Khurram Husain

By all standards, it was a tumultuous day in Pakistan’s parliament. Less than a month earlier, in July 2018, the Pakistan Tehreek-e-Insaaf, led by cricket-captain-turned-politician Imran Khan, had won a majority in the National Assembly elections. On 17 August, Khan rose to make his inaugural speech before the house as its newly elected prime minister.

The galleries in the assembly were packed with PTI party workers and Khan’s supporters. His party leadership pressed in tightly around him, while the opposition erupted in some of the noisiest protests and chanting the parliament had seen in years. The leading opposition party, the Pakistan Muslim League (Nawaz), founded by former prime minister Nawaz Sharif and led by his brother Shehbaz, was crowding the space in front of the treasury benches. Some wore black armbands in protest. They were shouting so loudly Khan’s words were nearly drowned out.

The PTI and its coalition partners had secured one of the slimmest majorities in Pakistani history—a mere four seats past the 172 required—while Khan made the widest of claims in his inaugural address. “I want to start by thanking Allah,” Khan began, straining to be heard above the melee, “for having given me the opportunity to bring that transformation in Pakistan, for which this nation has been waiting 70 years.” His coterie burst into applause.

“First thing we will do, we will have strict accountability for those who robbed this country and left it indebted,” he continued. “Today, I promise before God that I will not let even one of them go.” He turned to look in the direction of the opposition benches. Waving his finger for emphasis, Khan said that there would be “no negotiations, no talks and no settlement” with “any of the thieves.”

In the party’s manifesto and campaign, Khan had promised to deliver 10 million jobs, end corruption, hold elections for local governments, build 5 million low-cost housing units, create a separate province in southern Punjab—a long standing issue in Pakistani politics—and to reform the public-sector enterprises that had become white elephants on government finances and depoliticise their performance, among other promises.

In the months leading up to Khan’s election victory, the main opposition party, the PML(N), found itself targeted by a string of cases that left Nawaz disqualified for life and sentenced to ten years in prison. His family had hinted that the military was involved in the conviction. The army establishment denied this. PML(N) leaders said that the army approached members of their party, asking them to switch loyalties to Khan’s PTI. Many leaders complied in the weeks prior to the polls.

Election day stirred further controversy. Six political parties rejected the poll results. They prepared a long list of irregularities, including the expulsion of their polling agents from many stations during counting and inexplicable delays in announcing poll results in many constituencies.

The day after the election, the spokesman of the army sent out a cryptic tweet of a Quranic verse: “Thou endowest with honour whom Thou pleases, and Thou bringest low whom Thou pleases.” Two things made it significant. First, the verse was from the Surah Al-e-Imran section of the holy book, which translates to “the family of Imran.” And second, the spokesman had tweeted a truncated version. The rest of the verse read: “Thou givest power to whom Thou pleases, and Thou strippest off power from whom Thou pleases.”

The meaning was not lost on anyone—power was taken from Sharif and given to Khan. Posted at a time when results from many constituencies were not even in, the tweet was seen as a confirmation that the army was batting for the PTI. In the years since Independence, the military had orchestrated three coups and effectively ruled Pakistan for over three decades. Letting go of power was never easy for the military.

Khan suited the establishment. For nearly a decade, revelations had mounted Khan’s bid for power enjoyed the army’s backing, including his attacks on Sharif, with whom the establishment had always been at loggerheads. Khan’s anti-corruption image and cricketing past held wide public appeal. The fact that he did not hail from a political dynasty, like the Bhuttos—the family leading the Pakistani Peoples Party, which ruled Pakistan for years—and the Sharifs, also worked in his favour. He appeared willing to let the army lead on matters it cared about, such as Pakistani foreign policy. In return, the army could use its influence to hold Khan’s political coalition together and protect his party from the threat of defections.

But Khan’s “hybrid regime”—a term coined by Pakistani commentators to describe his closeness to the military establishment—was not to last. By 2022, it came apart in one of the messiest political divorces Pakistan had seen. In April that year, Khan became the first ever Pakistani prime minister to be ousted in a vote of no-confidence.

Since his ouster, Khan has unleashed a scorched-earth politics, the likes of which Pakistan has not seen before. He is determined to return to power while the government that replaced his, the Pakistan Democratic Movement, a coalition led by Shehbaz Sharif, is equally determined to thwart this ambition. The police and the election commission have filed a litany of cases against Khan, with offences ranging from corruption, to asset concealment and sedition. In turn, Khan too has filed multiple cases against the government and its institutions. Both parties in the power struggle—the PDM and the PTI—have been found by the Supreme Court to have openly violated the constitution. This battle for power is being fought in media studios, in the courts and in police thanas. Importantly, it is not being fought in parliament, which the PTI has abandoned.

The military establishment had been targeted by political leaders in the past, but Khan took it to a whole new level. In particular, he launched a vitriolic campaign against then army chief Qamar Javed Bajwa, a general who served as the head of the military between 2016 and 2022. Khan accused the military of hamstringing his government and forcing his hand on economic policies that burdened the Pakistani economy, and then conspiring to oust him. Khan even accused the current government and a senior army officer of colluding with foreign powers to attempt to assassinate him.

Positioning himself as an anti-establishment hero, Khan has managed to turn the narrative in the streets in his favour. In March this year, when the police attempted to arrest him from his home in Lahore’s elite Zaman Park neighbourhood, it was thwarted by mobs of his supporters. The crowd hurled petrol bombs at the police, which responded with tear gas and lathi charges. Dozens were arrested as the clashes dragged on for three days, until the Lahore High Court stepped in. “We are fighting for Imran Khan,” one supporter told the media. “If Allah wills it, we will die for him.”

