SBP report
From the Newspaper | Editorial |

THE State Bank of Pakistan’s annual report for the last financial year is not just another grim reminder of an impoverished economy. It is also an indictment of various institutions whose responsibility it is to create an enabling and investment-friendly environment in the country. The report shows a decline in public and private investment — the lowest in over three and a half decades. It laments poor governance, mourns the waste of limited financial resources by loss-making public-sector entities and shows concern over anaemic growth. The bank is as much worried over growing power shortages as the rising fiscal deficit on the back of increasing public expenditure and plunging tax revenues. With foreign official capital inflows drying up because of poor global economic conditions the need for deficit financing is forcing the government to borrow heavily from commercial banks. This has diluted the SBP’s efforts to control inflation in spite of raising the cost of borrowing at the expense of private investment, exports and jobs. Moreover, it is squeezing the fiscal space for future public development spending.

The expanding current account deficit, too, remains a challenge owing to decreasing promised multilateral and bilateral financial assistance and private investment. The government’s weakening fiscal position and depleting foreign currency reserves have already put pressure on the exchange rate and escalated dollarisation of the economy. In the bank’s view, the issues of fiscal problems and energy shortages must be effectively addressed to break out of the current state of stagflation.
The bank blames both internal and external factors for the current state of the economy. But it believes that domestic issues — the energy crunch, low fixed investment, security conditions and poor infrastructure — are “more decisive and chronic”. It also holds “institutional weaknesses at all tiers of the government — judiciary, civil services, law enforcers, regulatory and accountability agencies — as directly responsible for poor economic growth”. In other words, the report underscores the need for improving economic management, implementing fiscal and governance reforms as well as strengthening institutions for economic recovery.

However, it does not list the persisting political uncertainty in the country and key institutions working at cross purposes as a dominant factor that may have kept the political leadership from focusing on the sliding economy. It is naïve to expect a government facing all kinds of threats to its claim to power to take tough and unpopular decisions that are needed to put the economy back on the growth trajectory. The economic rot cannot be arrested unless political instability is ended and the government makes an earnest effort to rid itself of the ‘incompetent’ tag.

MAJOR floods have always been a periodic occurrence in Pakistan but that is no longer the case. The frequency of inundation has risen and the toll that it takes, due in part to a lack of preparedness, also continues to grow. Take what happened in two consecutive years, 2010 and 2011. Catastrophic floods wreaked havoc across vast swathes of the country, leaving hundreds dead and millions homeless. Many were barely recovering from the previous year`s calamity when they were hit yet again by the deadly onslaught caused by torrential rains in 2011. The times are truly changing, and much too fast for countries that are least developed to cope with the consequences. Global warming induced by human activity is very much a reality, as proven by scientists. The nay-sayers, backed by exploitative big business, have their own `think tanks` that continue to churn out `evidence` that climate change has nothing to do with the interference of man. Nothing could be further from the truth.


A recent study by the Asian Development Bank warns that Pakistan is at an increased risk of frequent floods because of a rise in temperature and the accompanying hazard of glacial melt. The same holds true, other experts say, for countries like India, China, Nepal, Bhutan and Bangladesh. When glaciers recede they release enormous amounts of water, forming lakes that could burst their banks at short notice and inundate not only nearby areas but also those far downstream. The ADP report rightly points to the need to cut back drastically on deforestation to prevent flash floods. It also says that what are needed are preventative measures, not those taken after the event. Early warning systems are of the essence here and rehabilitation measures, which are equally significant, come later. Prepare for disaster before it strikes. Is anyone listening?



AN internal probe conducted by the US military into the events leading to the killing of 24 Pakistani soldiers in Mohmand Agency last month has concluded that Pakistani military officers were provided the wrong information on the basis of which they permitted US-led Nato forces to strike. Yet American officials have not apologised. It is a sad indictment of the state of Pakistan-US relations that an apology cannot be issued for the deaths of soldiers in a direct, though perhaps unintentional, attack. From a distance, it is difficult to discern the reason for the US reluctance. Perhaps struggles inside the Obama administration — the State Department vs Pentagon, hawks vs doves, generals vs civilians — based on arguments over the general approach towards Pakistan is the reason for the refusal to apologise. Or perhaps President Barack Obama doesn`t want his administration to look weak as he enters the presidential election cycle with low ratings and a rabid Republican cohort attacking him any which way it can. Still, the Pakistani expectation that an apology be tendered is legitimate, and domestic US compulsions or squabbles ought not to override the demand for one.

