A Conversation With Political Economist/Columnist Mosharraf Zaidi (Part II)

This is the second installment of my two-part conversation with The News columnist Mosharraf Zaidi. Part I, which you can read here, covered education in Pakistan, clientelism, Barack Obama, and Asif Zardari. Part II covers the IMF bailout, Pakistan's political economy, the middle class, and foreign policy.
_____________________________________________________________________________________

Ahsan: Let's move from politics to political economy. I read your columns regularly during the run-up to the IMF bailout. You often repeated a variant of this phrase: Pakistan's problem is simply that it spends more than it saves. Can you expound on that?

Mosharraf: Sure. Just to clarify, what I was saying, or should have been saying is that Pakistan spends more money than it has.

I am trying to appeal to your common sense, rather than the idea that economics is a complex black hole that is only comprehensible to supercomputers and bankers that wear better suits than you and know long words that don't mean anything.

So the first thing we do is identify the problem. The problem at that time was (and soon once again, maybe even this year will be) that Pakistan doesn't have any money. Now the thing that makes the need for money urgent is that Pakistan owes "people" (lenders) money. If it doesn't pay back that money according to the agreed schedule, the whole system takes a nosedive, because at that instant, the theory is that nobody would give Pakistan any money in the future. It would have proven to be a bad place to give a loan--having "defaulted" on its obligations.

That's the problem. But the problem is defined on the terms of someone who thinks that the infinite supply of loans to Pakistan is important. Who would think such a thing?

Someone who needs that money. Who needs the money? Let's see.

The biggest chunk of money in the Pakistani budget is for paying back loans, ironically. So of course Pakistan's creditors, those banks, countries and organizations to whom Pakistan already owes money. They need the money to keep flowing in, so it can keep flowing out.

The second biggest chunk of money in the Pakistani budget is for the military. So of course, the military needs the money to keep flowing in.

The third biggest chunk of money in the Pakistani budget, cumulatively, is the cost of running government--salaries, pensions, electricity--the works. So the government and its employees all want the money to keep flowing in.

(Some will argue that without this money, how will the government provide services. Uh, what services?)

Don't forget subsidies like the ones for PIA--which not only makes it a nightmare to travel anywhere, but also charges your children and their children money, so that political parties can firm up votes.

We digress. So essentially, Pakistan's taxpayers are perpetually in debt as a collective, because international bankers need bonuses, generals need tanks, and bureaucrats need a chair to sit on, from where they can make your life miserable.

This is spending more money than you have, and doing it without any real purpose--in a normative sense. Of course Pakistan should default. This is not ideology. Its common sense.

Ahsan: Ok.

How do you feel about Musharraf's economic policies in retrospect? There was significant growth, the middle class boomed, refrigerators and cars were bought, and then the floor came crashing down. First, the global price of oil skyrocketed. Second, the wheels came off politically and militarily, leading to a crisis of confidence. And third, water and energy shortages meant businesses simply couldn't do what they had to.

All that aside, people like Shahid Javed Burki are on record as saying Musharraf's economic policies were, at best, band-aids - and that they were shortsighted and reliant on contingent factors like foreign investment. Do you agree with that assessment?

Mosharraf: I have to admit that I was bullish on the idea that Aziz and Co. were capable of delivering sustained growth in Pakistan--but I was always very worried about the very thin and superficial basis for that growth. Essentially it came from four places. The deregulation of the telecom sector, the innovative enterprise of Pakistan-returns post 9/11, the real estate boom, and the explosive growth in the banking sector. The growth was financed by two external factors: remittances from Pakistanis abroad, and inflows from the US. The US impact is overstated and the remittance impact is understated. Its about 3 to 1 (3 remittance dollars for every one US assistance dollar).

But I think there's a problem of perception in Pakistan that the economic well being of the country is a government domain. It is not. Never can be. The Pakistani private sector is one of the great untold stories of laziness, incompetence, greed and elite capture of state resources. It shoudl be no surprise that the government is always there for the rich--not just generals and fuedal lords and bureaucrats, but also for so-called capitalists. And never there for the foundation of growth, the middle class.

All said and done however, the Musharraf era was transformational in the sense that it creates the momentum for a middle class narrative. This was an unintended consequence of the economic policies pursued during the first decade of this century. The lawyers movement was the first squeak. The real war in Pakistan now is the war on the middle class. If the elite wins it, Pakistan has no hope. But this is not a war that will be lost or won in weeks or months. And the elite hasn't even begun to invest in the weapons that will decide this war. Blogs, social networks and knowledge.

