What is a true democracy? Should the military control politics and election outcomes? Dr Kalim Siddiqui analyses the recent fallout from the military intervention in Pakistan’s election, the origin of the problem, and whether, this time, the military will cease to be tone-deaf and hands-off meddling with the democratic process, allowing Pakistan to become a true democracy.
I. Introduction
During Pakistan’s recent parliamentary election, imprisoned leader Mr Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) performed well, despite pre-polling election rigging, and against all odds his party emerged as the largest party in the Parliament. However, the powerful Pakistani military had other plans. Before the election, they already had decided who would be the next Prime Minister of the country. According to their plan, they brought back Nawaz Sharif, former Prime Minister and self-exiled leader of the Pakistan Muslim League Nawaz Party (PMLN). As he returned to Pakistan, all cases against him were quashed. The judiciary stamped the military’s decision to remove all corruption cases against Nawaz Sharif and members of his family. The media and TV projected him as the only leader who was acceptable to the Pakistani military and the United States (US). It was predicted that Nawaz Sharif would win easily, but the parliamentary election on February 8 proved that they were wrong and miscalculated the people’s mood.
Despite the mass arrests of PTI workers and their leaders, the PTI supporters came out to vote, refusing that the military dictate the outcome of an election that the army wanted them to lose. Candidates supporting the PTI were forced by a court ruling to run as independents and it was expected that Imran Khan could be prevented from taking power. It was hoped that some independent candidates would switch sides and join the coalition with the Pakistan Peoples Party (PPP) and Pakistan Muslim League Nawaz (PMLN) and this would result in a ‘‘weak and unstable coalition’’ and a ‘‘prolonged period of political instability’’. Such a situation suits the military well, they manipulated election results so that weak governments would be unable to question military intervention in politics and they get to impose who will be ministers in central and provincial governments.
Moreover, six senior Pakistani judges have accused the country’s military spy agency of interfering in judicial matters and using “intimidatory” tactics such as secret surveillance and even abduction and torture of their family members. These six judges from the Islamabad High Court wrote open letter to the Supreme Judicial Council (SJC) on 26th March 2024 and urged to investigate the allegations of intimidation and harassments against officials belonging to the Inter-Services Intelligence (ISI), the Pakistani military’s premier intelligence agency. The SJC consists of Pakistan’s chief justice, and four other top judges – two each from the Supreme Court and High Courts – and is the country’s judicial watchdog.
The recent election unfolded amid widespread concerns that it would not be conducted fairly as polling results were manipulated and vote rigging was openly carried out by the election commission with full support from the army. The Human Rights Commission of Pakistan and foreign observers acknowledged the “lack of transparency’’ surrounding the delay in announcing the election results was “deeply concerning”.
This is the biggest institutional crisis that the military has ever faced in Pakistan, and their strategy has clearly failed. Moreover, the military’s ability to define and control Pakistan’s politics is being questioned. Since Pakistan’s creation 76 years ago, the generals have either ruled the country directly or indirectly and often either overlooked or promoted corruption to undermine politicians as corrupt and insufficiently attuned to existential threats from India.
Since the early 1950s, the Pakistani military had been closely linked with the Pentagon, and the country joined the anti-communist alliances in the region. In 1977, the US orchestrated a military coup to replace Zulfikar Ali Bhutto and backed General Zia’s military takeover. The US used Pakistan to interfere in Afghanistan and it became more obvious after the Soviet Union invaded Afghanistan in 1979. All these years Pakistan’s military received huge amounts of US aid in return for protecting the US interests in the region. Pakistani ruling elites found their interests are closely related to the US and that the US would not only safeguard their interests but rescue their country from major financial and economic crises (Girdner and Siddiqui, 1988).
When Imran Khan refused to support the US policy in the region, the military removed him from power two years ago. The military took revenge for not toeing their line, they removed him from power and dismantled his party. Several PTI leaders were arrested including Imran Khan, who has now been convicted in three separate cases by the court. Imran Khan has been in prison since August 2023, and despite his party being denied the election campaign and party symbol, his party adopted an AI-generated version of the PTI leader that urged voters to ‘‘now show the strength of protecting your vote’’.
