When Pakistan got independence in 1947, it was unstable both economically and politically. It was lacking in economic stability because it had almost nothing which it could use as a basis for its economy to develop on. It did not have financial resources. In fact, unlike India, it did not have a capital city. What is more, India denied the country its due share of 17 percent of finances in its nascent years, and transferred only part of it; this became possible only after Liaquat Ali Khan’s flight to Delhi combined by Gandhi’s intervention. So Pakistan was not a stable country in its formative days.
As far as the political stability in the early years of the country is concerned, it was also unstable because it had no constitution until 1956. The first constitution, which was formulated 9 years after the creation of the country, was also abrogated within three years after its formulation. So since then political stability has continued to evade the country as its political parties have created a conducive environment for the military to interrupt the democratic set-up and impose coups.
Political instability has harmed Pakistan’s economy in many ways. For starters, the necessary and much needed institutional reforms have not been implemented or carried out because of it. History bears testimony to the fact that whenever attempts have been made at introducing reforms, they have not been implemented thoroughly. Let’s see the main attempts at introducing reforms.
Although Pakistan’s economy was in a shambles from the outset, no substantial reforms were taken until Ayub’s era as Pakistan was engulfed in political chaos and constitutional crisis. Ayub, who assumed power through a coup, adopted policies of liberal markets. He assisted the growth of industrialisation through privatisation. It is because of this that his era was characterised by the wealth of 22 families.
However, Ayub’s reforms could not be implemented thoroughly as they lacked the legitimacy. Hence, when Bhutto rose to power after the debacle of East Pakistan, he wanted to impose socialism in Pakistan. He nationalised big industrial complexes and wanted to confiscate the wealth of 22 families. His slogan was Roti, Kappra, and Makkan.
Bhutto was not successful in establishing socialism in Pakistan because he was ousted through a coup by General Zia ul Haqq. After Zia died in a plane crash in 1988, Benazir Bhutto was elected to the government. She did not go ahead with his father’s policy of socialism. She hardly introduced economic reforms and continued with the status quo. Thus since then, all government including military ones have continued to follow the economic system of neo liberalism. However, not a single government has been able to introduce reforms.
The purpose behind the brief discussion of the attempts of leaders at introducing reforms is to show that they all have failed to introduce genuine reforms because of political instability. The local government system introduced by Pervaiz Musharraf serves as a typical example. When PPP came to power in 2008, instead of correcting the defects of the system, it discarded it altogether and brought a very inefficient system.
Because of political instability, since 1988 the country has negotiated various agreements with the IMF, but has not been able to complete even a single one. Each time a government reaches an agreement with the IMF, it goes off track or misses target because of the change of government. Against this backdrop, even the recent bailout package of 6 billion dollars given to the PTI government could not be completed because it was removed out of office through the vote of confidence after much political tumult and turmoil. As a result of which, the incumbent government has to renegotiate the agreement.
The political instability is eroding the trust of investors who fear that because of instability they might lose their investment. So they shy away from investing in Pakistan. As a result, the foreign direct investment is almost drying up in the country. Even the native people avoid making investment.
Another manifestation of political instability is that leaders are launching populist projects and making populist policies that lead to economic unsteadiness. For example, when it became evident to Imran Khan that he had little chances of winning the vote of no-confidence, he resorted to populist announcements. In order to win over people, he gave subsidy on petroleum prices despite the fact that it would have dire consequences for the economy because his government was already providing petrol and diesel at low prices.
This is not limited to Imran Khan alone. In fact, PM Shahbaz also resorted to populist announcements as he pronounced 10 percent raise in the salaries and pensions of government employees and declared Saturday as working day; but later, he had to take back his decisions.
To conclude, the incumbent government will have to realise that economic stability is not possible without political stability. Hence, it should try to achieve political stability by holding talks with the imposition parties. Only then will it be able to tread in the direction of achieving economic sustainability.
The writer is a freelance columnist based in Larkana. sjatoi831@
The political instability is eroding the trust of investors who fear that because of instability they might lose their investment.