Asif Zardari: A Corrupt Master Manipulator?

The recent shock defeat of  Dr. Hafeez Shaikh, Prime Minister Imran Khan's nominee for the Senate, has former President Asif Ali Zardari's fingerprints on it. The former president and current co-chairman of the Pakistan Peoples Party orchestrated the buying of votes and arranged the hundreds of millions of rupees used for the purpose to ensure former Prime Minister Yusuf Raza Gilani's surprise victory in the recent Senate Elections. Zardari has been widely known to be "in his elements" when it comes to "money transactions". 

L to R: Khurshid Shah, Asif Ali Zaradri, Yusuf Raza Gilani

What Mr. Zardari pulled off is a reminder of what he did for Prime Minister Benazir Bhutto, his late wife who faced almost certain defeat in a no-confidence motion against her in November, 1989. In his recent book entitled "The Bhutto Dynasty", veteran British journalist Owen Bennet Jones offers several specific instances of how the Bhuttos used money for political gain. One such instance was when Benazir Bhutto's husband Asif Ali Zardari helped her defeat a no-confidence motion in 1989 that appeared to be all but certain to remove her from power. Here are the relevant excerpts of the book:

"Having seen politics close up when her father was in power, Benazir had long been aware that money played a part in Pakistani politics. But now it could not have been clearer: if one of her National Assembly members was being offered a bribe to switch to the opposition, she needed to be able to match it............As another of her political advisers later recalled, ‘Asif’s role became more prominent when she beat back the motion of no confidence. There was some wheeler dealing in that. Some buying of votes. The moment money transactions came into play, Asif was in his element.’ Asif Zardari has consistently denied any financial malpractice. During her second government, Benazir told an aide that you needed to have $200–300 million to go into an election so that you could fund your candidates and secure their loyalty. While many of her advisers gave her plenty of interesting suggestions about what to do, Zardari actually did things, proving himself to be a man she could rely on" 

Forms of Corruption and Impact. Source: Dr. Yuen Yuen Ang

Owen Bennet Jones has described in some detail how Zulfikar Ali Bhutto and his daughter Benazir Bhutto saw the role of money in Pakistani politics. Here's an excerpt of Benazir's candid admission that "kickbacks must be taken":

"In a surprisingly unguarded interview with the American Academy of Achievement in 2000 she (Benazir Bhutto) said, while denying personal involvement, that she wished she had done more to tackle corruption: ‘We all knew kickbacks must be taken . . . these things happen.’Politicians everywhere, she argued, made money. The difference was that while Western politicians did so after they left office, their counterparts in the developing world did not have that option".

Owen Bennet Jones has reported another instance in which Zulfikar Ali Bhutto gave away bundles of cash to a religious leader who was the last hold-out against the adoption of the 1973 constitution. Here is the excerpt:

"It was, by any standards, extraordinary that Zulfikar managed to push it through with no one in the National Assembly voting against it. Mubashir Hassan described how the final hold-out – a cleric – was persuaded to vote in favour with a payoff: ‘The amount was settled and Bhutto described the scene to me how when the fellow came to President’s House to collect the money, Bhutto threw a packet of notes on the floor and ordered him to pick it up. There the man was, moving over the carpet on all fours, picking a bundle from here and a bundle from there. Bhutto was mightily amused. By using all his political skills – bribery included – Zulfikar had made a significant contribution to Pakistan’s national story." 

Related Links:

Haq's Musings

South Asia Investor Review

Political Patronage in Pakistan

Zardari Corruption

Panama Papers

US Aid to Pakistan

1971 Debacle in East Pakistan

Is it 1971 Moment in Pakistan's History?

Mission RAW by RK Yadav: India in East Pakistan

Benazir Bhutto Gave Birth to Taliban

What if Musharraf Had Said No to US After 911?

Riaz Haq Youtube Channel

VPOS Youtube Channel

"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.

PPP Cutting Deal With Musharraf

A few weeks ago PPP's senior leader and current Defense Minister Chaudhry Ahmad Mukhtar described President Musharraf as a "national asset". Now a report in the Wall Street Journal is describing the details of secret negotiations underway between the President's men and Zardari's representatives.

Let us not forget how we got where we are. It all started with President Musharraf signing the NRO (National Reconciliation Ordnance) that gave the PPP leadership blanket amnesty. This arrangement between General Musharraf and late Prime Minister Bhutto, brokered by the Bush administration, paved the way for the PPP leadership to return to Pakistan, participate in the elections and share power with Mr. Musharraf. It was only later that the Saudis insisted on Pakistan allowing Nawaz Sharif's return that apparently displeased the US and the PPP leadership. But Sharif's remarkable showing in the elections in Punjab has made him a very important player that the PPP has to deal with.

