Pakistan in new era
PAKISTAN is facing a new era. The Ukraine war is over for the West due to divisions, economic fallout, NATO, energy and $84bn aid fatigue.
The UK is adrift with a poor economy, divided EU, and no trade deal with America. Unemployment is a long-term challenge for India (manufacturing 17% of GDP).
If Pakistan blocks India’s access to CARS, numbers predict India will have to dump Indo-Pacific policy (outsourcing of security) for saving its bilateral trade, exports (trade deficit) and water security with China.
It explains political and economic turmoil in Pakistan. Islamabad can get four things from Saudi pivot to Asia:
1.diplomatically force India to restore Kashmir status as per UN Resolutions or face downsizing of Indian workers under country first from the Gulf.
2.Get guarantees of no foul-play in GB and Azad Jammu & Kashmir.
3.Remove India from Afghanistan and do trade from the Chinese side.
4.Welcome India’s era of peace to end any military adventurism with Pakistan and the region. Putin has demanded inquiry of NS2 ending India’s self-serving terrorism dramas.
Pakistan can bring down the dollar under Rs130 with following steps:
- Ask for writing off debt of Pak and other vulnerable countries including UN default list (10 Nov 2022, the Guardian).
2.IMF to approve $4T Special Drawing Rights (XDR) demanded by its members (SDR, Wikipedia) due to Covid, natural calamities and Ukraine war (IMF part of Problem, Guardian).
3.Use regional currencies (due to dedollarization), gold and return SBP under state control for banking reforms for nation building.
France and Germany are leading Europe to protect their industries from America’s Inflation Reduction Act.
Due to IRA incentives, lower interest rates and cheap energy, Europe’s industries including EV manufactures are moving to America.
Pakistan has to rely on agri-sectors (value addition, land reforms, recover wheat and cotton belts from sugar mafia, seed, fertilizer, chemical and water security).
The gap will be filled with imports that will increase inflation, devaluation and cost of living. A good manufacturing policy is needed for increasing its 12% GDP share.
If villages are made castles of economy, cottage industry, SMEs can boost domestic consumption-based economy (DCBE).
It will cut the cost of living, import bill, exchange rate, local manufacturing, and allied infrastructure costs (rail, road and bridges).
Investment in these local communities for low skills jobs (NAVATT) can cut crime rate to cut 50% from the Rs.450bn police budget and 70% income support program with Rs.260bn budget.
Government needs a house, not an income support policy. City development authorities (cheap plots) and HBFC (loans) should help the public build houses to cut 35 percent living cost, lower rents and boost 18 industries.
It will increase revenue, create pensionable jobs and revive municipality services from taxes in the colonies on education & healthcare institutions, water, sewer, parks and businesses.
A combination of public healthcare, education and transport will free 20% disposable income of the public which will add to DCBE.
Government stop the Health Tahafuz program instead of cutting its budget. It will end privatization with public funds at the cost of building new healthcare systems and jobs in it.
India-UK FTA standoff on increase in generic drug prices for big Pharma shows how 800 percent increase in Pakistan medicine prices is mega corruption (2 Nov 2022, the Hindu).
Pakistan like NHS UK should use cheap generic drugs to cut the cost of healthcare. Healthcare should be under the public sector as it outperformed the private sector during Covid.
IT (block chain), CNIC (linked with healthcare) and local production of generic drugs is a credible solution. Two step authentication and barcode can eliminate corruption and fake drugs.
Private sector and pharmacy schools can manufacture generic drugs for 10 percent profit on lines of the state-owned energy sector of Norway for improving Pakistan health services, cutting costs (NHS) and creating pensionable jobs.
The Higher Education Commission should be assigned a 30 percent annual target of boosting DCBE, cutting imports and expanding domestic manufacturing.
Another 50 percent will be assigned to vocational and technical institutions (NAVTTC).Both their institutions should take up critical projects like industry, energy, food, water, transport, healthcare and manufacturing to boost economy and employment.
It will strengthen DCBE, reduce imports and cut living costs. Pakistan is getting a $3bn energy infrastructure development fund from WB.
Modi has promised to make India a $5T economy by 2025 with energy security. Like India, Pakistan’s energy policy should have targets for production, benefits for sectors and job creation.
India is using wind energy for local use, jobs and exporting its parts to meet world demand and climate targets.
On foreign policy front, Pakistan should revive Pak Steel and build itself railway, roads, industry, planes and defence equipment.
For trade, use Trump’s USMCA with BRICS, Eurasian Economic Union (Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia) and Iran.
To avoid NAFTA like fallout, there should be transparent policies for trade, energy and import & export.
We should engage with America and India on very friendly terms but following western hemisphere exclusive zone rule keep India out in East Asia while securing its interests and those of the region.
—The writer is senior political analyst based in Islamabad.
