Tuesday, January 14, 2014

Musharraf Earned Legitimacy By Good Governance

Former President Musharraf's detractors argue that he lacked legitimacy because he came to power through a coup which removed a duly elected government in 1999.

Implicit in Musharraf's opponents' argument is the assumption that the electoral process is the only source of legitimacy for a ruler. It ignores the possibility that the will of the people can also be expressed in ways other than elections to confer legitimacy on a leader. It rejects the notion that a leader can earn legitimacy in the eyes of the people by delivering results to the people through good governance.

Public Opinion Surveys:

Such an expression of people's will can come in many forms, including results of frequent public opinion polls conducted by multiple professional pollsters in Pakistan and many other countries around the world. One such credible survey is done regularly by Pew Global Research.  It shows that the majority of the people believed the country was headed in the right direction in Musharraf years. It also shows that people's satisfaction with Pakistan's direction has been in rapid decline. It has sharply fallen to about 8% in 2013.
Source: Pew Research in Pakistan

Another survey conducted by Gallup Pakistan  in August 2013 shows that 59% of Pakistanis have a positive view of President Muaharraf (31%  say they hold a favorable opinion of him and another 28% say he was satisfactory). 34% have an unfavorable opinion of the former ruler.

Judiciary and Parliament Approval:

Musharraf's actions of 1999 were legitimized by Pakistan Supreme Court in Syed Zafar Ali Shah v. General Pervez Musharraf, Chief Executive of Pakistan (PLD 2000 SC 869). In addition to endorsing the coup, the Supreme Court granted extensive powers to the new Musharraf Government, empowering it to unilaterally amend the 1973 Constitution and enact new laws without the approval of Parliament.

Musharraf held parliamentary elections in 2002 and subsequently won a parliamentary vote to confirm him as President of Pakistan.

Good Governance Under Musharraf:

When Musharraf took over in 1999, Pakistan was essentially bankrupt with just a few hundred million dollars in reserves and a heavy debt load which it couldn't repay. Economic growth plummeted to between 3% and 4%, poverty rose to 33%, inflation was in double digits and the foreign debt mounted to nearly the entire GDP of Pakistan as the governments of Benazir Bhutto (PPP) and Nawaz Sharif (PML) played musical chairs. Before Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. In 1999 Pakistan’s total public debt as percentage of GDP was the highest in South Asia – 99.3 percent of its GDP and 629 percent of its revenue receipts, compared to Sri Lanka (91.1% & 528.3% respectively in 1998) and India (47.2% & 384.9% respectively in 1998). Internal Debt of Pakistan in 1999 was 45.6 per cent of GDP and 289.1 per cent of its revenue receipts, as compared to Sri Lanka (45.7% and 264.8% respectively in 1998) and India (44.0% and 358.4% respectively in 1998).





So what did Musharraf do to gain the trust of a very large number of Pakistanis who supported his rule after the 1999 coup? He undertook a number of economic and regulatory reforms to rejuvenate the country's economy. Deregulating telecommunications and liberalizing electronic media business, particularly television, immediately brought in significant first wave of domestic and foreign investment and created media and telecom boom in the country. Banking and financial services sector took off and rapidly grew and created lots of jobs. A construction boom followed which more than doubled per capita cement consumption and created millions of new jobs. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs.





Pakistan Savings Rate as Percent of GDP (Source: World Bank)

Source: Credit Suisse and Cement Industry

Per Capita Cement Consumption in Pakistan Source: Credit Suisse and Cement Industry
Thanks to the dynamic economy under President Musharraf's rule, Pakistan created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.

The above summary is based on volumes of recently released reports and data on job creationeducationmiddle class sizepublic hygienepoverty and hunger over the last decade that offer new surprising insights into the lives of ordinary people in two South Asian countries. It adds to my previous post on this blog titled "India and Pakistan Contrasted in 2010".


