Welcoming Naya Pakistan

Welcoming Naya Pakistan

ISLAMABAD: The Messiah has arrived. How long will it take us now to have our utopia? The promised utopia is not only moral, of the kind that religious messiahs promise. Of course there is the promise of a Madina-like state, but we are also promised a Denmark – material utopia. It is time for Imran Khan to walk his talk. Can he?

The success of Imran Khan’s political narrative lies in reducing all of Pakistan’s problems to a single issue – corruption – and presenting himself as the solution. Corruption is a devil that symbolises both moral and material deviance. It is a serious governance issue. Is it the only demon, or even the biggest demon, that Pakistan has to confront? Will it be scared away by the silver sword of Imran Khan? Will we automatically turn into a developing country by ridding our land of this demon?

According to the Corruption Perception Index prepared by Transparency International, Bangladesh is almost on the bottom of the heap of corrupt countries. It ranks 145 on a list of 176 countries. Pakistan is proudly 29 notches up and is placed at 116. What’s even better, Pakistan has improved its ranking sustainably during the last decade. In 2006, Pakistan was at 142 out of a list of 163 countries listed that year. Yet Bangladesh’s GDP is growing at a whopping 7.1 percent , creating jobs, throwing up a vibrant middle class and reducing poverty – things that will soon work against corruption in that country. Bangladesh’s exports stand at $40 billion, while Pakistan’s exports are merely $22 billion.

Contrary to popular narrative, Pakistan’s economic development went down as it became less corrupt. The correlation here is not causation but it shows that the link between the two is not as clear cut as the PTI would have us believe. In the next five years, we will have to watch how Pakistan goes up on the index and how this change results in prosperity. Going by the PTI’s promises, much of the change should come instantaneously and automatically.

The material utopia lies in turning Pakistan into a welfare state. ‘Welfare state’ is one of Pakistan’s biggest clichés, borrowed from the British Labour Party at the time of the creation of the country and integrated into our textbooks. Outside our textbooks, Pakistan is an elitist economy and will remain so in the foreseeable future, even at the risk of the constant economic decline – relative to other countries in the region – that we are witnessing.

The welfare state is built on two pillars: fast-paced economic growth and a system of redistribution. A country where the poor form a dominant majority cannot be a welfare state because it does not have enough resources for redistribution. In order to carry out redistribution on a smaller scale, the state must first raise resources through taxation, if it is not sitting on oil wells. Pakistan’s track record of collecting taxes has been very bad. Whole segments of population have been reluctant to contribute to taxation. These sections include the service sector, the retail sector and the agriculture sector.

Can Imran Khan force shopkeepers, lawyers, doctors and large landholders to pay their taxes? The PTI’s record of collecting provincial taxes in Khyber Pakhtunhwa has been dismal. In fact, the KP government supported theft of utilities like electricity and gas. Will the PTI suddenly clean up its act by forcing people to pay for the utilities and pay their taxes?

Imran Khan has promised has promised to double the taxation in nominal terms. That is not enough. Even Ishaq Dar was able to double tax receipts by forcing the current taxpayers to pay more. Pakistan is currently collecting 10 percent of GDP in taxes. Even at the current level of development, it must be able to collect 20 percent of GDP. Even these resources will pay for only a fraction of the cost that the PTI’s utopia requires, but it will be a huge leap. Let’s see how the PTI government fares on this promise.

I have argued in these columns that Pakistan’s biggest development problem is not the rent-seeking kind of corruption but crony capitalism – ie the kind of business activity that thrives on state patronage. Pakistan has diverted its resources to less productive or even harmful sectors at the cost of more productive economic activity. The sugar industry and real estate are two such sectors. Both sectors have come to dominate Pakistan’s politics as well. Unfortunately, domination of crony capitalists on the PTI is as strong as it is on the other two parties. The PTI’s success would not be possible without huge investment by crony capitalists, and these leaders from a crony capitalism background may come to dominate leadership positions as well.

Can Imran Khan single-handedly deal with the interest groups that dominate his party, and steer the government in a direction that is contrary to their interests? As many political scientists have argued, the goals of politicians are mainly the goals of the groups and activists that provide them with backing and resources. It is their agenda that a party is likely to follow. Will Imran Khan belie global experience? We can only wait and see.

The opposition likes to term Imran Khan as laadla; at the moment he is the apple of the Pakistan’s establishment eyes, the power salariat class who have ruled the country directly for half of its existence. This is a most powerful group, even when it is not ruling directly. Imran Khan must mediate between the worldview and the diverse interests of other sections of society who have elected him. This is a tight rope walk that no prime minister in Pakistan’s history has been able to survive. But Imran Khan is not an ordinary mortal. Let’s see how he fares.

What is even more important is that, even in order to achieve a fraction of his agenda, Imran Khan will require political stability and some amount of consensus-building. He has threadbare majority in the National Assembly and lacks sizable representation in the Upper House. He will face difficulty even in navigating ordinary legislation, let alone the constitutional amendments required for major reforms.

Imran Khan arrived here by unleashing huge political instability that also resulted in economic instability. Rather than economy or development, Pakistan’s politics remained tangled with street agitation, wakaalat and adaalat (lawyers and courts) during the past four years.

In his victory speech, Imran Khan has tried to send a message of reconciliation to his political rivals. Unfortunately, the burden of anger has shifted and political norms lie in tatters. Politics of agitation has its own momentum. It may take many months or even a year or two to build up, but street protests will surely haunt his government. The parties on the street may not be able to overthrow his government. Imran Khan himself was unable to dislodge the PML-N government. But an overheated political environment is enough to thwart any meaningful process of reforms.

Opposition parties, including the PML-N, the PPP and the PTI, have made it impossible for incumbents in the last ten years to undertake such simple but crucial actions like privatisation of loss-making state businesses including PIA and Pakistan Steel that gobble up huge chunk of national resources. Will the new opposition that faced a virulent PTI in government be willing to act like a saint?