Is Pakistan a failed state? No, but it's damned lousy at pretending it's a democracy.

The country's newly elected government, the first in the world headed by two former convicts (between them the president and prime minister have served time on charges of corruption, narcotics, extortion and murder, no less) was heralded into power by a barrage of praise and congratulations by the Labour Party - David Miliband is a huge fan - and the Republicans waiting out their term across the pond. However, eight months into the new government's post-Musharraf rule, Pakistan's economy, sovereignty and freedoms have been considerably eroded. Think Zimbabwe, minus the good governance.

The nation's economy, debt laden and mired in a never-ending spiral of inflation, has hit rock bottom. President Zardari's recent trip to China, eager friends of the strategic nuclear armed nation, was the latest blow to the country's economy. China offered no bail-outs, no friendly cash donations, nothing. The government, desperate, formed a "Friends of Pakistan" forum through which they asked other nations to step in and help out with the financial meltdown hitting the country. No one volunteered, not even the Saudis.

Food inflation has hit record highs, with the price of sugar rising close to 150 per cent this year. The same goes for other staples - flour and wheat especially. Electricity in much of the southern Sindh province, from which the ruling Pakistan People's Party - since renamed the Permanent Plunder Party - draws its strength, has been cut off. Prices were raised 71 per cent in one day by the chairman of the Karachi Electric Supply Company before being lowered after protests.

Traders in the commercial capital have been on the streets for much of the month, threatening the government with the non-payment of their bills, and why should they pay? On average, one spends more time in darkness than light in Karachi. Electricity whirs on and off five or six times a day - hospitals, homes, and businesses rely largely on private generators.

The Karachi Stock Exchange, wise to the gig, has placed a floor on the bourse since late August - stocks can't trade below the prices set in the summer. The move, which flies in the face of basic economic theory, instituted a capital control on investors. Your money is stuck. Foreign investors can't flee - though they'd quite like to and will as soon as the floor is lifted. And the credibility of Pakistani equity markets is shot. It would be prudent to note that collapse is fairly imminent.

Pakistan remains a rich and diverse country held hostage to a government chock full of ill-equipped and unqualified carpetbaggers

On the war-on-terror front, Pakistan's new government is proving to be a most gracious ally. The country's borders have been opened to unmanned drones that fly over parts of Pakistan's Northwest Frontier province when and as they please, hitting various targets. Some are meant to be al-Qaeda bullseyes, some are reported to be Taliban strongholds, and some are just schools. On 24 October US-led strikes in North Waziristan killed seven students of a seminary school.

Pakistan, 61 years young, is a new country. It is a sovereign and independent nation, or used to be. The new government has huffed here and there about being left out of the decision-making process that sends planes over the country, but no borders have been shut and no serious attempts made to halt US aerial infringement of Pakistan's skies. All that's been created is an internal refugee problem. With the foreign bombings in Waziristan and the civil war in the Swat valley being fought by local insurgents against the state, the Internal Displacement Monitoring Centre puts the number of internally displaced in Pakistan at close to one million people, Asia's largest current displacement. With the US elections close at hand, it's anyone's guess which way the tide will turn. But I'd put my money on worse.

Politically, this government has managed a most inglorious feat - it makes the unimaginable possible and past dictatorships look lightweight. Since taking office in February of this year, the PPP has continually reneged on its promise to reinstate the country's former chief justice, Iftikhar Chaudhry, who was unceremoniously unseated from the Supreme Court in 2007 by General Musharraf. They have invited the former judge to join politics if he wishes, but have suggested he quit his day job.

Worse still, press freedoms have been whittled down to the point of the farcical. Pakistanis have turned to text messages and emails to criticise the government - it's nothing grand - satirical texts and jokes mainly - but the government responded with characteristic aplomb. The cyber-terrorism wing of the Federal Investigation Authority has been tasked with hunting down the "anti-democratic" forces that seek to discredit or "character assassinate" the country's politicians. In democratic Pakistan, even text messages have become treasonous.

So, no, Pakistan is not a failed state. It's the country's leaders that are failures. In the 21st century, Pakistan remains a rich and diverse country held hostage to a government chock full of ill-equipped and unqualified carpetbaggers.

This year alone, the government has recycled three men as ministers of finance. With the war on terror escalating and Taliban-style militants gaining power in the northern reaches, Pakistan cannot afford any more failures. Try texting that to the government, though.

Fatima Bhutto will be writing regularly for the New Statesman