Pakistan: Imran Khan and the politics of inflation
Benjamin Parkin and Farhan Bokhari in Islamabad 20 hours ago
13-16 minutes
Pakistan: Imran Khan and the politics of inflation
Will the prime minister survive a vote of no confidence over his management of the economy at a time when Pakistanis face crippling price rises?
Zarina Bibi has in recent weeks been forced to choose between food and her family’s education. The nurse lives on the outskirts of Pakistan’s capital Islamabad, working two jobs to support her ageing parents and three younger siblings.
But she has been so squeezed by rising prices she had to withhold the money for a computer course for her 20-year-old brother. “I couldn’t afford to send him and also pay for our food for a month,” says Bibi.
She blames one person above all others: Imran Khan. His “years in power have seen many poor people simply becoming unable to afford anything other than food”, Bibi says of the country’s prime minister. “How will our people continue to live like this?”
Khan, Pakistan’s celebrity former cricket captain, came to power in 2018 as a populist, religious reformer promising to deliver welfare to the poor, stamp out corruption and end the boom-and-bust cycles that have plagued Pakistan’s economy for decades.
Yet Pakistan faces one of the worst inflation crises in Asia, with a basket of sensitive items such as food and fuel rising 15.1 per cent last week from a year earlier. Pollster Gallup says almost two-thirds of Pakistanis consider it the biggest problem facing the country, with living standards deteriorating. Such is the frustration that Khan’s political future is now in doubt.
The prime minister is due to face a no-confidence vote in parliament before the end of March — only the third in recent decades — after a motion filed by opposition parties to oust him and force elections. Earlier motions in 1989 and 2006 both failed.
During Khan’s four years in office he has struggled to meet the enormous expectations that accompanied his rise to power. He has been accused of economic mismanagement, using the spectre of anti-corruption to hound rivals and critics and impulsive policy U-turns that have undermined his agenda — repeatedly tussling with the IMF, for example. Almost half of Pakistanis have an unfavourable view of Khan’s performance, according to Gallup, compared to 36 per cent in favour.
There are also signs of tension between Khan and Pakistan’s powerful military, such as a recent stand-off over the appointment of a new intelligence head. Observers say military support was vital to Khan’s rise but the rift encouraged the opposition to launch its bid to topple him in the expectation that military leadership will not continue backing him. The military denies involvement in the process.
Yet the vote follows a clear historical pattern. No prime minister of Pakistan — a country that has swung between democracy and dictatorship — has ever completed a full term in office.
“It’s a mixture of the military being unhappy, the opposition being dealt with too confrontationally and the economy having collapsed in a major way,” says Bilal Gilani, Gallup Pakistan’s executive director. “But the larger issue is we don’t have a huge consensus on how to run Pakistan.”
Khan last year survived a “confidence” vote that he brought in response to unrest within his own party. But analysts are divided over his ability to fight off the opposition’s bid to oust him, given the deteriorating economic and political situation. His tight majority in the National Assembly is held together by a coalition. Several parliamentarians from his Pakistan Tehreek-e-Insaf party have defected and the loyalties of his coalition partners are unclear.
Asad Umar, Pakistan’s planning minister and a Khan loyalist, argues that the no-confidence motion is an opportunistic move by the opposition designed to take advantage of surging global commodity prices — a factor outside the government’s control — to force elections when domestic inflation is high.
“They know that . . . ‘If not now, we’ll never be able to stop Imran Khan.’ They cannot afford to have the government complete its term and go into a normal election cycle,” he adds. “Once he defeats this no confidence motion, he’ll emerge much stronger than he was before.”
But Nafisa Shah, a parliamentarian from the opposition Pakistan Peoples Party, says Khan’s “poor handling of the economy and flip-flopping on the IMF have made him very unpopular”. She says this was indicative of his chaotic rule: “He screams and shouts . . . His style is very anti-political, very Trumpian.
“Imran Khan has destroyed political culture, weakened parliament and institutions,” she adds.
Economic pain
Pakistan’s economic and political instability is an extreme example of the pressures felt through the developing world as global inflation accelerates, something only accentuated by the surge in energy and food prices following Russia’s invasion of Ukraine. Across the Arabian Sea in Sri Lanka, for example, protesters are also calling on President Gotabaya Rajapaksa’s government to resign as it too struggles with double-digit price increases and hovers close to default.But Pakistan’s economic problems go back decades. With a population of 220mn, the country has more people than western Europe combined, with a median age of 23. Yet both the pace of growth and the value of exports have trended lower in recent years. Low productivity and a dependence on imports has hampered job creation and triggered repeated balance-of-payments crises.
“Whenever we have growth, even the semblance of growth . . . we run into a current account deficit issue,” says Miftah Ismail, a former finance minister and member of the opposition Pakistan Muslim League-N party. “Our imports shoot through the roof and our exports don’t increase at the same pace, and so therefore we run out of dollars.”
Khan, better remembered internationally for his cricketing career and jet set lifestyle, underwent a religious awakening and devoted himself to domestic politics, campaigning against the alleged corruption of Pakistan’s political dynasties and its support for Nato’s war in Afghanistan.
“Khan captured Pakistan’s middle class moment,” says Maleeha Lodhi, a former Pakistan ambassador to the UN and US. He found support among students and upwardly mobile Pakistanis who “want a greater share of global power”, she adds.
Khan was, however, trapped by the same economic cycles he had vowed to end. He negotiated a $6bn loan package with the IMF in 2019, only to suspend the programme. His government this year revived the scheme, passing a series of politically contentious reforms to boost revenues and strengthen central bank independence.
