Thursday, June 13, 2019
I HAVE never seen a prime minister upstage his own government’s budget announcement the way Imran Khan did on Tuesday night. It was a surreal experience. The calm, almost schoolboy-like earnestness with which Minister of State for Revenue Hammad Azhar announced the budget provided an almost mirror opposite to the fire-and-brimstone address delivered only hours later by the prime minister through clenched teeth.
Something more important than any of the numbers in the budget documents was revealed in this moment. In a brief flash we all saw the two faces of what is now clearly a bifurcated government. On Tuesday night I actually had to check whether or not there is a full moon, because not many other explanations were working.
Fortunately though, one line in Khan’s address gave the game away. That was the line in which he said “now that the economy has been stabilised” before going on to promise bolts of lightning for his political opponents, upon whose vilification he has built his entire political persona. With these words he made it clear that he has nothing to do with the economic management of the country. Those decisions are now being made exclusively in his financial adviser Hafeez Shaikh’s camp, and his entourage. And probably a good thing too, because Khan was likely to be too much of a bull in Shaikh’s china shop.
We’ll come to Shaikh’s china shop in a moment. First consider Khan’s address. It seemed to be hastily arranged, given the technical glitches and large amount of editing it had undergone before being allowed to be aired, probably the reason why it was delayed by almost three hours. He said that since 2008 the country’s debt burden rose by Rs2,400 billion, “and during these years the wealth of these two households also rose by the same speed”. Then he clinched it: “The rise of the debt burden is because of corruption.”
In significant measure, the revenue effort depends on people agreeing to cooperate with the government.The story he built goes like this. “These people” engaged in corruption, made money, sent the money abroad via hundi and hawala channels, and whenever they wanted to bring it back they did so through a remittance sent from a fake account, and sometimes into fake accounts. In the Hudaibiya case, for example, he said something like Rs1bn was involved in such a scheme, and in a later example he said Shahbaz Sharif’s two sons laundered Rs3bn in such manner. Never mind for the moment that the details he was sharing in a televised address are part of ongoing court proceedings. The numbers involved provide a sharp contrast to the numbers that were being discussed in the budget speech.
Consider for example that in all the corruption examples one can possibly add up, the amounts involved never go beyond a few billion rupees. Yet the increase in the debt burden that the ruling party enjoys talking about is Rs2,400bn. So something far more than just pocketing this money is going on. Sometimes Khan talks about $10bn being laundered annually out of the country, though I’m unable to find a clear source as to where this figure is stated.
Azhar’s speech a few hours earlier showed some idea of the fact that larger, impersonal and powerful macroeconomic forces exist. He spoke instead of a fixed exchange rate policy that drained the reserves, growing expenditures without concomitant revenues to pay for them, the rising circular debt in the power sector and so on. The budget speech described the problems left behind by previous governments in entirely different terms. The play of macroeconomic forces and critical decisions in economic management were responsible, and the government will seek to rectify these deficiencies beginning with this budget.
This is Shaikh’s china shop — a revenue target of Rs1.5 trillion to chase by quite literally grabbing potential taxpayers by the scruff of their necks and making them pay up. The government intends to criminalise non-filing of tax returns, said Azhar on the floor of the assembly, and prosecute people who are not filing and possibly seek jail terms for them. Industry that was used to enjoying sales tax exemption via SRO1125 has been slapped with 17pc levy starting from July 1. The tax plan reads like a war plan almost, so what exactly makes it a china shop you might ask.It’s a china shop because in significant measure the revenue effort depends on people agreeing to cooperate with the government, a bit like the dam fund. The amnesty scheme, which kicks off the entire exercise, is a classic example and it is drawing an anaemic response thus far (though the last few days are usually when the bulk of the response comes in such affairs so let’s see). If people don’t step forward, the government’s message to get tough will stand a bluff called.The finance bill similarly criminalises a large number of actions, but whether or not the FBR will be able to use these powers to produce revenues (as opposed to settling scores) is yet to be decided.
