Pakistan under influences

7 July 2009

On the basis of a series of texts by Abdul Khaliq, the spokesperson of CADTM-Pakistan and Bushra Khaliq, the general secretary of Women Workers Help Line we would like to present an overview of the situation in Pakistan for a better understanding of the political, economic and social condition of the country.

The IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org
impose its conditions amidst the economic crisis

Almost a year ago in August 2008, Pakistan was at the brink of a default. The financial analysts explained this as a natural consequence of Pakistan’s support to the war on terror led by the United States. A desperate Pakistan finally decided to knock the IMF door. And, despite strong opposition from many in Pakistan, the government finally entered into a $7.6 billion Stand-By Arrangement (SBA) loan with the IMF in November 08. Meanwhile, the US also worked out a common economic package for Pakistan and Afghanistan, besides involving the two countries in formulating a new security strategy for the region. However, US administration has warned that the pledge of $7.5 billion in civilian aid over the next years will only be forthcoming if Pakistan demonstrates its commitment to uproot Al-Qaeda and other violent extremists.

Abdul Khaliq comments on the recent promises of “aid” by different partners and the unpopular conditions attached to IMF loans. It is important to note that the IMF has not demanded a reduction of the defence expenditures and the military budget for this loan…. Read Pakistan is not out of the woods

Pakistan starts privatization of agriculture lands

Contrary to conventional western investors, worried by the level of political instability and situation of the war on terror in Pakistan, Saudi Arabia and the United Arab Emirates (UAE) are not at all hesitant to launch projects in Pakistan. Arab companies rush for corporate farming in Pakistan to lock up scarce water resources in agriculture belts as Federal Government offered one million acres of agriculture land to Arabian monarchs, giving way to new corporate feudal system of it own kind.

Abdul Khaliq, in his article Pakistan starts privatisation of agriculture lands gives an account of the dramatic fallouts of the agro-business for Pakistan and this worrying “rush for water” in the country and also at a global level.

The women are the first victims

With the deepening crisis in valley of Swat - the arena for the third military operation against the Talibans in less than two years - more and more displaced families - over 1.5 million people - are pouring in Mardan, Swabi, Peshawar and other areas of Pakhtunkhawa. Bushra Khaliq recently visited three of the camps, set up in Mardan for the displaced population from Swat and witnessed the deplorable and grueling living conditions, especially, for the women. Read Pakistan. Women voices from inside IDPs camps.

The first victims of these conflicts are the women, who as well suffer the lashes of the capitalist patriarchal model. On the 1st of May, 500 women, mainly working in the informal sector - the most exploited and marginalised social layer (employing more than 2 million women) - demonstrated at Lahore demanding their rights. Among other demands, they called for the implementation of labour laws and a social protection for the informal sector workers. Bushra Khaliq, the general secretary of Women Workers Help Line who led the rally, graphically reports this demonstration. See Pakistan: Women workers vow to continue struggle for rights.

CADTM demands that Pakistan must immediately suspend the reimbursement of the debt to face the crisis.

Almost a year ago in August 2008, Pakistan was at the brink of a default. Its foreign exchange reserves were hitting the rock bottom of $4 billion, depleting rapidly in the range of $250 to $330 million weekly, which were hardly sufficient to sustain a month’s imports. Pakistan’s sovereign debt Sovereign debt Government debts or debts guaranteed by the government. and liabilities Liabilities The part of the balance-sheet that comprises the resources available to a company (equity provided by the partners, provisions for risks and charges, debts). had crossed the $45 billion mark, the Pakistani rupee had depreciated to 23 per cent and the gap between balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of trade was widening to an alarming extent. To confront this problem, a desperate Pakistan decided to knock the IMF door, and despite strong opposition from many in the country, the government finally entered into $7.6 billion Stand-By Arrangement (SBA) loan.

Yet, even after resorting to pump-priming measures, the global economy does not escape the stagnation in which it is plummeted. If it risks plunging more countries in the infernal spiral of debt, this “solution” additionally forces the PPP (Pakistan Peoples Party) government headed by Asif Ali Zardari to apply the same spurious recipes that have inevitably led to the current impasse.