From the comments made by Gen Stephen Clark tasked with leading the US investigation, it was evident how the deep distrust that exists between Pakistan and the US affects ties at even the operational level. Military standard operating procedures may prevent the full sharing of information with even the strongest of allies. But there is a sense that what transpired in the border coordination centre, where the wrong target information was allegedly shared with Pakistan, could have been avoided if the level of distrust had been less between the two countries. Perhaps the US and Pakistan will have to work out fresh ways to share information at the operational level and factor in their deteriorating relationship at the strategic level. That soldiers should die because the two states don`t trust each other`s intentions is surely something that can and must be avoided.

__________________
Real richness is that you are so expensive that no one can buy your character.

World Bank’s assistance
From the Newspaper | Editorial |



THE World Bank’s decision to provide $5.5bn in development assistance to Pakistan over the next three years to fiscal 2014 should somewhat ease the financial troubles of the cash-strapped government and give it some respite in the wake of drying foreign official and private capital inflows. The Bank’s assistance is meant to shore up the country’s sliding economy, as well as to create jobs and health facilities, and construct roads in poorer and less-integrated regions and tribal areas near the Afghan border, under a multi-donor trust fund supported by 10 nations. The project for the crisis-hit areas in Balochistan and Khyber Pakhtunkhwa is aimed at reducing the influence of Al Qaeda and other terrorist groups over the population living there. The initiative unveiled through the Bank’s Country Partnership Strategy Progress Report shows that the international community recognises the implications of poverty and backwardness for peace in the region, and is ready to help.

But there is no such thing as a free lunch. The government will be required to contribute to the effort to get the country back onto the path of high, sustained economic growth as articulated by it in its new growth strategy to continue to receive assistance.

The Bank says Islamabad will be expected to improve economic governance, take steps for human development and social protection, build social and economic infrastructure, and work to reduce security and conflict risk. The World Bank’s renewed commitment to support Pakistan in the wake of the country’s persisting economic troubles has afforded it with yet another opportunity to show to the world that it is serious about tackling its problems. The government must take effective steps to improve macroeconomic governance and implement the long overdue structural, administrative, fiscal and tax reforms to create space for future development spending. It has already delayed implementation of the reforms for a very long time at the expense of the people and the economy. Further dilly-dallying on the issue of reforms can have serious repercussions for the people who are suffering because of the incompetent handling of the economy.

__________________
Real richness is that you are so expensive that no one can buy your character.

PTI rally
From the Newspaper | Editorial |


THE Pakistan Tehrik-i-Insaf rally near Mr Jinnah`s mausoleum on Sunday was billed by organisers as a continuation of the political `tsunami` that was first in evidence in Lahore on Oct 30. Critics of the PTI maintained that unless some hard policy positions were fleshed out the long-standing accusation that the PTI had not matured as a political party would stick. Both sides were valida- ted to some extent by Sunday`s rally. The PTI certainly validated some of the hype in the run-up to what was a historic rally. In particular, the ability to draw in a diverse crowd in such large numbers in a city like Karachi where ethnic and political fault lines are deep and deadly suggests that Imran Khan has tapped into a vein of popular discontent against the status quo that isn`t limited to the Punjab heartland or the Pashtun belts. The rally also had a very different vibe to other political events in Karachi, there being an air of celebration and goodwill that only infrequently marks politics in the turbulent city.