Ahsan: What is the "war on the middle class"? I am completely unfamiliar with this war. To me, there is no middle class in Pakistan - a politically salient one anyway. The relevant political actors are:

1. The military
2. The feudals
3. The faux capitalists/industrialists
4. The bureaucracy
5. The lawyers (since March 2007)

None of those are even remotely middle-class in any common-sense understanding of the term (although the bureaucracy comes close I guess). As for the "biggest war in Pakistan", I would say the following qualify:

1. The state vs. the Taliban
2. The government vs. anti-Americanism/talk shows on TV/the new nationalist right/the old religious right
3. Centralists/Punjab vs. federalists/smaller provinces
4. The fourteen liberals left in the country vs. everybody else (not exactly a fair fight, but neither was the first Gulf War, and we still call that a war, so there).

None of those are defined by class-based cleavages. So I ask again: what is this "war on the middle class" of which you speak?

Mosharraf: I use the term in the most unscientific way possible. And the middle-class is not entirely politically impotent, though I couldnt' agree more that it has a long, long way to go. I should also point out that the right/left construct only exists in books anymore. I mean, really. Have you seen the right? They talk like Che is in the back changing, and that Karl was one of the disciples. The right isn't what it used to be, and neither is the left. Anyway, that's a whole other discussion.

Within Pakistan, I'd say you are middle class if you are not elite, and not poor. Poor is less than 5 dollars a day. Elite is a phone call away from the rule of law. Everything in between is middle class. So the lawyers are middle class, the competent employees at PIA, middle class, the entrepreneurs post Amreeka return, middle class. Incompetent PIA employees who are there because of their politics are elite, or elite-constituency. I keep using PIA because it is such an accessible example.

Issues in Pakistan that are being discussed on blogs like All Things Pakistan, Grand Trunk Road and Five Rupees today are going to occupy the heart of public policy within the next decade. And none of the protagonists of these blogs (or thier readers) qualify as elite, or as poor. I know it won't fly in PolSci 101, but that's cool. No one's looking. There is a small, and increasingly important middle class in Pakistan. And the elite don't like them. They want them to disappear. Immigrate to Australia or Canada in the best case scenario, and actually physically disappear in the worst. Hence the war on the middle class.

Ahsan: We'll simply have to agree to disagree on these definitional issues then. To me, if you have a car and a house in a country where a third of the population (at least) doesn't have clean drinking water and half can't read, you're elite. That means the authors and commenters on Five Rupees and Grand Trunk Road are elite. Can't say anything about All Things Pakistan, because I don't read it.

To be self-referential for a second, I also have to take issue with your statement about the stuff being discussed here forming public policy debates for the next decade. One thing that is really disheartening for me personally is how far out of the mainstream I exist. The fact that I believe in secularism, and rapprochement with India, and political and diplomatic disengagement with the Arab-Israeli dispute, and a woman's right to marry whomever she chooses without threat of violence or even social shunning, means I'm engaging in conversations that public policy simply isn't concerned with. It's not even on their radar. It's a whole different world. The older I get, the more this is rammed into my head.

Have you read Lipstick Jihad? It's actually pretty decent, despite my low expectations going in. Its subtitle is "A Memoir of Growing up Iranian in America and American in Iran". It really captured a lot of my thoughts on the quasi-immigrant experience. I am forever made to feel like an outsider in Pakistan by the Imran Khans and Ayaz Amirs and Talat Hussains and the Urdu op-edders and the America-bashers. My ideas find acceptance nowhere other than my close friends; even much of family thinks of me as some fringe lunatic. And you really should read one or two of the extreme comments we've gotten on this blog.

All this is to say that (a) who you count as middle-class count as elite for me, and (b) that particular section of the elite is about as politically and socially irrelevant to Pakistan's future as Cartman.

Mosharraf: Happy to disagree on the definition, after I point this out. If you're in your car, headed toward your house, and the cops stop you, and decide to search you, harass you and accuse you of things that you haven't done, you're elite if you can shout them down, or call their boss, or their bosses boss. But if you end up at the thaana, with nothing but dad, chaaha and maamoo looking out for you--you are not elite, even by the technical definition. The majority of car owners in Pakistan are helpless sheep. They have no access to justice, if justice decides to miscarriage on them. None. That's not elite. That's developing country middle class. Hope no one is waiting for Henry Ford in the developing world--that paradigm is done and dusted. So too is the chronological fiddelity of that model. The Pakistani middle class will not follow a pre-defined set of parameters as it comes into its own.

