Imran Khan’s Pakistan
Young people, seeking better services and a crackdown on corruption, powered Imran Khan's victory in the recent general election. But can the greatest cricketer Pakistan has ever produced deliver on his promises?
KARACHI – The cricketer-turned-politician Imran Khan will become the next prime minister of Pakistan. The vote count was completed three days after the election on July 25, and Khan led his party, the Pakistan Tehreek-e-Insaf (PTI), to victory. A party – or a coalition of parties – requires the support of at least 137 members of the National Assembly to be called upon to form a government. Khan is close to achieving that goal. Having won 115 seats, the PTI should be able to get the support of scores of independents and members of the half-dozen smaller parties. He will likely be sworn in before August 14, Pakistan’s 71st birthday.
Submitting to the counsel of his close advisers and addressing the public as prime minister-elect, Khan said that, having played cricket, he knows the game is not over until the last ball has been bowled. But he subsequently appeared on national television promising a naya (new) Pakistan.
The country has completed one of world’s largest democratic exercises. Altogether, 106 million voters were registered to elect the next National Assembly and four provincial assemblies. Of these, 56 million people (almost 53% of the total) cast their votes. The electorate chose 270 members of the National Assembly. Because two candidates were killed in pre-election violence, voting for two of the directly elected seats was postponed. Sixty women and ten members of various religious minorities were indirectly elected by the four provincial assemblies, bringing the total membership of the national legislature to 342.
Over 3,600 candidates competed for the 272 directly elected National Assembly seats, an average of 13 per seat. This is a good proxy for gauging the state of politics. In less-developed political systems, party discipline typically is too weak to limit the number of people who can contest elections.
The Pakistani political field is crowded in terms of the number of parties, too – another sign of an underdeveloped system. In addition to the PTI, which Khan founded in 1996, two other parties have mass followings. The oldest is the Pakistan Muslim League (Nawaz), which traces its history to 1906, when the Muslim population of British India formed an organization to represent their community’s political and economic interests. Under the leadership of Pakistan’s founder, Muhammad Ali Jinnah, the PML campaigned for the creation of a separate state for India’s Muslim population. Since Pakistani independence in 1947, the party has had several reincarnations; the latest is PML-N, until recently led by former Prime Minister Nawaz Sharif and now by his brother Shehbaz.
The other major political force, the Pakistan People’s Party (PPP), was founded by Zulfikar Ali Bhutto in 1967, after he quit the cabinet headed by his mentor, General Ayub Khan, the country’s first military leader, over differences regarding Khan’s policies on relations with China, India, and the United States.
The recent general election was Pakistan’s eleventh. Until now, only the elections in 2008 and 2013 have been open and democratic. Both led to the peaceful, orderly transfer of power. The 2008 election was won by the PPP under the co-leadership of Asif Ali Zardari, the widower of former Prime Minister Benazir Bhutto, who was killed in December 2007 while addressing an election rally. The PML-N won the 2013 election, with Sharif becoming prime minister. He was ousted in 2017, however, when revelations in the so-called Panama Papers led to criminal charges against him for various financial crimes. Earlier this year, the Supreme Court barred him for life from holding public office, and this month he was sentenced to a ten-year prison term.
This year’s election took place in relative peace, partly owing to the presence of 370,000 troops at polling sites. Though their deployment was also intended to prevent allegations of vote rigging, which Imran Khan and his supporters used to cast a shadow over the legitimacy of Sharif’s government, the defeated parties nonetheless claimed that the election had been tainted.
The PTI’s success resulted from a combination of factors. For starters, the party increased its standing among Pakistan’s urban youth. Pakistan has one of the world’s youngest populations, with a median age of just 25 years, and migration of young men to large cities has swelled the share of young people in places such as Karachi and Lahore to 70-75%. For many of these young people, neither the PML-N nor the PPP met their aspirations, whereas Khan promised well-paying jobs, education, health care, and urban transport. The PTI made major inroads in the megacity Karachi, where its candidates defeated long-established parties.
Khan’s unrelenting focus on corruption also attracted support from young voters. Both Zardari and Sharif were charged with corruption by the National Accountability Bureau, an organization with judicial powers established by General Pervez Musharraf, the country’s fourth military president, to investigate high-level wrongdoing. In his election campaign, Khan drew a link between official corruption and the state’s failure to deliver the goods and services young people want.
The election has brought two other issues to the fore. First, how involved was the military in producing a result that many in the country believe the generals wanted? Second, what are the long-term implications of the judiciary’s aggressive role in state affairs? It will take time to answer these questions. But a consensus has developed that Khan was the military’s favorite. And, with the foreign media largely accepting that assessment, that consensus will shape international perceptions of his government.