If Pakistan’s economy was reeling from the various ups and downs—and there were many downs—of the hybrid years, the subsequent political chaos has sent it into a tailspin. Inflation has hit a record high and shows little signs of abating, while the Pakistani rupee has plummeted faster than at any other time in recent memory. Shehbaz’s government, like others before it, finds itself needing to administer one painful shock to the economy at a time, even as it is battling for its political survival. Two question crops up in any gathering in Pakistan these days: Will there be a coup? Will there be a default?

But it cannot be said that Khan’s ouster was the sole cause that brought Pakistan to this moment. The seeds of discord were sown during his time as prime minister, if not before. The hybrid experiment rested on one key relationship: between Khan and Bajwa. While Khan may have leaned on the military to come to power, his ambition took over once he won. As his Faustian bargain with Bajwa came apart, so did whatever modicum of stability Pakistan had found after a hard fought decade since the stormy end of its last military dictatorship.

DIFFERENCES BEGAN EARLY. The preceding PML(N) government had pumped growth with a combination of low interest rates and fixed exchange rates, paid for by sharply increased borrowing. The result was a massive hike in public debt and a sharp depletion of foreign-exchange reserves, which had peaked in 2016. Khan inherited an economy veering towards crisis, with barely enough reserves for one month’s import cover. This was not unusual. For at least a quarter of a century, every incoming government had inherited a bankrupt treasury and had to reach out for foreign funded bailouts to stabilise the economy.

Khan chafed at the necessity of signing onto an International Monetary Fund programme immediately upon entering power. During his campaign, he had vowed that he would “rather commit suicide than go to the IMF.”

There was no other way to climb out of the hole left behind by the previous government other than to introduce painful adjustments, such as inducing a sharp slowdown in the growth rate, raising interest rates and devaluing the currency—a bitter pill for the newly inducted prime minister. Meanwhile, Pakistan borrowed more than $8 billion from foreign allies to keep its reserves from reaching critical levels.

The government finally approached the IMF in late 2018, but resisted the financial agency’s stringent terms. The economic downslide continued.

In April 2019, Khan removed his finance minister and brought in Hafeez Shaikh as a finance advisor. An economist with long experience in the World Bank, Shaikh had served as finance minister a decade earlier in the People’s Party of Pakistan government and served as the privatisation minister during Pervez Musharraf’s rule, in the early 2000s. Shaikh was comfortable with the generals, and they were comfortable with him. With his appointment, the purse strings of the state were pulled out of Khan’s hands. From there on, he struggled to regain control over economic policy and the power to allocate resources that came with it.

Shaikh moved fast and signed onto a $6 billion IMF programme. Interest rates had already begun to be hiked before his arrival, but as soon as the programme began in July 2019, they were hiked further, to 13.25 percent. The exchange rate had hovered around 140 Pakistani rupees to the dollar all through that year, but shot up to above 160 Pakistani rupees by the end of the fiscal year, one of the sharpest adjustments Pakistan had ever seen. According to the World Bank, the growth rate touched 2.5 percent, one of the lowest of the decade.

Once the IMF programme kicked in, it was as if the government was presiding over the allocation of pain in the country. Unemployment rose, factories shuttered under collapsing purchasing power, inflation rose from five percent in January 2019 to above ten percent by January 2020, and millions fell below the poverty line.

By the time the fiscal year ended in July 2020, the economy had slowed to a near halt, registering a negative growth. The IMF had projected that, as a result of its programme, the GDP growth rate would slow down from 3.3 percent to 2.4 percent in the first year—a reasonably sharp downturn, but nevertheless, manageable.

As it turned out, the GDP growth rate plunged further than negative one percent. The government first attributed this difference to the pandemic, which was partially true. But in significant measure, the sharp slowdown had happened because the finance ministry hiked interest rates faster than ever before, and the tax-collection target increased by nearly a third, a rare precedent.

Discontent too had begun welling up almost immediately after the programme began, and the government was at the receiving end. The business community was up in arms, the poor and the middle classes were weary of inflation and rising unemployment, and the media was aflame with stinging criticism of the economic situation.

In September 2019, the governor of the central bank, Reza Baqir—an IMF bureaucrat who was educated at the University of California Berkeley—had led roadshows around the country to meet with business leaders and explain to them the necessity for high interest rates, but to little avail.

Having buckled and given into the IMF’s austerity measures, Khan struggled to explain himself. Through this time, his leadership was erratic and impetuous, earning him the moniker “U-Turn Khan” from his critics. At first, he defended his decision about IMF as the mark of a great leader—in one widely shared speech, he compared himself to Adolf Hitler and Napolean Bonaparte. “Hitler and Napoleon suffered huge defeats and caused losses as they did not take U-turns,” he said.

Earlier in the year, Khan had met with delegations of business leaders and listened to their suggestions on the policies that could be introduced under these constraints to help relieve their liquidity issues. One suggestion was related to a cess on gas consumption for manufacturing units. Many industrialists had been hauled to court for their failure to pay the dues, which had amounted to about 416 billion Pakistani rupees—not a small sum.

Khan drafted a presidential ordinance allowing companies in certain sectors to settle out of court, offering a large discount if they paid half their dues. This was met by a massive public outcry in the media and sections of the opposition, who pointed out that the benefit of this move will flow to select companies. Faced with a growing outcry, Khan quickly backpedalled and withdrew the ordinance.

