Pakistan’s US-allied ruling party avoided the collapse of its government on Friday after its reversal of unpopular economic reforms helped persuade a key ally not to defect to the opposition. However, the economic concessions could cost Islamabad billions in international loans badly needed to stabilize its shaky economy.
The Muttahida Qaumi Movement (MQM) announced it would remain a member of the ruling coalition after a pomp-filled visit to its Karachi headquarters by Pakistani Prime Minister Yousuf Raza Gilani. Without the MQM’s 25 seats, Gilani’s Pakistan People’s Party would fall short of the 172 seats needed for a parliamentary majority.
The political crisis had threatened to distract Pakistan’s government from its counterterrorism alliance with the US. Some analysts had suggested that Pakistan’s powerful army could use the political discord as a reason to counter US pressure to crack down more on al-Qaeda and Taliban militants along the border with Afghanistan.
The MQM’s decision to rejoin the coalition came a day after Gilani said the government would reverse unpopular fuel price hikes that partly prompted the party’s defection. The premier said on Friday that the government also would postpone a new tax system meant to raise more revenue.
“Our unity will benefit both the country and the national interest,” Gilani said. “We can steer the country out of this storm.”
Senior MQM leader Raza Haroon said his party agreed to rejoin the government for the sake of democracy and the country’s well-being.
The party quit the coalition on Sunday, citing anger over the government’s decision to raise fuel prices up to 9 percent on New Year’s Eve and its failure to combat corruption.
Some observers have said the MQM may have defected to force concessions that would increase its power in its main stronghold of Karachi, a sprawling port city of more than 16 million that is Pakistan’s main economic hub. It was unclear Friday if the People’s Party agreed to anything on that front.
The MQM may have also taken up the mantle of populist anger over unpopular economic measures to improve its performance in the next set of parliamentary elections, which are scheduled for 2013, but could be called earlier.
Although the MQM rejoined the coalition, Haroon said it would hold off on reinstalling its Cabinet ministers, possibly to retain some leverage.
The move to reduce fuel prices and push back tax reform will deepen the country’s deficit, which could lead the IMF to withhold billions of dollars in loans desperately needed to stabilize the shaky economy.
IMF spokeswoman Caroline Atkinson criticized the fuel price decision on Thursday, saying Pakistan needed to reduce its spending on energy subsidies.
“They’re inefficient and untargeted so that the bulk ... of the benefit from the energy subsidy goes to higher-income individuals and large companies,” Atkinson said.
US Secretary of State Hillary Clinton also criticized the decision, calling it “a mistake to reverse the progress that was being made to provide a stronger economic base for Pakistan.”
The US has pledged billions of dollars in civilian aid to bolster Pakistan’s economy, but Clinton has said repeatedly that the country must reform its tax system to increase the amount of revenue it is generating domestically.
Even though the government survived the recent political crisis, it is severely weakened and will have a harder time getting its agenda through in the two years remaining in its term, independent analyst and columnist Mosharraf Zaidi said.
“There’s a good chance it’ll complete its mandated tenure, but it will do so literally continuing to stumble and sputter from one crisis to the next,” he said.
It is unclear how the country’s main opposition party, the Pakistan Muslim League-N (PML-N), will respond to the MQM’s decision to rejoin the ruling coalition.
PML-N chief Nawaz Sharif gave the People’s Party a six-day ultimatum on Tuesday to agree to a series of demands to avert the government’s collapse, including reversing the fuel price hikes, reducing government expenditures and removing party officials allegedly involved in corruption.
Political analyst Hasan Askari Rizvi said MQM’s quick reversal means PML-N “has been left out in the cold” and will reduce the opposition’s ability to put pressure on the ruling party.
Also on Friday, a suspected US missile strike killed six alleged militants in Pakistan’s North Waziristan tribal region along the Afghan border, Pakistani intelligence officials said.
North Waziristan is dominated by al-Qaeda and Taliban-linked militant groups whose focus is attacking US and NATO troops in Afghanistan. The US has pushed Pakistan to launch an offensive in the area, but the army says it is too stretched with other operations against insurgents.
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