Pakistan rounds up politicians in wave of arrests

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The Independent Online
PAKISTAN'S NEW military rulers fulfilled their threat yesterday to arrest politicians and businessmen in a crackdown on corruption.

Those who had a knock on the door in the small hours of the morning included a former cabinet minister and a one-time chief minister of the province of Punjab.

The army's four-week campaign to tackle those accused of borrowing money from the banks and then failing to pay it back has not, however, produced many dividends.

According to the Finance Minster, Shaukat Aziz, the banks recovered about $160m (pounds 100m) - less than 6 per cent of the total owing to the banks. The total figure might rise because information is still coming in from remote branches. The banks have also received some assets in non cash forms such as shares, which are currently being evaluated.

Mr Aziz also gave new figures for the total owing to the banks, which he now estimates at about $3bn.

He said the army is determined to press on with its crackdown and recover at least some of the 94 per cent of loans that are still outstanding.

"Our focus will be on wilful defaulters," Mr Aziz said, adding that the arrests did seem to be having a salutary effect. "Some of those who had not been negotiating with the banks are now doing so." The new regime in Pakistan has made the recovery of the loans one of its priorities and the generals, aware that their credibility is on the line, are determined that their campaign should not fizzle out.

But some are fearful of what might happen if the army does succeed in raising all the missing billions.

"If that much money is taken out of the economy," said one stockbroker in Karachi, "then there will be massive deflation. The rupee could also strengthen, which would bring its own problems."

The Pakistani President has promulgated a legal order, which states that those found guilt of corruption could face up to 14 years in prison and be disqualified form holding public office for 21 years.

But the army's chief focus is not economic but political. In a country where many people have difficulty finding enough money to feed their families and to educate their children there is considerable support for the campaign to take the political elite to task for supporting opulent lifestyles on the back of bank loans. The crackdown against a corrupt political elite is an important source of the widespread support for the military takeover.