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May 7, 2019

Contrasting journeys, metaphors for nations


May 7, 2019

Two remarkable political appointments, many worlds apart, were made within the span of a few hours of each other last week. In the United Kingdom, a member of parliament by the name of Rory Stewart was appointed secretary of state for the Department for International Development (DFID). In effect, he becomes the UK’s minister for fighting poverty (full disclosure: I worked for DFID from 2004 to 2008, and ran the DFID-funded project Alif Ailaan from 2013 to 2018). In Pakistan, an economist by the name of Reza Baqir was made governor of the State Bank of Pakistan; in effect, he becomes the guardian of the value of Pakistani money.

Stewart takes over DFID at a terrible time. The UK is in the middle of renegotiating its role in the world, mostly with itself. A lot of this conversation tends to be, quite rightly, about the UK’s strange intolerance for a European project that Britain itself helped build up over the course of the last century. But some of the conversation about the UK’s role in the world is also about how Britons relate to what their tax money is doing abroad. This is not an uncomplicated journey for the country. Great Britain’s exploitative colonization of various parts of the world, including its devastating and divisive time in South Asia, has been seen by some as part of the moral impulse that has helped forge DFID’s role as among the world’s leading aid-giving organizations.

This is a fanciful notion. DFID has hardly been able to soften the blow of even the UK’s most recent follies, such as the one in Iraq. No amount of aid could ever undo what colonialism did to the confidence of South Asians in the organic, pluralistic ethos forged in the Indian subcontinent under all that preceded the British Raj here. Yet in Bangladesh, in India and in Pakistan, (as in dozens of African and other Asian nations) DFID has won a reputation as a capable aid partner that is responsive to the governments it seeks to help. This alone is a distinguishing quality for a donor.

Sadly, as DFID minister, Rory Stewart will spend less time listening to the countries he seeks to help, and more time explaining to British voters why this help is necessary – all thanks to a gotcha culture in British journalism that exploits the vulnerabilities and fears of the ordinary British taxpayer. A taxpayer that wonders why all that aid money can’t be spent on the NHS, or the local schools, or to lessen the burden of public transportation costs that seem to escalate every few months. Worst of all, he will do so at a time when British ministers are falling like flies, as Brexit destroys not only the UK’s reputation as a well-run country, but also the reputation of any Tory that goes near the reins of power. None of this is Rory Stewart’s fault. That’s just how the public discourse works in 2019.

Closer to home, here in Pakistan, freshly appointed State Bank Governor Reza Baqir finds himself in a weirdly similar dilemma. While populism has eaten away at the British public’s imagination of how important its immediate neighbourhood (aka Europe) is to Great Britain, populism in Pakistan has boosted the imagination of discontent Pakistanis about just how keen the world is to conspire against the country. Populist belief in the divine attributes of an infallible Great Leader (sic) has created an unsustainable pressure on government to live up to a series of fictional, fairy-tale notions about how countries work. One of them is that 'corruption' can be contained and countered by the goodness of the person occupying high office. It cannot be. But the jet stream of evidence to the contrary will not deter the true believer. After all, what good is a belief if it crumbles at the first (second, third, or even five hundredth) piece of evidence that undermines it?

Perhaps more worrying than the populist fantasies about anti-corruption is the magical austerity that has preceded Dr Baqir’s appointment. Austerity cannot be enacted without a massive human cost. Evidence for this is now beginning to mount. This is just the beginning. It will get substantially worse before it gets better. Poor Reza Baqir is coming home after over two decades abroad. He is going to be welcomed by the same gotcha culture that dominates the British press. Pakistani newspapers and TV talk shows will not only not thank him for his return, but also blame him for an austerity programme that he did not conceive. The ungratefulness of the nation is neither Reza Baqi’s fault nor the nation's. That’s just how public discourse works in 2019.

Both Stewart and Dr Baqir have much in common. Both are Generation X, both must deal in their new jobs with their respective countries’ relationship with money, and both have spent long periods of their adult lives outside their countries. Stewart left Britain on assignment, first as a diplomat and later a traveller. He then spent three years running an NGO in Afghanistan, and nearly five years as a scholar in residence at Harvard University in the US. Dr Baqir left Pakistan straight out of high school, and studied and worked in the US, and at various locations throughout a distinguished career at the International Monetary Fund (IMF).

The most poignant point of departure between the stories of these two men, both among the best their countries have produced, is how much preparation the UK system has afforded Rory Stewart, and how little Pakistan has afforded Reza Baqir. After a career as a diplomat, travel writer, and philanthropist, Stewart first ran for office in 2010 (winning), holding onto the seat once in the 2015 election, and again in the 2017 election. Before becoming the full DFID minister, Stewart was a junior minister, a parliamentary under secretary, and chair of the Defence Select Committee. For eight years, Stewart has marinated inside the British political system – preparing for a role he seems almost custom-built for. Dr Baqir’s ascension to the extremely critical position of State Bank governor stands in stark contrast to this. While he is an eminently qualified economist, Dr Baqir has not been afforded the luxury of a gradual path to one of the most important jobs in his country. The cost of this absence of systemic preparation and support is not negligible. It exacerbates the five key challenges the new governor faces.

First, the new governor will arrive to work at his new job with very little exposure to how the micro-economy works. For those that can afford to live in elite or semi-elite bubbles, this knowledge is often alien even to those that have spent the bulk of their careers in Pakistan. He will need to aggressively seek alternate voices on the micro-economy. (I would begin with Asim Sajjad Akhtar and Afiya Zia).

Second, the new governor will need to deal with and manage two types of bureaucracies: the entrenched State Bank bureaucrats, and the wider array of federal babus. If he seeks to deal with them gently, and to 'bring them along' he will fail. The status quo isn’t a damsel waiting to be saved. It is a monster that will eat us. He needs to be hungrier than the monster.

Third, the new governor needs to change the quality of life of Pakistan’s bankers. Bankers in Pakistan have no pressure to expand banking to a wider population. They have no pressure to alter the profile of their lending (pro-rich, pro-government). They have no pressure for more robust due diligence and KYC. The new governor can transform access to finance and build a banking and finance system fit for the fourth industrial revolution. He should not wait.

Fourth, the new governor needs to remember that Pakistan has more young people than any other country he has worked on. Jobs don’t grow on austerity, they grow on growth. Austerity kills growth. Lower interest rates and increased money supply are vital tools in the jihad against anti-youth, anti-people austerity. Paying the bills isn’t the SBP’s job, its the FBR’s. Make them do it.

Fifth, the new governor must remember that Pakistan is ripe and ready for real reform. It has been since he first left these shores to earn the great education and experiences that he brings back with him. He must use them not to keep things the same, but to change them.

The writer is an analyst and commentator.

(PS: May Allah bless you all with a spiritually enriching Ramazan of contentment and joy).

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