The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding with the International Monetary Fund which said:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Contrary to what Musharraf bashers dismiss as "aid-fueled " or "consumption-driven" economy in 2002-2007, the economic growth was actually driven by private savings and investments. Private domestic savings rate was over 18% of GDP in Musharraf but has slumped to just 7% in recent years. Pakistan attracted record foreign direct investment (FDI) in telecom, banking, manufacturing and other sectors of the economy. Annual FDI flow into Pakistan reached $5.4 billion in Year 2007-08. As to US aid during and after Musharraf's years in office, it has actually tripled in size from $700 million in 2007-8 to $2.1 billion since 2010. If aid alone were responsible for economic growth, then the GDP growth rate should have accelerated, not plummeted, after Musharraf left office.

Pakistan FDI as Percent of GDP (Source: World Bank)



In addition to the economic revival, Musharraf focused on social sector as well. Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”.



Overall, Pakistan's human development score rose by 18.9% during Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent.

Going further back to the  decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP,  the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

Acceleration of HDI growth during Musharraf years was not an accident.  Not only did Musharraf's policies accelerate economic growth, helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007, his government also ensured significant investment and focus on education and health care. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which  continue to sustain huge losses due to patronage-based hiring.

So Why Didn't the Musharraf Miracle Last?

It takes a long time to build and very little time to destroy a beautiful, well-manicured garden with flourishing plants and flowers. A new incompetent, lazy and corrupt gardener can turn it into a disaster by failing to fertilize, water and prune. That's what happened in Pakistan in 2008. A healthy, well-run and growing economy was quickly turned to shambles in a very short time because of policy inaction and neglect. Here's how Pakistani economist Dr. Ashfaque H. Khan explained it in 2010: "What went wrong? Why one of the fastest growing economies in the Asian region until two years ago has been totally forgotten in the region? Firstly, the speed and dimension of exogenous price shocks (oil and food) were of extraordinary proportions. Secondly, the present government found itself totally ill-prepared and clueless in addressing the challenges arising out of the shocks. While rest of the world was taking corrective measures and adjusting to higher food and fuel prices, Pakistan lurched from one crisis to another."

Constitution Not Suicide Pact: 

To those who say nothing should trump the constitution of Pakistan, let me remind them that there is legal precedent to suggest  that there are things more important than the constitution. "The Constitution is not a suicide pact" is an oft-repeated phrase in American political and legal discourse. It refers to the belief that constitutional restrictions on governmental power must be balanced against the need for survival of the state and its people. It is frequently attributed to Abraham Lincoln who is said to have used it in answering charge that he violated the United States Constitution by suspending habeas corpus during the American Civil War. Others who have used it include Justice Robert H. Jackson (Terminiello v. Chicago, 1949) and Justice Arthur Goldberg (Kennedy v. Mendoza-Martinez, 1963).

Here's a video discussion on the subject:


Civil-military Stand-Off on Musharraf Trial; Musharraf Govt's Performance Record from WBT TV on Vimeo.

Related Links:

Haq's Musings

Musharraf Wants to Face Trial; Military Opposed to it

Saving Pakistan's Education

Political Patronage Trumps Public Policy in Pakistan

Dr. Ata-ur-Rehman Defends Pakistan's Higher Education Reforms

Twelve Years Since Musharraf's Coup

Musharraf's Legacy

Pakistan's Economic Performance 2008-2010

Role of Politics in Pakistan Economy

India and Pakistan Compared in 2011

Musharraf's Coup Revived Pakistan's Economy

What If Musharraf Had Said No?

Human Development in Musharraf Years


15 comments:

Mayraj said...

Well, his detractors cannot claim that themselves, so what else they can they do?

Riaz Haq said...

Mayraj:

@Asma_Jahangir calls @P_Musharraf tribunal "Kangaroo Court" says "next military coup won't be bloodless" #Pakistan http://www.riazhaq.com/2014/01/musharraf-wants-to-face-trial-but.html …

Mayraj said...

MNS misses big picture. But he is a short sighted thug himself, so what do you expect. Will poison all future military civil relations.

Ismat said...

Brilliant research, excellent article, Riaz Saheb. It would be great if this receives max publicity in Pakistan.

Riaz Haq said...

Mayraj,

Attorney Asma Jahangir said yesterday at a televised news conf that she knows the judges on the tribunal which is trying Musharraf. "They are slapping their foreheads and privately saying they don't have a clue about the applicable laws in the case". "These clueless judges are being asked to render precedent-setting judgement", she added.