Disappointing, though, was the lack of any serious policy prescriptions. Imran Khan did talk about the goal of establishing an `Islamic welfare society` but mentioned virtually no details. Mr Khan talked of a revolutionary system of service delivery based on computerisation and information technology but where will the concrete plans and implementation come from? The former IT minister who has recently joined the PTI, Azam Swati, doesn`t have a particularly strong track record in getting things done. On taxation, an issue Mr Khan has talked much about (and rightly so), the PTI chief also did not have any suggestions for nudging upwards the disastrously low tax-to-GDP ratio. Does the PTI endorse a meaningful agricultural income tax or support the reforms of the sales tax system? No answers were provided. Given the politicians with diverse, if not opposing, foreign policy briefs in the past that have been inducted into the PTI, what will the PTI`s foreign policy look like? Again, silence.

The broader question: is the PTI set to become a mishmash of the views of the disparate traditional politicians who have been inducted into the party recently or will Imran Khan`s `vision`, to the extent one was discernible before, still be the guid-ing principle of the party? The PTI`s core still seems to be the `new voter`, whether young voters or previously politically inactive citizens disillusioned with the status quo. As Mr Khan works to bring `electables` on board, how will the core PTI supporter respond? Only this is clear: a fascinating election lies ahead.

__________________
Real richness is that you are so expensive that no one can buy your character.

DAWN 28-12-2011

THE Afghan government`s official peace and reconciliation organ, the High Peace Council, cautiously accepts the Taliban opening an office in Qatar; a report in The Guardian suggests Al Qaeda in Afghanistan and Pakistan may be on the verge of extinction in the region; and a pamphlet distributed in South Waziristan warns of retaliatory attacks against Pakistan, the US and Afghanistan for the killing of an Al Qaeda leader, Tehsin bin Ali Abdul Aziz, in a drone strike in August. Reports published in this newspaper yesterday about these three developments suggests that perhaps new movement in the peace process in Afghanistan may occur soon. While the warning pamphlet distributed in South Waziristan suggests Al Qaeda still has some presence in at least the border regions between Pakistan and Afghanistan, the more general sense is that Al Qaeda has suffered heavy losses in Afghanistan and Pakistan recently. The killing of Osama bin Laden, which provided some of the most visible evidence of a sophisticated and relentless campaign to track down and eliminate Al Qaeda types, was only the most prominent of numerous successes in the fight against the `internationalist` jihad of Al Qaeda and affiliated networks.

With the strength of Al Qaeda diminished, the incentive for the US to engage the Taliban, who by and large have more of a `nationalist`, Afghanistan-focused agenda, ought to increase. Seen in that context, the Afghan High Peace Council`s cautious acceptance of a political office for the Taliban in Qatar, from where the Taliban can be engaged on peace and reconciliation, is a welcome move. With suspicions and mistrust so high between Pakistan, the Afghan government and the US when it comes to engaging the Taliban in talks — all sides worry that the others may use talks with the Taliban to their own advantage, and so to the disadvantage of the other sides — anything that signals a small step forward ought to be welcomed.

Still, the challenges ahead are immense. By conflating the Afghan Taliban and Al Qaeda for many years after the post-9/11 war began in Afghanistan, the US inadvertently drove the Taliban and Al Qaeda closer and made them interdependent to some extent. So the belated recognition of the different goals and agendas of the Afghan Taliban and Al Qaeda will have to contend with the history of mistakes and bad policy in the years before and it remains to be seen how successful that will be. Then there is Pakistan`s position. Will it help or hinder a joint reconciliation attempt? On that answer may hinge much of the future of talks with the Afghan Taliban.

DAWN 28-12-2011

MOURNED by thousands, a dynamic champion of democracy was paid homage yesterday at Garhi Khuda Bakhsh on the occasion of her fourth death anniversary. The late Benazir Bhutto left behind many admirers and in her passing, despite the disparity in social status, joined the ranks of ordinary party activists who fought with their lives for a common cause. Irrespective of political divides, she will be forever missed by those who believe that a truly democratic culture needs to take root in this country so it can flourish and put an end to any future attempts at adventurism. True, deals could have been brokered that may not be palatable for some. But there can be no denying that Benazir Bhutto was a brave politician who fought for the rights of the Pakistani public.

