Pakistan's economy is suffering from stagflation, a very unhealthy combination of very slow growth and high inflation, since 2008. These three years have also seen significant turnover in the nation's top economic management team.
Pakistan is now on its third finance minister, Dr. Hafeez Shaikh, in three years. Mr. Shahid Kardar, the third central bank governor since 2008, has just quit amid serious policy differences with the PPP-led government. Kardar is the second central bank governor to leave in just over a year and the third senior policymaker to quit in less than 18 months. During this period, the IMF has also suspended its loans to Pakistan on concerns about lack of progress on budget deficit reductions through revenue enhancements committed by the government in 2008.
"Differences of opinion on policy actions and on the implementation of certain directions that I, in my best judgment, did not consider to be judicious have compelled me to resign from office," Kardar told Reuters in response to questions about the reason for his resignation less than a year after he was appointed.
"Such differences are impeding the State Bank from discharging its mandate to safeguard its own integrity and autonomy, to ensure prudent conduct of monetary policy and to maintain the safety and stability of the banking system."
In simple terms, the biggest problem Mr. Kardar had with the government was sustained and excessive borrowing from the central bank to fill the large gap between revenue and spending. This has fueled inflation, and made a mockery of the central bankers' tight monetary policy. Rather than accept the advice of his own team of experts, it seems that President Zardari has essentially been following his own economic policy of "print the notes", a quote attributed to Mr. Zardari by the New York Times in a 2008 story.
In February 2010, there were rumors that the ruling PPP politicians, particularly President Zardari and his inner circle, ignored former Finance Minister Shaukat Tarin's key recommendations to address the acute power shortages in the country. Zardari's insistence on pushing rental power projects, rather than fix the huge circular debt problem in the energy sector first, specially frustrated the outgoing finance chief, when he first reportedly threatened to quit 2009.
To put it all in perspective, let's recall how late Dr. Mahbub ul-Haq, the renowned Pakistani economist who is credited with the idea of UNDP's human development index (HDI), explained the corrosive impact of political patronage on economic policy in Pakistan.
In a 10/12/1988 interview with Professor Anatol Lieven of King's College and quoted in a recent book "Pakistan-A Hard Country", here is what Dr. Haq said:"Growth in Pakistan has never translated into budgetary security because of the way our political system works. We could be collecting twice as much in revenue - even India collects 50% more than we do - and spending the money on infrastructure and education. But agriculture in Pakistan pays no tax because the landed gentry controls politics and therefore has a grip on every government. Businessman are given state loans and then allowed to default on them in return for favors to politicians and parties. Politicians protect corrupt officials so they can both share the proceeds.
And every time a new political government comes in they have to distribute huge amounts of state money and jobs as rewards to politicians who have supported them, and short term populist measures to try to convince the people that their election promises meant something, which leaves nothing for long-term development. As far as development is concerned, our system has all the worst features of oligarchy and democracy put together. 
That is why only technocratic, non-political governments in Pakistan have ever been able to increase revenues. But they can not stay in power for long because they have no political support...For the same reason we have not been able to deregulate the economy as much as I wanted, despite seven years of trying, because the politicians and officials both like the system Bhutto (Late Prime Minister Zulfikar Ali Bhutto) put in place. It suits them both very well, because it gave them lots of lucrative state-sponsored jobs in industry and banking to take for themselves or distribute to their relatives and supporters."
To summarize, there is insufficient revenue collected by the state of Pakistan, and the diversion of this very limited revenue to political patronage fosters dependence on foreign aid and impinges on the nation's sovereignty. It also seriously harms Pakistan's ability to invest in education, health care and infrastructure development in terms of school and hospital buildings, roads, rails, and water and energy projects for Pakistan's future.
Discussing the politics of patronage in Pakistan, Professor Lieven, the author of "Pakistan-A Hard Country", sees a silver lining to it by describing the difference between Nigeria and Pakistan in the following words:"Rather than being eaten by a pride of lions, or even torn apart by a flock of vultures, the fate of Pakistan's national resources more closely resembles being nibbled away by a horde of mice (and the occasional large rat). The effect on the resources, and on the state's ability to do things, are just the same, but more of the results are plowed back into the society, rather than making their way straight to bank accounts in the West. This is an important difference between Pakistan and Nigeria, for example."
I personally see no better explanation for the boom under President Musharraf in 2000-2007, followed by current economic crisis since 2008, than the prevailing system of political patronage continuing to trump good public policy almost 23 years after late Dr. Mehboob ul Haq described it so well.
Related Links:
Haq's Musings
Pakistan's Tax Evasion Fosters Aid Dependence
Finance Minister Shaukat Tarin Resigns
Musharraf's Legacy
US Fears Aid Will Feed Graft in Pakistan
Pakistan Swallows IMF's Bitter Medicine
Shaukat Aziz's Economic Legacy
Power and Patronage in Pakistan
Pakistan's Energy Crisis
Karachi Tops Mumbai in Stock Performance
Threre are more reasons to migrate to Canada
1 year ago
30 comments:
Riaz: Good blog. Is there anything good left in Pakistan except food -:)
I knew this would happen. It is only matter of time.
Maybe Commissionerate system was also imposed to hide this issue?
"Print the Notes" --- How is it f--- different in the United States?
Barrack Obama bin Laden has printed TWO TRILLION DOLLARS over the last two and a half years in bailout money, and he is now fighting to increase the debt ceiling.
Poor Zardari has no place on this "print the money" totem pole.
Mohammad: "Is there anything good left in Pakistan except food -:)"
Professor Anatol Lieven, the author of "Pakistan-A Hard Country", sees a silver lining to it by describing the difference between Nigeria and Pakistan in the following words:
"Rather than being eaten by a pride of lions, or even torn apart by a flock of vultures, the fate of Pakistan's national resources more closely resembles being nibbled away by a horde of mice (and the occasional large rat). The effect on the resources, and on the state's ability to do things, are just the same, but more of the results are plowed back into the society, rather than making their way straight to bank accounts in the West. This is an important difference between Pakistan and Nigeria, for example."
He misses out on fact that this is why Pakistan ends up in IMF lap. In the end when you cannot pay your bills, it doesn't matter whether money gets plowed into society or not. Society also begins to starve when there is no money.
This is why military intervenes and is welcomed time after time.
The difference between Pakistan and say Turkey or Brazil is that they are capable of having politial parties that manage the economy properly. Heck even an Islamist party in Turkey is capable of that.
This is missing in Pakistan.
As Karachi is the main earner return of Commionerate system is the way to deprive Karachi while pockets of PPP cronies are filled. It isn't as if the money gets spent in Sindh either. From my trips in interior Karachi looks like paradise compared to the poverty stricken hell of Sindh! Only the landlords do well. Remember parts of Sindh have the poorest of Pakistanis! There is also a reason why some of them used the floods to escape the cruelty of these landlords.
Mr. Haq
Given Mr. Maqbool ul Haq's comment on the issue of patronage, which I agree are accurate - how do we correct this? Is it even possible? For instance, if patronage and the electoral process are intertwined, then we have a fundamental, structural problem or is that the making of laws has to be separated from control over the purse string and will that not bring about greater lack of accountability??
muse,
Political patronage is not unique to Pakistan. It exists in almost every society in various forms to varying degrees. So I think ending political patronage is not going to be possible.
