MQM's real challenge

Interview: Amir Zia, April 2016, Monthly Newsline

By Farieha Aziz 

Is the emergence of Mustafa Kamal a repeat of the attempt to splinter the MQM in the ‘90s – a Haqiqi part two?

The emergence of Haqiqi, the quality of its leadership and of its hardcore workers, and the objective political conditions at that time, stand in contrast to the phenomenon we are witnessing today. The ‘92 crackdown on the MQM and the way Haqiqi took over Karachi have no parallel in our politics. At that time, the establishment openly supported dissidents and spearheaded the demolition of the MQM power structure. As a result, MQM’s top tier was forced into hiding, and most of its workers – whether involved in terrorism and crime or not – went on the run. Many of the party’s members and leaders were arrested and pressured to switch sides. The operation sustained its momentum for a long time and resulted in unprecedented bloodletting. The killing spree continued all through the ‘90s and resulted in thousands of casualties.

Mustafa Kamal and his team members do not have the kind of stature within the party which the duo of Afaq Ahmed and Amir Khan enjoyed in their time. In the ‘90s the MQM was at the zenith of its power and radicalism. It had an iron grip on the city and it evoked fear in the hearts and minds of rivals. But with time, the party and its leaders have mellowed down and changed tactics – because of both, internal and external factors. The most recent factor is the Karachi Operation.

The ‘90s challenge was the biggest external challenge the MQM faced after the split. Today, it is more about conquering internal ghosts stemming from an aging leadership, and managing the discontent within its ranks.

What are the similarities and differences between what is happening now and what happened during the ‘90s?

There are more differences than similarities, but let’s take the three apparent similarities first. In the ‘90s, the MQM was being portrayed as an absolute villain, just as it is today. The vanguard of the attack against the MQM – then and now – comprised/comprises disgruntled dissidents. The dissidents of that time made more or less similar allegations against their party, specially targeting its supreme leader, Altaf Hussain, as is being done by the new generation of rebels.

The biggest difference today meanwhile, remains that the MQM enjoys political space to operate, which was denied to it during the initial years of the ‘90s operation. At that time, the entire party was virtually made inoperational. Today it is being allowed to carry out its political activities unhindered. This is a good omen for Pakistani politics.

In the ‘90s, there was an attempt to oust the MQM from the political process by a blanket crackdown on its rank-and-file and by propping up its rivals. Today, only those are being targeted who are allegedly involved in crime, terrorism and under suspicion of having links with the Indian intelligence agency, RAW. Today, the MQM is not facing the kind of political heat and the fury it faced in the ‘90s.

Do you think there will be more ruptures in the party and its vote bank? 

Despite various crackdowns, splits, and defections, the MQM has managed to keep its vote bank intact. In fact, whenever there has been an operation or witch-hunt, the MQM has managed to bounce back, though often at a huge human cost.

This time again, a number of MQM leaders, including lawmakers, may switch sides. Some of them have already joined the dissident camp, but these defections are unlikely to dent the MQM vote bank. As long as Altaf Hussain is holding fort, the bulk of MQM workers, supporters and the party’s organisational network will stay with the mainstream party.

However, the post-Altaf Hussain scenario remains a question mark. The future of the party will depend on how it manages to make the transition in its leadership in the post-Altaf days, and on how it adjusts itself in the future politics of urban Sindh, especially Karachi, where there has been a sea-change in demographics.

Do you think Afaq and his group could also benefit from this turn of events? Will people from the party join them and gain support from the MQM vote bank?

Afaq Ahmed has been around for more than two decades now. During this period, his group has shrunk rather than expanded. In fact, even in its hey-day – when the Haqiqi faction had all the support of the establishment – it was routed in the 1993 general elections, even though the MQM had boycotted the National Assembly polls. It was routed again in the 1997 elections. Since then, the Haqiqi has only lost ground to the MQM.

One of its major dissident leaders – Amir Khan – is back in the mainstream MQM fold along with his loyalists. As Afaq Ahmed was not allowed to operate freely since 2002, his group has not been able to induct fresh blood into his party ranks, and in recent months, many of his close associates have left him because of his alleged soft stand on the MQM. His loyal militants and supporters have grown old like their leader, and now although Afaq Ahmed is holding on to his small domain – if one can call it that – he is unlikely to make it big again on his own.

