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Institutions, Individuals And The National Crisis
The Z.A. Bhutto Regime
Dr.Akmal Hussain
Newspaper: Daily Times
Dated: September 19, 2002

In Pakistan's history after the death of the Quaid-e-Azam, the personal proclivities of individuals in positions of power within the State structure found increasingly free play, as the institutional structure weakened. In turn individual leaders unrestricted by institutional accountability were able to further undermine the state institutions themselves. This dialectic between individuals and institutions was driven more by the greed for personal power than the aspiration for public service.

Mr. Bhutto and the PPP

Mr. Bhutto's support came not only from workers and peasants but also from elements of the urban middle classes seeking reform. Conservative landlords also gravitated to him, because of their antagonism to an industrial elite that was appropriating a growing share of the economic resources.

The radical stratum of the middle class was dominant in the Pakistan People's Party until 1972. This was evident from the manifesto which was anti-feudal and against monopoly capitalists. The same stratum played a key role in devising a propaganda campaign that aimed to present the manifesto as "revolutionary", thereby mobilizing the support of the workers and peasants. By 1972 Mr. Bhutto had consolidated his power and began to shift the balance of social forces within the PPP in favour of the landlord groups. This shift was rooted in the imperatives of mobilizing popular forces on the one hand and the practice of politics within the traditional power structure on the other. In the pre-election period, the dominance of the urban middle class and its radical rhetoric was necessary if the PPP was to get a mass base for its election victory. After the election, Bhutto's own proclivity to constrain demands for radical change within the existing power structure, combined with the dominance of the landed elite within the party, led him to purge the radical middle class leaders from the Party. Consequently there was an institutional rupture between the PPP and its mass base amongst the workers and peasants. This set the stage for economic measures that were socialist in form, while actually serving to strengthen the landed elite and widening the base for state patronage.

Patronage, Power and the Economy

One of the most important initiatives of the Bhutto regime was the nationalization in 1972 of 43 large industrial units in the capital and intermediate goods sectors such as cement, fertilizers, oil refining, engineering and chemicals. Just three years later the government nationalized the cooking oil industry and then flour milling, cotton ginning and rice husking mills.

While the first set of nationalizations impacted the "monopoly capitalists", the second set of nationalizations in 1976 by contrast hit the medium and small sized entrepreneurs. Therefore nationalization in the Bhutto regime cannot be seen in terms of state intervention for greater equity. Rather the rapid increase in the size of the public sector widened the resource base of the regime for the practice of the traditional form of power: State patronage. Those individuals and political factions which had political access to the resources of the nationalized sector, were able to enrich themselves through contracts, lucrative employment opportunities or outright misappropriation of funds.

During the Bhutto period while private sector investment as a percentage of GDP declined sharply, public sector investment increased even more sharply, so that total investment as a percentage of GDP increased. Yet overall GDP growth declined from 6.3% in the period 1960-72 to 5% during the period 1973-77. This suggests a decline in the productivity of overall investment during the Bhutto period. The reason was that a large proportion of public sector investment was going into unproductive spheres. Thus defence and public administration were growing at 11.4% per annum being the fastest growing sectors of the economy, while the commodity producing sector was growing at only 2.2% during this period. Even in this sector the lion's share of public investment went into the Steel Mill Project using a Soviet design, which was both capital intensive and technologically inefficient. Consequently the tendency for the declining productivity of overall investment was exacerbated.

The problem of the government's dependence on financial borrowing as we have indicated, started in the Ayub period, when the obligation of maintaining a large military and bureaucratic apparatus combined with the imperatives of providing huge subsidies to both agriculture and industry. In the Z.A. Bhutto period, budget deficits widened further as expenditures on defence and administration increased sharply. Higher defence expenditures were part of Bhutto's policy of refurbishing the defence establishment in the hope of winning it over after his hand picked appointment of General Zia ul Haq as the Army Chief. Large expenditures on government administration arose mainly out of Bhutto's decision to build new para military institutions such as the Federal Security Force which he expected to be personally loyal to him. He also enlarged and re-structured the bureaucracy through the policy of 'lateral entry' which enabled loyalists outside the civil services cadre to be appointed at the upper and middle echelons. Bhutto's attempt to build a demesne of patronage within the state apparatus had huge financial consequences. For example, defence expenditure as a percentage of GDP increased from 2.7% in 1965 to 6.7% in 1974-75. Similarly general administration as a percentage of GDP increased from 1.1% in 1964-65 to as much as 1.8% in 1974-75.

Apart from the increased expenditures on defence and administration, the budget was additionally burdened by the losses of the public sector industries. The deficits in these industries were generated by their poor performance on the one hand and the pricing policy on the other. Nationalized units under official pressure to suppress price increases inspite of rising costs, were recovering not much more than their operating costs. Consequently, internally generated funds could finance only 7% of the investment undertaken, thereby necessitating heavy borrowing from the government.

The Dialectic of Power: Military Vs Politicians

An abiding feature of Pakistan's power structure, has been a relentless contention for a share of the power cake between the military on the one hand and civilian politicians on the other. The space won by each protagonist has depended on the misgovernance and the economic and political crisis engendered by the preceding regime.

When Mr. Bhutto came into power in 1973, he had enormous political space, with the military having been humbled by the East Pakistan disaster. Yet this political space was gradually constricted, as Mr. Bhutto restructured institutions of the state and civil society to create a personalized demesne of feudal power that induced popular resentment and economic decline. Tragically the apparently boundless political space with which Mr. Bhutto began his regime, gradually constricted until it became a hangman's noose.

Mr. Bhutto's style of governance was a combination of some of the cultural attributes of populism, liberal democracy and feudal despotism. He had reached out to the people like a messiah of the poor racked by an inner pain. His ability to communicate to the people, his emotional empathy with their misery as well as their great potential, enabled him to achieve a special chemistry with the downtrodden. He had a powerful rhetoric whose images were drawn from the contemporary nationalist struggles in the Third World, the ideology of liberal democracy, Socialism and the folklore of the Indus Valley Civilization. Some of the institutions whose formal structure he attempted to construct (like the Constitution of 1973, a number of universities, autonomous industrial corporations and progressive labour laws) were all indicative of his modernist and liberal democratic dimension. Yet, at the same time, a despotic streak was manifested in his restructuring of some institutions like the civil services and the paramilitary Federal Security Force in an attempt at creating within them, a personalized chain of command based on fear of and loyalty to him.

Through his charismatic personality and populist rhetoric, Mr. Bhutto had in his early years galvanized mass consciousness and unleashed powerful popular forces. His failure to institutionalize these essentially spontaneous forces within a grass roots party and the associated failure to subordinate the military and bureaucratic elites to the political system, led to his tragic downfall. Yet, the style and content of Mr. Bhutto's political message left a lasting legacy in popular consciousness: That the poor have the right and the ability to be freed of the shackles of oppression; that they too can dream of reaching for the citadels of power.

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