The powerful military establishment had cracked down on the PTI with unprecedented ferocity. Thousands of politicians in the PTI had to leave the party, while many were coerced into withdrawing from politics. Those who remained loyal to Khan, meanwhile, were either thrown in prison or forced underground. PTI was also stripped of its electoral symbol, a critical identifier in a country where nearly 30 percent of people are illiterate. Just one week before the election, Imran Khan was sentenced in three separate court cases including misuse of a diplomatic cable, illegally selling state gifts, and the punishment for contracting an illegal marriage. The aim was to demoralise the PTI workers and hope that the election would be won by the Pakistan Muslim League (PMLN), the party of three-time former Prime Minister Nawaz Sharif. But within a couple of hours of the closing of polls, it was realised that the strategy was not working and PTI despite all odds was leading in the polls. So for several hours in the early morning of February 9, the results stopped being released only to suddenly favourite candidates as winners. It seems certain that the sham election will now be litigated in the courts and that the crisis will continue in the days to come.
The military miscalculated the amount of resentment and backlash from the people against its interference in politics. Suppose the military uses a heavier hand to control the people, such as imposing martial law or other draconian laws as the generals had done in the past to exert their authority. However, unlike in the past, public support in favour of military intervention is very low and also the US and UK most likely would find it difficult to support such an undemocratic move. It is ironic that since its inception in 1947, not a single prime minister has served the full five-year term (Hakimi, 2024).
Two political parties, PMLN and PPP, have dominated the political scene for the last four decades. However, they are both led by political dynasties. Khan’s staunch opposition to such dynastic, family politics resonates closely with urban and young Pakistanis who are deeply dismayed about the state of their country, which they blame on the rampant corruption and incompetence of the ruling elite. (Hakimi, 2024)
II. Military and Politics in Pakistan
I intend to examine the too-powerful military in Pakistan, historically and the external (the US) and internal forces that have influenced and were formulated since independence and currently brought about this critical situation. Even Imran Khan’s struggle to restore democracy and sovereignty and attacks against corruption will not bring much relief to the masses because the socio-economic crisis cannot be resolved by cosmetic reforms.
The British Indian army was formed from the East India Company after 1857, the first war of independence. It was one of the pillars upon which Britain’s world empire rested. After 1857, the British colonial administrators reorganised and restructured the British army in South Asia, which meant a change in the army from East India Company to imperial rule, and its recruiting practices, especially the development of the ‘‘theory of martial race’’. After the 1857 rebellion, the British recruiters avoided enlisting soldiers from Bengal and United Provinces and drew from Western Indian provinces, especially the four districts of Punjab, which had largely remained loyal to the British at the time of 1857 (Siddiqui, 2022a). The British Indian army was a very formidable force and helped Britain in the Second World War in Asia, Africa, the Middle East, and Europe. India was also the major source of food and industrial materials in support of war efforts.
The British colonial period left behind profound legacies, most of which have influenced military affairs, especially in Pakistan. About the post-colonial states, Franz Fanon described the responsibility of imperialism for socio-economic, cultural, and political problems faced by them: “Colonialism and imperialism have not settled their debt to us once they have withdrawn their flag and their police force from our territories. For centuries, the capitalists have behaved like real-war criminals in the underdeveloped world. Deportation, massacres, forced labour, and slavery were the primary method used…” (Fanon, 1963: 57).
From the beginning, the Pakistani government gave importance to its army and increasingly relied on this institution even in governance matters, as the army was a very disciplined and well-equipped force from the colonial period. In 1948, Prime Minister Liaquat Khan said that ‘‘defense of the state is our foremost consideration, it dominates all other governmental activities’’. In 1951, he appointed Army General Ayub Khan to become the country’s defence minister, which meant the relinquishment of civilian supremacy over the military (Siddiqui, 2011b). After Liaquat Khan was assassinated, President Sikander Mirza, a Sandhurst-educated and former General abrogated the constitution, removed civilian government, banned political parties and political activities, and appointed General Ayub Khan as Chief Martial Law Administer. Just three weeks later, General Ayub Khan replaced Mirza and declared the first coup d’état and began Pakistan’s long subsequent history of military rule (1958-61, 1977-88, 1999-2008).
