Imran Khan’s First Year at Bat

After years of campaigning as the figurehead of a minor party on Pakistan’s political sidelines, Pakistani cricket star and philanthropist Imran Khan’s efforts to bring about a “New Pakistan” culminated in victory. Having split the opposition vote to little effect in the previous elections of 2013, in the July 2018 national elections Khan led his Pakistan Tehreek-e-Insaf (PTI) party to beat out weakened rivals and form a government at the national level, as well as in two of the country’s four provincial assemblies.

Achieving this electoral victory required Khan to make numerous compromises on the path to power, including accommodations with the country’s military establishment and other political elites who now support his premiership. Though Khan’s populist convictions and commitment to pursuing an anti-corruption drive against his now-vanquished political rivals appear to be unshaken, his first year in office has been a difficult one, with more challenges and compromises yet to come.

The PTI’s Path to Victory

Once a marginal player with little in the way of a support base outside of his own considerable national celebrity, Khan first rose to head a broader political movement in the run-up to the 2013 elections. He drew large crowds of supporters — particularly among the urban middle class elites and urban youth — and campaigned on a vaguely defined but resonant message of transformational “change.” In the political heartland of Punjab province, PTI candidates split the 2013 vote in threeway contests with the then-incumbent Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N), but in most cases failed to secure pluralities, leaving the party with few elected representatives outside of Khyber Paktunkhwa province, where it was able to form a government.

With little representation afforded to it through the formal democratic system, the PTI was swift to dispute its losses through both the legal system and through extralegal street protests that paralyzed the capital city of Islamabad for several months in 2013-2014. Contemporaneous and subsequent reporting has suggested that the Pakistani military establishment, whose relations with the PML-N government of three-time Prime Minister Nawaz Sharif were tense from the start, and which has a long history of both direct and indirect intervention in the country’s politics, was a behind-the-scenes booster of the PTI demonstrations. Those protests helped underscore the PTI’s role as the major national opposition force, regardless of the number of seats it held in parliament.

As the PTI gathered momentum over the course of the PML-N’s tenure in office, it brought further legal challenges against Sharif and his administration. The PTI tied the government up in court battles, and maintained a drumbeat of steady criticism in the press. Khan also followed the traditions of Pakistani political expediency by recruiting breakaway members from the other established national parties – some of whom may have simply sought to join a new winning electoral bandwagon, while others were reported to have been encouraged or coerced into doing so by military officials who favored Khan and his party. During their period in exile during the military regime of General Perez Musharraf, the leaders of the PML-N and PPP had reached a détente agreement on a “Charter of Democracy” that included a commitment to settle their political rivalry through electoral competition, rather than extralegal appeals to outside power centers like the military, as they done through a series of short-lived governments in the 1990s. Although neither held strictly to this agreement, the leaders of the two more established national parties were perhaps more hesitant to embrace military partnership than the PTI, which had little investment in the existing formal system and needed external leverage to overcome the advantages of incumbent entrenchment. Today, many of Khan’s cabinet members are veterans of the Musharraf administration, and the PTI is reliant on the support of the Pakistan Muslim League-Quaid (PML-Q), the party formed by Musharraf to legitimize his rule in parliament, in order to maintain its majority.

A year ahead of the 2018 elections, Nawaz Sharif was disqualified from office in a Supreme Court case originally brought against him by the PTI, linked to allegations that he and his family had amassed undeclared assets held overseas and disclosed only through the publication of the Panama Papers. In the month before the election was held Sharif was convicted and sentenced to jail, a blow that sealed the party’s electoral losses. Other regional parties were also weakened and fractured in the run-up to the elections, particularly the Muttahida Quami Movement (MQM), which had previously dominated Pakistan’s largest city of Karachi and served as a swing bloc in parliament. Although the PTI’s 2018 electoral victory was narrower than the two governments that had preceded it – its candidates won by smaller margins, and it fell short of an absolute majority in parliament, leaving its coalition reliant on smaller parties to serve as partners – it nonetheless emerged as the broadest-reaching of the three major national parties, claiming a mandate to enact Imran Khan’s populist vision for Naya Pakistan, or “New Pakistan.”

