Congratulations dear readers! The army has stepped in as an arbitrator and a guarantor, and hopefully normalcy will soon be achieved. The democracy camp is quietly licking its wounds. The slogan of, for and by the people becomes hollow when people do not agree with each other and need guarantees. The biggest problem with democracy apparently is that government actions are a zero sum game and it is impossible to keep everyone happy, which is perhaps why Spock’s logic, “The needs of the many outweigh the needs of the few” seems so logical. Unfortunately, the “few” need to accept the axiom that perhaps might even be brokered if it could first be established who are the few. Frankly, in the last few days, things have come to moot point; it is best not to get into a political debate with friends from the opposing camp, passions having escalated beyond boiling point with the end result being anything but gentlemanly. Worse still, all this bashing seriously hurts Pakistan and no one seems to care. Permanent fissures in national unity aside, not that they are any less important, the economic impact can and will have serious repercussions for times to come.
Even the innocuous demand for civil disobedience that most analysts classified as a non issue, apparently had an economic objective, as explained in an email; the gist of the argument was odious debt, hence the title smelly credit. In its own right, the initial call for disobedience did not support the hypothesis but, coupled with the comment on IMF debt, the ball game changed. Ignorant of the term, the next step was obviously a Google search and Wikipedia does a great job of explaining the term, reproduced below.
According to Wikipedia, “The doctrine was formalised in a 1927 treatise by Alexander Nahum Sack, a Russian émigré legal theorist, based upon 19th century precedents including Mexico’s repudiation of debts incurred by Emperor Maximilian’s regime, and the denial by the US of Cuban liability for debts incurred by the Spanish colonial regime. According to Sack, when a despotic regime contracts a debt, not for the needs or in the interests of the state, but rather to strengthen itself, to suppress a popular insurrection, etc., this debt is odious for the people of the entire state. This debt does not bind the nation; it is a debt of the regime, a personal debt contracted by the ruler, and consequently it falls with the demise of the regime. The reason why these odious debts cannot attach to the territory of the state is that they do not fulfill one of the conditions determining the lawfulness of state debts, namely that state debts must be incurred and the proceeds used for the needs and in the interests of the state. Odious debts, contracted and utilised for purposes, which, to the lenders’ knowledge, are contrary to the needs and the interests of the nation, are not binding on the nation — when it succeeds in overthrowing the government that contracted them — unless the debt is within the limits of real advantages that these debts might have afforded. The lenders have committed a hostile act against the people, they cannot expect a nation, which has freed itself of a despotic regime to assume these odious debts, which are the personal debts of the ruler.”
Desperate times may call for desperate measures but the dictionary seems ill equipped for a superlative to correctly label the act of even considering such a course of action. The mere fact that the premise of the theory is drawn from ancient history should curtail any serious deliberation. Even an iota of understanding of the repercussion should take care of the rest.
Notwithstanding and irrespective of evidence for, and to the contrary, it is impossible that any such argument can be considered credible at any forum. The basic premise of international finance is that government debts can never go bad. Default is never an option for any nation, especially for a nation dependent upon foreign funding for its development. The minute a nation travels this path the first casualty is future funding. Perhaps a nation self-sufficient in most everything, and without any ambitions of global influence, may tread such a path, albeit very carefully. But, for a nation like Pakistan, dependent upon imports for the very raw material that runs everything else, even considering such an option can be fatalistic.
Smelly credit is not the end of it; while the entire nation sits in front of the idiot box, obsessed with the happenings in front of parliament, the economy is tumbling. The rupee is sliding and this time around even friends of Pakistan will loath to gift a few billion dollars more. Who in their right mind would want to invest in a country continuously plagued by serious political squabbling, even if they were to ignore the unparalleled security situation?
Causing irreparable damage to the economy is not a justifiable remedy for disagreement on policy issues. Admittedly, over the course of time, there have been views against the privatisation policy, the need to monitor and manage trade deficit, the pitfalls of foreign debt and a host of other economic issues, but the intent was always to contribute positively towards an informed decision making process. All the time there has always been an underlying realisation that those at the helm of financial affairs have complete information that any critic on the sidelines will surely lack. At the end of the day, the goose that lays the golden eggs is more important than everything else.
However, as has been the case for the past few weeks, when emotions run that high, common sense takes a leave of absence. Frankly, whoever wins will have a huge mess on their hands when the dust clears and no one seems to want to understand this. Sincerely, the hope is that the champions of democracy keep quiet and, more importantly, the arbitration is acceptable to all parties looking towards the future and keeping the best interest of Pakistan in the forefront.