Protest March Targets Pakistan's Economic Tack

Critics say recent economic reforms fail to reach ordinary Pakistanis

IN an ongoing campaign to unseat Pakistani Prime Minister Nawaz Sharif, opposition leader Benazir Bhutto will begin a two-day march Dec. 3 through the heart of Punjab, Mr. Sharif's home province. Spokesmen for Ms. Bhutto's People's Democratic Alliance say she is trying to split Sharif's support where it is the strongest.

The "long march" campaign that began Nov. 18 is unlikely to topple Sharif's ruling Islamic Democratic Alliance government, but it comes at a time of economic stagnation after two years of economic liberalization. Opposition leaders say that Sharif's promises of prosperity have failed to materialize.

Before Sharif came to power, Pakistan's economy was dominated by unprofitable state-run firms and a heavily centralized bureaucracy. Pakistani businessmen say Sharif's efforts to break up and privatize the huge state-owned companies and to remove bureaucratic restrictions on private businesses have borne fruit.

"In the past, people had to wait for up to three years to get the government's permission for setting up factories," says a leading businessman who asked not to be identified. "Now, we can get that in three months at the most."

In a break from past controls on money transactions, Pakistanis are now allowed to set up local bank accounts in foreign exchange, including the United States dollar. Foreign businesses are being encouraged to invest in a large number of areas with permission to repatriate profits.

"While my opponents' long march is designed to damage the democratic institutions and create hurdles in the way of prosperity," Sharif said at a public meeting after a Nov. 18 march, "the government's efforts are aimed at constructive politics, building highways, uprooting poverty and illiteracy, ending unemployment, and providing opportunities to the youth."

Sharif has taken comfort from reports that the Army and the president, the two most important institutions in Pakistani politics, have no intention to unseat Sharif either by force or through constitutional methods. And weeks after Bhutto's campaign began, there are few signs that she has the kind of massive public support necessary to bring down the government.

The immediate concern, Western diplomats and senior officials say, is that a prolonged confrontation would hurt investors' confidence and set back plans for opening up the economy.

"This sort of thing makes investors worried if the government will remain on track," a senior diplomat said on condition of anonymity.

Finance Minister Sartaj Aziz denies that there has been any loss of confidence in the economy. He argues that since the confrontation began, the stock market index has not dropped and Pakistanis have not diverted money to foreign exchange accounts.

But Mr. Aziz admits that a prolonged confrontation could create problems.

"If it [the confrontation] lasts for several weeks or months, then obviously it will affect the investment climate," he says.

In addition, officials say that recent floods causing damage to roads, bridges, and buildings could add $2 billion in repair costs to the country's strained budget.

Even if Bhutto's campaign fails to unseat Sharif, an ongoing deadlock in the legislature could hamper his ability to push further economic reforms.

"Sharif has tried to change things around fast, but has probably found that running a business empire is much easier than dealing with the complexities of government," another senior diplomat said on condition of anonymity.

While Sharif's ability to deliver on his economic commitments is crucial to his survival, other issues also could intensify pressure on the government.

Army troops sent to quell lawlessness in the southern province of Sindh earlier this summer are still in place. Although some order has been restored to the province, senior officials say that the solution ultimately lies in giving employment to unemployed youth and providing new sources of income to poor, landless peasants, many of whom are believed to have turned to highway robbery.

"The law-and-order situation will improve in real terms if there are jobs. But those cannot be given overnight," says one provincial government official in Karachi.

Bhutto's Nov. 18 march to Islamabad was thwarted by riot police and paramilitary troops armed with batons and tear gas. Bhutto was temporarily placed under house arrest and is banned from entering the capital. Hundreds of activists who were arrested are still imprisoned.

"The prime minister may not be under threat of falling from power," a government official says. "But it seems that he needs to establish political peace before he can put in place his plans for economic prosperity."