THE military operation in North Waziristan has raised hopes of getting rid of the militants. In this euphoria, nobody is interested in tempering the expectations of the public and preparing them for the long drawn-out struggle this proposes to be, with chances of success only if all the parties play their role effectively. The parties in this game are the federal government, the army alongwith the agencies, and most importantly the four provincial governments.

The narrative of each of the four provinces and the army are different. Punjab wants to end terrorism but has no problem with entering into political dialogue with the likes of Sipah-i-Sahaba Pakistan. Sindh wants to end violence but sees no problem with going soft on the militant wings of political parties. If the MQM has a militant wing, the PPP is not left behind either and comes up with its People’s Amn Committee. The Awami National Party has its own gunmen.

Balochistan wants peace but wants to treat Baloch nationalists differently from the manner in which the army/FC do. It refuses to acknowledge the Taliban problem, even though foreign sources inform us that Quetta is the favourite destination for the Afghan Taliban. The Balochistan government prefers to follow a wait-and-see policy in terms of Punjab-based sectarian groups that are sworn enemies of the Shia Hazaras.

The KP government wants to continue with dialogue because, given the geography, it feels vulnerable to the onslaught of the Tehreek-i-Taliban Pakistan. The army has its favourites in the tribal areas, which it perceives will help it retain and enhance influence in Afghanistan. For influence on the eastern front, there is another set of favourites. The federal government’s narrative is neither here nor there; it is too scared to take a stand on anything to do with terrorism and prefers to run to the National Assembly, hold all-party conferences or hide behind the army.

Is anyone doing anything to develop the national discourse that is so crucial in fighting terrorism?
There are thus five clear narratives in the country, if you count the federal government out. Is anyone doing anything to reconcile these narratives and develop the national one that is so crucial in fighting this curse?

The other day, a counterterrorism resear*cher working abroad addressed a seminar in Lahore. The main theme of his findings was that around the world, only those countries have effectively countered insurgencies that were able to put forward a consensus narrative. In our case, we are not only miles away from that consensus, no one is even flagging it as crucial.

The best-case scenario of the ongoing operation in North Waziristan would be neutralising the non-Mehsud Taliban of the tribal areas alone. What will happen to all the gun-toting extremist groups in the country who are supported by one of the provincial governments or the army itself? This includes half a dozen well-known groups ensconced in the tribal areas, southern Punjab, Sindh and Balochis*tan. A number of them are operating under new names after having been proscribed by the government. Does anyone think there can be sustainable peace while extremist wings and political militant wings thrive? We may win respite for a few months, but the extremists will continue to haunt us and push us into poverty, international isolation and despondency until we take the bull by the horns.

Despite our desperate state, where most agree that fixing the terrorism problem is more important than fixing the economy or the power shortages, are any of the main players willing to come on one page? The only consensus they have is to demolish the TTP; but they see no need to touch the extremists that serve their own purposes.

The whole thing started when Pakistan trai*ned mujahideen and entered into America’s war in Afghanistan to contain the USSR, and took the initiative of training non-state ‘soldiers’ for India and Kashmir. It is these trained ‘ghazis’ whose claim to fame is their ability to wreak violence that are our main problem. They may be from any lashkar or jaish; they are available to share their violent skills for money or, in other cases, break the spell their teachers or handlers cast on them.

When there were reports of fighters heading to Syria from the tribal areas, there was no reaction in Pakistan — unless perhaps there was a sense of relief, not realising they would be back after a year or two, with even more sophisticated skills.

These fighters can only be removed through two methods. First, if the six entities mentioned above, including the army, develop a national narrative rather than their own institutional narrative. Or second, if the state establishes its writ and demonstrates zero tolerance for banned parties under any banner, as well as implementing strict gun laws, depoliticising the police and re-establishing a working criminal justice system. The government does not seem to be working on either of these options.

The writer is a former federal secretary interior.

tasneem.m.noorani@gmail.com

Published in Dawn, June 27th, 2014


THROUGH a combination of indifference and ineptness by successive governments in the recent past, Pakistan’s manufacturing sector has been pushed into long-term decline. This unfortunate and inauspicious trend is evident in the numbers. The share of large-scale manufacturing (LSM) in GDP has declined sharply since 2000, dropping from 14.7pc of total value added to a provisional 10.9pc in 2013-14.