During the Bandung Conference in 1955, the former colonies set the terms of mutual coexistence in the post-colonial period. Here it was said that newly independent countries would like to maintain peace and stability through mutual respect for sovereignty and without aligning themselves with a superpower. However, soon after independence, Pakistan and India had very different visions of their place in world politics (Siddiqui, 2011a). Pakistan saw its security only assured through close association with the US and joined US-led alliances in the region (Siddiqui, 2013). The country became a crucial ally of US imperialists to fight communism in the region. In contrast to Pakistan, India aligned itself with anti-colonial
movements in the Global South and emerged as a founder member of the Non-Aligned Movement to unite the former colonial countries and raise demand for sovereignty and economic independence.
On the domestic front, in the 1950s, India carried out land reforms, secured tenancy rights, implemented land ceilings, removed absentee landlordism, and increased public investments in irrigation— all these measures increased agricultural output and increased small and medium farmer incomes. Despite the shortcomings in the implementation of land reforms, it did end absentee landlordism and was seen as an attack against the concentration of land into a tiny minority of the rural population. Furthermore, India adopted a secular constitution in 1950, strengthened institutions, and its leaders increasingly mobilised people in support of parliamentary democracy and pluralism (Siddiqui, 2018a; also, Siddiqui, 2018b). The army from the beginning, brought into the control of democratic institutions.
In contrast, Pakistan had from the beginning weak institutions, its political leaders had little mass support in that region, and the leadership had relied heavily on feudal and merchants for their support, and in return, they sought to safeguard their interests. The military was seen as a strong institution and the state began increasingly to rely more on its support, not only during natural crises such as floods, but also to run administration and to establish law and order. Pakistan on the issue of land inequality just paid lip services to land distribution, but in fact, never really attempted to carry out land reforms and minimise the power of landed gentry in the rural areas (Siddiqui, 2013).
Furthermore, all developmental funds were given to big landowners and these so-called developmental funds strengthened the economic power of landlords. For its revenue needs, Pakistan relied on either indirect taxes or US aid, and this further undermined the country’s sovereignty. The military since the 1960s acted to defend the US interests and its Generals to please the US than to defend the country’s sovereignty. Pakistani Generals saw themselves above the Law. To achieve these, the military consistently interfered in politics and made sure that the political institutions never became independent, and the political parties remained weak and always relied on the army for their survival. In these last six decades, the Pakistani military has built very close relations with the Pentagon. I think the relationship with the US has become a hurdle and regressive force for Pakistan’s progression. And for carrying out democratic reforms and moving towards a modern and sovereign state, such a neo-colonial relationship with the US should end.
In recent years, Pakistan has witnessed a deepening economic crisis with rising inflation and unemployment while growth rates fall. At the end of the war in Afghanistan, Pakistan did not receive US aid as in the past, which resulted in rising foreign debts and a trade imbalance. The rising imports have to be paid by more borrowing from international institutions and it is shocking that in the past, Pakistan has borrowed from all international lenders and its appetite to borrow more continues unabated. Under such circumstances, the upper middle classes and educated youth do not see the military as something that rescues them from bad politicians, but it is seen as an institution that is a part of the trouble. They have also realised that the US economic and military cooperation and war on terror did not benefit the poor and middle classes, while such a relationship has undermined the nation’s sovereignty. And without economic independence and sovereignty, their country cannot make policies to benefit its citizens.
Indonesia’s transition from military dictatorship towards democracy and respect for human rights and dissent could be a good lesson for Pakistani politicians. What were the factors that led to the reduction and finally, the end of military rule and how did the external forces led by the US withdraw its support to the military in Indonesia?
