– The Malaysian Consul General, General Khalid Abdul Razzaq, told the press that in the last few years, about 700 Pakistanis had transferred Rs one trillion and 80 billion to his country in a specific programme. If one includes the most popular places for Pakistani capital in the Gulf States, Europe and the US, the transferred amount would be in the hundreds of billions of dollars. If capital is flying out so ferociously, the Pakistani economy has a very dim future. The more depressing aspect is that the policies that created such conditions are not changing in the foreseeable future.
First of all, it is mindboggling how a country wracked by all kinds of law and order problems and power shortages can still generate such a mammoth surplus that is being transferred abroad. This reflects the vibrancy and tenacity of the Pakistani population that it can survive against all odds the way it has been doing for centuries. Probably, this is one of the reasons that our rulers, specifically the military, are continuing the perilous policies that they adopted three decades ago.
Last month, Pakistan’s economic division estimated that the Pakistani economy has suffered losses of about $ 68 billion due to the war on terror. However, the figure was based on certain unproven assumptions and less than solid stipulations. It seemed that the figure was touted in the international press to convince foreign governments about the cost Pakistan is bearing for the war on terrorism and tell them that their aid is too little when compared to the losses. One could have questioned Pakistan’s projected loss figure on various grounds but the capital transfer to Malaysia cannot be questioned because it is coming from the horse’s mouth.
Every economist knows such a huge surplus that is being transferred abroad is gained through extreme exploitation and skimming of the masses. The surplus, whatever way it is gained, is called ‘the savings of an economy’. And, if the savings are not invested back into the economy, the country can never grow — on the contrary it can only degenerate. Pakistan’s rate of inflation, rising poverty and unemployment, which may be as high as 70 percent if one includes the redundant rural workforce, is a manifestation of how the export of Pakistani savings abroad has jeopardised the revival of the economy.
The migration of Pakistani savings to other countries shows that its top wealth holders — whatever their percentage — do not see a safe future in Pakistan. Insecurity is the fundamental reason for such a prevalent view among prosperous Pakistanis. The rise of religious extremism and acceleration of jihadism through the Taliban, al Qaeda and other private militias is the root cause of insecurity in Pakistan. Therefore, the state institutions that have given rise to such forces are directly responsible for the disaster Pakistan is facing.
The flight of capital from Pakistan started during the 1970s and 1980s, long before 9/11 and the US invasion of Afghanistan. Rising sectarianism in the country and ethnic violence in Karachi, engineered by secret agencies with no US input, started scaring potential domestic and foreign investors. It is interesting that this violence-ridden environment opened another chapter of economic plundering in Pakistan by all kinds of exploiters. The attitude had been to squeeze as much as possible in the shortest period. Somehow, the deepening of anarchy provided more opportunity to the exploiting classes and we witnessed unprecedented accumulation of wealth and its transfer abroad in this period. Who is responsible for creating such conditions?
The Pakistan military’s doctrine of seeking strategic depth in Afghanistan with the help of the Taliban and al Qaeda added to the anarchy, insecurity and, strangely enough, economic exploitation. Military spending kept on rising at the expense of the impoverishment of the masses. Therefore, the policy of seeking strategic depth in Afghanistan has caused misery for common Pakistanis from many angles.
Despite the international pressure and domestic rejection, Pakistan’s military is continuing its failed policy. Besides the US, every international power, including China, has asked Pakistan to clean up its jihadi mess and change its direction from India obsession-cum-seeking-strategic depth in Afghanistan to being friendlier towards its neighbours. Domestically, after Mian Nawaz Sharif’s declaration that we should end hostilities towards India and that the military should get out of civilian matters, other than a few religious parties no mainstream political party shares the military’s strategic vision. The PPP and ANP may be toeing the military’s line for opportunistic reasons for the time being but both parties are far from India-haters.
Therefore, it is the military strategy that is causing insecurity in the country and forcing Pakistani capital to flee. The quantity of outflow of capital is so huge that a few billion from the US, any other country or international agencies (the World Bank and IMF) cannot compensate the losses. Therefore, the first sign of stability in Pakistan would be seen when Pakistani capital outflows stop and domestic savings start getting reinvested in the country.
On the contrary, if the military keeps walking on the suicidal path, the economy will be squeezed and, if India grows steadily, Pakistan will become irrelevant in the region. The outcome of the ongoing military strategy of Pakistan will result in just the opposite of what is desired.