The Stand-By Arrangement calls for example, the elimination of fuel and electricity subsidies, doing away with exemptions on income and agriculture taxes, continuing privatisation process and cutting social sector spending. The only thing IMF did not emphasize was to cut was the military budget... The Pakistani government fulfilled its obligations of the privatization of industrial units. It put up for sale millions of hectares of agricultural lands, withdrew fuel subsidies and increased electricity tariff; all these provoked strong protests. To keep down its budgetary deficit, the government put an end to around 125 public sector developmental projects |1| and have postponed 432 others. The expenditure for higher education has been reduced by 73% while the imposition of fiscal supplementary charges could terribly wreck this sector.

The recourse to indebtedness and the implementation of neo-liberal measures, imposed at the global level since the last 30 years have been a failure in terms of human development. These are contrary to a genuine political course to be taken in dealing the financial crisis, defending the interests of its victims.

CADTM calls on the Pakistani government to discontinue submitting at the pernicious injunctions of the IMF and to take urgent measures such as a unilateral suspension of the repayment of debt – odious and largely immoral – in order to assign priority to the fundamental human requirements of its population.

CADTM recalls that the earlier General Pervez Musharraf regime was a strategic ally of the US in the region, especially since the 9/11 attacks. The principal creditors have never hesitated to lend the Pakistani dictatorship the funds it needs to pursue this alliance. In the autumn of 2001, the United States asked Pakistan for assistance in waging the war in Afghanistan. Musharraf agreed to let the US use his country as a rearguard base for US armed forces and those of its allies, but in exchange, he negotiated a substantial reduction of Pakistan’s debt. In December 2001, the rich countries meeting at the Paris Club Paris Club This group of lender States was founded in 1956 and specializes in dealing with non-payment by developing countries.

http://clubdeparis.org
were quick to agree to this reduction. The regime then continued indebting Pakistan with the active support of the World Bank World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 180 members in 1997), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

http://worldbank.org
and the other major powers. The loans granted have no legitimacy; it has only served to reinforce the tyranny of the General and have not improved a bit the living conditions of the Pakistani citizens... The debt contracted by this despotic regime can therefore be classified as odious. CADTM declares that the creditors who made loans to Musharraf did so in full knowledge of the facts; and under such circumstances, it is inadmissible that the Pakistani people should in the future be forced to repay the odious debt contracted by Musharraf. In these conditions, a pure and simple cancellation of the debts is the least demand.

In addition, the fight against pauperisation and against the growth of religious fundamentalism cannot be victorious until the fundamental problems of the peasantry, the working class and that of the women, in the social, political and economic domain are resolved.

- CADTM supports the demand for a programme of radical agrarian reform, the redistribution of lands in the hands of armed forces (the ‘Military Farms’, the ‘Army Welfare Trust’ and the Punjab Seed Corporation) which controls close to 30,000 hectares of very fertile lands which the peasants and their families cultivate for more than a century. There should be a radical reduction of the military budget to benefit social expenditure.

- CADTM calls Pakistan and all the countries of the South to set off another economic logic respecting the fundamental human rights and the environment, opposed to the neo-liberal logic imposed at forceps through an odious debt which they must immediately call for abolition. CADTM supports a programme for a total legal and constitutional reform which incorporates the convocation of an assembly to draft a new secular constitution respecting the minorities and women.

- CADTM demands an end to the occupation of Afghanistan by the American and NATO NATO
North Atlantic Treaty Organization
NATO ensures US military protection for the Europeans in case of aggression, but above all it gives the USA supremacy over the Western Bloc. Western European countries agreed to place their armed forces within a defence system under US command, and thus recognize the preponderance of the USA. NATO was founded in 1949 in Washington, but became less prominent after the end of the Cold War. In 2002, it had 19 members: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the UK, the USA, to which were added Greece and Turkey in 1952, the Federal Republic of Germany in 1955 (replaced by Unified Germany in 1990), Spain in 1982, Hungary, Poland and the Czech Republic in 1999.
forces as well as their withdrawal from other parts of the world.

- CADTM provides support to popular support against the pursuit of neo-liberal policies and the return of foreign military forces. CADTM supports the struggle of social and political forces opposing religious fundamentalism. CADTM supports the women’s struggle for their emancipation.


Footnotes

|1| The budgetary cut for these programmes is currently estimated at 100 billion Pakistani rupees.

CADTM

COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85
info@cadtm.org

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