However, it should be possible to strike a better balance by growing the economy and the public revenue to leave sufficient money for education, health, defense and infrastructure.
To begin with, it is necessary to privatize some of the state-owned enterprises that are a huge drain on public treasury.
For example, the govt subsidy to PIA alone exceeded the entire federal education budget last year, according to the findings of a govt commission on education.
The commission on education found that public funding for education has been cut from 2.5% of GDP in 2005 to just 1.5% - less than the annual subsidy given to the PIA, the national airline that continues to sustain huge losses.
Haq's Musings: Brits Offer $1 Billion to Aid Schools in Pakistan
Pakistan Railway is another badly run inst that sucks up lots of public funds and provides horrible service.
Taking some basic steps to cut unnecessary expenses, plus levying a modest income tax on farm income exceeding Rs 1 million, and a few paisas of fees on service sector transactions, can make a significant difference.
"but more of the results are plowed back into the society, rather than making their way straight to bank accounts in the West."
I know of even mid-level business people hoarding their money in Dubai, let alone upper echelons. So the theory does not ring true.
Mohammad: "I know of even mid-level business people hoarding their money in Dubai, let alone upper echelons. So the theory does not ring true."
Although long-term FDI in Pakistan is down significantly, but it seems that FII portfolio investments in Karachi stocks are up as foreigners see more opportunity to make money in Pakistan than locals.
Pakistan's main shares index KSE-100 rose 28% (26% in US dollar terms) in year 2010, as profits registered 14% growth and dividend yields of 5.2% in the companies making up the index.
The market gains were driven by significant foreign buying, particularly by insitutional investors after the massive summer floods in KP, Punjab and Sindh provinces. Foreign institutional investors bought $1.2 billion worth of shares, and sold about $687 million, with the net FII capital inflow of $522 million during the year. One example of renewed foreign institutional buying after the post-floods market is Mark Mobius of the Templeton Asset Management Ltd, as reported by Businessweek. “There will be an impact on growth but company valuations are very, very attractive now and therefore we continue to invest in Pakistan despite all the negatives,” Mobius said in an interview in Singapore. “The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood.”
The highest performing sectors were food and beverage (65%), oil and gas (40%), chemicals (30%) and personal goods(20%). These were followed by smaller gains in electricity, fixed-line telecom, automobiles, and construction materials, according to JS Global research. Oil and gas shares now make up 36% of KSE's total marke cap, a major shift from 2007 when financial services made up 31% of the Karachi Stock Exchange market cap of about $40 billion.
Even with lower than historic average gains in a challenging year, KSE-100 easily beat the performance of Mumbai(+17%) and Shanghai(-14.3%) key indexes. Among other BRICs, Brazil is up just 1% for the year, and the dollar-traded Russian RTS index rose 22% in the year, reaching a 16-month closing high of 1,769.57 on Tuesday, while the rouble-based MICEX is also up 22%.
After the 26% gain in 2010, the KSE-100 shares still trade at PE ratio of just 8, significantly discounted relative to KSE's historic price-earnings multiple of 10, and other regional markets of Shanghai and Manila at 15, and Mumbai at about 20.
And after all is said and done, KSE has been a far better investment for investors than BRICS over the last ten years, and it continues to be very attractive this year.
Hence bigger FII inflows in Karachi and than Mumbai, as reported by India's Financial Express recently.
Mumbai: Whether Dalal Street likes it or not, India is now the worst-performing market in the world as dark clouds have started cluttering the economic, investment and political horizons. Worried foreign institutional investors (FIIs), who came to India in droves last year, have been pulling out funds with such alacrity this year that even a much smaller — and significantly more volatile and unstable — market like Pakistan has got more foreign inflows in the last six months.
http://www.financialexpress.com/news/more-fii-money-to-pak-than-to-india/807995/
Here's an excerpt from an interesting Op Ed by Ambassador Maleeha Lodhi published by The News:
At a time when daunting problems of security, a weakening economy, crippling energy shortages, inadequate public services and an exploding population are blighting the country’s future, no policy thinking is going on within or among parties about appropriate strategies to deal with any of these.
Instead the preoccupation is with politicking, power plays and deal making for the campaign season ahead, which will start with the senate elections in March 2012. There is little or no focus on issues except in terms of vacuous platitudes or slogans, and virtually no debate on national policies even as parties gear up for another round of electoral politics.
Why is there such a disconnect between politics and policy, between challenge and response and between multiplying problems and the solutions needed to fix them?
The answer lies – in large part – in the persisting nature of Pakistan’s politics that has undergirded both civilian and military rule. The defining character of such politics is that it pivots around patronage and operates principally on the basis of patron-client structures that tie politics to a web of hierarchal relations and obligations rather than to a world of citizens, rights and policy.
This form of politics rests on working a spoils system rather than responding to the needs of the people. Political competition is about gaining access to the spoils of office and its distribution among supporters. Patronage not policy is the driving force.
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Certain types of social structures give rise to networks of relationships of obligation and patronage. The personalised nature of Pakistan’s politics is closely related to the dominant position enjoyed throughout its history by a narrowly based power elite that was feudal in origin and remained so in outlook even as it gradually came to share power with well to do urban groups. While different in social origin and background, members of the ‘newer’ power elite shared a similar ‘feudal-tribal’ style of conducting politics: personalised, based on working ‘biradari’ or clan networks, characterised by patronage-seeking activity and focused on protecting and advancing their economic interests and privileged status.
Seen from this perspective, ‘feudal’ attitudes reinforced by a social system of biradari and tribal alignments have long spilled into and influenced Pakistan’s urban politics. This has expressed itself in patron-client forms of representative politics.
Even urban members of many parties function much like their rural counterparts, in that their efforts at political mobilisation rests more on working lineage and biradari cleavages and alliances than representing wider urban interests.
Politics embedded in these structures are more oriented to patronage than to issues of policy. When parties become extensions of personalities, influential families, clans and biradaris, the focus is not issue-based politics, but what promotes or cements their ‘clientelist’ networks of support and bolsters their privileged positions.
Electoral competition becomes principally about gaining control of state patronage to cement patron-client relationships and reward supporters. Politics and governance becomes more about leveraging the spoils system than framing policies. Political contests are rarely about issues but reflect a tussle over the privileges and resources that power confers.
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To align governance to public purpose, the basis of politics must change – away from patronage and towards policy and professionalism in managing the country’s affairs.
Here's an interesting review of Anatol Lieven's book "Pakistan-A Hard Country" by Ahmad Ali Khalid published in Dawn newspaper:
Pakistan is hence not a “failed state’’, but it’s not democratic either. In many ways, it is not a modern nation-state at all, but a social conglomeration defined by the ideals of patronage and kinship. It is this durable socio-economic glue that has kept Pakistan going over the last 63 years. It is not a state in the modern sense at all but awkwardly combines the deep rooted customs of patronage politics with the outer trappings of a democracy. Democracy isn’t a philosophy of life in the country because that space for social deliberation and political negotiation is taken up by pre-modern paradigms of negotiation and conflict resolution. There is no space for democracy in the Pakistani public sphere, not because of radicalism but because of traditionalism.
