An extraordinary encounter with Musharraf

As Pakistan votes tomorrow in its postponed elections, Jemima Khan is granted a rare interview with Pervez Musharraf, the country's beleaguered leader

Sunday, 17 February 2008

'Since you were so kind as to greet us in London at Downing Street last month, the President would like to return the favour," announces Major-General Rashid Qureshi, President Pervez Musharraf's PR man over the phone. Only in Pakistan could the government's head of spin be a retired major-general. He is referring to my last encounter with the President on 28 January – when, along with a 2,000-strong, placard-waving, slogan-jeering mob, I protested on the main road outside 10 Downing Street while Musharraf discussed democracy with Gordon Brown over lunch inside. On the way in he waved at us. Clearly he's a man who is not afraid of confrontation. Much to the justifiable fury of every journalist in Islamabad, he has now granted me an exclusive half-hour interview despite or perhaps because of the fact that I have recently described him as one of the most repressive dictators Pakistan has ever known.

On the way to the Camp Office in Rawalpindi, I cross the bridge and pass the petrol station, which mark the spots of two recent attempts on the life of the now deeply unpopular President. I have a horrible fear that, bamboozled under the spotlight of his renowned charm, I may start to simper. My ex-husband, one of the President's most vocal critics, has already told me he thinks this is all a terrible idea. "It will be misinterpreted in Pakistan. Besides, you'll be too soft on him," he said.

The Camp Office turns out to be an old colonial building which used to be the HQ of the northern command under the British. With its delicately carved, wooden, double-height ceilings, sweeping central staircase, marble floors and ornate carpets, it's not hard to see why the President chose this as his private office in Rawalpindi. His residence is just up the driveway.

A dozen straight-backed men in uniform – red waistcoats over starched cream kurtas – are ready to greet me outside. The President, I'm informed, is not quite ready so I am led to the staff office for a "tea break" with a group of army officers who make up his presidential office team. Musharraf's personal assistant, a dashing, grey-haired, light-eyed naval commander, and a jovial head of security, also a young army officer, joke that the delay is just an excuse for them to do a little preparatory brainwashing.

A bright yellow cake, some intimidating-looking chicken vol-au-vents and chai (milky tea) are wheeled in. Major Qureshi, Musharraf's Alastair Campbell, tucks in happily and regales me for an hour with stories about Soviet-era Pakistani military triumphs and the magnanimity and general excellence of his boss. "Any country in the world would like to have this person as their leader," he tells us proudly.

After an hour I am shown into a huge sitting room, divided in the middle by a latticed wood screen to segregate ladies from men at more formal functions. Musharraf enters. The last time I saw him in the flesh he was in his full army regalia. Somehow his civilian clothes have diminished him. I find his brown business suit and dainty penny loafers which have replaced the sturdy army boots almost unsettling. He seems to have lost both height and swagger. And his body language seems just a touch defensive. The immaculate hair also troubles me. Boot-polish black, artfully grey at the temples, it shows signs of some work.

I start the interview on an unfortunate note. "Given that the last time you saw me, I was protesting outside No 10, I'm grateful that you've granted me this opportunity. It's quite a coup." Bad word. There's a moment's silence while it hangs in the air.

The President, it turns out, is very disappointed in me. For a moment I think I have been called to his office for a sound ticking-off. "I was disappointed. Very disappointed," he says. "I was disappointed because you ought to be knowing our environment ... what Pakistanis are like ... what is our society. Well, it's acceptable if a person has never visited Pakistan and doesn't know Pakistan to have ideal views [presumably, he means idealistic views]. But I thought you ought to be knowing what Pakistan is ... This is not an ideal society."

He goes on. Mindful that I have only limited time and that there's a man in uniform sitting at the back of the room already checking his watch before I've even asked my first question, I politely interrupt. I remind him that when I first met him he too was an idealist. There is strange symmetry to this visit. I last met Musharraf three days before the last elections in 2002. And now here I am, five and a half years on, three days before elections on Monday. Back then, especially when Musharraf first came to power, I was a somewhat naive supporter. Selfishly, I was relieved when he succeeded came to power by military coup on 12 October 1999. Nawaz Sharif, the prime minister he deposed, had tried to have me jailed on trumped-up, politically motivated charges of smuggling – a non-bailable offence in Pakistan.