How do you view the future of the MQM, and what impact will the current state of affairs and how they develop, have on the people of Karachi?

The MQM faces challenging days in the near- to mid-term. Its long-term prospects depend on the kind of choices the party makes today. The era of the 1980s and 1990s politics is over. The real challenge for the party doesn’t come from Mustafa Kamal, but from its own politics and internal dynamics. This includes firstly, Altaf Hussain and his future role and the planning for the transition of the MQM leadership, which is inevitable, whether sooner or later.

Secondly, the MQM must close its doors on criminals who operate under its banner. The party says that it has already done a lot in regard to this issue in recent years, but it must succeed in this effort.

Thirdly, the allegations of ties of some of its leaders with RAW are very serious. These allegations must be probed by the concerned authorities. A closure of the case remains in MQM’s own interest. A vast majority of the MQM leaders, workers and 100 per cent of its voters do not harbour any agenda of advancing the interests of the enemy country. This majority needs to prevail so that the MQM continues to play its role as a party of the urban middle and lower middle classes.

And lastly, the MQM must work hard to evolve into a multi-ethnic party – representing all urban communities. If we want to see peace, progress and prosperity in Karachi, its politics must be multi-ethnic and issue-oriented.

Has Mustafa Kamal been propped up by the security establishment, as is being alleged?

Yes, such speculation does exist. It can be true, partially true or entirely false. But past experience shows us that only those leaders prevail and make their mark who are connected with the people. I think we shouldn’t speculate at this juncture. Everyone has a right to leave a party, make a new one, or join some other. No establishment can create leaders with the snap of its fingers. It can support one political group or the other, but in the end, it is the leader and the masses who matter.

The ongoing Rangers-led Karachi operation has ensured that the days of organised militancy are over. So I don’t see a repeat of bloodletting between MQM loyalists and dissidents.

However, Mustafa Kamal and his team face the tough task of establishing their political credentials. But they will have to really slug it out for years to make their mark. It is not just Karachi, but all of Pakistan that awaits a committed, honest, pro-people, visionary leader.

It is widely perceived that with the Rangers operation against the MQM in progress, there is a danger that all the party’s criminals will take refuge in Mustafa Kamal’s party. Do you agree?

This possibility cannot be ruled out. Some leaders in the Mustafa Kamal group do have cases against them. It will be a challenge for him to keep the criminal elements away – in fact, he is already flanked by some such people. Mustafa Kamal needs to start clean rather than banking on tainted colleagues.

 This interview was originally published in Newsline’s April 2016 issue.

The Debt Dragon

By Amir Zia

Monthly Newsline

March 2016

Prime Minister Nawaz Sharif’s government has become “a desperate borrower” because of its fiscal indiscipline and decline in external inflows. The government is aggressively piling up expensive debt – both foreign and local.

It took 60 years for Pakistan to accumulate a total of Rs 4.8 trillion in debt – both through foreign and domestic borrowing. But since the fiscal year 2007, the two successive elected governments multiplied this amount to a whopping Rs. 20.70 trillion by the first quarter of fiscal 2016-17. 

This nearly 400 per cent increase in public debt in less than nine years has emerged as yet another gigantic threat not just to Pakistan’s economic viability and stability, but also for national security.
“The speed at which the two successive governments borrowed should be a cause for serious alarm,” says Dr. Ashfaque Hasan Khan, a former advisor at the Finance Ministry, who is currently working as the principal and dean of the School of Social Sciences & Humanities at the National University of Sciences and Technology (NUST). “Pakistan’s public debt in general and external debt in particular will reach an unsustainable level over the next five years if the government continues to borrow at the current unchecked pace,” he told Newsline. One can understand the concerns of independent economists about the country’s economic outlook. The PML-N government’s reckless foreign and domestic borrowing is making the country’s economy and security more and more vulnerable with each passing day.

According to State Bank of Pakistan (SBP) data, the country’s overall public debt has jumped to Rs. 20.70 trillion from 16.33 trillion at the start of the PML-N government term in June 2013. This means in the first 820 days of its rule, the PML-N government increased the debt by Rs. 4.36 trillion or a hefty 26 per cent. 