The most worrying aspect of this trend of “de-industrialisation”, if it can be called that, is that new investment by the private sector in large-scale manufacturing has fallen by more than half since 2007. In seven short years, the share of new investment in the LSM sector has declined from over 22pc of GDP to only 10pc. This sharp decline in new capital spending by businesses in large-scale manufacturing for the past several years portends a “weak” outlook for the sector in the years ahead, particularly as the continued opening up of the global and regional economies translates into ever-rising competitive pressures.

In fact, in a related development, Pakistan’s ranking in global competitiveness (as compiled by the World Economic Forum) has plummeted from 83rd in 2007 to 133rd in 2014, a drop of 50 places — the sharpest for any country.

While new investment in the LSM sector has virtually stalled, overall private investment in the country has also declined to record lows. For 2013-14, total investment by the private sector dropped to 8.9pc of GDP. However, this figure is inclusive of $2 billion of Eurobonds purchased by international bond investors. If this resort to dubious accounting is corrected for, fixed investment by the private sector has actually sunk to a new multi-decade low of 8.1pc of GDP in 2013-14.

Tax revenues and job-creation will be impacted by the decline in Pakistan’s manufacturing sector.
Why should the decline of the country’s manufacturing sector worry the government — or anyone else for that matter? Despite the much-trumpeted arrival of the so-called “New Economy” at the beginning of the 21st century, the “Old Economy” consisting of smokestack industries, factory floors and mass-production assembly lines remains very much a vibrant part of the global economy.

In fact, for many of the dynamic emerging economies of the world (Thailand, Malaysia, Indonesia, China among others), “manufacturing” continues to occupy a dominant share of domestic value-added and non-agriculture employment. Despite the sharp rise of commercial services on the global stage, manufactured exports provide the bulk of foreign exchange for non-oil exporting countries, with the share of manufactures in world exports amounting to 67pc.

In Pakistan’s case, the manufacturing sector provides a large proportion of government taxes, and accounts for a still-significant share of new investment, jobs, foreign direct investment (FDI), innovation, the imparting of skills and the diffusion of technology. Apart from prospects for tax collection, the rather dim outlook for large-scale manufacturing in the medium term should be a cause for worry for the government on another important front: job-creation. If industry in general, and large-scale manufacturing in particular, continue to operate at only a fraction of their installed capacity, new employment opportunities will not be created.

The principal reasons for the decline in manufacturing in Pakistan since the 1990s appear to be:

• The disturbed internal security situation

• Policy inconsistency and uncertainty

• Political uncertainty

• Exchange rate policy

• Energy crisis (especially gas)

• Unchecked smuggling and under-invoicing

• Tax policy and practice

While all the factors have played an important part, increasingly it is the resort to what I have called “predatory taxation” by the Federal Board of Revenue (FBR) that is resulting in the suffocation and slow death of the large-scale, formal manufacturing sector in Pakistan. I am reproducing what I wrote in a previous column:

“In broad terms, this is reflected by the fact that industry accounts for over 70pc of total tax collection by FBR, with agriculture’s contribution at less than 1pc. (In fact, despite all the ruckus about indirect taxation of agri-inputs, this avenue provided Rs 20.9bn, or only 0.3pc of the sector’s value added, to the exchequer in 2012-13).

“Similarly, investors on the stock market continue to be handled with kid gloves. On a capital gain of Rs 2,828bn (US$29bn) in the past 18 months, most of it accruing to a narrow circle of large investors, the stock market’s contribution to the national exchequer was an abysmal Rs588 million (around US$6m) in 2012-13 — for a tax incidence of 0.02pc.

“On the other end of the scale, according to data compiled by the World Bank, a formal business in Pakistan makes 47 different payments of tax and government levies a year, while, on average, it spends 577 hours a year in dealing with tax matters. On both counts, Pakistan is ranked amongst the highest-burden countries in the world.”

The increase in the ambit of the withholding tax regime in the recent budget puts an additional burden of responsibility on withholding agents, adding to their transaction cost. Finally, a potential new layer of complexity for large sales tax payers has been added by the setting up of provincial revenue authorities, with no clear or uniform policy on using the origin or the destination principle for determining the tax liability. Adjustments and credits for input taxes have also been affected.

The bottom-line is that rather than burdening the formal (principally manufacturing) sector, as is happening in practice, the government should strive harder to widen the tax base before it is too late. The slow-motion implosion of large-scale manufacturing is already under way, and if allowed to continue, it will have serious long-term consequences.

