Zafar Iqbal
The World Bank has tied a 670 million dollar financing programme to a familiar list of reforms. Wheat and sugar must be removed from the Export/Import Order 2022. The private sector must be given a larger role in importing urea. Regulatory barriers to investment and trade must go. On paper, these are the standard prescriptions of open markets. In practice, they arrive at a moment when the world that produced them is quietly falling apart.
Consider Washington. The Trump administration has turned its back on globalisation. It has raised tariffs to shrink its large trade deficits, even with its closest allies, and it imposes sanctions on its adversaries with growing frequency. The country that once preached free trade to the developing world now practises managed trade at home. Why, then, should Pakistan be asked to open its commodity markets as if the old consensus still held?
Consider Europe. The European Union is no longer the economic engine it once was. Its old hostility towards Russia now shapes its budget. Scarce money is being spent on military hardware rather than on health, education and productive industry. The result is visible on the streets. Protests and unrest have become common in several European capitals, as citizens ask why guns come before bread.
The European Union has also borrowed a further 70 billion euros for Ukraine. The working assumption is that Russia will lose the war and pay the bill. The ground realities say otherwise. Few serious observers today expect Moscow to sign a cheque for its own defeat. Europe is, in effect, borrowing against a victory that is not coming.
Then there is debt. The West is carrying a debt burden that weakens its claim to global leadership. For decades, the petrodollar helped carry that burden. Gulf states earned dollars from oil and parked them in American treasuries, allowing Washington to borrow at remarkably low cost. The ongoing conflict involving the United States, Israel and Iran has effectively brought that era to a close. The cheap money that underwrote Western power can no longer be taken for granted.
The world order is shifting before our eyes. Yet the World Bank, and other multilateral lenders with it, continue to press conditions designed for a different age onto debtor nations such as Pakistan. This is difficult to understand. What is harder still to accept is the silence on our own side of the table. Those who negotiate for Pakistan do not appear to question these conditions at all. They sign. They nod. They return home.
Take the demand on wheat and sugar. The Export/Import Order 2022 allows the government to track demand for these two essential commodities and to act when there is a shortfall or a surplus. It is a tool of food security. Removing these commodities from the Order in the name of private sector participation would leave the state blind at precisely the moment it most needs to see.
This is not to defend the record of our own administrations. Past and present governments alike have failed, again and again, to judge whether a shortage truly exists. Export subsidies have been granted for surpluses that were never there. Months later, the same commodity has been imported at a price higher than the export earnings the private sector pocketed. The public paid twice. The exporters gained once. That failure is real, and it must be fixed. But the cure for poor monitoring is better monitoring, not the abandonment of monitoring altogether.
There is a deeper problem. Pakistan does not have a free market. It has a market shaped by elite capture. Powerful trade bodies are organised to maximise the profits of their members, and they use their political influence to bend policy in their favour. Even the prices of perishable goods are set not by farmers but by aarthis, the middlemen who function as small-time oligarchs of the mandi. To hand greater control of wheat, sugar and urea to such a market is not liberalisation. It is surrender.
Adam Smith himself warned that people of the same trade seldom meet together without the conversation ending in a conspiracy against the public. The World Bank would do well to remember its own intellectual ancestor. Markets work when competition is real. Where cartels rule, deregulation simply transfers power from the state to the strongest private players.
The Bank’s demand to remove regulatory barriers to investment also ignores what Pakistan has already done. In mid-2023, the Special Investment Facilitation Council was established, both at the apex level and across key sectors, to facilitate investment, clear bureaucratic bottlenecks and address security concerns. Its success so far has been limited. That should be said honestly. Yet it exists, and as growth gathers momentum its role is likely to become more important. A lender that ignores such an institution is not engaging with the country in front of it. It is reading from an old script.
Multilateral institutions must practise what they preach. They ask borrowing nations to reform their governance. They should reform their own. Staff trained for the world of the Washington Consensus must either be retrained to understand the new order or be offered early retirement, so that people who grasp today’s realities can take their place. Conditions written by those who have not noticed the change will only produce failure.
Pakistan, too, must change. Our negotiators cannot be clerks who carry home whatever is placed before them. They must understand the shifting balance of power, the collapse of old certainties and the leverage this gives a country of 240 million people. They must be able to read the writing on the wall, and to say so across the table.
So the question is simple. Who is the reform for? If the answer is the lender’s comfort, Pakistan should refuse it. If the answer is the citizen’s bread, the price of his sugar and the fertiliser on his field, then let us negotiate with open eyes. The world has changed. Our bargaining must change with it.
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