The economic chargesheet

THE constitutionality, legality and the morality of Musharraf’s impeachment is doubted by few. But many, and this includes some supporters of impeachment, seem to believe that he did turn the economy around. This is patently false.

An illusion of turnaround was created by imposing a wrong strategy of growth, sustained by a series of commando actions to enforce a culture of being economical with the truth. No wonder, when the inevitable meltdown occurred, it was simply unstoppable.

Take the criminal choice of growth strategy first. Any economist will tell you that growth in national income, the so-called GDP, can be achieved by promoting consumption, investment or net exports. The choice among these depends on the stage of development of a country. While net exports are good for both developed and developing countries, consumer spending dominates growth in the former and investment in the later. The reason is that developed countries have already accumulated a sizeable stock of capital while developing countries like Pakistan have not.

Growth under Musharraf has been driven by consumption. For example, GDP at market prices grew at six per cent in 2007-08. Consumption at 6.5 per cent, however, exceeded the GDP, the extra consumption coming from imports. Investment made a negligible contribution. Again, consumption-led growth has been contributed by the predominance of the services sector. In the past eight years, the average annual growth of services was 6.2 per cent, higher than the GDP growth of 5.6 per cent. The commodity-producing sector, important for livelihoods, grew far less at 4.9 per cent. The most pro-poor sector of agriculture posted the lowest growth of 2.8 per cent. The sector of the rich and the powerful — finance and insurance — achieved the highest growth at 14.4 per cent.

In the years of Musharraf as chief executive, the GDP growth was very low. In 2000-01, it was around two per cent which deeply upset him. All illegitimate governments focus on the economy to have a semblance of legitimacy. The Shaukat Aziz team, which was still trying to get its feet wet, assured it would correct the situation.

The correctives applied were two-fold. On the one hand, the staff of the Federal Bureau of Statistics (FBS) was put on the mat and asked to ‘improve’ its collection arrangements and methodology. On the other hand, the State Bank was drawn into financing a consumption-oriented growth strategy by co-opting the ‘autonomous’ governor into the official economic team.

The dirty work of threatening the suppliers and processors of data in the name of the ‘big boss’ was assigned to the economic advisor, who being a contract employee was all too eager to be ‘result-oriented’. Secretaries in charge of Statistics were put on notice, the most pliable of them working effectively as director general of FBS, a lower post but one crucial to manufacture desired outcomes.

After this, GDP growth never looked back. It went up and up to reach the peak of over nine per cent in 2004-05. Early estimates had shown this growth to be around 6.6 per cent mainly because agriculture had done extremely well. But this quite respectable growth was not satisfying the ‘dream’ economic team. A commando action jacked it up first to 7.5, then 8.4 and eventually to above nine per cent. There was an implicit consensus from then on that growth would never be allowed to fall below seven per cent. Any deviation from this implicit consensus led to explicit interventions. The lying about the wheat output last year provides a graphic example of how the much-trumpeted growth was won by the Musharraf regime.

Sectors which do not have a very reliable database and those dependent on occasional surveys suddenly started to show high growth rates. This was done when major crops and large-scale manufacturing, with relatively more reliable data, could not justify the magic growth number. Thus minor crops, small-scale manufacturing, informal services and transport made their contributions in the hour of need. Sectors under the control of government, such as public administration and defence, electricity and gas distribution came in handy to fill any gaps that remained. The Shaukat Aziz Sector, i.e. finance and insurance, danced to his tune.

Growth and investment have to match for credibility. In the beginning, the slow-moving investment was explained away by claiming higher productivity. When the argument became unsustainable, investment was also jacked up without conducting any detailed enquiry or survey.

Fudging was perfected to an art form, and was fully ‘responsive’ to public concerns. Prices have always been of great concern to the public. This used to be the permanent item, number one on the agenda of the Economic Coordination Committee of the cabinet meeting nearly every fortnight. Spurious regional comparisons coming out of this meeting are well-known.

What is not known is that if the price of a commodity showed an unpalatable rise in some area, the problem was always ‘fixed’ by the next meeting, with the chair claiming the success of the ‘measures’ taken and telling the PR staff, no, dictating the text to be sure, what to highlight in the media. Inflation thus remained low in the five to six per cent range. Part of the reason why inflation recently has been extremely high is that prices are being reported as received.