In mid 2019, Khan had tapped Shabbar Zaidi, a well-known chartered accountant, to head the Federal Board of Revenue, the country’s tax body.  Zaidi was famous for urging greater documentation of the economy, with particular emphasis on the services industry, which had grown over the decades to account for more than half of Pakistan’s GDP but paid negligible amounts in tax. Reforming the FBR and broadening the tax base were core promises of Khan’s campaign, his manifesto as well as his televised inaugural address to the nation. Zaidi’s appointment suggested he was serious about delivering on this goal.

Zaidi announced a “war” on businesses outside the tax net. He prepared lists of non-compliant manufacturing units and retailers. In a matter of months, thousands of tax notices were sent to educational institutions, hospitals, doctors, lawyers, beauty salons, retailers and wholesalers, among many others in the service sector. Zaidi moved against smuggling rackets and introduced a scheme for taxing shopkeepers. In addition, he announced a far reaching internal reform of the FBR.

By October, the taxation drive had triggered a revolt within the FBR bureaucracy and threats of a general strike from shopkeepers, who were represented by hundreds of trade associations from around that country that came together in a rare show of unity to shutter their shops. Days later, the government buckled and rolled back Zaidi’s programme. In January 2020, Zaidi quietly left his post.

By late 2019, Khan was already itching for an exit from the IMF programme. Fiddling with the core austerity settings of the programme was not possible. As the finance ministry under Shaikh continued to impose these measures, he began diverging from his own government’s decisions. In a speech at the Pakistan Stock Exchange in Karachi in December 2019, he assured his audience that the year 2020 “will be a year of growth.”

But with the FBR having fallen short of its revenue collection measures, another round of measures was required to plug the shortfall, close to $200 billion. Shaikh had been preparing a mini budget, a mid-year package of fresh taxes along with the third hike in power tariffs since the IMF programme began.

Shaikh seemed to have met a great deal of resistance while persuading his cabinet colleagues to live up to the commitments made to the IMF. He issued a strong statement to his own government from the floor of the parliament in February 2020. “If we do not take right decisions, it is likely that we would also fail,” he warned. “The last government did not maintain fiscal discipline for the sake of protecting its popularity and winning elections.”

A SECOND FLASHPOINT between Khan and Bajwa had begun brewing in 2019 as well. The general’s term as army chief was due to end on 29 November, and he was looking for an extension.

Khan issued a routine extension in August, citing the “regional security situation.” But bureaucratic process dictated that the president, not the prime minister, be the appointing authority for the office of the army chief. So, Khan’s office withdrew the original notification, and then sent a summary to the president advising the extension of Bajwa’s tenure. But this too was not kosher—the prime minister required cabinet approval before issuing such a summary. Once again, the summary was withdrawn and then circulated to cabinet members for approval, even though the president had already signed it. So far, so good. The deed was done, even if ham-handedly.

The shocker came three days before Bajwa’s tenure was due to end. On 26 November,  the Supreme Court of Pakistan heard a petition submitted by a little-known group, The Jurists Foundation, challenging the extension. The court called for “a detailed examination of the matter of the extension/re-appointment of General Qamar Javed Bajwa” and ordered that the notification by which this extension or reappointment had been issued “shall remain suspended.” The chief justice of Pakistan was heading the bench that issued the notification.

The announcement sent shockwaves through the country. Extensions to the tenures of army chiefs in Pakistan under a civilian government were rare—they were mostly a characteristic of military dictatorships—but challenges were even rarer. The scandal around it was seen by the army as Khan’s failure to deliver on his end of the bargain.

Khan called an emergency cabinet meeting the same day. Bajwa decided to attend—another rare occurrence. Some critical decisions were taken. The army’s regulations were amended to include the word “extension” and a fresh notification was issued—the third one so far—granting the chief a three-year extension. Further, the law minister resigned from his position so he could personally appear before the court as Bajwa’s counsel.

The court did not budge. A day before Bajwa’s tenure was to end, the government withdrew the third notification. Khan’s office moved yet another summary, using a different clause in the constitution, which was cleared by the president the same day. Even this attempt failed—in a judgement issued on 28 November, the court laid down the law. “After detailed examination of the laws relating to the Army it is concluded that there is no provision providing for the tenure and age of retirement of a General and as a consequence of the COAS, as well as, for the extension of tenure or fresh appointment for another tenure,” it noted.

To the government’s relief, the court granted it some wiggle room. Instead of striking down the extension, it granted the government six months to introduce laws and provisions to allow for the extension of Bajwa’s tenure. Over the next few months, as the PTI and its allies worked to draft the legislation and have it passed, the issue was examined threadbare in every forum, with debates in parliament and heated discussions on primetime. By the time the requisite reforms were passed, in January 2020, the damage was done. Never before had an army chief’s extension turned into such a public spectacle.

Publicly, however, Khan had continuously heaped praise on Bajwa in public, calling him “the best army chief Pakistan has ever had” and “the most pro-democratic minded chief ever.”

Another episode had added fuel to the fire, although it largely escaped the glare of the headlines. In June 2019, Khan had abruptly removed Asim Munir, the powerful director general of Pakistan’s intelligence agency Inter Services Intelligence, barely eight months into a three-year tenure. He did not specify a reason. Faiz Hameed, another general, was announced as Munir’s replacement.