I suspect it was to intimidate my ex-husband, who at that time was a noisy critic. I had scarpered to London before I could be arrested and was able to return with my two children to Pakistan six months later only after Musharraf seized power and the charges against me were duly dropped. More importantly, though, Musharraf took over with the express aim of cleaning up Pakistani politics. He despised the corrupt politicians as much as anyone. He immediately set up his own national accountability bureau and declared that his mission was to hold the corrupt accountable.

I'm also disappointed, I tell him. The corrupt got off scot-free. And now it looks as though he will shortly be doing business with the very same politicians he wanted to get rid of.

Disarmingly he agrees – something he does a lot of. And I sense it's genuine rather than appeasement. He argues that he had no other choice but to deal with the existing leaders of the main parties. This is a little disingenuous. The national reconciliation ordinance which he passed in October 2007 effectively guaranteed lifelong immunity from prosecution to corrupt politicians such as Benazir Bhutto, her husband Zardari and others, and enabled her to return to Pakistan to contest elections. He asks if he is being recorded. I say yes. He hesitates, then answers tellingly, "Yes, I agree with you [that charges should not have been dropped]. But then Benazir has good contacts abroad in your country, who thought she was the future of the country."

I press him further. Surely even in spite of pressure from outside, given his feelings about the effects of corruption on Pakistani politics, those charges should never have been dropped. There should have been a proper judicial process.

I put this to him. "No," he replies, "because they would have all joined and then I would have been out." At this point he looks a bit wild eyed. He quickly adds that, of course, being in power has never been his ultimate goal. How much easier it would be, he adds wistfully and a touch unconvincingly, if he'd just resigned to play golf.

A uniformed bearer offers fruit juice and warm roasted almonds. I down my juice in one gulp, then worry it may have looked unseemly. In the past four years I'd forgotten that Pakistani women are expected to overplay their femininity. I'm lounging like a bloke and downing pomegranate juice like lager.

Often he fails to see the irony in his own words, which can be unintentionally comic. Several times I have to suppress a smile. When confronted with the suggestion, for example, that he will have to work with a coalition government consisting of some the most infamous crooks in Pakistan, he responds with great sincerity, "I'm not running a martial law here. What can I do?" He adds, "My role as a president is simply the checks and balances – the seatbelts ... a sort of father figure to the Prime Minister but I won't have to see him for weeks."

The image he paints of himself as a benign, legitimised dictator is at odds with the recent Human Rights Watch report that accuses his regime of hundreds of enforced disappearances, arbitrary detentions, harassment, intimidation and extrajudicial killings

Later when I point out that his old opponent Nawaz Sharif, leader of the Pakistan Muslim League (PML-N), has vowed that if elected he will reinstate the judges who were unconstitutionally deposed by Musharraf, he retorts incredulously, "It is not a dictatorship here! How can you reinstate judges if you become prime minister? How?" This rhetorical question comes from a man who on 3 November dismissed 60 per cent of the superior court judges, including three chief justices, in anticipation of their ruling against his re-election as President while still head of the army. Many remain under house arrest.

He seems to be someone who feels painfully let down and misunderstood. This is particularly the case when he talks about my ex-husband, Imran. "You know, I liked him. But he is the most unrealistic person. I wanted to support him." He mentions him a few times in the interview. And the strange thing is, I detect hurt. President Musharraf, dictator, despot, guardian of the West against al-Qa'ida – and all I can see are the wounded eyes of a betrayed lover when he talks about my ex. Under his regime, in the past year, Imran has been held under house arrest, jailed, then released and has had his movements restricted. Hell hath no fury like a general scorned.