Pakistani policy makers are in a fix. Advocating reforms of traditionalist feudal structures may pave the way for liberalisation, but as Lieven warns, it may opena Pandora’s box where provincial nationalism ultimately fragments and breaks up any hope of a universal Pakistani narrative. The clientele of the feudal lords to the authority of the Pakistani state is paramount to its continued existence.
Furthermore, the appeal of the Islamist parties does not stem from deep theological commitment to the political project of the “Islamic state’’. On the contrary, it is actually the deep seated aggravations and frustrations with the fragile and anaemic civic, juridical and political organs of the nation’s nascent democracy. It is the failure of the westernised “liberals’’ of Pakistan through their acquiescing to the feudal leadership that has created a space for Islamist protest.
The theocratic Islamist project is one born out of protest, frustration, alienation and anxiety — it is an ideology of “resistance’’. In the words of Khaled Abou El Fadl it is “an orphan of modernity’’ that struggles to find certainty and justice in the messy aftermath of colonialism. In this respect Alaistair Cooke’s study, Resistance — The Essence of Islamist Revolution complements Lieven’s work on this topic.
In many ways Lieven argues that Pakistan is closer to 18th century Europe in terms of its political culture rather than Somalia. Pakistan’s socio-political conservativism also provides the foundations of economic transactions. The resources of the state are not redistributed through modern means, such as welfare politics, as in Europe for instance, but through the same traditional institutions that have loomed large over sub-continental life over the last few hundred years. But stagnation has set in — the landowners of Sindh have kept such monopolistic control over politics that any hope for the emergence of creative enterprise or economic liberalisation is squashed in the rural hinterland. The big landowners are perhaps the most serious obstacle to democratisation, universal education and other cherished virtues of meaningful politics.
The challenge for Pakistan is to develop a distinctly indigenous and organic discourse of democracy that reconciles the conflicting political psychologies at play when operating in a democratic framework and in a feudal framework. But such suggestions in the past have come only from dictators and never from elected representatives.
The challenges, Lieven mentions, are not unique to Pakistan but are rather symptomatic of the post-colonial experience. In fact, the most grievous challenges to Pakistan’s social organisation do not emanate from Islamists but from the brutish forces of mother nature itself. Lieven writes that, “Over the next century, the possible long-term combination of climate change, acute water shortages, poor water infrastructure and steep population growth has the potential to wreck Pakistan as an organised state and society’’.
Actually riaz political patronage trumps public policy is ALL maor countries.
Its the people who finance politicians in different countries that matter.
In India for instance politicians are financed by industrialists which is why India takes its industrial policy very seriously.
A by product is rapid industrialization and a financially solvent state.
In Pakistan the problem is political power is with the feudals which is a recepie for ruining a country which is what is happening.
The deathblow was dealt with son of a prostitute(this is a fact) Bhutto culling the power of a nascent industrialist class in the 70s...
The laws of political expedience did the rest.
The increasing demand of the government to fund its deficits have resulted in a total debt of Rs10 trillion (up from Rs5 trillion in 2007). Mr. Haq whats wrong with our country. At this rate will be survive another 10 yrs. Political patronage seem to be taking a big toll on our economy and our country.
Dr. Amjad Khan
It seems that the latest 2011-12 budget passed by the PPP-led coalition pleases neither the right nor the left. Here's a view from the World Socialist Forum:
The $31 billion budget was passed, without amendment, by the National Assembly in June after months of maneuvering by the PPP. Attempts by rival parties to posture as opponents of IMF austerity, especially on the part of Nawaz Sharif’s Pakistan Muslim League (N), produced a months-long political crisis for the PPP. Although the entire political establishment supports austerity, privatization and other pro-business reforms, the PPP’s rivals have sought to distance themselves from the implementation of policies that they know will incite opposition from the working class and rural poor.
Had the National Assembly rejected the budget, the coalition government would have been forced to resign. Ultimately, the PPP was able to get the budget passed with the support of the Pakistan Muslim League (Q) and the Karachi-based Muttahida Quami Movement (MQM).
The MQM had previously left the coalition in May forcing the PPP to invite the PML (Q)—which served as a civilian veneer for the Musharraf dictatorship— to join the government so as to provide it with the parliamentary votes needed to adopt the budget and share the burden of imposing unpopular measures. The MQM subsequently rejoined the government and helped pass the budget.
The PPP-led government is determined to narrow the budget deficit in order to bring an end to a freeze on IMF credit. The IMF has refused to disburse any money to Pakistan since May 2010, citing the government’s failure to implement draconian pro-market reforms, including a Goods and Services or VAT-type tax. The government is desperate to secure the remaining two tranches of an $11.3 billion loan originally issued in 2008, about $3.2 billion. It has also indicated it will soon be seeking additional IMF funding, at least in part so it can begin paying back the 2008 loan.
During the past year, the state has increasingly relied on borrowing from the central bank to fund its budget deficit, stoking inflation to 13 percent. According to Finance Minister Abdul Hafeez Shaikh, the government hopes to reduce the deficit to 4 percent of gross domestic product during the 2011-2012 fiscal year, down from 5.7 percent of GDP for the financial year that ended June 30. It plans to achieve this by decreasing its expenditure and broadening the country’s tax-to-GDP ratio, which, at around 9 percent, is one of the lowest in the world.
After failing to secure the requisite political support to impose a new goods and services tax, the government created a Reformed General Sales Tax (RGST), ending sales-tax exemptions on about 500 items. This is expected to bring in additional revenues of about 200 million Pakistani rupees, even while the government lowers the sales tax rate by one percentage point from 17 to 16 percent.
The RGST and other indirect taxes whose burden fall most heavily on the working class and toilers are supposed to raise 64 percent or close to two-thirds of the government’s 2 trillion rupees ($23.2 billion) in tax revenues
http://wsws.org/articles/2011/jul2011/paki-j22.shtml
Here's an interesting opinion by economist Jeffrey Sachs. about budget politics in America:
..Every part of the budget debate in the U.S. is built on a tissue of willful deceit. Consider the Republican Party's double-mantra that the deficit results from "runaway spending" and that more tax cuts are the key to economic growth. Republicans claim that the budget deficit, around 10 percent of GDP, has been caused only by a rise in outlays. This is blatantly untrue. The deficit results roughly equally from a fall of tax revenues as a share of GDP and a rise of spending as a share of GDP.
On both sides of the ledger -- spending and taxes -- part of the shift results from the weak economy ("cyclical factors") and part from long-term trends. Spending, for example, is higher in part because of unemployment compensation, food stamps, and other federal spending to help the downtrodden in a weak economy. That's the "cyclical" component. Part of the higher spending reflects long-term patterns, such as rising health care costs and an aging population, as well as America's chronic addiction to wrongheaded wars and military occupations in Africa, the Middle East and Central Asia.
Taxation is lower also because of short-term factors and long-term factors. The short-term factors involve reduced federal revenues in an economy with high unemployment. The long-term factors involve repeated tax cuts for companies and high-income individuals that have systematically eroded the tax base, giving unjust and unaffordable benefits for America's millionaires, billionaires, and multinational corporations.
