Page 7 - Pakistan Link - May 17, 2019

OPINION MAY 17, 2019 – PAKISTAN LINK – P7
Economic Stabilization Requires Better Governance and Political Stability

pines, Vietnam, Taiwan, Malaysia, and Bru-
n By Misbah U Azam nei. So it is yet to be seen how the countries
CA in the region and the US, Russia, and China
would respond if the reserves are really found.
enezuela – the Petrostate – is in an All said, the PTI experiment has turned
economic crisis. The inflation is out to be a miserable failure. The Khan gov-
Vso high that a cup of coffee today ernment has not been able to deliver in any
costs as much as the monthly rent of a one- sector of governance. Media reports suggest
bedroom apartment did that even the new economic team of non-
a decade ago. Economists elected technocrats has been nominated on
believe that the countries the demand of the International Monetary
which rely heavily on their Fund (IMF). Now, the IMF will negotiate with
natural resources are often its own ex-employees who may not be report-
vulnerable to the “Dutch ing to the civilian government.
disease” because the foreign On the other side, the opposition is get-
capital starts pumping into ting ready to make its move in the coming
the economy, increasing the value of the lo- days. They have already sensed the vulnerabil-
cal currency amid skyrocketing imports. ities of Khan’s team and also the panic among
All the labor and capital get sucked into those who brought them in power. After Eid
the natural resource while other sectors, like al-Azha there may be more pressure applied
agriculture and manufacturing, remain de- by the opposition parties on the government.
prived of any growth. Venezuela’s imports In order to salvage the experiment, there
grew almost 500% between 2004 and 2008 are strong chances that a move to bring about
and the GDP growth rate went down almost an in-house change will be made after the
350% during the same period. The crisis con- So much for the claim that “oil producing other 5-10 years before it will be available for budget by luring the turncoats from PTI and
tinued after Hugo Chavez’s death in 2013, and countries always have great economies”. production and due to the highly sophisticat- the opposition parties. The defections from
the new leader, Nicolas Maduro, also has had Pakistan’s economic managers have a lot ed techniques of extraction, the price may be the two main opposition parties, namely
to face hyperinflation, climbing hunger, dis- to learn from the economic disaster of Ven- much higher than expected. PML-N and PPP, have proved that they could
ease, crime and death rates, and massive emi- ezuela. After mismanaging the economy for Another problem could be the reaction hardly have an impact on the parties’ support
gration from the country. the last 8 months, the government in Pakistan of oil-producing countries around the region base but PTI has a lot more to lose if such a
According to an UNHCR report (No- is now expecting that changing its economic who would be losing their monopoly. The move is made.
vember 2018), around 3 million people had team would do some miracle and all pledges South China Sea region – which is home to Some commentators argue that the main
emigrated from Venezuela to Colombia (over of Imran Khan will suddenly come to fruition. a wealth of natural resources, fisheries, trade reason for economic troubles in Venezuela
one million), Peru (over half a million), Ec- For the first 6-7 months, they hid their routes, and military bases – can be one ex- was that the Venezuelan leadership was some-
uador (over 220,000), Argentina (130,000), incompetence behind the political rhetoric ample. The Ministry of Geological Resources what hostile towards the US and the US con-
Chile (over 100,000) and Brazil (85,000). that mismanagement during the last 10 years and Mining of the People’s Republic of China tributed to their economic problems in order
What brought Venezuela – a country was the reason for the economic woes. When estimates that the South China Sea contains to punish them, while Pakistan is friendlier to
which has the world’s largest oil reserves – to the media stopped buying this logic, the gov- 17.7 billion tons (approximately 130 billion the US and so the US would not want to de-
economic and political ruin? ernment began to promise good news about barrels) of crude oil (Kuwait has around 13 stabilize Pakistan.
Experts believe that although the drop an imaginary 205 million tons (approximately billion tons of crude oil reserves), though The argument does hold some truth, es-
in oil prices is one factor, the main causes of 1.5B barrels) of off-shore oil reserves, which other sources claim that the reserves of oil in pecially if one adds the Nuclear State dimen-
economic melt-down were years of poor gov- would – according to a boasting federal min- the South China Sea may only be about 1.1 sion to the equation. But if we take a closer
ernance, political instability and economic ister – change the country’s fortunes over- billion tons. look, it isn’t something we can rely on. The US
mismanagement which had driven what was night. All of this is at stake due to the increas- has already decided to leave Afghanistan and
once one of Latin America’s most prosperous Experts argue that even if that large ingly frequent diplomatic standoffs among right now it is trying to cut some kind
countries to a nightmarish economic disaster. amount of oil is discovered it would take an- the countries in the region, including Philip- STABILIZATION, P24

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