She called the tribunal a "Kangaroo Court" and added that "next military coup won't be bloodless"

CanadianBoy said...

How much everybody want to bet that Mr.Musharraf will die of mysterious causes, a car accident, a sudden cardiac arrest, a stroke. He will then be buried without proper autopsy thus leaving all sides with plausible dependability. Of course Ms. Jahangir this not the 70's or 80's anymore, army has learned it is wise to work behind the scene and in the front.

Suhail said...

The government seems to be continuing on the path of subduing the military, with Musharraf case becoming symbolic. Whether a military coup will take place or not depends on whether the military has already been castrated or not during the last six years. The article of Dec 2007
and the subsequent reign of Kayani and Iftikhar Chaudhary need to be seen in conjunction. The task of the present generals is tougher than the generals in 1999; we'll have to wait and see if they are committed (and courageous) enough to protect their institution.

Riaz Haq said...

IA Rehman Op Ed in Dawn:

First, the nation is not united on punishing Pervez Musharraf, however small in number his defenders may be. Dictators may hang politicians on the basis of a divided court’s verdict; democrats cannot ignore a split in public ranks. There is no point in proceeding against Musharraf any further. The punishment he has undergone should be considered enough. The majesty of the law has been demonstrated.

Secondly, it is fashionable to criticise only military adventurers and courts for military takeovers. The list should also include the politicians who have been keen to serve any man on horseback. Could Ziaul Haq have gotten away with murder and much worse, including the creation of Pakistan’s present-day tormentors, without the aid of politicians who had rushed to join him? The people must realise that the bosom of many a politician is home to a potential dictator.

http://www.dawn.com/news/1080540/the-coup-lovers-brigade

Riaz Haq said...

86% of Pakistanis say Musharraf should not be tried alone for his actions of declaring emergency in 2007, according to a nationwide Gallup survey:

Majority Pakistanis (86%) believe individuals privy to and in favor of declaring emergency in the country in 2007 should be tried for treason along with Musharraf. GILANI POLL/GALLUP PAKISTAN


According to a Gilani Research Foundation Survey carried out by Gallup Pakistan, majority Pakistanis (86%) believe individuals privy to and in favor of declaring emergency in the country in 2007 should be tried for treason along with Musharraf.

A nationally representative sample of men and women, from across the four provinces was asked “In your opinion, should individuals who were privy to and in favor of former President Musharraf’s act of declaring emergency in the country in 2007 be tried for treason under Article 6 or do you believe that Musharraf should be tried alone?” Responding to this, 86% were in favor of trying all individuals associated with declaring emergency in 2007 while only 12% think Musharraf should be tried for treason alone. 2% did not respond.

http://www.gallup.com.pk/pollsshow.php?id=2014-01-21

Riaz Haq said...

Post-2000, the awkward, inconvenient truth is that, particularly during the regime of retired General Pervez Musharraf and former chief minister Arbab Ghulam Rahim, the physical infrastructure of Tharparkar reached an unprecedented level of progress.

Where, for example, in previous times, only about two kilometres of metalled road was built in a whole year, roads of the same length and more were built every month, and in even less time, for several years.

Grid electricity to main towns, water pipelines to large settlements, preparatory infrastructure for exploitation of coal reserves including work by the post-2008 PPP government, rapid proliferation of telecommunication and mobile phones have vastly enhanced mobility, access and information flow. http://www.dawn.com/news/1091961/tharparkar-a-famine-of-facts

Riaz Haq said...

Here's a Reuters' report on Pakistan COAS Gen Raheel Sharif vowing to "protect dignity" of military (being seen in context of cabinet ministers' attacks on Pervez Musharraf):

(Reuters) - Pakistan's military will protect its dignity "at all costs", the army chief said on Monday in an apparent show of irritation over the treason trial of former army chief and president Pervez Musharraf.

Such talk from the army chief, General Raheel Sharif, the most powerful figure in Pakistan, is likely to raise concern about political intervention by the army, which would set back hopes for the development of democracy and civilian rule.

Last month, a Pakistani court indicted Musharraf on five counts of treason over his suspension of the constitution and imposition of emergency rule in 2007, when he was trying to extend his rule.