The Republicans also misrepresent the costs and benefits of closing the deficit through higher taxes on the rich. Americans wants the rich to pay more, and for good reason. Super-rich Americans have walked away with the prize in America. Our country is run by millionaires and billionaires, and for millionaires and billionaires, the rest of the country be damned. Yet the Republicans and their propaganda mouthpieces like Rupert Murdoch's media empire, claim with sheer audacity that taxing the rich would kill economic growth. This trickle-down, voodoo, supply-side economics is the fig leaf of uncontrolled greed among the right-wing rich.
The truth is that we need more federal spending to create good jobs and remain globally competitive, not as some kind of short-term "stimulus" but as a long-term investment in education, job skills, science, technology, energy security, and modern infrastructure. I travel around the world as part of my job, and I can say without doubt that America has failed to modernize the economy and is steadily losing its international competitiveness. No wonder the good jobs are disappearing and the pay is stagnant, unless of course you are a CEO who can keep grabbing stock options and profits from the shareholders (who are anyway enjoying record incomes because of stagnant wages and high profits earned overseas).
The Democrats of the White House and much of Congress have been less crude, but no less insidious, in their duplicity. Obama's campaign promise to "change Washington" looks like pure bait and switch. There has been no change, but rather more of the same: the Wall-Street-owned Democratic Party as we have come to know it. The idea that the Republicans are for the billionaires and the Democrats are for the common man is quaint but outdated. It's more accurate to say that the Republicans are for Big Oil while the Democrats are for Big Banks. That has been the case since the modern Democratic Party was re-created by Bill Clinton and Robert Rubin.
Thus, at every crucial opportunity, Obama has failed to stand up for the poor and middle class. He refused to tax the banks and hedge funds properly on their outlandish profits;...
Here are some excerpts from a Dawn Op Ed by former SBP governor Shahid Kardar:
One particularly bad example of privatisation, the KESC (a subject that requires a separate treatment and discussion), is repeatedly brought up not just by vested groups but also the general public to oppose the divestment of a host of poorly managed, loss-making enterprises.
This perception persists and continues to find supporters despite overwhelming information on outcomes following privatisation or the opening up of economic sectors like telecom, banking, etc that were hitherto closed to private entities. An array of stakeholders has latched on to this outlier example (the KESC), contrary to all available proof of the immense contribution of privatisation towards bolstering Pakistan’s economy.To start with, take the case of the banks. The lessons learnt from the recent experience with the Bank of Punjab and that of banks like MCB, Habib, UBL and Allied (the last three with huge holes at the time of their privatisation) until their privatisation began in the early 1990s should be a sobering reminder on the need to protect the interests of depositors and to maintain the soundness and stability of the banking system by saving the remaining public-sector banks from the fate of the Bank of Punjab.
It would be naïve to expect the State Bank as the regulator to be able to initiate timely, corrective measures to prevent such abuse.
Can anyone deny the quality of services and products, the outreach to those outside the banking system and the increased employment opportunities provided by the rapidly growing private banking industry? Add to this the part it has played in the expansion of the country’s GDP and to government tax revenues to value the nature and scale of its contribution to overall public welfare.
From an after-tax loss of Rs9.77bn in 2001 (when they were government owned) the earnings of these privatised banks rose to a profit after-tax of Rs73.115bn in 2007. Higher earnings resulted in increased tax payment by banks to the government from Rs10.8bn in 2001 to Rs33.8bn in 2007. In the same vein, it is instructive that in 2008 and 2009 the average loan write-off per borrower in public-sector banks was more than twice that per borrower in the case of private banks. Therefore, the sooner we privatise the remaining public-sector banks the higher and quicker the economic and social returns to the nation.
Next, let’s take the case of the telecom sector. Does anyone seriously believe that had PTCL continued to have a monopoly in this sector we would have been able to get this variety of choice and quality of services and products and, more importantly, at such alluring and competitive rates? Also, hasn’t PTCL’s service improved since its privatisation? No bribes now needed for new connections and for getting your landline fixed — all seamless with little, if any, human contact. It wasn’t that long ago that we had to suffer all this. Either our memories are short or conveniently selective.
Next, take the case of the electronic media. Could PTV ever have provided such a variety and quality of programmes and also raised public awareness and knowledge of a whole range of constitutional, political, economic and social issues to such heights, and in a society with an abysmal literacy rate?
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... it is this same set of politicians and bureaucrats and their collaborators who continue to oppose privatisation because of the resulting reduced opportunities for ‘patronage’ (an appropriate all-embracing term in our context) or earnings as fees or junket trips as directors of these banks and publicly owned entities.
http://www.dawn.com/2011/08/14/case-for-privatisation.html
Here's a Washington Post story titled "Pakistan's Only True Living Hero" about Abdus Sattar Edhi:
His name is Abdul Sattar Edhi. He is a legend in Pakistan, where he has been hailed as a Mahatma Gandhi and Father Teresa — and denounced as an infidel, communist and madman. In a patronage-based nation where wealth and bluster often pass for leadership and cruelty is more common than mercy, he may be Pakistan’s only true living hero.
I first found my way to Edhi’s office in the summer of 2010. I knew little of him then, except that he had founded a free ambulance service for the public. At the scene of every train crash or terrorist bombing, Edhi Foundation ambulances always rushed about. I knew many Pakistanis admired him, and I had seen photos of an old man with the flowing white beard of a wise elder or a Muslim cleric.
I was not expecting the slyly subversive and cranky octogenarian who sat at his desk under a portrait of Pakistan’s founder, Muhammad Ali Jinnah. He didn’t say much at first, but he handed me some photographs of a tiny girl with gashes in her face. She had been found in a garbage pit, partly eaten by dogs, and was rescued by his volunteers. Later she was sent abroad for surgery and adopted by a family in Canada.
“Some people strangle illegitimate children. Others just dump them to die. We believe there is no such thing as an illegitimate person,” Edhi said. Indeed, he had spent 40 years helping social outcasts, from unwanted infants to the unclaimed dead. He had opened programs for abandoned girls, AIDS patients and senile shut-ins. Far more than an ambulance service, it was a philosophy.
I asked whether he was a religious man, and he shook his head. “My religion is humanity. It is the only religion that matters,” he said. This was a startling statement to hear in an Islamic republic. Later, I learned that some Muslim clerics had banned mosques from helping Edhi, but that admirers greeted him as “maulana sahib,” a term of religious respect.
There were other contradictions: Edhi was the product of a prominent business clan, but he had been drawn early to a humbler calling. After serving briefly in Parliament, he grew disillusioned with politics and rejected organized charity as placating rather than empowering the poor. In the 1960s, he turned full-time to his fledgling mission in the slums.
“I decided not to knock on the door of the industrialists and the landlords, because they are the root cause of all our social problems,” he told me. “The rich have deprived the people of their rights, and the state does not take responsibility for their welfare. It is my dream to build a welfare state in Pakistan, but I have not seen it come in my lifetime.”
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He is not an easy man to be around, demanding that his acolytes give up even small luxuries. Yet his army of volunteers and ambulance drivers, some rescued from lost lives, revere him, and Bilquis, after four decades at his side, remains his tireless partner and ally.
