Pakistan: Personalisation under the guise of privatisation – by Bilawal Bhutto Zardari

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by Bilawal Bhutto

Over a period of time the people of Pakistan have become conditioned to certain economic myths propagated by a powerful conglomerate of industrialists and big business. One of these myths is that Pakistan’s economy is suffering solely because of an inefficient public sector and that privatization is the only solution. This myth has been, and is again being used, to blatantly take forward opaque privatization schemes that will result in national assets being transferred into the hands of a select few, at the expense of the majority, whilst making thousands of Pakistanis redundant in the process. This is crony capitalism at its worst. This nation must not sell off its assets just because this government cannot run these assets properly.

This is a kin to selling all the family silver to pay for a wedding and making no provisions for the child born from this marriage. The current government’s thinking on privatization appears to have only one underlying plan – the creation of a permanent oligarchy that can exploit the state, and the poor people of Pakistan at will. While the thinking may appear brilliant to its architects and their friends, the Pakistan People’s Party and I are committed to stopping any plans based on the personalization of the economy. Personalization under the guise of privatization must be prevented.

Privatization has been successful in many developed countries but at a distinctive point in their economic history. Pakistan, on the other hand, is at a fundamentally different stage in its development trajectory, one at which further privatization will inevitably result in the mass exploitation of the poor, while giving the rich the ability to manipulate state-sanctioned rents in their favor. Unbridled privatization will simply result in the further perpetuation of private monopolies, cartels, and unemployment, and will take us further away from the desirable goal of equitable growth.

The so-called privatization led growth during the previous Nawaz Sharif and Musharraf eras has little to show for it other than increased unemployment, informalisation, and the development of a crony business oligarchy which has now become powerful enough to meddle in and manipulate the democratic vote. The much-vaunted benefits of privatization, namely the transfer of know-how, increased tax-revenue, and sustained private investment in labor-absorbing and productive sectors are missing, and will never come if privatization is forced through at this stage in our development. With about 80% of previously state owned enterprises – especially in large-scale manufacturing, banking, and other services – already privatized, what have we to show for it?

The main argument for privatization, or in the case of this government personalization, seems to rest on the pre-conceived notion that growth can only be achieved through the private sector. That we as a country have no alternative. Yet many of the world’s thriving economies are in countries where there has been an intelligent and effective partnering between the public sector and capital.

China, the second largest economy in the world, has experienced unprecedented economic growth of 9.5% per year over three full decades with the Chinese state remaining the largest shareholder in the country’s 150 biggest companies. Above all the state has undertaken large-scale poverty alleviation work and has reduced socio-economic inequality by providing for the poor.

Our opposition to the privatization of the economy does not mean that we are opposed to the fundamentals of a free market economy. We support the practices of a free market economy where the public and the private sectors are able to work in tandem for the betterment of society. We are for a public sector that sets the standards of good practice in terms of human resource management and protection of employee rights while remaining economically viable. Instead of peddling our assets on the cheap, we need to revisit our approach to the public sector. Instead of privatization we must focus on raising the quality of corporate leadership in the public sector, and promote management led share acquisitions coupled with employee share schemes.

The answer to our current economic malaise lies not in hawking of state-owned institutions but in restructuring these industries and developing effective public enterprise management and providing workers with a genuine stake in any such venture. Successful managements, which have driven similar enterprises successfully either in Pakistan or abroad, should be given the opportunity to take over failing state industries, backed by a mixture of public and private financing.

Similarly, the enormous potential of cooperatives must be unleashed fully, particularly in our agriculture and aquaculture sectors. Through cooperatives smaller farmers and stakeholders can gain access to financing from pooled resources that enable them to increase their productivity. Financial risk alleviation, like insurances and market-driven forward buying, will reduce the risk environment in which farmers operate in Pakistan, and would only be offered by state-driven cooperatives. Such cooperatives can also be extended to bring more land under cultivation and assist in the redistribution to the haris and other landless people of Pakistan.

Only in limited sectors where private capital is extremely difficult to raise should the state opt for limited participation of the private sector in the form of Public Private Partnerships and Private Finance Initiatives. Such enterprises must be crafted carefully and not used as vehicles for the sale of valuable assets to a select few. Any such initiative will only be acceptable to the Pakistan People’s Party if it guarantees worker rights, including jobs, and ensures that eventual ownership will not be transferred from the state. Pakistan belongs just as much to the poor majority as it does to the rich minority. During the last government the Pakistan People’s Party was unable to push through such programmes because we were part of a coalition government, saddled with an economically conservative judiciary that ventured beyond its constitutional mandate and forced a popularly elected government into administrative stasis.

Civil servants carrying out the will of the government were ruthlessly purged or humiliated, and in their place a hostile, conservative and obstructive civil service emerged. Similarly, attempts at broadening the tax-base were fiercely contested by a host of conservative business lobbies. Those same conservative forces of Pakistan, which were instrumental in the restoration of a predominantly conservative judiciary, are now in power. We are the only political force now standing against the pillaging of Pakistan’s resources and the continued exploitation of its masses. We will democratically resist anyone attempting to impose their version of imported economics on Pakistan for personal gain.