General Pervez Musharraf
Pervez Musharraf was born in Delhi in 1943. At Partition in 1947 his family moved to Karachi. He is thus a Muhajir, a Pakistani who migrated or is a descendant of those who migrated from India. The native language of the Musharraf family is Urdu. Although Urdu is the official language of Pakistan only a minority speak it.
Pervez Musharraf's father was an official in the government of Pakistan from the very beginning. Soon after the family's arrival in Karachi the father was sent to Turkey as a member of the Pakistan embassy in Ankara. Pervez Musharraf and his two brothers were thus away from Pakistan for seven important years of their childhood. Musharraf's mother also worked and provided additional income for the family. This helped the family finance the best education for the three sons. Pervez's older brother was a brilliant student, but Pervez, while generally a good student, did not match other brothers' scholarly achievements. Pervez was more of a incorrigible prankster and a participant in boyhood gangs. In some ways Pervez's early life was similar to that of Vladimir Putin. Putin admits that as a boy he was a hellion and only achieved self-discipline through competitive sports. Pervez was likewise somewhat of a little rascal but through self-discipline achieved much.
Pervez Musharraf's mother decided early that her oldest son would go into the government, and that her youngest son would become a doctor. She recognized that her middle son, Pervez, was somewhat of a problem and decided that a military career is what he needed to tame him. In due time he applied to the Pakistan Military Academy and passed the examinations, both intellectual and physical.
Ironically what tamed her middle son was marriage. He accepted the fate of a parent-arranged marriage but he clearly could not have done as well choosing for himself.
What marriage and family changed was not so much any more dedication to training and education. He had always had the capacity to do well in those fields and generally did so. What marriage changed was his inclination to willfully distain leaders whom he did not personally respect. With marriage and family he became more tactful and used better judgment in expressing his opinions.
Musharraf progressed steadily in the leadership hierarchy of the Pakistan army. There were occasional instances in which he was passed over in promotions but those generally turned out to be to his benefit. For example, if he had been selected to be the close adviser to Zia ul-Haq that other had expected him to be he would have died along with Zia in the plane crash that killed Zia and about 30 of his entourage.
Musharraf obtained a wide variety of experience in military assignments that prepared him for his ultimate selection to head the Pakistan army.
Musharraf's coup, or counter-coup as he called it, took only about three hours. Nawaz Sharif and the president of Pakistan were placed under arrest. In the year 2000 Nawaz Sharif was found guilty of the attempted hijacking of Musharraf's plane and sentenced to life imprisonment. The Army however commuted the sentence to exile in Saudi Arabia. Sharif was banned from political involvement for 21 years. Later Nawaz Sharif was charged with corruption and given a sentence of 14 years.
Musharraf's Institutional Reforms
In a chapter in his autobiography, In the Line of Fire, entitled "Putting the System Right," Pervez Musharraf says,
"Given Pakistan's checkered political history, alternating between martial law and sham democracy the way to true democracy has been difficult, requiring travel on several different paths at once. Our main political parties have in reality been no more than family cults, a dynastic icon at their head. Remove the icon, and the party evaporates. Hardly any of our political parties have been democratic on the inside, and therefore these parties never bother to hold genuine internal elections. The head of the party is the party. A party head appoints whom he (or she) wishes, almost always sycophants, to party positions. These sycophants always look upwards to the boss who appointed them rather than downward at the party workers who ought to elect them. "
Musharraf noted that Benazir Bhutto never held an election in her Pakistan People's Party (PPP) and yet was her party's Chairperson-for-Life. Both her PPP and Nawaz Sharif's Pakistan Muslim League (PML-N) were run as dynasties. Musharraf set as a goal the remedying of this situation. He commented,
"I noted the absence of democracy at the grassroots level and the absence of effective checks and balances of the three power brokers of Pakistan: the president, the prime minister, and the army chief. Those were the impediments to sustainable democracy. Each of these problems needed to be solved."
Musharraf had specific remedies in mind for these problems. He wanted a national political party that would be a real political party rather than a family cult. He needed organized political support for his agenda of other reforms. Musharraf in collaboration with his principal secretary, Tariq Aziz, decided to reconstitute the party of the Pakistan Muslim League. This was the name of Ali Jinnah's party and the same name had been chosen for the party of Nawaz Sharif. Musharraf and Aziz chose to name the party PML and selected two cousins, Chaudry Shujat Hussain and Chaudry Pervez Ilahi, to organize it. The Chaudry cousins were influential in the party of Nawaz Sharif. They added the letter Q to the name, Q being for the honored title of Ali Jinnah, Quaid-e-Azam (Father of the Country). Sharif's party then became known as PML-N, N for Nawaz.
Musharraf saw a need for an opposition party. He held a referendum on his being president of Pakistan for five years. The referendum sanctioned his continuation in power, but because there was no publicly organized opposition the resulting approval was suspect. He concluded that political opposition is necessary for any poll to have credibility.
