Pakistan’s Financial Crisis: Who’s Responsible?


Closing down airspace may debar entry of commercial aircrafts but it doesn’t prevent hostile fighter aircrafts from entering these spaces and carrying out aggressive actions. Therefore, it’s obvious that Islamabad’s decision to close down it’s airspace for Indian flights consequent to the Balakot airstrike was more of a punitive action rather than a security related decision. This was a populist decision by the Pakistani ruling elite that was aimed at hurting India. On the face of it, this wasn’t a bad idea since it forced the Indian aviation industry to take alternate routes, which being much longer led to massive pecuniary losses. As per available estimates, from the time Pakistan closed its air space until July 2, while India’s national carrier Air India lost Rs 491 crores, the combined loss of private airlines was estimated at nearly Rs 56 crores.

But revenge is a double-edged sword and so, while Islamabad’s decision was financially bleeding India, it was simultaneously hemorrhaging Pakistan’s fragile economy, resulting in a whopping loss of about $100 million (Rs 690 crore) to it. At a time when Pakistan’s financial condition is so precarious that it’s literally at the mercy of foreign donor nations and the IMF, the decision to prolong closure of its airspace for nearly six months is rather surprising since it makes bad economic sense. But, if whispers emanating from the Block Q corridors of Pak Secretariat in Islamabad are to be believed, then it appears that while the Finance Ministry was keen to reopen Pakistan’s airspace much earlier since in this war of ‘economic attrition’, Islamabad was turning out to be the bigger loser. But the Pakistan Army, which oversees the country’s India policy, refused to relent.

It goes without saying that inept economic polices coupled with poor fiscal discipline of successive governments have brought Pakistan to the brink of an economic disaster and former army chief Gen Pervez Musharraf has openly blamed politicians by saying that while civil governments derailed Pakistan, it was the army that put it back on tracks. Pakistan Army’s current chief Gen Qamar Javed Bajwa too appears to share this viewpoint as is evident from his recent statement that while Pakistan was going through difficult economic situation due to fiscal mismanagement, the armed forces were playing their part in addressing this problem by voluntarily foregoing annual increase in defence budget. But the question is, when Pakistan’s army has ruled the country for three out of the seven decades of its existence and continues to manipulate government functioning even when not in power, how can one believe that the military is in no way blameworthy for Pakistan’s financial crisis?

The pro-army lobby points out that history bears testimony to the fact that Pakistan never faced any financial crisis when it was under military rule, which is a fact. But the flip side is that Pakistan was economically well-off under military rule only because its dictators ensured regular fund inflows through Faustian deals. During the cold war era, Gen Ayub Khan entered into the SEATO and CENTO defence agreements in order to get monetary and material aid from America, even though by doing so he turned Pakistan into a pawn of the US. By focussing only on matters military, the much-needed infrastructural development to create a self-sustaining economy was completely neglected.

The Paki Generals had got so used to massive aid grants that in 1979, Gen Zia ul Haq refused a $400 million (Rs 2,760 crore) US economic and military aid package, calling it “peanuts.” When the US launched its proxy war against the Soviets in Afghanistan, Pakistan Army became its main recruiter, trainer and supplier of mujahideen for which Islamabad was rewarded with massive doles in the guise of aid. But by allowing Pakistani soil to be used as a breeding ground for mujahideen, Zia ended up ushering terrorism into the country- a blunder that has economically ruined the country and the people of Pakistan continue to pay dearly for this humungous folly with their blood.

Gen Pervez Musharraf ended up selling the country’s sovereignty by allowing the US to conduct drone strikes within Pakistani territory in exchange for military and economic aid. He pushed Pakistan into the Kargil war that caused immense strain on the national exchequer without achieving any territorial or diplomatic gains. Also, during his rule clandestine delivery of nuclear technology to North Korea in exchange of an undisclosed sum of money took place and due to this irresponsible action, even today the international community looks down upon Pakistan as an undependable nuclear power.  

The ‘trigger’ for present economic crisis in Pakistan, is the army’s reluctance to act against terrorist groups that it considers to be its ‘strategic assets.’ Readers would recollect that in October 2016, Dawn newspaper created ripples in Pakistan by publishing a report written by Cyril Almeida that mentioned of how “…In a blunt, orchestrated and unprecedented warning, the civilian government has informed the military leadership of a growing international isolation of Pakistan and sought consensus on several key actions by the state.” Writing in Economic Times, Dharminder Kumar aptly summed up Almeida’s scoop by stating that “The report had revealed something that had rarely happened in Pakistan: the mouse of the government was roaring back at the lion of the military.”  He was right because it soon became clear that Pakistan’s powerful military wouldn’t take this affront lightly.

When Dawn stood by its journalist and refused to retract its report (that subsequently came to be known as the ‘Dawn Leak’), the army reacted like a spoilt brat with an inflated ego, it rejected findings of the inquiry ordered by the Prime Minister’s office, expressing its scorn for the legislature through DG ISPR Maj Gen Asif Ghafoor via a curt tweet that read, “Notification on Dawn Leak is incomplete and not in line with recommendations by the Inquiry Board. Notification is rejected.” But things didn’t end here — the then Pakistan PM Nawaz Sharif was arm-twisted into sacking Information Minister Pervaiz Rasheed, later on Sharif lost elections to Imran Khan’s Pakistan Tehreek-e-Insaf which, (as everyone knows) was propped up by the military. Almeida became the only journalist in the Interior Ministry’s ‘exit control list’, an extraordinary action to prevent hardened criminals and high-profile economic offenders to evade the law by fleeing country.

No one can deny that the Trump administration gave Pakistan more than adequate time for clearing its stable of terrorists. But the government’s attempts to apprise Rawalpindi regarding the serious repercussions of duplicity in its war against terror, these apprehensions were rebuffed by the ‘high-on-ego’ military leadership. It was amusing to read the Inter Services Public Relations (ISPR) statement that Gen Bajwa “reiterated that Pakistan will not seek resumption of (US) aid but expects honourable recognition of our contributions, sacrifices and unwavering resolve in (the) fight against terrorism for peace and stability in the region.” An army General taking a national decision on financial matters maybe something unheard in modern democracies, but then Pakistan has always stood out as an exception in this regard.

So, how can the Pakistan Army disassociate itself from being equally responsible for the financial mess that Pakistan is in today?

Tailpiece: While announcing that Pakistan’s armed forces were playing their part to help in overcoming the nation’s financial crisis by voluntarily foregoing annual increase in defence budget, Gen Bajwa had also mentioned that “this isn’t the only step we are taking for improvement of the economy.” Though he didn’t reveal what other measures the Pakistan Army is contemplating, but if Gen Bajwa is genuinely as concerned about the country’s faltering economy as sounds, then he can really help Pakistan in a substantial way. All he needs to do is to hand over control of the more than 50 highly profitable commercial enterprises (valued at $20 billion by the Senate in 2016 that the Pakistani armed forces are presently running) to the civilian government.

But will Gen Bajwa walk his talk?

Leave a Reply