Pakistan is feeling the heat of the world economic crisis along with the devastation of the dying monster of capitalism. One of the weakest links in the chain of world capitalism, Pakistan, is on the brink of bankruptcy. Its economic reserves are rapidly shrinking and the deficit in the state economy is exponentially rising. The rupee is losing its value against dollar and the euro by leaps and bounds, although the injection of $20 million by the State Bank has provided a temporary breathing space, but all that will mean is more devaluation of the rupee in the coming days.
The economic crisis that has been piling up for the last few years has prepared the basis for infrastructural collapse throughout the whole country. The crisis of flour supply and other basic food items in the past few months has shattered the basic fabric of society and now to purchase a bag of flour at astronomical price is a daunting task.
The latest infrastructural collapse is that of electricity supply. There are power outages of 18 hours per day in small cities and towns while in the big cities like Lahore, Karachi and Islamabad there is no electricity available for 14 to16 hours each day. Despite that the price of electricity has been increased by 75%.
This has fuelled the anger of the masses and riots against electricity shortage and high bills are taking place in every nook and corner of the country. Women have come out of their homes and are protesting against the inflated electricity bills. Many have torched their bills on the streets. Many installations of WAPDA (the Water & Power Authority) have been ransacked and destroyed by angry youth and protestors. WAPDA offices in different cities are being burned and roadblocks are the daily routine.
Here one can see the whole economic and social system in a state of collapse. This is what the Marxists have been predicting for the last few years. This is the real result of so-called “trickle down economy”, in which nothing but the evils of the capitalist economy have trickled down to the downtrodden masses.
Many bourgeois intellectuals and economists up until yesterday were singing the praises of neo-liberalism and the market economy. Those vulgar bourgeois intellectuals are now having to eat their words. The preachers of the eternal development and the boom of capitalism are looking for a place to hide. Those who came up with the thesis of the “end of history” after the collapse of the Soviet Union and the fall of the Berlin Wall can see the bankruptcy of their ideas and theories with open eyes. The world financial bubble has burst. The illogical rise of capitalism against the laws of gravity is now reaching its logical end. The monstrous imperialist financial institutions are going to default. Trillions of dollars which were fictitiously created have vanished now.
The shabby building of capitalism now looks like a ghost house. But in spite of all this crisis capitalism will not fall by itself and it will shed more blood of human civilization, societies and cultures. We will have to dig its grave by our conscious struggle for which a Marxist tendency is working in Pakistan and throughout whole world.
Economy teetering on the brink
Pakistan is a failed state and the present global economic crisis has increased its sufferings. Economically Pakistan is near bankruptcy. Its foreign reserves are not enough to run the economy for more than two months. Government officials in Pakistan are begging for a bail out from world financial institutions, but till now they haven’t got any fruitful response. They have received many promises and assurances but none has delivered yet. Pakistan’s economy in the last few years became highly dependant on the foreign investment by different multinationals and corporations through privatising vital sectors of the economy. This FDI (Foreign Direct Investment) was one of the main reasons for the increase in the GDP growth rate that reached almost 7 percent in the last few years. But all this investment was actually aimed at ravaging those sectors. Those multinationals made huge profits in Pakistan leaving thousands of employees jobless and the whole infrastructure in tatters.
The foreign debt and liabilities have increased in rupee value by more than Rs705 billon in less than six months simply due to the more than 25 per cent or Rs15 per dollar decline in currency value. The country’s overall external debt stock has increased by almost $7 billion to $47 billion since June 2007.
The country’s total debt stock now hovers around Rs7 trillion, up by about Rs1.4 trillion from Rs5.6 trillion in March 2008.This includes about Rs3.4 trillion domestic loans and Rs3.6 trillion in foreign loans and liabilities.
The cost to protect sovereign bonds from default that stood at 788.8 basis points on August 22 has increased to 975 basis points, overtaking Argentina’s number one position of being the riskiest investment paper. Foreign-exchange reserves have declined from their peak at $16.5 billion in October to just $7.32 billion, less than three months of imports, while trade and current account deficits are widening.
