A fraying federation

THE federation is now at stake. The bonds of national integration for a functioning federation are under severe stress. There is anger at the denial of political rights and the lack of effective ownership or even a say in the use and pricing of assets such as coal, gas and the ports. A recent decision to transfer land in Sindh and KP to the military for corporate farming intensifies this disgruntlement. In the case of KP and Balochistan, the bitterness extends to Islamabad’s controlling the provinces’ opportunities in cross-border trade.

In KP and Balochistan, social transformation has rendered traditional political leadership irrelevant. The baton has now been grasped by the youth, who are angry, if not alienated. In the case of Balochistan, they are seemingly unwilling to accept solutions within the ambit of Pakistan. The causes of their distress are historical and deep-rooted, and their significance should not be trivialised by claiming that the uprising and terrorism are being stoked by the Indians. Even if true, it is decades of Baloch grievances that are providing the fuel for the present insurgency.
To satisfactorily address these protests, a new federal structure has to be devised for the long-term sustainability of the state of Pakistan. Lest we forget, we have a centre because the provinces ceded some powers to it. This requires a recasting of the Constitution for a more viable structure that strengthens the autonomy of the provinces following the 18th Amendment. This realignment would have to entail the handing over of full control of all key resources (such as coal, oil, gas, and major minerals) to the provinces where these are located.
If Pakistan’s political and economic structure were to be implanted in oil-rich Texas (and in federations like Canada and Australia), this American state, with all its oil, would not be rich; instead, entrepreneurs in New York and Washington would be living it up. Whereas the wealth of Texas belongs to the citizens of that state, in Pakistan effective control over this country’s lifelines and richest resources does not lie with the provinces where they are found, the corruption of the provincial leadership notwithstanding.
More importantly, whereas the government of Punjab can carve out its own vision and development agenda for the province, a province like Balochistan and to a significant extent Sindh, whose two principal assets are their minerals and coastline, are unable to develop their own growth strategy because these assets are essentially controlled by the federal government. KP suffers similarly in the case of its gas and the denial of regular, timely payments of committed net hydel profits.
The argument that provincial governments are partners in decisions made by the federation on such matters, through the Council of Common Interests, and paid a royalty — in whose determination the provincial role is limited — for its minerals, and a ‘modest’ share in the port profits in Balochistan’s case, is a weak one. It doesn’t fully recognise their right to ownership and full autonomy to take decisions on the utilisation and disposal/ leasing of these assets. The acceptance of such rights should be complemented by an effectively functioning CCI, instead of a Special Investment Facilitation Council.

Government spokesmen lament that the narrow interpretation of Article 158, which gives the residents of the province where gas or coal is found precedence over others in their utilisation, results in non-productive consumption and is unfair to other users. However, this conveniently overlooks how Punjab imposes Section 144 on the movement of wheat in order to buy the crop at a price lower than its market price so that it can subsidise its consumption for its own citizens.
The injustice does not end here. While Punjab and Sindh have, at times, been selling their cotton and wheat and related products to KP and Balochistan at higher than world prices, the latter has historically been made to provide its gas to the residents of other provinces at well below world prices, reflected also in the nominal royalty payments on this scarce resource. Therefore, the provinces should have full control over their minerals and be paid international prices for them. After all, decision-makers in other provinces and at the federal level support world prices for other products on the pretext that these are produced and sold by the private sector and that good economic policy should not disincentivise efficient investments through a regime of distorted price structures.
Islamabad should also shelve many activities that it is performing in Balochistan, partly on the plea that it does not have the capacity to carry out such projects — which the federal agencies themselves execute through private consultants and contractors! Federal programmes include Gwadar and Gadani (in partnership with the Chinese), the Saindak and Reko Dik projects and provincial roads. Islamabad will simply not let go of functions that rightfully belong to the lower formations of government, as it refuses to shed weight by correcting the incongruity of its size and the expanded role and mandate that it has arrogated to itself.
Moreover, the argument that there is a need to prevent the siphoning of funds by the corrupt leadership in the province is an amusing one. Those making it neither have clean hands themselves nor are accountable to the voters in the province on whose behalf this money is being spent on a whole range of projects that may not be accorded similar priority by the provincial leadership. In fact, taking this line of reasoning to its logical conclusion, we should still have been the colony of the honest and benevolent Britishers.
Therefore, the answer to the existing unfair arrangement lies in a genuine federal system and not in conjuring a political system around some misconceived notion of ‘supreme national interest’. There is a small window of opportunity that is open, and that too for a short while, to halt and reverse the process of this drift, before there is little left to salvage.
The writer is a former governor of the State Bank of Pakistan.
Published in Dawn, October 1st, 2024