According to the Wall Street Journal report today, the terms under discussion are as follows:

1. The President is willing to agree to a constitutional change that would restrict the president's power to dismiss Parliament.
2. Mr. Musharraf isn't prepared to relinquish his power to appoint the chiefs of the armed forces.
3. The former judges would be returned but the new judges appointed by Mr. Musharraf after their dismissal would be retained.
4. Mr. Musharraf will be legitimized by the current parliament as Pakistan's president for a five-year term.

The talks involve Lt. Gen. Nadeem Taj, head of Pakistan's Inter Services Intelligence, and close presidential aide Tariq Aziz. The two emissaries have been in regular contact with top PPP leaders, including Asif Ali Zardari, Ms. Bhutto's widower who leads the party. PPP leaders have publicly declared that they are willing to have working relations with Mr. Musharraf.

The strains between the PPP and the PML (N) have given Mr. Musharraf's supporters a cause for optimism.

Is the PPP-PML(N) Coalition Up To The Task Ahead?

The drama between the PPP and the PML(N) and within each party that has unfolded during the last 48 hours clearly shows the lack of competence and maturity of their leadership in handling the very basic political disputes in their ranks. In the midst of rising terrorist violence claiming many innocent lives on a daily basis, the petty personal differences and mutual suspicions have clearly trumped any discussion of how to deal with the real challenges Pakistan faces today. The simplistic answer being parroted by the two parties and their mindless followers seems to indicate the belief that everything would be fine as soon as Musharraf steps down and the judiciary under Iftikhar Chaudhry is restored. I believe this answer is misleading. Pakistan's problems are much bigger than any one individual or institution. The resolution to these problems of rising violence, high worldwide inflation of food and fuel prices and continuing political instability will require all Pakistanis to work as a team. What Pakistan needs is a unifying leadership, not a divisive bunch with personal ambitions and vendettas against others.

The very public and crude manner in which a PPP stalwart Makhdoom Amin Fahim has been snubbed by both parties is nothing short of absolutely astounding. Not only does it smack of personal ambitions of a few individuals gone awry but also of the ethnic prejudice. But beyond that, it inspires little confidence in the leadership qualities of Asif Zardari and Nawaz Sharif and their closest lieutenants.

As the entire Pakistani nation holds its breath waiting for a peaceful power transfer, the coalition can not even agree on who will be the prime minister in the new set up. This clearly does not augur well for democracy in Pakistan.

PPP Infighting Becomes Public

As the headlines in Pakistan proclaimed the formation of the PPP-PML(N) coalition at a summit meeting between Asif Zardari and Nawaz Sharif, there were obvious signs of rift emerging within the PPP. Makhdoom Amin Fahim, the PPP leader who faithfully guided the party during Beanzir Bhutto's self-imposed exile, told the news media that he was not invited to join the negotiations with PML(N) nor was he present during the announcement. In fact, he learned of the news through the media reports. While still maintaining his loyalty to the party, he was clearly agitated by this development.

There have also been reports of Sind-Punjab tussle on the choice of the prime minister within the PPP. In the Geo News show ‘Who would be the prime minister’, Makhdoom Amin Fahim said that the prime minister should be from Sindh and he was the candidate for this post. He said that he was a senior member of the party.
Mohtarma Benazir Bhutto and Asif Ali Zardari had also offered him the PM slot.

On the other hand, Chaudhry Ahmad Mukhtar insisted that the PM should be from Punjab. He also claimed to be a senior member of the party, as his family's had a long association with the Bhutto family since 1967. He also challenged that Makhdoom Amin Faheem was ever offered to become PM. Other names that have been mentioned are Raja Mahmood Qureshi and Syed Yusuf Raza Gilani.

The fact that Mr. Zardari has chosen to make deals with other parties without Mr. Fahim's participation is the clearest indication yet that Amin Fahim is either out of the running for the position of prime minister or, that he would not be fully empowered even if he gets the nod from Zardari. The real power will, in fact, continue to be in the hands of Mr. Zardari.

This is clearly an inauspicious beginning for the PPP and the new coalition. It calls into question Zardari's intentions and personal ambitions. It raises issues such as how the PPP unity can be maintained in the absence of an adult Bhutto at the head of the party. It also creates doubts about the durability of any coalition arrangements with other parties. This situation is likely to strengthen President Musharraf's position in dealing with the new civilian government.

Zardari Ready to Reconcile With Musharraf

As Mr. Asif Ali Zardari reviews his political options and the PPP-PML(N) coalition takes shape, there are clear indications that the PPP is ready to work with President Musharaf rather than seek confrontation. "The ground reality is that we do not have two-thirds majority in both the houses of Parliament" that would be required for a successful impeachment, Mr. Zardari said in an interview with the Wall Street Journal. The widower of former Pakistan Prime Minister Benazir Bhutto and leader of the party that won the most seats in parliamentary elections last week, said his coalition will be unable to impeach President Pervez Musharraf, and that he would instead seek a working relationship with the embattled leader.

