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All indicators show that our economic managers, due to imprudent economic and tax policies, have pushed Pakistan into chronic, unremitting, unceasing debt-enslavement. Debtocracy, a term yet to become part of public discourse, is not merely an economic issue. It has multi-faceted political connotations. Once a nation is trapped in 'debt prison', it characteristically becomes politically subjugated. The lenders exploit the enslaved and subjugated. Pakistan is a classic study of victim of debtocracy leading to economic and political subjugation. Slavery, physical or mental, has devastating effects. The subjugated live in a permanent state of submission, suffering and subordination. In the capitalist world, the 'debt-slavery-syndrome' represents a perpetual despair and never-ending suffering both for individuals and nations. This is the worst one can think of in the age that is also known for enlightenment and struggle for human rights.

Economists mention debts and liabilities only in numbers, e.g., Pakistan's public debt has touched the dangerous level of 70% of GDP. Of course, numbers are important, but more vital is discussion on all aspects of debt-slavery-a new form of subjugation that needs to be exposed and countered through self-reliance by exploiting our indigenous natural and human resources. The fundamental question to be asked and debated is: why in the name of people, our elites have been recklessly borrowing money and paying huge amounts in debt servicing, which is now more than double the amount we spend on defence!

History of subjugation and resistance in various parts of the world presents vital lessons for humanity. Debt shackles cannot be broken without waging resistance against elites and oppressive World Order. India under the British Raj was ruthlessly plundered-see 'An Era of Darkness: The British Empire in India' by Shashi Tharoor and 'Class Structure of Pakistan' by Dr Taimur Rahman. As elsewhere in the world, economic subjugation of India paved the way for political subjugation. This malady persists in Pakistan even after independence as we are still subjugated economically.

Economic subjugation creates helplessness and complete submission. Resistance, on the contrary, kindles the hope for liberation-regaining of dignity, self-respect and equality being its main goals. Unfortunately, in the case of India and Pakistan, as in many other erstwhile colonies, the subjugators after end of colonial era regained control indirectly through a band of sycophants and cronies, who in the name of self-rule started exploiting their own people. The era of Neo-Colonialism was followed by Late-Neo-Colonialism, under which political cronies serve foreign masters and business interests are looked after by representatives of big multi-national companies. This is the tragedy of most of the post-colonial states, including Pakistan, as masterly elaborated by Zulfikar Ali Bhutto in his book, 'Myth of Independence'.

Post-Colonial political and economic vested interests operate through allies in politics and local gumashtas (agents) in businesses. Pakistan is a suitable case-study of this phenomenon. After independence in 1947, the country was economically and politically subjugated. From day one the rulers vowed allegiance to the United States and did not support the nations fighting with colonialism and rising imperialism, for example, near home, China under the dynamic leadership of Mao Zedong. The role of political elite in the post-independent "security state" of Pakistan has been shamelessly anti-people. Calling themselves "leaders", they have been serving neo-colonialists/imperialists with great zeal-see work of Hassan N. Gardezi, Neocolonial Alliances and Crisis of Pakistan. The unholy alliance of feudal-legal-military-collegium in the case of Pakistan has been dominating politics and economics, under military or civilian rules alike. Unfortunately, from 1949 to 2018, this is the sad story of Pakistan and nobody is ready to dismantle these elitist structures that have pushed Pakistan to a terrible state of debt enslavement and political subjugation.

The most loathsome legacy of the five-year term (2013-18) of Pakistan Muslim League (Nawaz) [PML-N] has been debtocracy, a term yet to be debated by our experts. All governments, especially PMLN, have borrowed recklessly, imposing harsh tax measures, and devaluing currency many a time. With every devaluation of our currency, foreign liability increases manifold. The government of PML-N employed all kinds of measures, from introduction of cash margin to imposition of heavy regulatory duties on imports, but failed to curtail the current account and trade deficit. The trade deficit hit US$ 33.9 billion as imports increased to US$ 55.2 billion during July 2017 to May 2018. Even 14% devaluation of the rupee since December 2017 could not help in reducing the import bill.