Hameed became crucial to Khan’s political attacks on his opponents. As the head of the ISI, Hameed helped Khan carry out his mission for “strict accountability,” which he had promised in his campaign. Opposition leaders suddenly found themselves mired in cases of corruption and under arrest. In July 2019, former prime minister Shahid Khaqan Abbasi, of the PML(N), was arrested on allegations of corruption in a 2015 deal with Qatar. The same month, Rana Sanaullah, also a stalwart of the PML(N), was arrested on charges of smuggling heroin in his private vehicle. A string of similar arrests followed. None of these people were convicted, many were not even charged, and most were eventually acquitted. But Khan was making a point.

The accountability drive suffered a couple of blows in late 2019. In October, the courts released Nawaz Sharif—Khan’s bitter opponent, whom he had repeatedly cast as the paragon of corruption and dynastic politics—who had been jailed since 2018. The next month, the courts lifted a travel ban the government had placed on him. Nawaz promptly departed for London, leaving Khan red-faced.

The month of December saw a massive escalation in the prices of wheat and sugar, both critical food items in Pakistan. Incensed by rampant media allegations that hoarders and speculators had taken advantage of the government’s ineptitude, Khan ordered an inquiry, in early 2020. The investigation named Khan’s associates—in particular, Jehangir Tareen, a sugar magnate from southern Punjab and a member of the PTI, whom the report named as the principal beneficiary of the hike.

Tareen had risen to become one of the richest men in Pakistan after his stint serving as a minister in the Musharraf regime. He was among the PTI’s biggest bankrollers and was said to command the loyalties of around thirty members of the Punjab assembly and the National assemblies—numbers sufficient to bring down the PTI government, should he have chosen that course. By this time, Khan’s allies in the coalition had begun threatening to resign, unhappy with the constant political scandal surrounding their government. The prime minister relied on Tareen to placate them.

Soon, FIRs began to be registered against Tareen and his family members in the price-hike case. Estrangement set in between Khan and the sugar magnate, who threatened to take his loyalists and leave the government. He never delivered on the threat, using it as leverage to prevent the government from taking any strict action against him.

TO EVERYONE’S SURPRISE, the pandemic became the turning point Khan desperately needed. Having lost face in front of the army establishment and alienated its supporters, and with the cloud of economic failure hanging over it, the PTI had fallen into a deep slump.

The first case of COVID-19 was reported in Pakistan in February 2020, and by March, there were lockdowns across the world. The IMF suspended all programme reviews. Pakistan applied for and quickly received $1.4 billion from the IMF through the Rapid Financing Instrument to defray the costs the lockdowns were going to impose. A few weeks later, the intergovernmental forum G20 announced its Debt Service Suspension Initiative, under which Pakistan saved close to $2.2 billion in debt service payments. Further disbursements came from the World Bank and the Asian Development Bank, boosting the country’s reserves.

Shorn of the shackles of the IMF programme, armed with the fiscal buffers built up during the period of austerity and the fresh inflow of dollars, Khan’s hybrid regime burst out of the doldrums. It administered one of the most powerful stimulus measures the economy had perhaps ever seen—but not before another round of friction with the military.

As the first wave and lockdowns gathered momentum across the world through March, Khan refused to order a shutdown, arguing in a televised address that the country’s poor and daily wage labourers could not afford it. The next day, on 23 March, the army overrode him. Its spokesperson announced a general nationwide lockdown. Khan bristled at the humiliation. In later interviews, he directly disagreed with the decision, saying that it hurt the poor the most.

Within a few weeks, pressure from the business community began to build, asking for factories to be reopened. Khan gave in readily, announcing exemptions every day. Pakistan was among the first countries to reopen its export-based industries. With its main competitors still tackling the effects of COVID-19 in their countries, it reaped their benefits as well.

Khan further used the chance to shore up his religious credentials. Islamic lobbies in Pakistan were keen to defy the lockdown during Ramadan, at least in the days leading up to Eid, in late May. Against the advice of the medical community, Khan urged Pakistanis to pray and held a televised prayer session with a prominent religious scholar. He told everyone that COVID-19 was “just a flu.”

By the middle of June, the first wave had subsided somewhat. Khan announced a new policy of “smart lockdowns,” which would focus on areas where positive cases were being reported in larger numbers. Khan’s supporters credited him for saving Pakistan from the crushing costs of complete lockdowns.

Even though many businesses were continuing as usual, the government announced massive stimulus measures for the economy. Following in the footsteps of central banks around the world, the State Bank of Pakistan slashed interest rates from 13.25 percent to seven percent over a few weeks in the summer. It further announced a number of refinance facilities—basically printed money that is handed it over to commercial banks, which lend it to qualifying business enterprises at low interest rates.

The measures were an instant hit. The State Bank said the impact of the monetary stimulus was close to five percent of Pakistan’s GDP, possibly the largest monetary stimulus ever applied in Pakistan. Though the fiscal year had ended with a negative GDP growth rate, by August, indicators of economic performance were already beginning to spike.

A boom in economic activity followed. The first quarter of that fiscal year, running from July till September 2020, posted a current-account surplus—the key indicator that measures the ability of an economy to engage with other countries—for the first time in almost five years.

Over the next few months, airwaves and newspapers were full of business leaders singing Khan’s praises. Companies listed on the Karachi Stock Exchange reported a sharp rebound in profitability in 2020. “Outstanding performance due to low interest rate and demand revival,” a leading stock broker tweeted in February 2021 after sharing the latest figures on earnings growth by listed corporates. Asad Umar—who had served as finance minister before being replaced by Shaikh and had returned to work as planning minister—quoted the stock broker’s tweet, adding, “Yet more evidence of the acceleration of economic activity.”

