Cashing in on floods?

Dawn Editorial
Sunday, 29 Aug, 2010

IT seems that Pakistan will remain hostage to petty politics, even at a time of grave national crisis. Initially it was said that a ‘trust deficit’ was the root cause behind the international community’s slow response to the ongoing flood relief operations in this country. That was possibly a fair assessment given the mismanagement and lack of transparency that are the hallmarks of Pakistani officialdom. Donors have every right, after all, to expect that the funds they provide will go to the needy and not line the pockets of government functionaries. Facts must be faced: Pakistan’s reputation when it comes to honest governance is poor and it is understandable that foreign countries, at least until UN Secretary General Ban Ki-moon’s visit this month, were reluctant to hand over large sums of money directly to state-run organisations.

The world’s view of Pakistan is one thing. What is more deplorable is the trust deficit that exists between the centre and the provinces as well as the federating units themselves. PML-N chief Nawaz Sharif stressed on Friday that the provinces should on no account be bypassed when funds are disbursed for the flood relief operation. The message is clear: Mr Sharif doesn’t believe that Islamabad will treat his province, Punjab, fairly in its time of need. He has also called for a meeting of the Council of Common Interests so that each province’s rightful share in relief funds can be ascertained and distributed accordingly. This is a welcome proposal and should be pursued without delay because the suffering of the public is immense.

No province should be left believing that it has been hard done by, either at the hands of the centre or another unit of the federation.

Political parties of every hue — and that includes both the PPP and the PML-N — apparently want direct access to flood relief funds so that they can build up their political capital. They want to be seen as the people personally handing over money because that could win votes at the next election. But a greedy, distasteful scramble over cash is the last thing that Pakistan needs right now. Why, for instance, should we have a multitude of flood relief funds set up by offices as disparate as the PM House, the army, the National Assembly speaker and the Punjab chief minister? The activities of individuals and NGOs are a different matter altogether and every rupee or sack of flour they raise ought to be commended. But the key players that constitute the state must show unity and act as one. This is a time for giving, not politicking.

Uncertainty at SBP

Dawn Editorial
Sunday, 29 Aug, 2010

YET another example of the government’s carelessness and lack of interest in strengthening institutions is before us. Since June 2, the State Bank of Pakistan has been operating under an acting governor following the resignation for ‘personal reasons’ by the previous incumbent. No one is sure why the president or the prime minister has been content with the ad hoc arrangement for weeks, but now a legal hurdle is looming: on Aug 31, the 90-day period during which the SBP can legally operate under an acting governor will expire. This state of affairs is very frustrating. The SBP is perhaps one of the most professional institutions in the country. It may be blamed for issues like allowing the banking spread to grow too much and for lending too much to the government. Still, overall, it is considered one of the few solid institutions in the country. Why imperil its operations unnecessarily?

Experts familiar with the operations of the SBP say that its routine business can be conducted adequately by qualified and competent officials below the level of governor, and that three months of ad hoc leadership will not bring the bank grinding to a halt. However, the experts also point to a potentially serious downside. Consider that the country is fighting a fresh round of inflationary pressure with little or no help on the fiscal side (deficit remains high, for example), therefore giving crucial importance to the monetary side. Surely monetary policy at the moment ought not to be designed with a temporary head of the SBP, regardless of whatever internal mechanisms and committees may exist. Consider also private-sector borrowing from the banks, which is sagging. At the moment, banks are happy to lend to an eager government at lucrative rates, so policy initiatives need to be put in place to encourage lending to the private sector. The same goes for the agricultural sector, even before the floods. From the creation of new instruments to readjusting existing policy instruments, much needs to be done. And without a full-term governor much of what needs to be done cannot be done adequately.

ME talks: no useful purpose

Dawn Editorial
Sunday, 29 Aug, 2010

IT is doubtful if Israel’s latest diplomatic move seeking talks with the Palestinian Authority every two weeks will serve any useful purpose, going by an almost similar exercise earlier. On Friday, Israeli Prime Minister Benjamin Netanyahu proposed biweekly meetings with Mahmoud Abbas, after they meet in Washington soon to re-launch talks which President Barack Obama would like to see produce results in a year. Former Prime Minister Ehud Olmert held similar meetings with the PA president but without success. The Abbas-Netanyahu talks are to formally begin on Sept 2, but the crucial date is Sept 26, when the moratorium announced by Israel on settlement construction expires. Sources in the Israeli government have made it clear that the Likud government has no intention of extending the moratorium. This has cast a shadow on the talks which are supposed to tackle all crucial, final status issues.

The man leading the talks on Israel’s behalf is a super hawk. Mr Netanyahu was elected prime minister in the wake of the assassination of Yitzhak Rabin, who had signed the declaration of principles (DoP) with Yasser Arafat at the White House in September 1993. Mr Netanyahu’s election pledge was that he would wreck the “sell-out”. He succeeded, for he and his successor, Ehud Barak, sabotaged the peace accord by having the DoP renegotiated with President Bill Clinton’s full support. Going by the fact that Mr Netanyahu has repeatedly rebuffed Mr Obama’s call for a halt to settlement activity, the prospects for the success of the latest round of talks next month look bleak. Israelis are experts at dragging their feet and prolonging the negotiating process to “create facts”. This was Menachim Begin’s way of saying that he would continue to build settlements to alter the occupied territories’ demographic character. Mr Netanyahu seems determined to follow the late prime minister.