Flight from reality

Courtesy:- Dr Maleeha Lodhi
September 11, 2012

The two greatest threats to the country’s democratic consolidation come from a floundering economy and deepening voter cynicism that the coming election can bring any improvement in national conditions. Although the economic danger is of a different order and far more consequential, stagnant politics can also undermine the country’s democracy. Leaders of the ruling coalition however, seem less interested in addressing these risks than in casting an activist judiciary as the destabilising force.

The judiciary has undoubtedly been in hyperactive mode. At times it has been injudicious in using its newfound power to launch into areas arguably beyond its domain. Despite this, it has often stepped into a vacuum created by weaknesses in the formal structures of executive accountability and by a lack of governance. Its main thrust however has been in trying to anchor Pakistan’s democracy in the rule of law and ensure that holders of power play by the rules – aspects absent in past democratic experiments.

For the ruling party, its thinly-veiled attempts to portray the judiciary as a roadblock to governance has become a way to deflect public focus away from its own performance deficit. These efforts have also diverted attention from two factors integral to any functional democracy: a robust economy and public confidence in the political process. Today, the first is in the emergency ward and the latter at its door. The ruling party can hardly disclaim its share of responsibility for this.

The economic facts are well established. The PPP-led government has earned the dubious distinction of presiding over the longest consecutive period of consistently low economic growth and falling foreign and domestic investment. It is the first government to have double-digit inflation throughout its tenure. Foreign debt and domestic borrowing have also reached record levels in the last four years. The government has done little to arrest the country’s diminishing capacity to meet external liabilities or reduce deficit financing, despite the inflationary pressures created by fiscal indiscipline – the most important source of economic hardship testing people’s endurance.

The signs that the flailing economy is in the danger zone are unmistakable. Not only have four successive years of low growth left per capita incomes stagnant, aggravated poverty and worsened unemployment they have also robbed the economy of the means to absorb two million people entering the job market every year. The intersection between rising joblessness and the demographics of a youth bulge exposes the country to the heightened risk of social unrest.

The fiscal deficit has hit its highest level since 2008 fuelled by heavy spending on energy subsidies and financial support to loss-making public utilities. The equivalent of $16 billion has been spent this way over the past four years, but without resolving the energy crisis. This alone is enough to sink the economy.

To finance the widening budget deficit the government has borrowed excessively from the State Bank and commercial banks instead of mobilising tax resources and making meaningful expenditure cuts. This has pushed prices up further among other deleterious effects on the economy.

Government leaders have routinely blamed the country’s economic woes on financial problems inherited from the previous government and the 2010 floods. But it cannot shift responsibility for its incoherent, patchwork management, failure to come up with a recovery plan and for the perilous state that public finances are now in. Four and a half years later, predecessors can hardly serve as a perpetual alibi. Governments after all are expected to take charge and meet challenges, not blame others and play victim all the time.

This disingenuous approach has pushed the country to the edge of an inescapable financial crisis. With no remedial measures in sight and elections around the corner, the most immediate threat to economic stability is posed by the rapid weakening of the external account, as a result of the widening balance of payments deficit. This is depleting the country’s foreign exchange reserves at a time when the capital account is deteriorating as net inflows taper off. As a consequence, a foreign exchange liquidity crunch looms.

The present $10 billion in reserves are set to dwindle further by the first part of next year when more repayments are due on the $8 billion loan from the IMF contracted in 2008. Between now and next June, the end of the present fiscal year, about $2.5 billion has to be paid to the Fund and a similar amount on other debt servicing. With other sources of external financing unavailable, the growing trade and current account gap, that includes these debt repayments, can only be financed by further drawing down reserves. These will resultantly plunge to a level barely enough to cover a month’s worth of imports.

A point of extreme vulnerability can be reached in the first quarter of 2013 when, unless external resources are raised from somewhere, the country will face financial insolvency and the breakdown of market confidence. This will put national stability in jeopardy with dire consequences for the country’s future.

If the government has been singularly unsuccessful in averting the economic slide it has also failed to move the politics – by inspiring confidence that the political process is responsive to public needs. Instead public faith in political institutions has continued to decline. If the low voter turnout of 44 percent in the last election – lowest in the region – wasn’t enough of a warning signal of public disillusionment with politics-as-usual, opinion polls since have recorded even higher levels of voter disenchantment. A survey by the Pew research centre earlier this year showed that 87 percent of people polled thought the country was headed in the wrong direction with 54 percent pessimistic about the future.

These bleak findings acquire a more serious nature when juxtaposed with opinion polls, which measured the approval ratings for political institutions. The Pew survey found low ratings for them when compared say to the media and judiciary. A Gallup Pakistan poll in 2009 found only 39 percent people viewed political parties favourably. In perhaps the most telling indicator of voter disillusionment or apathy, another Gallup survey in March 2012 found that 75 percent of respondents in a nationally representative sample felt their vote would make no difference to decisions about the country’s grave problems. Only 18 percent believed in the efficacy of their vote.

Overall these surveys confirm rising public estrangement – also indicated by anecdotal evidence – from the way politics works and what it delivers. If more people start seeing politics as simply a vehicle by which a privileged political class protects its interests at the expense of the public interest and choose not to engage in the process this will seriously undermine democracy.

Parties and individuals who win political office by a minority vote resting on a low turnout – as increasingly is the case – end up with weak representative credentials. This has implications for both the credibility and effectiveness of the representative system. Of course traditional parties with their client list networks of supporters may still be able to garner enough votes to win elections. But securing a feeble mandate in an environment of public mistrust and cynicism neither translates into real authority nor empowers a fledgling democracy.

Voter alienation in fact endangers democratic consolidation. If disaffected citizens don’t show up to vote and elected leaders become less representative of their constituencies this erodes a foundation of democracy – how adequately and fairly the system reflects the people it represents.

From this perspective the warning signs of declining public trust in political institutions should be of concern to the country’s political leaders just as the grim economic indicators merit their urgent attention. The danger of an economic breakdown and a meltdown of people’s faith in the electoral/political process both spell trouble in different ways for democratic stability.

It is these dangers that the ruling coalition should be addressing rather than seeing a plot in every setback. A government reaching the end of its five-year term but still crying conspiracy is either delusional or believes that people can be easily duped.


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