Pakistan's National Interest and World's Changing Priorties

Facing the last over in the innings, PML N had introduced various Tax Reforms; Foreign Assets Amnesty, massive Income Tax Cuts and Local Assets Amnesty. A drastic cut in the income tax rates is a good omen for people who are tax-payers. Being a human, they're still not happy with lower rates for Amnesty for previously non-tax payers. Such amnesty schemes have been widely offered by major economies and it is the need of the hour to do so considering OECD's compliance and renewed focus on declaration of wealth. So it's mind-boggling when our very own beneficiary of Amnesty Scheme - Imran Khan - rejects amnesty. PTI and PPP have much to lose owing to these tax reforms, as they are in generally good for the documentation of the black economy assuming ceteris paribus (no suo motos please!)

So, when I asked my family electrician – who does earn more than Rs 50,000 per month – about his take on lower income tax and if it would encourage him to file tax returns? He would laugh and dismiss the notion. But if the same person is told that along with lower income tax, the property you own can be bought by government at double the declared price, he cringes. Such is the attitude of a common Pakistani over tax-payment culture. We all want it but are not willing to be the change we want to see.

 The broader context of such government revenue measures do not go that far. When the Army Chief held a meeting with Mr Ishaq Dar and the debate between gun vs butter started, we saw Army Chief speaking loudly over tax-promoting culture. Yes, we have borrowed tens of billion dollars on infrastructure spending and partly for defense up gradation as well, there definitely is more required for both, economic and military development, respectively.

We have always lived in a hostile neighborhood, despite losing half of our family – Bangladesh – the other half was always looked down upon by Indian government (not the Indian masses as a whole). And our participation in Afghan war and our showing-the-back to Iran – to avoid US’s displeasure – had rendered us lonely with few notable friends, China, Turkey and GCC. Admittedly, India is perhaps already the third largest economy in the world, galloping at growth rate of 6-7% (on that base) it can easily have the muscles to continuously bully Pakistan to serve; own interest and that of his newest partner, United States in containing China’s back-up plan on fuel safety through Gwadar Port. Thus, very few visionary leaders envisage the regional economic – and thus political – connectivity through Belt and Road Initiative (BRI) as did Mr Xi Xinping. But he needs more time and thus got the term limit enhanced. No wonder why his vision was doctrine in China’s constitution.

The world’s priorities are increasing evolving. Thus, the 2018’s National Defense Strategy of United States cite “China and Russia” as bigger threats to the nation than the “terrorism”. You would see world leaders talking more about polarization of the world between Team America and Team China and your CNNs, BBCs, Facebooks would focus less on the terrorism than what wrongs China has done (recent trade tariffs?. United States economic (and military) might has never been this challenged in last half a century. China had planned it’s rise in last 2 decades remarkably well, until now.

Sensing the risk of an economic hard-lending, Chinese authorities immediately controlled state enterprises, Such as Anbang Insurance, HNA Group, Wanda and Fosson to unload their borrowing binge and more importantly shed their assets in the United States. Is there a game plan in the offing? Since getting Yuan included in the IMF reserve currency, China would use its geo-political influence to reduce the trade in US Dollars, that has long been the strength of US economy. If that involves asking allies, such as Pakistan, to launch Panda bonds, or purchase Oil in Yuan contracts and use of Yuan as legal tender, is to allow gradual acceptability of China’s economic might in the 21st Century.

There is no bigger power than the economic might. That’s a universal truth. And it seems that the global equity markets as well as global economic growth rate has already peaked. Today’s top market capitalization companies are primarily knowledge-based FAANGUBATT (Facebook-Amazon-Apple-Netflex-Google-Uber-Baidu-Alibaba-Tencent-Teslas). A mere accusation or litigation on Intellectually property theft  is all that is required to burst the bubble, especially when company-centric issues are emerging and questioning the underlying business models, Facebook’ privacy theft from Cambridge Analytica, Tesla’s late deliveries, Uber’s Autonomous Car Crash etc.

Oh, but where are we standing? (lots of laughs) Politicians are electioneering amidst Panama drama. If it weren’t the numerous “diplomatic” visits undertaken by the Army Chief to Iran, Saudi Arab, Oman, Maldives, UAE, Sri Lanka, Afghanistan, Russia, Australia, Turkey, Germany and Qatar, PML-N after Nawaz would have probably nudged us towards isolation. Kudos to Qamar Bajwa for almost raking in million air-miles in his endeavor to garner geo-political respect for Pakistan when politicians are squabbling immaturely. In the process, we need to understand the need to diversify of economic dependency on China as well.

So when China wants more concessions in Free Trade Agreements, securitization of Diamer-Bhasha dam, to introduce Yuan as legal tender in Gwadar , allow mention of Pakistan based banned organization in BRICs summit, to not give a free-lunch in upgrading Railway upgrade or Karachi Circular Railway, they have the right to ask and Pakistan has the right to refuse just like we’re beginning to tell the United States that we will do whatever is in the national interest and according to the wishes of people. The dependency of economic growth should be regionally inter-linked and diversified away from Chinese led growth for Pakistan to garner better geo-political respect. Trade/Investments should be carried at arms length with the national interest as the prime ingredient. 

Thus, the focus back on Kashmir issue. Thus, the visit of Army Chief to Naqeebullah Mehsud, who if wouldn’t have been good/innocent looking social media star perhaps would have been ignored like thousands killed in fake encounters or drone attacks in the Northern areas as “collateral damage”.

In today’s world, everybody works for country’s national interests, so should we. China has been our time-tested friend and ally but onus of failure would fall upon us if we fail to unite the nation and succumb after US’s aid cut. Very prompt FATF’s reservation over Tax Amnesty is conspicuously design to complicate the Balance of Payment crises and choke the economic development of a "nuclear-armed" Muslim nation among top 16 economies in the world by 2050.

The importance of a successful tax amnesty, and a tax-paying culture, is a precursor towards national development, the background of which resonates in the armed forces whispers as well. Only if we can all be on one page over this issue, can we be respectable, developed, strong and admirable nation globally. Thus, our economic decisions under CPEC, or any other bilateral relationship, must keep national-interest while negotiating deals. We might have to learn to say no to our allies, friends and each other as well. If we want to dream higher, we ought to work harder. Let’s all “do more”.