It seems due to a huge transformation in the region after US President Richard Nixon visited China in 1972, while at the same time, there was rising tension between the Soviet Union and China. Subsequently, China became the US ally in the region. This affected US relations with Indonesia’s military, which was seen in the changing scenarios as not so important. In 1965, in Indonesia, General Suharto in a military coup removed the elected President Sukarno and carried out the massacre in which nearly a million political workers were killed. His operation was fully backed by the US, who saw this as a good opportunity to remove the radical nationalist President Sukarno, who often criticised the US’s neo-colonial policy in the newly independent countries. Then President Sukarno, with his critical US foreign policy and clear socialist sympathy, was not liked by the US. General Suharto held power for thirty years in Indonesia. The US and international financial institutions fully supported General Suharto through IMF loans and through increased foreign aid and investment.
General Suharto resisted any move towards democracy and respect for human rights during his very long authoritarian rule that lasted from 1967-98. After he was removed, the first few years of the transition towards democracy were difficult, but slowly the country moved towards building greater respect for democracy. And by 2001, Hassan Wirajuda, the country’s foreign minister said, “Indonesia today stands proud as the largest democracy in the world” (Sumka, 2011: 110). Domestic pressures from political parties and mass organisations sided in the defence of democratic rights during this transition period. Moreover, the 1997 East Asian financial and economic crisis led to the collapse of the Indonesian currency (Rupiya) and the country plunged into rising unemployment, inflation, and a deepening economic crisis. Suharto’s family had acquired huge wealth through nepotism and corruption and opposition to his rule grew stronger and finally, he was forced out. The ruling elites realised that the way out lies with closer economic and trade ties with the Association of Southeast Asian Nations (ASEAN). In fact, despite the authoritarian rule, the ASEAN countries have achieved higher growth rates and a steady rise in incomes and employment since the 1980s. They also successfully are more integrated economically, and their trade patterns have changed enormously by moving towards an important part of the global supply chain and their exports consist of high-value manufactured goods and services. Also, their share in the global economy has risen hugely in recent years. All these changes in the region led to the realisation among Indonesian ruling elites that the way out of the crisis in the 2000s lies with closer ties with the ASEAN countries.
As Sukma notes: “The inclusion of democracy in Indonesia’s foreign policy should be understood within two important and interrelated domestic contexts that were relevant from the outset of the democratization process. First, the early years of Indonesia’s democratic transition were difficult and messy, as the country coped with a severe economic crisis, protracted bickering within the political elite, communal and religious violence, and the escalation of secessionist threats. And democratization naturally resulted in the diffusion of political power…. With the disintegration of authoritarian rule and its attendant problems also went Indonesia’s reputation as a politically stable, economically dynamic developmental state… enhance its ability to reinvigorate the economy, reeling in the wake of 1997 East Asian financial crisis” (Sukma, 2011: 111-12). Certainly, the gradual transformation towards democracy, along with establishing closer economic ties with ASEAN countries saw a sharp rise in the inflow of foreign capital and technology.
The US began providing economic assistance and military aid to Pakistan shortly after the country’s creation in 1947. In total, the United States obligated nearly US$ 67 billion (in constant 2011 dollars) to Pakistan between 1951 and 2011, as indicated in Figure 1. The levels year to year have waxed and waned for decades as the US geopolitical interests in the region have shifted. Peaks in aid have followed years of neglect. In several periods, including as recently as the 1990s, the US halted aid entirely and shut the doors of the USAID offices.
In the 1980s, the Pakistani army created the Muttahida Quami Movement (MQM), a sectarian organisation that has involved ethnic violence and the killing of thousands of people in Karachi, Pakistan’s port city. The terror organisation was supported to undermine the Peoples Party (PP) and Jamaat-e-Islami (JI) in Karachi. Karachi is Pakistan’s largest city and financial capital and has long suffered civil-military conflict and violence. Karachi remains a fragmented, continually contested political power centre in which the military, political parties, and ethnic militant groups have a substantial presence, keeping economic and political stability in a state of flux. In the port city, the local political party MQM, is a cautious provincial party with important political and financial stakes in Karachi. A secular party representing the Pashtun, the Awami National Party (ANP), also operates in the city but has been severely weakened in the aftermath of armed violence with the MQM (Siddiqui, 1989).