Musharraf promoted other major political institutional changes. The voting age was reduced from 21 to 18. The membership of the National Assembly was increased from 217 to 342, with 60 seats specifically reserved for women. Women could contest any of the seats for the National Assembly and in the 2002 election 12 women won no reserved seats bringing the total of number of women in the National Assembly to 72.
There was a similar reservation of seats for non-Muslims. The reserved minority seats meant that the major political parties would have to give some consideration to how their programs would affect minorities.
Musharraf made advanced education a requirement for candidates for the national and provincial legislatures. This meant ten years of school and four years of college. Not only would this result in better educated legislators but it would keep out a certain class of politicians. A limit of two terms was imposed for the offices of prime minister and president.
One of the most important institutional changes promoted by Musharraf was the creation of a National Security Council that would include the top military leaders of the three armed forces and the chairman of the Joint Chiefs of Staff Committee. It would also include the prime minister and opposition leader of the National Assembly as well as the chief ministers of the four provinces. This body would only have a consultative function but would give the various power brokers a place to vent their concerns before events precipitated drastic actions.
A final program of institutional reform of Musharraf was the creation of democratic local government. The deputy commissioner and superintendent of police ran local affairs without any checks on their power. Musharraf promoted the passage in 2000 of a piece of legislation called the Local Government Ordinance. This legislation made the deputy commissioner and superintendent of police subordinate to the mayor.
Under the Local Government Ordinance there were local government unit created on three tiers. The smallest local units were population districts of fifteen to twenty thousand people. They elected a union council of thirteen members, four of which had to be women, one a non-Muslim and four had to be workers or peasants. The next higher unit was the sub district council and the highest was the district council. The district council would be chaired by the equivalent of a mayor.
The Economic Performance of Pakistan Under Musharraf
When Musharraf took power in 1999 Pakistan had only enough foreign exchange to cover two weeks worth of imports. In addition to needing foreign exchange to pay for imports Pakistan had a foreign debt of $39 billion that required each year about $5 billion of foreign exchange for payment of interest and scheduled repayment. Pakistan was importing about $10 billion and exporting only $8 billion. Pakistan not only had a deficit in its balance of trade but had a far more serious deficit in its balance payments of $5 billion. This was the verge of financial collapse and default on its debt.
Some of the trade deficit is covered by remittances of Pakistanis working in foreign countries. Pakistan has a large expatriate population who wants to send funds back to their families. However they were only sending about $1 billion through official channels. Instead they were using the informal system of money handlers called the hawali or hundi system. This informal system was much more efficient than the banks. A transfer would take only one day by the informal traders whereas the banks might take a week to complete the same transfer. The banks were inefficient because they became government bureaucracies after nationalization under the Bhutto regime.
Foreign exchange can also come from foreign direct investment. Due to the uncertainty of getting a fair treatment from the Pakistan government, foreign businesses were investing a negligible $300 million per year.
Tax revenues were low because of inadequate collection. There were numerous public investment projects that needed to be carried out but the government did not have the funds. Part of the shortage of funds came from the numerous public enterprises created by past nationalization programs. These enterprises were not making a profit; they were losing money and needed subsidies to keep running.
Musharraf appointed new directors to the public sector enterprises on the stipulation that they stop the losses and start earning a profit. He instituted a program of tax collection for existing taxes. This of course was not popular but it worked. Over the tax years from 2000 to 2006 tax revenues increase by 130 percent, from about $5 billion to about $12 billion, without creating new taxes or increasing tax rates.
By putting pressure on the banks to provide faster and more efficient service he was able to quadruple the amount of remittance sent through the banks.
In the matter of foreign direct investment Musharraf said,
"I personally spearheaded the campaign to increase our exports and FDI. First we adopted the course of deregulation, liberalization, and privatization. We created strong regulatory mechanisms to ensure transparency and checks and to provide a level playing field for all investors in all sectors of the economy. We also introduced rules and regulations to create a very investor-friendly environment. Armed with these positive environmental changes, I met with business communities wherever I went around the world to increase trade, joint ventures, and investment in Pakistan. We achieved phenomenal success. In 2005 FDI crossed $1.5 billion, up 500 percent from 1999."
As a result of the efforts of Musharraf and the Pakistan Export Promotion Bureau under the chairmanship of Tariq Ikram Pakistan's exports by the end of 2006 had grown to $18 billion, up from about $8 billion in 1999.
The overwhelming burden of the service payments was dealt with through diplomacy and negotiation. There was a rescheduling of the repayments and some cancellation. This enabled Pakistan to cope with its debt burden instead of being overwhelmed by it. By ending the fear of imminent default Pakistan's financial rating improved dramatically. Whereas the ratings of Pakistan's bonds in 1999 were below the investment grade they rose in 2006 to better than the B level and Pakistan's country risk premium dropped to 2 percent; i.e., Pakistan could borrow at a rate only 2 percent higher than the interest rate on U.S. government bonds. In 1999 Pakistan's risk premium was probably in the neighborhood of 7 to 8 percent.