From floundering indecision in its first year, to groaning under the weight of IMF adjustments in its second, Khan’s hybrid regime suddenly found itself presiding over one of the most stunning periods of economic dynamism in Pakistan’s history in its third year. It was, by all accounts, the most spectacular turnaround in the fortunes any government could have hoped for.

Foreign-exchange reserves had nearly doubled since 2019, when the IMF programme first began, and import cover had improved from funds for less than two months to nearly three months projected by end of fiscal year 2020. The economy had registered a growth rate of negative one percent in the previous fiscal year. By June 2021, it shot up to 6.5 percent. An increase in growth by over seven percentage points in a single year had never been seen before.

But beneath the surface, trouble kept brewing. Economic vitality had been gained artificially, by printing money on a large scale. This strategy was not new in Pakistan and neither were its consequences. In the short term, it yielded rapid growth. Once the growth plateaued, deficits piled up, leading ultimately to a crash.

The first sign appeared as early as January 2021, when the current-account swung back into deficit. At first, the government tried to explain this away as a one-off development, due to unexpected payments on wheat imports and vaccines. But the deficit persisted and grew as months passed.

Meanwhile, Shaikh had restarted talks with the IMF to resume the programme. This indicated a gap between the government’s bluster on the economy and reality—if the economy was fine, why did Pakistan need the IMF’s help?

A political maelstrom was also taking shape. Opposition parties, smarting under Khan’s consistent attacks and his accountability drive, began to band together. In July 2020, the PML(N) and the PPP, of the Bhuttos, had held talks. In September, eleven opposition parties came together under the umbrella of the Pakistan Democratic Movement and elected Maulana Fazlur Rehman, a radical Islamist leader who heads the Jamiat Ulema-e-Islam party, as their head.

In the coming months, the PDM was vocal about its demands, but appeared uncertain in its strategy—while some parties suggested resigning from the assemblies altogether, others wanted to flood the capital with their supporters in a show of strength. Parties like the PPP favoured working within the parliamentary system. The disagreements were aired publicly, and drew mockery from Khan and the ruling party. Khan often accused PDM leaders of being traitors working at the behest of foreign powers, and mocked the  leaders of the two biggest constituent parties as dynasts—Bilawal Bhutto, the son of slain former prime minister Benazir Bhutto, and Maryan Nawaz Sharif, Nawaz’s daughter.

The PDM’s credentials were put to the test in March 2021, when elections to Pakistan’s upper house, the Senate, took place. In a highly controversial move, the presiding officer for the elections, whose party belonged to the PTI’s coalition, dismissed seven votes cast in favour of the opposition candidate for the chairman’s seat. The votes would have led the opposition to victory. Instead, the PTI won. Three days later, Khan won a vote of confidence in the national assembly, winning 178 votes to the 172 required.

A SIGNIFICANT DEVELOPMENT had edged in under the radar. After serving as finance adviser, Shaikh had been sworn into the cabinet in December 2020. The law required that he be elected to one of the houses in order to continue serving as a minister for more than six months. The PTI put him in the running for a senate seat. He lost by five votes, limiting his tenure to June.

This was a critical juncture in the political economy of the hybrid regime. The IMF programme revival was nearly done, but approval from the fund’s executive board was pending. The programme was crucial to building reserves, as well as to underpin a planned Eurobond flotation—another debt instrument that allows entities to raise capital in foreign currencies—that was looming. The revival would have restored the high interest rates, taxes and spending cuts of 2019. Shaikh had also agreed to bring amendments in the State Bank Act that would effectively ensure that the central bank’s powers to print money at the government’s command would forever be surrendered, its powers to issue refinance facilities to funnel subsidised credit to big business would be severely circumscribed, and tariff adjustments in the power sector would become a virtually automatic affair, to contain the growth of the circular debt.

Khan had never considered Shaikh to be in his inner circle, seeing him as the army’s stand-in. In Shaikh’s defeat, the prime minister saw an opportunity to wrest control of the finance ministry back for himself. As soon as the IMF board approved the release of funds, the government launched a roadshow to float a Eurobond, a debt measure that allowed the government to raise money from private markets.

Just before the flotation, in late March, Khan fired Shaikh. The PTI’s line was that Shaikh was let go for failing to control inflation—a concern that had not been raised when it campaigned for his election to the senate. Shaikh was replaced with Shaukat Tarin, the owner of a small and troubled bank based out of Karachi, who had served as finance minister under the PPP government in 2009. In his maiden interview, Tarin told a TV anchor, referring to Shaikh, “He wrecked the economy.” Tarin then announced that the government would seek to renegotiate the IMF programme conditions Shaikh had agreed to.

Far from the headlines, a silent negotiation had taken place between the government and the military over defense allocations in the budget. The IMF agreement revealed that Shaikh had agreed to grant the military a 12.5-percent hike in the defense budget. Tarin brought this down to 3.1 percent. The government released a budget-strategy paper stating that it was moving towards another expansionary budget for the next fiscal year, even though the agreement with the fund was to return to austerity.

In June 2021, Tarin announced the expansionary budget, hiking the federal public development spending by over 40 percent and laying out a revenue plan that made little sense. The IMF was sceptical and held the disbursement of the next tranche, asking Tarin to first demonstrate that his plan could work. Tarin also sought to renegotiate the amendments to the State Bank Act the IMF was demanding, arguing that these would require a constitutional amendment and could not be passed as simple legislation.

Bajwa found that despite all the hybridity in the system, he could no longer get what he really wanted—the military defense budget was eventually increased only by about 6.3 percent, with the argument that funds to pay for more were simply not available. Only days before the budget was announced, Khan had unveiled a 100 billion Pakistani rupee programme for the youth—the shortage, it appeared, did not apply to this.