With growth high and inflation low, policy consistency required that poverty must fall. In 2001, the correct survey-based estimate was 35 per cent, implying a rising trend but it was announced as 32 per cent. Even this was not published for a long time and was officially questioned in a smaller subsequent survey supervised by the economic advisor. The survey for 2005 was a well-planned operation. The data was not released and results announced until commando action in the computer centre of the FBS did not, by an iterative process, yield the desired result of 24 per cent. By re-fixing the poverty ratio for 2001 at 34 per cent, it was claimed that poverty had come down by 10 percentage points between the two years.

The success on the poverty front could not have been allowed to be contradicted on the employment front. Commando action in the Labour Force Survey added two to three million new jobs.

To recap: the chargesheet against Musharraf must include (a) the active promotion of conspicuous consumption of the rich by ignoring the sectors on which the large majority of the people depend and creating a bubble rather than sustainable growth; (b) the destruction of the integrity of the statistical system. While Shaukat Aziz is absconding, all other members of the team continue in important positions hoping for the return of the big boss. The responsibility rests in his person as much as his chosen economic team because efforts to tell him the truth met with his displeasure.

The writer was chief economist of the Planning Commission in 2000-06.

Swat in the grip of violence

THE echo of what Faiz Ahmad Faiz said half a century ago is reverberating in Swat today:

Koi masiha na eefai ehd ko puhncha

Buhat talash pas-i-qatl-i-aam hoti rahi

(No messiah arrived to provide relief, but after the carnage much investigation took place).

The people of the Swat valley, once billed as the Switzerland of Asia, feel abandoned, helpless and betrayed today. Since July 2007 this scenic valley of orchards, snowcapped mountains, fast-flowing streams and thick forests has been in the grip of violence.

A second spree of violence began recently. It has reportedly left more than 100 people dead, including a number of security personnel, civilians and Taliban in the troubled areas of Kabal, Matta, Charbagh and Malam Jabba. The local people estimate more than 500 human casualties in the ongoing spree of death and destruction in the valley.

Besides the loss of human lives, an additional dozen or so girls’ schools, the remaining part of a PTDC motel in Malam Jabba and police checkposts have been torched and destroyed in upper Swat. Meanwhile, a notorious FM radio station continues to air hatred against the government and exhorts the people to revolt against the state’s security apparatus.The current wave seems to be the result of the failed peace deal signed between the NWFP government and Fazlullah’s militia in May 2008. The deal was expected to fail and lead to this violent scenario for several reasons.

Firstly, it was signed without consultation with civil society, political parties and the professional classes of the area. Secondly, a huge gap was evident between the interpretation given by the Taliban and the government to some key clauses of the deal. Thirdly, the probability of the deal not taking off in the absence of monitoring systems remained high. With its failure, a new and ferocious current of death and destruction became inevitable and is being witnessed today in the valley. In other parts, the violence is of low intensity.

Fourthly, the militants in Swat previously never enjoyed the space the deal gave them. The chances were that the deal would create a snowball effect on militant organisations throughout the length and breadth of the valley leading to ‘warlordism’.

The present scope of insurgent activities is broad-based and all-encompassing with ever-increasing expansion further north and west of upper Swat. The militants and security forces have gun-battles in Qandeel (Madyan) despite the refusal of local residents to give sanctuary to the militants and the residents’ constant appeal to the security forces to desist from actions that would cause the scenic mountain resort to be engulfed in the flames of violence. The same seems to be happening in the Lower Dir district just beyond the hills of Peuchar though the local people have adamantly refused the militants sanctuary.

The present round of violence is more deadly and the Taliban and the military seem to be in a more aggressive mood than before. The number of civilian casualties, including men and women, and the destruction wrought are greater. Curfews and unabated firing from both sides have brought all activities to a standstill. According to the incharge at the Mata Tehsil Hospital, patients in the hospital are stranded as no attendant can reach them and bring food and medicines for them.

Charitable hospitals, such as the one set up by the Layton Rahmatullah Benevolent Trust in Kabal tehsil, are virtually closed and the staff there is afraid that the hospitals might be shifted to other areas. Markets in the upper part of the valley are deserted and amenities are sold at prices that are 10 times higher than the actual rate because of the non-supply of edible items. Public and private properties are being destroyed with impunity. Several brides and grooms, who were en route to their villages in the upper part of the Swat valley, are stranded in different hotels in Mingora.

The common people believe that the present violence is being orchestrated for the procurement of more dollars from the US, despite the fact that there are casualties among the Taliban and the military everyday. Some local people also believe that the military would like the valley to be plunged into turmoil in order to provide sanctuaries and infiltrating points to the Taliban to enter Afghanistan through the border at Chitral.