After 9/11, under huge US pressure, General Musharraf reluctantly abandoned the Taliban and with US bombings, thousands of Taliban workers and their supporters took refuge in tribal areas, particularly in Waziristan. With the US invasion of Afghanistan, the aid again started flowing into the country. However, a large part of the US aid to Pakistan in the 2000s had enriched top army officials, bureaucrats, judiciary, and politicians.
From 2002-2007 and as a President, Musharraf tried to increase his power through amendments and decrees, while restricting the parliament and other institutions. In 2007, he dismissed the Chief Justice of the Supreme Court of Pakistan and also dismissed sixty other judges of the judiciary. And with threats and manipulation, he got himself re-elected both as army chief and President. Against the dismissal of the Supreme Court Chief Justice by General Musharraf, lawyers throughout the country protested and organised huge demonstrations all over the country as they saw it as a gross violation of the 1973 constitution. Under growing internal and external pressure, General Musharaff announced to hold a parliamentary election on January 7, 2008. Along with this, he also had secret meetings with the exiled political leaders and offered them the National Reconciliation Ordinance (NRO), meaning all charges in cases of corruption would be dismissed. And they will be allowed to return and take part in the election campaign. During the election campaign meeting on December 27, 2007, Benazir Bhutto was assassinated. The way the military removed all evidence and hindered any impartial investigation, it seems that the army and the US were behind her murder.
To understand the grip of the military on power politics, we must analyse the period soon after the country became independent. The new country faced military insecurity vs India, and from very early on it joined anti-communist forces in the region by joining Cold War military alliances (Siddiqui, 2023), which empowered and strengthened the military and brought it close to the US. This laid down the future track on which civilian and military would develop. Moreover, its founders Jinnah and Liaquat Khan had weak social and organisational roots in newly created Pakistan. Since its inception, Pakistan has invested hugely in the military by allocating 60% of the annual budget to the armed forces.
From the early years, over-reliance on the military has serious consequences for the process of political institutions and economic development. As the country established the pursuit of security vs India as its top priority, this resulted in claiming a large chunk of the state’s scarce resources that otherwise could have been spent on other national economic goals. And the military got relative autonomy from civilian oversight under the pretext of secrecy needed to defeat the enemy. “Faced with a mobilized opposition, in a civilian and political society, the Pakistani military yielded power to civilians after eight years of authoritarian rule under General Musharaff (1999-2008). The military under Musharaff responded to sustained anti-regime demonstrations and protests that led to the “lawyers’ movement” as well as US pressure to civilianize, by reaching out to the largest opposition party the Peoples Party (PPP) to negotiate …its exit…, the military was able to retain its core institutional privileges concerning control over its internal structure, national security missions, budgetary allocations, intelligence gathering, and so on.” (Shah, 2014: 1008)
Even after the military left formal power, it still maintains its political and strategic influence. To understand this, we have to see that many military officials were appointed, but the military did not hierarchically take over direct control of the state. In Pakistan, post-military period, we see no military council of ministers and no reserved parliamentary seats for military officials as in the case of Indonesia under Suharto or Chile under General Pinochet.
Moreover, the military has deeply penetrated the civilian economy, building itself vast business corporations spanning real estate, cargo, oil and gas, fertilizers, and cement, and now planning to acquire lands for agro-business by attracting foreign capital. This, rather than providing solutions, would undermine the environment, overuse water resources, and displace farmers from their livelihoods (Siddiqa, 2007). The military is involved in the acquisition of land for real estate to provide their retiring officers with residential lands. Military officials often own several land plots and sell them or rent them to civilians. This has become a common practice and can be seen in most of the urban areas in Pakistan. Goldbaum, notes (2024): “No one thinks that the military, with its lucrative business interests and self-image as the backbone holding together a beleaguered democracy, will cede power anytime soon.”
Moreover, the military officials after retirement join private companies as companies find them very useful to get work done more effectively and their influence is seen as an asset to expand their business empire. For instance, real estate agent Mr Malik Riaz in a matter of just two decades has multiplied his wealth enormously and openly said that ‘‘the reason for hiring retired army officers help him to get things done fast and to expand his businesses’’ (Siddiqa, 2007).
