Sharif Emerges as Pakistan's Power Broker

Less than nine years ago, Mr. Nawaz Sharif, the two-time prime minister of Pakistan, was overthrown, jailed and then forced into exile by General Musharraf. Now, he is emerging as the ultimate come-back kid of Pakistani politics. Recent polls indicate he is the most popular politician in Pakistan. His party, the PML(N) has emerged as the second largest force in Pakistan's parliament in February elections held under President Musharraf. His brother rules Punjab, the largest province in Pakistan, and Sharif has forced Asif Zardari to join him in removing Musharraf, his personal nemesis, under the threat of impeachment.

Who is Nawaz Sharif? What is his past? What does he want? These questions are gaining great relevance with the rising popularity and increasing clout of Nawaz Sharif. A recent Wall Street Journal interview and story shed some light on Mr. Sharif.


Here are some excerpts from the Wall Street Journal report today:

Mr. Sharif hails from a family of industrialists. At his heavily guarded home on the outskirts of Lahore, his wealth and power are both on display. Peacocks stroll on neatly trimmed grass and statues of a doe and her fawn mark an entrance where security guards wearing black T-shirts and carrying automatic weapons await visitors. Just outside Mr. Sharif's cavernous dining room are two stuffed African lions that appear to be stalking prey. "From Botswana," Mr. Sharif said. "Male lions."

In an interview at his home Wednesday, Mr. Sharif said he is prepared to withdraw his Pakistan Muslim League (N) from the governing coalition, led by the Pakistan People's Party, if about 60 judges -- sacked during a six-week state of emergency declared in November -- aren't given their jobs back immediately. Mr. Sharif added, "Mr. Musharraf threw the judges out of office. He ridiculed the institution," he said. "If this institution is not restored, it will shake the foundations of this country."

In answer to a question on business, Mr. Sharif said, "The privatization program started from our government. We should open up further. I'd like to privatize everything. This is the key to success. The government shouldn't be in the business of running factories".

Answering another question, Mr. Sharif said, "The coalition of the PPP and our party came into being on the basis that democracy would be strengthened and judges restored. And of course, we would restore the constitution as it stood before Mr. Musharraf overthrew an elected government, my government. The reinstatement of the judges hasn't come through."

Is Mr. Sharif a really changed man? Has he learned from his past mistakes? Has he had a real epiphany? Let's see how one can square the new persona of Mr. Sharif with the following realities from his past two stints as prime minister:

In June 1994 when Nawaz Sharif was the prime minister, Pakistan faced its worst-ever constitutional crisis when a pro-Sharif mob stormed into the supreme court, forcing Chief Justice Sajjad Ali Shah to adjourn the contempt of court hearing against Sharif. Hundreds of Pakistan Muslim League supporters and members of its youth wing, the Muslim Students Front (MSF), broke the police barricade around the courthouse when defense attorney Mr. S.M. Zafar was arguing his case.

A journalist ran into the courtroom and warned the bench of an impending attack. Heeding the warning, the chief justice got up abruptly, thanked Zafar and adjourned the hearing. While judicial members left the courtroom soon after, the mob ran in shouting anti-Supreme Court slogans, and damaging furniture.

The angry mob, led by ruling party member from Punjab Sardar Naseem and Colonel (retired) Mushtaq Tahir Kheli, Sharif's political secretary, shouted slogans against the chief justice. The mob also beat up Pakistan Peoples Party senator Iqbal Haider. The police managed to restore normalcy after baton charging and teargassing the mob, both inside and outside the courthouse. The court which assembled at 9:45 a.m., could continue the proceedings for only about 45 minutes.

According to media reports in 1998, Nawaz Sharif, after taking over as prime minister for the second time, amended Pakistan's constitution twice to consolidate his power. He attempted to transform the constitution and system of government completely by attempting to get unlimited powers of Amir ul Momineen (the chief of the faithful) by means of the Sharia Bill, which he introduced.