Edhi, ever the crusader, still dreams of building a modern welfare state that will be at least another generation in the making, but his wife’s greatest joy is in saving one child at a time, and in pampering brides whom no one in Pakistan would once have thought fit to marry.
http://www.washingtonpost.com/opinions/pakistans-only-true-living-hero/2011/08/24/gIQAj6cRgJ_story_1.html
Sugar mills have been one of the vehicles of political patronage in Pakistan.
In an August 2011, Zulfiqa Mirza told the media that "Asif Zardari is so generous that if you gave himn a glass of water he'd give you a sugar mill".
In Mirza's case this is definitely true as he himself admitted that he had received the permit to install his sugar mill with the help of Asif Ali Zardari, according to Daily Times.
In a Friday Times Op Ed in Sept 2011, Najam Sethi wrote that "Mr Mirza owes his great wealth (sugar mills sanctioned during the PPP's two stints in power) and power (his wife is the Speaker of the National Assembly) to Mr Zardari's largesse".
No wonder so many politicians own sugar mills that they dominate the business and control its supply and prices to enrich themselves.
The fact that Pakistanis have a sweet tooth is not lost on the nation's ruling elite, particularly the powerful political families and the Pakistani military. While the military owns Fauji sugar mills, more than 50% of the sugar in Pakistan is produced in sugar mills owned by the most powerful politicians of all major parties and their families.
Multiple sources indicate that the mills owned by President Asif Ali Zardari’s family and the ruling PPP leaders include Ansari Sugar Mills, Mirza Sugar Mills, Pangrio Sugar Mills, Sakrand Sugar Mills and Kiran Sugar Mills. Ashraf Sugar mills is owned by PPP leader and incumbent ZTBL President Ch Zaka Ashraf.
The media reports also indicate Kamalia Sugar Mills and Layyah Sugar Mills are owned by PML-N leaders. Former minister Abbas Sarfaraz is the owner of five out of six sugar mills in the NWFP. Nasrullah Khan Dareshak owns Indus Sugar Mills while Jahangir Khan Tareen has two sugar mills; JDW Sugar Mills and United Sugar Mills. PML-Q leader Anwar Cheema owns National Sugar Mills while Chaudhrys family is or was the owner of Pahrianwali Sugar Mills as it is being heard that they have sold the said mills. Senator Haroon Akhtar Khan owns Tandianwala Sugar Mills while Pattoki Sugar Mills is owned by Mian Mohammad Azhar, former Governor Punjab. PML-F leader Makhdoom Ahmad Mehmood owns Jamaldin Wali Sugar Mills. Chaudhry Muneer owns two mills in Rahimyar Khan district and Ch Pervaiz Elahi and former Minister of State for Foreign Affairs, Khusro Bakhtiar have shares in these mills.
http://www.riazhaq.com/2009/09/solving-pakistans-sugar-crisis.html
Here's an interesting comparison between the coffee elite of Central America and sugar elite of Pakistan by Dr. Adeel Malik in The News:
In his famous book, Coffee and Power, Jeffrey Paige provides a vivid illustration of how a single commodity, coffee, is sufficient to explain the power structure of Central America. Despite the varying political complexions of its regimes, Central America has one thing in common: they are all ruled by coffee elites. For decades, Central America's coffee elites have thrived on state patronage, rent seeking, and distortion of private markets. As Jeffrey Paige concludes, these elites have generated in this process "unprecedented wealth for the few at the expense of the general impoverishment of the many". Despite this, the coffee elites have been remarkably resilient in Central America, surviving periods of both revolutions and authoritarian rule.
In terms of its links with political power, sugar is Pakistan's parallel for coffee. Sugar industry is Pakistan's second largest agro-based industry. Its linkage with politics, patronage and protection sets it apart from other industries. Available evidence suggests that it is economically inefficient, enjoys one of the highest rates of protection, and is dominated by a small number of political influential owners, making it an excellent illustration of the interconnection between business and politics. The analysis of sugar markets in Pakistan, and their manipulation therefore opens up a fascinating window into how the economic interests of our political elites are strongly entrenched in the current power structure. The operation of sugar markets in Pakistan offers a telling story of how both markets and public policy are routinely captured by vested political interests.
http://thenews.com.pk/TodaysPrintDetail.aspx?ID=198042&Cat=9&dt=9/12/2009
Here are some excerpts from Forbes story on Pakistan's electricity crisis:
Analysts say Pakistan's chronic electricity shortages are largely the result of the government not charging consumers enough and of customers, including the government, not paying their bills. There are also problems with outdated transmission systems and bureaucratic infighting that has stalled power generation projects.
The U.S. is working with the Pakistani government to increase the power supply by constructing and rehabilitating six power plants, according to the U.S. Embassy. This extra energy will eradicate 20 percent of Pakistan's existing energy shortage, it said.
But many analysts say a lasting solution to the country's power crisis must involve politically painful increases in electricity prices and forcing customers to pay their bills.
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The country's main opposition leader, former Prime Minister Nawaz Sharif, lashed out at the government over the electricity shortages.
"The country is facing a severe power crisis, but the government is sleeping and doing nothing for the last 15 months over this issue," Sharif told reporters in Bahawalpur, another city in Punjab.
Pakistani Prime Minister Yousuf Raza Gilani sought to deflect blame away from his government in an address to parliament on Monday, pointing his finger at the United States. He said that the U.S. should help Pakistan solve its energy crisis if it wanted better ties.
Pakistan and the U.S. are nominally close allies in the war against Islamist extremists, and Islamabad has received billions of dollars in military and civilian aid over the past decade, including money to help the country's energy sector.
But the two countries have often clashed, and Pakistani officials regularly criticize the U.S. to divert attention away from their own government's performance.
http://www.forbes.com/feeds/ap/2011/10/04/general-as-pakistan-power-protests_8715078.html
Today I had a conversation with someone who told me he was in Karachi for 6 years.
He was born and raised in Canada and went there for a job with Barclays. He does seem to have parents who were from Pakistan, however. He worked there and was involved in other banking industry orgs and also helped an NGO out.
I asked him for his impressions about the local system and the present state of the country. He has just returned home to Canada a few weeks ago.
He told me the system worked well and the mayor was a good mayor. He said he thought he did a very good job.
He also said right now country is in a deep mess. People in power seem to just want to take what money they can out of the system. he said this happening at all levels!
I would like you to be cognizant of the fact that now in Pakistan, corruption is at a scale that boggles the mind - at least it should boggle the mind. We are talking no longer millions but BILLIONS. We are talking about Pakistan's external debt shooting up by ten billion dollars in a short span of 3 years with nothing to show for it. I suspect the borrowed dollars have been purchased with corruption billions and transferred abroad. In the next 2 years huge repayments are maturing to the IMF and other lenders. The oil price may shoot up. Our exports reduce and our water supplies may stunt our agriculture. I don't see how we will be able to cope.
Billions are 'spent' by the government and as much as 40-50% if not more is diverted for pay-offs. There is hardly any development or relief going on anywhere. debt service has gone through the roof, being the biggest item in the budget. Poverty is rising, employment growth is nonexistent. Spending on social services had collapsed as there is no fiscal space.
Corruption is a HUGE component in both out fiscal and current account deficits. It has made a huge increase in both our domestic and international debt. it can corrupted the moral fiber of the country, especially the bureaucracy. Now the younger generation is actually embracing corruption as a perfectly acceptable way of life, looking at the leadership, the tycoons and the senior government officers as role models. They are actually openly defending the corruption of their families and expressing their intention to indulge in the same.