III. Economic Crisis and Economic Policy
At present, the Pakistani economy is in the worst crisis of stagnation in investments, the lowest growth rates (See Figure 2) and the worst economic performance in South Asia. Pakistan owes more than US$120 billion in foreign debt and even much more in domestic debt. Most of this loan is either wasted on mega projects such as motorways, with no obvious benefit to the poor or bribes deposited in foreign offshore accounts. As a result, neither were workers’ skills improved to make exports more competitive nor were there reduced trade deficits. The country is spending more than two-thirds of state revenue (obtained mostly through regressive, indirect taxation on consumer goods) on servicing the debt burden and military expenditure.
At the same time, inflation is 39 percent as shown in Figure 3, and one-third of the population lives below the poverty line. Pakistan was also devastated by enormous floods in 2022 that ‘‘displaced eight million people and were estimated to cost the country US$ 30 billion in damage’’. The loss of cotton crops had adversely affected the country’s textile industry, a major source of exports.
In 2022, Pakistan secured a US$3 billion loan from the IMF, which is its 22 times fund programme since 1958. The Pakistani economy is very unpredictable and dependent on imports, the IMF has provided loans to Pakistan so many times, but at the end of each programme, the country became more dependent on international financial institutions despite transferring its central bank to be governed by the IMF and even in the past on a number of occasions going as far as to appoint IMF’s person to take in-charge of the country’s Finance Minister. All these measures made Pakistan more vulnerable and lose its sovereignty over the national economy and further deepened the crisis as foreign debts and dependence only increased.
However, the lending package came with strict conditions of new taxes imposed on the power sector which led to sharp hikes in electricity prices, hitting poor people and industries. IMF had in the past supported a ‘‘structural adjustment programme’’ i.e., trade liberalisation, privatisation, and devaluation of the Pakistani Rupees, which only proved a short-term remedy. It is ironic that the same prescription, despite little success, is given by the IMF again, which only further depresses poor peoples’ incomes, while widening the gap between the poor and rich in the country and only postponing the crisis and increasing dependency on international financial institutions.
The elites are those who control a large proportion of the economic resources and lands in Pakistan, and whose family members are over-represented as top officials in the military, bureaucracy, judiciary, and politics (Shah, 2014). These elites siphon off a large proportion of the country’s wealth and enjoy all the perks and privileges, supported by the US and the UK. They are not ready to give up power and privileges and dismantle the status quo. To see any transition towards democracy in a largely agrarian economy like Pakistan, breaking land-monopoly is key to reducing the power and influence of the landed gentry via land reforms and land ceilings so that society can move towards greater democracy and socioeconomic equality. Historically, such policies have proved to be useful and important policy measures in a transition towards democracy and assisted expansion of domestic markets (Siddiqui, 2022b).
However, Imran Khan has yet to put forward any radical alternative economic policy to reduce growing inequality, rising inflation and poverty, and to reduce the elites’ total grip on the country’s wealth, but has nonetheless generated hopes that the grip of a stultifying and corrupt power structure might be broken. Most of the support Imran Khan has received is from the poor and young people under the age of thirty, who constitute over 60 percent of the country’s population as shown in Figure 4.
Population growth rates in Pakistan are the highest in South Asia, a region where 25% of the world’s population lives. Pakistan is a young country: about 65% of the population is under the age of 30. The adoption of IMF’s neoliberal policies means increased reliance on market forces for resource mobilisation and investments and job creation. And in the lack of major state intervention and structural changes, it is difficult to see how Pakistan is going to create a huge number of jobs for the rapidly rising population. This would be a major challenge for the country. The country is facing a deepening socio-economic crisis, rising trade deficits, unemployment, falling investments, and a rising population. Just a half-century ago, Bangladesh’s population was slightly higher than Pakistan’s, but today due to the continuation of high birth rates in Pakistan, its population has risen much higher than Bangladesh’s (as shown in Figure 5). Bangladesh’s success in bringing down population growth was mainly due to investments in rural health care, and primary education, especially among girls, has provided tremendous success, not only bringing down the population growth but also improving nutrition and hygiene levels in the rural areas.
