Naya Pakistan, Purane Loag! Almost three dozen newly elected Members of Pakistan’s National Assembly (MNAs) face criminal charges. 34 of them belong to five major parties along with one independent MNA.

According to a new report titled “Parliament Monitor” released by Free & Fair Election Network (FAFEN) Parliament Monitor, 18 of them belong to Imran Khan’s Pakistan Tehreek-e-Insaf (PTI), while Pakistan Muslim League-Nawaz (PML-N) is in second position with nine MNAs and Pakistan People’s Party (PPP) occupies third spot. One each belong to Balochistan Awami Party (BAP) and Muttahida Qaumi Movement-Pakistan (MQM-P).

Also, “Around one-third (112) legislators have declared their assets worth between Rs11 million and Rs50 million while 58 had the assets worth one to 10 million rupees. As many as 12 legislators have assets having worth ranging between Rs501 million and Rs1 billion while five legislators have the assets less than one million rupees. Furthermore, the lower house of the parliament has eight billionaires with PTI’s Noor Alam Khan being the wealthiest legislator. His net worth, as declared on Form B of nomination papers, is more than Rs3.2 billion. Among eight billionaires, four belong to PTI, two to PML-N and one each to PPP and Awami National Party (ANP). These include PPP chief Bilawal Bhutto Zardari, PML-N’s Ehsanul Haq Bajwa and Noorul Hassan Tanvir, PTI’s Muhammad Najeeb Haroon, Sher Akbar Khan and Muhammad Yaqoob Shaikh as well as ANP’s Amir Haider Azam Khan. Five legislators, on the other hand, have less than one million worth of assets. As many as two of these legislators belong to PTI, and one each to PML-N, MQM and PPP.”

These facts “are based on information contained in Form B and affidavits as annexed to the nomination papers submitted to the Election Commission of Pakistan (ECP) by the candidates ahead of July 25 polls.”

One of Pakistan’s continuing challenges for the last seven decades has been economic management. Influx of huge amounts of American aid, waiver of Pakistani debts have been buttressed by Saudi largesse, 12 International Monetary Fund (IMF) low-interest loans and high-interest Chinese loans.  However, Pakistan’s economy has yet to achieve stability.

For the last few years there have been those who view the China Pakistan Economic Corridor (CPEC), under China’s Belt and Road Initiative (BRI) as the panacea and way out for Pakistan.

There are others like the IMF and The Economist that have argued that until and unless Pakistan undertakes structural reforms, CPEC will only burden Pakistan with loans it cannot repay.

On the occasion of Pakistan’s 72^nd Independence Day, leading Pakistani-American economist, Atif Mian, Professor at Princeton, laid out – in a series of tweets- what are the challenges Pakistan faces and why CPEC is not a simple cure. 

Dr Mian is John H. Laporte, Jr. Class of 1967 Professor of Economics, Public Policy and Finance at Princeton University, and Director of the Julis-Rabinowitz Center for Public Policy and Finance at the Woodrow Wilson School. He has taught at University of California, Berkeley and the University of Chicago Booth School of business.

Professor Mian’s work focuses on the connections between finance and the macro economy. His latest book, House of Debt, with Amir Sufi builds upon powerful new data to describe how debt precipitated the Great Recession. The book was critically acclaimed by The New York Times, Financial Times, The Wall Street Journal,The Economist, and The Atlantic among others.

We have reproduced those tweets below:

“On Pakistan’s Independence Day 2018, why is the country still far from economic independence? (e.g. seeking its largest bail out ever this year). I will focus on last 5 years as an example. It will get a bit technical but I will try to be clear. Economic growth is almost entirely a function of ‘domestic’ productivity growth. What matters is investment in building your institutions and people. Instead Pakistani governments have increasingly looked ‘outside’ in what I would call an attempt at “import-led” growth. It doesn’t work.”

“The idea is to borrow from outside, and task another country with building your infrastructure or institutions, and hope some magic others. The latest example starts in 2013, when PML-N comes to power and decides to outsource growth to China. I will explain why it doesn’t work. “When government funds large infrastructure projects through China’s Belt and Road Initiative (CPEC in Pakistan), the external debt rises from USD 62 to 90 billion. The borrowing raises domestic demand “artificially”, making Pakistan more expensive and less competitive globally. “This is a variant of the famous “Dutch disease” and Pakistan suffered an extreme version of it. Poof? Real effective exchange rate (Pakistani prices relative to trading partners) increased by 20 plus % and total exports did not increase over past 5 years. To make matters worse, Pakistan’s “in-law” finance minister strips away independence of the central bank and sets the terrible policy of keeping the exchange rate appreciated. Now Pakistan has the Dutch disease, on steroids.”

“Meanwhile there is a blanket ban on any objective assessment of CPEC. Ask a question, and you would be accused of conspiring against national interest. Media feeds the frenzy that it is a “game changer” and a big bubble develops in the port city (currently largely sand) of Gwadar. Real estate bubbles further artificially raise domestic demand, & given the senseless exchange rate policy, it makes the Dutch disease sclerotic. Notice we haven’t even gotten into whether the huge borrowing is “sustainable”, the damage is being done before any repayment is due.”