I change the subject. Last time I visited him here in Rawalpindi he gave me a spookily accurate prediction of the imminent election results, which suggested information more than insight. Who will win this election? His answer is definitive. The PML-Q (the party otherwise known as the King's Party, assembled by President Musharraf himself six years ago to legitimise his "managed" democracy) allied with the Muttahida Qaumi Movement will "certainly have the majority. Whether they'll be able to form a government is a question mark." This contradicts all the recent opinion polls, which have shown that the popularity of his favoured party is right down, at just 12 per cent. I point out this out to him.

He dismisses the polls. They are biased, conducted by local organisations that are against him. "They have been abusing me right from the beginning and you will never get good results from them."

He seems increasingly paranoid. "The media have let me down ... The NGOs are against me. I don't know why. I think I have been the strongest proponent of human rights ..." In fact, the only people who are not against him, according to him, are the Western leaders who he says are "absolutely supportive" and "express total solidarity".

I don't doubt Musharraf's bravery or even his initial good intentions. Nor is anyone underestimating the scale of the problems that Pakistan faces today.

If anything, the impression is one of amateurishness and of a naivety that would be endearing if it had not been so profoundly damaging to his country. And in recent months he has become belligerent with local journalists. In London last month a respected Pakistani editor was castigated for asking about Rashid Rauf, the escaped terror suspect, and the fact that many believe he was deliberately freed by the police. Such impertinent journalists "should be roughed up", he was alleged to have told the assembled crowds in response.

When I ask about the deposed chief justice, Iftikhar Chaudhry, who is still under house arrest, he denounces him as "the scum of the earth – a third-rate man – a corrupt man". And the lawyers' movement? The lawyers have vowed to continue protesting on the streets and boycotting the courts until the deposed judges are reinstated and the constitution is restored to its pre-3 November status. "With hindsight," he replies solemnly, "it was my personal error that I allowed them to go and express their views in the street... We should have controlled them in the beginning before it got out of control." To those more used to seeing beards and white robes at protests, the images of suited, bookish-looking lawyers fighting off police batons were a memorable spectacle.

Musharraf mentions democracy a great deal. He seems sincere. He is genuinely likeable. But it seems he just can't help himself. You can take the general out of the army but not the army out of the general. It reminds me of the Aesop fable about the scorpion and the frog. The frog gives the scorpion, who cannot swim, a lift across the river. Halfway across, the scorpion stings him. "Why did you do that?" asks the frog. "Now we'll both die." "I'm a scorpion; it's my nature."

As I leave he presents me with a clock inscribed "from the President of the Islamic Republic of Pakistan". It seems an inauspicious gift from a man whose time may be up. He shakes my hand. "It will be the saddest day for Pakistan if Benazir's crooked widower is in power by Monday," I say. As the President walks away, he looks back. "At least we part on agreement."

An extraordinary encounter with Musharraf - Asia, World - Independent.co.uk

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Verging on Delusions: Inside the mind of a Dictator (and the 'yes-sayers')

Delusion: a firm, fixed belief held with great conviction despite evidence to the contrary. Delusion is a symptom of psychosis- mental disorders in which a person loses contact with reality.

In the last eight years of misrule this country has been subjected to, two pictures stand out for me. In August 1999 soon after the Nawaz Sharif government was overthrown, Brig. Rashid Qureishi, the spokesman for the military government came on television and declared 'We don't want sham democracy, we want real democracy. We want a government that is of the people, by the people, for the people'. I found it surreal for a man in military uniform using Abraham Lincoln's (without even acknowledging him) hallowed words and having no qualms about it.

The second picture is of an interview a few weeks ago. Mushahid Hussain, secretary general of PML (Q) was asked whether General Musharraf would give up his uniform. "Yes, he would", he said, adding "General Musharraf looks dashing in uniform and Mr. Musharraf would look dashing in a designer suit".

Although eight years apart the two statements give us an insight of how the minds of dictators and those around him, work. It is important to understand this if we are to break out of this impasse and save the sinking ship of this country.

