True to its cause of serving the interests of rotten Pakistani capitalism, the current PML (N) regime has unleashed aggressive neoliberal policies—making the rich even richer and the oppressed imperilled to a fierce socioeconomic onslaught—with impunity.
The imperialist institutions and rating agencies have never lauded a regime in Pakistan so generously. The IMF in its July statement wrote, “Despite weak track record with previous programmes, Pakistan is making steady progress in meeting ‘reforms’ bench marks.”
The PML (N) government never mimics these as evidence of its superior handling of the economy. Security is returning, so we are told, and the economy is on a growth path. However, Moody’s ratings report, if read in depth, gives a different picture: “Institutional effectiveness has been hampered by factious relations between the executive, military, and judicial branches of government and political event risks remain relatively high . . . despite recent ‘stability.` Downward pressures on Pakistan’s credit rating come from `very low fiscal strength,’ due to its high debt levels and weak debt affordability in light of a narrow revenue base. Meanwhile, ratings are held up by `support’ from multilateral and bilateral lenders alone, which raises several questions, given the approaching end of the IMF programme next year, and the turbulent waters between Islamabad and Washington DC these days. Despite rising reserves, the level of external public debt poses a serious credit risk.” This analysis by Moody`s is in sharp contrast to the turnaround story being relentlessly swanked by Ishaq Dar, Pakistan’s Federal Finance Minister.
The so-called stability is more on the macroeconomic level. Figures are fudged so often that the Finance Ministry had to apologise to the IMF for giving spurious statistic on the economic condition last year. However, the economic misery and social turbulence the vast majority of the masses are suffering is catastrophic. One of the leading bourgeois economist confessed in early September, “Pakistan’s merchandise trade deficit has widened to $22 billion. In July, the monthly trade deficit surged to $1.77 billion, a 34% increase over the same period last year. Exports are declining. In the 2015 financial year exports proceeds were 3 billion below target at $24 billion. Textile related exports, which account for almost 60 percent of all exports, declined 11.79 percent. Some fear they will decline by 15 percent by the end of the year.”
The oppressed masses have been denied any economic benefits from the colossal fall in oil and commodity prices. Plunder by the imperialist institutions in the form of debt servicing, along with the institutionalised corruption by PML (N) and others, is continuing unabated. Health, education, and state enterprises are up for privatisation. In an environment with no political party representing the cause of the workers and the poor, the mantras like privatisation as a recipe for economic development have been inducted into the economic programme of all the mainstream political parties. Everybody seems to have capitulated to this vicious exercise, which makes products and services more expensive, massive redundancies’ adding to the ocean of the unemployed, and brutal crushing of the oppressed by the “market” forces.
The ruling elites are jubilant, as the PML (N) regime has showered them with corporate tax exemptions bolstering their rates of profit. As in other sectors of the economy, the parasitic banking bosses have made enormous profits. The State Banks September 23rd report says, “Banking sector profit-after-tax surged by 52 percent year-on-year during the second quarter (April-June) of 2015, on the back of strong interest and noninterest income. The banking sector`s pre-tax profit stood at Rs171 billion during the period. Though the reduction in policy rate during 2015 will impact the interest income of banks, huge stock of long-term bonds accumulated prior to cut in policy rate and corresponding capital gain on such securities placed under AFS category are expected to shield the profitability of the banking system.”
Depositors mainly from middle and lower classes, such as the widows, the elderly, and other weaker sections of society, who deposited their lifelong earnings in the banks and lived on those returns, have had their incomes cut more than half. In the last two and a half years these rulers have slashed the interest rates from around 12 percent to 5.5 percent. And, lo and behold, every “economist” and bourgeois expert is glorifying this heinous act as the greatest feat, depicting the “economic turnaround.” Yet the private borrowing with such low interest rates has fallen, with little prospect of higher rates of profits in manufacturing or any productive sector. Rates are cut for access to cheap borrowing for the elite, to indulge in gambling on the stock markets.
This reduction in rates is a reflection of the severity of capitalism’s crisis rather than its healthy growth. Bank of England chief economist Andy Haldane found, digging through the historical record on interest rates, “Interest rates are lower today than they were when FDR or Napoléon or Henry VII or Genghis Khan or Charlemagne or Julius Caesar or Alexander the Great or even Hammurabi were around.” A Washington Post article confessed, “Now, financial crises aren’t new, but global ones are. The only other time that has happened was in the 1930s. When everyone around the world becomes risk averse, you can’t even export your way out of trouble since there`s nobody to export to. Interest rates fall to zero, and get stuck. It took the stimulus program known as World War II—which nobody wants to repeat—to climb out of this economic trap in the 1930s, but there isn’t anything to do so now.”
The declining purchasing power of the middle class is corrosive for Sharif, as it is losing large sections of this petit bourgeois into the arms of the PTI. The plight of the working classes and the poor is rapidly worsening, with a seething revolt simmering below the surface. The fragility of the economy is reflected politically in the weakening of the regime. Nawaz Sharif is supposed to be the “democratic” ruler of the country, but it’s Raheel Sharif who is calling the shots. Economic stability is a myth, social development is sham, and poverty alleviation is a deceit. Poverty and misery are on the rise, with the crisis unravelling into a conflagration. Bourgeois democracy has failed. The system doesn’t have the capacity to sustain it. Military rule has failed again and again and is not an option. The top military brass is enjoying more power, perks, and profits than it could have gained in a direct military dictatorship. All sections of the ruling classes are trampling each other in a stampede to plunder in the shortest possible period. They are aware their time is up. They are sitting on top of a volcano that will erupt sooner rather than later. Their media and their political gimmickry, along with their state institutions, cannot save them. Not for long, anyway. The conditions for a revolutionary transformation are rotten ripe. The missing element is the entry of the workers and youth into the arena of history to change their destiny. Once they are on the move, these military and democratic edifices of capitalist coercion will crumble. The movement will carve out a revolutionary leadership and a party once it surges forward.