In April 2001, Ayaz Amir, a popular newspaper columnist and now a PML(N) MNA, wrote as follows about the Sharif brothers: The Sharifs’ notions of government were intensely private: which is to say, have your own man at every key post. They began with commissioners and police DIGs, the dregs of both services pandering to their whims and enriching themselves in the process. Major Mushtaq of the Police Service who has finally been caught by NAB for becoming a real estate tycoon while in service was an outstanding example of this breed: doing as he was told and becoming an impressive man of property along the way. But when Nawaz Sharif became Prime Minister the second time round the family’s sights were set higher. They had whiz-kid younger brother running Punjab. They had their own man in the presidency. After Sajjad Ali Shah’s arranged departure from the Supreme Court, they thought they had the apex court lined up in their favor. In the person of Justice Qayyum at the Lahore High Court they had the closest thing they could get to a personal judge. Division of family assets, balancing of huge bank loans against dummy collateral, tightening the noose around Asif Zardari and Benazir: the only judge who could handle these sensitive matters was Justice Qayyum.

In 1999, when Nawaz Sharif was prime minister, Pakistani economy was in shambles. Pakistan’s total 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% & 264.8% respectively in 1998) and India (44.0% & 358.4% respectively in 1998). The Economist recently noted that the current macroeconomic disarray will be familiar to the coalition government led by the Pakistan People's Party of Asif Zardari, and to Nawaz Sharif, whose party provides it “outside support”. Before Mr Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. But since then, as the IMF remarked in a report in January, there has been a transformation. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October."

Like his coalition partner Asif Zardari, Nawaz Sharif has also been the subject of corruption allegations. He is accused of abuse of power and amassing personal wealth at Pakistan's expense, and leaving the country bankrupt in 1999. There are lingering questions of where and how Mr. Sharif got the money to pay off the $450m judgment as rendered by a British court against him in 1998, in connection with Hudaibia Paper Mills Ltd.

Let me conclude with some questions and a sincere hope: Is the transformation of Nawaz Sharif genuine? Or, are we seeing just another two-faced politician vying for more power and popularity? Sometimes, people do change profoundly. I sincerely hope, for the sake of Pakistan's future, that the metamorphosis of Nawaz Sharif is positive and genuine. I also hope that Asif Zardari , the other major power broker in Pakistan, has gone through similar transformation to enable genuine democracy to take roots in Pakistan.

"Economic Meltdown" in Pakistan

Modern economies and markets are largely driven by business, investor and consumer confidence. The movers and shakers of business and investment world look to the national political and economic leadership and their pronouncements and actions for cues on what is to come. When they sense a lack of competent leadership, their confidence drops and the markets and the economies come crashing down, as has been observed in Pakistan recently.

In his first comments about Pakistani economy since the formation of PPP-PML(N) coalition government, the PPP co-chairman Asif Ali Zardari told a press conference on May 17 that the economy is headed toward "meltdown". These remarks came immediately after Finance Minister Ishaq Dar had pulled out of the cabinet on the issue of the judges restoration. Yesterday, Nawaz Sharif said that Pakistan’s ruling coalition had agreed to “expel” President Pervez Musharraf from power, further contributing to market unease.

As the PPP and PML leaderships continue their political posturing, the larger story is the massive loss of confidence by business/investment community in Pakistan. It is worrying to see a sudden halt to foreign investments and the flight of capital by Pakistani investors to investments elsewhere in the world.

State Bank has raised interest rates from 10% to 12.5%, the rupee is in free fall, the dollar reserves are disappearing and both S&P and Moody’s have cut Pakistan’s credit ratings.

KSE 100 index has lost 2992 pts during May 2008 starting at 15122 & ending at 12130. The index has lost 879 pts during the week ended May 30th , 2008, standing at a nine month low.

Credit-default swaps on Pakistan's government debt increased 10 basis points to 530 in Hong Kong, according to Morgan Stanley's prices. That means it costs $530,000 a year to protect $10 million of Pakistan's debt from default for five years.

As Pakistan's foreign currency reserves dwindle, the ability to borrow additional cash has been impaired by Pakistan's credit rating cut for the first time in nine years by S&P and Moody's Investors Service, which cited "growing economic imbalances and renewed political difficulties."

"The ratings could impact Pakistan's effort to raise debt overseas or sell shares in companies," said Zaheeruddin Khalid, head of research at Al-Meezan Investment Management Ltd. in Karachi, which oversees $270 million in stocks and bonds.