Now let`s address the murkier side of the equation. The party currently in power, Ms Bhutto`s own Pakistan People`s Party, has been at the helm of affairs since March 2008. It has been said on numerous occasions by the late Ms Bhutto`s husband President Asif Ali Zardari, as well as the prime minister and members of the inner coterie, that the identity of her killers are known to the government and that her assassins will be brought to justice — with the proviso that this can only happen when the time is right. Such statements do not instil confidence amongst the general public and leads to the view that the government is in fact disregarding the issue. Whatever the truth, it is clear that there has been a massive government failure on this count that cannot be explained away by the same old statements. If the authorities are confident they know who killed Benazir Bhutto, the assassins should be arrested forthwith. Was it Baitullah Mehsud and his murderous cohorts in the Tehrik-i-Taliban Pakistan who assassinated Benazir Bhutto? Was the plan hatched in an entirely different quarter, and if so where? With no credible answers the government should simply close the case and admit its inadequacy. If this government can`t solve the case, it is highly unlikely that any other dispensation will.

DAWN 28-12-2011

THE fact the Pakistan Tourism Development Corporation has asked the federal government for a Rs400m bailout reflects the frail health of this country`s tourism sector. The financial crunch has apparently been caused by the government`s indecision regarding the PTDC`s devolution as per the requirements of the 18th Amendment, while the corporation`s own income-generation capacity is negligible. Neither the provinces nor the centre appear too concerned about the PTDC`s raison d`etre — promoting tourism. They are far more interested in getting hold of the organisation`s assets, worth over Rs35bn. This short-sighted approach reflects the state`s blinkered vision and muddled priorities. Tourism has the potential to generate millions annually and create jobs throughout Pakistan, yet officials seem more interested in grabbing prime real estate.

Terrorism has indeed dealt a blow to Pakistan`s tourism industry, with constant bad news scaring away foreigners. Yet those tasked with promoting tourism are equally responsible for the present predicament. Law and order is absolutely necessary for a healthy tourism sector, but even in parts of the country unaffected by militancy, infrastructure is crumbling or non-existent indicating the government has failed to market Pakistan`s tourism potential. Many PTDC resorts are either closed or in a decrepit condition, while facilities such as transport and tour guides are absent and information unavailable. The PTDC has also failed to pull in domestic tourists as in many cases people are simply unaware of natural and historical wonders that lie only a few hours` drive from their cities and towns. A bailout may well be needed. But more than cash what is needed at the PTDC is vision and resolve. The provinces need to take primary responsibility for promoting tourism while the PTDC should coordinate at the national level. It is a shame that Pakistan`s immense tourism potential remains untapped due to officialdom`s complacency.

Progress on N-issues
From the Newspaper | Editorial |
29th Dec 2011

EVEN though it is recommendatory, the expert-level meeting’s decision in Islamabad on Tuesday on nuclear confidence-building measures between Pakistan and India deserves, at best, to be taken note of. The issues discussed were sensitive, and given the trust deficit, it had to be the sixth round of talks held after four years in which experts could find common ground on nuclear risk reduction. They recommended the treaty’s extension for another five years. For some reason, the decision to extend the accord on ‘pre-notification’ of missile tests didn’t find mention in the statement issued simultaneously in Islamabad and New Delhi, but the two sides have done well to clinch an agreement in principle before it expires in February. One could understand if there is no progress on such a crucial issue as the Fissile Material Cut-off Treaty. It is an issue involving the international community, and an agreement with India would have little effect on the proposed cut-off treaty which 65 nations have been negotiating.