Musharraf, who first seized power as army chief in a 1999 coup and later became president as well, faces the death penalty if convicted. He has pleaded not guilty.

The case again Musharraf highlights the competition for influence between Pakistan's three power centres: an increasingly assertive judiciary, the fledgling civilian government and the powerful military, which has ruled Pakistan for more than half of its 67-year-history.

Musharraf's indictment has broken an unwritten rule that the top ranks of the military are untouchable.

"The Pakistan army looks at all institutions with respect," Sharif said on a visit to a military base in response to questions from soldiers about recent criticism of the army, including, a military source said, one about the trial.

"But it will also preserve its own dignity and institutional pride at all costs."

Sharif, speaking at a base in Tarbela, about 70 km (44 miles) northwest of the capital, Islamabad, did not elaborate.

Musharraf was forced to step down as president in 2008 after street protests spearheaded by the judiciary and an election in which his political supporters fared poorly against a pro-democracy party.

He returned to Pakistan in March 2013 after nearly four years of self-imposed exile to contest a general election in May that year but was disqualified because of court cases pending against him.

Since then, he has faced a series of charges including murder in connection with the assassination in 2007 of former prime minister Benazir Bhutto.

Musharraf has denied all the charges and dismissed them as politically motivated.

He is living under house arrest in his farmhouse on the outskirts of the capital.


http://www.reuters.com/article/2014/04/07/us-pakistan-military-idUSBREA360QF20140407

Riaz Haq said...

Pakistan needs to do the following to wean itself of IMF:

1. Increase exports to earn foreign exchange

2. Build products domestically for import substitution

3. Take steps to encourage and incentivize foreign and domestic investments (FDI) by a) solving energy crisis b) improving security and c) increasing ease of business

4. Decrease reliance on foreign and domestic loans and grants

Riaz Haq said...

#Musharraf never double-crossed #US: SaysRobert Grenier, Ex #CIA Station Chief in #Islamabad Pakistan http://www.dailytimes.com.pk/islamabad/11-Mar-2016/musharraf-never-double-crossed-us-ex-cia-official …

Former CIA top spy in Pakistan has conceded that General (r) Pervez Musharraf never double-crossed the Americans in the aftermath of 9/11.

“I can say with good authority that General Musharraf never double-crossed us,” Robert Grenier, former Islamabad station chief of Central Intelligence Agency (CIA) told Daily Times in an interview. Several American journalists, analysts and politicians had repeatedly accused Musharraf of playing both sides, just to stay relevant in the eyes of the world superpower. After the US Marines’ raid to kill Osama bin Laden, another former CIA official Bruce Riedel had claimed that Gen Musharraf knew where the al Qaeda chief was hiding. Though, Riedel was quoting former Inter-Services Intelligence (ISI) director general, Ziauddin Butt.

Grenier is visiting Pakistan after 11 years to promote local publication of his book “88 Days to Kandahar: A CIA Diary.” After his assignment in Islamabad, he spearheaded CIA operations, in Iraq, to topple Saddam Hussein. He also worked at CIA’s Counter Terrorism Centre. He was reportedly fired by then CIA chief Porter Goss, after he opposed the torturing of captured al Qaeda operatives. He also testified against Lewis Scooter Libby, adviser to former vice president Dick Cheney, who was accused and later sentenced for leaking the identity of a CIA agent, Valerie Plame.

Grenier recounted how at several occasions Gen Musharraf went the extra mile to help the Americans. He claimed it was Gen Musharraf who had made explicit instructions to powerful ISI to extend full cooperation to the CIA whether it was about convincing Mullah Omar expel bin Laden from Afghanistan or capturing important al Qaeda leaders. He was given the task of running CIA Islamabad station several months before 9/11. “Despite my request, I could not meet then DG ISI Gen Mehmood. He was too busy digging up corruption cases against (deposed prime minister) Nawaz Sharif,” he revealed.

On page 58 of his book, Grenier termed the ISI “an infamous organisation.” Asked to elaborate his position on the ISI, he took a diametrically opposite view and denied his own words. “What I wrote was merely a set perception about the ISI in the world. That was not my estimation. Throughout in my book I praised the role and services of the ISI,” he said. Grenier said the most important catches from Pakistan were Khalid Sheikh Muhammad, popularly known as KSM and Abu Zubeyda, two key al Qaeda leaders. He refused to comment on who had pocketed big bounties the Americans were offering on al Qaeda operatives.