On June 11, 2018, rupee witnessed devaluation of 3.8% and resultantly foreign loan increased by the same ratio. The impact of earlier devaluation made in March 2018 was around Rs 393 billion. On June 11, 2018, the government increased the prices of POL by 8.9%. This is bound to increase inflation and higher discount rate by State Bank of Pakistan (SBP) would become unavoidable. The continuous deterioration in macroeconomic indicators is worrisome for caretakers for a few days, but will pose a daunting challenge for the new government assuming charge in August 2018.

The unelected ex-finance minister, Miftah Ismail, on May 14, 2018 told the National Assembly that borrowing of Rs 22 trillion would be necessary for 2018-19 for payment of domestic/foreign debts/debt servicing. Thus for the newly elected government, the deadly debt trap was already laid by PML-N. Due to thoughtless policies of the economic wizard of PML-N, Ishaq Dar, presently suspended senator and proclaimed offender, the country's external debt and liabilities reached US$ 98.16 billion by the end of February 28, 2018. The position of internal debts is equally alarming. According to SBP, it stood at Rs 26.8 trillion as on May 1, 2018-it was Rs 22.5 trillion as on June 30, 2017. The consequences of present economic mess are obvious: more borrowing and taxes by the new government after elections on July 25, 2018 which will retard growth, affect fixed income earners and the poor. Further debts mean more squeezing of fiscal space-enormous debt-servicing leading to deadly debt trap that is, to borrow just to pay interest of old debts.

Not only the latest figures of total debts and liabilities of Rs 28.29 trillion, released by SBP, present a shocking scenario, there is another important document titled, Revision Study on External Debt Statistics, that narrates the history of our economic subjugation that started in 1960s, when the rulers began taking large intakes of foreign loans. With every loan came a host of conditions. These conditions ostensibly aimed at reforms, in fact, meant to subjugate us, economically and politically. This aspect of debtocracy is brilliantly highlighted by Dr Ammar Ali Jan, in his op-ed of May 24, 2017, in the following words:

"......The basic questions we must ask about 'our' debt burden remain the same. Who took on such high amounts of debts, where were they spent, and who will repay them? By asking such questions, we transform the problem of debt from a technical issue of economics into a political question about democracy and priority-setting. This means challenging the notion of the 'we' that takes loans and insisting that the loans were taken by ruling elites, whether civilian or military, without a system of accountability for their deployment.

The Pakistani elites have been able to play their international donors by threatening an imminent collapse in case of a liquidity crisis (no one wants a strategically located nuclear power to collapse), while ensuring that the public remains disorganised so as to remain irrelevant in such negotiations. The result is that, while there remains enough money to build housing societies and new malls for the elites, the Pakistan government repays debt by extracting resources from ordinary people through increasing general sales tax on basic commodities, spending cuts in healthcare, education, sanitation and now even drinking water.

Thus, debt should not be viewed as simply a technical issue, but a class project in which ordinary people become the guarantors for the risks taken by the elites........ In Pakistan, there is a dire need for a political force to demonstrate the will to hold the government accountable for its (mis)use of loans acquired in the name of its citizens. The future of democracy depends on the crystallisation of such a political will that breaks the monopoly of anonymous bureaucrats on financial matters, and turns it into an arena for popular deliberation".

Nobody has advocated what Dr Ammar suggested: In Pakistan, there is a dire need for a political force to demonstrate the will to hold the government accountable for its (mis)use of loans acquired in the name of its citizens. He is right that future of democracy in Pakistan depends on the crystallisation of a political will that challenges the monopoly of bureaucrats on financial matters and makes it a popular public discourse for deliberation. But the tragedy is that three top vote-securing parties, PPP, PML-N and PTI, are totally indifferent to this issue. In their election manifestos, this is conspicuous by its absence. It confirms that in financial matters, there is unchallenged control of babus. This control needs to be taken away if we have to become a self-reliant economy.

(The writers, lawyers and partners in HUZAIMA, IKRAM & IJAZ, are Adjunct Faculty at Lahore University of Management Sciences)

Copyright Business Recorder, 2018


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