Building Naya Pakistan

Khan has taken some steps toward enacting the New Pakistan program, which he describes as a social welfare state drawing inspiration from the early Islamic societies of Mecca and Medina. In particular, he has made high-profile pledges for greater investment in low-income housing, commitments to poverty reduction programs, and the provision of healthcare for the poor. The government has also taken steps to overhaul the structure of local government bodies in several provinces – ousting councilors elected during the PML-N government in the process – and has reshuffled many senior civil service appointments in a bid to assert greater control over the bureaucracy, as its predecessors had also done. To date, however, the PTI tenure in office has been principally defined by further legal actions against its political rivals, a retrenchment on pluralism and press freedoms, and economic challenges that have diverted resources and curtailed the government’s ability to make substantial efforts toward more generous welfare provisions.

Opposition leader Shehbaz Sharif of the PML-N, who succeeded his brother Nawaz as party leader after the latter’s conviction and jailing, was arrested in October 2018 on corruption charges dating to his tenure as chief minister of Punjab. Shehbaz’s son, Punjab assembly opposition leader Hamza Shehbaz, was also arrested, and several other party lawmakers have also been detained, although some — including Shehbaz — have subsequently been allowed release on bail or parole. Former president and PPP leader Asif Ali Zardari was also arrested in June 2019 as part of an investigation into allegations of money laundering and fraud on the part of several of his associates and members of the Sindh provincial government. In the face of criticism from the opposition over the government’s pursuit of a bailout loan program from the International Monetary Fund (IMF), the PTI has most recently formed a commission to conduct a sweeping investigation of its predecessors’ loan agreements and government contracting decisions. Opposition lawmakers accuse the government of pursuing “selective accountability” and a witch hunt against its rivals.

The leaders of the PPP and the PML-N have faced the brunt of the legal charges brought since the PTI took office, although two lawmakers affiliated with the Pashtun Tahaffuz Movement (PTM) have also been detained. The PTM is a social movement that formed in protest against extrajudicial security crackdowns on members of the ethnic Pashtun community in Karachi and the former Federally Administered Tribal Areas (FATA) on the country’s northwestern border. Pakistan’s military views the PTM as an externally sponsored threat to the country’s territorial and political unity; national media coverage of the group’s activities has been effectively banned, although its members remain active to some degree on social media.

The PPP, which controls the only provincial government independent of the national PTI and which has retained a solid – if narrow – base of support in rural Sindh, has clashed with the central government over encroachments on provincial autonomy and devolution measures that were previously introduced during its term in national office in 2010. As the legal proceedings against Zardari and other top party leaders have intensified, the PPP has shifted to a more confrontational opposition stance.

The opposition parties most recently united in June 2019 to agree on a push to oust the senate chairman through a no-confidence vote; the PPP had previously cooperated with the PTI in support of chairman Sadiq Sanjrani’s election. While they have been able to block the passage of most legislation or constitutional amendments through their position in the upper house of parliament, the opposition’s available formal routes for challenging the PTI’s rule are limited. Chief Justice Asif Saeed Khosa, who assumed the position of head of the national judiciary in January 2019, has taken a much less confrontational approach toward the PTI government than his predecessor Mian Saqib Nisar did during the final two years of the PML-N tenure, leaving the opposition on the defensive in the courts. Opposition parties have been slow to mobilize any large-scale mass protests against the government, and their ability to effectively do so as increasing numbers of their leadership are arrested or charged remains unclear.

The media environment has also become more closely controlled during the PTI’s first year in office. Government press regulators are increasingly taking action to directly freeze or prohibit the broadcast of interviews or remarks by opposition politicians. Pakistan’s legal system offers little protection for forms of speech deemed to be “defamatory” against state institutions — particularly the judiciary and the military, whose public relations arm has taken an active role in shaping press coverage and the social media environment, borrowing inspiration in part from Pakistan’s patron-in-chief, China. Journalists are regularly subject to threats and harassment, curtailing independent political coverage.

Despite all of these constraints, the government’s management of Pakistan’s troubled economy has offered the opposition a new rallying cry, which it will attempt to use to broaden its support base in the coming months, particularly as the impact of new reforms begin to bite.

Confronting Pakistan’s Economic Challenges

Prior to his electoral victory, Khan’s diagnosis of Pakistan’s economic ailments, and his prognosis for addressing them, was a simple populist message: the country’s previous political leaders had robbed the country of its wealth and potential, and the solution was to remove them from office and recoup the losses to the national treasury through prosecutions and criminal cases. Khan has continued and repeated this rhetoric many times since taking office, and his conviction that the country’s problems can be so directly personified in his political rivals appears to be deeply held. However, Pakistan’s economic difficulties are in fact much more complex and structurally rooted, and the PTI government enjoyed little in the way of a grace period after taking office before being confronted with the full scale of the challenges facing the country.

