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FY 1999: Pakistan |
III. POLITICAL ENVIRONMENT A. Nature of Political Relationship with the United States Pakistan and the United States have had bilateral diplomatic relations since Pakistan's independence in 1947. Pakistan is a member of the United Nations, the Organization of the Islamic Conference, the Economic Cooperation Organization, and the South Asian Association for Regional Cooperation, among other international organizations. Pakistan has worked effectively to promote and support peace-keeping operations in Somalia, Bosnia, Haiti and elsewhere. In 1990, U.S. economic and military assistance to Pakistan was suspended as required by U.S. legislation (the so-called Pressler Amendment to the Foreign Assistance Act) when the U.S. President could no longer certify to Congress that Pakistan did not possess a nuclear explosive device. The Brown Amendment enacted in 1996 provided some relief from the Pressler sanctions. However, Pakistan's nuclear tests in May 1998 have resulted in the imposition of U.S. economic sanctions. The United States has traditionally been Pakistan's leading trading partner and largest source of private foreign capital, but the treatment of independent power projects may affect inflows of further U.S. investment into Pakistan. B. Major Political Issues Affecting Business Climate Since 1988, a broad consensus on a liberalizing, market-oriented economic policy has emerged between the two principal political parties. At the same time, Pakistan has moved toward a two-party system, dominated by the PML (Nawaz Group) and the PPP. This has resulted in a continuity of economic policy, even during the six-month period in 1993 when Pakistan had five Prime Ministers. The consensus on economic policy, together with the macro-economic discipline imposed by the structural economic adjustment programs adopted with the full support of the International Monetary Fund (IMF) and the World Bank, has had a positive impact on the business climate. Periodic political and civil unrest in Sindh province and elsewhere has the potential to dampen foreign investment and trade. The law and order situation in Karachi has deteriorated since the last report, and sectarian violence in the Punjab has worsened. As in many developing countries, corruption is an unwelcome, but ubiquitous, part of the business milieu in Pakistan. Recent anecdotal reports suggest that this problem continues and that, rather than serving to facilitate transactions, the phenomenon may be having a sclerotic impact on the economy. Efforts to reduce opportunities for corruption by improving management systems in, for example, the customs and tax services are under way. Also, important business organizations, including the nation-wide Federation of Pakistan Chambers of Commerce and Industry (FPCCI), have made curbing corruption a principal plank of their policy agendas. Since November 1996 the government has made a special effort to root out official corruption. C. Political System Pakistan is a parliamentary democracy. The parliament consists of two houses, a National Assembly elected directly through universal suffrage, and a Senate elected by the provincial legislatures. The Prime Minister is the head of government and is elected by and from the National Assembly. The Head of State is the President, who is chosen by an electoral college consisting of the National Assembly, the Senate, and the Provincial Assemblies. The Constitution requires that the President be a Muslim and provides for a five-year term. Pakistan is divided into four provinces: Punjab, Sindh, Baluchistan, and the Northwest Frontier Province. Each province has its own directly elected Provincial Assembly, a government headed by a Chief Minister, and a Governor appointed by the President, upon recommendation by the Prime Minister. There are two federal legislative houses - a 217-member National Assembly elected for five-year terms and an 87-member Senate. Senators are elected for six-year terms by the provincial legislatures. National Assembly seats are currently apportioned 115 to the Punjab, 46 to Sindh, 26 to the NWFP, 11 to Baluchistan, 8 to the Federally-Administered Tribal Areas (FATA) and one to the Federal Capital District of Islamabad, with ten additional seats reserved for religious minorities. Each of the four provinces has 19 senators and there are eight senators from the FATA and three from the federal capital area. Indirect elections for half the members of the Senate are held at three-year intervals. The Constitution of Pakistan guarantees an independent judiciary. The Supreme Court is the highest court in the country; High Courts in the provincial capitals of Lahore, Karachi, Peshawar, and Quetta stand at the head of the provincial judicial systems. Pakistan's press is free and aggressive in pursuing a story. The electronic media, however, is under state control. Pakistan came into existence on August 14, 1947 with the Partition and independence of British India. The creation of a separate Muslim nation was accomplished largely through the efforts of Mohammed Ali Jinnah (known as the Quaid-i-Azam or "great leader"). Jinnah served as Pakistan's first Governor-General until his death in 1948; his picture graces virtually every official Pakistani office. Pakistan initially consisted of two areas, East Pakistan and West Pakistan, separated by 1,000 miles of Indian territory. In 1947-48, Pakistan and India fought the first of their three wars involving the Muslim-majority territory of Kashmir, which both claimed and whose Hindu maharajah opted for India at Partition. The conflict ended in stalemate and Kashmir remains disputed territory divided by a heavily-defended Line of Control where since 1948 UN observers have investigated reported violations. A Constituent Assembly met in 1955 and produced a parliamentary, federal, and largely democratic constitution which became effective in March 1956 and proclaimed Pakistan an Islamic Republic. By