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TECHNOCRATIC SOLUTIONS VS DEMOCRATIC OPTIONS

Difficult Choices Determine the Pace of Privatisation

AT HOMELAND ABROAD

S. M. ALI
A combination of Internal compulsion* and external pressure* ha* produced a loose eonaenou* among major political parttea In the country, especially the Bangladesh Nationalist Party (BNP) and the Awoml League, that the nation has IttUe choice but to hasten the pace of privatisation of the economy
The broad unspoken agreement between the ruling party and the opposition is that the country should let market economy come Into own. with the minimum of "control points" as suggested by a kirmri Governor of Bangladesh Bank. A K N Ahmed In a three part series published by thia paper last week
However, as a former Deputy Prime Minister Jamal Uddin Ahmed said tn these columns on Friday, while "conceptually there arc no major differences, opinions vary on how. to what extent and to what time frame these (steps towards the introduction of mar k-t economy) are to be implemented." Then, the former BNP leader ended his stimulating piece with the kind of statement that all politicians uk most. Enough confusion has al ready been created It s time to clear them "
At this stage It Is relatively easy to Identify the areas of confusion which may get more complicated tn time unless they are tackled decisively and without any delav
On the Internal front, one major area of con fusion Ues In growing contradictions between political pledges of the government, such as waiving the agricultural loan of up to Taka 5.000 or the promise to avoid any retrench ment of workers during the reorganisation of the railway, and the pragmatic moves of the Ministry of Finance, moves which are partly prompted by the technocratic approach of Minister Salfur Rahman and partly, if not largely, by the conditionalities Imposed by the donor nations and aid agencies The danger Is. as time goes on. the leaders of the ruling party, especially Prime Minister Khaleda Zia, will find it Increasingly difficult to discard or even to tone down popular political pledge* in favour explaining hard and not-so popular economic decisions If a government cannot take tough decisions during Its second year in office. It will probably go for increasingly soft options in subsequent years, tn the light of IU chances tn the next election and the fear of growing strength of the opposition
The second area of confusion relates to the failure of the administration to revitalise and sharpen the tools of privatisation, such as the banking sector, the rural credit system, a rela tively corruption-free streamlined bureaucracy and a decentralised decision making pnxess Here, we also appear to have overlooked the fact that the market-oriented economy cannot come into its own on a country-wide basis, un less the development of rural based commerce and industry goes hand in hand with the progress In the industries set up tn urban centres.
Furthermore, the development of rural economy docs not merely mean setting up medium-sized Industries in villages, which use Impoverished local people as cheap labour. Il also means involving rural entrepreneurs tn small projects, ranging from. say. bicycle repair shops to grocery stores, supported by easily-available rural credit. This is what reduction of rural poverty Is all about, as we have seen in China since it embarked on Its mod ernisatibn process or as we now see tn Vietnam which, after years of debate, ts moving towards a market-oriented economy on a limited scale. In fact. China had turned to rural devetopment as a key to the country's overall progress even before II tiad launched Its md ernlsatton programme. On this subject, a book which has much relevance for South Asia ts "Learning from China written by SartaJ Aziz, the present Finance Minister of Pakistan, published in the seven ties when Aziz was the sec ond-in-command of the Rome based International Fund for Agricultural Develop ment (IFAD).
All these areas of confusion, suffering from lack of policy directions to varying degree*, are now overshadowed by conflicting opinion* within the administration and outside, over conditionalities To take a commonsense view, conditionalities Imposed on developing court Iries by aid agencies, especially the World Bank (WB) and the International Monetary Fund (IMF). and donor nations must be seen in the context of our over dependence on external assistance, the failure to use foreign aid with optimum lunrii the inability of the develop Ing countries to mobilise their domestic resource* to match, even to the smallest degree, the ever growing assistance from outside and to relate the development process to the re ductton of poverty at the grassroot* level.
among others. This la the crux of the whole controversy Of course, the package of cond! tlonaHtles Includes "demands" such as with draws! of agricultural subsidies and removal of virtually all restriettona on Imports, which cannot be met In a country like Bangladesh, unless they are Implemented tn stager. This, we believe. Is the position taken by the Government of Bangladesh.
The anger and Iruslratlon that many of our expert* feel over conditionalities are well ex pressed by Jamal Uddin Ahmed In concluding paragraphs of h1» article, published on Friday when he ask*. "If countries having the highest economic development are allowed to have limitation* Imposed on the management of their economies, why (should) the poor coun tries of South Asia be made to accept a pre scription which ts totally market-oriented and deregulated?"
A part of the answer to this good question is obvious. If a country reaches the level of eco nomlc development of any of the four dragons of East Asia — or even of Malaysia — It manages Its afiair* tn the way it likes, without being even told by WB and IMF what It should do to receive foreign assistance which it doe* not probably need anyway. By the standard set by aid agencies, the performance of these coun tries Is even impressive enough to be a model for other developing countries, especially the nations in South Asia It can also be said that if countries In South Asia had developed their own Individual agenda for progress carefully and carried It out with scrupulous honesty and dedication, they would not have been put In the present humiliating position over the so called conditionalities.