Pakistan’s IMF Problem
In exchange for bailouts over the past three decades, Pakistani governments have repeatedly agreed to draconian spending cuts and arbitrary taxes in pursuit of fiscal targets. As a result, the country's economy is as weak as ever, and its state capacity has been hollowed out.
ISLAMABAD – After Pakistan’s recent election, Imran Khan and his Pakistan Tehreek-e-Insaf (PTI) party are now forming a new government. As usual, it will be greeted by an economic crisis. A trip, cap in hand, to the International Monetary Fund seems inevitable.
Pakistan, after all, is an IMF addict. The country has already spent 22 of the past 30 years in a dozen different IMFbailout programs. As the former IMF advisers Ehtisham Ahmad and Azizali Mohammed explained in a 2012 working paper for the Asia Research Center, no American, IMF, or Pakistani official has any incentive to reform Pakistan’s structural economic problems, and so the cycle of bailouts continues.
Unfortunately, few in Pakistan have ever read Ahmad and Mohammed’s paper or debated its significance. If they had, they would know that the IMF’s approach to the country has been a failure. For decades, IMF programs have been undercutting Pakistan’s productivity and growth potential, by eroding governance and state capacity, and creating conditions for ever more rent-seeking and corruption.
Successive IMF programs have required that Pakistan adopt more withholding taxes (never to be refunded), surcharges, and levies on essential goods such as oil and electricity, even though these measures hurt employment and investment growth. And when the government misses its fiscal targets, the Fund and Pakistan’s finance ministry agree on quarterly mini-budgets, which often include new taxes on school fees, bank transactions, Internet access, and so forth.
It should go without saying that if businesses do not even know what tax measures will be included in the next quarterly mini-budget, they will be unable to plan and invest. This is Economics 101.
Moreover, alongside distortionary tax policies, the IMF has forced the finance ministry into unplanned spending cuts without any real reforms, despite the obvious negative effect this has on growth. When such reductions were made under an IMF program in the 1990s, Pakistan’s national bus service ended up on the chopping block, and vehicles were allowed to deteriorate. Since then, funding for public services – including railways, police, health, and education – has been cut to the bone.
In other words, Pakistan has been the subject of a long-running experiment in austerity. Hastily designed spending cuts have undermined growth, and thus the government’s fiscal position, forcing it to kill off public services and infrastructure projects. The result has been a severe erosion of state capacity.
To be sure, Khan’s new government and the IMF will talk of reform; but such talk is never followed up with action. Reforms to overcome Pakistan’s constant power shortages have been discussed for the last decade, and yet the losses continue to mount. With the costs of mismanagement passed on in the form of price increases, the debt held by private power producers and the government stands at over one trillion rupees ($8.2 billion).
New IMF funding will no doubt lead Khan’s government to repeat past mistakes. It will cling to artificial exchange rates, while avoiding reforms that could actually plug leakages in state-owned enterprises. When the Fund was preparing its 2013-2016 program for Pakistan, I warned the deputy director overseeing the plan that it would be used to overvalue the exchange rate. She insisted that it would not. It was.
The pattern is always the same. With the Fund’s blessing, the government goes on a shopping spree, taking out costly loans for expensive projects, thus building up even more debt and adding new inefficiencies. After a few years, another crisis ensues, and it is met by another IMF program.
The short-term focus of these programs ensures that reforms will be postponed, and that obsolete industries will not be allowed to die. Meanwhile, education goes underfunded, energy and water shortages grow more frequent and severe, economic imbalances worsen, and the government’s policymaking capacity continues to erode. Rapidly achieving stable macroeconomic indicators is all that matters, even if doing so accelerates social and political decay.
It is precisely the rush to meet IMF-dictated fiscal numbers that leads to bad policies. In the absence of due process – such as parliamentary or cabinet scrutiny, ministerial and expert review, and domestic consultation – the finance ministry accrues more power, and governance declines. That is what happened under the previous government – which used an IMF program to push through vanity projects – and Pakistanis are now paying the price.
Sound macroeconomic policymaking cannot be conducted through arbitrary mini-budgets. The way to address economic imbalances is to spur growth in the real economy, which will allow for the accommodation of deficits and debts. As I show in my book Looking Back: How Pakistan Became an Asian Tiger in 2050, economic growth and development require sound governance and ample state capacity. Those criteria can be met only through extensive, well-considered reforms over the long term. The question is whether the IMF will encourage that, or have Pakistan keep doing the same thing while expecting different results.
The Pakistan Conundrum
The big US error after 9/11 was to treat Pakistan as if it were an ally with which it is possible to assume a large degree of policy overlap. In fact, even a more calculated, transactional relationship will not bring the US and Pakistan closer together.
