Mosharraf Zaidi

http://www.thenews.com.pk/daily_detail.asp?id=146039

No Oxygen in the IMF Ventilator

Tuesday, November 11, 2008
by Mosharraf Zaidi

Being of Pakistani origin qualifies an IMF employee to be as much of a Pakistani economy expert, as being of Pakistani origin qualifies a child that eats a lot of Krispy Kreme doughnuts to be an expert in Pakistani child nutrition. That is, not very much. IMF economists that spend the better part of multiple decades prescribing bitter pills for poor countries should stick to pretending to know Latin American debt markets. The utter brazenness of IMF pensioners advocating an IMF programme for Pakistan is so typical, it makes the challenge of affecting change in Pakistan for Pakistanis like Raza Rumi, Masooda Bano, and Harris Khalique (among dozens of others), much, much more difficult. How are these Pakistanis supposed to take on conflict of interest in the public sector for example, when the loudest IMF-type “reform” voices are IMF employees or pensioners? 

How out of touch are the pundits that are not only proposing Pakistan’s re-entry to the IMF club, but arguing for it vociferously, day and night, on television and in newspapers? Well, while the rest of the world is taking a moment to bask in the sheen of the triumph of ideas and idealism in Barack Obama’s election victory in the US, the freshest idea these guys can come up with is to drag Pakistan back into the same black hole it has been to eleven times before. How unrepentantly docile a response does an IMF programme represent? Consider this. Pakistan was chosen as a case study for the first-ever evaluation conducted by the IMF’s own Independent Evaluation Office. Why? Pakistan represents a unique country, which until 2002 had the longest-running relationship with the IMF in the world. No country to that point had spent as much time in board rooms with the IMF negotiating loans and conditionalities. Here’s what the IMF’s own evaluators had to say about the IMF and Pakistan in this report: “Serious doubts about the prospects of future implementation of the program would have had to be raised.”

So while IMF cheerleaders (who happen to be former IMF employees) are kicking and screaming for another IMF programme for Pakistan, it is not only the poets that have a problem with an IMF solution, it’s the thieves too. The IMF itself has “serious doubts” about how effective yet another IMF programme can be for Pakistan. 

Who else is against an IMF programme for the country? Most civil-society leaders, who tend to lean left of centre, want Pakistan to default. Most defence policy hawks, who tend to lean right of centre, have also endorsed the idea that Pakistan must default. Common Pakistani expats from around the world are excited–not just in agreement with, but actually excited–about the prospects of a Pakistani default. Young Pakistanis just starting their careers? Deeply motivated to rough it out, rather than use unsustainable crutches. Pakistan spending its way into a deep dark hole has become somewhat of a time-honoured tradition for this country. The fact that a radical solution like default is as popular as it seems to be should send serious and stern signals of warning to decision-makers at the State Bank, the Ministry of Finance and at IMF headquarters in Washington, DC. 

The popularity of a radical solution alone is bad enough. Even more worrying–indeed, incredibly worrying–is how the issue bridges the bipartisan divide. The two most polar positions in Pakistani political economy–the Islamabad hawks, and the Islamabad NGO-wallahs–are aligned when it comes to another IMF programme. Who will be left for the Washington Consensus to co-opt if these two get together on this issue? 

Of course, given that former IMF employees never worry about the political viability of their soup-in-a-can prescriptions, or the future of the country they are about to tag when they are with the IMF, it is only reasonable that they not worry after they are outside the agency. In fact, as the crisis becomes more and more desperate, the IMF cheerleaders become more and more shrill. Instead of taking pause to reflect about the state of a country that rewards cavemen with ministerial portfolios, that prioritises begging-bowl economics over infrastructure investments, and that values ideology over ideas–the IMF gang clearly wants one more shot at “fixing” Pakistan. 

What anyone who has spent the better part of the last decade in the trenches in Pakistan–rather than competing with the Republic National Committee at Neiman Marcus–has learnt, is that Pakistan can’t be fixed by the IMF, or any other external force. This is a beast of a country. It has its own momentum, its own political compulsions, and it requires its own dedicated experts. At PIDE, PILER, PIEDAR, SPDC, and SDPI many already exist, but have almost no voice. Their voice is stolen from them by jet-setting Washington Consensus operatives that have opacity and multiple interests pouring out of their international roaming Blackberries. 

The IMF evaluation of its work in Pakistan does not specify Pakistanis working at the IMF at the heart of the problems it has had in being successful in Pakistan, but it raises enough questions to raise more questions about why even basic due diligence does not occur when it comes to the IMF’s preparation for “assistance” packages for Pakistan. Here’s another excerpt from the evaluation conducted in 2002: 

“Even internal documents, however, did not go beyond the stage of taking note of past implementation difficulties. The only effort to take stock of past experience and draw strategic orientations for future IMF involvement was done in a 1993 country strategy paper (CSP), but its close links with the briefing paper for the negotiation of what became the 1994 EFF/ESAF limited its “strategic” value, and the lessons it drew from past experience did not appear to be consistently reflected in the design of subsequent programs. No other CSP was prepared since then, even after CSPs were given new impetus in 1997 through guidelines aimed at making them a prime vehicle for staff to step back from the contingencies of programme negotiations, learn lessons from past country experience, and design an optimal strategy for the IMF’s involvement in the country.”

So, not only does the IMF never really end up being useful for Pakistan, but in fact it mysteriously keeps continuing to engage with Pakistan, even after Pakistan continuously and repeatedly fails to live up to its commitments to the IMF. 

Will this time be any different? Of course it will not. The incentives are just too skewed. There are even more Pakistanis at the IMF and World Bank today than there have ever been in the past. They have seen the light. The brilliant career trajectories on offer in this country through the fast stream of international bureaucracy are too delicious to resist. Spend a decade in Washington, DC, pray for a crisis, fly into Islamabad with a “solution,” meet a dictator (or a democrat), speak in tongues, and get the job of a lifetime. It has been happening regularly since Ayub Khan. Change, however, is afoot in Pakistan. If you were working as an international bureaucrat, you might have missed the memo. This is a country of 172 million people. Economic crises may scare the super-rich and the elite, but most Pakistanis have nothing to lose. The lawyers know this. So they have lived by the sword, like they too have nothing to lose. The lawyers have inspired a generation of Pakistanis. Rumi is one voice among an almighty opera. A thousand policy memos cannot silence the chorus of change. 

In the meantime, it is of course deeply professionally risky for young writers to take on the Washington Consensus, and to write with a lack of the fake and hypocritical “respect” that these IMF uncles have got accustomed to. But it is much more risky for Pakistan to allow these same uncles to continue to peddle the mythology of Pakistan’s dependence on the IMF. The destiny and roti of 172 million people dependent on a bunch of suits? That will be the day. The IMF itself knows the value of a good suit. Its own reports and evaluations reject the hyperbole and hyperactivity of these cheerleaders. So should Pakistanis, left of centre, right of centre, and everywhere in-between.