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Nawaz disqualified; long live Abbasi

The much-quoted refrain, the king is dead, long live the king refers to a seamless continuity of a political system with the old being replaced by the new king; and is a tacit acknowledgement that no one, not even an all-powerful monarch, is indispensable because he cannot possibly rule for ever, given human life expectancy.

Nawaz Sharif hand-picked Shahid Khaqan Abbasi to replace him and then proceeded to ensure votes in his favour by parliamentarians from his own party as well as from allies notably Maulana Fazlur Rehman (JUI-F) and Achakzai (Pakhtookhwa Milli party). It is not yet clear what cost, if any, has been exacted by the JUI-F and PKMP for this support. MQM-P (with its electoral support sans its Founder remaining largely untested), and with growing differences with the PPP-led Sindh government as well as a host of complaints/demands as a consequence of the ongoing Karachi operation was easy pickings for Governor Sindh. It is unclear what promises Governor Zubair made to MQM-P though it was acknowledged that an additional 25 billion rupee package for Karachi was agreed. In a later press conference, the Sindh governor stated that most of the federal government-funded projects were those recommended by MQM-P and added that this was understandable as the party was the most representative of the people of Karachi. Zubair also revealed that a monitoring and implementation cell for federal government-funded projects would be established in the Governor’s House which the MQM-P wants him to delegate to the local government headed by MQM-P; however, this was denounced by the Sindh government on legitimate grounds namely that this authority rests with the provincial government and not the office of the Governor.

There is therefore speculation that the new king was voted into power at some cost to the treasury. The question is what has the new king done during his first four weeks (minus one day) that is at variance with what the old king would have done? Abbasi is at great pains to insist that Nawaz Sharif’s policy directions would be meticulously adhered to and in one interview stated that as far as he is concerned the former prime minister remains the prime minister. While such sycophantic statements towards any party’s leader continue to be the norm in this country yet there are obvious differences in style of the former and present prime minister.

Nawaz Sharif’s four years were marked by an inordinate amount of trust in his Finance Minister (who had almost complete control over all matters political as well as economic) which appears to be lacking in the incumbent administration. Abbasi not only issued a notification in which (i) the prime minister, instead of the finance minister, would head the Economic Co-ordination Committee of the Cabinet, a forum where some of Abbasi’s proposals were not approved and/or delayed when he was the Minister of Petroleum and Natural Resources; (ii) Privatisation Commission would no longer be under Dar’s administrative control which was for all intent and purpose non-functional in any case as Nawaz Sharif had directed over a year ago that the entire process be stalled as it was having negative political implications on the party; and (iii) the Statistics Division would no longer be under Dar, though its head remains a Dar appointee and one would assume loyalist, and it is unclear whether macroeconomic data would now be allowed to reflect ground realities that would enable Dar to finally take informed policy decisions. The new minister is Kamran Michael but here one would be compelled to assume that Dar can always trump his influence in the Abbasi administration.

Less than a month old prime minister who owes his job to his party leader, and who is unlikely to remain in that position for more than 10 months, is not likely to take a momentous decision like curtailing the powers of his trusted man – Dar – without his party leader’s express approval. So why was he allowed to cut Dar down to size? There is speculation that Nawaz Sharif was angered at Dar for the affidavit that significantly narrowed down the line of investigation by the Joint Investigation Team in the Panama Papers case. Dar’s supporters on the other hand maintain that Dar himself requested that his responsibilities be reduced as he would need time to mount his defence in a reference to be filed against him in the National Accountability Bureau as per the apex court verdict; but his detractors claim that he is considering slipping out of the country quietly leaving the business of state to others. Some also maintain that Abbasi expanded his cabinet on the instructions of the former Prime Minister (more than 50) which required the break-up of Dar’s empire. Whatever the actual reason may be it appears unlikely that any decision taken in this regard has not been approved by Nawaz Sharif.