In rupee terms, on average the PML-N government has borrowed Rs. 5.21 billion a day against the average daily borrowing of Rs. 0.67 billion in the first 60 years of Pakistan’s independence. The foreign component in this daily borrowing stands at around 0.75 billion rupees, while domestic loans from various sources is around 4.5 billion rupees.

In the fiscal year 2015, the government spent Rs. 1,300 billion to service its debt against Rs. 369 billion in fiscal 2007. It means that the current government is spending roughly Rs. 3.5 billion a day under the head of debt servicing.

Dr. Hasan says that the rising public debt has serious economic consequences. “The surge in public debt during the last eight years caused interest payments to almost quadruple.”

The official data shows that interest payments consumed one-third of the total revenue in the last fiscal year, compared to 28 per cent in the fiscal year 2007. Debt servicing is now the biggest expenditure in the budget, surpassing both defence and the public sector development programme.

Analysts say that Prime Minister Nawaz Sharif’s government has become “a desperate borrower” because of its fiscal indiscipline and decline in external inflows. The government is aggressively piling up expensive debt – both foreign and local.

According to SBP data, the share of domestic debt in the overall public debt soared to 70 per cent in the fiscal year 2015 against 52 per cent in the fiscal year 2000.

However, the biggest cause of concern for economists remains the external debt, which has the potential to trigger a balance of payments crisis. SBP and Finance Ministry data says that Pakistan’s external debt and liabilities surged to $65.2 billion by the fiscal year 2015 from $36.6 billion in fiscal year 2000.

“Pakistan added almost $29 billion in its external debt since 2000, of which $3.761 billion was added during 2000-07, while the remaining $24.9 billion between 2008 and 2015,” Dr. Hasan said.

The PML-N government has been extensively borrowing expensive foreign debt to repay loans and build up foreign exchange reserves of over $20 billion, which it showcases as a major achievement.

But is it really an achievement or a delusion? Shouldn’t the surging debt burden make Pakistan’s economic outlook scary?

According to estimates, Pakistan’s external debt will rise to $70 billion by the end of the current fiscal year (2015-16) and over the next two years it will be hovering at around $85 billion.

A finance ministry official, requesting anonymity, said that the former PPP government contracted $25 billion worth of foreign loans in five years. “But the Sharif government achieved an equally large foreign debt in barely two years. We always thought that the PPP government is the most irresponsible, but Nawaz Sharif, his family and close associates have smashed all records,” he said.

Finance Minister Ishaq Dar, a friend and a relative of Prime Minister Sharif, is looking for shortcuts to to manage the economy on the advice of foreign donors, he added. “Dar has an ‘I-know-it-all attitude’ and does not listen to professional advice. His agenda is PML-N’s short-term interests and not Pakistan’s long-term needs.”

Pakistan spent $6.5 billion to service foreign debt in fiscal year 2015 and needs a total of $7.0 billion for this year. Debt servicing number will continue to rise sharply every year and will become unsustainable within the next couple of years.

According to a report by former finance minister Dr. Hafiz Pasha, Pakistan will need at least $20 billion by the fiscal year 2018-19 to service its debt and bridge the current account deficit.  Pakistan’s exports would have to improve to $36 billion to sustain debt servicing, Dr. Pasha said.

But given the current condition of exports, pushing them to $36 billion is easier said than done. For the last two years, Pakistan’s exports have been between $23 and $24 billion. In the fiscal year 2016, they are expected to decline and barely be able to cross the $23 billion mark. The IMF forecast put Pakistani exports at $27 billion by the fiscal year 2019-20.

The low international price of oil has so far been a saving grace for the PML-N government. However, the country faces a looming balance of payment crisis despite low oil prices as the Sharif government has sunk Pakistan deeper and deeper into debt.

If the government continues to borrow at the same pace, Pakistan’s total public debt will jump to Rs. 25 trillion by FY2018 against Rs. 16 trillion from when the PML-N started its innings. This means that by the end of its term, the PML-N will increase Pakistan’s debt by an unprecedented 57 per cent. If we add the funding of $46 billion for the China-Pakistan Economic Corridor, Pakistan’s total debt is set to increase by 100 per cent of the GDP from the current level of 67.5 per cent.

