“There are legitimate uses for offshore companies, foundations and trusts. We do not intend to suggest or imply that any persons, companies or other entities have broken the law or otherwise acted improperly,” reads the disclaimer by the ICIJ’s so called ‘Panama Papers’. Talking heads in Pakistan, though, are in no mood to give the House of Sharif – which has figured in the leaks – benefit of the doubt.
First things first! Wealth will find its way to wherever its patrons can preserve and grow it the most. That’s the basic reality of a capitalist system that is at the height of its globalisation today. Feel free to accuse all of the folks listed in those leaks of being unethical or immoral for stashing their dough offshore. But you cannot prove the activity illegal – because it isn’t.
And that should be the biggest sleaze in the whole affair. “I don’t expect this to lead to one single legal case. We are not afraid – we haven’t done anything bad.” The person saying that wasn’t some head of state embroiled in Panama Papers. It was Ramon Fonseca – who is one of the founders of Mossack Fonseca, the Panama law firm at the center of this storm – who sounded really buoyant in an interview to the Financial Times earlier this week.
But high-profile folks mentioned in the 11.5 million documents, especially those in public service in democratic nations, are facing the heat. The Iceland PM has resigned. British PM is under pressure. The EU tax commissioner has vowed to crack down hard post Panama. India has already launched an investigation. Over at home, Prime Minister Nawaz Sharif has personally sought to contain the damage.
The judicial commission announced by the PM will likely be a dead rubber, as 1) it is being painted in a partisan hue by the opposition, and 2) if at all its proceedings are held, it may only address the “legal” aspect of offshore transactions. The opposition is trying to put into the frame the “dirty money” aspect, which, frankly, they can go to a TV talk show and talk about, but it wouldn’t lead to meaningful accountability.
But this exposé of the hazy business dealings of his progeny has landed PM Nawaz in the court of public opinion. What lies ahead for him? Political predictions are not the forte of this column. We leave that to “experts” and “pundits”, who, according to Philip E. Tetlock – the famous Wharton Professor who is considered foremost authority on the intersection of psychology and politics – are no better than a dart-throwing chimp aiming for the bulls-eye.
It is safe to say this, however, that these leaks couldn’t have come at a worse time for PM Nawaz. In a couple of years, political parties would be getting ready for the next general elections. Now would be the last call for the PML-N mandarins to feed some belated substance into the rosy narrative they have maintained on economy and governance. Instead of a shot in the arm, recent events have forced them to fend off awkward questions.
PML-N had already seemed on the defensive following the military’s reportedly single-handed response to the carnage in Lahore on Easter Day. Raiwind is perhaps afraid to lose its aura of competence and control in their political bastion of Punjab should the military become more visible. Then there is the fear that a repeat of the Karachi script – where the canvass of paramilitary operations expanded to tackling corruption as well – in Punjab might deal a blow to the tried and tested politics of power and patronage.
But cohabitation with the Khakis may not be easier in this round. There is now an environment where political heat, which had disappeared since the dharna days, is gaining new life in the light of these leaks. Also, the uncertain new dynamic of security operations may affect the PML-N’s delicate politico-religious equilibrium in Punjab.
Remember, Islamabad’s red zone has already been breached twice under the current government, followed only by toothless prosecution. In the current political environment, few would completely rule out the possibility of a politically-charged crowd demanding the PM’s resignation descend on the capital again by slipping through law enforcement agencies’ competence gap. It was only last week when government had seemed helpless for days in front of a mob camped outside, chanting outrageous demands.
The military never seemed likely to withdraw its Punjab push last week. It is even unlikelier after this week’s developments. Concessions might be in order. After all, PM Nawaz probably lost so much face that he felt the need to contextualize his family’s business matters by addressing the nation, which is at war. The opposition paid no heed and instead insisted on investigations on sources of wealth.
The Panama leaks are clearly a credit negative event for the Nawaz government. The disclosures don’t have the power in themselves to politically bankrupt the PM, but when taken together with other recent events, they have the energy to really depreciate the Sharifs’ political currency in Punjab. That’s not good news for PML-N’s hitherto bright chances in 2018.
PM Nawaz needs to do something drastic to put out this fire. He can’t sit idly by and watch himself become an even weaker authority, leaving Shahbaz Sharif, presumably the PM-in-waiting, in the lurch. Frank Underwood famously said in House of Cards, “If you don’t like how the table is set, turn over the table.” Will PM Nawaz do that? We won’t venture a guess, for we have too much admiration for Professor Tetlock.
