies to isolate and bring down left-wing governments. Washington’s recent Summit of the Americas was boycotted by some Latin American countries such as Mexico because the US had not invited Nicaragua, Cuba and Venezuela. Without overstating the case, it is to be hoped that Latin America has put the brutal past stoked by the US behind it and the Left has developed sufficient depth of support to be able successfully to ward off any attempts at regime change through foul means at the behest of the northern hegemon.

 

 

 

 

 

rashed.rahman1@gmail.com

rashed-rahman.blogspot.com

Tuesday, June 14, 2022

Business Recorder Column June 14, 2022

An unsustainable development model

 

Rashed Rahman

 

Far be it from me to add to the reams of newsprint and hours of air time devoted to the federal budget 2022-23 presented by Finance Minister Miftah Ismail in the National Assembly on Saturday, June 11, 2022. In any case, this traditional outpouring of analysis and comment is led by many much more competent than me in this field. However, it behoves me to touch on at least the most pertinent and important points of the budget in order to buttress my argument that Pakistan has incrementally over time arrived at an unsustainable model of economic development.

First, the facts. In their integrity statement to parliament required under the Public Finance Act as part of the federal budget, Miftah Ismail and his Secretary Finance Hamed Yaqoob Sheikh conceded that their mismanagement of contracts in their previous tenure was (is?) a major source of the current energy sector challenges. Further, the statement identifies domestic political uncertainty, the Ukraine war, higher provincial deficits and significant (continuing) losses and debt of state-owned enterprises as key risks to the budget and the medium term economic outlook.

The statement goes on to argue that subsidies, debt servicing and lower revenue collection because of import and demand contraction pose substantial risks to economic growth and the credibility of the budget’s fiscal and monetary projections. The power sector’s woes are highlighted as the high cost of generation, attributable to costlier (out of date?) technology and poorly designed contracts that result in exorbitant profits for private investors and front-loading of debt repayments during the first 10 years of plant operation, above average transmission and distribution losses and below average recovery of electricity bills. As a result of all these factors, the power sector is the largest recipient of subsidies currently.

Oil, gas and coal imports constitute a large portion of our import bill. Their global prices affect the price of various goods and services. The current volatility in the prices of these fuels is a major factor in burgeoning inflation, with its fallout on interest and exchange rates. Rising global prices of fuel and a falling rupee could produce lower GDP and revenue growth, feed into a higher current account and fiscal deficit, and increase public debt. The statement admits we do not have in place any fiscal buffers or a risk management framework for dealing with adverse shocks in the price of imported fuels.

While it is a given that the PML-N-led coalition government’s hands were tied to a considerable extent by the legacy of the Imran Khan government’s mismanagement, the critical question is whether the budget finds favour with the International Monetary Fund (IMF), without whose imprimatur we cannot hope to receive financial aid from other multilateral lenders nor our bilateral friends and allies. Already, the IMF has indicated the total unacceptability of the government's proposed relief in Personal Income Tax (PIT) of Rs 47 billion. The government will have no option but to change this proposal if it hopes to see desperately needed money rolling in.

Despite the budget’s claims of taxing the rich and giving relief to the poor, the people by and large are not impressed because their day to day lives and experience confront prices beyond the reach of the average household, with little or no hope of improvement in the foreseeable future. This federal budget has been dubbed a survivor’s budget. ‘Survival’ underlines the allocation of 57 percent of the budget’s outlay of Rs 9.5 trillion for debt interest payments (Rs 4.0 trillion) and defence (Rs 1.5 trillion). Since the remaining 47 percent is not enough, Rs 740 billion additional taxes have been imposed, of which the fuel levy alone will fetch Rs 300 billion (this levy having been raised from Rs 30 per litre to Rs 50). The banks and real estate, arguably two flourishing sectors in the present economic scenario, will be subjected to higher taxation. Meanwhile the inflation target of 11.5 percent seems unrealistic and not credible, judging by present  trends.

The shape of the real economy is at the heart of this seemingly endless economic crisis. Agriculture has suffered neglect and mismanagement over many years, resulting in, amongst other problems, inadequate water and fertilizer for food crops (particularly wheat, so much water having been diverted wastefully to sugarcane, driven by vested interest). The famed ‘bread basket’ of the entire Subcontinent in the past is today forced to contemplate import of even this essential staple food crop, wheat. Surviving industry in almost a half century of deindustrialisation in Pakistan remains uncompetitive internationally and therefore addicted to rent-seeking from the state in the form of various concessions (the textile industry first and foremost).

Pakistan has now solidly arrived in what is known as a debt trap: borrowing in order to repay past loans. In the absence of a turnaround in the real economy, Pakistan will continue to flounder, dependent wholly on the goodwill of the international lenders and those friends and allies still willing to bail us out (again and again). How long is this economic path (calling it a ‘model’ may be misplaced) sustainable and at what cost?