The former CIA station chief sent an important memo to Washington in September 2001, which he described as the most important three-hour work of his entire 27-year career. In that memo he recommended covert operations in Afghanistan enabling Northern Alliance and Pushtun tribal leaders topple Taliban regime.

Riaz Haq said...

"Speaking fee for #Musharraf in $150K-200K range for a day," says Embark USA President David B. Wheeler. #Pakistan

http://www.newsweek.com/pakistans-musharraf-lucrative-speaking-fees-88033

"The [speaking] fee for Musharraf would be in the $150,000-200,000 range for a day," says Embark President David B. Wheeler, "plus jet and other V.I.P. arrangements on the ground." Wheeler says Clinton, for whom Embark has arranged speaking engagements in the Middle East, commands up to $250,000 per appearance. "If we did multiple events in multiple cities, [Musharraf] could get closer to the $500,000 to $1,000,000 range [for a series of talks]," he said. Embark, which promises "unique experiences that educate, entertain and enlighten," has also booked speeches for former U.S. President George H.W. Bush and former U.S. Secretary of State Colin Powell.

Pakistanis who know Musharraf well say this is good news for the former president, who is not believed to have salted away a fortune as some of his predecessors have done (Musharraf will only receive a modest army retirement pension). But he is a long way from the poor house. Workers are putting the finishing touches on a mansion, said to be worth some $2 million dollars, that he is building on five acres of prime land just outside Islamabad. Since his resignation he has been playing golf and tennis with friends, surrounded by heavy security, and is also planning to write a sequel to his successful 2006 autobiography, "In the Line of Fire," which could easily net him another seven-figure windfall.

Riaz Haq said...

#Pakistan #cement industry continues growth. Per capita consumption to rise from 147kg in 2015 to 250kg in 2020.

http://tribune.com.pk/story/1122920/cement-industry-poised-continued-growth/

Pakistan’s cement industry will continue to grow over the next few years due to strong pricing power and contraction in supply and demand gap, a Topline Securities report said on Tuesday.

The capacity utilisation of Topline Cement Universe – a sample of cement companies listed on Pakistan Stock Exchange (PSX) – is likely to reach 96% in fiscal year 2018 from 78% in fiscal year 2015.

Gross margins of Topline Cement Universe will reach 47% by fiscal year 2020 (which were 34% in fiscal year 2015) while earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins will reach 46% by fiscal year 2020 (34% in fiscal year 2015).

Resultantly, Topline Cement Universe’s profitability is expected to grow at 4-year (fiscal year 2017 to fiscal year 2020) Cumulative Annual Growth Rate (CAGR) of 24%.

Pakistan’s cement industry has entered into a new paradigm. The turnaround in macroeconomic fundamentals, mega projects under the umbrella of China-Pakistan Economic Corridors (CPEC) and booming private sector spending are accelerating local cement demand.



“We believe economic recovery will continue to bolster domestic demand. Based on past trend, we have applied a factor of 2 times to our average real GDP growth forecast of 6% during fiscal year 2017 to fiscal year 2020 in order to arrive at average local cement growth forecast of 12% during the same period,” the report said.

This should take per capita cement consumption of Pakistan from 147kg in fiscal year 2015 to 250kg in fiscal year 2020.

Major capacity additions of 19 million ton (42% of current capacity) worth around Rs192 billion are in pipeline (from fiscal year 2017 to fiscal year 2020) in Pakistan. “Despite these additions, we see no price war risk as additional capacities will easily be absorbed due to buoyant cement demand.”

The government in budget for fiscal year 2016-2017 has changed the federal excise duty (FED) on cement bags from variable 5% of retail price to fixed Rs50 per kg while duty on imported coal is reduced from 6% to 5%. “Thanks to strong pricing power, we believe that, the net impact of Rs33 per bag will be gradually passed on,” the report added.

However some developments can change the present scenario including price competition, imported cement, higher than anticipated rise in gas tariff, delay in construction projects and change in economic policy