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IMF reforms: Sucking poor’s blood

Shaukat M Zafar

Globalization is not new but in recent years it has become the subject of an impassioned debate. Karl Marx had predicted that the relentless search for markets will alter older social structures. As he put it “all that is solid will melt”. That prediction is going to be proven to be true in the today’s scenario. The policy of the government is to make Pakistan a private sector-driven economy where the government will only regulate. But privatization in Pakistan has been proved to be very controversial. It has generated strong debates in Pakistan where it is perceived to have more negative impact. Although it is an efficient way of promoting competition and enhancing growth, yet it has been experienced that it makes the poor poorer by increasing unemployment and reducing access of the poor to basic goods and services through increase in prices. The vast majority of people are worse off now than before.


In Pakistan, there have been several protests by unions that are opposed to the proposed sell-off of the public sector entities because of the fear of losing their jobs. Apart from the fear of job losses, many workers argue that the sale of public enterprises to either foreign owners or domestic investors is an infringement on their rights as Pakistanis. Today’s financial and food crises are the result of the same policies of deregulation and have supplemented each other.


The direct negative impact of privatization had been that about 600000 workers lost their jobs. Labour patron have been changed the privatization has pushed flood of informal sector. No labour laws have been imposed in informal sector. According to the Privatisation Ordinance 2000, the purpose of privatization is poverty alleviation and retiring foreign debts. During privatization regime in Pakistan, these two purposes have not been accomplished.


An other problem is that the process of selling off of these national companies and assets remained vague and resulted in huge corruption; a massive 1550 Billion Rupees ($23.84 billions) corruption took place during Musharraf-Shoukat Aziz privatization push, an amount that was sufficient to discharge the entire debt liability of Pakistan. When privatization started in 1991, the foreign debt was $23.323 billion. Now, in 2012, it has gone up to $62 billion. While internal debts are on ever increase, have been doubled during these four years PPP regime. Poverty has increased to a level all times high. The companies and national assets that were created with much sweat and blood of the people of this country are being sold at very cheap prices to politically-connected groups. Privatization is nothing more than mercantilism – the opportunity for ruling elite and their cronies to gain control of the public purse, a dominant social theme, making the realization of elite command-and-control goals even more achievable. It’s not what it appears to be.


Corruption, non-transparent privatization and black economy are leading Pakistan to more economic troubles. People have lost faith in the institutions of the country; political-security situation has been deteriorated by the growing social tension and economic crisis. There has never been a phenomenon of accountability in privatization process. The emergence of rich-corrupt people and their supremacy on national structure has made it easier for global institutions to launch their agenda. By this real democracy cannot grow. The state officials are busy in implementing the programs of IMF to privatize all utility services. Thus, citizens have to bear the consequences because of the policies made for foreign profiteers.


The global food crisis is benefiting only the multinationals that monopolize each one of the links in the chain of production, processing and distribution of food. Indeed the economic benefits for the major seed, fertilizer, marketing and processing multinationals in the food area and the retail distribution chains have increased incessantly. It is a global agro-industrial complex, supported by public funds, international cooperation and international agricultural “development” policies.


During 2007-12 the multinationals dealing in seed, fertilizer, and food items saw profits grow by average 60 to 95 percent annually. The big commercial distributors also boosted their margins. The agribusiness multinationals and the retail distribution companies deepened their control of the productive chain, especially through the direct trading of agricultural production, with the aim of reducing procurement costs and guaranteeing profits. The seed industry is closely linked to that of pesticides. The bigger seed companies also dominate the pesticides sector and, frequently, the development and marketing of both products is done together. But in the pesticide industry monopoly is even higher and the ten multinationals control 84 per cent of the global market.


Pakistan has the potential to develop and become a modern Muslim welfare state without getting any debt or aid because it has human and natural resources in abundance. But the potential of people and their attempts to build a strong democratic society have been obstructed by the puppet regimes. Without any iota of doubt we are in debt and poverty crisis partly due to the policies of International Monetary Fund (IMF) and the World Bank. Structural Adjustment Policies were imposed by the IMF to ensure debt repayment and economic restructuring. But the way it happened has required Pakistan to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. We should adopt practices that have been carried out for centuries and have guaranteed food security for broad sections of the population through diversification of crops, care of the land, the use of water, the creation of local markets and community food systems. The restoration of agriculture into the hands of the peasantry will allow us to ensure universal access to food. Governments should support small-scale and sustainable production. Faced with neo-liberal policies it is necessary to generate mechanisms of intervention and regulation to stabilize market prices, control imports, set quotas, prohibit dumping and at times of over production create specific reserves for times of food shortage.


It is high time the government review its privatization and globalization policies. Privatization Commission should be dissolved and the decision to privatize Public utilities and other entities should be rescinded. The essential services providing entities must remain in state control. However we have experienced in Pakistan, the supremacy of the CEOs in public corporations has brought in many problems of recklessness and lack of transparency giving rise to financial crashes in those entities which needs to be properly regulated.


Public appointments require the highest standards of propriety, involving impartiality, integrity and objectivity, in relation to the stewardship of public funds and the oversight and management of all related activities. Instead of privatization these entities need to be restructured. Before entering into the process of restructuring, to properly regulate the appointments process of CEOs and other executives an Independent Appointments Commission delegated with statutory responsibility for making these appointments, be established to provide an independent and transparent appointment process for public appointments, based on the principle of selection on merit.

Courtesy: Pakistan Observer

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