Here's an Express Tribune story on a discussion at Inst of Business Admin in Karachi, Pakistan:
A vigorous difference of opinion among technocrats, economists and corporate leaders on a number of socio-economic issues was witnessed during an interactive session held at the Institute of Business Administration (IBA) on Saturday. And at the end it was unclear whether democracy was the answer, or a dictatorship, as advocates for both arguments came up with pretty convincing logic.
Speaking at the session organised by IBA in collaboration with Blinck, a youth resource group, under the title of “New Year Resolutions for the Economy of Pakistan,” panellists candidly expressed disagreements over the questions of foreign aid, democracy and the interplay of policy-making and implementation at the national level.
“Many people think that a non-democratic set-up is a panacea for the economic problems of Pakistan. They’re wrong. A non-democratic government is not sustainable,” said Ishrat Husain, former governor of the State Bank of Pakistan, who is currently serving as dean and director of IBA. “Democracy is slow and messy. It takes two steps forward and four steps backwards. Yet it’s the only option. The democratic process shouldn’t be interrupted.”
Husain said military regimes do make an extra effort in the beginning to improve the economy because they have not yet developed a constituency of their own. “But later on, they start making compromises.”
Claiming that a democracy needs low poverty and high literacy rates to prosper, Gillette Pakistan CEO Saad Amanullah Khan said Pakistan had only two eras of development: first, in the early 1960s, and second, during the first three years of the Musharraf government. “I don’t care if a dictator is there as long as he revamps the economy,” Khan said.
He said that the idea of a government led by technocrats that could bring the economy back on its feet had its relative merits. Khan emphasised the need for adopting a national vision for long-term growth, adding that the entire nation should work towards its realisation. “Go to Proctor & Gamble or Gillette, and they’ll tell you their five-year goals in detail. But ask a government representative what the vision for Pakistan is for the next five years, you won’t get any definite answer.”
Disagreeing with Khan, Husain said Pakistan did not need any more “visions,” as the problem existed in their implementation only. “The country is full of pious documents. These are beautifully written policy papers that nobody reads. We all agree on the substance of policy, but the implementation is the real issue.”
Responding to a question, former Asia editor for The Economist Simon Long said it was wrong to attribute Pakistan’s dismal economic performance of six decades to its culture or laid-back attitude to work. He said that 35 years ago people often assumed China’s poor economy was a consequence of Confucianism. He said it was now obvious that Confucianism had nothing to do with the slow growth in the economy of China.
Talking about Pakistan’s economic indicators, Long said an economy with a tax-to-GDP ratio of less than 9% was not sustainable. He said it was hard for him to understand how Pakistan’s economic managers would bring down the fiscal deficit in next two to three years.
In response to the comment of a business student that Pakistan should stay away from all kinds of foreign aid and assistance to achieve self-reliance, Husain said the assumption that the Pakistani economy depended on US aid to survive was wrong. “Isolationism won’t solve our problems. Transfer of knowledge and technology is important. You’ve to be outward-oriented.”
http://tribune.com.pk/story/301827/failed-rescue-act-too-many-visions-for-pakistan/
Here's a Daily Times report on Pakistan's Planning Commission's efforts to improve economic governance:
ISLAMABAD: Planning Commission of Pakistan with the support of Department for International Development (DFID) and assisted by Governance Institutes Network International (GINI) has initiated the process of consultative workshops in all provincial headquarters and major business hubs to involve stakeholders for economic literacy and local ownership to facilitate the implementation of framework for economic growth of Pakistan - a strategy that seeks accelerated and sustained growth and development formulated by the Planning Commission.
Planning Commission of Pakistan has developed a framework for Economic Growth of Pakistan, which has been approved by National Economic Council (NEC).
Framework for economic growth is informed by the latest in economic thinking and seeks to strengthen both government and markets. It is not a ‘government versus markets’ approach but a ‘government and markets’ approach. An efficient government underpins a vibrant market. Much of the proposed reforms are to get the role of government and market in balance to develop efficiency within and between the two. At the first stage, efforts will be undertaken to revive the economy to its short-term potential GDP growth rate of about 5-6% a year. If issues regarding energy governance are resolved and some credible macro stability is reached, this could be achieved in a short time.
The strategy also suggests deep and sustained reforms - in areas such as public sector management, developing competitive markets, urban management and connecting people and places - as a way forward for accelerating growth to above 7%. The major themes of the Framework for Economics Growth are vibrant and competitive markets, governance, urban development, youth and community and energy.
Six critical changes have been identified that need to be introduced to strengthen the linkage between the Planning Commission and government performance. These changes are: strengthen the Medium-Term Development Framework (MTDF) and the Medium-Term Expenditure Framework (MTEF) for setting medium-term priorities in line with growth strategy and reforms agenda, support a unified result-based budget preparation process, decentralise responsibility for projects to line ministries, redefine the Planning Commission’s role and processes in respect of major capital projects and establish a results-based monitoring and evaluation system.
Planning Commission should lead the reform and change process through identification and advocacy of critically required amendments in policies. The commission has urged all stakeholders to own the policy and become agent of change, as until and unless they put force behind this growth framework, it may not be implemented in its true spirit.
http://www.dailytimes.com.pk/default.asp?page=2011\12\20\story_20-12-2011_pg7_15
Here's Dr. Ataur Rahman's Op Ed in The News on building Pakistan's knowledge economy:
Agriculture represents the backbone of our economy. It can serve as a launching pad for transition to a knowledge economy, as it has a huge potential for revenue generation. But that can happen only if agricultural practices are carried out on scientific lines and use of technology maximised. The four major crops of Pakistan are wheat, rice, cotton and sugarcane. They contribute about 37 percent of the total agricultural income and about nine percent to the GDP of Pakistan.
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Wheat is the most important crop of Pakistan, with the largest acreage. It contributes about three percent to the GDP. The national average yield is about 2.7 tons per hectare, whereas in Egypt the yields are 6.44 tons per hectare and in European countries such as France, Germany and the United Kingdom they are above seven tons per hectare. We presently produce about Rs220 billion worth of wheat. If we can boost our yields to match those of Egypt, it can generate another Rs350 billion, allowing us to systematically pay off the national debt and make available funding for health and education.
However, the government has been reluctant to invest in research, water reservoirs and dams and extension services so that the country continues to suffer. Some progressive farmers in irrigated areas have been able to obtain yields of 6-8 tons per hectare but they are very much a minority. In rain-fed areas the yields are normally between 0.5 tons to 1.3 tons per hectare, depending on the region and amount of rainfall. In irrigated areas the yields are normally higher, in the range of 2.5 tons to 3.0 tons per hectare. Improved semi-dwarf cultivars that are available in Pakistan can afford a yield of wheat between 6-8 tons per hectare. It is possible to increase the yields substantially with better extension services, judicious use of fertilisers and pesticides, and greater access of water from storage reservoirs and dams that need to be constructed.