Since the 1980s, Pakistan has received a huge amount of US aid when military regimes were in power, and the rising trade deficit did not matter much. Pakistan always exported less than imports, which resulted in trade deficits. The deficit rose sharply in the last decade. However, the deficit was covered not by rising exports but by rising remittances, and under such circumstances, the export of labour became an important strategy. No attempt was made to cut down the military budget or luxury imports. Therefore, the rising deficits and crisis forced the regime to ask repeatedly for IMF bailouts, and in return Pakistan must impose neoliberal reforms i.e. privatisation, trade liberalisation, raising taxes, and public spending cuts, especially on health and education. Trade liberalisation led to a reduction in tariff revenues and since the government did not want to tax the rich, the only option for the government was to raise indirect taxes, meaning an increased burden on the poor sections of the society. By adopting these policies in recent years, the country has witnessed a sharp rise in the prices of essential commodities.
Pakistan faces severe crises, rising foreign debts (See Figure 6), trade deficits, and falling growth rates as its economy is on the verge of collapse. The new government will be forced to negotiate with an IMF bailout and adopt a ‘‘structural adjustment programme’’ after Pakistan received a bailout of $3bn last year that prevented a sovereign debt default. Inflation hit nearly 39% in January 2024 and 95 million Pakistanis live in poverty. The Pakistani rupee has been ranked the worst-performing currency in Asia after losing 20% of its value against the US dollar in 2023.
Debt servicing is also one of the reasons for the decline in foreign reserves and its debt services obligation is rising over time (See Figure 7). Pakistan’s total debt and liabilities are rising fast and currently have reached US$120 billion. The country’s debt servicing is also rising and reached US$ 7.479 billion in 2017-2018, which includes the principal amount of US$ 5.186 billion and US$ 2.293 billion of interest payments. The problem of debt servicing in Pakistan has become so big that the current account deficit was US$ 18 billion in 2017 and reached US$ 21 billion in 2018.
The Pakistan economic crisis is linked with the ‘‘crisis of neoliberalism’’ and the country is going through a deepening crisis as more doses of neoliberal economic reforms would not take the country out of the current crisis. For instance, despite the following of IMF prescriptions, the county’s problems such as rampant corruption, poor governance, rising inflation and unemployment, and chronic energy shortages, were exacerbated, and an almost collapsing essential public services has further reduced the trust in government.
The same policy prescription has been imposed again and again for the last two decades, but it failed either to improve performance or bring relief to the masses. For the last two decades, Pakistan also has witnessed the closure of industries (i.e., de-industrialisation) and falling exports and despite repeated devaluation, the export performance could not be improved. One important factor is that the state is unable to assist industrialisation (also known as state-led industrialisation as happened in the East Asian countries in their early phase of industrialisation) due to neoliberalism as the government has to rely largely on market forces.
IV. Conclusion
The main political movement behind the creation of Pakistan was dominated by landlords, merchants, and salariat classes, who saw religion would help them to keep possession of lands and other assets in the new country as its leaders did not talk about land reforms or breaking land monopoly to achieve socio-economic equality in rural areas. During the campaign for a separate country for Muslims, the Muslim League never mentioned land reforms, rather gave all assurances to big land-owning elites that their property would be safe in a new country. The Muslim landlords of the United Province and Bihar were worried about Nehru’s talk about socialism and land reforms and the Congress Party in its convention at Karachi in 1931, clearly passed a resolution favouring land reforms and supported ‘‘land to the tillers’’ in favour of tenant rights.
On the eve of independence, the North-west region which became West Pakistan in 1947, was very underdeveloped and industries were almost non-existent in the region. The whole economy was dominated by agriculture, and land was then highly unequally divided, most of the rural population had no claim on landownership and worked as tenants. The region was closer to comprador than the national bourgeoisie and gradually became dependable allies of US imperialists in the modern ‘‘neo-colonial’’ era (Siddiqui, 2024a).
Pakistan’s tax revenue is the lowest in the world, which is less than 10% of the GDP, and increasing reliance on indirect taxes rather than taxing the rich has further widened social-economic inequality. However, the ruling elites are disconnected from the realities facing ordinary Pakistanis, whose demands and sense of security have been disregarded for too long. If these problems aren’t addressed immediately, large segments of Pakistan’s society will feel further alienated and disfranchised.