A recent report on Pakistan’s Geo TV said that Pakistani real estate companies have been moving capital out of the country to the tune of at least $15 billion so far to invest in Gulf real estate. Such steep loss of capital will inevitably lead to job losses in Pakistan and contribute to further economic and political instability.

Unfortunately, it takes time and serious effort to create confidence in markets and economy. But it is very quick and easy to destroy such confidence by ill-conceived, impromptu statements. Zardari's comments such as Pakistani economy heading toward a "meltdown" add fuel to the fire and weaken confidence in Pakistan's economy and drive away investors. What Pakistan needs more than anything else is a sense that the leadership understands the issues and working seriously in a focused manner to resolve the economic issues. They need some sense of political stability and predictability.

Is 90% Good Enough?

In response my earlier post on the role of Justice Chaudry and Pakistani Judiciary, I got an interesting comment from Khalid A in London, UK. I'd like to share it with you as follows:

"I wrote the following, as early as March 2007
Knowing When to Stop ( Dawn 27.3.07 & Frontier Post 25.3.07)
I often wonder why our nation manages to extract defeat from the jaws
of victory. I am not talking of cricket.
I was able to identify at least 3 important historical moments when
history of Pakistan would have changed, had we known when to stop, and
bank our profits.

1. In 1969, an agitation for restoration of democracy was launched by
Air Marshal Asghar Khan and others against the Ayub regime. It was no
mean achievement that the all powerful military government was really
shaken. Ayub Khan offered to hold elections within 6 months and to
hand over power to the elected leaders. But Air Marshal Asghar Khan
was thumping the table and demanded immediate hand over of power.
There was no elected civilian leader who could have taken over
immediately. The only person who could take over was Gen Yahya Khan,
and he did. Air Marshal Asghar Khan and his colleagues did not know
when to stop. Having achieved 90 percent of their goals, they tried
for 100 percent and lost everything.
2. In 1977, the combined opposition launched a campaign against Mr
Bhutto. It was no mean achievement that the all powerful Bhutto was
ready to meet 90 percent of the demands of his opponents. But they
wanted 100 percent – Bhutto must go immediately! Bhutto did go, but it
was Zia who took over. Our politicians in the opposition did not know
when to stop!
3. In 1997, Chief Justice Sajjad Ali Shah had the Prime Minister Nawaz
Sharif in the dock. It was no mean achievement for a judge in a third
world country to be able to summon the Prime Minister. Even in the
West, such a situation would be quite remarkable. The Chief Justice
had achieved 90 percent of the goals and could have accepted an
apology. But he wanted a hundred percent victory. The rest is history.
Alas he did not know when to stop!

Today we have another watershed moment in our history. Will the
agitators know when to stop? Will they accept 90 percent victory or
must they lose everything to achieve 100 per cent? The smell of
victory is quite intoxicating and it blurs one's judgement. Will they
extract defeat from the jaws of victory? Will the nation face a coup
a-la-GHQ?"

I also wrote more recently:

What Supreme Court could have done. (Frontier Post 17 nov 2007)

I wrote on the subject in March 2007, under the title "Knowing When to
Stop" ( Frontier Post 27th March 2007). It is very tempting for me to
say " I told you!", but the events are too traumatic for me to do
that.

I said then that our nation always extracts defeat from the jaws of
victory, because we do not learn when to stop. This happened in 1969,
1977 and 1997. Having achieved 90 per cent of our goals, we do not
stop and consolidate our position. We go on fighting to achieve total
humiliation of the opponent. Instead of a 100 per cent victory, we end
up with total defeat.

This time, the Supreme Court had asserted itself and would have had a
major role to play in our national affairs, in future years, had the
Court avoided the path of confrontation. This should have been
done,not under any pressure, but in the supreme national interest. The
Court could have declared that the President's election would be
valid, but with the following conditions:
1. Gen Musharraf will give up the Army uniform BEFORE he takes the new
oath as President. In this way Gen Musharraf will be a civilian when
he takes the oath.
2. Gen Kiyani will be sworn in as Army Chief, in the same ceremony,
immediately after the Presidential oath.
3. Gen Musharraf must seek a new vote of confidence from the next
assemblies, within a specified time. If the vote of confidence is not
granted, the office of the President will become vacant.

Alas, it was not to be!

Khalid A
London UK



This comment reminded of the lyrics of a Kenny Rogers song:

"You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done"