NEW YORK – Harold Brown, the US defense secretary under President Jimmy Carter, was reported to have described the arms race between the United States and the Soviet Union in these terms: “When we build, they build. And when we don’t build, they build.”
From the US government’s perspective, the state of current relations with Pakistan is remarkably similar: When we support Pakistan, they do things we don’t like; and when we sanction Pakistan, they do things we don’t like.
From the Pakistani perspective, the past would be mostly a narrative of multiple betrayals, featuring a US that gets close to Pakistan for a time, only to cut off aid whenever its leaders see fit. For example, the US armed the mujahedeen who fought the Soviets in neighboring Afghanistan in the 1980s, but then all but abandoned the region soon after the Soviet military exit in 1989. Conveniently missing from this narrative is that it was Pakistan’s development of nuclear weapons in contravention of US law that necessitated the withdrawal of aid.
Much of that US aid was restored in subsequent years. But mutual mistrust remained, in part because the father of Pakistan’s nuclear program (presumably with government knowledge) aided and abetted the nuclear programs of Libya, North Korea, and Iran.
The two countries grew closer again after 9/11, when George W. Bush’s administration delivered an ultimatum to the Pakistani government, telling it to choose between its relationship with the US and its relationship with the Taliban, which had opened up Afghan territory to al-Qaeda. Pakistan promised that it would be a partner in the war against terror, and was rewarded in 2004 by being designated a “major non-NATO ally,” which qualified it to receive some of the most advanced military hardware and technology.
Now, however, another American president has come to be frustrated with Pakistan. Rather than delivering the message in private in Washington or Islamabad, Donald Trump opted to go public: “The United States has foolishly given Pakistan more than 33 billion dollars in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools. They give safe haven to the terrorists we hunt in Afghanistan, with little help. No more!”
If asked, which I was not, I would have recommended that such a message be delivered through diplomatic channels, because open, rhetorically charged criticism would make it even more difficult for Pakistan to change its policy course – presumably US officials’ goal – lest it appear to be a client state. And I would have argued against cutting security ties and in favor of linking US support to specific Pakistani actions.
Indeed, the big US error after 9/11 was to treat Pakistan as if it were an ally. With an ally, it is possible to assume a large degree of policy overlap. With Pakistan, no such assumption can be made.
Pakistan has the world’s fastest-growing nuclear arsenal, is home to some of the world’s most dangerous terrorists (including, for a time, Osama bin Laden), and, as Trump suggested, provides sanctuary to the Taliban, who are doing all they can to destabilize Afghanistan. Pakistani policy is threatening not only a decade and a half of US effort in Afghanistan, but also the lives of the thousands of American soldiers still stationed there.
But even a more calculated, transactional relationship will not bring the US and Pakistan closer together. Pakistan – a democracy in name only, owing to the political dominance of its military and intelligence services – wants an Afghanistan in which the Taliban play a dominant role. The US, for many reasons, does not.
Moreover, in recent years the US has strengthened its ties with Pakistan’s archrival, India, with much economic and strategic momentum now carrying the relationship forward. Pakistan’s natural partner is increasingly China, which is already investing heavily in Pakistani infrastructure and has become a major source of military equipment. China, too, is wary of India, which will soon surpass it in population size and is emerging as an economic and strategic competitor – one with which it shares a disputed border.
The US should not, however, drop Pakistan. Bad situations can always get worse. Today, Pakistan is a weak state; tomorrow, it could become a failed one. That would be a regional and global nightmare, given the presence of nuclear weapons and terrorists.
Economic and humanitarian support should thus continue to flow, though with close oversight of how it is used. Some limited cooperation in countering terrorism and in Afghanistan might still be possible. To reduce the chance of war, the US should also continue to work with both Indians and Pakistanis to strengthen their relationship (which is still far less developed than the US-Soviet relationship at the height of the Cold War).
It might also make sense for Pakistan to become a regular part of the US-China agenda. The US and China are discussing various scenarios on the Korean Peninsula involving their troops, nuclear weapons, and local instability. Talks on how to avoid a crisis involving Pakistan – and how to manage one should prevention fail – are no less urgent.
How Can America Change Pakistani Behavior?
The US has plenty of incentive to put pressure on Pakistan, a country that has long pretended to be an ally, even as it continues to aid the militant groups fighting and killing US soldiers in neighboring Afghanistan. In fact, it is partly because of that aid that Afghanistan is a failing state, leaving the US mired in its longest-ever war.
NEW DELHI – US President Donald Trump’s recent decision to freeze some $2 billion in security assistance to Pakistan as punishment for the country’s refusal to crack down on transnational terrorist groups is a step in the right direction. But more steps are needed.