On the "mainstream", one thing that I think a lot of privileged middle class young people don't realize is how deep rooted the changes that have taken place in Pakistan really are. I won't go into a list, but some of the fundamental assumptions about Pakistan are actually begging to be corrected. Pakistan is now an urban country, not rural. If there's a half-decent census (not possible in the current atmosphere) you'll see the urban share of the population has gone past 40%. Then consider that the current definitions don't really account for extended metropolises and peri-urban areas. Then consider that if you can get cable, and have a highway nearby (that's virtually all of the Punjab save three to five districts, out of 35) then how "rural" really are you? Point. The mainstream in Pakistan is not what it used to be. Syeda Abida Hussein said horrible things about middle class Pakistanis in an interview with the Wall Street Journal before the election. One generation ago, that was not news. Now it is. She's over as a political entity. Her ilk is near extinction as well. Two more election cycles and all this will be more obvious than it is right now. It might not even take a full ten years.

The things you beleive in are not a unique set of ideas, much as they might seem to be from reading the newspaper and watching television. They are more mainstream than the regressive politics that dominates the national landscape. In part this is because the middle class has yet to "land" it is still circling the airport tentatively. The landing is inevitable because it will run out of fuel--or to translate the metaphor, the middle class will engage politically because it has to, not because of a high minded nobility of ideals. Its engagement alone will transform the mainstream into a place where having radical ideas on either end of the spectrum is recognized as the lifeblood of a dynamic soicety.

If I sound overly optimistic, it is because I am. The lawyers movement was not about the handful of elite-captured politicians who can read poetry. It was about the political activation of a generation. Remember, since the PPP began, and for some, since the PNA, there's been no new political blood in Pakistan. This movement has injected freshness. It won't be pretty, or always rational, or liberal. But it will create the space for those things.

Ahsan: I don't think the lawyers movement was the political activation of a generation. I think it was the social mobilization of a certain professional class around parochial interests which ended up being (mis)appropriated by political opportunists who seized upon an opportunity to use a crisis as a focal point for obviating the difficulties of collective action.

Long marches, shong marches. When Nawaz Sharif starts talking about the independence of the judiciary, and Imran Khan starts talking about freedom and accountability, I know I should probably just go to bed.

Mosharraf: I think if you're expecting teenage students and twenty something lawyers to launch into spectacular careers in politics, then you're expecting too much, too soon. If we aren't prepared for an intergenerational transformation, then we'll keep getting jacked up for the next dynastic fircracker in the geneological arsenal. Gracias, but no gracias.

The lawyers movement represents the activation of a new generation of politicians, if for no other reason, that its the first big movement the country's experienced since the late 1970s. Tommorrow's second tier political leadership is going to have earned its first stripes during this movement. Where I think I am willing to go, in terms of investing hope, is that first-tier leadership as we know it is in its final stages. That the students that marched with the lawyers will not only occupy tommorrow's second-tier leadership, but also the top. So I am saying dynastic politics as we know it will come to an end. When? Not for another 10 to 15 years. But its coming.

Now that doesn't mean that these folks can solve the most urgent problems Pakistan is facing. Not with ambient levels of talent they have at thier disposal. But they can learn. I'll trust a slightly dodgy lawyer over the available options in this country, any day of the week. The lawyer comes from the same place that most people who can read in this country do. Insecurity, unequal access and some semblance of linear reasonability.

Bottom line? Those that have participated in the movement are capable of linear algorithmic processing of data. They can be convinced by reason to do what is reasonable. The current elite does not share those qualities, because it maintains elite status by sustaining irrational allocations of resources and by perpetuating its irrational public discourse.

And let's not forget that the irrational public discourse is too easily projected on only the right-wing. The right wing hasn't had to come up with a new idea for three dacades, at least, because all its work is done for it by so-called seculars and progressives. Remember who the Papa Bhutto was eh? The leading pan-Islamist, nuclear prolierator supreme and the Ahmadi/Qadiani Banner-in-Cheif. Secular? Hey, if you want a cigar and a drink in Pakistan today, you don't need to go to the people's party, you can find it at any party. This isn't 1989.

Of course, I think you're right not to invest too much hope in the other parties. It isn't ideology that does them however, its incompetence. They all have the same ideology. I will say that Khan scares me the most. Fifteen years into politics and he still can't find his way around the bureacracy, the local governments, the nuts and bolts of the thaana and the kutchehri! That's an astoundingly slow learning curve. But hand to him this... he has been able to help define the shape of public discourse--for whatever its worth--from a very miniscule political platform. Ehtesab, the 2 rupee roti, the citizenship/voluntary activity bit. That's all Khan, all day.

Ahsan: I take your point that so-called seculars and progressives do the right's work for them. I've been saying for a few weeks now that there are no true liberals left in Pakistan. The old left has been co-opted by the anti-American/anti-West movement. The avowedly secular parties are more ethno-regional centric in their worldview, and choose not to define themselves on the secular/non secular axis (MQM, ANP). The Army we already know about. And mainstream politicians just find it easier to get their point across if they cloak it in the language of religion and civilizational differences. Being a liberal today in Pakistan is a very lonely occupation.

