As the war drums beat loud over the region surrounding Pakistan and Washington remains perilously close to a new war on Iraq, there are indeed fresh questions over Pakistan's future. For many within the country as well as those outside looking at Pakistan closely, there's the concern over a fallout in the shape of a new anti-Western backlash, capable of taking many shapes and forms.
In the past several months, events such as the fallout from a controversial presidential referendum to the conduct of national elections amid charges of manipulation by the opposition parties, have all come together to compound the outlook for an economy which is seen by many Pakistanis as largely moribund and heading for few upturns in the near future.
The grim economy for the Pakistani outlook despite claims of "sub acha" (all is well) by the country's top leaders is yet another fine example of how the leadership, which loses no opportunity in claiming success for its so-called policies of "good governance", may well be standing at odds from its people.
The gap between official claims and the day to day reality provides yet another piece of evidence that if traditionally Islamabad has remained distant from mainstream Pakistan - thanks to the legacy of flawed policies which have remained detached from the daily lives of ordinary folks - that distance has probably increased in the past few years.
Ironically though, seldom before has Pakistan been in the enviable position of presiding over some of the healthiest signs emerging over a portion of its economic outlook. The build-up of liquid foreign currency reserves and the fast inflow of remittances from its expatriates worldwide, even if largely driven by events following the New York terrorist attacks, has for now at least rid the country from the prospect of a recurring balance of payment crisis.
The improved outlook provides ample room for relief in celebrating the break from a past legacy when successive governments, driven by spendthrift leaders, eventually confronted with difficult cash shortfalls, had to go touring outside the country with a begging bowl. Much to the discredit of that unfortunate past, few countries in the world so ceremoniously celebrated becoming increasingly indebted as Pakistan, despite the acceptance of stringent conditions and some of the highest interest rates on otherwise short term borrowings.
But emerging from the morass of unendingly frequent balance of payment crisis, for many Pakistanis the ultimate question is, if they are indeed now better off than before. In a country led by an lite which has traditionally remained distant from the reality of the lives of ordinary citizens, there's all the more reason to vociferously question the improvement in macro indicators which have so far failed to trickle down to the micro level.
For most Pakistanis, faced with rising unemployment, widening poverty and modest investment levels that remain at the centre of new economic opportunities, are indeed the true litmus test of the country's present day position. Such a bleak outlook stands in sharp contrast to trends widely publicised by the government - such as significant improvements in the performance of the Karachi stock exchange. Though Karachi's stocks have appreciated with the highest margin by comparison to any other stock market in the past year, the beneficiaries of such a rise are far too few in numbers to make a profound difference for Pakistanis.
Ultimately, getting the basics right is going to be more about turning around the lives of mainstream Pakistanis than the lite, or more importantly understanding the significance of a larger middle class and discernible change for the better in the lives of the poor, rather than accounts of increasing enrichment of the rich. But redefining Pakistan's economic direction remains a challenge for policy makers. Many of them are locked so closely to events, such as the periodic visits by IMF delegations, that there are compelling questions over their capacity to wean themselves away from a consistent reliance upon international financial institutions.
Pakistan's misfortune, however, is that the challenges it faces today are hardly those which could be solved by the community of international financial institutions. Just as Pakistan's newly emerging political outlook is in danger of eventually ending in tears with the credibility of the new parliamentary order already in tatters, there's every chance that the economic outlook may end up similarly landing itself in tears.
To build a new success story for Pakistan, redefining the economic imperatives must be driven by three important factors that must be central to launching the country in to a new beginning.
First, redefining the role of government comprehensively with the intention of tearing down dysfunctional parts to create new governing entities has never been as pressing a challenge as it is today. The popular perception that the devolution plan overseen by General Pervez Musharraf, the military ruler, has so far brought little joy to Pakistan, holds true more today than at any other moment since the initiative was first launched. While the devolution of administrative structures is sought, the return of traditional political families to the parliament speaks volumes over the failure of the so called National Reconstruction Bureau, charged with conceiving the plan.
With a larger than life and post colonial military led bureaucracy overseeing Pakistan, the challenges for the economy only promise to become even more profound. Unless the structures of government are re-created, beginning first with the tearing down of large chunks of fat in the form of redundant ministries and associated bodies, a bureaucratic stranglehold on the economy is likely to remain intact. Eventually, a government which cannot be the change leader in a country where change is overdue, is only capable of managing periodic crises, each time eroding its own capacity to create a new economic order.
Second, Pakistan's reliance on international financial institutions (IFIs), be it the International Monetary Fund, the World Bank or indeed the Asian development bank, only assures what could best be characterised as a half-hearted approach to the challenge of rebuilding the economy. If the '80s became an era of so-called democratic change across the world with historical events such as the collapse of the Soviet Union, the '90s brought together a succession of economic crises spanning the developed and the developing world.
The turmoil across the world markets and the fragility of financial systems only too well exposed the gaps in economic structures as conceived under the world's leading IFIs. But if economic medicines from the likes of the IMF failed, countries were left with the challenge of prioritising economic needs and responses. In Pakistan's case, years after the first bit of turmoil which hit the global financial markets, the need to redefine policies and priorities still remains an unaccomplished challenge. Can Pakistan's economic future be secured by the country consistently following the lead from the community of IFIs without thinking hard in terms of putting together a new strategy? Tragically, the answer to that question must be an obvious "no".
Finally, Pakistan remains a state where patronage in many forms has become the driver behind the daily lives of the relatively more influential. The largely unprofitable public sector companies are fine examples of the extent to which businesses which have been propped up by artificial means, all in the name of preventing further unemployment, have ultimately become major liabilities. In supporting the financial needs of such loss making companies, the extent to which genuine borrowers from the private sector are crowded out, all due to the large borrowings by the public sector, often remains an easily ignored issue. Ultimately, the fat surrounding the government must be removed for the economy to begin turning around.
But textbook answers to complicated economic problems may ultimately fail in laying the basis for Pakistan's new economic order.
Farhan Bokhari is a Pakistan-based commentator who writes on political and economic matters.
Gulf News 2003
