Nawaz Sharif’s New Government: First, Focus on Pakistan

Nawaz Sharif’s swearing-in as prime minister on June 5 represents yet another “second chance” both for Pakistan and for him. Unlike many of the analyses coming from the world outside Pakistan, we believe that the most important question is how he follows through on the promises of prosperity and governance that he made in his first speech to parliament. Accordingly, we will examine his domestic prospects here. His domestic track record will affect his freedom of action on foreign policy; we will explore this in a second essay. One theme that runs through both is that the United States needs to focus more of its attention on Pakistan as Pakistan, rather than viewing the country as a sideshow of the Afghan drama.

A political upheaval: The swearing-in illustrated the scope and the limitations of the election’s upheaval in Pakistani politics. Sharif was voted in as prime minister by nearly two-thirds of the newly installed parliament, and sworn in by President Asif Zardari, whose formerly dominant Pakistan People’s Party (PPP) was crushed. Zardari has announced his intention to step down. The new president, to be chosen by indirect election, is unlikely to challenge Sharif’s leadership.

Decisive as it was, Sharif’s victory masks some familiar fissures in Pakistani politics. The vote divided sharply on regional lines. Sharif’s Pakistan Muslim League/Nawaz (PML/N) won overwhelmingly in his home province of Punjab, the traditional heart of Pakistani politics, but also bagged a few seats in each of the other provinces. Together with the 19 independents who joined his party after the election, he has an absolute majority. By contrast, the PPP, which traditionally had representation in all four provinces, was held to only 11 percent of the assembly seats, all but two of them in Sindh, and all but one of those outside the major cities. It was largely leaderless in the election campaign.

The third major contender in the election, Imran Khan’s Pakistan Tehrik-e-Insaf (PTI, or Pakistan Justice Movement), had never won more than one seat in the past. This time, it won nearly as many assembly seats as the PPP, almost all of them in Khyber Pakhtunkhwa province, where it now leads the provincial government.

But it is far too early to suggest that this political transformation is permanent. Pakistan’s feudal political barons still control important constituencies, and it will be another decade or so before urbanization seriously erodes their power base. The PTI, a major player now, has not yet cemented this status for the long term. The regional party it wiped out in Khyber Pakhtunkhwa could easily come back as it has done before, and that province has not been a launching pad for elected national leadership. Pakistan’s government parties have often gained patronage but lost popularity during their terms in office. Indeed, this has happened before to Nawaz Sharif. Turning the strong base he has today into a national base for the future will depend on his track record on the economy and governance.

The agenda: Since his election, Nawaz Sharif has stressed governance and the economy. They took center stage in Sharif’s inaugural speech, delivered in elegant Urdu. Elsewhere, he has focused on the power outages that have made life miserable for Pakistan’s growing urban population and hamstrung its small business sector. This emphasis contrasts Sharif’s goals with the weakest parts of the PPP’s record.

Accordingly, Sharif picked a strong and experienced finance minister, Ishaq Dar, who performed well in this position in Sharif’s previous government. Several other new ministers have previous cabinet appointments or experience in senior business positions. Not in the cabinet, at least for now, but listed as special assistants or advisers are two familiar figures: Sartaj Aziz, political powerhouse and former minister of both finance and foreign affairs; and Ambassador Tariq Fatemi, who served as the senior diplomat in Nawaz Sharif’s office at the time of Pakistan’s 1998 nuclear test, and was briefly his ambassador to the United States.

Sharif’s cabinet is overwhelmingly Punjabi. Most of its members have deep personal ties of loyalty to Nawaz Sharif as well as to the party. The cabinet is small by Pakistani standards – only half the size to which the constitution now limits the cabinet – but it could well grow, adding ministers or special advisers.

Sharif is more committed to economic progress and to governing than the previous government. Can he deliver? His previous economic record was uneven. He was drawn to dramatic projects like building a motorway from Lahore to Islamabad and a massive taxi import scheme.

Today, Pakistan desperately needs growth, job creation, and reliable energy. Its balance of payments, relatively comfortable in the past few years, is now shaky as payments to the World Bank and IMF come due. Two early indicators will be the government’s budget, normally submitted in June, and its discussions with the International Monetary Fund, for which preliminary contacts have already begun. The Fund has historically proposed crushing austerity programs. But even if the Fund’s recent bad experience in Greece leads to a somewhat softer approach to Pakistan, the price of balance of payments relief and of ending power outages will include unpopular measures. These could involve rationalizing the energy sector, raising power prices, and raising government revenues. Economic discontent could bring people into the streets of Pakistan’s growing cities. Implementing any of these measures will test Sharif’s ability to lead people through a difficult economic transition.

Sharif also faces a challenge to the authority of the state from Islamist groups, some of them linked to the intelligence services. His initial statements have stressed harmony and negotiation. His relations with his Punjab power base will strengthen his instinct to avoid an overt clash with the Islamists. In Pakistan’s political culture and Sharif’s personal modus operandi, one approaches powerful adversaries with at least as much honey as vinegar. Pakistan’s track record of negotiating with militant organizations is not encouraging, and the process is likely at best to be “two steps forward, one step back,” with ambiguous results.

Managing the challenge from the extremist organizations will depend critically on his relations with the army, which had worked closely with him early in the 1990s but later twice forced him from office. An early challenge will be his handling of former president Musharraf, now under house arrest. Sharif and the army leadership have had extensive consultations in the period since the election. If these have produced an understanding on how the army and the civilian government can work together, Sharif’s chances of succeeding will be much improved.

Don’t expect miracles: Sharif’s great strength is his skill as a politician. He enjoys the considerable advantage that many Pakistanis have greeted the departure of the PPP government with relief. He has never relished making choices in which one option is starkly ruled out. He may have learned more patience during his years in the wilderness, but there is no evidence that the operating style Sharif developed over six decades has changed in any fundamental way. He is apparently convinced, however, that his political future demands economic growth and “delivering the goods” of governance. If he is willing to take some risks in pursuit of these wise goals, he may be able to change Pakistan’s political center of gravity and begin turning around its growing radicalization.

For U.S. policy, the conclusion is clear: it will be critical to support Pakistan’s economic growth, especially through business links and expanded trade. Liberalizing textile imports would be the most powerful measure, but in the present toxic political environment in the U.S. and with the current tensions in U.S.-Pakistan relations, it is almost certainly out of reach. Official aid should be part of this process, but a diminishing part, with as much as possible of the heavy lifting being done by private business connections and educational exchanges.

A stronger domestic polity and economy will also profoundly affect what Pakistan can do in the foreign policy arena – the subject of our next essay.

Teresita and Howard Schaffer

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