Loss-making. It is a term that is being bandied about with increasing frequency as the debate over privatizing PIA rages on. We are told that the airline, drowning in debt and racking up unsustainable losses, represents an unbearable burden on the national exchequer. We are informed that the privatisation of PIA, and other state-run entities like the Pakistan Steel Mills, is necessary for the revival of Pakistan’s economy. Repeatedly, the blame for PIA’s troubles is laid at the feet of its employees, whose dismissal is being demanded as an essential part of the process through which the airline’s fortunes will be turned out. In the narrative emerging from the government and its mouthpieces in the media, the villains in this story are the workers and unions, cast as implacable opponents of reform and progress. All of this, in turn, is provided as justification for opening fire on unarmed protesters; just a few more bodies added to the foundations of the more prosperous Pakistan the government claims to be creating.
In perhaps any other democracy, the murder of unarmed protesters by state security forces would have led to apologies, resignations, inquiries, and prosecutions. In Pakistan, where citizens are rarely safe from the arbitrary exercise of power by the state, none of this will happen. Instead, the thoroughness with which the mantra of privatization has penetrated officialdom, coupled with the unrelenting demonisation of the Left and organized labour, has meant that the death of two PIA employees has been met with little more than a shrug; the two PIA employees who were killed had it coming, and their deaths ultimately amount to little more than minor bumps on the road to selling the airline.
Opposition to the privatization of PIA has been portrayed as being the ideological posturing of ageing Leftists nostalgic for a past defined by vibrant labour militancy and animated by dreams of revolution. This is in opposition to the vision presented by the government, which allegedly focuses on progress and the future. The reality, however, is that if anyone can be accused of blind ideological dogmatism, it is the PML-N and its patrons in the IMF. For all its supposed emphasis on numbers and logic, the fact is that the desire to privatise PIA and other state-owned entities is driven by an almost unthinking adherence to a neo-liberal economic orthodoxy that is demonstrably committed to the evisceration of the public sector, the hollowing-out of welfare programmes, and the pursuit of profit above all else.
The entire case for privatization is premised on the assumption that reducing government expenditure and bringing down the deficit is crucial for economic progress. It is also argued that private management will lead to PIA being run more efficiently, eventually enabling it to turn a profit and also provide better services to its customers. This all sounds well and good except that both assumptions do not really stand up to scrutiny. Deficit reduction hardly seems to be a priority for a government that has accumulated historic levels of domestic and external debt, and expectations of better service provision may be overblown when considering how even a privately-owned PIA will essentially function like a natural monopoly.
There is, however, an even more fundamental assumption here that needs unpacking. While it would be ludicrous to deny that PIA is poorly run, little attention has been paid to the reasons why this is so. Rather than simply being the fault of the airline’s employees, it makes sense instead to see how PIA’s travails are symptomatic of a more general lack of public sector capacity. Like other public institutions, PIA is ultimately subject to the same mismanagement and rent-seeking that is the hallmark of the Pakistani state. Indeed, one of the greatest ironies of the current situation is the way in which many of the PIA employees currently being decried by the government were probably provided with their jobs by different political parties using public sector enterprises as a means through which to dispense patronage.
This is important because it demonstrates one of the key problems at the heart of the privatization strategy being pursued by the government and the IMF; while it could be argued that the case of PIA shows that the government should not be involved in running businesses, it could also be argued that the real problem lies with the government itself, and that it is there that reform is required most urgently. After all, it is not too difficult to find public sector firms in other parts of the world that manage to do as well as, if not better than, their private sector counterparts. Seen this way, the solution to the PIA ‘problem’, and indeed Pakistan’s issues more generally, lies in emphasizing the structural reform of the state itself.
Take, for example, the question of tax reform. Much has been made of the government’s efforts to increase tax collection but the reality is that little has actually been achieved. This is due, in no small part, to the state’s lack of capacity to actually collect revenue, as well as its reluctance to confront the entrenched economic interests that would oppose such a move. This is not surprising; after all, the PML-N and all the mainstream parties remain beholden to the capitalist and landowning classes, and are loath to take any action to disrupt the activities of those whose interests they truly represent. One need only compare the response of the state to a striking union with its response to striking traders to see how this is the case. If deficit reduction were a concern, it would be reasonable to argue that improved tax collection is a strategy that is of arguably greater long-term benefit than the short-term windfall emerging from privatizing PIA. And yet, it is the latter that is emphasized over the former.
This, however, is not something that the IMF seems to be particularly concerned about. For all the advice is gives, and conditionalities it imposes, the IMF is decidedly limited in its outlook and approach. Deficits must be reduced but if this cannot be achieved through difficult structural reforms complicated by vested political and economic interests, so be it. If the more expedient route to ‘reform’ lies in slashing welfare spending, so be it. After all, the entire point of state-owned enterprises is the provision of vital public services devoid of a desire for profit. State ownership of entities like PIA and electricity providers is the best way to ensure that these services can be delivered at a cost and scale geared towards maximizing public welfare rather than shareholder value. The fact that PIA is loss-making does not mean it does not or can not be operated in the greater public interest.
The government’s approach to managing PIA’s privatization has been shambolic to say the least. Even if one were to concede the point that privatization is necessary, surely measures could have been taken to involve the airline’s employees in producing a more gradual and consensual transition. At any rate, pretending that privatisation will solve Pakistan’s economic problems is wishful thinking. The real solution lies in reforming state capacity and confronting the vested political and economic interests that continue to impede this country’s progress. Instead, we have an IMF that continues to provide the government with positive reviews and more money in order to justify the billions it has already loaned out, and a government that cheers its subservience to external debt while delaying the meaningful long-term reforms this country needs.