Today, millions of Pakistanis live in abject poverty teasing out a living for mere existence. Millions are unemployed or underemployed. Millions remain without health care and education. Millions are subjected to the indignity of being treated in government hospitals. They have no security. They have no laws to protect them. Where there are laws it is only to protect the rich and powerful.

In many parts of the country, people are selling their kidneys to pay off their debts. Millions suffer the daily humiliation of hanging from buses to get to work. Millions live and breathe the air whilst surrounded by filth, garbage and overflowing gutters.

What goes through the mind of dictators and the people who hold the real power in Pakistan, as they see the abysmal state of affairs? Quite clearly they see the situation very differently from the way the man in street sees it. From their perspective, the existence of the country is being severely threatened (which everyone sees too) but they feel they are the only ones who know how to save it. They see the politicians as tried and failed, corrupt, greedy people who only have lust for wealth and power. They have examples of Nawaz Sharif and Benazir's experiments in front of them and that feeds their way of thinking.

What are we to make of our rulers who tell us that only they know what is good for the country? That the rest of us- academicians, economists, scholars, lawyers, judges, doctors, engineers, teachers, students, retired senior military officers and other members of the civil society are ignorant mortals who know nothing about the dangers facing this country or how to tackle them? That democracy is not good for us? That they know how much the people love them? And that they will know when the time is right for them to step down?

Or is it that they are suffering from delusions?

A dictator's thinking is severely restricted and he suffers from selective listening. He has a very narrow vision. He cannot live with dissent. Dictators tend to be liberal as long as you agree with them. Any serious opposition and they crush it, never mind the democratic intent. They do not trust anyone beyond a small close group of people who feed them only with the information they want to hear. Their whole perspective is based on this narrow line of information. Hence our (ret) General's reply in the BBC interview recently, when asked if he would resign, 'I will go when I realize the people don't want me'. When asked how would be know that, he replied 'I have my sources of information'. These sources of information are his close aides who feed him the information he wants to hear. He has no idea how unpopular he is and that the vast majority do not want him. But it is important to understand he actually means it when he says the things he does. He is not making them up.

This type of thinking is verging on a 'delusion'. Many dictators also suffer from paranoia- a feeling (beyond the normal opposition one encounters) that others are against them and out to get them and must be eliminated. Hitler showed many traits of paranoia, as did Stalin and Saddam Hussein. It makes them more and more isolated and insular and as they near their demise they become more and more bizarre- both in their thinking and behavior. We have countless examples in history of such dictators and their strange behaviors- Idi Amin of Uganda, Mugabe of Zimbabwe, Duvalier of Haiti, Marcos of Philippines.

One can see it in the General's (ret) responses in interviews recently. Hosing down of Benazir's assassination site was 'inefficiency', Benazir was 'unpopular with the Army', 'I am very popular with the people', the West is 'obsessed with democracy' and the ex-servicemen opposing me are those 'I threw out of the military'. The latest we hear is the statement against the London based senior journalist where he had no misgivings in letting him 'have a couple to fix him' because the journalist dared to ask uncomfortable questions. These are statements of a man whose rational thinking is fast eroding.

A dictator's military background and particularly if he has had commando training makes it difficult for him to think otherwise. It makes him rigid in his approach with a 'never surrender' attitude. To him every encounter is a battle and the enemy must be vanquished. The frequent use of terms such as 'tactical', 'strategic' and 'campaign' while discussing issues that have nothing to do with the military are indicative of this. You can take a man out of the army, you can never take the army out of the man!

Even his physical appearance is important to consider. Observe his walk, with chest out, tummy tucked in, dyed hair, purposeful stride. He tries to look much younger than his 64 years. This also contributes to his self-image and ego. Imagine if he stopped dyeing his hair- a white haired General (ret), which he actually is, would look very different and his whole image and persona- both for himself and others would undergo a drastic change. Mushahid's Hussain statement is a rare glimpse of how the 'yes men' praise the master, making him even more self-centred and in the process, more reckless.

