Unbridled chaos in Pakistan

Pakistani author and journalist Ahmed Rashid called his book Pakistan on the Brink. It was an apt title because Pakistan always appears to be on the edge but never quite tumbles over it. But this time, let’s say it has one leg in the air hanging over the cavernous void below.

In Pakistan, it’s always smart not to bet against the all-powerful army. Certainly, it allowed Imran Khan’s supporters to run wild for a few days. But now it’s swiftly swung into action and is about to dole out exemplary punishment to rioters who barged into the Lahore corps commander’s house and the holiest of holies: the army’s general headquarters. The civilian government, unsurprisingly, has retreated into the background and okayed the trials of civilians in military courts. Imran Khan’s supporters are slowly realising they’re up against a force far too strong for them to take on and are returning to their homes.

Amidst all this chaos, can a deal be struck with the International Monetary Fund? That’s looking increasingly unlikely. Talks about talks first began last November. But the IMF’s terms are proving too difficult for Shehbaz Sharif’s coalition government to implement. Last-ditch efforts are on to resurrect the deal but it’s looking tougher by the day.

The budget is also due next month. Pakistan’s suggested fuel subsidies for two-wheelers to help poorer sections could be offset by hiking prices for larger vehicles. Such schemes would, of course, be extremely tough to carry out and leakages are certain.

The big question, however, is: Will the US allow Pakistan to slip into default? There were differences between the two countries at the height of the Afghanistan war. Now Washington needs Pakistan much less. Still, Pakistan is in a crucial corner of the globe (also, let’s not forget its nukes) and it seems unlikely the US will abandon them totally. Nevertheless, there haven’t been any signs the Americans are rushing to their aid. Pakistan’s foreign exchange reserves have slipped to a piffling $4.3 billion. It’s staying afloat only because of Chinese loans and rollovers. Even their usual deep-pocketed saviour, Saudi Arabia, has indicated there won’t be any blank cheques.

It’s also tough to imagine Pakistan can strike an IMF deal that won’t hit its already suffering citizenry brutally. Inflation is at 41 per cent while interest rates, for anyone who cares to borrow when the economy’s tottering, are at a punitive 21 per cent. The Pakistan rupee has fallen precipitously by almost 50 per cent in the last year, and is now at a dismal PKR 286 to the US dollar.

Forex shortage

The desperate foreign-exchange shortage means Pakistan automakers haven’t been able to import parts. Honda’s shut its Pakistan plants for an amazing 68 days and Toyota’s not far behind. Even the highly successful Suzuki plants have been shut for weeks. Though there’s demand for Suzuki’s bikes, it can’t keep up supplies since components can’t be imported. Thousands have been laid off obviously.

Another high-employment industry is also warning it may go up in smoke. Pakistan Tobacco, majority-owned by UK’s BAT, that makes global brands like Dunhill, says it will have to cut production steeply. In February, the federal excise duty was hiked by over 200 per cent and now eight of its 10 production lines have been halted. The company says 42.5 per cent of the country’s cigarette market has been captured by illegal imports that don’t pay taxes.

Amidst all this, the political situation is fractured in an unprecedented way. Some Supreme Court judges still back Imran Khan but he expects to be arrested any time.

Another minister, Shireen Mazari, was rearrested as she stepped out of jail even though the courts had ordered her release. Several other leaders of Khan’s PTI Party including leading figures like Shah Muhammad Qureshi and Fawad Chaudhry have also been jailed.

With these divisions, don’t expect Imran to quit the scene without a struggle. He’s perfectly capable of trying to take on the army and thinking he can win.

As for the army, it’s facing an unheard-of situation: its popularity has never sunk so low. As one commentator noted, the army’s prestige was higher even after its 1971 war defeat.

Husain Haqqani, Pakistan’s former ambassador to the US and leading analyst, says the army won’t let this bother them. Haqqani predicts the army will hang tough come what may.

He says: “The military’s power comes from its ability to deploy force, not popularity. Pakistan’s generals like being liked but they like being in control even more.”

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