Calcutta Notebook

For the first time in 65 years of history of Independent Pakistan a new Government has been elected under the leadership of Nawaz Sharif with the previous one having completed its full term of five years under the leadership of Asif Ali Zardari. Sharif has put revival of the economy as his core priority. But this rings hollow in absence of a clear prognosis. The basic problem of Pakistan economy is that the national resources-land and capital-have been wholly captured by a small coterie of feudal-landlord families. The people have been left outside the march of economy. They are restive. They see the world marching ahead while Pakistan is embroiled in conflicts and economic morass. The change of leadership may turn out to be like a palace revolution because neither of the two main players is focused on solving the twin problems of feudal setup and corruption.

A rigid feudal system prevails in the countryside. A report in the New York Times had this to say : "The extraordinary inequities in Pakistan seem not only unjust but also an impediment to both economic growth and national consensus... in remote areas you periodically run into vast estates—comparable to medieval Europe—in which the landowner runs the town, perhaps operates a private prison in which enemies are placed, and sometimes pretty much enslaves local people through debt bondage, generation after generation... (This) lack of compassion for ordinary people seems to create space for Islamic extremists." The landlords get elected as MPs and, instead of paying taxes on their vast estates, further rip off the state of scarce revenues. This feudal system prevails in the field of education as well. There are top notch English medium schools for the elite while the common man has to send his child to government schools where teachers do not bother to show up. The people are deprived both of respectable livelihood as well as chances of progress.

The Zamindari system, thanks to Nehru, had been abolished in India in 1956. Land reforms were also implemented even if half-heartedly. Landless have got a plot to build their hut in which they can survive without the oppressive dependence on landlords even if they have not got cultivable land. Nothing like this happened in Pakistan. In fact, the small attempts at land reforms were reversed. Land reform was high on the national agenda as in India in the first three decades of Independence. Then Zia created religious Sharia courts. This court issued a verdict that land reform was un-Islamic. The peasants were subsequently forced to give up lands acquired under land reforms. There has been no progress on this front since then. Sharif and Zardari have both remained silent.

Pak economy is controlled by a Grand Feudal Alliance. Nehru had put private businesses on the leash by declaring that commanding heights of the economy will be held by the public sector. Subsequently Indira Gandhi had gone on a spree of nationalizations. That policy may have proven unsuccessful but it sent a clear message—the businesses were second to the larger interests of the people. Such was not the case in Pakistan. Feudal landlords rule the countryside and trade and industry are controlled by a small coterie of few business houses and the army. The Pakistan army extended support to this Feudal-Business Alliance. America also propped up this Alliance. That country had its own agenda against Taliban in Afghanistan and a resurgent India. But people of Pakistan were generally pro-Taliban. America, therefore, supported this Feudal Alliance to push its anti-Taliban agenda despite public consensus to the contrary. This led to a disjoint between the rulers and the people. The people's energy was directed towards religious fundamentalism and did not get channelised into productive economic activities.

The army has regularly created scare of 'India's designs on Pakistan' to distract attention of the people from their domestic woes. This anti-India harangue has helped build a consensus in favour of large defense expenditures, the beneficiaries of which are the top army brass. This has left little revenue for investment in education, technology, highways, railways and other infrastructure necessary for the exploitation of the country's vast natural and human resources. Limited spread of education has prevented development of grassroots entrepreneurship.

Musharraf tried to solve this problem by seeking more foreign assistance. The events of 9/11 created a willingness in the United States to provide financial support to Pakistan. Musharraf opened the economy to foreign investment. But this came mainly in the speculative service sectors such as real estate and not in the productive sector such as software parks and steel mills. In result, the respectable rate of growth of 7 percent achieved under him proved to be a bubble. Musharraf also opened the Pakistan economy for American companies. The fourth member was thus co-opted in the Grand Alliance of Landlords, Industrialists and the Army-the American Multinationals.

Asif Ali Zardari took over the reins of the country in this circumstance. He is widely perceived to be hugely corrupt. He was known as 'Mr 10 percent' during the two times that his wife Benazir was the Prime Minister. He used to demand 10 percent cut in all government contracts. A Balance of Payments crisis soon confronted him. He sought assistance from China and Saudi Arabia but both declined because they perceived him as unreliable. Zardari was forced to approach the IMF which granted loan on the condition that tax collection regime will be reformed and Public Sector Undertakings will be privatized. Two years later one of his pro-reforms alliance partners parted ways. Zardari could no longer push the reforms dictated by the IMF. Subsequently the IMF did not disburse the remaining loan.

Neither Sharif, Zardari nor the Army is interested in solving the twin problems of feudal control of economy and corruption. Both Sharif and Zardari belong to the dominant feudal families. They do not have a policy of allowing the bubbling energy of the youth to come to the fore.

Vol. 45, No. 50, June 23 -29, 2013

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