Although the Sharif government frequently claims a turnaround in the economy, the figures tell a different story. Pakistan’s economy has grown at a sluggish pace of 3.2 per cent on average during the last seven years. Its industrial growth stands stagnant, at slightly above 1.0 per cent per annum, and agriculture is growing at a dismal 2.5 per cent. There has been an unprecedented decline in private sector borrowing as businesspeople are not expanding because of the uncertain economic and political situation. Foreign Direct Investment has also fallen sharply and many investors are pulling out of Pakistan. Tax collection continues to remain poor as the government has been unable to expand the tax net. The number of taxpayers remains below a million in a country of nearly 200 million people.

The macroeconomic impact of the debt crisis, according to economists, will be even lower investment and economic growth, rising unemployment and poverty, stagnating exports, declining foreign investment and oppressive tax collection.

Pakistan will need to borrow more and at a faster pace just to service its external debt, which will put foreign multilateral and bilateral lenders in the driving seat. They will keep Pakistan on a tight leash in return for keeping its economy afloat through the lifeline of loans and grants.

This will bring pressure on Islamabad to curtail its expenditures, especially on defence. Pakistan’s nuclear programme will also be in the eye of the storm. Foreign powers will be in a position to dictate regarding foreign policy and security matters.

According to Dr. Hasan, “Debt is nothing but deferred taxation…our children and grandchildren will be paying off our debt.”

Does the Sharif government, the parliament or any other national institution have a plan or strategy to ward off this looming debt crisis? The time to act is now.

The Haunting Shadows

By Amir Zia

May, 2016

Monthly Hilal

The challenge of corruption needs immediate attention as it is weakening the state and the society from within....The authorities need to take-on corruption on a war-footing and in tandem with fight against terrorism and extremism as they feed one another.

What are the two core issues that hurt the country and ordinary Pakistanis the most? Most likely, there will be an instant and overwhelming consensus that reining in terrorism and corruption remain the biggest challenges.

Other issues – for instance a weak economy, absence of quick and affordable justice, poor governance and misrule – stem from these two fundamental challenges. If a government aims to fix economy, the utmost important steps needed to achieve this goal would be provision of a secure and a corruption-free environment.

Similarly, ensuring justice, good governance and an efficient government also require – as a prerequisite – the rule of law and a proper system of checks and balances to prevent corruption and hold the corrupt accountable.

The future of Pakistan depends on how the military and civil leadership address these challenges. Any delay, lackluster approach or failure in tackling terrorism and corruption remain harmful for the future stability, security and unity of the country.

The credit must go to the military leadership that on both fronts it took the initiative and leads by an example.

Although Pakistan’s fight against terrorism and extremism is far from over, there have been major gains on this front. The ongoing Karachi operation and Zarb-e-Azb have been successful in containing this threat and putting terrorists, extremists and criminals on the back foot.

Pakistan’s military leadership took the initiative of taking the fight to the terrorists at a time when many civilian leaders were wavering either due to political expediency or the fear of a possible adverse fallout. However, they eventually extended support to the crackdown – first in Karachi where an operation was launched in 2013 and then for the Zarb-e-Azb in North Waziristan and other tribal areas in 2014.

Following the massacre at the Army Public School Peshawar, military and civil leaders agreed on the National Action Plan in January 2015 to counter the threat of extremism and terrorism in a holistic manner. But since then, implementation on NAP has been painfully slow. This damages prospects of a decisive victory in this war in mid-to long-term and the civilian leaders must focus on taking decisive actions to implement NAP in totality.

The challenge of corruption also needs immediate attention as it is weakening the state and the society from within just like termite. The authorities need to take-on corruption on a war-footing and in tandem with fight against terrorism and extremism as they feed one another.

Yes, corruption is deterring Pakistan’s progress and economic turnaround. It is stoking injustice and offsetting efforts to establish the rule of law. And it is hurting and biting the common man on a daily basis.

It is ironic that eradicating corruption – which makes the life of majority of Pakistanis miserable and denies them good and honest governance – is not on the agenda of many of our mainstream political parties, including those in power at the center and the provincial level.

Mostly lip-service is paid to this cause when some mega-corruption scandal hits the headlines, but seldom any such case gets to a closure. These scandals disappear from the media and slip out of the public mind without a whimper. This has happened countless times and the cycle keeps repeating itself.

