Sugar bubble and the heist

Prime Minister Imran Khan has just seen the tip of the iceberg. Soon he will see submerged icebergs that can sink many a titanic. The Prime Minister of Pakistan made a very bold decision around the time when the noose was tightening around his neck. He broke the lock-hold and hit back all guns blazing; like a rebel and reformist we expected. Persistence will be the key to his power punching.

For an analyst like me, the findings of the ‘Report of Inquiry Committee Constituted by Prime Minister of Pakistan Regarding Increase in Sugar Prices’ was no surprise. Much of the findings of the committee can be found in many writings of the past decade. This was a repeated and beaten theme in scores of articles published since 2007. The committee has just added facts and figures. How and why these opinions by many went unnoticed, explains the proliferation of the dirty rich in the governance and politics of Pakistan. They know the art of blindfolding.

The fish may rot from the head but all toxins collect in the gut. Pakistan is a case of rotting from the head and producing toxins within. If the trend continues and reforms are missed, Pakistan could be heading the way of many Latin American countries.

The rise of gangsters in Pakistan’s politics is by design. Pakistan’s vulnerabilities were identified, studied and operationalised. Bubble economies with local hitmen were created. Previously it was only the armed forces that insulated against some of these hybrid threats. The nation now expects Prime Minister Imran Khan to stand like a rock.

Exactly the same scenario was played against President Musharraf in 2007-2008. The entire edifice he had built from 1999-2007 rather than redeem him, turned against him. Pakistan’s golden years from 2000-2004 were rolled back to begging.

This time, Prime Minister Imran Khan, rather than bask in the illusion of grandeur that President Musharraf fell to, perceived the danger and pre-empted. What will be the logical end to this scandal will be apparent within a month. Pakistanis have no other expectation but to fight back.

It cannot get from bad to worse. The worse is already happening. Now that the entire economic template and planning is topsy-turvy because of the corona crisis, it is best the Prime Minister takes a critical appraisal of the system and moves towards a ‘Pakistan friendly’ economic revival.

It goes to the credit of this government that unlike the past, the subsidy mafia walked away with merely 3 billion compared to 22 billion during the tenure of the previous government. But more than the subsidy, the sugar cartels made hundreds of billions in cost escalation that was not appropriately challenged by the Competition Commission. This is the money they minted from sugarcane they actually bought at prices much lower than Rs180 per 40 Kg as their weight scales measure at least 25% less and other products they sold as derivatives. And what about the dons who grow their own sugarcane on forcibly acquired lands and taken on rent from the government? These lands must be taken back.

Proliferation of sugarcane fields in South Punjab has had a negative effect on cotton and wheat. In the past decade, from a leading exporter, Pakistan has become a cotton import country. The quality of wheat is substandard for exports. The sugar cartels of Punjab have compromised food security, cotton production and value addition in all of Pakistan. They have permeated and polluted the entire agriculture research to mint money. The best revenge against them will not be judicial proceedings but Pakistan friendly policies that strip them of their hitmen weapons.

The effects created by their farming techniques on the environment are disastrous. The subsoil is inundated with water that kills microorganisms (nature’s fertiliser factories) and depletes carbon dioxide, releasing it into the atmosphere. They have packed the soil with artificial fertilisers and agro chemicals, making the natural environmental cycle and balance irrelevant. They have forced exorbitant cost inputs on the farmers through the fertiliser and agro chemical cartels that enslave farmers. Once the government decides to restore the balance and shift to natural and environmentally friendly farming, Pakistan will emerge on the world map as the greenest country.

The last man who went down fighting as a loner against this mafia was Dr Zafar Altaf. Imran Khan has challenged them and I hope he will live to see the Green Pakistan he will create. But there is a rider clause?

Now that battle lines are drawn, any compromise will be a death knell. The impetus and momentum must be offensive but be relentless and maintained.

There is an even bigger racket that is unfolding.

Pakistan’s spiralling foreign debt in the past decade has been crafted by hitmen. This is a familiar story that needs induction of facts and figures; something the present inquiry into foreign borrowing is doing. Unlike President Musharraf who had it inquired to the minutest detail and then abandoned, Prime Minister Imran Khan is expected to take it to its logical conclusion. The surgery will identify and remove pests, moths, hyenas and vultures that infect every sinew of Pakistan to engineer a stunted country.

I always had a feeling that Pakistan’s bureaucracy, technocrats, military and businessmen have lived in exclusive bubbles in chagrin to long term strategic and economic interests. Bureaucracy and technocrats are eclipsed by the Harvard models with their feet and heads elsewhere than the ground realities of Pakistan. The military’s focus has always been India centric. There never was awareness that ‘what could not be lost on the battlefield could be easily conceded through bad planning;? The time has come when all this could change.

After the coup of 1999, one big concern was Pakistan’s spiralling debt of 32 billion dollars. No one in the Ministry of Finance or State Bank could confidently tell the volume and breakdown of this debt to include country to country borrowing, multi-lateral loans, bonds and other encashment to provinces and autonomous bodies. It was decided to get reports from all ministries, provinces and autonomous bodies to analyse the volume of borrowing. Within weeks, the sum jumped to over USD38 billion and reports were rushing in. The Musharraf cabinet and advisors were stunned and aghast.

Then the ‘Wise Men of Gotham’ prevailed and the inquiry was shelved. The report still rots in GHQ and the Finance Division. As for advisors: some of them still pour pearls of wisdom in the capital as gurus of commerce, industries and institutional reforms. Certainly, the new report will be much beyond the one in 2000, including the management of CPEC funds. In all probability, the loss to the national exchequer will be way beyond the USD10 billion identified in 2000.

To have a bird’s eye view, the readers must know that the framework for the great heist was laid in the Economic Reforms Act 1992, providing a gateway to money laundering.

Major economic decisions from 2002-2004 provided the framework for proliferation of cartels and cabals. Pakistan was successively sucked dry.

Agriculture and industrial sectors were major targets. Agriculture growth and a pricing mechanism were deliberately discouraged and loopholes created for the proliferation of cartels. Purposeful research stopped. The canola oil project, locked down in 1996 despite appeals was never revived. Local industrial growth was stunted through bad policies. Local automobile manufacturers were pushed out of competition.

Till 2000s, the water and power sector of Pakistan was the biggest consumer of foreign debts. With stop to dams, a new dynamic began to take shape in the form of non-hydro energy through IPPs. By 2006, IPPs with tax exemptions had recovered investments and begun remitting profits and outsourcing costs abroad. Rather than renegotiating contracts, they were facilitated to become energy manipulators and bloodsuckers. Even if Pakistan does not consume and they do not produce, they still get paid.

Reorganisation of PSO in 2004 put all the eggs in one basket. All regulators connected with all forms of energy were interlinked. This created a monster known as circular debt, an instrument effectively used in 2007 to bring Pakistan and President Musharraf to knees. It is this plug and not sugar that can turn off Pakistan very quickly.

Prime Minister Imran Khan has taken up a challenge, the enormity of which is forbiddingly unimaginable. Every citizen of Pakistan prays that the parliament, judiciary and the armed forces stand by him to ward off challenges other than corona.

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