At the root of many of these problems is the stagnation over the past decade of Pakistan’s exports, which remain primarily conscribed to low value-added corners of the textile sector. Internal security threats from militant and terrorist groups, and a difficult-to-enter domestic business environment, in the meantime, have dissuaded foreign direct investment in recent years from almost all countries, with the exception of China. Even China’s much-heralded investment under the China-Pakistan Economic Corridor (CPEC) framework has slowed during the transition period of the PTI government’s first year, in part as some PTI leaders have expressed objections over the distribution and prioritization of previous CPEC projects.

Low levels of domestic investment in education and female workforce participation have compounded these problems, leading to a loss of export market share to other lower middle income competitors such as Bangladesh, Vietnam, or the Philippines. Although buoyed along by a relative decrease in international oil prices and CPEC-related investments that have brought new power generation capacity online in recent years, the Pakistani energy sector remains inefficient, subsidy-dependent, and incapable of reliably meeting national demand, which has further dissuaded productive investment.

Pakistani tax collection rates are among the lowest in the region, with evasion high and many politically privileged sectors and constituencies exempted outright from taxation; fewer than 1.5 million individuals file tax returns in a nation of approximately 200 million people. In the absence of a broadly enforced progressive income tax, regressive sales taxes and customs tariffs necessarily comprise the bulk of revenue intake. In part due to the resulting revenue shortfalls, Pakistan’s debts have grown significantly over the past decade, with foreign and domestic repayments now encompassing more than half of expenditures in the most recently-passed national budget, and government borrowing crowding out a significant portion of the domestic credit market. Under the previous PML-N government, the Pakistani rupee’s exchange rate was kept overvalued to shore up consumption imports and facilitate foreign debt repayment, but doing so further hampered Pakistan’s export competitiveness and cost foreign exchange reserves to maintain.

These problems are chronic, structural, and have been enduring features of Pakistan’s economy across multiple civilian and military governments. All of these factors contributed to a balance of payments crisis that was cresting just as the PTI took office and a new round of debt payments were further eroding the country’s foreign currency reserves. Like the two governments that immediately preceded it, the new PTI government would be obliged to seek a bailout loan agreement with the IMF, whose last three-year program under the PML-N had ended without resolving any of these deeper structural issues.

Although his economic advisors were quick to grasp the dire situation, and opened staff-level talks with the IMF soon after the new government took office, Khan was initially resistant to enter into an IMF agreement – particularly as his political rivals were ready and eager to trade roles and criticize him for taking up the “begging bowl” that he had previously forsworn and castigated them for making use of. While staff-level talks with the IMF continued inconclusively, Khan spent several months between September 2018 and January 2019 instead making high-level appeals to Pakistan’s principal allies for alternative sources of financial support, ultimately receiving lending pledges, deposits, and deferred oil payment agreements from China, Saudi Arabia, the United Arab Emirates, and later Qatar.

These commitments helped provide temporary boosts to Pakistan’s foreign currency reserves, and averted some of the immediate crisis over the first six months of the PTI’s term. It also helped signal that Pakistan retained important strategic partnerships even as it faced greater pressure from the United States. The Trump administration abruptly cut off most remaining forms of military assistance to Pakistan in January 2018 – which, while fallen considerably from previous levels of support reached during the early years of post-2001 counterterrorism cooperation, remained an important source of dollar inflows – and joined India and other allied countries in pressing Pakistan with the threat of blacklisting through the international Financial Action Task Force (FATF) forum for its insufficient controls against fundraising by terrorist groups. Pakistan also faced new signals from the Trump administration and the U.S. Congress of dissatisfaction with Pakistan’s growing strategic relationship with China, and objections to the provision of American or IMF assistance that might go toward the repayment of debts incurred through the CPEC program.