The revenue plan will not work to the extent that it is supposed to if traders don’t step forward to get themselves registered, if businesses do not agree to let their tax-evaded activity become visible to the taxman, if high-net-worth individuals do not declare themselves and so on. Without some level of a game-changing tide of people and entities stepping forward to participate in this plan, the government will be left to tax those who are complying even further.
On how many fronts are they intending to fight? The government cannot fight the political opposition, a growing movement in Khyber Pakhtunkhwa and the media, and at the same time, open a front against the business community, traders and other powerful groups. At some point, it will have to fold. How and when that moment comes will be determined by which face of this bifurcated government is carrying the day when necessity knocks.
Pakistani political discussions are reverberating with talk of hanging 5,000 people to cleanse the country of opposition.
After weeks of rumors of a possible large-scale crackdown against opposition politicians and dissidents being contemplated in the upper echelons of power, a senior government minister has publicly advocated hanging thousands of Pakistanis outside the existing laws and constitution of the country.
“If it was in our hands, hanging 5,000 people today would change the destiny of [Pakistan’s] 220 million people,” Faisal Vawda, Pakistan’s minister of water resources, told Geo TV on June 11. “Our next 20 generations have to wait to do this [purge] in accordance with the law.”
The comments generated debate and sharp reactions in Pakistan.
“The talk of hanging 5,000 people is fascism,” said lawmaker Khurram Dastgir Khan, senior leader of the opposition Pakistan Muslim League Nawaz (PML-N).
“The recent statement by a federal minister that 'hanging 5,000 people' would 'solve Pakistan's problems' was highly irresponsible,” the Human Rights Commission of Pakistan, the country’s leading rights watchdog, said in a message on Twitter. “It makes a mockery of the rule of law — something no democracy can afford to do.”
Rauf Klasra, a senior journalist and television host, confirmed that during a recent discreet meeting with several television hosts a “major figure in Pakistan” discussed possible plans for such a purge.
“It was discussed there that, if needed, 5,000 people will be killed,” he told the Aap News television channel. “Perhaps Faisal Vawda got wind of the discussions of that high-profile meeting.”
Alluding that the meeting was held with a senior government figure, Klasra hinted that Islamabad was taking a cue from recent crackdowns around the globe.
“It was said that they have already prepared the lists [of the 5,000 people supposed to be killed] and can act on it in an Egyptian or Chinese model.”
Pakistan’s opposition political parties, press, and activists campaigning for peace, rights, and accountability are already facing what appears to be a widening government crackdown.
The arrests of former Pakistani President Asif Ali Zardari and a senior leader of the PML-N on corruption charges have provoked protests inside and outside the parliament. Zardari’s Pakistan Peoples Party (PPP) and PML-N are expected to lead opposition political parties in protests on the streets and challenging the government’s wafer-thin majority inside the parliament.
Opposition politicians believe skyrocketing inflation and a fledgling economy are expected to attract people to the anti-government protests. On June 14, Pakistan’s lawyers are expected to protest the government’s misconduct case against a Supreme Court judge who was critical of the country’s powerful military.
On June 12, the Election Commission of Pakistan postponed for nearly three weeks provincial assembly polls in seven districts of the former Federally Administered Tribal Areas (FATA) that were scheduled for July 2. Now merged into Khyber Pakhtunkhwa, this is the region where the Pashtun Tahafuz Movement (PTM) first emerged. Since May 26, two of the movement’s lawmakers and scores of its supporters have been arrested in what appears to be an extensive crackdown on the movement.
Islamabad’s crackdown, however, appears to have hardened opposition leaders.
Bilawal Bhutto Zardari, the young PPP leader, recently warned that his country was on the path toward rolling back representative rule and the state’s priority is to crush democratic civilian voices while continuing to support and harbor terrorists and extremists.
“We are experiencing a transition away from democracy,” he told opposition lawmakers. “We are experiencing a transition to dictatorship -- a transition to authoritarianism -- a transition to totalitarianism."