The writer is a former economic adviser to government, and currently heads a macroeconomic consultancy based in Islamabad.

Published in Dawn, June 27th, 2014


AFTER a week acclaiming it as the ‘final solution to terrorism,’ everyone is now clambering to highlight the fallouts of the North Waziristan operation. The government, opposition, and everyone else in between have suddenly woken up to the fact that hundreds of thousands of local people have been forced to flee the bombing zone. The plight of the so-called ‘IDPs’ has, in rather quick time, become the most significant public interest concern in the country.

Odd, is it not, that it requires us to see images of men, women and children strewn out across the plains of Bannu with nowhere to go before we realise that the ‘wipe out the Taliban’ celebrations will have to be put on hold? Indeed, one can only wonder whether we are completely devoid of collective memory given that this story has played itself out for millions from Swat, Bajaur, South Wazir*istan and Khyber — to name but a few — on numerous occasions over the past decade.

Or maybe we just like grappling with ‘disasters’ and ‘conflict zones’ that require development interventions? Perhaps we want to make the thousands of reports written by government, donors and consultants using such terminology actually seem relevant?

I, for one, still have a hard time digesting the term ‘IDP’. Devoid of any political and historical content whatsoever, it is the epitome of 21st century development-speak that is increasingly dominant in journalism, academia and popular culture.

Waziristanis are far better equipped to come up with a ‘final solution to terrorism’ than us armchair experts.
We are supposed to feel sympathy for IDPs because they have been ‘displaced’ through no fault of their own. We are encouraged to set up relief camps to alleviate their suffering. We are reminded time and again that the IDPs are suffering for the greater common good. But we are not allowed to ask critical questions about this supposed greater common good, who frames it, and why dropping bombs on the people of this country is unavoidable.

The usual suspects are predictably laying into government for not making proper arrangements for the more than half a million people that have been forced to leave their homes. But let us not forget that camps set up in the past were beset by a plethora of problems. There is no ‘right’ way to be a refugee; it is unbearable under virtually all conditions.

Let alone the authorities, a wide cross-section of the urban, educated classes remain completely ignorant about the lives and social practices of the people who are conveniently all lumped together under the bracket ‘tribal’. Indeed, there is a barely disguised orientalism at work in urban Pakistan when it comes to the people of the peripheries. It is thus that — in the case of North Waziristan at least — we vacillate between perceiving all ‘tribal’ Pakhtuns as extremists and then obsessing about the dismal conditions to which they are subjected as IDPs.

Accordingly we find it difficult to move beyond false choices such as ‘operation versus peace talks’, and ‘state versus extremists’. We urgently need to recognise that, while people in warzones are often victims, they are also conscious agents, aware both of their own history, and able, if we are so gracious as to allow them, to chart out their own future.

Notwithstanding Waziristan’s geographical location and its deliberate and sustained segregation from the settled areas, a large number of people from the region have been exposed to, and participate in, the same Pakistan as the rest of us. As students, merchants, transporters, and government employees, Waziristanis form political opinions about their condition like anyone else, and are, in fact, far better equipped to come up with a ‘final solution to terrorism’ than us armchair experts.

Rest assured, such a solution would involve a look back into history, at least as far back as British colonialism when the ‘tribal’ polity as we know it was created. It would also involve introspection, because there is little question that religion — including the idiom of jihad — has been a potent ideological and political force in local society over a long period of time. Finally, it would involve recognition that neither is everyone in Waziristan a Taliban sympathiser nor committed to resisting the right-wing onslaught. In short, a solution would involve nothing less than dismantling and substituting a political economy of war fashioned over four decades.

Of course the state has actively prevented those outside the regions that it considers its strategic backwater from going into and learning about them. But this does not excuse the ignorance of those who consider themselves progressives. It is not just colonial perspectives on Waziristan — and the rest of Fata — that many of us have internalised; many other regions, including ‘feudal’ Sindh and ‘sardar-dominated’ Balochistan are also, in our imagination, suspended in the medieval era.

Crying hoarse over IDPs after actively asking for them to be bombed is not good enough. Would we feel so charitable if a military operation was launched in Muridke?

The writer teaches at Quaid-i-Azam University, Islamabad.

Published in Dawn, June 27th, 2014