Ultimately, however, the structural foundations of the crisis remained unchanged, and the PTI government was left with little choice but to compromise and commit to a new package of structural reforms as a condition of reaching agreement on a new IMF aid program. In the process, Khan was obliged to overhaul his economic team, bringing in a new de facto finance minister, central bank governor, and head of the national tax authority. The three-year, $6 billion agreement reached with the IMF, which received final approval in July 2019, obligates Pakistan to undergo quarterly monitoring and evaluation on a range of criteria, including a shift to a market-determined exchange rate for the rupee, interest rate increases, fiscal deficit reduction that will limit the space for any ambitious welfare spending programs, strengthened autonomy for energy market regulators to set higher tariff prices, and a major boost to tax revenue collection. The latter effort – coming after the Federal Board of Revenue fell far short of its target for the previous fiscal year – required the passage of a new budget for the 2019-2020 fiscal year, which began in July, that eliminates tax exemptions for many formerly protected sectors of the economy. This included textile exporters and traders, who in the weeks since the budget’s enactment have begun to hold protest strikes against the prospect of new tax burdens.

The IMF program offers the PTI government a much-needed international endorsement that has unlocked additional lending from the World Bank and Asian Development Bank. It also coincides with U.S.-Pakistan rapprochement around efforts to support peace negotiations in Afghanistan, which has eased some of the tension in the bilateral relationship. But implementing the agreed-upon IMF reforms will be politically contentious and difficult to achieve. The PTI government coalition thus far remains more united and cohesive than its opposition rivals, although at least one smaller partner, the Balochistan National Party-Awami (BNP-A), held multiple meetings with opposition members before ultimately circling back to the governing coalition folds. But as inflation, interest rates, and tax burdens grow over the course of the PTI’s second year in office, public discontent may provide new avenues for opposition mobilization or weaken the stability of the current ruling arrangement.

Prospects for Year Two

The PTI’s primary constituency of concern remains the military establishment, which thus far appears content to allow the prime minister and his cabinet to serve as the public face of Pakistan’s government at home and abroad. Tensions between civilian and military officials during the Nawaz Sharif government culminated in the October 2016 “Dawn Leaks” incident, in which Pakistan’s Dawn newspaper published excerpts of an internal debate between the two sides, disclosing Sharif’s concerns that the military’s support for militant proxies in India and Afghanistan risked leaving Pakistan isolated and subject to growing international censure. Civil-military relations under the PTI government appear much more stable, as the PTI has made no move to challenge the military’s internal or external prerogatives.

Many of the pressures on Pakistan that Sharif warned of have come to pass during the PTI’s term, however, including the aforementioned aid cut-offs by the United States and the FATF proceedings, which are due for another round of formal review in October 2019. Scrutiny on Pakistan has particularly increased following the February 2019 cross-border crisis with India, after which Pakistan has been forced to undertake new crackdowns – however transitory they may ultimately prove to be – against anti-India militant groups like Jaish-e-Mohammad and Lashkar-e-Taiba. Although the Pakistani military now appears equally conscious of the need to show compliance and avoid a total cut-off of relations with the West, further flare-ups could potentially increase strains between military authorities and the PTI civilian officials who must now serve as external interlocutors for them.

The military’s direct role in managing the country’s economy has increased, with the government now reportedly preparing to cede most oversight authority over the CPEC project to a new special secretariat to be headed by a current or retired military officer, and the army chief having recently been appointed to a new national policymaking body on the economy. Overt spending on defense and military pensions continues to constitute the largest portion of Pakistan’s budget outside of debt repayments, and is likely to remain so even as the government is obligated to cut other forms of expenditure to curtail its deficits as part of its IMF program. Later this fall, the military is scheduled to undergo a leadership transition of its own following the retirement of current Chief of Army Staff Qamar Javed Bajwa; assuming he steps aside as scheduled, there is the potential for a rebalancing in the civil-military relationship. But overall the Pakistani military remains the dominant player in the country’s political system and a governing partner that the PTI cannot afford to alienate.

With an IMF agreement now reached and the country’s security policies under the firm management of the military, Khan can be expected to continue with his top political priority: the prosecution of his political rivals. Thus far this has proven an effective means of weakening and dividing the opposition, but the PTI’s ability to deflect blame for the country’s many domestic challenges may diminish as its time in office continues.

Pakistani governments have been comparatively durable for the past decade, as the PML-N and PPP governments that preceded the PTI both managed to complete their full five year terms in office, despite considerable domestic political turmoil. But while their governments may have become more durable in recent years, none of Pakistan’s prime ministers has managed to serve out a full term in office since the country’s founding. With only one year in office behind him at this point, it remains to be seen whether Khan will be the one to break this unenviable streak.