Khan’s paths were now diverging sharply from the military as well as the IMF. As he asserted his prerogative as prime minister, sidelining the military, rumours began to swirl of contact between Bajwa and the opposition. Things came to a head in October 2021. That month, Bajwa decided to rotate Hameed out of his posting at the ISI and appoint him the commander of the Peshawar Corps. The opposition had been claiming that Hameed, the ISI head, had assumed the role of Khan’s political manager and trouble-shooter. With Hameed gone, Khan would be left to his own devices.

Khan delayed signing the notification for Hameed’s transfer, an act that put him on a direct collision course with the army chief. The army jealously guarded its prerogative over transfers and postings. It was rare for civilians, including the prime minister, to interfere in this matter. Two weeks later, when he eventually capitulated and signed the notification, it was already too late. The Rubicon had been crossed.

In later interviews, Khan admitted his government was dependent on power that lay “elsewhere.” “Power wasn’t with us. Everyone knows where the power lies in Pakistan so we had to rely on them,” he said. “We relied on them all the time.”

A steadily unstable economy added the prime minister’s plummeting fortunes. All the money that was printed and pumped into the economy in 2020 was inevitably going to roil prices across the nation—especially the value of the Pakistani rupee itself. Between May and October 2021, the Pakistani rupee had plunged from about 150 to a dollar to about 170.

The gross foreign-exchange reserves of the country hit a peak of $27 billion in August 2021 and began an inexorable decline, as the current-account deficit marched on and inflation began hitting the economy with growing ferocity. The State Bank only took the small step of raising interest rates by a meagre 0.25 percentage points in that month.

By November, economic pressures had climbed to a level where more drastic action was required. Pakistan asked for a $3 billion deposit from Saudi Arabia to help stave off the collapsing reserves. The State Bank called an emergency monetary policy meeting to hike interest rates by another 1.5 percentage points, saying, “The balance of risks has shifted away from growth and toward inflation and the current account faster than expected.”

Less than a month later, another hike of a single percentage point was announced. The bank issued a statement saying it expected “monetary policy settings to remain broadly unchanged in the near-term.” This turned out to be more wishful thinking than a projection.

In the ensuing fifteen months, Pakistan lurched from one crisis to another—economic, political, constitutional, sometimes all at once. The interest rate shot up to 21 percent in April 2023 while inflation crossed 30 percent, the highest level since 1974. While every country was battling inflation in a post-pandemic world, few were in the extreme dire straits that Pakistan found itself in—the South Asian average for inflation in the past year was 7.7 percent, according to the IMF’s World Economic Outlook report. An adverse global environment, coupled with strong domestic weakness, had Pakistan barrelling toward an unprecedented catastrophe.

2022 BEGAN with Pakistan scrambling to restart the IMF programme. The IMF was demanding the State Bank reforms be passed into law before the funds could be disbursed, and Tarin had to drop his resistance to the idea. In January 2022, the government passed another “mini budget” with additional taxes of 350 billion Pakistani rupees as well as the amendments to the State Bank Act that it had earlier opposed.

Later that month, the government floated a bond for $1 billion, and a few days later, the IMF approved disbursement of another $1 billion from the programme. Combined with a deposit from Saudi Arabia the previous month, the government borrowed a total of $5 billion in two months. But the fall in the foreign exchange reserves continued unabated, spurred by the growing pace of imports as well as debt-servicing payments.

In February, Khan made another U-turn. In clear violation of the agreement with the IMF, his government announced sweeping subsidies on fuel and yet another amnesty scheme to legalise tax-evaded wealth. Within weeks of having restarted, the fund programme stalled once again, as the IMF demanded a withdrawal of both these measures before the next review, scheduled for March.

The opposition decided to capitalise on the moment. Emboldened by the rupture in Khan’s ties with the army chief, it mobilised afresh. The media was rife with speculations that the army chief had decided to no longer support Khan’s government and that a challenge could now succeed in the parliament.

A high-voltage political drama played out over the next two months. On 8 March, the PDM filed the resolution calling for a vote of no confidence. According to the law, the vote had to take place by the eighth day of filing. But the speaker of the assembly refused to table the bill and the deadline was missed—the first major constitutional violation of many. A week later, 24 members of the National Assembly from Khan’s party came forward to announce they intended to defy their party directive and would vote “in accordance with their conscience.”  Some of these dissidents, as Khan called them, were from the faction of the PTI that was beholden to Tareen, the sugar magnate.

The legislators had moved out to Sindh House, premises in Islamabad operated by the provincial government of Sindh, led by the PPP. A mob of PTI lawmakers and workers attacked the property, trying to scale its gates, but were stopped by Sind police that has jurisdiction over the premise. Video of the confrontation played on national TV all day.

Another parliament session was scheduled for 25 March, but the PTI managed to stave off the resolution once again. Given its razor-thin majority and dissidents within its party, the PTI was struggling to put together the numbers it needed to survive the no confidence motion. Its allies in the coalition were holding their cards close to their chest, refusing to commit one way or the other until the day of the vote.

At a rally in Islamabad, Khan dramatically waved a piece of paper before the audience and claimed that it was a “threatening letter” from a “foreign government,” gesturing to the United States. He claimed the opposition was working at the behest of this foreign power to topple his government, because he had dared to visit Russia on the day of the invasion of Ukraine and chart an “independent foreign policy.” The paper was later found to be a diplomatic communique referring to US-Pakistan relations—not a threat.

