Prime Minister Nawaz Sharif is a dreamer of unreal dreams. He believes that he has the ability to resuscitate the comatose economy and transform Pakistan into an Asian tiger. The flaw in this grandiose scheme is that there can be no growth and development in the absence of an enabling environment of peace and security. Nawaz is the builder of sandcastles that are swept away by the angry waves of the turbulent sea.
At the heart of Pakistan’s problems is the violence unleashed by terrorist groups that has wrought havoc in the country for more than a decade. It has taken almost 13 months for Prime Minister Nawaz Sharif to authorise military action against the TTP. The delay, caused by attempts to reconcile with irreconcilable violent extremists, has proved costly in terms of the loss of precious lives and cannot be brushed aside.
Nawaz Sharif commenced his hitherto unspectacular third prime ministerial term on June 5, 2013. Since then, till June 15 this year, 4,113 people, including men in uniform, have been killed in terrorist outrages perpetrated by the TTP and its affiliates. A month-wise breakdown of these blood-curdling statistics is available at the South Asia portal of the Institute for Conflict Management.
But Nawaz Sharif is not exclusively culpable for the ill-advised policy of appeasement which has cost the country so dearly. Till the belated launch of operation Zarb-e-Azb in June, successive governments have emphasised peace negotiations with the Tehreek-e-Taliban Pakistan and its affiliates. This was senselessly reaffirmed by the country’s political leadership on no less than eight occasions between October 2008 and September 2013. Their starry-eyed consensus resolutions and declarations include:
The documents that emerged from: (i) the in-camera proceedings of the joint session of parliament (October 22, 2008); (ii) the Parliamentary Committee on National Security in April 2009; (iii) the joint parliamentary session on May 14, 2011; (iv) the All Parities Conference convened by then prime minister Yousaf Raza Gilani (September 29, 2011); (v) yet another joint session of parliament for endorsing the guidelines framed by the PCNS (April 12, 2012); (vi) the APC sponsored by the Awami National Party (February 14, 2013); (vii) a similarly futile conference organised two weeks later by the JUI-F (February 28, 2013); and, finally (viii) the Nawaz Sharif initiative of getting together the leaders of all major political parties on September 9, 2013.
The cost of inaction has been horrendous and this is quantified in the Economic Survey of Pakistan 2013-2014 which was released by the finance ministry on June 2. In the last 13 years, the country has suffered a loss of a stunning $102.51 billion (Rs 8,264 billion) because of terrorist attacks.
The Survey reveals that terrorism-related damage to the economy in the 27 months from January 2011 to March 2014 amounted to a mind boggling $28,459.89 million. The breakdown in annexure III shows that in this brief period exports dwindled by $2,290.31 million, foreign investment plummeted by $8,067 million, infrastructure damage stood at $2,470.53 million, the drop in tax collection was $ 6,479.94 million, losses on account of non-privatisation of public sector enterprises were estimated at $4,996.46 million, “the cost of uncertainty” triggered by the unstable economic environment was $ 204.78 million, expenditure overrun amounted to $644.52 million, compensation to terrorist victims came to $59.21 million, industrial output fell by $769.79 million, and finally that ludicrously vague government head of account ‘other expenditures’ totalled $2, 477.53 million.
The May 2013 issue of Defence and Peace Economics published by Routledge evaluates the macroeconomic impact of terrorism in Pakistan. According to Sultan Mehmood, an adviser to the Dutch government, the outcome of the econometric investigation shows that “terrorism has cost Pakistan around 33.02 percent of its real national income over the sample time period of 1973-2003.” If this is accurate, it implies that the country has been losing 1 percent of real GDP per capita growth every year.
The prestigious Washington-based research institute, the Fund for Peace has placed Pakistan at the number 10 slot in its recently released ‘fragile states index’ – previously known as the ‘failed states index.’ Rankings are made in accordance with 12 determinants – the most important of these being the extent to which the state is able to exercise control over its own territory. For more than a decade Pakistan has consistently been on the failed states index – last year it ranked 13th and, since then, it is has come down three notches and is reckoned to be among the ten most fragile states of the world.
