Oil price windfall
OIL prices have defied all projections as the downward spiral continues. According to the IMF`s World Economic Outlook, last year the average price of oil in international markets was $104 per barrel, and as of April this year it was forecasting the price would remain at that level throughout 2014 as well, with a small decline to $97 in 2015. Instead, the price has plummeted steadily since June when it stood at $115, accelerating from September onwards. When Opec failed to agree on production curbs in its last meeting in Vienna on Nov 27, the price fell steeply to as low as $51 on contracts for February`s delivery. The declines stem from a glut in the markets, coupled with contracting demand as global growth remains sluggish. More importantly though, increasingly the collapse is being recognised as engineered by Saudi Arabia, the country at the heart of Opec`s refusal to curb production, to hurt Iran and constrain its growing influence in the Middle East.
Pakistan had erred on the side of caution in its last budget and its estimates for oil prices at $109 for the fiscal year 2015 were higher than IMF forecasts. According to that figure, the oil import bill was estimated to come in at $15.5bn for the current fiscal year. The real windfall from this price decrease has yet to arrive since much of the oil landing in Pakistan thus far this fiscal year was contracted before the downward spiral got under way in earnest. Thus far, the reported oil import bill is slightly higher than in the corresponding period last year. But that is now set to change, as oil being contracted today for delivery in the first few months of 2015 is being purchased at prices almost half of what was expected.
There is a danger that this windfall can lead to complacency and poor utilisation of the resultant savings. If it is true that the declines are due to geopolitical reasons, then it stands to reason that they can reverse very quickly. The IMF, as well as other international agencies, is warning of a price spike due to geopolitical developments in the Middle East. The government must not allow the lower prices to breed a sense of comfort on the reform measures undertaken to wean our economy off its dependence on imported oil. It must also resist the temptation to utilise foreign exchange savings to artificially prop up the value of the rupee. The windfall should be seen as a window of opportunity to take the necessary steps to move towards cheaper fuels, as well as renewable sources of energy instead. A brief spell of respite on the external front is a good opportunity to bring down the external debt service bill, as well as help ensure price stability. That would be money well spent.
Security threat
THE lifting of the moratorium on the death penalty in response to the Peshawar carnage has triggered a serious threat: terrorist attacks to avenge the executions by the state. Already, intelligence agencies are issuing all manner of warnings to possible targets, especially state institutions and security installations across the country, and many educational institutes, including in the federal capital, have closed their campuses indefinitely ahead of the scheduled winter break. Pakistan is bracing for a backlash.
This is the moment in which the performance and capabilities of the intelligence and law-enforcement apparatus across the country will be assessed. Failure could have catastrophic consequences, not just in terms of lives lost and individuals injured but also in terms of the state`s very ability to fight terrorism and militancy in all its manifestations. For, a wave of successful attacks in response to state execution of militants could leave the resolve to fight terrorism in tatters, especially if the forces on the frontline are left exposed and vulnerable. To be sure, in this long fight against militancy, there will be more suffering inflicted on the country. Given the willingness of the militants to attack virtually any target, hard or soft, and the reality that militants are embedded across the country, the possibility of more terrorist attacks is high. But there is, or ought to be at least, a difference between the unexpected attack, the one that slipped through the cracks in the system, and attacks in major cities at a time when the country’s security apparatus is in a state of high alert and mobilised essentially on a war footing.
Yesterday, Interior Minister Nisar Ali Khan gave his frankest assessment yet of the scale and size of the militancy problem in the country. But it is not enough to call on the citizenry to act as eyes and ears on the ground against militancy. What is the government doing about the militant supporters and sympathisers within the state machinery? Time and again, the infiltration by militant groups into law-enforcement agencies and even the intelligence apparatus briefly emerges as a topic of debate at the national level before being quietly pushed into the background again. Beyond that, where is the public investigation into lapses that have made militant attacks possible and where is the accountability of those who are found to have failed in their jobs? No system anywhere can improve if there is no transparency and accountability. In essence, it is about disrupting the militants` tactics and plans. Studying past attacks and disseminating knowledge within the security apparatus about how attacks are carried out help prevent future attacks but only if the state is willing to adapt and learn itself.
Cricket defeat
PAKISTAN`S preparations for the upcoming ICC Cricket World Cup 2015 received a setback of sorts with the 3-2 defeat against the lowly ranked New Zealand in the ODI series that concluded in the UAE on Friday. The national team, though clear favorites to win the five-match contest, failed to perform as a well-oiled unit.
Their campaign was further dampened by a spate of injuries to key players including skipper Misbah-ul-Haq, Umar Gul, Wahab Riaz, Bilawal Bhatti and a few others. The Kiwis, on the other hand, proved a surprise package as they put up a thoroughly professional, highly competitive show. Their comprehensive homework on the strengths and weaknesses of the Pakistan players paid off as they successfully managed to blunt match-winners such as Sarfraz Ahmed, Younis Khan and Mohammad Hafeez in most games. Besides, Kiwi newcomers including Adam Milne, Matt Henry and Anton Devcich did surprisingly well to get the better of their highly rated rivals.
What should be of greater concern to Pakistan is that this is their third consecutive ODI series loss in the UAE, coming on the heels of a 4-1 drubbing by the Aussies two months ago. A similar fate befell the team when it played against Sri Lanka last August. The other major concern is diminishing bowling resources. No team can afford to lose match-winning bowlers like Saeed Ajmal, Junaid Khan or Umar Gul, especially in their build-up campaign for the World Cup which commences in Australia and New Zealand from Feb 12 next year. However, one heartening factor has been the return to form of mercurial all-rounder Shahid Afridi. The seasoned player looked pretty much in his element as he slammed a flurry of sixes and fours to keep the Kiwi bowlers at bay during the series. Along with young Haris Sohail who has clearly come of age, he put in some fine all-round performances giving his fans something to cheer about and, perhaps, providing them with a ray of hope vis-à-vis next year’s extravaganza.