Oil price hike: Role of opposition and media
March 2nd, 2011
The latest oil price increase by the Oil and Gas Regulatory Authority (Ogra) comes in reaction to a significant increase at the global level because of tensions in various oil producing countries. Without initially going into the merits or demerits of the decision, one is compelled to say that the reaction to it by several political parties and large sections of the media has bordered on the extreme. One can understand the former because part of their job description, so to speak, is to politicise issues but the media could have responded with some critical analysis based on economic facts and realities rather than name-calling and resorting to using emotive headlines. With the use of phrases like “Govt lobs petrol bomb over masses” together with other headlines like “Altaf invites army to save country” and “Nawaz threatens another long march”, some sections of the media seem to have thrown rational argument to the winds.
The MQM has also said that it rejects the oil price increase and has given the government three days to withdraw it, after which it will announce what line of action is to be taken. The Pakistan Tehreek-i-Insaf and the Jamaat-i-Islami have threatened to do this as well. None of them, however, has suggested any alternative course of action for the government.
Now, coming to arguments based on economics, the fact of the matter is that the international price of oil has substantially increased in recent months and, since Pakistan depends solely on imported petrol, there is not much that can be done about passing this increase on to consumers, unless the government pays for the difference — which, in effect, is a subsidy. This however, adds to government expenditure and is one reason why the federal government’s budget deficit is spiralling out of control, well above the 4.7 per cent stipulated by its foreign multilateral donors. A budget deficit is usually financed by government borrowing from the central bank which, in other words, means printing more money and that in turn leads to inflation. So critics who defend their call to the government to not increase petrol prices and who support that by saying that this will keep inflation under control, fail to see that subsidies, especially those that are across the board and do not target the poor specifically, are an undue burden on the federal budget and have an inflationary impact.
Again, for the critics it should be pointed out that the amount given in subsidy is not small by any yardstick. In the last five years alone, this subsidy has cost over Rs412 billion — last year the figure was Rs146.5 billion. In fact, even after raising petrol prices from March 1 by 9-10 per cent, the government will still be subsidising oil consumption by around Rs5 billion a month.
This is precisely why political parties, especially those in the opposition, need to exhibit some practical thinking and pragmatism on this issue. Taking a populist stance may win approval from a largely uninformed — or disinformed — public but it will not resolve anything, and will certainly do nothing for the economic crisis that Pakistan currently finds itself in. In fact, if the political parties and media are keen that the general public be saved from this ‘petrol bomb’, then pressure should be brought to bear on resolving issues such as circular debt; widening the tax net; implementing the RGST; and the matter of extra spending requests to the tune of Rs45 billion made by the armed forces during this fiscal year.
Some so-called experts who think the removal of the government in tandem with hanging Raymond Davis and arresting Americans suspected of being Blackwater agents will usher in a utopia of cheap oil and full employment should understand that hyperinflation will simply throw everything connected with the state out of joint. Getting rid of the PPP government will become a meaningless exercise when the state itself starts crumbing with all public amenities shut down and law and order playing to the advantage of al Qaeda.
Stranded in Libya
March 2nd, 2011
Times of crisis often reveal the true nature of individuals — and also states. Certainly this appears to be the case in Libya, where 20,000 or so Pakistanis remain stranded in a situation of rapidly mounting insecurity and uncertainty, unable to obtain food as shortages hit Tripoli and fearful as to their own safety in such volatile times. Whereas the Pakistan Embassy in the Libyan capital and also the Foreign Office at home have been making claims that they plan to assist the stranded Pakistanis for much of the last week, in actual fact nothing has happened at all. And words, of course, won’t ease the suffering of those caught up in the Libyan turmoil — or the desperate anxiety of their families at home. What they need to see is action and there is as yet no evidence that it has been planned.
Unlike other nations, including India, which have sent flights to Tripoli to airlift nationals out of danger, PIA has stated it has received no instructions to do the same. The Foreign Office spokesperson has claimed the problem is that flights cannot land safely in Libya. This seems hard to believe given that airlines from nations other than Pakistan have been able to send in their planes with little evidence of difficulty.
The issue seems to be one of attitude. We have seen similar indifference in the past from Pakistani missions when it comes to helping nationals abroad. Those who land up in jail — sometimes for no fault of their own — most often receive no support and even when the release of persons is secured by human rights groups, our missions make little effort to help send them on their way home. We must ask what the primary purpose of these missions is. The evidence of this indifference in Libya is appalling. Thousands of Pakistanis are desperate to get out. Even the 3,000 who have registered with the embassy have been given no assurances as to when this may happen or what effort their government is making to bring them out of a country where violence threatens every life.