Yet in February the government reintroduced fuel subsidies, saying it was needed to help hard-hit Pakistanis. But analysts say this could undermine the IMF programme weeks after it restarted. Financial data company MSCI late last year downgraded Pakistan from an emerging to frontier market.
Analysts also say Khan has proved impulsive as a leader. Like many populists he uses inflammatory rhetoric to mobilise his base and discredit critics. And while his anti-corruption drive resulted in the arrest of several rival politicians, few were convicted. Although his government blames inflation, the erosion in living standards for low-income Pakistanis who voted for Khan has been a bitter disappointment.
“I voted for Imran Khan in 2018 but that was the biggest mistake of my life,” says Hidayat Khan, a taxi driver in Islamabad who migrated to the capital from Pakistan’s rural north-west. “In the last three years, everything has become more expensive. The worst part is that the government refuses to believe that they are at fault.”
Mohammed Sohail, chief executive at brokerage Topline Securities, says Pakistan’s turbulent politics has been a persistent drag on investment. “Over the last three or four years the situation has been constantly deteriorating,” he says. “The biggest risk is the political risk . . . This has been a major factor affecting the economy.”
Since the no-confidence motion was proposed, Khan has gone on the offensive, holding several large rallies across the country in which he vowed to “go after” opponents such as former president Asif Ali Zardari of the PPP and Shahbaz Sharif, leader of the PML-N. Sharif’s brother and former prime minister Nawaz has been exiled in London for more than two years after failing to return to the country following temporary medical release from a Pakistan prison, where he was jailed on corruption charges.
“Some of the criticisms we’ve faced from our own followers is that the accountability drive has not delivered the results that were expected. So [we’re] refocusing,” Umar, the planning minister, says. Zardari and Sharif “are symbols of a system, which runs from the top and goes all the way down”. Both deny wrongdoing and dismiss allegations of corruption as politically motivated.
Khan’s image as a pious crusader against the excesses of his predecessors continues to carry appeal. Mohammad Bilal, a 22-year-old motorcycle mechanic in Pakistan’s port hub Karachi, is feeling the pinch of inflation but still supports the prime minister. “His collar is clean,” Bilal says, using an Urdu idiom for Khan’s personal integrity and tugging at his own grey shirt collar as he speaks. “He’s a good Muslim and an ambassador of Islam.”
Friends in Moscow and Beijing
In February, Khan travelled to Moscow to meet Vladimir Putin on what turned out to be the day Russia’s president launched his invasion of Ukraine. “What a time I have come — so much excitement,” a beaming Khan was filmed saying as he disembarked his plane the night before.The prime minister has insisted he will remain neutral on the conflict. This has not only inflamed political rivals at home, who have urged him to distance himself from Putin, but strained ties with Pakistan’s traditional western allies. The prime minister attacked the UK, EU member states and others at a rally this month after they publicly urged Pakistan to condemn Russia. “Are we your slaves?” he asked. “Whatever you say, we will do?”
Khan’s supporters say his reluctance to get dragged into “blocs” was vindicated by the failed western campaign in Afghanistan, with Nato’s chaotic 2021 retreat after the Taliban seized power. “Pakistan’s position is very clear and simple. We’re not willing to take sides in an international dispute,” Umar says. “[Khan] for the last 20 years, even when overwhelming public opinion was against his views, has always stood for peace.”
Khan’s government argues it is rebalancing an overreliance on the west in order to secure the country’s long-term interests. It is, for example, close to finalising a deal for a Russian-built gas pipeline to transport fuel from the southern coast to the north, which authorities argue is vital to securing long-term energy security.
It is also deepening military ties with China, which is already investing tens of billions of dollars as part of its Belt and Road scheme. Khan this month posed in a newly delivered Chinese-made J-10C fighter jet near Islamabad, part of a pipeline of advanced weaponry, including frigates, stepping up their years-old military relationship.
Critics say Khan’s tense relationship with the west risks damaging the country’s long-term economic interests. Pakistan’s exports to the EU, where it enjoys tariff-free privileges under the Generalised Scheme of Preferences Plus programme, are worth more than $6bn a year, according to the European Commission, compared with less than half a billion dollars to Russia. Analysts say further disputes with the EU could jeopardise those trade perks, which are subject to regular review.
Azeema Cheema, a director at policy-focused Verso Consulting in Islamabad, says that the country “is going to be pushed inadvertently into getting closer” to Russia and China. “What enables it as a factor is that you have a prime minister whose rhetoric is very anti-western,” she says.
“The prospect of economic collaboration [with Russia] is real,” says Najmuddin Shaikh, a former Pakistan ambassador to the US. “But we have to recognise the reality of where our economic and trade interests lie.”
The Russia-Ukraine conflict has so far exacerbated Pakistan’s economic pain. The country is an important buyer of wheat from Russia and Ukraine but with the onset of the war it has been forced to search for more-expensive alternatives.
From left, Imran Khan and Vladimir Putin meet at the Kremlin Palace in Moscow © Kremlin Press Office/Handout/Anadolu Agency/Getty
After years of improvement, Pakistan’s security situation has also deteriorated as the Taliban’s victory in neighbouring Afghanistan — which was welcomed by Khan — emboldens domestic extremists. The number of terrorist attacks rose 42 per cent in 2021, according to the Pak Institute for Peace Studies think-tank, the first increase since 2013.
Hasan Askari Rizvi, a former chief minister of Punjab and political commentator, says Khan faces his biggest political test to date. Rizvi argues that even if Khan survives it will become harder for the prime minister to secure the parliamentary backing needed to advance his agenda during the remaining year of his term.
“His ability to take new initiatives would have been weakened,” he says. “Pakistan is already in an election framework.”