The present mantra of the NWFP governor at the behest of the presidency and the adviser for interior affairs that India’s RAW agents are involved in the insurgency in Fata and other parts of the NWFP has actually given more credence to this perception. The ISI and the military’s panic over the order of the prime minister to bring the ISI under the administrative, operational and financial control of the interior ministry also played a crucial role in developing this perception of the people.

The provincial chapters of the JUI-F and PML-Q have been actively demanding the end of the operation in the Swat valley. A large section of the population in Swat believes these two parties have close ties to spy agencies in Pakistan. It was the MMA government in the NWFP which allowed Fazlullah’s militia to grow from a small bunch of hardcore militants into a Frankenstein.

While the man in the street wants peace and the dismantling of organisations responsible for the turmoil, professionals, businessmen, students, teachers, political activists and media outlets in the valley appear to be sceptical about the motives of the military in breaking the organisational structures of the non-state religious militant bodies active in the valley.

The people of the valley think that the supply of manpower, weapons and other necessities to Fazlullah’s militia could have easily been disrupted if the security forces had been keen about doing so or had been allowed to eliminate militancy in the valley. The federal and provincial governments have failed to launch a substantive dialogue while resorting to the selective use of force and offering a comprehensive economic development plan for the rehabilitation of the displaced population. They have also failed to effectively put into operation the village peace committees. All this has further eroded the confidence of the people in the state apparatus.

The writer is coordinator for the Aryana Institute for Regional Research and Advocacy.

khadim.2005@gmail.com

Much may be on trial

IMPEACHING a president? Nixon wasn’t impeached for Watergate; Clinton was for Monica Lewinsky. Nixon evaded impeachment; Clinton faced it successfully. But Pakistan’s political landscape is something else. Just why is Gen (retd) Musharraf to be impeached and by whom?

By the parliament of course! Yet the people disinvested the president long ago: palpably on the streets from March 2007 onwards in applauding the legal fraternity’s courageous stand for constitutionality and the independence of the judiciary; and then by the ballot when they rejected ‘the president’s men’ in Feb 2008. Yet he continued in office and the unconstitutionally deposed judiciary stayed in limbo. The executive did nothing to implement the national demand for reversion to the pre-Nov 3, 2007 status and chose to leave it to the legislature.

The parliament did not take up the issue at will; it waited for a signal from Mr Asif Zardari, the man who now holds the strings of the new executive. The issue eroding his party’s coalition with the PML-N was inattention to the Murree Declaration but the tension was dissipated by announcing the intention to impeach the president. It could be a long haul or a very swift one. A much simpler formula by far was the restoration of the deposed judiciary based on the fact that the dismissal and what followed thereafter had no standing in the existent law. Impeachment opens a different can of worms. Uncertainty prevails and suspicion abounds.

Impeachment motions and proceedings could fall between the stools of two PCOs or procedural controversy cutting away the ground from under the feet of impeachment. If proceedings prolong, ancillary developments in administrative terms of national security and the economic meltdown could justify proclamation of emergency rule; albeit by a civilian government. And what happens if the impeachment goes through as it should: effortlessly impelled by truth? That other matter of the independent judiciary may be buried in the wrappings of the triumphant parliament’s new constitutional packaging.

Is it entirely inexplicable that the new government shunned a more direct course or are there concealed motives? Perhaps because we are innately a rhetorical and loquacious people we are extra susceptible to false logic and sophistry. We are also emotive. In the passions and heat of the post-Benazir assassination context Mr Zardari assumed control of the PPP and gave it a new complexion. What may transpire in the euphoria following a successful impeachment of the usurping retired COAS?

The grim fact is that there are no civil institutionalised checks and balances on errant self-serving executive power running in tandem with a self-perpetuating legislature and accommodative judiciary. Civil society in Pakistan has to act as its own watchdog and remain wakeful.

There are sad precedents of parliamentary sovereignty and supremacy being perverted by democratically elected politicians gone rogue. Parliament too is on trial. It has to persuade the people of its fidelity to the mandate it received. The vote for a democratic system is one for self-government that honours the will and good of the common citizen as enshrined constitutionally.

If we look at parliament today there are many familiar faces. The difference is that members who sat on benches representative of what was establishment power are now members of a harried opposition. But what about the new establishment power — the new government? Will its members also be just simply a new president’s men? An old party for a new king? That question will have to be answered no matter whether the inert retired general being described as president finds the energy to resign or waits to be dragged away.