Sharif Struggles With Parallel State as Army Rises in Pakistan

(Bloomberg) -- Civil-military tensions are rising in Pakistan.

The latest sign of a rift came Oct. 2, when paramilitary troops barred their boss, Interior Minister Ahsan Iqbal, from entering the court hearing a corruption case against former premier Nawaz Sharif.

"I cannot be a puppet interior minister," Iqbal said, threatening to resign in protest. “There will be one rule, one government.” Although military spokesman Asif Ghafoor later told reporters those soldiers were providing security to Sharif, Iqbal ordered an inquiry into who ordered their deployment.

Meanwhile, parliament passed a bill allowing Sharif to return to politics. It was a dramatic turnaround two months after he was ousted by a six-person, Supreme Court-appointed investigative team -- two members of which came from military agencies.

This maneuvering ahead of elections next year is not only raising concerns the military will tighten its grip on policy, it is deterring investment in a stock market that has slumped to among the world’s worst performers from the best in 2016. The army has directly ruled Pakistan for almost half its 70-year history and, even when not in power, is seen as exerting influence over security and foreign strategies.

Weakening Democracy

“Tensions are increasing,” said Talat Masood, a retired lieutenant general in Islamabad. Pressure will result in “further weakening of the state in terms of its authority, weakening of democracy and further assertion of the military," he said.

The renewed civil-military tensions threaten to reverse Pakistan’s economic fortunes. After expanding at the fastest pace in a decade in the year ended June 30, the economy is now imperiled by a ballooning current account deficit, fueling speculation the government may be forced to seek a bailout from the International Monetary Fund.

The main KSE100 equity index has fallen about 15 percent this year -- the second-worst performance after Qatar -- after rallying 46 percent in 2016. Authorities are facing increasing pressure to devalue the rupee, which has fallen 0.6 percent this year despite strengthening Asian currencies.

With its substantial business interests -- an empire that covers everything from food, schools and cement -- the military stays in the public eye and enjoys local support.

Silencing Concerns

“We have concerns about the future of Pakistan’s government,” U.S. Secretary of State Rex Tillerson told reporters in Washington Oct. 4, after President Donald Trump accused Pakistan of continuing to harbor terrorists that attack American troops in Afghanistan. “Pakistan is critical, I think, to the long-term stability of the region.”

Pakistan’s military spokesman Ghafoor denied the army would implement martial law and said “nobody should even talk about it.” At a briefing on Oct. 5, he said army chief Qamar Javed Bajwa plans to visit Iran soon for security talks, following his meeting with Afghan President Ashraf Ghani in Kabul.

Meeting foreign leaders is the job of the civilian government or bureaucracy, and the army chief’s moves are a manifestation of the civil-military rift, said political and security analyst Zahid Hussain. “Afghan policy has directly been handled by the military,” he said. “All high-level security meetings are led by the military.”

Relations between the two branches of power have deteriorated since lawmakers initially resisted extending terms of opaque military courts in January, which were set up to fast-track terrorism hearings. 

Sharif’s disqualification in July continued a trend where no Pakistani prime minister has ever completed a full term. More than anyone, he’s come to represent the battle between the military and politicians -- he was ousted before by the military in a 1999 coup when he tried to replace then army chief General Pervez Musharraf.

Panama Papers

His downfall this time followed last year’s leaks from a Panama law firm, which showed Sharif’s children used offshore companies to purchase high-end London flats. Opposition leader Imran Khan led a highly-charged campaign, which prompted the Supreme Court to mandate an investigation into the Sharif family businesses.

What raised eyebrows was the probe’s inclusion of two serving members of the military intelligence agencies, along with the breadth and scope of the 254-page dossier that was presented within 60 days. Khan has also been accused of acting on the army’s behalf, a charge he denies.

Sharif still faces criminal charges, along with his three children and Finance Minister Ishaq Dar. After retreating to London last month, many were surprised when Sharif and Dar returned to Pakistan to fight the cases, a rarity in a country where politicians often flee into exile.

“The whole party stands firmly under the leadership of Nawaz Sharif,” Shehbaz Sharif, Nawaz’s younger brother and chief minister of Punjab province, said Oct. 3 on Twitter.

However, Sharif’s Pakistan Muslim League-Nawaz faces stiff competition at next year’s poll. Winning a by-election last month, the party lost its share of the vote to Khan’s party and right-wing religious outfits.

And if the fight between the army and politicians continues, “the negative impact will not be limited to the stock market,” said Mohammed Sohail, chief executive officer of Karachi brokerage Topline Securities Ltd.

--With assistance from Chris Kay and Faseeh Mangi

To contact the reporters on this story: Kamran Haider in Islamabad at khaider2@bloomberg.net, Khalid Qayum in Islamabad at kqayum@bloomberg.net.

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Jeanette Rodrigues, Chris Kay