Year of uncertainty
Dr Maleeha Lodhi

The year ends on a note of uncertainty even as Pakistan approaches a critical milestone in its political history – the transfer of power from one elected government to another. Public uncertainty is not over whether elections will take place. They have to be held no later than May 2013. Uncertainty prevails about what might emerge after the elections.
Adding to this uncertainty is the danger that a prolonged period of electioneering could delay urgent policy actions needed to avert an economic crisis – delay that could drive a precarious economy over the cliff.
2012 draws to a close with the election season already in full swing. Political wheeling and dealing is underway as party leaders try to lure ‘electable’ candidates and out bid the other to entice local power brokers. A mixture of hope and anxiety characterises the public mood. Hope that the election result will put an end to the drift and disarray of the past five years. But also fear that the outcome may not bring enough change to put the country on the path to economic recovery and better governance.
The outgoing year offered signposts for both continuity and change. By-elections in November – the last before national polls – saw the reassertion of traditional, constituency politics, giving an early edge to former prime minister Nawaz Sharif’s Pakistan Muslim League (PML-N) in the battleground province of Punjab.
But there were also signs that Pakistan was headed towards the most unpredictable election in its history. A political landscape significantly transformed by socio-economic developments and changing demographics seems to open possibilities for new voter alignments, even a departure from politics-as-usual. Substantial addition of new voters and the youth bulge – almost half the electorate is under 35 years – imparts a greater ‘swing’ factor to the next election.
The shifting rural-urban balance in Punjab (more rural constituencies with urban features) and emergence of a larger urban middle class has also injected new dynamics into the electoral equation. Together this could produce many election surprises, upset traditional balances and even realign Pakistan’s politics, especially if voter turnout is high.
Anecdotal evidence and opinion surveys during 2012 seemed to support these possibilities. A survey by the International Republican Institute (IRI) for example indicated that elections would be a three-way fight, between the Pakistan Peoples’ Party, the PML-N and Pakistan Tehreek-e-Insaf, not a two-horse race. It also found a significant number of ‘swing’ voters – those uncommitted to any party. This throws the election wide open. The survey also showed PML-N and PTI leading decisively, with support for the PPP and the PML-Q crumbling to record lows. This found an echo in media reports that the PPP was losing ground even in its stronghold of rural Sindh to traditional rivals and nationalist forces.
If the electoral fortunes of political aspirants seem difficult to predict there was no mistaking a dominant feature of national life in 2012: judicial activism and the consequent rebalancing of power between state institutions. The Supreme Court intervened at extraordinary speed and force in many areas. Often it earned wide praise. At other times its actions invited controversy. Acting as the constitution’s custodian, intent on subjecting the executive to the rule of law, the court’s forays into multiple arenas, nonetheless, provoked criticism that it was jeopardising its quintessential role by overreaching and undertaking too many ‘populist’ interventions.
What encouraged judicial activism however was the void in governance left by a ruling coalition preoccupied by working the spoils system rather than addressing the country’s mounting problems. The Supreme Court intervened to seek a halt to Karachi’s descent into lawlessness and Balochistan’s slide into the abyss of ungovernability – but with indeterminate long-term effect. The response of various political actors was instructive. They cheered when judgements went in their favour, but refused to accept those that didn’t.
The incident that shook the country but also fleetingly united it was the brazen attack in October on Malala Yousafzai , the young champion of girls’ right to education. Her extraordinary courage made her a national icon. Outrage against the attack came from every section of society. But the government squandered an opportunity for a decisive push against militants by failing to even move a parliamentary resolution to pave the way for such action. Government leaders chose overseas visits to declare their ‘resolve’ to defeat Malala’s assailants rather than do anything at home.
The outgoing year also saw a record surge in sectarian violence, with assassinations, target killings of Hazaras and attacks on places of worship rising throughout the year. The number of sectarian attacks went up to 147 from 121 in 2011 and killings to 340 from 239 in the previous year. Overall, incidents of terrorist violence declined somewhat, but casualties went up, with a modest decrease in suicide bombings and IED explosions.
As the level of violence remained high so did public concern about security. A series of attacks on female health workers at year-end urged the UN to halt its polio drive and left Pakistan’s immunisation campaign in jeopardy. The killings of six female polio vaccination workers also underscored the trend of militants increasingly targeting women. This was another grim sign that defeating militancy remained a distant goal.
Gains made in preceding years by military actions in the tribal areas seemed fragile especially as Fata’s security remained linked to the continuing war in Afghanistan. The uncertainties of the 2014 transition, when most Nato forces will depart Afghanistan, continued to cast a shadow on the stability of Pakistan’s border region. This raised an important question: had Pakistan evolved a strategy to deal with this and reinforce lines of defence on the border and its mainland against the fallout from any post-2014 turmoil? No official answer was forthcoming.
While this external challenge loomed, a deteriorating economy posed the most immediate threat to Pakistan’s stability. In 2012 all the signs of an impending economic storm were apparent. Growth stagnated for the fifth consecutive year, domestic and foreign investment dried up, the budget deficit hit its highest point since 2008, and national debt reached a record high. Worsening internal and external imbalances continued to push the economy further into the critical ward.
Electoral considerations drove a reform-averse government into policy paralysis. It wilfully avoided taking remedial measures to halt the slide. Several negative trends accelerated the downward economic spiral – rising oil imports, falling exports and sharply declining foreign inflows. Excessive government borrowing from the State Bank and commercial banks and lax fiscal and monetary policies exacerbated financial imbalances and inevitably, fuelled inflation.
2012 saw a heightened risk to the economy from the country’s rapidly weakening external position. This was reflected in the rise in the current account deficit and steady depletion of foreign exchange reserves. With dwindling foreign capital inflows and looming external liabilities, including repayments to the IMF, the country moved closer to a situation of being unable to meet its financing requirements despite strong overseas remittances. By year-end foreign exchange reserves held by the State Bank dropped to $8.5 billion. This raised the spectre of reserves plunging in a few months’ time to a precarious level, barely enough to cover a month of imports.
Once that point is reached a balance of payments crisis would become inescapable. This could lead to an economic emergency, similar or worse than that of 2008. Then the country reached the brink of external debt default when elections were around the corner and a policy paralysis took hold. The budget deficit hit a dangerous high, reserves plunged and a foreign exchange crisis ensued. This was only resolved by a bailout from the IMF.
The key question this raises for the year ahead is whether such a crisis can be averted by timely action by a new government, which is installed well before an economic meltdown threatens, and is also strong enough to take tough but necessary decisions. This turns on another question that is even more consequential for Pakistan’s future: will the election produce more of the same or a way out of the country’s present predicament and mess?
The writer is special adviser to the Jang Group/Geo and a former envoy to the US and the UK.