Meanwhile, last year’s consolidated federal accounts showed that the budget deficit had increased to a record Rs777.2 billion or 7.4 per cent of GDP during 2007-08 that was met through the highest ever bank borrowing of Rs625 billion and over Rs75 billion cuts in development expenditure. The most depressing feature was a massive reduction in revenue receipts that declined to 14.3 per cent of GDP compared with 14.9 per cent in 2006-07 despite higher revenues in absolute terms.
During separate senior level visits two officials of imperialist banks last week asked Pakistan to introduce tough decisions for macroeconomic stabilization by allowing a full pass-through in utility costs, removal of subsidies in petroleum products, reduced domestic borrowing and a flexible exchange rate, so direly needed to reign in the enormous fiscal deficit.
The price of oil was raised when a barrel cost $150 on the international market. But since then the price has seen a downfall internationally due to world economic crisis to almost $65 per barrel, but the prices in Pakistan are still the same. This is one small example of the extent of looting by the multinationals operating in Pakistan. There was also a rise in consumer financing of Rs. 367 billion till December
In spite of being an agricultural country Pakistan has to import all of its important food products to fulfil the requirements of the country while the growth rate of agriculture declined from 6.5% to 1.5% from 2005 to the current year.
In recent years we have seen the decline of large scale manufacturing industry on a huge scale due to the big investments in non-productive sectors.
In this critical economic situation the State Bank, mimicking the imperialist powers has come up with a bail out plan of Rs. 270 billion. It will meet the same fate as those of the US and Britain. Other measures they are being instructed to implement are the same that have already failed. One of them is aggressive privatisation.
The privatisation of the energy sector and the increased role of IPPs (Independent Power Producers) on a large scale have given rise to the energy crisis and the collapse of the basic energy infrastructure. The shortage of 4500 megawatts to 6000 megawatts of electricity causes severe power outages which not only affect the big industrial units but also devastate small industry. Due to the current energy crisis millions of industrial workers have become jobless and are compelled to live in miserable conditions.
More than 45% of the textile industry has been closed down in Karachi and many other industries like steel, sports goods, garments etc., have collapsed. This electricity shortage not only affects industry but it also disturbs the whole lifecycle and gives rise to the shortage of water used for households and other basic every day activities.
The pain of privatisation
The present PPP-led government is inflicting the pain of privatisation on the working classes even more than its predecessors. However, the workers are responding to this attack with full force. Although KESC (the Karachi Electric Supply Corporation) which was privatised by the last government has the capacity to fulfil the energy requirements of Karachi, since its privatisation a few years back the suffering of the people living in Karachi has increased many times over. The private owners have increased the cost of electricity many times again and again to maintain their rate of profit and get more in less time. This present condition of the electricity supply in Karachi is the ultimate result of privatisation. The anger of the masses across the country is seen in the form of violent protests against the present government. Also we have seen clashes between the masses and the state on a large scale causing social unrest, but the government has no solution to this issue except for holding meetings and press conferences.
Just before the start of winter, people are going to face shortages of natural gas and this will increase in the coming months which will further frustrate the public and will cause great unrest. The supply of natural gas to many industries has already been stopped which has again led to big downsizing in industry.
However, the present Zardari government is aggressively following anti-working class policies on the dictates of the imperialist financial institutions. One of the main features of their draconian policy is privatisation.
Currently they are in the process to privatise the natural gas reserve at Qadirpur from which Zardari wants get a huge kickback. In 2002, M/s Merrill Lynch had proposed the sale of OGDCL’s (Oil & Gas Development Company) Qadirpur gas field as a separate entity, which was out rightly rejected by the then company management and the board of directors. While this hot cake is put up for loot sale on its advice yet again, there is seemingly no obstacle to this criminal act so far, except for the protesting workers at OGDCL who are being joined by the activists of the Pakistan Trade Union Defence Campaign (PTUDC).
Located eight kilometres from Ghotki in Sindh, this gas field was discovered by OGDCL in 1990 and started supplying processed gas to the national grid system in September 1995. By virtue of its proven reserves, it is Pakistan’s largest gas field. It supplies 550 mmcfd of processed gas to SNGPL and 48 mmcfd to Liberty Power Ltd, thus contributing a staggering 18 per cent to the country’s total gas production. It also produces 950 barrels of condensate daily. Its yearly net revenue on account of the government’s 75 per cent share is US$451 million. With the enhancement of its capacity to 640 mmcfd by the end of October 2008, this net revenue is expected to increase to US$524 million.