Unfortunately, it is very difficult to change this line of flawed thinking as dictators do not think there is anything wrong with their way of thinking. Hence most dictators are forcibly removed- either violently or forced out. This is what history teaches us. Let there be no doubt about it.

The important question is: How much further damage would be inflicted on this hapless country before 'the dashing man' in 'designer suit' departs?

The author is a Professor of Psychiatry at Aga Khan University. He can be contacted on muradmk@gmail.com.

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Kaiser Bengali explains the Economic performance of Shaukat Aziz and Musharaff's claims

Kaiser Bengali is currently working for Collective for Social Science Research, a research company based in Karachi, economist Bengali has also served as the managing director Social Policy Development Centre between 2001-2004. Here he talks with TNS about a range of issues and gives his own economic blueprint which is closely tied up with politics. Excerpts of the interview follow:

The News on Sunday (TNS): How do see the relationship between military regimes and economic progress?
Kaiser Bengali (KB): There is a myth about development and economic performance of military regimes. In Pakistan, Ayub Khan, Ziaul Haq and Musharraf have all received unprecedented support from IMF and World Bank. In the case of Musharraf, it was the rescheduling and, of course, money that was coming as rental from the United States for using our space.

There were four factors which contributed to the high growth during the Zia period, none of which can be located in Zia’s economic policy. The oil price shock hit the world in 1973 but it was 1975-77 when the first emigrants from Pakistan began to leave for Saudi Arabia and it was 1978 when the remittance inflow began and it peaked in 1982onwards. So the price of the oil price shock was borne by the Bhutto regime but the benefits were accrued by the Zia regime. This rate of remittance inflow gave the govt sufficient fiscal space.

Second, there were very large investments made during the Bhutto period that had long gestation periods. The Pakistan Steel Mills construction started in 1974, and it started commercial production in1982. Similarly there were Heavy Mechanical Complex, Indus Highway, Heavy Electrical Complex, Port Qasim and Ittehad Chemicals (chemical lindustry’s foundation was laid in 1970s and chemicals are a major input in a large number of consumer industries). So this investment in the 1970s began to fruit in the 1980s leading to large chunk of output increases.

Third, because of Afghan war Pakistan received enormous amount of foreign funding, almost unlimited.

And fourth, Zia resorted very heavily on borrowing and deficit financing. When he took over the debt-GDP ratio of the country was 24%and in 1988 when Zia left the scene, it was 48%. So if you get manna form heaven your performance will be good. However, the poor performance of Zia regime became apparent in the 1990s and till later.

TNS: What happened in the 1990s?
KB: In the 1990s the civilian governments had no fiscal space because all the resources they had were mobilized for repaying the dept which Zia had left them. You will recall in 1984, Mahboob ul Haq, Zia’s finance minister floated whitener bonds with a ten year maturity period. They matured in 1994. If you look at the budget of 1994, debt service rate went very high - almost 40% in nominal terms. Zia government had collected money and spent it [on defense], so in 1994Benazir government had to repay that money.

So, if you say 1990 were not an era of good economic performance, it was there were no resources. I once asked somebody very senior in Nawaz Sharif government as to why the ninth five year plan was not being prepared. His reply was that whenever the economic team met, all they discussed was when was the next installment due and where would the money come from. He said there was no point in discussing any thing else.

TNS: In this backdrop how do you look at the economic performance of Musharraf in the last eight years?
KB: GDP growth rate is an average of growth in its component sectors. So in the years that GDP growth rate was around 8%, in 2003 for instance, banking sector growth rate was 29% and the automobile sector growth rate was 45%. Now if you have some sectors where growth rate is so high, your average will go up, even if the variance is very high.

The banking sector growth rate was high because the government, or the State Bank rather, allowed consumer financing from 2002 onwards. The monetary was you could get a loan for a house, car, fridge, camera, if for nothing else, a vacation or a personal loan. Banks made enormous profits out of consumer credit and profits are a component of GDP. A lot of this credit was going in for buying cars so automobile production went up by 40-45%.

So basically it was a one legged growth and that one leg is consumer financing. You remove consumer financing, everything else collapses. You are only managing an economy for your numbers to look good, for headlines.