The vote of no-confidence was finally scheduled for 3 April. But as soon as the session began, the government’s law minister, Fawad Chaudhry, repeated the foreign-conspiracy allegations. He demanded the resolution be set aside. Startlingly, the deputy speaker accepted these arguments, set the resolution aside and adjourned the session.

As soon as the session ended, Khan took to the airwaves in a televised address and announced that he had advised the president to dissolve the assemblies and call early elections. It was soon announced that the president had approved the advice. “The Prime Minister will continue his duties under Article 224 of the Constitution. The Cabinet has been dissolved,” Chaudhry tweeted.

But the Supreme Court had taken notice of the deputy speaker’s actions. It stayed all decisions, and immediately began hearings into the legality of what had transpired. The hearings dragged on for many days, during which the country was in limbo, not knowing whether it had a prime minister.

Eventually, the court order set aside Khan’s call for elections and asked that the vote of no-confidence be carried out. Khan had earlier announced that he would “fight till the last ball.” The Supreme Court and the Islamabad High Court opened late into the night, in case of any more manoeuvres. News footage showing riot police and prison vans were deployed outside parliament.

The vote took place late in the night on 9 April. The no-confidence resolution fetched 174 votes. Khan was out, but it seemed like he was refusing to leave.

At midnight, a helicopter landed at the prime minister’s residence, and all the cabinet members were soon seen leaving in their vehicles. Rumours swirled that military officers had paid an unannounced visit and a coup may be in the offing.

Things ended suddenly, and peacefully, when Khan left of his own volition. Later, a PDM coalition government was sworn into power, led by Shehbaz.

But even more extraordinary events were in the offing. Large spontaneous crowds assembled in virtually all cities across the country, to protest Khan’s ouster in a striking display of solidarity. Thousands sang the national anthem together.

No prime minister had completed a five-year term in Pakistan, but never once did it incite this kind of response. In later interviews, Khan said that the protests infused him with a new energy. The people were calling him, he felt, and he resolved to answer them. Khan immediately mounted the most ferocious opposition campaign the country had ever seen, one that is still ongoing.

In less than six months, Khan held close to fifty rallies, packed with tens of thousands of supporters, delivering fiery speeches. He subjected the military, and Bajwa in particular, to a campaign of hate and mockery and invoked memories of Zulfiqar Ali Bhutto in some places and Mujib-ur-Rehman in others—popular leaders who had run afoul of the military. In one particularly cheeky speech, Khan referred to a Mughal-era commander, Mir Jafar. “Do you know who Mir Jafar was?” He asked the crowd, before answering his own question. “He was the commander-in-chief of the army who betrayed his ruler and delivered his people to prolonged subjugation by foreigners.”

He turned his guns towards the PDM government as well. He told the media that Bajwa had stopped him from taking strict action against Pakistan’s elite dynastic families. In one speech, Khan said, “When good and evil fight, only animals are ‘neutral.’” He was referring to a statement by the military. Forced out into the open by Khan’s vicious attacks, the director general of the powerful ISI himself appeared in a press conference and told the media that the army would remain apoloticaland let politics take its own course.

The campaign on the streets was accompanied by ferocious hell-raising on social media, where PTI workers and supporters attacked the military incessantly. The public was quickly polarised–you were either with Khan, or against him.

Khan attempted some other political moves as well, to force the new government to call early elections—which he is confident of winning. First, all PTI MNAs resigned from the assembly, in an attempt to halt parliament. This did not work, because the new speaker sat on their resignations for months before starting to accepting them a few at a time. In July 2022, bye elections were held in 20 constituencies whose resignations had been accepted by the speaker. Khan conducted a vigorous campaign for these seats, barnstorming each constituency with rallies in which he himself spoke, attracting massive crowds. The PTI won 15 seats, lending his popularity the stamp of electoral approval.

He launched a long march in May, attempting to recreate the “Azadi March,” a 2014 protest that had propelled him to prominence. Without the backing from the establishment his earlier marches had had, the May call proved abortive. But the public support was unrelenting, and Khan was not discouraged. He called for a second march in October.

During the march, Khan was shot at, and sustained bullet injuries to his leg. Not one to lose the opportunity, Khan addressed the media the day after the shooting, propped up on a wheelchair with legs in bandages. He again claimed a far-reaching conspiracy to kill him, involving the government as well as foreign powers. The government denied this. The police claimed that a lone shooter had fired at Khan.

THERE IS SOMETHING ABOUT KHAN’S popularity that defies easy explanation. The year since his ouster has been marked by incessant political developments, almost too many to note. His political opponents tried all the  tricks of the trade to bring him down, but nothing seemed to stick.

They tried to draw attention to his high-flying lifestyle from his cricketing days, which was in sharp contrast to the pious and religious image he now cultivates. The government filed cases against him, arrested his close aides, questioned his commitment to the country, castigated him for his assaults on the military, and tried to highlight the contradictions between what he was saying now and what he did while in power, but to no avail. Khan’s followers seemed to not care what he said or did, connecting instead with his confidence and defiance.

There is a way things are done in Pakistan. When “they” come for you, the entire machinery of the state kicks into gear—FIRs are registered, arrests take place, evidence appears, bails are denied, custody is granted and convictions are carried out. Somehow, Khan has escaped the worst of this. The courts have been granting bail as fast as the state can bring cases against him. Earlier this year, when Khan finally agreed to show up in the Lahore High Court in a case involving the sale of state gifts taken by him while he was prime minister, he was accompanied by mobs that packed the courtroom with him. The court granted him bail in the first hearing.