Technically, the Qadirpur gas field has seven distinct reservoirs of which only three, namely Sui upper, Sui main and Habib Rahi, have been tested and their remaining recoverable gas reserves are assessed as 3.7 trillion cubic feet. The other four reservoirs have not yet been tested to work out any estimates. Accounting for the three tested and estimated reservoirs only, the estimated value of this field is US$5 billion. However, the present government plan to sell it cheaply in a “hush hush” manner simply to get huge kickbacks and to avoid the wrath of protesting workers.
Even from a bourgeois point of view it is like doling out a seven-storey gold mine for less than half the price of the top three storeys, together with precious installations, vast acreage of land and a fully developed network for free. The present ruling class has risen from the swamp of capitalism and is the ugliest manifestation of the market economy. The future owners of this gas field would, however, get 100 per cent returns on their investment in less than three years with extensive downsizing and increasing the cost for consumers.
However, the workers of the Qadirpur gas field are fighting a war against this privatisation. The protest in this field has been joined by the workers of various other industries in the area and a working committee has been formed at district level. Also protests and token strikes have started at other fields of OGDCL in Pakistan. A big demonstration was held in Islamabad in front of the Parliament House on October 22 in which nearly one thousand workers and officers from management staff participated. This movement is also inspiring the workers of the other institutions and industries in Sindh and South Punjab.
The imperialists and the Pakistani ruling class are aggressively perpetuating the dark forces of fundamentalism and Fascism to counter the wrath of the working masses and injecting huge sums of money to spread terrorism to scare those poverty-ridden and unemployed masses, but they will never succeed.
Imperialists, Army and Taliban – Friends or Foe?
It is now an open secret that the war against terrorism is actually a war against the working class. Specifically, if we talk about the character of war on the western borders of Pakistan one can apparently see instability and factions within the different security and intelligence agencies of Pakistan. But as a whole the ruling classes of Pakistan, the Army and US imperialism are utilizing this war on both sides against the class struggle by terrorising the working class. It is the basic principle of dialectics that every thing reaches its extreme before its own negation. Hence this fear is reaching to that extreme where the workers will overcome it and will enter the scene of history through their revolutionary struggles and this movement will take the whole of society into its grip.
The conscious level of the masses in these border areas that are being directly affected by this war is increasing day by day as they are facing the aggression of the state, imperialism and religious extremism at the same time. Why is it that large battalions of armed forces have failed to control a force of only 500 to 2000 religious extremists in Malakand? The same is the case in the tribal areas bordering Afghanistan. Fighters on the both sides are equipped with the same kinds of weapons in almost similar quantities.
Neither the Pakistan Army nor the imperialist forces are there to win any war or to curb terrorism. They are there to earn trillions of dollars in drug money from the opium fields of Afghanistan. Their real friendship is with that money and they keep on changing friends or foes in this cruel business of narcotics. However, whenever there is a threat to their class interests the imperialists unite with the Generals of the Pakistan Army and utilize their hired fundamentalists to repress the working class.
The people’s resistance in these areas is increasing against these reactionary forces and the time is not far off when the people will reach the conclusion that both these parties of war are actually the representatives of this capitalist system. This war is imposed on the people in a dramatic manner in order to have control over the resources and to secure the finance capital of the imperialists. Leon Trotsky once said that the fascist forces within society appear dominant in the absence of the political participation of the proletariat in politics and with the weakness of the bourgeois. But as the class war will start and show its strength then these conservative and fascist forces will dwindle. This is going to happen in Pakistan very soon. The interviews of the refugees from Bajur and the mass protests in Mingora give the true picture of what is happening in those areas.
In this very critical situation for the country a political vacuum is prevailing in society and the extreme right wing of the state apparatus is being financed with this drug money to fill this vacuum with political campaigns which don’t have public support. Meanwhile the class consciousness of the working class is undergoing a rapid transformation due to the cruel objective conditions and they are not ready to accept any demagogues.