TNS: What is the other leg of the economy?
KB: Largely there are two legs of an economy, agriculture and manufacturing. The services sector is the body. If you look at the national accounts, more than 50% of growth of GDP is coming from services sector. Agriculture is stagnant, and so is manufacturing barring one or two sectors, like automobiles. Today we have an economy with weak legs and a bloated body. It is not sustainable.

TNS: What is wrong with consumer financing?
KB: What it did was that it increased money supply in the economy. In the first two years, inflation remained low because there was excess manufacturing capacity in the country. So factories which were operating at two shifts began to operate at three shifts and the supply increased. But once that capacity was reached demand continued to increase because people kept going to restaurants and kept paying out of credit cards. Once supply was constant and demand continued to increase inflation was the result. Sp today we have runaway inflation, nearly double digit and food inflation which is certainly more than12%.

Another things that has happened is that a lot of demand has been created for imported products. W are importing billion dollars worth of mobile phones. We are importing cars, because we only assemble cars here. And with cars come petroleum imports as well.

So we have created two problems: inflation that is out of control and a trade imbalance. Our imports have risen sharply while the exports are stagnant. And this is what the coming government is going to inherit. Just as Zia gave a debt mountain to the incoming government, the Musharraf regime is going to give the next government a massive foreign exchange crisis.

TNS: What about the outgoing government’s privatization policy?
KB: Our services deficit which has always been very small is rising sharply because of our privatization and foreign investment policy. All the large entities have been privatized to foreign companies. And the investment (FDI) has been in terms of telecommunications, mobile phones and food. All of these companies earn their profits in rupees but remit their profit in dollars. So there is dollar outflow in terms of profit remittance against which there is no dollar inflow. We have created a liability without creating a countervailing asset.

In 1999 total profit remittance outflow, which in monetary language is called reverse remittance, was 97 million dollars a year. Today it is close to a billion dollars and rising.

TNS: About PTCL, is there a justification for a profit-making enterprise?

KB: There was no real policy or principle involved. This is a neo-liberal government which believes it is not the business of the government to be in business. What they have done is that that have sold PTCL to a company which is a state enterprise. So de facto their policy was that is not the business of the Pakistani state to be in business in Pakistan but it can be the business of a foreign state to be in business in Pakistan.

TNS: There is a massive power and energy crisis n the country. Where did we go wrong?
KB: The last investment that was made in the power sector was in the Ghazi Barotha project, which was an achievement of the political governments of the 1990s. In 1988, the Benazir govt. saw a power crisis coming and they went ahead with establishing thermal power plants which takes about three years to build. If those power plants had not been setup, we would have seen the same situation in 1990sthat we have today. There would have been power outages for eight to ten hours.

Since 1999, the Musharraf regime has not invested n a single megawatt of power. In 2001, we had surplus power, today we are living with power shortage. When Benazir’s govt. contracted to buy power at 6cents per hour, there was excessive criticism. Today, for one project they are contracting at 11.5 cents per hour. Today, the world knows that we have a power crisis, it will increase its power knowing that Pakistan has no choice but to buy.

So it is mismanagement of the highest order of the economy. All the investment that they talk about is either portfolio investment, which is the stock market, equity markets or soft investments like telecommunications. These are all investments which do not require these companies to build any brick and mortar and steel structures. So if they have to leave at 24 hours notice, they don’t lose much. What do banks lose, furniture?

TNS: But they have paid huge licensing fees.
KB: That is peanuts compared to the kind of profits they have made. They have recovered several times their licensing fees.

TNS: So are big dams like Kalabagh the only solution to the energy crisis?
KB: Dams don’t produce water, they only store water and you don’t have water. Even now you cannot store water in Tarbela and Mangla to their full capacity.

TNS: You are a strong advocate of low GDP growth rates. Comment.
KB: For about ten years we need to run an economy where the finance minister and the prime minister have the courage not to get good headlines. We need to invest in infrastructure which has deteriorated to a point that we don’t have productive capacity.