What is disappointing is the lack of progress on lingering, peripheral issues despite the note of optimism sounded by the two prime ministers at their last meeting on the sidelines of the Saarc summit meeting in Addu last month. While Manmohan Singh said future sessions — it was not clear at what level — would be “practical-oriented” Syed Yousuf Raza Gilani said the next round of talks would be “more positive, more constructive” and would open a new chapter in their relations. Nothing of the sort has happened. Even Pakistan’s decision to give India most-favoured nation status in trade is mired in bureaucratic red tape, and is linked to the removal of non-tariff barriers by New Delhi. Frankly, pious declarations have not been translated into action, and no progress has been recorded even on less contentious issues like Sir Creek, greater cultural contacts and a liberal visa regime.
There is more than Mumbai in the background. Meanwhile, with Pakistan mired in serious domestic crises and difficulties in relations with America and Afghanistan, fewer issues with India would lessen the pressure on a beleaguered government.

__________________
Real richness is that you are so expensive that no one can buy your character.

Himalayan waters
From the Newspaper | Editorial |
30th Dec 2011

CLIMATE change is one thing and the lack of cooperation between affected countries quite another. Pakistan points the finger of blame at India while others in the region are also suffering on account of no clear-cut policy on how Himalayan waters are to be shared and conserved. Accords and treaties may have been signed but they are not always respected, much to the detriment of the people of the region. Today the glaciers are melting and the result is deadly deluges that are claiming lives and ruining livelihoods in a manner that can cause cyclical poverty that could make each generation more distressed than the last. In following decades, however, we may be facing extreme shortages of water on account of global warming and the eventual disappearance of glaciers. Action has to be taken, and soon, as the Abu Dhabi Dialogue Group pointed out recently. A meeting between the concerned countries in Asia will reportedly take place next month.
The World Bank too is working on this front. The major stakeholders in this battle for survival include Pakistan, Bangladesh, India, Afghanistan, Bhutan, China and Nepal. Common sense and a proactive attitude concerning the betterment of the world need to prevail in this dire situation, as opposed to the politics of nationalism. In addition to glacier melt, rising sea levels are also cause for serious concern.

It has been estimated that nearly 1.5 billion people live in river basins in our part of the world and they are expected to be hit hard by climate change that could induce unusual precipitation as well as drought in areas that were once fertile. As stated earlier, regional cooperation is the key here because sharing data, irrespective of nationality and cross-border friction, is of the essence. Our environmental future and livelihoods lie in a renewed sense of harmony based on trust.

__________________
Real richness is that you are so expensive that no one can buy your character.

Tension in the Gulf
30th Dec 2011

GLOBAL focus has shifted to the narrow yet strategic Strait of Hormuz as America and Iran recently engaged in verbal sparring over one of the world’s key oil transit routes. The US navy has said any disruption of marine traffic through the strait would “not be tolerated”. Iran had earlier stated it would block the channel if fresh western sanctions — reportedly being considered — were imposed targeting the Islamic Republic’s critical crude oil exports. Recently tensions between Iran and the West have been rising due to western allegations that Iran is pursuing a nuc-lear-weapons programme.
Around 15 million barrels of oil pass through the strait daily. Though the tough talk from both sides may be mere bluster, considering the current geopolitical atmosphere even the slightest provocation could lead to bigger, unwanted consequences.
If the strait is choked it would cause major tremors in the global economy. If a conflict ensues due to a blockade, the repercussions worldwide would be incredibly grim.

Though it is unacceptable for Iran to block the channel, the US does not have much moral authority to challenge a potential blockade. It has maintained a trade embargo against communist Cuba for five decades while American legislation disallows foreign firms that trade with the island to do business with the US. Also, Iran is already suffering from four rounds of UN sanctions targeting its petroleum, banking and shipping sectors, as well as individual sanctions imposed by the US and its allies in Europe and elsewhere. These sanctions have done little to solve the nuclear impasse. Further pressurising the Iranians will be counterproductive and will only serve to heighten existing tensions. Hitting Iran’s crude exports may well prompt Tehran to react in a defensive, unpredictable manner. So far, the sanest voice seems to be coming from Beijing, as the Chinese foreign ministry has called for “peace and stability” to be “maintained in the strait”. While Iran needs to tone down its rhetoric, the West must refrain from threatening and isolating the Gulf country. Dialogue and engagement are the only options to resolve the nuclear issue and prevent conflict.

__________________
Real richness is that you are so expensive that no one can buy your character.