Regulators and economy (23-10-09)

Societies that are in transition often find their various institutions battling with each other for more space. In Pakistan most of the institutions have not developed because their natural growth has been retarded by frequent interruptions of the democratic process by the extra-parliamentary forces.

At present the elected government’s space is being encroached by other institutions, which is against the constitution of Pakistan. In a civilized democracy there are three recognised pillars – parliament, executive and judiciary. The rise of media power has made it the fourth pillar. But more powerful than all these is the armed forces in the power structure of Pakistan, thanks to basic political formulation which was laid at the time of the formation of the country.

Now let’s see how these institutions are working in our country? How their conflicting interests are damaging the political, economic and social environment of the country?

A leading lawyer said yesterday that at present the superior judiciary is trying to run the government while it should be the job of the executive. Honourable judges it seems are of the view that they are being dragged to take up the public interest cases, because of the high expectations built during the pro-judiciary independence movement. But the issue is that they have to draw a line and should refrain from getting involved in issues like fixing sugar and petroleum products prices, although it is a popular thing to do. What has to be understood is that we are not running a socialist controlled economy. Market economy has its own ecology; nobody in the world has been able to dictate it through executive or judicial orders. The only way to keep the prices within the reach of the people is either through subsidy or by managing the supply side commodities which show a sharp price increase.

Again the judges should keep in mind that across the board subsidy has two major defects. One, it subsidises the rich and poor equally at the expense of the exchequer. As the country is short of finances the government then has to resort to borrowing from the banks, which creates inflation. And inflation my lord is the most cruel and blind form of taxation hurting everybody in the economy. So a diabetic not using any sugar has to finance the sweet-toothed people like me. In the past we have seen that the benefit of subsidizing basic commodities has always been reaped by the middle man. You can regulate a few mills, but cannot regulate the millions of grocery shops and middlemen.

Two, as we have seen in the case of sugar the court orders are not effective in the marketplace and they cannot be no matter how hard the government tries to follow them in letter and spirit. The sugar prices are almost 50 to 100% percent higher in the neighbouring countries so the sugar is flowing out of our porous borders. Again counter argument could be that it’s the failure of the government in checking smuggling. Here again we have to be realistic and pass orders that are taking in account the overall situation. We know all governments in Pakistan and in most of other countries have failed to check smuggling of commodities and human trafficking. At present sugar is being smuggled out to Afghanistan and India, cheap pharmaceuticals are smuggled to Bangladesh and many African countries. On the other hand a number of items are flowing in from Iran to Balochistan, from Afghanistan most of the goods imported by them through the transit trade are sold here and Indian goods are available in Anarkali Lahore.

Similarly, the courts should not get involved in issues like how much tax the government should levy on the petroleum products. I have checked petroleum prices of 12 countries of Asia including India, nowhere are petroleum prices less than Pakistan. In both developed and developing countries governments do raise the revenue through taxation of petroleum products. It is unpopular for me to say it. But as a political science and economics student, I cannot take any other position just for the sake of popularity. A journalist’s job is to analyse issues on the basis of hard economic and political facts, so that people are educated by the constraints under which systems work. Our job is not to seek cheap popularity. So while making the populist decisions Executive should handle what it should and should not trespass into the Judiciary’s space and vice versa. The judiciary should also be careful for the sake of its prestige to order what is possible and what is implementable.

We have already dealt in previous columns the issue that GHQ has always encroached on the powers of the political governments in the name of the national security. So I would not say much on this except that Mr. Zardari may have a million faults, but he was elected through a democratic process by our parliament and provincial government members. Any attempt to brow beat him out of office just because many among us don’t like him would once again derail the democratic process in the country. It seems from the influential quarters’ drawing rooms gossip and media reports that a script has been written to dislodge him without going through a difficult impeachment path.

The most popular script is that in the first place agencies would lobby with the parliament members against the NRO Bill. If at all Mr. Zardari, who it seems has not blinked so far gets the bill through, then preparations have been made to challenge the law in the Supreme Court on the ground that it is contradictory to the spirit of the Constitution. Now looking at the mood in the country and powerful decision-makers the market people say odds are against the bill. So if it is struck down the question comes what would be the position of the President. Most such cases are deemed as past and closed. Will Mr. Zardari get this relief? Can the cases which were not decided in 11 years be revived? These issues have again to be decided by the Supreme Court. Under the present circumstances chances of getting the relief are slim. Can Mr. Zardari invoke Presidential immunity? Senior constitutional experts say he can but again the question can be raised that this immunity is for the constitutional actions and not for private actions. Legal experts who are well aware of the prevailing mood say the latter view is likely to prevail.

So what are options for the beleaguered President Zardari? First option is that he should show traditional flexibility and accept the constitutional role which as envisaged by his founding Chairman Zulfikar Ali Bhutto. For that he will have to take a page from Chaudhry Fazal Elahi’s history. This may appease the real powers. He should not bank on the Americans for the support. History shows that while Ms. Bhutto was assured till the last moment by the American Ambassador, she was chucked out by Ghulam Ishaq Khan with the support of the Khakis. Second option is that he joins hands with Nawaz Sharif to strengthen his position. But that he will have to give the pound of flesh PML (N) wants. Third option, which I doubt he would go for is to leave the country and set up an effective party institution. He has to keep in mind that it’s not the army which can be blamed for the present situation; bad governance has given his opponents a window, which they now intend to widen. His other mistake is that he has also been encroaching on the powers of the Prime Minister. So he has been losing friends in his party rather than making them.

In this backdrop when the country is in a state of long drawn war. When the chances of this war, whether the establishment likes it or not is going to expand to other parts of the country, moves to destablise the democratic government are indeed a bad omen for the country. But unfortunately, many democracy lovers are also being led astray by their personal dislike of Mr. Zardari. And Mr. President himself is not helping his case either. (


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