As I said in my previous posts on post-election horse-trading and PPP's national character this recognition of "the ground reality" seems to be based on the following factors:
1. The PPP-PML(N) coalition lacks the two-thirds majority in both houses to impeach the President, as acknowledged by Mr. Zardari.
2. The outcome of the Feb 18 polls amounted to a split verdict: Together, the pro-Musharraf forces won the second largest number of seats after PPP.
Out of total votes cast, the former ruling coalition received 10,844,233 votes followed by PPPP with 10,055,491 votes and PML-N with 6,240,343 votes.
3. PPP's US patrons are urging Mr. Zardari to work together with Mr. Musharraf. It shoud be noted that the US sponsored the return of Mr. Zardari under an amnesty signed by Musharraf. The US senators who reportedly called for Musharraf's resignation yesterday have denied that report. They clarified that they asked Musharraf to "step back", not "step down".

I believe that it is in the best interest of Pakistan, its democracy and its economy for all the key players to move forward in a conciliatory manner and focus on the serious challenges ahead rather than waste energies fighting each other. The conciliatory course is the wisest course for Mr. Zardari as the senior partner in the new coalition. Let's hope that Mr. Zardari can persuade Mr. Nawaz Sharif to abandon his personal vendetta against Musharraf. This will be the first real test of the coalition being formed.

Switzerland Pursues Zardari Corruption Charges

Months after the amnesty signed by President Musharraf, Switzerland is continuing to pursue corruption charges against Mr. Zardari. Asif Zardari, the widower of former Pakistani prime minister Benazir Bhutto, is accused of depositing $55 million worth of bribes in Swiss bank accounts. Swiss judicial authorities have been investigating Zardari and Bhutto for the past 10 years over allegations that they took bribes from Swiss cargo inspection firms and transfered them into their accounts, according to Reuters and Al Jazeera.

At a hearing on Feb 20, Swiss lawyers for Pakistan argued that money-laundering charges against Zardari should proceed in Geneva despite Pervez Musharraf, the Pakistani president, dropping all graft charges against the couple last year. The constitutionality of the amnesty has not yet been ratified by the supreme court in Pakistan. The Swiss lawyers said the decision was expected in "a few weeks".
Dominique Henchoz, Pakistan's Swiss lawyer, told the Geneva court: "This dossier is a bomb for Zardari. "His name appears on each page as the beneficial owner of offshore companies. Some 60 million Swiss francs have been frozen in Geneva accounts", reports Al Jazeera. Saverio Lembo, Zardari's lawyer in Geneva, said that the case should be suspended until a decision on the amnesty is made.

In 2003, a Geneva court convicted Bhutto and Zardari of laundering funds linked to alleged kickbacks worth $13m. However, the verdict was thrown out on appeal and a new investigation by magistrates was dismissed last October. Charges against Bhutto ended when she was assassinated.

As Mr. Zardari attempts to put together a coalition with Mr. Nawaz Sharif's Pakistan Muslim League, the restoration of judiciary remains a point of contention. While this difference seems to have been glossed over temporarily, it has the potential to cause a serious split between the two coalition partners. The fact that the amnesty for Zardari signed by President Musharraf is still to be ratified by the Supreme Court will figure prominently in the outcome of any negotiations.

In spite of all the efforts by late Prime Minister Benazir Bhutto and her US backers, and the recent electoral success of the PPP, this issue of corruption refuses to go away.
It will be interesting to see how this gets resolved. In my humble opinion, Mr. Zardari should insist on the completion of this trial to clear his and his late wife's name.

Bilawal's Appeal for Personal Privacy

After being named Chairman of Pakistan Peoples Party to succeed his high-profile mother Benazir Bhutto, Bilawal's life has suddenly gone from very private to very public. As expected, the tenacious Papparazi and the ruthless tabloid press have found a new subject to pursue relentlessly. Examples of this coverage include the stories in the British tabloids The Sun and The Daily Mail. While clearly distressing for the teenager just starting college, this attention is not unexpected. What is most unfortunate is the fact that poor Bilawal probably did not choose to be in this situation. More than the circumstances, I believe it is Mr. Asif Zardari, the widower of late Benazir Bhutto, who has brought it upon his 19-year old son. As the father of a daughter of the same age as Bilawal, I truly sympathize with his need and appeal for personal privacy that he has made in his news conference in London today. At the same press conference, he has echoed a number of allegations and made demands that have been made by other PPP leaders. Taking very public positions on such issues while at the same time appealing for personal privacy seem incongruent. More than anything else in the world, what this young man needs is advice and support and sincere guidance from his family to survive this difficult period right after the tragic loss of his mother. Such advice and guidance should include a wise counsel to lay low and stop making any public statements to the media. I wish this young man the very best in this difficult time.