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Populism confronts reality

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By: S.Akbar Zaidi

It is two months since Imran Khan became Pakistan’s Prime Minister with the very partisan and public support and assistance from Pakistan’s military and its clandestine organisations, when his main opponent, Nawaz Sharif, and his daughter were put behind bars following a highly controversial and dubious legal judgment. Yet, Mr. Khan has still not discovered the fact that being a populist rabble rouser in Opposition, at which he was particularly good, is very different from being an elected leader with serious responsibilities and consequences, where sombre reality sobers down even the most exaggerated claims and promises.

Going back on promises

These last few weeks have only reinforced the appellation, ‘U-Turn Khan’, used for Mr. Khan on numerous occasions in the past, regarding his various statements about what all he intends to do. From making exaggerated promises that he would break Pakistan’s begging bowl; that he would “rather commit suicide” than go to the International Monetary Fund (IMF); that his government would be one of new, clean faces, all chosen on high standards of merit; that his government would end nepotism of every kind in every public office; that he would bring back the supposedly $200 billion “looted wealth in 100 days”; and so on, he has had to backtrack on all these claims and dozens of others, made at different times in different stages of exuberance.

This idea of “new and clean” faces in his Cabinet, and as his advisers, was the first to be dumped when the long and growing list of his team was announced. He appointed various Ministers and advisers who had served with and under General Pervez Musharraf in some capacity or the other, including the lawyer defending General Musharraf in the treason case. Some members of his team had been in government in different political parties prior to them switching to his Pakistan Tehreek-e-Insaf (PTI), the infamous ‘electables’ of the July election, many of whom were advised by Pakistan’s clandestine organisations to switch sides. A number of Mr. Khan’s close friends, including one who reportedly holds British nationality, were made advisers and ‘special assistants’ to the Prime Minister and given important tasks. Moreover, some of the senior members of his team, in addition to having won their own seats, have had their close relatives (son, daughter, wife) elected to the National and Provincial Assemblies, rubbishing claims of a non-nepotistic style of government. Having put together an unstable coalition of political parties and individuals in order to form a government, choices have had to be made which might look unsavoury to those pursuing some ideal ethical and moral norms, yet reflect the highest standards of the reality of Pakistani politics.

The most consequential of decisions which Mr. Khan’s government has had to take in its two months so far is to go to the IMF asking for a loan estimated to be an unprecedented $10-15 billion. This will be Pakistan’s 13th IMF loan since the 1980s, and also probably the largest. In addition, the political conditions surrounding IMF loan disbursement have changed considerably for Pakistan since the good old days of the War on Terror, when the U.S. perceived Pakistan to be a particularly close ally when such loans were disbursed somewhat leniently and with slipping standards of monitoring and surveillance, with numerous waivers given on unmet tasks and targets. This time, for a host of reasons, the conditionalities and the political baggage behind being approved for the loan will be particularly heavy, with U.S. Secretary of State Mike Pompeo already having stated that the U.S. would be “watching what the IMF does”. He said: “There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding… to go to bail out Chinese bondholders or China itself.” In fact, the IMF Managing Director has also stated that the IMF would require “absolute transparency” of debts owed to China. Clearly, a different geopolitics is being played out in Pakistan today compared to that of two decades ago.

Having sworn never to go to the IMF, as has every prime ministerial aspirant in the past, Mr. Khan went “begging”, a term used by one of his close advisers, for money from “friendly countries”, which these days happen to be only Saudi Arabia, the UAE and, of course, China. On all three counts, it seems that Pakistan’s few friends sent their regrets about bailing it out, yet again. The government had to turn to the IMF after its own indecisions and poor handling led to a huge meltdown in the economy, with the stock market falling to a 28-month low, and the rupee plummeting more than 9% in one day. If there wasn’t such an acute crisis of the Pakistan economy prior to his election, Mr. Khan’s government’s particularly poor handling ensured that one was created — and hence, to the IMF.

Mr. Khan ought to have known that going to the IMF results in severe constraints on the economy, with fiscal cuts, higher interest rates, devaluation and other so-called austerity measures. The consequence of an IMF loan backed with tight conditionality results in growth slowing down, often with higher inflation, and undermines any expansionist neopopulist programmes. Immediately after the meeting of Pakistan’s Finance Minister and the IMF leadership, economists projected that Pakistan’s GDP growth rate would fall to around 3% this year, down from a 13-year high of 5.8% last year, and that inflation would reach anywhere between 15 and 20% by next July. Importantly, while these early IMF negotiations were being held by the Government of Pakistan, with dire consequences for the economy writ large, Prime Minister Imran Khan was announcing his Naya Pakistan Housing Programme, of constructing five million low-cost houses in five years. Clearly, the Prime Minister has no clue about simple arithmetic, and that the numbers under IMF austerity just won’t add up.

On a loan and a prayer

One of the first statements uttered by Mr. Khan a few hours after he realised he was to become Prime Minister of Pakistan was his promise to make Pakistan into Prophet Muhammad’s Islamic welfare state of the Medina of his time. When he was launching his Housing Scheme, Mr. Khan tried to allay the fears of his audience about the impending economic crisis and told them, “Ghabrain nahin, hausla rakhain (do not worry, have fortitude).” Perhaps the chasm between populist promises and hard realities in Pakistan can only be filled by faith, belief and a prayer. Courtesy The Hindu

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