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ALTHOUGH Pakistan has not defaulted on its creditors, the truth is that Prime Minister Shahbaz Sharif inherited a systemic crisis with low reserves, a weakened rupee, and political instability worsened by the Taliban’s recapture of Afghanistan. Previous Prime Minister Imran Khan deepened Pakistan’s systemic crisis. Still, Khan claims that the parliamentary no-confidence motion that ended his government was orchestrated between Washington and Pakistan’s top military brass.
Khan came to power in 2018, backed by the military. After four years of supporting his mismanagement, the military opted for the no-confidence motion coalition against Khan, who tried to dodge parliamentary censure by extra-constitutional means. Still, the Supreme Court and Army also guaranteed the motion and the new government.
Shahbaz Sharif has no domestic political experience and heads a dissimilar coalition that is difficult to manage. Sharif needs new loans from the International Monetary Fund (IMF) to shore up the balance of payments, end subsidies, and raise taxes, while Khan appeals to those who cling to subsidies and tax exemptions.
Since Pakistan seceded from India in 1947, it assumed an unsustainable military expenditure for its economy because Washington supported it as a strategic ally in the Cold War. Today India, not Pakistan, is Washington’s strategic ally vis-à-vis Beijing. And a Pakistan alienated from the West entered Beijing’s economic orbit because its political inability to collect taxes and eliminate subsidies forced it to resort to recurrent loans from multilateral, the Middle East, and China.
Pakistan’s economy depends on cotton exports, agriculture, and military-run corporations subsidized and exempt from income tax, so reforms risk unrest and a military backlash. Khan’s dismal management, coupled with the impact of the COVID-19 pandemic shutdowns around the world, jeopardized Pakistan’s weak economy. Khan changed finance ministers four times in three and a half years because of erratic economic policies indebted the country to $6 billion from the IMF and $10 billion from Saudi Arabia, the United Arab Emirates, Qatar, and China.
Sharif’s government suspended fuel subsidies that Khan had reinstated, in breach of his IMF agreement, as he tried to dodge the no-confidence motion that brought him down. But rising utility and food prices and an expected increase in interest rates will slow down the economy, increasing unemployment and street protests incited by Khan. Pakistan would get out of its systemic crisis by opening up to trade with India, which is unacceptable to the ideology of its military establishment.
The military has always intervened in Pakistani politics, but Khan is using the Army’s discursive tools against the top brass to make and break politicians:
- Attributing problems to foreign conspiracies.
- Use anti-Americanism and pan-Islamism to fuel street protests.
- Accuse anyone who opposes him of being anti-national.
Among the middle and lower military ranks, the press, and the Pakistani middle class, the Khan narrative prevails because it expresses an ideology that the top brass forced to be taught for decades at all levels of education.
Army commander Gen. Qamar Javed Bajwa is suffering the political cost of supporting Khan’s misrule to finally replace him with a Sharif with whom the crisis worsens. The prime minister will appoint the next army commander in November, and Khan is betting on chaos in the streets to return to power with military support, while Sharif seeks to extend Bajwa’s command for another year, call elections to renew his government, and appoint a new army commander nominated by Bajwa.
The other possibility would be a military coup. But neither Khan, nor Sharif, nor the military commanders has the political capital to peacefully advance the reforms that would bring Pakistan out of its systemic crisis, and that makes the idea of deepening the alliance with Beijing through a much more authoritarian turn toward a Pakistani national Islamist version of Chinese techno-totalitarianism dangerously attractive.
Guillermo Rodríguez is a professor of Political Economy in the extension area of the Faculty of Economic and Administrative Sciences at Universidad Monteávila, in Caracas. A researcher at the Juan de Mariana Center and author of several books // Guillermo es profesor de Economía Política en el área de extensión de la Facultad de Ciencias Económicas y Administrativas de la Universidad Monteávila, en Caracas, investigador en el Centro Juan de Mariana y autor de varios libros