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The State of the Rule of Law in Pakistan – II

The business of life depends on a healthy life of business. A healthy life of business requires an environment conducive to its establishment, smooth running and flourishing, and protection of its income and property. It is because of this that many indices that measure in fact various business factors place rule of law at the top.

by Dr. Khalil Ahmad

The business of life depends on a healthy life of business. A healthy life of business requires an environment conducive to its establishment, smooth running and flourishing, and protection of its income and property. It is because of this that many indices that measure in fact various business factors place rule of law at the top.

We shall navigate only one such index and see how Pakistan fared on the scale of rule of law for the last 10 years. The Economic Freedom of the World Report is prepared and published by the Fraser Institute, Canada. It is ‘the best measure of economic freedom available.’ It uses the data collected and processed by ‘third-party international sources such as the IMF, World Bank, World Economic Forum. Much of its ‘data is of the “objective” statistical sort, and much is also “subjective,” coming from surveys, case analyses, or expert panels.’

This Report does not measure rule of law specifically and independently, however, it takes into account the factors related with the state of the rule of law which affect economic freedom. Out of its five main areas, the second one is concerned with Legal Structure and Security of Property Rights.

“Security of property rights, protected by the rule of law, is essential to economic freedom. Freedom to exchange, for example, is meaningless if individuals do not have secure rights to property, including the fruits of their labour. Failure of a country’s legal system to provide for the security of property rights, enforcement of contracts, and the mutually agreeable settlement of disputes will undermine the operation of a market-exchange system.

If individuals and businesses lack confidence that contracts will be enforced and the fruits of their productive efforts protected, their incentive to engage in productive activity will be eroded. Furthermore, poor performance in this area is sure to deter investment. Therefore, it is highly unlikely that countries with low ratings in this area will be able to achieve and sustain high rates of growth.”

FINALLY: “Protection of persons and their rightfully acquired property is a central element of both economic freedom and a civil society. Indeed, it is the most important function of government. The key ingredients of a legal system consistent with economic freedom are rule of law, security of property rights, an independent judiciary, and an impartial court system.” [Economic Freedom of the World 2006 Annual Report]

Here is the score assigned to Pakistan in this area for the last 10 years. The score is allotted from 1 to 10. The higher the score, the higher the rating and the better the performance and prospects.

As to the overall score in the area, it has been steadily declining from 1995 onward. The same is the case with other components of the area with little differences: on the whole they too are minimising. The two components, D and E, require our special attention. In the D component, the last four Reports have assigned zero score, why they did not do so prior to 2001? Didn’t the present spell of military government start in 1999?

Also, in E, though the score declined from 7.0 to 5.0, but from 2000 onward it is static. How so? Has the integrity of the legal system in Pakistan come of age? Why is it at a standstill? This may be explained as an illusion of quantification since practically the integrity of our legal system is in complete disarray.

Also, if read in conjunction with other components of this area, this score is unintelligible: when there is little judicial independence, almost non-existing impartial courts, and absolute military interference in the rule of law and political process, how the integrity of legal system can remain intact?

In component C, an improvement is visible perhaps because of increasing awareness on the part of people as well as government that rights to intellectual property need to be protected. In components A and B also, there is a bit of upward movement: that A bettered from 2.3 to 2.6 and B from 2.2 to 2.3. But it was in 2004.

What about what happened in 2005 and 2006 and how it affected the general perception and belief of people and media in Pakistan? Out of a plethora of heart-rending news reports and stories spread over the electronic and print media, here is just one example: a letter to the editor of an English daily has following to say:

Area Legal Structure and Security of Property Rights Components
A – Judicial independence – the judiciary is independent and not subject to interference by the government or parties in dispute
B – Impartial courts – a trusted legal framework exists for private businesses to challenge the legality of government actions or regulation
C – Protection of intellectual property
D – Military interference in rule of law and the political process
E – Integrity of the legal system

By this area, the Report seeks to assess and establish the following: “My generation – one that once lived under British governance – knows what the rule of law meant. What we have today is anarchy. People like me, who are not affiliated with a political party, the bureaucracy, the army or the press, are treated as though we are not even citizens of the state. And yet we are the majority, the teeming, toiling citizens of Pakistan…………”

In sum, the state of the rule of law in Pakistan is precarious, and so the life of the people. This shows utter failure of the government and criminal negligence on the part of the institutions of government. Or is it willful? Willful in the sense that it might be serving, or it might suit, certain interests of certain quarters. This fear is strengthened by the fact that there is no serious notice seems to be taken of the situation, and there are no efforts on the way to improve it.

Whereas what is urgently needed, and is strongly recommended here, is a new prioritising by the government putting the establishment and maintenance of the rule of law at the top with zero tolerance. The government must leave all its businesses other than infrastructure to the genius of its citizens and focus whole-heartedly on its basic duties such as betterment of the law and order situation, provision of justice. It must divert all its resources to the performance of its ‘protective function’ ably and indiscriminately.

The government which succeeds in creating a sense of protectiveness in its people as regards their life and property is a government helplessly needed by the people at this critical moment of our half century long unruly history. It is this policy which alone can ensure peace and prosperity to the people of Pakistan.

(How to Privatize Successfully – Part I)


Dr. Khalil Ahmad is the founder and Executive Director of the Alternate Solutions Institute, Pakistan’s first free market think-tank

This article appeared in the Business Recorder on March 24, 2007.