After months of uncertainty, the coming week might finally see an end to the long-running negotiations between Greece and its creditors. Requiring further bailout funds in order to meet its financial commitments, keep the state running, and retain its membership within the Eurozone, the left-wing Syriza government in Greece has thus far ben unable to come to an agreement with the ‘troika’ – the European Central Bank, the European Commission, and the IMF. On Friday, Greek Prime Minister Alexis Tsipiras broke off talks with the troika, claiming that their demands amounted to, ‘blackmail for the acceptance on our part of severe and humiliating austerity without end and without the prospect of ever prospering socially and economically’. Having been voted into power on the basis of a pledge to bring an end to the externally imposed cuts in public spending that have seen living standards in Greece plummet these past five years, with little concurrent economic growth and recovery, Tsipiras has now chosen to hold a referendum on accepting the terms imposed by Greece’s creditors. Depending on the outcome of this vote, as well as how it is received in the Europe, Greece faces the prospect of leaving, or being forced out of, the Eurozone.


That the Greek economy requires reform is a point that is not contested by anyone. This is a fact that was conceded by the Syriza government and towards this end, it proposed measures aimed at addressing some of the concerns raised by its creditors. With a view towards reducing its unsustainable debt burden (currently at 180% of GDP) and its deficit, the Syriza pledged to increase VAT and corporation tax, while also undertaking additional measures aimed at reducing tax evasion and improving revenue collection in order to yield 8 billion Euros worth of savings. This was not, however sufficient for the troika, with the IMF in particular insisting on an even greater increase in VAT, massive reductions in pensions and, paradoxically enough, a reduction in corporation tax (with this being justified in the name of creating an atmosphere conducive to business).
The implications of the troika’s demands are clear. Should the Greek government be forced to impose these policies, the result will be even greater deprivation and hardship for the Greek people.

After years of turmoil in which cuts to welfare and social spending have left almost a quarter of the population on the cusp of absolute poverty, an increase in VAT and a reduction in pensions will further hurt the most vulnerable and marginalised sections of the populace. The problem is exacerbated by the fact that, given the experience of the last few years, austerity policies of the sort advocated by the troika have simply not worked, resulting instead in unemployment, impoverishment, and a contraction of the Greek economy.
The mantra of austerity that is preached by the IMF and other international financial institutions is one that has repeatedly been shown to be ineffective at best and disastrous at worst. There is a considerable body of evidence and opinion within economics that suggests reducing government spending in times of recession is counterproductive, and that cuts only make sense in times of growth. The United States and, to a lesser extent, the United Kingdom themselves followed this advice in the wake of the 2007-08 financial crisis. However, for the rest of the world, the IMF’s insistence on fiscal discipline, no matter what the cost, is simply reflective of a purely ideological commitment to the notion that state intervention in the economy is inherently bad. The problem for Greece is exacerbated by its use of the Euro as a currency, which strips it of the ability to use monetary policy as a means through which to stimulate the economy.


When observing how the crisis in Greece has unfolded these past few months, it is not difficult to see some parallels with Pakistan. In particular, given how an infrequent supply of electricity was at least partially responsible for the heat-related deaths in Sindh this week, it makes sense to revisit the logic that governed the privatisation of electricity in Pakistan. Back in 1992, the PML-N government at the time was urged by the IMF and the World Bank to begin privatising electricity. As always, it was argued that this step would lead to greater efficiency and transparency, would aid in curtailing government spending, and would ultimately benefit consumers. Over the next decade, successive government pursued this policy with gusto, facilitating and even subsidising private power plants.
In 2015, the costs of this policy are plain to see. Despite having an installed capacity that is capable of meeting Pakistan’s current electricity demand, the country witnesses frequent outages. The cost of electricity for consumers has gone up several hundredfold since the 1990s, and is about to increase even further as part of the government’s commitments to the IMF. The country’s reliance on expensive thermal power, itself developed by the private sector, means that this state of affairs is likely to persist in the future.
There can be no denying that the government has mismanaged the power sector in Pakistan, nor is there any point in defending parties like the PPP that have shown little desire or will to take on the entrenched private sector interests that have contributed to the current power crisis. At the same time, it is important to acknowledge that the privatisation model is one that has failed. Electricity is more expensive and less freely available than it was in the past, and the profitability touted by companies like K-Electric signifies nothing more than an ability to streamline an organisation and charge exorbitant rates for its services. For the private sector, profit will always trump welfare.
So what is to be done in a context where the government is hopelessly incompetent and the private sector is completely inefficient? Rather than relying on the old binaries of the public versus the private, it makes sense to focus our energies on pressing for reform where it is truly needed. While it makes eminent sense to renationalise the production and distribution of electricity, doing so amidst rampant corruption and mismanagement is not the ideal option. Instead, rather than defending the indefensible, our energies should be directed towards holding those in power accountable. Whether they are the PPP or the PML-N, the provincial or the federal government, the people of Pakistan must demand more from their elected representatives, and must show them the door if they continue to fail to deliver. Privatisation has failed but re-nationalisation without concurrent political reform is meaningless. Like Greece, Pakistan must elect a government that is truly committed to the welfare of its citizens.