Being outside of power has allowed Khan the freedom to employ powerful, moralistic rhetoric. Khan has told his supporters that he is not waging politics, but is instead fighting for good against evil. He marshals up religious imagery to cast himself as a modern-day saviour. Compared to Khan’s impassioned speeches, the old guard of the PDM sound lumbering, flat-footed and out-of-touch.

But important caveats still apply when assessing Khan’s popularity. The July 2022 by-elections were undoubtedly a huge success for the PTI. In both turnout and margin, the PTI scored big gains. In similar polls in October, Khan nominated himself as the candidate in seven out of the eight constituencies. Turnout fell and the party’s winning margins were narrower. In one important seat in Karachi, he even lost. More recently, in local government elections in Karachi, the PTI came in a distant third.

The PTI is, essentially, a noise making machine par excellence. Khan’s rallies are spectacles, with music and DJs, and meticulous attention given to lighting and camera angles. Its social media game is years ahead of anyone else—its ability to trend hashtags, distribute video clips, generate rapid memes to advance their view or cut down the views of another is the sharpest among all parties. While mobs of supporters show up to rallies or protests, in its long marches, the party was not able to sustain a prolonged sit-in, as was originally planned. The party issued numerous calls for a general strike during the year. None was observed.

Noise is important in electoral politics. But it is hard to say whether a high-octane campaign is sustainable in the absence of a strong machinery that connects the party leadership to its base. Or, more importantly, whether noise can prevail against the will of the military.

To some extent the government’s difficulties in dealing with Khan can also be explained by the economic situation it inherited, and the difficult decisions it had to undertake in its early days. Pakistan’s history testifies that governments lose bye elections in those months when an IMF programme is in operation. Voters punish incumbent governments for the hardship these programmes always bring. And few governments have had to implement decisions as tough as the ones the PDM government had to undertake immediately upon coming into power.

Fuel prices were hiked as the IMF demanded rollback of the subsidies announced by Khan in February. One litre of petrol was selling for about 160 Pakistani rupees in February. By September, it had crossed 235Pakistani rupees. Same with the dollar, which shot up to touch 240 Pakistani rupees by July as the adjustment demanded by the fund kicked in. Same with inflation, which averaged around 15 percent in the first six months of 2022—very high even by Pakistani standards—but eventually shot past thirty-five percent, a historic high. No government could muster electoral strength in the face of these facts.

Despite heavy borrowing, gross foreign reserves have maintained a downward trajectory. By August 2022, these fell to less than half their peak level, coming in slightly below $13.5 billion—not even sufficient to cover six weeks of imports. Banks were running out of dollars. Increasingly, people were asking whether Pakistan could be heading down the road Sri Lanka went down—the island country had declared bankruptcy in July 2022.

But no sooner had the situation been brought under control, than the PDM government, rocked by the defeat in the July bye elections, decided it could afford to roll back some of the tough decisions. In September, it replaced the finance minister who had successfully negotiated restarting the fund programme and replaced him with party stalwart (and Nawaz Sharif’s relative), Ishaq Dar.

Dar arrested the adjustments underway, and immediately tried to reverse the exchange-rate devaluation, leading once again to a stalling of the IMF programme. He promised in interviews that the exchange rate would go down to 200 Pakistani rupeesto a dollar by 1 November. Dar was counting heavily on a bailout package from Saudi Arabia. In December, Dar claimed in a TV interview that everything was ready and the funds would arrive in two weeks. “All that is left is some paperwork,” he said.

The funds did not arrive. The traditional bilateral creditors that had in the past readily agreed to bail Pakistan out were now weary of shouldering the country’s chronic requirements for foreign exchange. They were demanding that Pakistan first revive the IMF programme. The IMF, in turn, was weary of successive Pakistani governments reneging on their commitments after receiving the tranche, and asked that all actions required under the programme be undertaken upfront before any further disbursements would be made.

While the government floundered, Khan saw an opportunity. In late 2022, he had announced that he would dissolve the provincial governments of Punjab and Khyber Pukhtunkhwa, both of which were under the PTI, to force a general election. In January this year, he delivered on the threat. The constitution dictated that a caretaker government take over, and that elections be held within ninety days. The government decided to not honour the constitutional requirements.

Khan immediately moved the high courts. But the Supreme Court intervened, using its suo moto powers, and ordered that elections in Punjab must be held by 14 May. Then, three judges of the Supreme Court broke ranks and aired their reservations about the court’s use of suo moto powers. What was a political crisis so far under Khan’s relentless bombardment now turned into a constitutional and judicial crisis as the government refused, offering the weak excuse that funds to hold elections were not available. The government proposed to hold the general elections to all four provincial assemblies and the national assembly in October, by when the term of the present assemblies is set to end. In March, the military hinted that it was also in favour of the unified election calendar, throwing its weight behind the government.

The government is adamant that no elections will be held before October. Khan is adamant that this would be a constitutional violation and contempt of court, actions that could result in Shehbaz’s disqualification. A stalemate appears to have been reached, with both the PDM and the PTI digging their heels in. At the time of publication, both sides had somehow agreed to sit down and talk their differences out, although few in Pakistan expected a breakthrough. The fund programme remained. Pakistan teetered on the edge of default as foreign-exchange reserves were not even able to cover one month’s worth of imports. In the past, stalemates such as these had often ended in a military coup.

KHURRAM HUSAIN is a Karachi-based journalist. He has previously worked with Dawn and the BBC. He was the Pakistan scholar at the Woodrow Wilson Center between 2013 and 2014.

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