Pakistan Must Sever Ties with America to Ensure Future Economic Sustainability

Lately, several notable Pakistani public figures have expressed their increased optimism about the Pakistani economy and its future. On November 10, 2013 Federal Minister for Finance, Muhammad Ishaq Dar expressed his desire to see Pakistan become the 11th biggest economy in the world. According to the World Bank statistics in 2012, Pakistan presently holds 43rd position with a GDP of $231billion, whilst Canada is in the 11th spot with a GDP of $1.8 trillion.

A few days later, Dar’s confidence was also echoed by Federal Minister for Planning, Development, and Reform, AhsanIqbal. On November 12, 2013 at a lecture at Harvard University, in the US, Iqbal said, “The Pakistan 2025 Programme will transform the country into a strong economy of upper middle income countries in ranking.” He added, “… by making Pakistan a hub of regional integration through regional connectivity projects, we can create three billion new markets in Asia comprising of South Asia, China, and Central Asia with great opportunities for global economy.” It appears that both Dar and Iqbal are basing their economic predictions on a paper entitled: ‘Pakistan in the 21st Century: Vision 2030’, which has been prepared by Pakistan’s planning commission. The paper summarizes the economic vision as: “Growing economically at a rate of around 7-8 percent per annum, Pakistan expects to join the ranks of middle-income countries, with a GDP of around $4,000 billion by 2030. This high growth rate would be sustained through developing its human resources, and by developing the necessary physical and technological infrastructure.”

In a separate but related development, the Pakistani government inaugurated the meeting of a working group on Integrated Energy for Pakistan Vision 2025. On November 14, 2013 the group met under the chairmanship of the Secretary Planning, Development & Reforms, Hassan Nawaz Tarar and consisted of many leading scholars, experts and scientists. The immediate aim of the working group is to address the crippling energy problems plaguing Pakistan. Farkhand Iqbal, Senior Chief of Energy Wing in Planning Commission said in his opening remarks that the country has been suffering from serious problems, as our industries are being closed, exports being declined, per capita income decreased. In short, he said that the energy sector of economy is badly suffering due to energy shortages in our country. He also emphasized that the 11th five year plan (2013-18) and vision 2025 would not be a plan like the plans of the past, but they should be a realistic, doable and a must, to achieve the desired growth rate for the next decade and to make Pakistan an industrialized knowledge base economy.

Like with all previous Pakistani governments, the present government is no different in trying to address Pakistan’s ailing economy and severe energy shortages. No government has succeeded to date, and there is very little evidence to suggest that the current government of Nawaz Sharif will do any better. Without even scrutinising the contents of the vision, it is evident that there is problem in terms of which vision the government is following i.e. the 2025 vision espoused by Farkhand Iqbal, Dar and Ahsan or the 2030 vision advocated by the planning commission. Now one may give the government the benefit of doubt for getting mixed up, but the lack of alignment between ministries and poor communication by ministers amounts to a poor start considering the gravity of the American economic sanction, which was first imposed in 1979. Peterson Institute for International economics calculates that from 1979 to 1998 the impact of the sanctions was equivalent to a $1 billion – a relatively small sum compared to the direct fallout that Pakistan has suffered when its foreign policy is aligned to America’s national interests.

The other factor which has wreaked havoc on Pakistan’s economy is the menace of IMF and WB policies implemented under American auspices. The country has borrowed heavily from the IMF for 29 out of the 40 years between 1971 and 2010. Pakistan’s external debt is currently thought to be around $58 billion – about 24% of GDP and 200% of exports. The IMF and World Bank argue that debts for low-income countries usually become impossible to repay when they are between 30-50% of GDP or 100–200% of exports. Yet despite this, IMF continues ignore its own warnings and is eager to lend billions of dollars to Pakistan.

In fact the Pakistani population has become accustomed to the unleashing of economic devastation, whenever IMF and WB officials visit Pakistan. The common prescription advocated by the IMF is privatisation, increase in the prices of petrol, electricity and gas, devaluation of the rupee, increase in tax revenues through the imposition of sales tax, reduction in import duties and several other notorious measures that always seem to increase the dependency of Pakistan’s economy on foreign creditors and piles up unwarranted debt. Simply put IMF policies have never worked to bridge Pakistan’s fiscal gap or address the balance of payments. All IMF policies do is to ensure the country commits to the ever increasing interest burden. Over the last five years, Pakistan’s foreign debt payments have averaged $2.3 billion. That’s the equivalent of 10% of exports, and 10% of government revenue, and is half the amount spent on health and education combined (“Unlocking the chains of debt A call for debt relief for Pakistan”, Islamic Relief and Jubilee Debt Campaign, July 2013).

Lastly, under American patronage corruption has flourished in Pakistan. It does not matter whether the government is civil or military, corruption is rife under governments that are directly supported by America. For instance, according to Transparency International, Pakistan lost an unbelievably high amount, more than Rs8.5 trillion (US $94 billion), in corruption, tax evasion and bad governance during the last four years of Prime Minister Yousuf Raza Gillani’s tenure.

In sum, since 1979, Pakistan’s unstinting support for America has cost the Pakistani economy circa $410 billion [1]. Even the die heard neo-liberals and secular fundamentalists in Pakistan, will have to concede that America’s relationship with Pakistan is the sole reason for the rapid erosion of the country’s economic sovereignty.

For Pakistan’s economy to have any chance of growth and self-sufficiency, economic policy makers must sever ties with the US, and devise a 2030 vision and associated strategies that does not feature America and the influence of its colonial tools. But this is only the first step, a more permanent solution necessitates the complete removal of democracy or dictatorship that always places man-made laws above the laws of Allah سبحانه وتعالى. Through these form of ruling, America repeatedly passes legislation through her supporters in both the executive and the parliament to enact capitalist solutions that only serve to safeguard her interests. This is the real root cause of the misery suffered by the Pakistani people. Allah says:

وَمَنْ أَعْرَضَ عَنْ ذِكْرِي فَإِنَّ لَهُ مَعِيشَةً ضَنْكًا وَنَحْشُرُهُ يَوْمَ الْقِيَامَةِ أَعْمَىٰ

“As for the one who disregards My message, he will have a miserable life, and we resurrect him, on the Day of resurrection, blind.”

(Ta Ha, 20:124)

It is only through the establishment of the Caliphate that sovereignty will return to Allah, and pro-American capitalist policies will be banished.

Written for the Central Media Office of Hizb ut Tahrir by Abid Mustafa


[1] This is based on costs to host Afghan refugees ($200b), external debt ($60b), corruption during Musharraf and Gilani’s tenure ($120b) and war on terror ($100b) costs minus the aid ($68b) received from America.