[stop-imf] Pakistan: Officials "should avoid taking advice from economists that are linked with IMF"

[robert weissman]

http://thepost.com.pk/OpinionNews.aspx?dtlid=3D150311&catid=3D11

The Post
March 17, 2008

*Whose advice government will take?*


M.B. Naqvi



A new Government is about to be formed and its shape is more or less
clear. It will comprise PPP, PML (N) and ANP coalition at the Centre and
similar coalitions in at least three provinces and maybe that some
similar development takes place in Balochistan. The country=92s economic
condition today can only be described as being a mess after eight years
of economic mismanagement by Musharraf=92s gift of New York based economic
wizards. Surely, the new regime will be forced to have new economic
policies and will necessarily seek advice over what policies to follow.

In this connection, some trade union leaders with a banking background
have suggested to the PPP, PML (N) and ANP leaders that they should
avoid taking advice from economists that are linked with IMF. This is a
sensitive issue but the advice is sound. Much of the economic malaise
that afflicts Pakistan economy points, in many ways, to what the
economic advice from the IMF (and World Bank) was. The IMF-World Bank
duo, working in concert with American Treasury and WTO or its
predecessor bodies, has duly led Pakistan down a path that has created
today=92s anomalies.

This, to use a plain description, must be said that many of the
Pakistani economists have been corrupted by IMF and World Bank by luring
them into writing papers for them for fees that are seen to be very
attractive here; this is a highly corrupting influence because their
papers tend to end with operative advice such writers imagine will be
appreciated in the World Bank-IMF community. It is a fact that many
Pakistani economists, despite knowing better, tender an advice that is
in consonance with the advice that the IMF and the World Bank actually
give to the third world under their various programs of structural
adjustments, now called globalisation guidelines.

There is no doubt that the new government will need competent advice. It
should come from Pakistani economists and not from abroad. But these
economists must not have been under undue influence of IMF-World Bank
thinking. The best course would be for the victorious parties to either
have their own think tanks comprising Pakistani economists and perhaps
retired officials or the coalition should have its own one larger
think-tank. There is no escape from the necessity of sound research by
locals, keeping in mind local conditions and problems. One formula for
the entire world does not and cannot work. That one formula formulated
by Western economists in Washington and London would, ipso facto, be
tailored to serve the interests of the rich and industrial Western
economies. Pakistani rulers need to beware.

Pakistan is passing through a phase that can mark a new beginning if the
new Government surmounts its initial political difficulties of wresting
decision-making powers from President Pervez Musharraf and his old cabal
of advisers. Assuming that a new beginning has to be made =96 and there is
no other option =96 new economic policies will have to be evolved whether
they conform to the thinking of World Bank-IMF or not. Blindly following
the World Bank-IMF advice has led Pakistan down the garden path of
present straits.

Pakistan is an underdeveloped, quite partially and newly industrialised
and not very efficient and still largely agricultural country, with few
skills and little education. It was advised, or forced into, adopting a
set of coherent policies =96 a specific paradigm really =96 that have
created conditions that, if they persist, can cause the failure of the
state or a meltdown. Why because it needed ever more loans and was
forced into throwing open its doors wide to more efficient exporters and
Islamabad being persuaded to let its price levels rise as markets demand
and make the currency convertible on both capital and current account =96
a formula to lead it eventually into a failed state because it needs
more imports and exports less unless it can industrialize and export
more (that would be impossible because of policy conditions Pakistan
accepted earlier). The advice also included the strange formula of
working for high growth rates, based on producing more (and if possible
with growing efficiency) for foreign markets and based on imported
capital for investments, the profits of which would continue to go out.
The magic of markets has in fact produced the present conditions because
Pakistan, like a tamed animal, has been obediently following IMF-World
Bank advice for as the ZA Bhutto days.

Unless Pakistan devises a growth strategy based on a modernised and
rejuvenated agriculture based on effective land re-distribution and a
self-reliant and self-sustained industrialization based on expanding
education and skills and domestic savings and investments and the new
industries producing primarily for the needs of a burgeoning population,
the development would be fickle and uncertain as indeed it has been.
Nobody in the West owes Pakistanis the sound development of industries
for the benefit of Pakistan. If they do give aid, it is only to serve
the ends of their own economies. Foreign official aid does what
commercial credit does in the private sector. It is not a safe means of
sustained growth for a poor third world country that would also reach
down to poorer citizens of the country.

The new rulers have to tackle mountainous problems. To deal with them
will not be easy. The new rulers would also need some help. But that
should be more on sound advice that supplements, and not supplants, the
recommendations of local independent economists, rather than financial
investments in making primarily consumer goods. The international
economic conditions in which the new Government will start its innings
are harsh and forbidding. Look at the oil prices so high above $106 a
barrel. This factor alone can cause an international recession. The
poorer third world countries, including newly industrialized ones, will
find it hard to exports to markets in recession, that will put new
burdens with origins in international recession and its many causes:
beginning of a revolt against a fast-depreciating dollar, the
geo-political difficulties of America that are isolating it and making
it world=92s greatest debtor, the rise of new economic superpowers and
above all the greed and designs of major international oil companies and
the oil producers cartel who are making a killing or grain markets
sharks=92 activities.

The huge profits to these huge companies and oil giants and producers
all make big profit at the expense oil-dependant world =96 most of which
are poorer third world countries including NICs. How long can this go
on? It is obscene loot. While other factors have to be taken into
account, it is time that the poorer nations taking the lead, unite into
a sort of international consumer=92s cooperative while bringing to bear
their political unity on big multinational corporations that control
international oil and other trades. Some sense has to be drilled into
them so that they remember their own rhetoric social responsibility.
Let=92s hope that can go some way toward preventing racketeering by what
are called oil giants and other MNCs, who keep many of the oil producers
in their pocket.

This is a field that had been briefly broached in 1970s as an evanescent
concern of the PPP government of Z.A. Bhutto who came under tremendous
American opposition afterwards. This had begun to be articulated in the
wake of the first Oil Shock. The new government must realize its correct
place in the world even as it eases out of the American stranglehold
over its economic and political policies such as making Pakistan a
non-NATO ally. Do Pakistanis need to be one? Do they feel any affinity
with NATO that has obviously outlived its original purpose and is now
involving itself far and wide in ME, Africa etc.

All said and done, the new rulers must realize that a majority of
Pakistanis are living lives of misery, thanks to the high levels of
inflation, led by high food prices, results of agricultural stagnation,
poverty of the masses, lack of education and skills and of course
underdevelopment of all kinds. Willy-nilly the new government(s) are
required to be agents of change whether or not the leaders actually want
any real change. If they do not come up to the expectations of voters to
change their lives for the better, they will end up as failures and
shall soon be driven out of politics.

/The writer is a veteran journalist and freelance columnist/