"We continue to urge Pakistan's leaders to make good on their pledges to take sustained and irreversible actions against terrorist groups operating within the country's borders, which is necessary for the long-term stability and prosperity of the region," Alice G Wells said.Pakistan has taken some steps against terror groups post the Pulwama attack but they are still reversible, a top US official said on Wednesday, urging the Pakistani leadership to take sustained, irreversible, and permanent actions against terrorists operating in the country and areas under its occupation.Terrorist organisations such as Lashkar-e-Taiba (LeT) and Jaish-e-Mohammad (JeM) will continue to pose a grave risk to international peace as long as they are able to operate freely in Pakistan, Alice G Wells, Senior State Department Official for South and Central Asian Affairs told House Foreign Affairs Subcommittee for Asia, the Pacific and Nonproliferation.
"On the broader issue of counter-terrorism, the Pulwama terrorist attack in February that sparked a crisis between India and Pakistan underscored the importance and immediate need to halt terrorist activity in the region," she said in a statement.
The sub-committee of the House Foreign Affairs Committee is scheduled to hold a hearing "US Interests in South Asia and the FY 2020 Budget" on Thursday.
"We continue to urge Pakistan's leaders to make good on their pledges to take sustained and irreversible actions against terrorist groups operating within the country's borders, which is necessary for the long-term stability and prosperity of the region," she said.
"In recent months, we have seen Pakistan detain some terrorists and seize assets belonging to front organisations raising funds for terrorist groups. While these steps are important, they are still reversible," she told the lawmakers.
She asserted that Pakistan must sustain these measures and expand upon them, including by prosecuting terrorist leaders.
"On a multilateral level, we succeeded on May 1 in listing JeM leader Masood Azhar at the UN 1267 Sanctions Committee - an achievement 10 years in the making. His listing sends an important message that the international community will not tolerate terrorism," she said. Ms Wells said that US relationship with Pakistan remains one of its most complex and most consequential.
In line with the Trump administration's South Asia strategy, its approach to Pakistan has focused largely on securing Islamabad's support for the Afghan peace process and for Pakistan to follow through on its pledges to take sustained and irreversible actions against all terror groups operating from within its territory, she said.
"Our engagement with Pakistan on nonproliferation issues is also crucial. The US and Pakistan both attach high importance to preventing the proliferation of weapons of mass destruction. We remain concerned, however, about Pakistan's development of certain categories of nuclear weapons and delivery systems," Ms Wells said.On Afghanistan reconciliation, she said, "We recognise that Pakistan has taken steps to encourage Taliban participation in peace negotiations, which has been important to the progress we have made thus far.""However, there is much more work to be done to achieve our ultimate goal of a peaceful Afghanistan free of terrorist groups," she said."Pakistani officials are correct when they say that no other country will benefit more from a peaceful Afghanistan than Pakistan, and we expect Pakistan to continue to play a constructive role in reconciliation efforts," she added.Ms Wells said that sustained progress on these two issues - reconciliation and counter-terrorism - will lie at the heart of a renewed bilateral relationship. "We believe in the potential of the US-Pakistan relationship to foster regional stability and economic prosperity," she said.
In the next year's budget, she said the Trump administration will focus civilian assistance programming on priority areas such as building capacity to deter the proliferation of weapons of mass destruction; building law enforcement capacity to fight crime and terrorism; and supporting economic development that can expand US business ties with Pakistan.
It will also focus on addressing communicable diseases that threaten both the countries; supporting civil society and religious freedom; and working with Pakistan to ensure that communities in the Afghanistan-Pakistan border region are stable and cannot be used as a base by terrorists, she said.
"The request reflects the trajectory of our relationship away from an assistance focus and toward a more trade-based one, and the bright economic future we believe a more robust US-Pakistan partnership can bring for Pakistan and the region, should Pakistan follow through on its pledges to fight terrorism and promote peace in Afghanistan," Ms Wells said.