The United States has plenty of incentive to put pressure on Pakistan, a country that has long pretended to be an ally, even as it continues to aid the militant groups fighting and killing US soldiers in neighboring Afghanistan. In fact, it is partly because of that aid that Afghanistan is a failing state, leaving the US mired in the longest war in its history.
More than 16 years after the US invaded Afghanistan, its capital Kabul has come under siege, exemplified by the recent terrorist attack on Kabul’s Intercontinental Hotel and the suicide bombing, using an explosives-laden ambulance, in the city center. In recent months, the US has launched a major air offensive to halt the rapid advance of the Afghan Taliban. The US has now carried out more airstrikes since last August than in 2015 and 2016 combined.
Yet neither the air blitz nor the Trump administration’s deployment of 3,000 additional US troops can reverse the deteriorating security situation in Afghanistan. To achieve that, Pakistan would have to dismantle the cross-border sanctuaries used by the Taliban and its affiliate, the Haqqani network, as well as their command-and-control operations, which are sited on Pakistani territory. As the US military commander in Afghanistan, General John Nicholson, has acknowledged, “It’s very difficult to succeed on the battlefield when your enemy enjoys external support and safe haven.”
The problem is that Pakistan’s powerful military, whose generals dictate terms to a largely impotent civilian government, seems committed to protecting, and even nurturing, terrorists on Pakistani soil. Only those militants who threaten Pakistan are targeted by the country’s rogue Inter-Services Intelligence agency.
Far from holding Pakistan’s generals accountable for the American blood on their hands, the US has provided them large amounts of funding – so much, in fact, that Pakistan has been one of America’s largest aid recipients. Even when the US found Osama bin Laden, after a ten-year hunt, holed up in a compound next to Pakistan’s main military academy, it did not meaningfully alter its carrot-only strategy. This has enabled the military to tighten its grip on Pakistan further, frustrating domestic efforts to bring about a genuine democratic transition.
Making matters worse, the US has dissuaded its ally India – a major target of Pakistan-supported terrorists – from imposing any sanctions on the country. Instead, successive US administrations have pressured India to engage diplomatically with Pakistan, including through secret meetings between Indian Prime Minister Narendra Modi’s national security adviser and his Pakistani counterpart in Bangkok and elsewhere.
This approach has emboldened Pakistan-based terrorists to carry out cross-border attacks on targets from Mumbai to Kashmir. As for the US, the White House’s new National Security Strategy confirms that America “continues to face threats from transnational terrorists and militants operating from within Pakistan.” This conclusion echoes then-Secretary of State Hillary Clinton’s warning in 2009 that Pakistan “poses a mortal threat to the security and safety of our country and the world.”
Against this background, the Trump administration’s acknowledgement of US policy failure in Pakistan is good news. But history suggests that simply suspending security aid – economic assistance and military training are set to continue – will not be enough to bring about meaningful change in Pakistan (which also counts China and Saudi Arabia among its benefactors).
One additional step the US could take would be to label Pakistan as a state sponsor of terrorism. If the US prefers not to do so, it should at least strip Pakistan of its status, acquired in 2004, as a Major non-NATO Ally, thereby ending its preferential access to American weapons and technologies.
Moreover, the US should impose targeted sanctions, including asset freezes on senior military officers who maintain particularly close ties to terrorists. With the children of many Pakistani military officers living in the US, it would also be worth barring these families from the country.
Finally, the US should take advantage of its enduring position as Pakistan’s largest export market to tighten the economic screws on the cash-strapped country. Since 2013, Pakistan has attempted to offset the sharp decline in its foreign-exchange reserves by raising billions of dollars in dollar-denominated debt with ten-year bonds. Pakistan’s efforts to stave off default create leverage that the US should use.
Likewise, Pakistan agreed to privatize 68 state-run companies, in exchange for $6.7 billion in credit from the International Monetary Fund. If the US extended financial and trade sanctions to multilateral lending, and suspended supplies of military spare parts, it would gain another effective means of bringing Pakistan to heel.
To be sure, Pakistan could respond to such sanctions by blocking America’s overland access to Afghanistan, thereby increasing the cost of resupplying US forces by up to 50%. But, as Pakistan learned in 2011-2012, such a move would hurt its own economy, especially its military-dominated trucking industry. Meanwhile, the added cost to the US would be lower than America’s military reimbursements to Pakistan in the last year, which covered, among other things, resupply routes and the country’s supposed counterterrorism operations.
If Pakistan is going to abandon its double game of claiming to be a US ally while harboring terrorists, the US will need to stop rewarding it for offering, as Trump put it, “nothing but lies and deceit.” More than that, the US will need to punish Pakistan for its duplicity. And US policymakers must act soon, or an increasingly fragile Pakistan could well be transformed from a state sponsor of terrorism into a state sponsored by terrorists.