However, we have no problem In agreeing with the former Deputy Prime Minister that there are double standard* when it comes to import quotas introduced by industrialised countries against exports from the Third World and the insistence that developing countries should do away with similar restrictions The best way of fighting these double standards is for developing countries to take a tough, strong and united position Inside UNCTAD. GATT and other agencies In the UN system. On these issue*, the Third World ts not Without its allies After all. such question* as agricultural subsidies — which Ahmed mlslak enly describes as "a norm In developed coun tries" — import restriction* and tariff barriers have become divisive ones within the European Economic Community (EEC), between EEC and the United States and, last but not the least, between US and Japan
Even on the question of conditionalities we should get some support from some unex-per ted quarters In a commentary published by the International Herald Tribune (IHT) some time last month. Jeane Kirkpatrick, a former US Permanent Representative to the United Nations blamed President Bush for "transferring to (Internallonai institutions) de-
ciaion* and function* that have traditionally been viewed as the business of national gr>v ernments." Then, site went on to say. 'People In many countries are offended by a sense that the IUF t technocrat* believe they know what I* best for other* " (Italics mine SMA)
The commentary by Kirkpatrick focused on the broad difference* between the democratic and technocratic decision making processes To qudle her again. The most Important requirement of a (technocratic) expert s decision ts that it be correct; the most Important requirement of a democratic decision Is that It be acceptable to those affected by It " Again. Io go further. The technocrat s habit of relying on abstract principles to deal with concrete problems breeds Impatience with local detail and Indifference toward the particular Interests that arc critical for elected officeholders
The former US envoy to the UN, a well regarded academician by profession, made all these cogent observations on the question of International assistance for countries In Eastern Europe and republics In the former Soviet Union But they seem a* valid for Bangladesh and India as they are for Poland and Russia
There Is. therefore, confusion surrounding the direction of the economy of Bangladesh, which cannot be cleared without a sustained debate. Interaction among official and non official experts and an honest assessment of the performance of successive regimes In the country
In the process, we should be able to see where the private sector and state-owned corporations went wrong — and sometimes right — In carrying out their assigned tasks. In taking a retrospective new of the past, we - Jamal Uddin Ahmed and myself - have our dOerrnces, Indeed rather serious ones
According to Ahmed, "Prior to 1947, excepting a few utfltty services, the economy tn the region was. by and large, totally free The economic sectors were not demarcated be tween pubhc and private sector* "
Was the economy of British India a colonial territory, really free" What was the share of our own people - Hindu* and Muslim — tn the industries, in the production of manufactured good* and even In the service sector? What happened to all our raw materials, like jute and cotton, except In ending up tn the factories ird the United Kingdom"'
This particular historical fact is somewhat irrelevant to our present discussion. But 1 could not let It go unchallenged
What Is more to the point is Ahmed's assertion that "with independence, everything changed rapidly, mammoth public sector in vestment* were undertaken in all walks of life " Then comes a Hat of area* from artificial tn-semtnatton of cattie stock to airline companies. from primary education to the develop ment of nuclear physics which "came under state ownership and control "
The question is did India and Pakistan have a choice but to place all these areas under state ownership — in India. Pandtt Nehru * com mitment to socialism was a major factor — when thanks to the colonial expkalatton of the past, there was hardly much of tndl^nous private capital in the erstwhile East Pakistan? If we did not have the Pakistan Industrial Development Corporation (PI DC). we would have been much, much worse off.
Yet. In a mailer of years. Adamjis and Daud* fnlcrcd the scene In both wings of the country and set up their Industries, trading houses, manufacturing plants and even banks
By the time General Ayub assumed power In 1958. industrialist* In what was then West Pakistan had gained their footholds tn most sectors of the country s economic life By early ■1xtle*. noted economist Dr Mahbubu) Haq propounded the theory that smr 22 families controlled the economic destiny of Pakistan, with all the statistic* twinkling like stars on n dark sky The World Bank hailed the progress in Pakistan and even organised * delegation from South Korea to visit the country to study how the private sector in Ayubs Pakistan worked
We all know by now what kind of price people In erstwhile East Pakistan paid for this progress in Pakistan or what "benefits' reached the poor farmers In Sindh. Balu chislan and Punjab Yet. the WB hailed this so-called progress and attributed it to the performance of the private sector, the 22 families of Pakistan
Despite this dismal past performance of the private sector, we remain committed to letting the market economy take shape and play its due role, In avoiding the past error*, we must develop our own agenda. Instead of Just follow Ing the conditionalities suggested by the aid w agencies, which our leader* accept at formal meeting* but oppose In private conversation*. Hence, formal official communiques say one thing, but the so-called reliable sources say something else lo the media In the process, we deceive the aid agencies and. what s worse, wc deceive ourselves There must be some other way of moving forward. Let's hope, mt can find It soon.