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The ‘New World Disorder’ and the relevance of Pakistan

As if by celestial edict, cricket World Order started dismantling itself 4 years ago. The most glaring examples are Trumpism and Brexit. Both are seismic events, presaging a tectonic shift in World Power politics. There is a massive push back against globalization, the driving ultra international mantra since WWII. Other events point in the same direction – nationalism in Europe, anti immigration sentiment, Venezuela, Egypt, trade wars, technological disruption – both infotech and biotech. Where will it all end? When? Nobody knows. There are 7.4 billion people in the world – and 7.4 billion agendas. Currently the G-7 nations play a dominant role with a combined GDP of US$ 32 trillion. (G-7 – Britain, Canada, France, Germany, Italy, Japan, the US). China is the second biggest economy tagged at US$ 9.7 trillion. It is extrapolated that Russia, India, South Korea and Brazil will also play a significant role.

Closer to home, Pakistan has to reckon with events spinning out of control rapidly. Afghanistan defies a solution. Yemen and Sudan are on fire. The Gulf Monarchies are bankrolling many events. The consistent pressure on the US to take out Iran comes from the GCC, not Israel. Israel is sitting pretty, taking advantage of every opportunity that presents itself – like permanently annexing the Golan Heights. Unbeknown to most people Mohammad bin Salman is not the strategic thinker behind all this. He is too young and inexperienced. The man calling the shots is MBZ – Mohammad bin Zayed, the Crown Prince and de facto ruler of Abu Dhabi. In the Arab world he is the ‘go to’ man.

Where does Pakistan stand? Is it irrelevant with an economy of 0.4% of the world? Let’s take a cold, hard, dispassionate look. Let’s look beyond the talk show hosts and the jokers they have as guests, both paid and unpaid. Even Mahira Khan has started tweeting about the economy and geo-politics. Once she has a proper degree from Mount Holyoke or Wellesley, or one of the sub-standard local institutions, her comments may matter. Currently she should stick to what she does best – displaying her considerable charms on the silver screen. Numbers don’t lie – unless produced by the Pakistan Bureau of Statistics. If you analyse the 25 (or so) statistics that matter (economic, healthcare, crime, pollution etc) you will realize that Pakistan is close to becoming a failed state. The myths of the past should be put to rest: Pakistan has 4 seasons hence… (all countries have at least 3 seasons), Pakistan is the gateway to Central Asia (the greatest myth of all).

The reality (good or bad) is as follows:

1. Imran Khan brings hope. His thinking is statesman like. But can he bring reform in the face of 1000 mafia groups – large, medium and small?

2. The Pakistan Armed Forces have delivered, as they usually do. They have rid the country of 90% of terrorism. Now they should go after ‘Economic Terrorism’ (i.e. Corruption) by lending support to the various institutions. The Americans will eventually exit Afghanistan and so will the GCC countries. With General Raheel Sharif well positioned and with GHQ’s forward guidance, the vacuum can be filled by the Pak Armed Forces, as in the 1960s/70s.

3. Don’t obsess about the IMF. In the past 9 months, all the news has been about IMF. Asad Umar did a good thing by delaying, as he built up a negotiating position. If Asad had gone to the IMF immediately, Pakistan would have had to swallow the IMF prescription hook, line and sinker. Well done, Asad. I stand with you. As a geopolitical reality, when Greece hit the skids, the EU has, so far, bailed Greece out with 280 billion euros. The difference being that Greece is an EU member, white, Christian and a thorn in the side of Muslim Turkey.

4. CPEC. Many call it a ‘game changer’ for the want of a better word. It’s a great opportunity for Pakistan and should continue. But the US-China trade war is already impacting China’s cash flows. The four biggest Chinese banks are suffering from a high incidence of NPLs. Also capital adequacy issues. Gwadar may run into problems with Dubai. Port Jabel Ali is Dubai’s life line. Why would Dubai or UAE encourage a port only 800 miles away?

5. Direct Foreign Investment. The Western MNCs have abandoned Pakistan, except a few. They had the management expertise, the technology and the brands. It’s the ‘ease of doing business’ issue. In the last 20 years the BoI has been underperforming. Even Humayun Akhtar, a powerful politician, could not get it moving. The ‘One Window’ operation is a 20 year old pipe dream. The answer is very simple – make the BOI a part of the Prime Minister’s secretariat. The PM can override any Ministry or bureaucratic resistance.

6. The local corporates. It is a truism that there is no fully professional Pakistan Private Enterprise. To be a truly professional organization that is a divide between the ownership and management. In all Pakistani organizations the final say rests with the family. Also the Pak Businessman cannot compete. The GSP plus negotiated with the EU during the Nawaz Govt. yielded meager results. The same will happen to the recent FTA being negotiated with China. The Pakistani Businessman cannot innovate, take risks or do strategic thinking. Period. He needs periodic bailouts.

7. Exports. My daughter lives in Vietnam. An amazing country. I visit occasionally. Vietnam’s exports last year were US$ 170 billion. Pakistan’s exports have stagnated at US$ 24 billion for many years. A fundamental rethink is required. Perhaps TDAP should be scrapped, or converted into a private/public partnership. All trade officers posted abroad need to be recalled and fired. A new batch has to be recruited through a professional interview board. When they are assigned abroad, they should submit and meet yearly targets. Or they get axed.

8. Innovation and R&D. The innovation index of Pakistan is non-existent. Israel spends 3.5% of its GDP on R&D. Other countries average 2.5% of GDP. Amazon, Alphabet, Microsoft spend over US$ 50 billion each. The only R&D carried out in Pakistan is by the military – The missile programme, JF Thunder jet, etc.

9. Labour Force & Remittances. Remittances by overseas Pakistanis keep the country afloat – about US$20 billion. In the GCC/Arab countries the mix is labour+semi-skilled. With the advent of new technologies such as artificial intelligence, Automation and Bio Engineering, the GCC demand for manual unskilled labour will drop 5% per year for the next 10 years. In fact, the greatest change, starting now, is going to be in the workplace. People will need to be re-educated, retrained, re-engineered, reprogrammed every two years. Is Pakistan ready for this? Majid Aziz, the chairman of the Employees Federation of Pakistan will have a tough time even understanding what’s coming.

(The writer is the former Executive Director of the Management Association of Pakistan)

Copyright Business Recorder, 2019

Farooq Hassan, "The ‘New World Disorder’ and the relevance of Pakistan," Business Recorder. 2019-06-27.
Keywords: Political science , Political relations , Economics crisis , Economic terrorism , G-7 nations , Corporations , Exports , Mohammad bin Zayed , Imran Khan , Pakistan , GCC , CPEC , DFI , IMF , GDP