We use cookies for site personalization and analytics. You can opt out of third party cookies. More info in our privacy policy.   Got it

Open markets, closed doors


In 1989 George Bush Sr announced a ‘new world order’ – an order that proclaimed the victory of freedom, following the crumbling of the Berlin Wall and the ‘evil empire’. Freedom as characterized by Bush the elder was a two-pronged concept. Economic freedom was to be ensured by the free market and political freedom was to be ensured by the spread of electoral democracy. This same rhetoric continues to be employed by the current Bush administration to justify the US war machine – a rampage that has now moved from Afghanistan to Iraq.

The reality is that the new world order has brought with it unprecedented state repression at the national level coupled with dramatic increases in inequality at both the national and global levels.

In Pakistan this contradiction is glaring. And many of the country’s current ills –anti-people economic policies, militarization of society and collapse of the political process – are intimately linked to a history of US meddling in the region.

The military has monopolized decision-making, both in and out of power. The first comprehensive structural-adjustment programme was signed in 1988 by General Zia ul Haq, who had come to power in a 1977 coup d’état and hanged Prime Minister Zulfikar Ali Bhutto. Numerous such agreements were signed by elected governments over the next few years with the IMF and other international financial institutions (IFIs). The deal was that Pakistan’s economy would be moulded in accordance with the standard precepts of market-friendly globalization. Initially the IFIs complained that the Government was not sticking with its agreement to implement adjustment policies. But from 1999 onwards the military regime of General Pervez Musharraf was much more committed to the process.

In any case the Pakistani people were never consulted. The economy stuttered consistently throughout the 1990s and continues to do so. Only the country’s élite has gained in any way from the accumulation of debt, which now stands at more than $36 billion.

Free-market policies have increased poverty to levels unprecedented since independence in 1947. Dr Asad Sayeed, an economist with the Social Policy Development Centre, an independent think-tank in Karachi, estimates that more than 40 per cent of the population now lives below the country’s official poverty line – up from 17 per cent at the beginning of the 1990s.

Privatization policies have led to massive job cuts in most sectors, as when the state-owned banks were sold off. The largest state employer, Pakistan Railways, recently shed some 30,000 workers in response to conditions laid down in the Interim Poverty Reduction Strategy Paper – a document prepared to qualify for concessional lending from the IMF.

Meanwhile poor consumers have been ravaged by a combination of indirect sales taxes and price increases on essential commodities. The state lacks the political will to tax the rich and powerful. Domestic electricity rates have tripled over the past decade while basic foodstuffs like cooking oil and sugar are now hardly affordable for the average consumer. And ordinary Pakistanis are still waiting for the promised increases in efficiency from privatization. The former Chief Economist of the Planning Commission found that of fourteen industries privatized since the late 1980s, only two have seen any noticeable growth. In three, growth rates have decreased and in nine there has been no difference.

Agriculture, which accounts for the livelihoods of 70 per cent of the country’s population, has been particularly hard hit by economic adjustment. Subsidies have been retained for the landed élite but completely slashed for subsistence farmers. Open markets have led to a worsening of the terms of trade: lower prices on local and international markets for both food and cash crops. Many rural dwellers have been forced to sell their land and move to already overcrowded cities like Lahore and Karachi. This process is not going to be helped by the Government’s recent announcement that it will lease unlimited tracts of state land to agribusiness firms for large-scale, capital-intensive agriculture.

These realities have coincided with a renewed attack on civil and political liberties. No elected government was allowed to complete a full term during the 1990s and dissent has been criminalized – especially under the regime of General Musharraf.

People’s movements involved in struggles for livelihoods and basic rights have faced the sword of the state. Students, teachers and doctors who have resisted the commercialization of education and health – a worldwide trend – have been expelled and fired. Landless tenants in rural areas and urban squatters resisting eviction have been charged under anti-terrorist laws and jailed for extended periods. Some have even been killed by local authorities.