All the right-wing parties like the Muslim League combined with the nationalist parties are at the very same time part of the government while they are also playing the role of opposition, which has exposed them to the people. They have run out of steam and have no solution to the impending crisis in society. The mockery of the lawyers’ movement has come to its logical end and now only Jamat-i-Islami and other extreme right-wing parties are supporting their original cause.
PPP in government
The present government of the Pakistan People’s Party, which is the traditional party of the workers of Pakistan, is rapidly being exposed in the eyes of the masses. Marxists have always said that the working class learns from experience and during this PPP government they have begun to understand a harsh lesson of history: that the leadership they have followed and trusted for such a long time has actually become a hindrance in their struggle for the overthrow of this system. Zardari, the second richest man in Pakistan, is now the top-most detested man in the country. By aggressively following imperialist policies he has exposed the real character of the present leadership of the PPP.
After coming to power the PPP leadership has done a lot to discredit itself in the eyes of the masses. The ability of the Pakistan People’s Party leadership to hold back the masses is no longer what it was in the past.
There is a deep resentment growing among the ranks of the party and the workers are looking for an alternative leadership inside the party. The only programme that can lead them out of the present misery is the one written in the founding documents of the party. The Marxists in Pakistan are presenting the ideas of revolutionary socialism to the workers and peasants inside the party. They are also openly exposing the right-wing policies of the leadership and the government and the corruption they have got themselves involved in.
Marxists understand that the masses have considered the PPP “their” party for several decades, ever since the party was set up. They have also explained patiently that the leaders of the party did not have and do not have a programme that can lead the masses out of the present crisis. Only a programme based on the expropriation of the landlords, of the local capitalists and the imperialists, can begin to tackle the burning problems of the day.
The leadership of the PPP, even at its best, has always sought to solve the problems without breaking with capitalism. Herein lies its weakness. In the present conditions any attempt on the part of the leadership to look for solutions within the limits of capitalism will push it ever more to the right. That means the party will come under huge pressure, both from the right, i.e. the capitalists and landlords, and the left, i.e. the workers and peasants. They cannot serve two masters and therefore these conditions will push apart the proletarian and peasant base from the landlord and capitalist class.
In these conditions the duty of Marxists is to stand out. We cannot take any responsibility for the policies of the PPP in government. We put forward a bold, revolutionary Marxist programme, and explain to the masses in and around the PPP that this is the only way out of the crisis.
This government is now asking for huge loans from the World Bank and the IMF which are reluctant to give money due to their own perilous condition. The Pakistani economy urgently needs $4 billion or it will collapse. The imperialists will only give this money on their own conditions which include an end to subsidies on all products. Also they demand privatisation which means more unemployment and infrastructure collapse. All this will force the millions of peasants and workers to come out onto the streets to find a solution to their miseries.
In the coming months we will see big demonstrations and agitations of the working class on the issues of the breakdown of power supply, unemployment and price hikes. The Marxists will stand side by side with the working class. Experience will teach that the only answer lies in the overthrow of this rotten system, in socialist revolution.
We have entered into an era of a worldwide crisis of capitalism. This means class struggle on a world level. The epoch we are entering gives the workers and peasants another historical opportunity to rid themselves once and for all of this system. What is lacking is the revolutionary leadership to transform this potential into reality.
The Struggle tendency, the IMT in Pakistan, as in many other countries, is ready to participate in these events and the upcoming movement to take it to its logical end and open the door of socialism for the whole of South Asia and the world.
- Pakistan: Rulers Playing Games – Masses in Unprecedented Suffering by Lal Khan (September 2, 2008)
- The role of the Pakistan Army by Lal Khan (July 22, 2008)
- Pakistan: Largest ever congress of Marxists in Kashmir by Yasir Irshad (July 8, 2008)
- Pakistan: “When worlds have to be won” by The Struggle (July 2, 2008)
- Pakistan - unravelling of the democratic farce by Lal Khan (May 15, 2008)
- 27th Congress of The Struggle meets at crucial turning point in Pakistan’s history by our correspondent in Pakistan (April 2, 2008)
- Pakistan: Coalition - no solution! by Lal Khan (February 20, 2008)
- Pakistan elections: The Mother of all Frauds by Alan Woods (February 19, 2008)