 

 

 

 

rashed.rahman1@gmail.com

rashed-rahman.blogspot.com

Friday, June 10, 2022

The June 2022 issue of Pakistan Monthly Review (PMR) is out

The June 2022 issue of Pakistan Monthly Review (PMR) is out. Link: pakistanmonthlyreview.com

Contents:

1. Gemini: The elephant in the room.

2. Tricontinental Institute for Social Research: Go to Yanan: Culture and National Liberation.

Rashed Rahman

Editor, Pakistan Monthly Review (PMR) (link: pakistanmonthlyreview.com)

Director, Research and Publication Centre (RPC) (on Facebook)

Tuesday, June 7, 2022

Business Recorder Column June 7, 2022

Grand dialogue: non-starter

 

Rashed Rahman

 

Prime Minister (PM) Shahbaz Sharif wants a ‘grand dialogue’ among all stakeholders to somehow keep sectors such as education, health and industries ‘above petty politics’. In fact, the PM, like many other well meaning commentators in Pakistan, want the economy as a whole to be taken out of the sphere of politics, implying that there is some irrefutable wisdom about how to go about development without allowing politics (meaning critical thought) to intrude. Such ideas have found traction since the decline of the Left worldwide and the wholesale embrace of a capitalist economy, disguised in such rubrics as a ‘Charter of Economy’. The fact is, however, that peeling politics away from economics is impossible.

In a class society attended by ethnic and sub-national deprivation of rights, exploitation by the federal state of smaller federating units and repression, asking for the economy to be ‘sanitised’ from politics is asking for the moon. Economics as a science has long ago deviated from its origins as ‘political economy’, since the pioneers being intellectually honest, could not deny that political considerations and interests dictated the form of the economy and how its benefits are distributed.

In any case, given the state of political polarisation in our country since the (perfectly legitimate) ouster of the Imran Khan government, any call for a grand dialogue that rises above partisan considerations in the interests of the country (whatever one’s reservations on the logic of the idea) predictably made shipwreck on the Pakistan Tehreek-i-Insaaf’s (PTI’s) outright rejection of the idea. The PTI went further in saying the only dialogue it wished to hold with the government was on fresh elections. In fact the entire thrust of Imran Khan and the PTI’s campaign since their government’s departure has been to put pressure on the government, establishment and judiciary to bring Imran Khan back into power. Unfortunately, Imran Khan’s increasing desperation, especially after the failed long march on Islamabad, has produced some outlandish statements from him. One such was the interview in which he, Cassandra-like, predicted an economic meltdown (without of course mentioning his contribution to an economy in free fall) that would not only cripple the armed forces and roll back our nuclear deterrent, but lead to the splintering of the country into three pieces (unless of course he was reinstalled in power). One cannot help but be intrigued how Imran Khan arrived at this ‘three pieces’ scenario, given that he did not enlighten us what shape or form such a division would take or why.

Not unnaturally, such a ‘doomsday’ prediction evoked universal condemnation, with the Pakistan People’s Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N) in the lead. The former has mounted a campaign of protest rallies on the issue. Even this kind of exaggerated alarmist prognosis is unlikely (even more so) to improve Imran Khan’s increasingly thin chances of re-entering the corridors of power, particularly since neither the government (which intends to stay in office until August 2023), nor the establishment or judiciary seem to be amenable to his pleas. The Supreme Court (SC), to whom Imran Khan appealed for safety from the government’s resolve not to let him repeat his long march, has asked for a detailed report on the previous march, Imran Khan’s actions and instructions to his followers on May 25, 2022. If the facts come out, the appeal to the SC may turn out to be a self-inflicted judicial noose around Imran Khan’s neck.

That neck is in trouble already from Federal Interior Minister Rana Sanaullah’s ‘reminder’ that the security provided to Imran Khan would ultimately be the weapon used for his arrest once his pre-emptive bail against arrest by the Peshawar High Court is vacated.

The mere mention of the possibility of Imran Khan’s arrest so incensed his PTI followers that a torrent of statements emanated from the party’s leadership warning of the reaction to any such action. One emotional PTI supporter from Khyber Pakhtunkhwa (KP) went so far as to threaten he would conduct a suicide bombing in the event his leader was arrested. Imran Khan having returned to Bani Gala from his ‘safe haven’ in KP, the PTI reiterated they had instituted their own security for their increasingly embattled leader. This portends a possible clash between the forces of law and order of the state and the PTI’s private security for Imran Khan.

Imran Khan’s anti-corruption mantra is also not doing so well these days. Scandals are emerging regarding the alleged triumvirate of Imran Khan, his wife, and her friend Farah Khan. The government seems bent on following up this line of inquiry as well as seeking other evidence to let the air out of the morally indignant anti-corruption mantra of the PTI.

Ironically, having ‘resigned’ from the National Assembly (NA) before the no-confidence motion against Imran Khan, the PTI now intends to contest the Punjab Assembly seats of their 25 dissidents unseated by the Election Commission of Pakistan for voting against the party whip. Obviously provincial politics and the numbers game in the Punjab Assembly are the considerations on this score. But it stands in sharp contrast with the PTI ‘quitting’ the NA and arguably denying itself a feasible platform from which to pursue its campaign.

Imran Khan and the PTI increasingly seem to be reduced to ranting ineffectually, while the government is struggling to manage the economic crisis. Fifty days is too short a period to deliver final judgement on the PML-N-led coalition government’s economic performance given the mess the PTI left behind, but this government’s credibility and legitimacy will rise or fall in the weeks and months ahead on its handling of inflation and the energy crisis (particularly load shedding).

 

 

 

 

 

rashed.rahman1@gmail.com

rashed-rahman.blogspot.com