In a recent article the former governor of the State Bank, Ishrat Hussain, drove home the point that Pakistan is being progressively delinked from the global economy because it is perceived as the epicentre of terrorism. The Paris-based Financial Action Task Force, an intergovernmental organisation established in 1989 on the initiative of the G-7, has included Pakistan and a few other countries “in the high-risk category for its lack of action against money laundering and terrorism financing. Capital inflows and outflows from Pakistan are now subjected to more serious scrutiny.”
This has impacted on international retail banks in Pakistan. Some have drastically reduced their operations while others have withdrawn from the country. Furthermore, it has become an uphill task for Pakistani banks to maintain “international correspondent banking ties.” The writing on the wall is that “Pakistan is being edged out of international financial integration.”
All this and much more is the price that the country has had to pay because of unbridled terrorist outrages. The proverb ‘a stitch in time saves nine,’ which was coined in 1732, may be hackneyed, but it is undeniably true. The government has unwittingly admitted in the Economic Survey that the reluctance of the political leadership to take on the violent extremist groups much earlier has cost the country dearly. In a little more than two years crippling damage amounting to $2.8 billion has been inflicted on the national economy.
The prognosis for the coming months is the likelihood of further violence and population upheavals. Three reasons are immediately identifiable. One, though the expectation is that the military operation in North Waziristan will be over in two or three weeks, an estimated 8,000 out of 10,000 terrorists have relocated elsewhere. Some, notably the Haqqani network, have shifted to the eastern provinces of Afghanistan whereas others have moved to the major cities of Pakistan where the actual war against terrorism will be fought.
Two, the possibility of chaos – even civil war – in Afghanistan could become a probability in the coming weeks. The July 7th announcement of the preliminary results in the runoff ballot for the presidential election showed former finance minister Ashraf Ghani, a Pakhtun, in the lead with 56.4 percent of the votes. His rival, Dr Abdullah Abdullah, identified with the Tajiks, trailed way behind polling only 43.6 percent. This represents a complete reversal from the first round on April 5 which Dr Abdullah won hands down. Tensions have soared sky high amid furious allegations of fraud.
The polarisation of the country along ethnic fault lines is as much a nightmare for the Afghan people as it is for Pakistan. In five months the US-led foreign forces will have withdrawn, and, by 2016 even the residual American military presence, if a bilateral security agreement is signed, will come to an end. Afghanistan will be by itself, and, should the country descend into turmoil the immediate fallout will be on Pakistan which it cannot sustain.
Three, in this time of crisis the politicians of Pakistan are playing their selfish games yet again. The lust for power has blinded them to the dangers the country faces. Imran Khan has threatened a million man march on Islamabad, the Canadian cleric has promised a revolution, the turncoat leadership of the PML-Q is dead set on toppling the government, and, till recently the interior minister was sulking away because of a wounded ego despite the anticipated terrorist attacks against our urban centres.
In the 13 months since Nawaz Sharif commenced his third prime ministerial term, an increasing number of people have fallen below the poverty line. Yet the government has granted tax concessions and exemptions to the rich in the expectation that this will spur investment and the benefits of growth will eventually peter down to the masses.
The term ‘trickle-down economics’ is attributed to the American humorist Will Rogers (1879-1935) who believed that the Great Depression of the 1930s had been triggered because “money was all appropriated for the top in hopes that it would trickle down to the needy.”
It is this discarded concept on which the economic philosophy of the PML-N government is anchored. But Nawaz Sharif does not realise that the trickle-down theory is sternly condemned by the Quran in several of its passages, for instance: “(Woe unto him) who amasses wealth and counts it a safeguard, thinking that his wealth will make him live forever! Nay, but (in the life to come such as) he shall be abandoned to crushing torment!”(104: 2-4).
Numerous Quranic ordinances emphasise that every citizen is entitled to an equitable share in the community’s resources. But if wealth is so unevenly distributed that only a handful of people bask in affluence while the vast majority are tormented by deprivation, then poverty becomes the most dangerous enemy of the society. This is one of the major causes of terrorism which the government has done nothing to redress. The Holy Prophet once warned: “Poverty may well turn into a denial of the truth (kufr).” The tragedy of Pakistan is that the warning has never been heeded.