Let's move on though, and talk a little bit about foreign policy or international affairs. The Obama plan seems to be to push India to make concessions on Kashmir either as a reward for, or a nudge to, Pakistan "doing more" on its western border. As sound as this strategy is, I have my doubts about its efficacy. Indian statesmen weren't born yesterday, and they're not going to let Pakistan essentially get rewarded for supporting militancy for twenty years.

Your thoughts?

Mosharraf: India hasn't had a statesman in the mainstream since Vajpayee. And his statesmanship was throttled by the mullahs in his party. I think we will all miss Vajpayee's relatively moderate brand of Hindutva once we all have to chew on Modi for a the next several years. He's the future of the BJP and he's no statesman. And anyone who thinks Rahul Ghandi is a future stateman should stick to NASCAR. He's a future Prime Minister, sure. But even Nehruvian genius has has its genetic limits.

I think there's too much being read into the newfound congizance of Kashmir as an issue. The strategy is to bleed the pakmil of its appetite for destruction by denying legitimacy to its claims of victimhood--not to reward Pakistan. The real question isn't whether India will play ball. Deep down, India will only be too happy to agree on the LOC as an international border (the US is not going to push it any farther). The real question is whether Pakistan has had enough? My guess is not. The ideological culture of the country and the military won't allow a raindance dance at the LOC as it exists. Of course, luckily for them, the Indian establishment has the same genes. They'll be the ones that get tagged for not wanting any movement. Its a lose-lose for the people. Win-win for the establishments.

Ahsan: I see today that Pakistan has admitted to some part of the Mumbai attacks being planned on its soil. Good times. This about a week after the release of A.Q. Khan (and blaming Bangladesh, don't forget). I feel like the leadership in Pakistan right now is a little schizophrenic - at once bowing to the Ziad Hamid types and bowing to the demands of the Indian government.

Back to the Obama plan: I think it fundamentally fudges the issue of time horizons. Even if everything works perfectly from their point of view (i.e. make Pakistan less afraid of India by getting a deal on Kashmir, and thereby convince Pakistan to do more on the western border), it confuses what is a long term problem with what is an immediate problem. The threat of militancy on the western border is a real and present danger. The potential of Pakistan scaling back its security fears vis-a-vis India is, at best, a medium term proposition (perhaps a decade or two). So the first part of the equation (the final solution--less militancy on the western border) cannot be solved by the second part of the equation (the intervening variable--making kissy face with India).

Mosharraf: Interesting that in the time that we've been having this exchange, as you pointed out, Pakistan finally admitted that there may be Pakistanis in Pakistan who want to do bad things to India. And now, "Sharia" has been "restored" in Swat. I can understand why Pakistan makes so many people, so nervous. I am not so sure however that the elite that has been playing chicken with this country's future for sixty years (and only has some bruises to show for it) quite understands how nervous Pakistan is making a lot of Pakistanis. This is a critical point. The expanded universe of voice in Pakistan--that is people that can shout and make a difference--is big trouble for the elite. Since the elite is not a monolith with a defined hierarchy, their reaction time to this is going to be too slow to matter.

But that's just the hyper-optimist in me. Its ok to be cynical. The real punchline in a world of qazi courts and playing footsie and then making out with the Taliban I suppose is the WTF factor. Why did we put thousands of Pakistani soldiers in body bags, many thousands more poor citizens in graves made of the rubble of thier homes, to eventually surrender to these terrorists who had to be "defeated at all costs"? WTF.

Of course, all this global attention for Pakistan--including Obama's carrot on Kashmir--is a product of the accentuated effects of South Asian dysfunction on the rest of the world. And while the rest of the world has done its part in bringing things here. This mess is our responsibility. For sixty years, power dynamics in Pakistan have changed clothes plenty of time, but never changed at their core. This is a place where the only contract that is consistently enforced is the contract among the elite. Long after American GIs are back in sweet home Alabama, Pakistanis will be left to contend with the same threats to their lives and liberty as they always have. Pakistan was being overrun by illiteracy and the law of the jungle before 9/11, it has been the same since 9/11 and it will be the same after 9/11 slips down the depth chart of defintive global inflection points.

India's best and brightest know this. Which is why they can afford to feed Holbrooke veggie-burgers, extract some H1-B favours, and take the nuclear relationship to the next level, while firmly telling the Americans to kiss thier ass on Kashmir. At this stage, Kashmir looks like it will eventually be resolved in a manner much more Nehru than LeT. It sounds so trite, but it rings so true. Imagine all the schools and bridges that could have been built with the money Pakistan has ploughed into its lack of relationship with India.

Ahsan: On that wistful note, I'd like to thank you for your time, Mosharraf. Keep writing your always-insightful columns.