Whenever there is a growing public pressure to hold someone accountable, the accused and his supporters start pointing fingers at others. As a result the main issue is lost in a barrage of allegations and counter-allegations and political bickering.

So far the successive governments have failed to establish an effective mechanism to hold the corrupt accountable in a fair, just and swift manner. The accountability process is usually driven by vendetta and marred with political pressures and interference. No wonder anti-corruption organizations, including the National Accountability Bureau and the Federal Investigation Agency have either become a handmaiden of rulers for the victimization of political rivals or unable to do the job because the corrupt enjoy patronage and support from powerful quarters, including various lobbies within the government.

If the prosecution system is weak, corrupt, inefficient, unprofessional and subject to political interference, the judicial system also remains flawed. Over-burdened courts are perpetually short of judges. The legal system itself is skewed in favour of the rich and the powerful. Executive authorities and interest groups manage to manipulate it to punish the innocent and provide relief to the guilty. Despite all these flaws – which are an open secret – judicial reforms are nowhere on the agenda.

Whenever there is a call for accountability, organized campaigns are launched by power players to tarnish the image of rivals, deflecting the pressure and diluting the issue. And in 99.9 percent cases, these attempts are successful. Like a villain of Shakespearean tragedy, the real villains of our society are seldom punished. The just exit from the stage amidst public uproar and manage to make a grand re-entry after a hibernation period.

In recent years, there has been a growing trend that when any past or serving government officials – whether elected or unelected – are being held accountable for corruption, various parties, interest groups, a section of the media start crying that it is only politicians who get targeted. They directly or indirectly try to imply that the personnel of the armed forces remain out of the ambit of accountability. And this they do, ignoring the fact that Pakistan Armed Forces have an internal mechanism of checks and balances and the military personnel, under the law, cannot be tried by the civilian courts.

World over, the accountability of soldiers and officers for violation of rules and regulations, any unbecoming behavior, or corruption is a serious affair with other security related implications and is being carried out within the institution.

However, lack of publicity does not mean that the process of accountability is taken lightly within the institution, which takes pride in its discipline and professionalism. But a particular lobby and their friendly media continue to tell half-truths and distort facts in an attempt to paint white as black. This propaganda campaign gained momentum in recent weeks in an organized manner both on the traditional and social media in the backdrop of some big corruption scandals that has hit the headlines.

Chief of Army Staff General Raheel Sharif, however, again set the tone and direction on taking on this termite when he said that the war against terror cannot be won unless “the menace of corruption is uprooted.”

On a visit to the Signal Regimental Centre Kohat on April 19, he underlined the need of “across the board accountability”, calling it “necessary for the solidarity, integrity and prosperity of Pakistan.”

“Pakistan’s Armed Forces will fully support every meaningful effort in that direction which would ensure a better future for our next generations.”

Within days of the statement, the Army Chief dismissed several senior officers, including a lieutenant general from service on corruption charges. By making the accountability process within Armed Forces public, the military leadership not just set an example but gave a clear signal that they mean business.

Pakistanis overwhelmingly welcomed Army Chief’s statement and action against corrupt officials amidst expectations that it will put pressure on the civilian leaders to contribute their bit in this effort.
And as the action against the corrupt was taken regardless of the seniority in the Armed Forces, there are expectations that our elected representatives will also do the same.

It is a known fact that any meaningful effort against corruption must start from the top for maximum impact and result. If the authorities manage to set an example by holding the most powerful accountable, this message resonates at every level.

Many elected representatives – realizing the gravity of the situation – have been calling for the accountability of the corrupt. But this must not be done on a one-time basis or to target few individuals. Our institutions, including the Parliament, must work to create a sustainable, independent and just accountability process which remains autonomous and free from political pressures and manipulations. This should be the top item on the agenda because a system, which cannot auto-correct itself and purge the corrupt from its ranks, not just fails to deliver but likely to implode sooner or later.

It is in the enlightened self-interest of the people’s representatives to help establish a just, fair, independent and autonomous accountability mechanism. This is vital to sustain institutions, ensure betterment of the masses and to take the country forward. The sooner it is done, without any fear or favour, the better.