Cotton represents an important fibre crop of Pakistan that generates about Rs250 billion to the national economy, and contributing about two percent to the national GDP. Pakistan is the fourth-largest producer of cotton in the world, but it is ranked at 10th in the world in terms of yields. The use of plant biotechnology can help to develop better cotton varieties. Bt cotton produces a pesticide internally and safeguards the plant against chewing insects. The yields of Pakistani seed cotton and cotton fibre are both about half those of China. A doubling of cotton yields is doable and it can add another Rs250 billion to the national economy.
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The failed system of democracy in Pakistan is strongly supported by Western governments. It serves Western interests as it leads to docile and submissive leaders who serve their foreign masters loyally. The stranglehold of the feudal system thrives with no priority given to education. More than parliamentarians have forged degrees and the degrees of another 250 are suspect. The Supreme Court decision of verification of their degrees is flouted and ignored by the Election Commission. The bigger the crook, the more respect he is given by the government and the biggest crooks are conferred the highest civil awards. The economy has nosedived and we are today ranked among the bottom six countries of the world in terms of our expenditure on education.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=83815&Cat=9
Here's an Express Tribune report on TI findings in Pakistan:
The latest perception report from Transparency International Pakistan (TIP) shows a limited number of respondents see centres of corruption in Pakistan in the following descending order, of being perceived as the most corrupt to the least: 1) land administration; 2) police; 3) income tax; 4) judiciary; 5) tendering & contracting; 6) customs, plus state corporations and the last is the army. Once again TIP has expressed its shock at the mounting lack of honesty in public affairs and has listed some of the reasons why the graph of evil is creeping upwards every year.
It is not surprising that land administration is the first among the perceived culprits. It is vastly the domain of the provinces where the politician has yet to begin to take responsibility for sorting-out maintenance and collection. Land record is still in primitive shape and the low bureaucracy that handles the sector is not upgraded and made competitive. Most of the trouble takes place away from the big cities because the writ of the state languishes in smaller districts and abdicates to three power centres: the feudal landlord (often a politician), the police and the judiciary. It will take a long time to sort-out this mess and it will not happen at the same speed in all the provinces. The police has endemic ills that most states in the Third World have failed to tackle. The recruitment of policemen has been pegged to good education only recently, but the provinces — whose domain this is — have been remiss in making the kind of allocations needed to upgrade the institution’s performance. The ratio of policemen to population is abysmal, training standards — though imitative of the army — are nowhere near being practically useful and low status has kept the average policeman tied to slavish behaviour towards the seniors and a brutish one towards the common man.
But the police may not be intrinsically as bad as the circumstances of its functioning make it. State policies favouring non-state actors involved in terrorism on the side have hamstrung the police. Unwillingness to prosecute has instilled in the department a habit of not trying too hard to convict, say, terrorists from a shady jihadi organisation simply because it is being clandestinely supported by the state. Because of this ambience of state-backed criminality, many policemen themselves indulge in crime and get away with it. Many senior policemen live beyond their means and own properties they could not have bought with honest money. As for the tax administration, if one were to look at the statistics, things may be getting better — and that is why it is no longer number one in corruption. Pakistan’s revenue collection is one of the lowest in the world (with the tax-collection machinery believed to be riddled with corruption and inefficiency) and that impacts directly the capacity of the state to spend on development. The reigning theory is to erect a system in which the income tax officer comes into least contact with the taxpayer.
http://tribune.com.pk/story/314181/pakistans-perceived-corruption/
Here's an Op Ed by Prof Anatol Lieven published in the Guardian:
If Pakistan's chief justice, Iftikhar Chaudhry, manages to press his charges of corruption against the president, Asif Ali Zardari, he will bring down the existing Pakistani government. If he extends his anti-corruption campaign to the political elites as a whole, he will bring down the entire existing political system – and replace it, his critics say, with a dictatorship made up of an unelected (and equally corrupt) judiciary.
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The truth is that Pakistani politics revolves in large part around politicians' extraction of resources from the state by means of corruption, and their distribution to those politicians' followers through patronage. Radically changing this would mean gutting the existing Pakistani political system like a fish. Nor is it at all certain how popular the process would really be with most Pakistanis.
For while the greater part of this process of extraction and redistribution is illegal according to Pakistani law, how much of it is immoral in Pakistani culture is a much more complicated question. Every Pakistani politician accuses his rivals of corruption but, equally, the perception that he himself is "generous" and "honourable" to his own supporters is likely to be central to his own local prestige. If a public monument is ever erected to the Ideal Pakistani Politician, the motto "He dunks but he splashes", originally coined by Mayor Richard Daley of Chicago, should be inscribed on its pedestal.
And this is not just a matter of cynical politics. It also obeys a fundamental moral imperative of local culture to be loyal to one's followers and, above all, one's kinfolk. The politician who is really despised is the kleptocrat who both steals immoderately and does not share the proceeds. As a result, a good deal of the proceeds of corruption does get distributed through parts of society, thereby helping to maintain what until recently has been the surprising underlying stability of the Pakistani political system.
The military is widely seen as relatively immune to corruption, and when it comes to its own internal workings, this is largely true – though it usually ceases to be true when generals go into politics. However, it is vitally important to note that this is in large part because for many decades the military as a whole has acted as a kind of giant patronage network, extracting a huge share of Pakistan's state resources via the defence budget and other concessions, and spending them on itself. Because – to its credit – it has distributed the resulting benefits in an orderly if hierarchical way among its generals, officers, non-commissioned officers and even to a degree privates, it has managed to keep a lid on corruption within the military itself. However, a belief is growing among ordinary soldiers, not just that the generals' perks are immoderate but that in some cases their families are using their connections to make huge corrupt fortunes outside the military.
As for Zardari, it seems highly doubtful that he can hang on much longer. The chief justice is pursuing him with bulldog determination and the letter of the law is on his side. The military has been infuriated by what it believes are his attempts to ally with Washington against it. It does not want another military government, but it does want a civilian regime that is much more responsive to its wishes. And the opposition want him out before, not after, senate elections that might just enable him to cling to the presidency even if as expected his Pakistan People's party is defeated in general elections due by early 2013. Whether getting rid of Zardari will fundamentally change Pakistani politics, however, is a very different matter.
http://www.guardian.co.uk/commentisfree/2012/jan/19/pakistan-culture-honourable-corruption?newsfeed=true
Pakistan is a resilient country, says Anatol Lieven according to Dawn:
In Pakistan’s diversity lies a measure of its resilience. This was argued by distinguished journalist and author Anatol Lieven during his talk at the Oxford University Head Office on Saturday.
Mr Lieven’s talk basically gave a sketch of his book ‘Pakistan: A Hard Country.’ He began by asserting that Pakistan was not a failed state and said the people who had gathered to listen to him were proof of it. Pakistan was not Afghanistan, Chechnya or Somalia. He maintained that his book was about the sources of resilience in Pakistan, which could be sources of stagnation as well (in terms of development). To explain his point, he said he had used the expression ‘Janus-faced’ many a time in the book, and that the editors had made 18 deletions of the phrase, leaving just half a dozen. The book was an attempt at discussing power in the country, how it is exercised and what are its roots – religious, cultural etc. This central theme was set against the background of the war in Afghanistan and the rise of militancy in Pakistan. He told the gathering that when an American publisher read it he was taken aback because he had thought that it would be about the Taliban and an impending Islamic revolution in Pakistan. He added that it also discussed the role of the military and the four provinces and the difference within those provinces.