What is significant though and may prove to be a game changer for the economy is the perception of the new Commerce Minister, himself a businessman, that he would be able to convince the new prime minister to approve some policy changes that would not only arrest the decline in exports but reverse it – decisions that Dar has consistently resisted which include: (i) delays in refunds; (ii) linking implementation of the export incentive package to a 10 percent increase in exports of individual units; and (iii) an overvalued rupee.

Abbasi, however, successfully convinced Nawaz Sharif that he be allowed to merge Ministry of Water and Power and Ministry of Petroleum and Natural Resources to create the Ministry of Energy (a commitment made by the PML-N in its 2013 manifesto) and to allow him to keep the portfolio as he was aware of the issues given that he held the Petroleum Ministry’s portfolio during the four years of the Sharif administration. This decision can be supported as various reports undertaken by experts, some dating back decades, had recommended such a merger in order to enable the administration to take a holistic approach to the country’s energy crisis. Persistent complaints of these two ministries before the merger had been that the Ministry of Finance was extremely lax in releasing budgeted subsidies and in releasing funds to cash strapped Pakistan State Oil (PSO) which was periodically not able to open letters of credit to import oil as a consequence (a liquidity crisis that persists due to the debilitating circular debt). For a 10-month tenure, no one would expect the head of government to change ongoing projects or to manipulate the energy mix though one would hope that he will succeed in convincing the former prime minister to allow him to meet the growing gap between energy generation and the capacity of our transmission system.

Be that as it may, Abbasi as head of the cabinet has already approved one pending decision relating to the portfolio he held during the Sharif administration: to trade petroleum and products, including LNG, with Maldives STO. Maldives is an importer of petroleum and products and according to data available on the internet Maldives exports of petroleum and products have consistently been zero. In addition, STO website reveals that it has never traded in oil and products but consumer items, including baby food; and one website gives STO Maldives (S) Private Ltd address as 10 Anson Road no 35-15 International Plaza Singapore. One would hope there is a revisit of this approval.

Nawaz Sharif, perhaps secure in his power over his cabinet, did not hold a cabinet meeting often, though he did more often than before after the Supreme Court verdict that the prime minister alone cannot take decisions and requires cabinet approval. Abbasi has chaired a cabinet meeting at least once a week and is clearly more engaged than his predecessor though it is not yet clear whether this engagement is leading to better results given that real power does not belong to him. Additionally, Abbasi has also changed the composition of the Council of Common Interest by dropping a federal minister each from Balochistan and Khyber Pakhtunkhwa and replacing them with federal ministers from Punjab. While Nawaz Sharif was criticised for not calling a CCI meeting every 90 days as per the constitution Abbasi is being criticised by the two smaller provinces for changing the composition which was really unnecessary as the majority opinion of the CCI prevails which was available to the ruling party in any case. Be that as it may, the stock market is by now convinced that nothing will change with a change in the king, and has begun to strengthen.

In four weeks, the marked difference in style between Shahid Khaqan Abbasi and Nawaz Sharif may be sourced to the presence of real as opposed to adulterated power. How long would Abbasi agree to be a man on deputation would depend on the outcome of the by-election in NA-120 and of course Kulsoom Nawaz’s health; but even if he stays on for the duration of 10 months it is unlikely that he would begin to take decisions independently, given our history where careful selections backfire not after 10 months but after a year or more.

To conclude, Abbasi is clearly more well-read than his mentor and is a qualified engineer to boot, has few bones to pick with institutions and appears to be doing a good job within the constraint that he operates under – the constraint that the old king is neither dead nor indeed in retirement. His tackling of Trump’s policy statement has been exemplary with all parties as well as the general public on board. One would wish him well though past precedence shows that the more successful he is the more quickly he would be replaced.

Anjum Ibrahim, "Nawaz disqualified; long live Abbasi," Business Recorder. 2017-09-28.
Keywords: Panama case , Political science , Natural resources , Privatisation Commission , Macroeconomic data , Panama paper , Economic , PKMP , MQMP , Pakisatn

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