When you are investing in infrastructure, and by that I also mean cities which are totally chaotic where no foreigners wants to come, and physical and human infrastructure, the results are going to come after a while. So you are not going to get any output and the GDP is going to be low. Ten years later when you have infrastructure in place then you can target double digit growth rates. That growth will be based on real sectors - on agriculture and manufacturing outputs, not an hot air balloon sectors like mobile phones. By doing so, you will have a massive boost in employment, income generation and poverty reduction.

As for inflation it will be controlled by switching expenditures from current heads to development heads - by abolishing concurrent list ministries and reducing defense expenditure.

TNS: In an idea economic model, what sort of a role do you see for the private and public sector.
KB: Private sector is good in producing those commodities, which are low technology and require small capital investments. We have seen that our private sector is unable to put together large outlays. We have no one in this country of the caliber of Tata or Ambani in India. These are areas where the state will invest.

TNS: But then the state tends to over staff?
KB: There is no problem with that. This is where your economic and social values come in. Is the purpose of the state merely to fill the pockets of profit makers? Or is the state supposed to work for the welfare of the maximum number of people?

It’s a value judgement. When Shaukat Aziz went out for all out privatization, he made a value judgement. The welfare of the people of Pakistan didn’t matter, what mattered was the corporate profits and he made that decision accordingly. As a state we need to determine what are our values. Are we prepared to have a few people who can enjoy summer holidays in Switzerland and the rest of the people virtually starving? If that is acceptable, then fine. We should follow that policy.

TNS: And now to the most immediate issues. How do you look at the current food crisis?
KB: There was a mala fide intention to begin with. The Shaukat Aziz ministry (Finance) predetermined the growth rate they want to achieve. So when you increase the wheat output you increase the agricultural sector growth rate. When you do that GDP growth rate will go up.

There was something else that was suspect here. The estimate for the wheat crop is made after the rains, but this time they mad an announcement of a bumper crop before the winter rains and, based on that announcement, allowed certain part to export wheat to India, apparently half a million tones. After that transaction was complete, the rains came and news began to come in that we are going to have a normal crop. A normal crop means that you import two million tones of wheat which is a routine

Because they had earlier announced a bumper crop, they took time to admit that they were wrong. So the LC for import of wheat was also delayed. One wheat had been exported and we had a normal crop, the wheat market knew there was to be a shortage. Now stockists every wherein the world will behave like that that when they know there is a shortage and prices can go up, they withhold their stocks. They are not evil people. This is normal behavior and this is what a market economy will do if there is a shortage.

They made another mistake. Instead of placing an order for 2 million tonnes of wheat, they placed an order of 1.5 million tonnes of wheat first. Then they realised this mistake and placed another order for half a million tonnes of wheat. After their first order, the signal had already gone out in the market that shortage will remain. So they continued to withhold stocks. If they knew that wheat was arriving and prices will fall, they would have released stocks and that would have taken care of the shortage.

TNS: Prices of other commodities have doubled alongside?
KB: There are two components of economic management: fiscal policy and monetary policy. The State Bank is following a restrictive monetary policy while the finance ministry is following a liberal fiscal policy, one is contradicting the other and neither of them effective. The government is borrowing heavily from the State Bank for its expenditure. That means the money supply increases. On one hand, the State Bank is trying to restrict money supply by increasing interest rates, and on the other the government is raising the money supply. When money supply increases prices will rise.

There is another reason for increasing food prices. Our agricultural yield per acre is constant on declining for most crops because we are not investing in our land, in supporting agriculture. The government’s adhocism is causing problems. When the government suddenly imported tomatoes and prices crash. As a result the farmer will not grow tomato next year, shifting the crisis to the next year.

For eight years Shaukat Aziz has mismanaged the economy like no other finance minister. Because Shaukat Aziz knew he does not has to go back and ask people for votes, he couldn’t care less about what he did to the economy. All he had to show for was the stock market performance which is only hot air.

Courtesy Teeth Meastro

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