Mr Lieven said he had spent a lot of time talking about the diversity in Pakistan. For example, how Karachi was different from the rest of Sindh and how Punjab was an immensely varied region. Also, the important role that kinship played in the country’s politics and power struggles. In his view, a measure of its resilience lay in the country’s diversity, because of which, however, it was sometimes difficult to get things done. He argued that Pakistan couldn’t have an Iran-style revolution because it didn’t have a monolithic culture.
Mr Lieven said that as he was a journalist he got quotes from the Pakistani people in their own words. The problem with the West was that it didn’t listen to people directly and therefore had a flawed understanding of things. If you were to know about the tribal justice system in Balochistan, you had to talk to a Baloch sardar, he pointed out.
With respect to militancy in Pakistan Mr Lieven said that although the fear of terrorism was pervasive, and that it had claimed numerous victims, the insurgency was limited, particularly after the 2009 Swat operation in which militants were driven back. However, he added that insurgency was common in the region and, except for Bangladesh, every country had faced it.
Mr Lieven said sympathy for the Afghan Taliban in areas like Peshawar was similar to the support for the mujahideen in the ‘80s. It did not necessarily mean an Islamic revolution. He argued that up to a certain point the situation did appear perilous but the post-Musharraf scenario proved that if the state and the army made a concerted attempt things could be done. He said his book also took issue with the US foreign policy. The US should realise that Pakistan is a much more important country than Afghanistan and that it needs to tread lightly here. He said however that the Osama bin Laden operation had impacted public opinion in the US, and if there was a terrorist attack in the US or India in future, US retaliation could be severe. It was important for Pakistan to continue visible cooperation against international terrorism, he remarked.
Replying to a question, Mr Lieven said one of the reasons he used the word ‘hard’ in the title of the book was that he would often hear the phrase ‘Pakistan is a hard country’ from the locals. He gave the example of a Chaudhry in Punjab who, explaining the killing of his detractors, commented that Pakistan was a hard country....
http://www.dawn.com/2012/02/05/pakistan-is-a-resilient-country.html
Political patronage in the US, called the "spoils system" reached its peak under President Andrew Jackson beginning in 1828. Here's an excerpt of Wikipedia entry on the Spoils system:
Before March 4, 1829, moderation had prevailed in the transfer of political power from one presidency to another. President Andrew Jackson's inauguration signaled a sharp departure from past presidencies. An unruly mob of office seekers made something of a shambles of the March inauguration, and though some tried to explain this as democratic enthusiasm, the real truth was Jackson supporters had been lavished with promises of positions in return for political support. These promises were honored by an astonishing number of removals after Jackson assumed power. Fully 919 officials were removed from government positions, amounting to nearly 10 percent of all government postings.[4]:328-33
The Jackson administration attempted to explain this unprecedented purge as reform, or constructive turnover, but in the months following the changes it became obvious that the sole criterion for the extensive turnover was political loyalty to Andrew Jackson. The hardest hit organization within the federal government proved to be the post office. The post office was the largest department in the federal government, and had even more personnel than the war department. In one year 423 postmasters were deprived of their positions, most with extensive records of good service. The new emphasis on loyalty rather than competence would have a long term negative effect on the efficiency and effectiveness of the federal government.[4] :334
President after president continued to use the spoils system to encourage others to vote for them. But by the late 1860s, reformers began demanding a civil service system. Running under the Liberal Republican Party in 1872, they were harshly defeated by patronage-hungry Ulysses S. Grant.
After the assassination of James A. Garfield by a rejected office-seeker in 1881, the calls for civil service reform intensified. The end of the spoils system at the federal level came with the passage of the Pendleton Act in 1883, which created a bipartisan Civil Service Commission to evaluate job candidates on a nonpartisan merit basis. While few jobs were covered under the law initially, the law allowed the President to transfer jobs and their current holders into the system, thus giving the holder a permanent job. The Pendleton Act's reach was expanded as the two main political parties alternated control of the White House every election between 1884 and 1896. After each election the outgoing President applied the Pendleton Act to jobs held by his political supporters. By 1900, most federal jobs were handled through civil service and the spoils system was limited only to very senior positions.
The separation between the political activity and the civil service was made stronger with the Hatch Act of 1939 which prohibited federal employees from engaging in many political activities.
The spoils system survived much longer in many states, counties and municipalities, such as the Tammany Hall ring, which survived well into the 1930s when New York City reformed its own civil service. Illinois modernized its bureaucracy in 1917 under Frank Lowden, but Chicago held on to patronage in city government until the city agreed to end the practice in the Shakman Decrees of 1972 and 1983. Modern variations on the spoils system are often described as the political machine.
http://en.wikipedia.org/wiki/Spoils_system
PIA, Pakistan's national airline, is a victim of corruption and incompetence from political patronage. Here's a Reuters' report on it:
PIA (PIAa.KA), like Pakistan, always seems to be on the brink of disaster. But now that seems closer than ever for the national flag carrier, once a source of pride for the country.
The airline is haemorrhaging hundreds of millions of dollars a year while being pummelled by competition from sleek Gulf giants like Emirates EMIRA.UL, Etihad and Qatar Airways.
A quarter of its 40 aircraft are grounded because the airline can't find enough money to buy spare parts. Flights are regularly cancelled and engineers say they are having to cannibalise some planes to keep others flying.
"The situation has worsened to the extent of rendering this airline almost financially unviable," said the State Bank of Pakistan in a report on the state of the economy.
In many ways the airline mirrors the way Pakistan -- a strategic U.S. ally often described as a failing state -- is run.
The same inefficiency, nepotism and corruption that critics say have prevented the government from tackling a Taliban insurgency, crippling power cuts, ethnic violence and widespread poverty also threaten to bring down the airline.
PIA lost 19.29 billion rupees in the first nine months of 2011, almost double the losses in the same period in 2010.
The airline, like the Pakistani economy, has relied on bailouts to stay in the air, and is negotiating with the state for another rescue package.
"Just like PIA has the potential to do well, Pakistan's economy does too. But both haven't because of mismanagement. In the end that is the story -- mismanagement," Salman Shah, a former Pakistani finance minister, told Reuters.
PIA officials were not available for comment on the challenges facing the airline despite repeated requests.
HUGE WORKFORCE WEIGHS DOWN AIRLINE
Over the years, critics say, governments have manipulated state corporations like PIA for political and financial gain, giving jobs to so many supporters that the size of the workforce has become unsustainable in the face of mounting losses.
"We don't have people in the right places in typical Pakistani fashion. It's about who you know not what you can do," said a PIA pilot, who like other employees asked not to be identified for fear of being fired.
Today, PIA has a staggering employee to aircraft ratio of more than 450, more than twice as much as some competitors. In the first nine months of 2011, employee expenses drained 16 percent of turnover.
"Politically motivated inductions have been the major cause of the significant increase in human resource burden in this organisation," said the central bank.
"It cannot be corrected without taking drastic steps for rightsizing and increasing operational efficiency."
That is unlikely in a country where political expediency and interests often undermine efforts to make everything from governments to corporations successful.
Frustrations with those realities are palpable at PIA.
http://www.reuters.com/article/2012/02/14/uk-pakistan-airline-idUSLNE81D02820120214
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