Capital suggestion: State capture

Public money v private greed. The Pakistani state has been captured. Of the 30 million Pakistani families, a thousand Pakistani families have managed to capture the state. State capture occurs “when the ruling elite and/or powerful businessmen manipulate policy formation and influence the emerging rules of the game – including laws and economic regulations – to their own advantage.”

Pakistan’s economy has been captured-captured by a thousand families. Yes, the Pakistani economy is “trapped in a vicious circle in which the policy and institutional reforms necessary to improve governance are undermined by collusion between powerful firms and state officials who extract substantial private gains….”

The State Bank of Pakistan (SBP) is a captured entity – captured to extract private gains. The Securities and Exchange Commission of Pakistan (SECP) is a captured entity – captured to extract private gains. The Competition Commission of Pakistan (CCP) under Chairman Khalid Mirza tried to promote public interest but he was thrown out and the CCP was captured – captured to extract private gains.

Of course, the National Accountability Bureau (NAB) is a captured entity – captured to safeguard private gains. Yes, the Federal Investigation Agency (FIA) is also a captured entity – captured to safeguard private gains.

Dr Ishrat Hussain, in a lecture titled ‘Pakistan: An Elitist Economy’, argues that “since elites have captured the market and the state in Pakistan, it has resulted in the “creation of a vicious cycle of inefficiency and inequitable distribution of wealth.”

To be certain, the most profitable business in Pakistan is ‘Raiding the State’. Yes, the State of Pakistan has huge resources – land, oil, mines, minerals and natural gas. The real owners of all these resources are the 30 million Pakistani families but the business and politics is all about transferring state resources into the private pockets of a thousand families.

Pakistan is controlled by a few dozen cartels (I do not want to call them ‘mafias’). We have the oil companies cartel. As is always the case with cartels, the members are all interlinked through cross-ownerships. Eight of Pakistan’s richest companies, in connivance with the bureaucracy and the political elite, supply the Pakistani market with inferior quality petroleum products and make Rs400 billion a year, every year. The other 30 million families are getting ripped off.

Look at how the automobile cartel – once again in connivance with the bureaucracy and the political elite – is ripping Pakistanis off. Some in the cartel are selling sub-standard automobiles, at least a decade-old technology, at exorbitant prices (In India, Maruti Suzuki Omni sells for Indian Rs237,000 or an equivalent of Pak Rs389,000). Then there are the sugar and the cement cartels.        

Policymakers have personal business interests and policymakers are making policies to enrich themselves. Public and private interests have collided. The two must now be separated. State capture has enriched a thousand families at the expense of 30 million Pakistani families. There’s concentration of economic and political power that has now become a serious threat to the State of Pakistan.

South Africa recently set up a Judicial Commission of Inquiry into State Capture. Thuli Madonsela, a former public protector and her team of investigators, published a report detailing how President Zuma along with his ministers connived with the Gupta business conglomerate for personal enrichment at the expense of 55 million ordinary South Africans.

The primary conflict between the forces of status quo and the forces of anti-status quo is that the forces of status-quo are bent upon continuing their state capture. For the sake of 200 million Pakistanis, the State of Pakistan must also set up a Judicial Commission of Inquiry into State Capture.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh