Ousted Pakistani PM taps his brother as his replacement
Move offers political continuity, but Shahbaz Sharif may be as vulnerable as Nawaz
TOM HUSSAIN, Contributing writer
ISLAMABAD Shahbaz Sharif, the chief minister of Punjab, Pakistan's most populous province, is expected to replace his ousted elder brother as prime minister in a transition that could calm investor jitters ahead of a scheduled general election in 2018.
The younger Sharif was tapped for the position by his brother and will be formally nominated as prime minister by the second half of September, assuming he wins the National Assembly seat that Nawaz Sharif vacated on July 28. The former prime minister was forced to step down after the Supreme Court ruled that he was disqualified from holding public office because he failed to fully disclose his overseas financial assets. According to the court, he had failed to meet the constitution's requirement that elected officials should be "honest and upright."
In what is widely seen as a temporary arrangement, Shahid Khaqan Abbasi, a former petroleum minister, was installed as prime minister on Aug. 1 by the ruling Pakistan Muslim League-Nawaz party, which has a sizable majority in the lower house of parliament.
Shahbaz Sharif's assumption of power would signal the continuation of the ruling party's growth-oriented economic policies. "More important than Nawaz Sharif is what he represents -- an understandable economic policy. If power is transitioned to someone who represents a similar economic policy, like his brother Shahbaz Sharif, the [stock] market would probably rise strongly," said Mattias Martinsson, chief investment officer at Tundra Fonder, a Stockholm-based asset manager.
The PML-N is "Pakistan's most investment-friendly and pro-business mainstream political party," said Asad Ali, Asia country risk analyst for IHS Markit, in a briefing note. "Opposition parties do not have the same policy emphasis."
The prime minister was brought down by revelations that his family's offshore companies in the British Virgin Islands moved assets from at least one Gulf Arab country to buy high-end properties in London.
Sharif and his three adult children have been ordered to stand trial on charges of corruption, money laundering and fraud, with a verdict expected by mid-March.
In deciding to disqualify Sharif without a prior conviction by a trial court, the Supreme Court has established a sweeping precedent under which the legal onus will be on elected politicians to establish their innocence without recourse to an appeals court.
The questionable grounds for Sharif's dismissal "create uncertainty in the minds of investors as regards stability," said Kamran Bokhari, director of strategy and programs at the Center for Global Policy, a Washington think tank. "But then some may read this as a sign that the judiciary is being strengthened, and that, in some ways, helps build investor confidence that corruption is being brought under control."
But concerns remain that a broadening of the judiciary proceedings could upset the political situation. Supreme Court hearings are continuing against opposition leader Imran Khan and key aide Jehangir Tareen.
Pakistan's powerful army moved to assure China that the next civilian government will proceed with planned Belt and Road Initiative projects in Pakistan, for which Beijing has pledged $62 billion in investment, up to 2030.
"The Pakistani army has consistently provided China with assurances -- publicly and privately -- that it is committed to ensuring [the China-Pakistan Economic Corridor's] success, and does so even more actively when there are political disputes or challenges facing the civilian government," said Andrew Small, a fellow at the Washington-based German Marshall Fund.
Pakistan's economy grew roughly 5.3% during fiscal 2017, which ended on June 30, on the back of Chinese infrastructure investment and strong domestic consumption.
Growth is forecast to reach roughly 6% by fiscal 2020, helped by the completion of $19 billion worth of power generation and other CPEC projects.