“So let us talk about debt sustainability now. The first thing to remember is, you are borrowing in dollars, while most revenue from the projects are in rupees (think domestic transportation use and local energy consumption). This is a big problem for two reasons. First, the whole enterprise is exposed to exchange rate (ER) risk. A future depreciation of the currency, which is almost certain to happen given the inane ER policy, will jeopardize profitability. Second, the country must generate sufficient additional exports to pay back, or else it will be forced to become poorer in order to generate an export surplus to pay back. This, again, makes things more difficult given the Dutch disease in the first place. Another big question on sustainability is that the borrowing and spending deals are highly opaque. No one really knows what’s going on. For example, what is the cost of capital in CPEC? A loan contract may report a “concessional” rate of 2%. But is it really 2%? Consider this: There is no open bidding and Chinese companies decide everything. They charge USD 100 for equipment, but put in place lower quality equipment worth only USD 80. Guess what, the “true” cost of capital just went up to (2+20)/80=27.5%! There is a lot China and Pakistan can gain from each other. But deals have to be structured properly, with proper macro-prudential framework. Unfortunately, none of that was done. The government wanted a shiny new road real bad before the next election, which they lost anyways.”

Prof Mian ends his thread of tweets with: “Let’s hope for better economic sense this time.”

Four decades after the start of the Afghan civil war and seventeen years after the American-led international intervention in Afghanistan, the Afghan Taliban appear to have made a comeback in that country.

On Friday August 10, over 1000 Taliban fighters entered the city of Ghazni, a strategic urban center less than 100 miles from Kabul, and have killed “dozens of Afghan soldiers and police officers, cutting communications and severing the main highway from Kabul to the south and beyond.” According to Afghan defense minister Tariq Shah Bahrami the attack on Ghazni city was carried out by Taliban with the support of foreign militants, including Pakistanis, Chechens, and Arab Al Qaeda fighters.

According to reports on the social media dead bodies of Pakistanis killed in Ghazni city clashes are being shifted to Pakistan. Prominent politician from the Awami National Party (ANP) and former senator Afrasiab Khattak in a series of tweets asked Pakistani authorities to explain what was happening and referred to the involvement of Pakistani militants in Ghazni as a repetition of the disastrous Jalalabad fiasco of 1989.

Afghan journalist Bashir Ahmad Gwakh stated that the fighters were primarily Punjabi, affiliated with the terror organization Lashkar e Taiba, and referred to videos of the funeral ceremonies of these Pakistani fighters being uploaded on the Facebook pages of the Taliban. 

Pakistan celebrates its 72^nd Independence Day today. The dream of our founding father Quad e Azam Muhammad Ali Jinnah and other leaders who supported him and his vision was that of a progressive, economically prosperous Pakistan at peace with its neighbors and the world. Unfortunately seven decades later we are yet to fulfil the Quaid’s dream!

With a new government taking over power on the eve of Independence Day, we at New Pakistan thought it would be useful to put forth views put forth in leading Editorials and Opinion pieces on why we are in the mess we are today and what we need to do in order to move forward.

The Dawn Editorial states “Democratic rule — true democratic rule — is not a gift that the country must wait to receive when deemed worthy of it; democratic rule is an inalienable right of each and every citizen of Pakistan.” Referring to the “deep political divisions and institutional strife” in Pakistan at the end of the latest elections, the editorial points to the consistent “institutional encroaching on the terrain of other institutions.” Further, “While institutions need vigorous oversight and checks and balances, the mechanisms must come from within the democratic system. A controlled democracy wherein other institutions circumscribe the authority and writ of an elected government and parliament, and impose their own policy prescriptions and priorities, is a recipe for enduring conflict.”

The Nation Editorial states that Pakistanis should stop looking for Messiahs in politics and seek to resolve their problems themselves: “let us get out of the messiah thinking pattern which pushes us to believe that a single entity can solve problems. This is precisely why we disrespect people we elect. Let us all pledge to work together and respect each other.” Referring to the multiple challenges facing Pakistan the editorial asks Pakistanis to “respect those around us and particularly those we elect in our public offices” and understand that “utmost responsibility lies on us to change as people because if the basic structure of the society is the same, no amount of policies can change the outcome.”

The News Editorial focuses on the rise of religious bigotry, the denial of full rights to Pakistan’s minorities and the need to achieve the dream of Pakistan: “to bring a peaceful and prosperous life for the Muslims of South Asia.” As Editorial states, “The rise of religious bigotry has not been confined to terrorist groups. Religiously inspired mob violence continues to serve as a reminder that we have not learnt to deal with the aftereffects of Partition. Dominant religious groups continue to peddle the narrative that they are under threat.” Further, “One of the many glaring challenges we have faced is our inability to accord the same rights and respect to our minority communities. To change this, Pakistan needs to change much within its legal, political and social frameworks.”