Poor Face Grimmest Choices as Pakistan's Economy, and Regime, Unravel

August 30, 1998

Poor Face Grimmest Choices as Pakistan's Economy, and Regime, Unravel

By BARRY BEARAK

SLAMABAD, Pakistan -- During such a tumultuous week, it might be expected that people here were preoccupied by the U.S. missile attack in neighboring Afghanistan. After all, dozens of Pakistanis were among those killed in the barrage that fell on what the United States says were terrorist training camps.
But this is not the case, for people in Pakistan have concerns far more immediate.
The world's newest nuclear power also has one of the world's worst credit ratings, and with the possibility of default looming on its $30 billion foreign debt, Pakistan's economy is quickly coming unspooled. Many people here, whether pundits or politicians or shopkeepers, say they believe that the government itself may unravel next.
With confidence in Prime Minister Nawaz Sharif in a seeming free fall, it is common to hear predictions that something dramatic is about to occur, though people are at a loss to suggest what that might be. They refer to what has happened elsewhere: social unrest in Indonesia; the emergence of theocratic states in Iran and Afghanistan. They mention a familiar staple of Pakistan's past: the military takeover.
"If this is an economic meltdown, as many say, Pakistanis who have stashed money away overseas -- or who have relatives living overseas -- are likely to leave," said Abida Hussain, a former ambassador to the United States and now a member of Sharif's Cabinet. "The institutional framework of government, already so stressed out, might come under unbearable pressure. Radical religious elements would try to profit off this.
"At the same time, people ask if the military would take over. I'll quote the answer given me by a young officer who is my friend. I asked him, 'Do you guys have the guts to impose military rule?' And he said: 'Of course, we do. But what would we get out of it but a lot of criticism?' The military's choices are no less grim than the government's."
As usual, those with the grimmest of choices are the nation's poor. Abdul Khaliq, 35, is a barber in the working-class city of Rawalpindi, near Islamabad, Pakistan's ornamented capital. "The feudal landlords and politicians have looted our country until there is nothing more to loot and they leave us with nothing but our poverty," he said.
Khaliq's barber shop is an 8-by-8-foot room with a single chair. Electrical wires, frayed as old rope, hang from the ceiling. He has halved the price of a haircut to about 33 cents, but customers seldom venture inside. "They have no money," he said.
Next door is a tiny vegetable stand run by Mohammad Farooq, 42. His shelves are stocked with only small amounts of ginger, tomatoes and cabbage. People have been buying much less these last few weeks. The price of onions has doubled. Potatoes have tripled.
"What is a man to do in a country like Pakistan, get a rifle, kill yourself, kill your family, kill someone else?" he said angrily. "My wife has pains in her ear. Medicine helps, but I have no money for medicine. I tell her she must live with the pain."
While foreign news programs repeatedly showed Pakistanis protesting against the U.S. missile attack, such rallies have been few and quite small. Even now, many people in Rawalpindi have never heard of Osama bin Laden, the Saudi-born millionaire whom the United States believes was behind the bombings of the U.S. embassies in Kenya and Tanzania. Certainly, the vast majority never knew who he was before the week before last.
The man most people speak of is Sharif, who was elected by a huge margin in February 1997 but has recently found his popularity plunging. Voters, a discouraged lot, had at the very least presumed him to be less dishonest than his predecessor, Benazir Bhutto, who faces corruption charges in Pakistan and in Switzerland. Many also supposed that a millionaire industrialist might know something about running a government.
But these days even a supporter like Ms. Hussain, the minister for population welfare and science and technology, is spare in her praise of Sharif's leadership.
"This government is probably cleaner than any in the past," she said. "But the cleanliness is at the top. Lower down, it's business as usual."
In its 51-year history, Pakistan has been a democracy only sporadically, with elected governments trading turns with military dictatorships. Corruption seems an unbreakable habit: politicians gorge at the public trough, landowners and industrialists refuse to repay mammoth loans from national banks, less than 1 percent of the population pays income tax. Almost 70 percent of the budget goes toward interest on debt or for the military.
These conditions have created a shaky economic scaffolding. Nevertheless, Pakistan, with about half the population of the United States, has usually managed to muddle through by begging and borrowing -- and forever promising to clean up its act.
Sharif has made such promises, and while even his critics say he has made some progress, his efforts at reform strike most as insufficiently bold.
With his support withering, and the economy already slowed by Asia's economic crisis, Sharif enjoyed a spurt in popularity after May 28, when Pakistan spurned United States offers of financial aid and tested nuclear bombs, matching earlier trials by its enemy, India.
The United States imposed economic sanctions on both nations, and the International Monetary Fund suspended disbursements -- castigations that have been harder on Pakistan than its rival.
Sharif implored his countrymen to economize, to drink two cups of tea a day instead of three, to cook with one spoonful of oil instead of two. He announced ways to raise revenue, including the recovery of those billions in loans owed by the country's elite.
But efforts to collect have largely been a flop, a failure all the more irritating to the public since among the well-heeled deadbeats was the prime minister. He has refused to repay his loans with cash, instead turning over assets that critics say he has overvalued. Calls for a comment from Sharif's information minister were not returned.

Desperate for revenues, the government increased prices for petroleum and electricity. At the same time, the value of the rupee has plunged by 30 percent. Inflation has hit hard.
With $3 billion in foreign debt coming due, Pakistan is in danger of defaulting. Last Wednesday, the United States expressed support for a deal among international lenders that would rescue Pakistan from its payments crisis.
Such last-ditch debt-juggling has saved Pakistan in the past, and while the IMF and others usually demand economic reforms to accompany their loans, many complain that such requirements are half-heartedly enforced here.
"The IMF and the World Bank bend over backward to appease these regimes," said Najam Sethi, editor of a weekly newspaper, The Friday Times. "At every step of the way, the government lies to these agencies and the agencies surely know they are being lied to."
But it has been difficult for the West to forsake a place like Pakistan, with so many illiterate people and so little health care. This is all the more true now that the nation is carrying a tin cup in one hand and nuclear bombs in the other.
"Pakistan and its creditors are locked in this unfortunate, self-defeating embrace," said Paula Newberg, an author who has written extensively about Pakistan. "What appears to be convenient in the short term may be worse for the long term. This pattern of bailouts keeps getting repeated, and in the meantime Pakistan's structural problems are never solved."
In the narrow stalls of the Rawalpindi market, with haggard old men and bony horses pulling heavy carts through the streets, people wonder if some virtuous Islamic leader might come along to save the country. Mohammad Jameel, 40, a shopkeeper, said he would welcome a fundamentalist government, but then was unable to name any Islamic leader he would deem worthy. Pakistan does have fundamentalist Islamic parties. They have yet to fare well in elections.
In what some here see as cynical politics, Sharif has begun to portray himself as newly zealous. Friday, in a speech before Parliament, he said the cure for the nation's social ills was a constitutional amendment to makes its laws more closely reflect Islamic teachings.
Pakistan's Muslims are split among Sunnis and Shiites, with the Sunnis in the great majority, as they are in almost all predominantly Muslim countries. Yet even within these groups, there are sects. They would be hard to unify under any banner, let alone a fundamentalist one. Most Pakistanis prefer less-strict interpretations of the holy Koran.
"The armed forces are a deciding factor, and I don't think they would welcome an Islamic resurgence," said Aziz Sidique of the Human Rights Commission of Pakistan, a private group, in Lahore. "I wouldn't rule out a military takeover. What has prevented it so far is that now they have the opportunity to influence decisions without taking responsibility for them.
"It is not so appealing to take responsibility these days in Pakistan."

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