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Thursday March 28, 2024

Living with crooks

By Shahzad Chaudhry
April 15, 2016

I have always told my yearly class at the National Defence University that international finance is one of the destabilising elements for developing nations. To be honest, unaware of the extent to which such modern economic imperatives play with the governance dynamics, what always proved this fact was the 1997 crash of the South-East Asian economies whose stock exchanges plummeted within hours and their currencies lost value to become worthless paper. Suddenly, developing economies such as Thailand, Indonesia and Malaysia were forced to gather the pieces and begin rebuilding.

International financier George Soros, now a celebrated author on international finance and economy and someone who champions the cause of unequal distribution of wealth and income, was accused of being the mastermind of the shattering drawdown of these newly burgeoning Asian economies. In a display of the crass opportunism inherent in modern capitalism, Soros, who had invested heavily in these economies, decided to sell out, surely for very good reason and for a huge profit.

Foreign money cometh, foreign money leaveth. With the economies crumbling, the political ramifications were felt far and wide. Long-serving leaders were dumped as these nations grappled with destabilising disruptions. The economic stumbles forced socio-political rethinking.

Since then, the unequal distribution of wealth has become the latest fad in the study of economics. Instability in modern economies is being explained by such startling facts as the wealth of the top one percent equalling or exceeding the cumulative holdings of the remaining 99 percent. And this is considered to be universally true.

The Panama leaks have strengthened the long-held belief that there were Shylocks squeezing the last ounces from the enervated dispossessed. The manipulative and exploitative domination of the modern capitalistic system has become the only economic model at play. For a while, the American system has been arrayed along the popular denominations of Wall Street and Main Street. And this in a country that still has some rules in place to regulate money. Despite such strict application of laws, Google will still move to Canada to save on corporate taxes.

While personal money is still closely scrutinised, corporate money is not, which can utilise loopholes to avoid taxation. Those who are filthy rich with dirty money, do not have scruples and use the lawyers to exploit every crack to slip their money through to havens such as Panama.

The Sharifs of Pakistan, along with the 200 others, in a broken economy have piggy-backed on the prevailing system of the global rich. In a land where laws only apply selectively, if at all, and ‘strong’, ‘wealthy’ and ‘powerful’ are adjectives that mostly apply to the same families and individuals, the environment of impunity reigns supreme. A Pakistani minister with stakes in companies dealing in grey telecom traffic was tasked with apprehending those who indulge in the illegal telecom businesses. Another, who was known to be a major human trafficker, was tasked with apprehending those dealing in this abominable business.

Those who collect taxes are those who evade them the most. Leaders who try to bring international investors into their country run businesses abroad. Those who make the laws to restrict this stealthy escape of money are the ones who are stealing the money of their people. The poor produce, create and supply, while the rich skim. The economies in these countries are either stagnant in or continue to shrink while the rich multiply their holdings.

What is painful – and the Panama Papers have only given voice to such anguish – is how the exploitative system in the land provides resources to those who borrow it off the banks, make money over it skimming millions and billions and then using the power invested in their being to recuse from returning the borrowed amount or pay taxes, and use the vehicles of modern finance to move their wealth offshore.

Making money is not bad; making bad money is bad. And any earnings that aren’t duly taxed are tainted. This is the dilemma of the more than 200 rich who have found havens abroad. Only 200 are mentioned in the Panama Papers; there are many other troves hidden in other off-shore locations that have yet to be revealed.

How does a poor country struggling for the last 70 years to find some sustenance and viability deal with such excesses of its elites? Add that to the troubles that generate from the societal schisms manifested by behaviours such as radicalism and extremism, and an ongoing war on terror which has, over the years, found roots in such existence, and the complexity becomes impossible.

Pakistan’s current dilemma lies in bringing society back to a normative mode, in congruence with global behaviours based on inclusive democratic orders. To win this at the mouth of an inferno of terrorism is not a mean task. Reluctantly, the elites who hold the reins have signed on to make it happen. To now see them embroiled in debilitating crookery is even sadder for a nation that they were meant to extricate from its difficulties.

Pakistan is faced with two extreme challenges: to get freedom from religious bigotry through a debilitating war led by tainted elites will mean that the elites will survive even when the war is won. Whether such wars can be won under such elites is the other paradox. Alternately, were these elites to be first brought to justice, the country would be denuded of a major crust of leadership that has been dominated by the families who have held a stranglehold over this country’s power structure.

A tenuous governance structure may be better than no governance structure. This is the dilemma. We may have to live with the crooks for a bit longer even if only some are brought to the book. It may be more prudent to survive the war before the dirt can be washed out. It remains a Hobson’s choice for the weak and the affected.

The writer is a retired air-vice marshal, former ambassador and a security and political analyst.

Email: shhzdchdhry@yahoo.com