Severe political crises in Pakistan and Afghanistan, both mired in wrangling over recent election results, have obscured the fact that these two neighbours’ finances are rotten. Both are on the verge of economic meltdown but the billions needed in international bailouts are unlikely to be forthcoming until their respective political elites stop fighting among themselves and start acting more responsibly.
In Pakistan, opposition politician Imran Khan’s blockade of Islamabad for more than two weeks, and his demands for the resignation of Prime Minister Nawaz Sharif’s government, have backfired. His opponents have been able to mobilise many sectors to condemn him: business people, lawyers, journalists and aid workers.
Meanwhile, groups from across the political spectrum have organised counter protests. After extensive talks between Imran and the government, a minister announced on Thursday that the government had agreed to five of his six demands but drew the line at Sharif’s resignation. The stand-off continues.
People’s distaste is largely down to the savaging of the fragile economy. Power cuts have risen from 14 hours to 20 hours a day in many areas, the stock market has been falling and the rupee has devalued more than 3 per cent against the dollar during August. Finance minister Ishaq Dar told Pakistan’s Dawn newspaper last week that the economy had lost $4.5 billion (Dh16.5 billion) since the start of August; Dawn itself estimates that losses run at twice that, or more. With western governments advising against travel to parts of Pakistan, even business people with supply deals are steering clear. The International Monetary Fund has postponed a review trip to Islamabad. Sharif has been forced to cancel a trip to Turkey, an important trading partner.
Absurd demands
Yet Imran has not addressed these economic concerns, instead making one absurd demand after another. His latest is that, if Sharif will not resign for good, he should do so for at least 30 days.
A demand that people stop paying taxes has been met with derision in a country that suffers from an acute shortfall in revenue. The government is now seeking a bailout from anyone who will help start the power stations working again. But trusted allies such as China, Saudi Arabia and the US are unlikely to provide relief until they can see a future for the country.
Across the border in Afghanistan, the months-long tussle over who won the presidential election persists. Following nonstop wrangling both candidates, Ashraf Gani and Abdullah Abdullah, have walked out of the UN auditing process — and whatever result the UN announces in the next few days is likely to be rejected by one or the other. Senior Afghan politicians and ambassadors abroad fear a civil war if the dispute is prolonged much further.
Western nations have said a leader must be chosen in time to attend this week’s Nato meeting in Wales, which looks unlikely, and that no money will be forthcoming until the matter is settled.
Much of the rich world is fed up with Pakistan’s perennial political crises, which usually result in leaders arriving in western capitals with begging bowl in hand.
A crippling uncertainty
This time it is even worse because in the past 12 months the economy had begun a slow recovery; foreign and local investment was starting to trickle in, the IMF had given a $6.7 billion loan and the currency was stable. The prolonged political uncertainty has thrown all that out of the window. Meanwhile, domestic tax revenues fell 27 per cent in the first half of this year, and the budget shortfall stands at $500 million-$600 million.
In Afghanistan the question of whether the army can stand up to an expected Taliban onslaught once US forces leave this year, and whether the new president will permit up to 10,000 US troops to stay on, is vital to the region’s security — but so is stabilising the vulnerable economy. Neighbouring states fear economic refugees arriving to seek work in their countries.
With the US and Nato gripped by global crises, the west does not have the money, patience or time to bail out countries whose political elites do not know what is good for them or their people. Both countries, which are crucial to regional and global stability, need responsible leaderships who see that the national interest lies in a democratic future, not one made up of warlords, threats and extra-constitutional demands.
-Financial Times
Ahmed Rashid is author of several books about Afghanistan and Pakistan, including Pakistan on the Brink.
