Political stability and economic growth
May 04, 2001
The wily leaders of the ARD have again managed to create something out of not very much. Heavy handed tactics by the government have ensured excellent press coverage, both at home and abroad. This, as one is getting tired of saying, is the entire purpose of the exercise. Who needs the hassle of a jalsa as long as a reasonable splash is made in the media. By these terms we can only call this particular meeting a success for the ARD.
This pattern is likely to repeat itself with even better results in the future. The interest among the general public may have been low for these political tamashas. Not any more. The government has in its wisdom, succeeded in creating an interesting game of hide and seek. With a long, hot and boring summer on its way, this is just the kind of diversion we need. Thank you, Nawabzada sahib. We wait with bated breath for your next call.
It all seems so incongruous. This is a government that has shown a great deal of maturity in handling criticism. Unlike the previous military dispensations, it has given the press a free hand. It has also not bothered very much with what the political leaders say. And this has worked in its favour. The people are free to form their own judgements and often it has not been so favourable about the politicians. Why this complete somersault on the issue of political meetings?
The explanation by General Musharraf and his people is hardly convincing. They say that political meetings would disrupt the country's steady progress towards economic revival. Political meetings have the potential to do this if there is widespread unhappiness. While things are not so easy, I do not believe that people see these meetings as a salvation. It would have been wiser to let the politicians have their say and move on.
On a more fundamental level, the thesis given by General Musharraf is worth considering. He is basically saying that political stability is a necessary condition for economic growth. This is self evident and nobody can argue with this. However, what kind of political stability are we talking about? One in which there is surface calm or real stability where everyone, the people and their leaders, join together to pull the country through.
The mood in which General Musharraf spoke is a continuation of military thought through the ages. He could have gone on to claim that in the previous military regimes of Ayub and Zia, there was tremendous economic progress because of political stability. I am putting words in his mouth as he would not publicly identify with Ayub and Zia. But, this is very much the conventional wisdom in military think tanks and therefore, needs to be studied.
Two issues emerge out of this. What is the definition of political stability and how real was the economic growth in previous military regimes? Let us look at the second issue straight away as it lies at the heart of the argument. According to the economic survey of Pakistan, the GNP growth during the Ayub years, 1960-70 was 6.7 percent. This compared favourably with the previous, largely political, decade in which the growth was 3.1 percent.
The GNP growth during the Zia years, 1977 to 1988, was 6.4 percent. This also compared very favourably with the Bhutto years, 1971-77, when the growth rate was 4.4 percent. As it happens the growth achieved under Zia was not maintained during the political period of 1988 to 1996. Under both Benazir and Nawaz, the GNP grew at an average of 4.3 percent. These statistics seem to confirm the basic thesis that military regimes have shown better performance in the economic sphere.
This, however, is not the end of the story. The politicians as an interested party and some others call into question this conclusion. They are at pains to argue that economic success under Ayub and Zia was possible only because of the policies made during the previous political regimes. Very few thinking people would be willing to give credence to this claim. After all the Ayub years were the golden years and we all believe that. However, let us see how the experts look at this issue.
Dr Parvez Hasan, a former Chief Economist of the World Bank has this to say in his book, Pakistan's Economy at the Cross Roads, OXFORD,1998. "...the exceptional growth during the Ayub years was in no small part due to the sharp stepping up of the rate of investment, especially public investment in the 1950's." Public investment means the money that the government was investing in the economy. This included electricity generation, communication, ports and the building of dams and barrages, the lifeline of an agricultural country. Such investments rose from 2.8% in 1949-50 to 9.3% in 1959-60.
1950's was the time when squabbling politicians were in command and governments fell as regularly as Sikander Mirza and Ayub changed their suits. Yet this same squabbling lot was able to initiate large scale public investment that laid the foundation for a strong growth during the Ayub years. Obviously growth was sustained during Ayub until 1965. That is when disaster struck. Almost everyone agrees that a major political and economic setback to the country was the war of 1965. Ayub, a military man, was in command.
Bhutto is universally considered to be anti-business and many people hold him responsible for a deadly blow to economy through large scale nationalisation. This is what Dr Hasan has to say about the Bhutto. "The slow down of growth during 1970-77 was due, in part, to the separation of East Pakistan, oil price shocks, poor weather conditions, and technical problems that delayed the availability of water from Tarbela." No mention of nationalisation as a culprit.
Not only that he does not castigate Bhutto for his anti-business policies, he goes a step further. He mentions some of the Bhutto era policies that actually contributed to growth during the Zia period. I quote again. "Growth during the Zia period benefited not only from the completion of sizeable investment in water, fertiliser, cement, and steel undertaken by the previous governments but also from the substantially positive impact of large scale remittances, external assistance for Afghan Mujahideen, and the growth in narcotics trade."
We know that large scale remittances were only possible because Bhutto made it easy for millions to travel the world seeking fame and fortune. And he did make large public investment in cement, fertiliser, etc. The other factors mentioned are also obvious. Pakistan became a conduit for CIA's war in Afghanistan and was awash with US dollars. The drug trade really grew during this period and contributed to the growth bubble of the economy during this period.
Dr Hasan goes on to add that "Growth in the period since 1988 has suffered, in part, because long term investment was neglected under Zia, the large overhang of domestic public debt made the reduction of fiscal deficit difficult, and the stimulus provided to the economy through large worker remittances continued to wane". He could have added that lack of focus on governance and a rather large degree of corruption, also contributed to poor growth.
Many people would take issue with Dr Hasan and perhaps rightly. What has been quoted above is not all of the story as he himself qualifies. It does however call into question the conventional wisdom that the economy progresses only during military regimes. As long as this issue is open or rather not settled beyond any doubt, a major justification for military rule vanishes.
This then has a bearing on the second question that of political stability. If economic progress and military rule have no direct linkage than where does political stability fit in. Particularly the kind of surface stability that is created by force. I mention this because even now the mantra of political stability and economic development is being repeated to justify denial of political meetings and hundreds of arrests.
The simple fact is that to a military mind surface calm translates into political stability. We know how illusory this is. Ayub had a stranglehold on the country for many years yet the moment his grip loosened, there was widespread agitation. Zia killed and tortured many to keep surface calm yet the moment he was killed Bhutto's daughter took over. Political stability is not the subjugation of a country by force. This is only the illusory calm of a lake under which a volcano bubbles.
Real stability comes when there is grand national compact between the genuine political forces in the country. In our situation I would include the army as a political force. After all it has ruled over us for more than half of our existence. Political stability would thus be created when the army and the real political parties in the country come together on a broad national agenda. It would not emerge if the army keeps trying to suppress the genuine political forces and create alliances with quislings.
It is not too late to begin a grand national dialogue. This can only happen if the question of political stability is analysed properly. Our distress does not allow us the luxury of bad judgement. Will someone think about this?
The author is former Senator, former federal and provincial minister