Memories of the 1958 takeover

Present problems mirror past dilemmas


The ill-concealed hidden hand behind the fall in the dollar made it almost seem that it did not want to be hidden. If there was credit going, then it should be ascribed where credit was due, and not to the caretaker government.

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This was nothing new. The armed forces have had a long history of intervening in economic matters. The main reason, the one given by the armed forces, is that it is a national institution, and cannot stand aside from what is going on in the country. Delving deeper, one finds concerns about the troops and their villages are going through. And finally, one finds that the officer corps, salaried to a man, are finding it hard to make ends meet, despite all the facilities that it is imagined they have got.

Another worry for the armed forces is that the rising of the dollar means that military import costs go up. Some of the costs can be covered by ordering less: less cannon can be got for the same money. Of course, less guns or even planes means lower combat ability, but at least the books balance, but one can’t very well order 85 percent of a destroyer or half a submarine. One has to give the Navy more money. Which will probably mean less for the Army or Air Force.

Even Imran Khan was only five when the Ayub Martial Law was imposed, and Only Mian Nawaz Sharif would remember it, but those would be childhood memories, which means they would be distorted by time, and would be bereft of the analysis typical of adulthood. The present COAS was not even born, but the way he brought down the rupee must have revived memories of that era.

Not in the details, however. The Pakistan rupee was still  then a sterling-area currency, and the dollar was still freely convertible with gold. The main problem was hoarding, but not of currency. Wheat and sugar were problems. It might be remembered that these two commodities were still rationed, after rationing had been introduced in World War II.

Sugar is still starring as a problem, and there are reports of the chronic smuggling which are apparently now to be handle. Certain arrangements have been made along the western border, both with Afghanistan and Iran, which now have to be disturbed. While in 1958, the probity of armed forces personnel was a given, it does not apply now to those serving with the border security forces, like the Rangers. Therefore, while the 1958 Army had no problems going after hoarding, now going after smuggling may mean difficulty tackling smuggling.

The Ayub regime is credited with many things on the economic front, deservedly so. It is also blamed for many things, again deservedly so. That the caretaker ‘hybrid’ wants any blame is unlikely, but the credit will drag it along in its wake. That credit and blame should be left to an elected government, which means having elections as soon as possible.

One of the present problems is that the IMF did not loom as large as it does now. There has already been a report of the IMF regarding the COAS’ intervention as undue interference. It should be remembered that that is how it regarded former Finance Minister Ishaq Dar’s intervention, which was after all similar. Perhaps the fate of Dar’s intervention is what has caused the coolness towards the current intervention.

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It failed. Not so much because it was bad or ill-intentioned, as because Pakistan does suffer a trade deficit. That leads to the dollar rising as it is chased by too few rupees. Similarly, sooner or later, the pressure on the rupee will resume, because the administrative measures have not remedied the fundamental imbalances in the economy, which lead to the deficit. Just as both interventions were similar, the reason was similar: speculation. In both cases, the target audience consisted of foreign exchange dealers. The COAS also addressed a wider audience of businessmen, who were also at the cutting edge of the speculation.

Another problem with dollar leakage is that it has to do with Afghanistan, indeed with the financing of trade and hawala in the whole of the Middle East. The disruptions are likely to be immense if there is a thorough-going Pakistani campaign against them. This might come up against one of the intiatives of the COAS, the Special Investment Facilitation Council, which is designed to ensure that the bottlenecks to foreign direct investment, especially from the Gulf, is brought in.

Back in 1958, there was no FDI being sought. The industrialization programme was to come later. At the time of the takeover, attention was focused on such minor matters as whether bakeries adequately protected food from flies. The impact of Martial Law was immense. Over recurrence, the impact has decreased, perhaps because it was learnt through experience that initial rigour would ultimately be relaxed. There was also the lesson that military men were human beings.

It is also worth noticing that the military did not have the sort of political clout it now has. The clout is not because of the threat that it could take over. It is because all the parties do not want the military to stay out of politics, but to support them, starting with getting them elected into power. As the PDM coalition showed, the objection was not to the ‘hybrid’ regime, but to the PTI being favoured. It should be noted that the SIFC was formed under the coalition.

In 1958, there were no parties which could provide such a vehicle. Ayub Khan was forced to go through the painful process of founding a party of his own, the Convention Muslim League. It could be said that every martial law becomes converted into a hybrid regime once it founds a political party of its own. In that respect, the Yahya regime could claim to be different, but it should be remembered that Yahya wanted the new National Assembly to elect him President. Only Mujib won majestically in East Pakistan, and the rest is history.

Indeed, it could be argued that there was a hybrid regime before 1958, what with the Commander-in-Chief in the Cabinet. The ruling party was hardly in a position to resist any of the demands of the military, but it seems there was not as much emphasis on the economy. That is understandable, because at the time, the country was wrestling with the conundrum of how to have two wings.

The ruling party was then trying something naïve, which was to avoid elections. It could be said that the present caretakers are doing the same, what with the elections being put forward by an

indeterminate period. It could be said that the imposition of Martial Law, which converted the hybrid regime into an out-and-out military regime, ended many of the contradictions then felt, but what it did not do was solve the country’s economic issues.

The Ayub regime is credited with many things on the economic front, deservedly so. It is also blamed for many things, again deservedly so. That the caretaker ‘hybrid’ wants any blame is unlikely, but the credit will drag it along in its wake. That credit and blame should be left to an elected government, which means having elections as soon as possible.


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