The Pakistan Steel Mills is a bottomless pit which no amount of money can save. It should be privatised.
This is not just my opinion. It is now also the unanimous opinion of the Senate Standing Committee on Industries and Production.
I have very strong opinions about the Steel Mills decision, in part because I was engaged to draft the review petition filed against the ‘historic’ judgment of the Supreme Court (which rescinded the privatisation of the Steel Mills). And, like many lawyers, I immediately convinced myself that my client was more sinned against, than sinning.
The point of this column though is not to rehash the legal arguments raised in the review petition. That is a debate for another time and another place.
Instead, my point here is that if an averagely bright group of senators is all but begging the government to ditch the Steel Mills then, legalities aside, the intervention of the Supreme Court was not in Pakistan’s economic interest.
Let me put that assertion another way. The bid by the winning consortium was $362 million. The same consortium pledged to the Supreme Court that it would invest another $250 million in the project. Throw in the losses accumulated by the Steel Mills since 2007 and you’ve got another $400 million. In short, that judgment by the Supreme Court cost this country a billion dollars.
A billion dollars, to put it mildly, is real money. You can do a lot of good things with a billion dollars, even buy an F-16 or two. The opportunity cost of the Pakistan Steel Mills decision, in other words, was substantial.
At this point, defenders of the Steel Mills decision typically retort that the judgment was not about the economic desirability of privatising the Steel Mills. Instead, the foundation of the Steel Mills decision was the determination that proper procedures were not followed and that the process of privatisation lacked transparency.
There are two problems with that answer. The first problem is factual. I was not involved in the original Steel Mills litigation, but I remember being well aware of the wave of hysteria which gushed forth from the media about how priceless national assets were being sold for a song. Day after day, hour after hour, the universe of talking heads beat the issue to death — all in breathless unison over the fact that there had to be, just had to be, something fishy going on. I’m not saying that the Supreme Court did not come to the conclusion that legalities were not observed; but I don’t think the Court would have decided the way it did, had it been convinced of the economic merits of the deal.
The second problem with that answer is that it denudes the judgment of much of its legitimacy. If we assume that the sale of the Steel Mills was, in fact, a good deal — or, at the very least, a fair deal — it is difficult to simultaneously insist that the procedural defects found by the Supreme Court were so troubling that they would justify a billion dollar loss. In my view, and yes I am biased, those procedural flaws were trivial. Seriously, assuming that the price paid for the Steel Mills was fair, do we really care now that the valuation report was not delivered 30 days in advance? Do we really care that the approval of the winning bid did not separately declare that the winning bidder was also being approved?
Notwithstanding what it may look like, the point of this column is not to beat up on the Supreme Court for getting it wrong. Instead, I just think it would be a good idea if the Supreme Court was to realise that it is no more infallible than the rest of the institutions of our state. As Justice Jackson of the US Supreme Court once pointed out to his colleagues on the bench, “we are not final because we are infallible; we are infallible because we are final.”
This point is important because the legitimacy of the Supreme Court is — contrary to received wisdom — not separate from that of the rest of the state.
To explain, it is common ground in the media that (a) we are governed by crooks; and (b) our only salvation lies in the judiciary. This is a dangerous message because it feeds into an alternate narrative, which denies not just the legitimacy of the current regime, but the legitimacy of democratic governance too. In other words, what the ordinary person takes home from the media roar is not just that all politicians are crooks, but that the system itself is useless. But if that message takes sufficient hold, the explosion which follows will wipe out not just the current crop of ministers and advisers but the entire system, inclusive of the judiciary.
I am by no means suggesting that their Lordships should be less than vigilant in trying to protect the rights of the people. Fairness also compels me to concede that their Lordships are not responsible for the manner in which the media chooses to broadcast pending proceedings. What I am saying though is the following two things. First, as shown by the Steel Mills case, we all make mistakes. Second, their Lordships must realise that they cannot separate their legitimacy from that of the other branches of state. If one branch sinks in popular estimation, eventually so will the others. What their Lordships must therefore ensure is that they do not wind up sawing at a branch on which they themselves are perched.
This column appeared first in the daily Express Tribune on 24 Feb. 2011.