“If you know yourself and know your
enemy, you need not dread the result
of thousand battles”
Sun Tzu in ‘Art of War’
In strategy, selection of objectives with an indirect approach, simplicity of plan, maintenance of aim and flexible contingencies are crucial for success. The process is incremental through a series of smaller objectives that act as precursors to a bigger success. A good marksman must have the ability to focus on a specific point on the target and not the sight of his rifle. He then hits the bull’s eye.
Imran Khan with his long term vision must stick to the basics. Innovation and entrepreneur spirit with a high bar must become his legacy. He must get the bull by the horns and hit the bull’s eye. Undeterred by events, intrigues and orchestrated crises in Pakistan, he must keep his sights fixed on the distant objectives of making Pakistan prosperous, self-reliant and proud. Each distraction should become the stepping stone to success. His immediate plan should be simple based on incremental successes around the prevailing economic crises. Pakistan faced similar and rather worse crises in the past. The spirit of ingenuity must be revived. Realistically, it would take a maximum of two years to wade out of the artificially and deliberately created financial crises. Thereafter, Pakistan would be well on the way to hitting the home runs-the bull’s eye.
Potentially, Pakistan is far too robust and dexterous to become a begging bowl. Half the battle can be won in the next few months. To frame a simple and implementable plan, the executors must know the enemy. They must know who and what caused the crises and how the red herrings have to be eliminated and gaping holes plugged forever. Alongside this strategic appraisal, they must have a good measure of Pakistan’s indigenous potential. Once the two are pitched and war gamed, the dream team will realise they need not dread the results of thousand battles.
Imran Khan’s economic team must know that the PML-N government over its five years tenure has squandered over $32 billion of windfalls. The feel good atmosphere had nothing to do with its governance and economic model but a blessing that came from unknown quarters. All PML-N government did was to snatch defeat from the jaws of victory. Such bad fiscal policies must not be repeated and Pakistan must emerge as a robust economy.
There was a fall in global oil prices from 2013 to 2017. The amount thus saved was equivalent to half of Pakistan’s external debt and many times more than the total national savings. These unexpected gains kept current account deficit below 2 percent of GDP until 2015-16. This is the primary reason why the inflation remained in single digits. Any sensible government should have used this unexpected boon to curtail Pakistan’s energy crises intermittently marred by circular debt, reduction in imports and export promotion. Even the Rupee could have been revalued. Surprisingly, the balance of payments was allowed to grow under the watchful eyes of a complicit IMF.
During this period the overseas remittances steadily declined, primarily because the government made no efforts to hedge the interests of its overseas workers in Middle East. They deliberately conceded an open field to India. The government should have taken the issue of the overseas workforce and remittances more seriously; yet the attitude of the government was callous.
Pakistan’s economy by default was on a high. There never was an urgency of external borrowing and IMF assistance. Yet devaluation was ensured and the government went ahead and borrowed over $ 35 billion. Add deliberately surrendered $ 32 billion of windfall; the total comes to a whopping $57 billion mismanaged and wasted in five years. This was criminal abetment in running down Pakistan. The State Bank of Pakistan, rather than becoming a regulator of fiscal matters, became a party to the crime.
There was no doubt that the PMLN government deliberately sunk Pakistan into a debt trap and economic recession. Corruption and kickbacks could be one motivation. But primarily, it was done to promote IMF and international intervention in Pakistan. The ultimate design was to weaken Pakistan’s security. Hence themes against Pakistan’s security establishment flowed in tandem.
During the same period, law enforcement agencies fought an outstanding war on terror. Law and order for enabling economic environments was ensured. Yet the government itself joined the international mantra accusing the armed forces of not doing enough. Pakistan was being run dry to ensure a pseudo civilian supremacy.
That IMF was certainly in collusion with Pakistan’s economic managers is proven. They were complicit and repeatedly gave a clean chit to Pakistan’s economy during the three-year $6.67 billion Extended Fund Facility, ending in September 2016. These timings coincide with the windfall gain of over $19 billion during the period that never came into deliberations. The government and media obscured this information from the nation. Though commentators like me have the answers, the future government must deliberate why IMF pushed such a facility and why the government accepted it. This is a question that must be investigated to chart out Pakistan’s future with IMF?
The economic team must also know that Pakistan’s industrial policies since 2002 have been unfriendly and that energy crises are deliberate and manipulative. These policies have failed to stimulate industrial growth. For example, the deletion programmes in auto industry are well behind schedule; policy on import of used cars puts the local industry at a disadvantage and extra burden on imports. The planning commission has been more gobbledygook than realistic. Transparency and regulation are nonexistent. Every organ was manipulated in a manner that facilitated IMF intervention, international oversight and weakening of Pakistan.
A critical study of this deliberate economic manipulation will lead to interesting revelations. It will determine the ‘haves and have not’s’ of Pakistan as also the ‘dos and don’ts’ of economic decision making.
But experts depending from where they come from can give contrasting and contrarian twists to facts. They are best at perpetuating a debate as to who came first: the egg or the hen. They will inundate arguments with words like macroeconomics, stability and indicators. Most will be strong advocates of International Financial Institutions like World Bank, IMF and ADB. But in order to cleanse the system this venom must be avoided. Pakistan must take the opening salvo on the chest and get about the job of nation building with a new paradigm.
So what is this paradigm?
First, marry up an integrated team of economic experts, political economists, planning commission, foreign policy, industry and commerce under the office of Prime Minister. It should be a secretariat directly under the prime minister synergizing every ministry, autonomous and semi-autonomous organisation related to economy and national development. All ministerial policy papers must be routed through this secretariat. Secondly, exercise an eagle’s eye in selection of top civil servants heading ministries and organisations. None of them should be relics of the past. The same criteria should also apply to diplomats. Thirdly, reevaluate the heads of all regulatory, transparency and oversight organisations and if needed change them. Fourthly, while fiscal deficits and imbalances are being addressed take the following steps.
• Across the board accountability through Judiciary, NAB, FIA, FBR, SBP and Anti-Corruption departments.
• Curtail government spending through austerity, banning luxury imports/cars, bare minimum PSDP, renegotiating payments with friendly countries, control over money markets, overseas remittances and controlling consumer cartels
• Renegotiate IPPs that fleece Pakistan through a pricing and exploitative mechanism.
• Take a critical look at PSO and all organisations connected to it directly and indirectly.
• Kick start energy projects with FDIs and soft BOOT conditions with at least two year deferred payments.
• Start by providing 700 community water treatment plants to all provinces within the next six months and a leading edge 15 MGPD desalination plant to Karachi through FDI.
• Employ armed forces in national development like dredging of canals, reclamation of arid lands, constructing of small dams and opening more hospitals, education institutions, vocational centers and technical training schools around the cantonments.
• Last and most important, avoid the IMF trap to create an economic bubble. There are many hidden and indigenous solutions that can close doors on economic manipulation and subversion forever. It depends how the economic team handles this issue.
The writer is a political economist and a television anchorperson.