Not surprisingly, this entire period has seen a shrinking of democratic space. Political parties remain answerable to the military – and largely unresponsive to the needs of the general public. The military, for its part, couldn’t care less about the long-term interests of the Pakistani people: consolidation of power is its sole concern. Meanwhile state repression has caused trade unions, the student movement and the media to retreat from the political sphere.

Hang on a minute, though, you might say: didn’t Pakistan recently elect a new government? It did, last October. But the election was judged ‘seriously flawed’ by the European Union and, besides, the military has ensured that the new administration toes the line. General Musharraf will remain President for the next five years, a feat he pulled off by amending the constitution through a so-called Legal Framework Order – an extra-constitutional legal coup that was aided by the hopelessly compromised Supreme Court. This gives Musharraf the right to dismiss parliament and the prime minister in the ‘national interest’ at any time, a constitutional right also enjoyed by his tyrannical predecessor, General Zia ul Haq.

The case of Pakistan provides evidence that the US has no genuine interest in promoting democratic institutions and practice in the rest of the world. The Legal Framework Order was imposed undemocratically in full view of the world and yet the US remains Musharraf’s biggest booster.

The IFIs also directly supported Musharraf’s crusade to hang on to the presidency. In April 2002 a presidential referendum was hastily organized, in which Musharraf himself later acknowledged that there had been serious irregularities. At the Pakistan Development Forum, held by the IFIs in Paris some days before the referendum, high-ranking officials of the World Bank and IMF voiced their support for the referendum. They suggested that Musharraf should stay in charge to ensure a ‘continuity of reforms’. The Country Representative of the Asian Development Bank in Pakistan threatened to renege on a massive multi-year $2.4 billion commitment made weeks before the October elections if the new government veered from the policy direction articulated by the Musharraf regime. It is threats like these that highlight the rapid erosion of sovereignty faced by the Pakistani state.

Meanwhile, ordinary Pakistanis are being mugged by free-market policies. The military continues to engage in ‘rent-seeking’ (otherwise known as corruption) at all levels. During General Musharraf’s tenure many civilian agencies including the Pakistan Railway and even the Pakistan Postal Services were taken over by retired generals who have absolutely no expertise or experience running such agencies. Many of the largest contracts issued by the state went to military-owned companies including the Frontier Works Organization which has a near monopoly on road construction across the country.

Ordinary Pakistanis are being mugged by free-market policies. The military continues to engage in ‘rent-seeking’ (otherwise known as corruption) at all levels. During General Musharraf’s tenure many civilian agencies including the Pakistan Railway and even the Pakistan Postal Services were taken over by retired generals who have absolutely no expertise or experience running such agencies

Many large dams and irrigation channels which comprise the majority of ‘development’ projects are providing water to previously unproductive land that has been allotted to military officers. This is particularly the case in the desert areas of southwest Punjab where projects like the Chashma Right Bank Canal have been funded by the Asian Development Bank. Such projects have displaced thousands of peasant farmers and destroyed the livelihoods of even more people because they completely overlook local needs. Resistance by communities from these remote rural areas is easily suppressed by the Government which falls back on ‘the national interest’ as the justification for ramming through inappropriate mega-projects.

Meanwhile, a segment of the Pakistani intelligentsia opposed to religious extremism has thrown in its lot with Musharraf because of his alleged secularism. Much hay was made of the fact that the General was banning organizations and parties involved in violence in the name of jihad. However, many of the arrested leaders have since been released. In fact Maulana Azam Tariq, head of the fiercely militant Sipah-e-Sahaba (Army of Muhammad) campaigned in last October’s election from jail – and won.

It is simply not in the military’s interest to change things. The propaganda about open markets, competition and political freedom continues to be spewed out unashamedly. But the damage is glaring and there is clearly no democracy. There is a crying need to debunk the myths surrounding the entire ideology: the sooner the better.

Aasim Sajjad Akhtar is a writer and social activist based in Islamabad.

Subscribe   Ethical Shop