In short, Pakistan’s political and economic crisis is deepening, and no one has the magic solution, but again turning to the IMF to borrow more, such so-called help would be temporary. For any long-term solutions, Pakistan has to tax the rich who had benefitted from more than thirty years of neoliberal reforms and now during the crisis, they have to sacrifice. Such policy measures would lessen reliance on the IMF, encourage the mobilisation of domestic resources and restore sovereignty.
Pakistan needs to achieve ‘‘self-sufficiency’’ and ‘‘food sovereignty’’ in food production. For any sovereign developing economy ‘‘food security’’ is very important. It not only saves foreign exchange and creates employment but also stabilises domestic food prices. This could be achieved by increasing investments in agriculture, especially to raise output and productivity with the help of small farmers, which will increase the incomes of small farmers and employment and protect the environment. To achieve all these policies, state intervention is crucial in the economy, which would be opposed by IMF, World Bank and WTO, who support trade liberalisation, which is ruining the agriculture in many developing countries and only benefits the big agro-multinational corporations based in the West (Siddiqui, 2024b).
The military has to be forced out of politics so that elected members can decide to implement policies favouring the poor, especially in public investments in agriculture, education, and health, while cutting down imports. It might hurt the elites, but without such drastic measures, the status quo would continue, and crisis and chaos would deepen. Restoring sovereignty is very important to making policies to improve the living conditions of the poor sections of society. Such policies would improve domestic production, skills, and productivity while reducing overreliance on foreign loans and US imperialist.
Mobilisation of people, especially workers, peasants, and the youth is urgently needed in favour of radical reforms against status-quo and to reverse the course of policies in favour of the poor sections of society. These two parties namely PLMN and PPP have ruled the country too long to implement IMF policies and the US strategic agenda, which has only benefited the elites and increased corruption while bringing more misery and suffering to the poor people. Pakistan is a nation capable of doing great things. The country’s increasing reliance on Saudi Arabia and Gulf monarchies will not help to promote democracy, equality, and prosperity in the long term, but only will increase dependency and unpredictability.
The question is whether the army will use a heavier hand to silence the uproar and restore its authority or if good sense will prevail and they will begin a process of reconciliation with Imran Khan. Or will the military stay the course and risk having the unrest spiral out of its control? The answer depends on many factors, including the US approval as the government needs new loans from the IMF and other international financial institutions to bail out the economy and also the US, EU, and Gulf countries’ support for its survival. The military has such deep relations with its former coloniser, Britain, and the US, where most of the stolen money has been invested in properties and businesses.
For Pakistan to move towards prosperity, these crucial policy measures could be important: people in power becoming accountable, accepting the ‘‘supremacy of law’’ while increasing public investments in productivity growth and education, and implementing land reforms to curb the power of large landowners. Industrialisation and export promotion (Siddiqui, 2021), protecting the environment, and enhancing agriculture based on small and medium farmers would expand employment and domestic savings to increase investments rather than relying on foreign loans. To achieve these targets, the military must be brought under democratic control. The emphasis should be given to achieving good governance, removing corruption at high places. The leadership, who has long-term visions and commitment to change the status quo and mobilise the people to take out Pakistan from the clutches of a ‘‘neo-colonial’’ relationship with the West and restore national sovereignty. For Pakistan, the important policy solutions would be to cut down imports of luxury goods, tax the rich to raise revenue and raise food production, strengthen economic sovereignty, and end the neo-colonial relationship with the Global North.
About the Author
Dr. Kalim Siddiqui is an economist specialising in International Political Economy, Development Economics, International Trade, and International Economics. His work, which combines elements of international political economy and development economics, economic policy, economic history and international trade, often challenges prevailing orthodoxy about which policies promote overall development in less-developed countries. Kalim teaches international economics at the Department of Accounting, Finance and Economics, University of Huddersfield, UK. He has taught economics since 1989 at various universities in Norway and the UK.
References
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