Jul 1, 2011

Mismanaged state, resilient society

Shafqat Mahmood

Finally, enough is happening on the political front to push security related stories into the background. The Pakistan People’s Party did whatever it took to gain a majority in the Kashmir elections and surprisingly, the MQM decided once again to quit the ruling coalition. Is there any connection between the two?

On the face of it, yes, because the reason given by the MQM leadership is the postponement of polling in Hyderabad and Karachi. But, was this the only reason, considering that more serious matters in the past have not led to such a strong reaction?

It is obvious that some problems were simmering in the background and have come to the fore in this latest disagreement. And it does not require deep analysis to figure out that the political tug of war in Karachi is at the heart of it.

Mr Zardari has a crafty way of undermining his opponents and he must be doing it in Karachi too. This probably includes empowering the Baloch and Pakhtuns and redrawing the Karachi administrative map to reduce the MQM’s hold on the city. There are also rumours that Zulfikar Mirza is on his way back to perhaps the top position in the province. This must be an anathema to the MQM.

There are conspiracy theories too regarding the MQM’s decision. It does not take long in the fraught national atmosphere for people to start speculating that this is the first step in a long anticipated removal of the federal government by the military. But, as in most such theories, there is no hard evidence other than that the country is in a rapid slide downhill.

This too is not new. We have been sliding down for some time but it must be a long slide as the end is nowhere near. Some would argue that actually, on the ground, things are not so bad. The farmers have never made so much money. The banks and industries, by and large, seem to be doing well. And, exports and remittances are up. So, what’s the big deal?

The big deal is that while the non-governmental sector is showing surprising resilience, the government is bereft of ideas and is just meandering along. Beset with huge power shortages, inconsistent policies, decaying infrastructure and more, the private sector is still able to stand on its feet and make money.

And, overseas Pakistanis are not ready to give up on their country. Some living here may be seeking alternate citizenships and investing money in properties abroad, but those of our compatriots actually living there see no reason to stop sending their savings back home. This has become an unexpected bonus with remittances this year totalling $11.2 billion.

This strength of the citizenry is not reflected in the government, which dithers on taking hard decisions to improve the economy or governance. Public finances are an absolute mess with a shortfall of over a trillion rupees in the budget and no rescue in sight. The Americans are cheesed off and their assistance has been reduced to a trickle. And, perhaps their anger has given the IMF the autonomy to cut off further financing.

So, how will the gap be filled up and from where? Government borrowing from the banks has already squeezed the private sector and there is a likelihood of further reduction in this. Domestic savings would thus be mopped up by the government. The public sector development programme has been cut to the bare bones. The only other alternative would be the printing of money and that would add to the price hike that is crushing the middle classes and the poor.

This could have been avoided if the government had the guts to tax the elite and this is true for the federation and the provinces. Some effort has been made in Punjab to create new revenue avenues but overall the performance of all governments is below par. Politics and voter backlash are actually hampering any possibility of improving public finances.

The much trumpeted, and rightly so because it is a fine document, Economic Growth Strategy devised by Nadeem ul Haq in the Planning Commission is finding no takers in the government. The top leaders do not have the intellectual capacity, attention span, or even the desire to understand it.

But the real problem is that our economic managers, all fine minds with the right ideas, have little or no political clout. They are new comers to the hierarchy of power at the federal level, and are only tolerated because there is no one in the PPP who can handle economic management. Their ability to push through difficult but necessary measures is virtually nonexistent. The stalemate in economic decision making is thus likely to persist.

The area of governance is a bigger mess with the state’s ability to maintain order, provide justice, and deliver services going down at a rapid pace. Unlike the intricacies of economic management, everyone in power, at some perceptual level, understands this but remains strangely paralysed in doing something about it.

Partly, they don’t know how but there is no shortage of donor money to hire experts to guide them. There are rumours that another Civil Services Commission is being formed to look at the structure of government and suggest ways to make it more effective. Whether this is correct or not, if the fate of this commission is going to be the same as that of earlier such bodies, then what’s the point.

Unless there is a genuine commitment to governance reform, at the federation and provinces, no amount of good advice will have any effect. The problem with structural reform is that it does not have an immediate political impact. It takes time to make a difference and politicians have little patience for that. They would rather build monuments that everyone can see and appreciate.

So, to revisit the point made earlier, the people of this country at all levels have much to offer. Even in these difficult times, with high inflation, a power crisis, decaying state organs, and fear of terrorism, they are not only surviving but through their ingenuity, thriving. If only the political managers of the state had the vision and commitment to top this people’s energy with better governance.

This is a cross we have to bear because there is no choice other than democracy. Elections will keep throwing up people with little understanding of how to manage the state but over time, it will get better. Already, many of the younger people coming into politics are of a much higher calibre and this trend may continue.

The challenge is to survive these difficult and dangerous times and hope that in the long run our democracy will mature and the leadership would have better ability to manage the state. Hopefully, at a state level we can then prove the economist John Maynard Keynes wrong who said that ‘in the long run, we’ll all be dead’.

1 comment:

  1. Very good post, I totally agree: