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44 robber barons and Pakistan

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    44 robber barons and Pakistan

    Here is an interesting article from 'Tribune'

    44 families call the shots
    by Sultan Shahin

    PAKISTAN is once again in the clutches of military rulers. Gen Pervez Musharraf has appointed himself as the Chief Executive of his country. Perhaps he wants to run the country’s terribly messy affairs with the help of technocrats, bureaucrats and military leaders on the lines of a multinational. Looking at the nature and dimensions of the problems Islamabad faces, running the country is not going to be an easy exercise, for the core problem— the Pakistani establishment —remains.

    Whether we like it or not, we will have to continue to deal with it in the foreseeable future. We must, therefore, seriously study the imperatives of Pakistani society, its politics, its economics and the role of the miitary-bureaucratic-feudal-industrial oligarchy that has been ruling it.

    For the uninitiated, one of the mysteries of Kargil is how a ‘failing’ State running a ‘failed’ economy could afford such a hugely expensive misadventure. Pakistan’s dying economy is on artificial respiration, being provided by the IMF for the 17th time. Most of its budgetary allocations are sucked up by debt servicing and defence.

    Occupying new areas in Kashmir or going to war with India was the last thing on the minds of the Pakistani people. In fact, common people in Karachi, Peshawar, Rawalpindi, Islamabad and Lahore were eagerly expecting Mr Nawaz Sharif to fulfil his election promise of “speedy normalisation” of relations with India.

    One refrain even in Punjab was: why should we compete with India which is seven times bigger than us?

    Another question on their minds was: why should we have an army of the same size that we had before the secession of Bangladesh when we were more than double the present size?

    That the Pakistani people do not care two hoots about jehad in Kashmir should not be in doubt. Never mind the TV pictures of jehadists shouting inflammatory slogans on the streets of Lahore. These people have enormous resources and can organise any number of street demonstrations using the unemployed youth.

    Look at the Economic Survey, 1998-99, on the basis of which reports in the Pakistan media itself record the failure of the economy to achieve any of the vital targets of growth. The year has been the most difficult one in Pakistan’s history. Most of the difficulties were compounded by the total unpreparedness of the economy’s managers to cope with the consequences that were to flow from the fateful action of May 28, when Pakistan went nuclear in response to a similar move by India a fortnight earlier.

    Mr Sharif’s government had clear four weeks for preparation and necessary adjustments before the presentation of the budget. The economy that had become addicted to heavy doses of foreign loans was suddenly deprived of its life-sustaining transfusions the suspension of which was easily predictable. And when the crunch came in the form of sanctions, the economy was caught wholly unprepared and in a state of utter panic.

    Driven by the desperation of the new situation, they then set out to take a series of “saving” measures in quick succession which complicated the situation still further. The crisis afflicted the economy mainly via the external sector. The year, however, ended with the immediate impact of the crisis being brought under control, as luckily the sanctions were short-lived and the resumed inflow of loans was on a larger scale than usual. But, meanwhile, considerable damage had been done.

    And yet the Pakistani establishment could afford to embark on this suicidal venture, completely oblivious of popular sentiments. This paradox can only be explained by the fact that it is only a small group of people —among them politicians of all hues, bureaucrats and army officers, apart from industrialists and feudal lords (Waderas) — who virtually own Pakistan.

    The notorious 22 families that ran the country until the sixties have now expanded to 44, largely through splits to avoid nationalisation in the Zulfiqar Ali Bhutto era. Members of these families are known as robber barons of Pakistan. None of these families has come up by dint of sheer hard labour or business acumen.

    These families have grown from small-time businessmen in pre-Partition India to their present position of eminence, largely through manipulating the government machinery, the banking system, land grab and unimaginable exploitation of the poor (known as Haarees, the defeated and conquered). No wonder, they were great believers in the two-nation theory that led to the creation of Pakistan.

    Just one landlord (Wadera), Ghulam Mohammad Mehr, owns 100,000 acres of land, and Ghulam Mustafa Jatoi owns 80,000 acres when agricultural reforms restrict land holding to 150 acres. The House of Habib has about 90 units in its fold. Mian Mohammad Mansha is the director of the boards of 45 companies. Mr Nawaz Sharif’s Ittefaq group controls at least 29 industrial units. Mr Sadruddin Hashwani has 25 companies. Monnoos have 18 textile and sugar mills.

    Mr Farooq Hassan of Hassan Associates lives in a house insured for 4 million dollars. The house built by Mr Bashir Ahmad of the Escorts group over 40,000 square feet in Gulberg, Lahore, has a library custom-made in London. Ms Farida Saigol lives in a house sprawling over 68 kanals of land in a plush locality. Seth Abid has invested Rs 5 million in real estate in Lahore and his front men control the Lahore Stock Exchange.

    One can have some idea of how this banana republic actually functions from the following:

    One, 1,500 individuals and firms make use of 80 per cent of the total bank credits. Rs 130 billion is stuck up in bad loans and Rs 8.2 billion has been written off. While the public demands the recovery of the struck-up loans, the government has come out with schemes to reschedule the loans and grant new loans to the same defaulters.

    Two, a business shark managed to secure 38 loans, totalling Rs 3.5 billion, through fake collateral and escaped when his trickery was exposed. He is living happily abroad.

    Three, an unknown entity was granted a loan of Rs 1.18 billion without any collateral on a telephone call from Islamabad and the banker who sanctioned the loan ended up as a federal minister, instead of ending up in prison.

    Four, all five loans worth Rs 500 million of a robber baron heading the Pakistan Chamber of Commerce Committee for the revival of sick industrial units were written off.

    Five, eighty industrial units, including 32 big units set up by public and private sectors in the last 50 years, were sold for a paltry amount of Rs 10 billion. New owners are defaulting in the payment of Rs 4 billion to the Privatisation Commission and the liabilities of the privatised units worth tens of billions in local and foreign currencies were being paid by the Government of Pakistan, that is the tax-payers.

    Signals about a massive concentration of wealth started coming as early as 1959, when a Credit Inquiry Committee of the State Bank of Pakistan revealed that just 222 depositors were making use of two-thirds of the total credit facilities offered by the banking system; that 43 families controlled 98 of 197 non-financial companies, accounting for 53 per cent of the total assets. The top four (Saigols, Dawood, Adamjee and Amin) controlled 20 per cent of the total assets, the top 10 families accounted for one-third, while the top 30 owned over half the listed assets.

    Zulfikar Ali Bhutto took over power on December 21, 1971, and on January 1, 1972, his government promulgated the Nationalisation and Economic Reforms Order. In the six years that followed, 31 key industrial units, 13 banks, over a dozen insurance companies, 10 shipping companies and two petroleum companies were nationalised out of which at least 22 industrial units, nine banks, nine insurance companies, three shipping companies and both petroleum companies belonged to the 22 families.

    Initially, nationalisation did curtail the financial powers of the 22 families. But it had some side-effects which seriously afflicted Pakistan’s economy in the long run. Industrial outfits disposed of industries that escaped nationalisation and self-imposed moratorium on new projects. Investors lost the urge to use their money in Pakistan. Most drastically, each of the 22 families, in an effort to avoid nationalisation, adopted a strategy to appear small by dividing into several groups. Thus, today, the initial 22 families run as 44 separate units.

    On the economic front, Zia-ul-Haq maintained the status quo as bequeathed by the senior Bhutto. But after him, the first Nawaz Sharif government in 1990 brought about massive economic reforms on the pretext that “the inefficiency of the public sector has deprived the national exchequer of a large amount of funds which would have contributed to the social sectors and industrial growth.” Ms Benazir Bhutto, who came to power again in 1993, continued with the reforms.

    These facts and figures have strategic implications. Clearly, the people of Pakistan (the Haarees, the conquered) simply do not matter. It is their conquerors who call the shots and it is they who we have to deal with. Peace with India will be a shot in the arm for the conquered people of Pakistan. That is why they gave a two-thirds majority to the first politician who put the possibility of friendly ties with India on his political agenda. But by the same token, peace will diminish the authority of the establishment, the owners and conquerors of Pakistan. We have to see how the author of Pakistan’s Kargil crisis, Gen Pervez Musharraf, conducts himself. Will he be more realistic in dealing with India? Well, South Block will have to keep its fingers crossed. (ADNI)

    (The writer is an expert in Islamic studies.)

    Unfortunately it is these 44 families who control the two main parties in Pakistan, hence the revulsion people felt with the elected members. What the military does remains to be seen


      Things crash with their own weights. So, how far one can go?

      Fata Morgana