Manoeuvres and rallies as Pakistan's election campaign heats up

It's set to be a tight race, and nothing - not even assassination - is beyond the realms of possibility.

 

Pakistan has finally set an election date. If all goes according to plan – which is far from certain in a country which has never before seen a democratic transition from one elected government to another – the polls will take place on 11 May.

And the political parties are not wasting any time. This Saturday, Imran Khan held a “jalsa”, or rally, aimed at demonstrating that he can still summon the numbers. His Pakistan Tehreek-e-Insaf (PTI) party emerged as a serious contender after a huge rally in Lahore in 2011, but the hype has since died down.

This weekend’s rally took place at the same spot, the Minar-e-Pakistan monument in Lahore, the capital of Punjab, Pakistan’s most populous state. The mood was jubilant; people sang and danced as they waited for Khan to appear. As always as Khan’s rallies, the crowd was predominantly made up of young people. Despite the rain that pelted the city, at least 100,000 people crammed into the park surrounding the monument to hear Khan. As the heavens opened and thunder clapped in the background, the crowd broke into a spontaneous chant of “tsunami”, the word often used by Khan to describe his supporters.

His main support is from the middle classes, but despite his “power to the people” message, many elites have also taken up Khan’s cause. (“What if he actually empowers the masses? Then we’re screwed,” one wealthy young man who plans to vote PTI said, ironically.) Most of his supporters are first-time voters, disillusioned and desperate for change in a country wracked by an increasing terrorist threat, crippling energy shortages, and a flailing economy.

At the rally, Khan reiterated his promises to end corruption and tyranny, and to always remain truthful. Although critics point out that these pledges are somewhat vague, the crowd lapped it up. Khan said that the PTI manifesto would be released soon. As the downpour intensified, the excited crowd was eventually forced to run for cover, with placards being turned into makeshift umbrellas, and supporters wrapping themselves in their green and red PTI flags to keep the rain off. The nearby Ravi Road came to a standstill as people swarmed out among cars, seeking cover.

Speaking to people in Lahore afterwards, the mood was one of hope. The desire for change is real and desperate, and people want to do something about it. I spoke to several people who had registered to vote for the first time so they can vote for Khan. The important thing is that he represents a change, even if his policies are somewhat thin at the moment. “It can’t be worse than what we’ve got,” one woman told me.

The enthusiasm may be there, but it seems unlikely that this will translate into the seats required to make Khan prime minister. Amongst large swathes of the population, apathy about the political process remains. Currently leading in the polls is the Pakistan Muslim League Nawaz (PML-N), headed up by Nawaz Sharif, whose party ramped up infrastructure projects in Lahore after Khan’s initial showing of support in 2011. If Sharif wins, it will hardly be a change from the status quo: he has already been prime minister twice, and if he wins, will be the first person to hold the office three times.

The next day, there was another, somewhat less jubilant event, as former military leader Pervez Musharraf returned from self-exile after more than four years. Musharraf, a now retired general who grabbed power in a military coup in 1999, has been living in London and Dubai since leaving Pakistan. He landed in the southern coastal city of Karachi on Sunday, to a crowd of around 1,500 – small by Pakistan’s standards. He will lead his party, the All Pakistan Muslim League, in elections.

His plan to hold a rally at the mausoleum of Pakistan’s founder, Muhammed Ali Jinnah, was stymied after the Taliban threatened to assassinate him and officials in Karachi refused to grant permission. “Where has the Pakistan I left five years ago gone?” asked Musharraf, when he finally did manage to make his speech. "My heart cries tears of blood when I see the state of the country today. I have come back for you. I want to restore the Pakistan I left."

Although his reception was significantly less enthused than Khan’s on Saturday – or indeed, than Benazir Bhutto’s euphoric return from exile in 2007 – Musharraf does retain some support. “Look at what’s happened to the country in the last five years,” Saima, a TV producer, told me last week. “At least we know that Musharraf was financially honest – he wasn’t corrupt – and he kept things running.”

His support base is committed, but it is small. I spoke to a group of his supporters on Friday, and even they conceded that Musharraf is unlikely to get a significant number of seats. Analysts say he has vastly over-estimated the level of support, and may even struggle to win one for himself. His best hope is striking a deal with another party.

With just under two months left to go, the cynics are anticipating another high profile assassination – perhaps even Khan, Musharraf, or Sharif – which would cause an election delay. In the bloody world of Pakistani politics, it is not outside the realm of possibility. But until that happens, we can expect many more big public rallies as the campaign, set to be a tight race, heats up.

Supporters wave flags at Imran Khan's rally in Lahore on 23 March. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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