this time, the provinces of West Pakistan had been combined into a single unit and West and East Pakistan made up the two units of the country. General elections held in December 1970 resulted in a potential rupture between the eastern and western sections of Pakistan. The Awami League, which advocated autonomy for the more populous East Pakistan, swept the East Pakistan seats to gain a majority in Pakistan as a whole. The Pakistan Peoples Party (PPP), founded and led by Ayub Khan's former Foreign Minister, Zulfikar Ali Bhutto, won a majority of the seats in West Pakistan, but the country was completely split with neither major party having any support in the other area. Negotiations to form a coalition government broke down and a civil war ensued. India attacked East Pakistan and captured Dhaka in December 1971, when the eastern section declared itself the independent nation of Bangladesh. Yahya Khan then resigned the presidency and handed over leadership of the western part of Pakistan to Bhutto, who became President and the first civilian Chief Martial Law Administrator. A new constitution, Pakistan's third, came into effect in August 1973 and Bhutto became Prime Minister. His government implemented portions of the PPP's socialist manifesto, restructuring the economy, increasing the prominence of the public sector, and nationalizing many industries. Bhutto's centralizing policies and autocratic ways galvanized the opposition, which challenged Bhutto's sweeping victory in the March 1977 national elections. Bhutto was deposed by his Chief of Army Staff, General Zia-ul-Haq, in July 1977. General Zia became president in 1978 and a provisional constitution, which retained substantial parts of the 1973 constitution, was imposed in March 1981. In the interim, Bhutto was executed by hanging in April 1979. Under Zia, the Government of Pakistan became increasingly Islamicized and benefitted from supporting mujahideen efforts to counter the Soviet invasion of Afghanistan. In February 1985, non-party elections were held for the National Assembly and the four provincial assemblies. In August 1988, General Zia died in an air crash. General elections were held in November 1988 and the PPP, headed by Benazir Bhutto, daughter of the late Prime Minister, won a plurality of seats and formed a coalition government. In August 1990, President Ghulam Ishaq Khan exercised his right under the constitution to dissolve the National Assembly, dismiss the Prime Minister, and call new elections. In the general election held in October 1990, the Islamic Democratic Alliance won the largest number of seats and Mian Nawaz Sharif, leader of its largest component party, the Pakistan Muslim League (PML), became Prime Minister. Nawaz Sharif, the first industrialist to lead Pakistan, continued the trend toward liberalization of the economy and promotion of private sector growth. In April 1993, President Ghulam Ishaq Khan again dissolved the National Assembly and dismissed the Prime Minister, but the following month the Pakistan Supreme Court reinstated the National Assembly and the Nawaz Sharif government. Continued tensions between the reinstated Prime Minister and the President resulted in governmental gridlock and the Chief of Army Staff brokered an arrangement under which both the President and Prime Minister resigned their offices in July 1993. Elections in October 1993 overseen by the reformist interim government of Moeen Qureshi resulted in a plurality for Benazir Bhutto's PPP and she secured sufficient additional support to be elected Prime Minister by the National Assembly. Prime Minister Bhutto's hold on power received a further boost in November 1993, when her PPP ally, Farooq Ahmad Khan Leghari, was elected President. In November 1996, President Leghari dismissed the Bhutto government, charging it with corruption, mismanagement of the economy, and implication in extra-judicial killings in Karachi. Elections in February 1997 resulted in an overwhelming victory for the PML/Nawaz and President Leghari called upon Nawaz Sharif to form a government. In March 1997, Sharif proposed and parliament passed a constitutional amendment removing the president's power to dissolve parliament and making his power to appoint military service chiefs and provincial governors contingent on the "advice" of the prime minister. 1. Schedule for Elections - The most recent elections for the national and provincial assemblies took place in February 1997, and national elections are scheduled to be held again in February 2002. Indirect elections for half of the members of the Senate were held in March 1997. Indirect elections for the other half of the Senate are scheduled for March 2000. The indirect election of the President was held in November 1993 and the next Presidential election is scheduled for November 1998. 2. Major Political Parties - The two largest political parties are the Nawaz Sharif group of the Pakistan Muslim League (PML/N), led by Prime Minister Nawaz Sharif, and the Pakistan Peoples Party (PPP), led by Benazir Bhutto. Both parties have a centrist orientation and support private enterprise and the free market. The PPP espouses a somewhat more activist view of government, especially in the social sector. The PML/N is slightly to the right of the PPP. There are several other smaller, but significant, parties. The Mohajir Qaumi Mahaz (Mohajir National Movement - MQM) is a party that claims to represent the interests of Pakistan's mohajirs (Urdu-speaking decendents of Muslims who migrated from India following the creation of Pakistan in 1947). It is allied with the current PML/N led government. The Awami National Party (ANP) is a Pushtun nationalist party in the NWFP and an ally of the PML/N in the national government. The Jamaat-i-Islami (JI) is a conservative Islamic political party that has enjoyed electoral success only when allied with a larger party. The JI boycotted the 1997 National Assembly elections.[end of document]
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