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  #701  
Old Thursday, August 09, 2012
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Déjà vu

August 9th, 2012


Another prime minister, another walk of shame. On Aug 27, Raja Pervez Ashraf will have to make the short walk from the gates of the Supreme Court to inside a courtroom where he will likely be charged with contempt of court unless his government writes the so-called Swiss letter. And therein lies the rub: what the court would regard as a walk of shame — a second prime minister hauled before it for explicitly rejecting an explicit court order — the PPP will regard as a walk of defiance: another jiyala ready to sacrifice all for his leader, Asif Ali Zardari. When the Justice Asif Khosa-led bench held out an olive branch to the government at the last hearing, anyone desperate to see an end to the mindless saga of the Swiss letter would have hoped that the government would reciprocate somehow. But even in that moment of desperate hope, there would have been an insistent doubt: had the PPP ever been inclined to allow the letter to be written, it would not have waited for one prime minister to be knocked out. In fact, with the president himself still not directly in danger of being dislodged from office, it seemed more than likely the government would accept whatever fate the SC has in store for its latest prime minister.

And so it appears to have almost come to pass. The PPP yesterday threw yet more diversions in the SC’s path, filing review petitions against the striking down of the Contempt of Court Act, 2012 and against the order requiring Prime Minister Ashraf to explain what his government is going to do about the letter. None of these will likely keep the court at bay for long. But then perhaps all the PPP is trying to do is buy time so that the fast-winding-down election clock comes into play and the party can pull the trigger on an on-schedule election while still hanging on to its second prime minister from the same parliament. Failing that, it will just as likely have a third prime minister elected and limp on to its ultimate goal of an election after parliament completes its five-year term.

Curiously, perhaps the PPP will be helped in achieving its goal by the court itself. The wheels of justice do take some time to move, even when they are moving quickly — the months-long disqualification process of Yousuf Raza Gilani being a very relevant example. If the same schedule is adhered to this time, Prime Minister Ashraf may have just received an early Eid present: many more weeks, and perhaps months, in office.


Constituency funds

August 9th, 2012


Given our patronage-driven political system, it is far from likely that the release of constituency funds for PPP and PML-Q legislators in Punjab will serve the actual purpose of development. The legislators, angered by the provincial government’s refusal to release the funds, had approached the prime minister for an amount of at least Rs100m each, but were offered only Rs20m. True, their anger is justified to the extent that the PML-N government has not been even-handed in the disbursal of funds, and has preferred to hand out more money to its own legislators and allies rather than to its opponents in the assembly.

But in a national milieu where development priorities are skewed and where political compulsions rather than goal-oriented efforts dominate, the practice of constituency development funding itself has been called into question. The general perception is that the politicians are up to no good and undertake only those projects that are likely to boost their electoral chances, and that the funds given to them are meant to ensure their loyalty. Moreover, there are regular allegations of corruption and nepotism in the implementation of projects, and a transparent system of accountability and of checks and balances essential to public-sector development is conspicuous by its absence.

These and other factors make for a convincing argument against the present system of fund allocation among politicians and for one that would involve some form of local government to identify local needs and implement well-thought-out development projects. Doubtless, it is difficult to uproot a system that has been entrenched in corruption and murkiness since it was conceived in the 1980s under Gen Zia, but a start has to be made in that direction. And this can only be done by keeping greater checks on the use of funds, probing dubious operations and investigating allegations of corruption and nepotism. What is equally important is a planning process that is cohesive and not haphazard as now. Schemes left incomplete because of political or monetary compulsions, the absence of connectivity in the development of adjoining constituencies or duplication of projects only cause further hardship to the people and waste precious taxpayer money.


Hockey defeat

August 9th, 2012


Pakistanis hoped against hope for a hockey medal at the London Olympics until their team was ferociously thrown out of the competition by Australia. If there was no harm in attaching expectations to the national side, the change in the public mood following Tuesday’s 7-0 drubbing is also not difficult to understand. Sport is a befitting forum for the expression of the see-saw sentiment that characterises life in Pakistan today. The lament will continue for some time to come, interspersed as it surely will be with the constant quipping of the ‘I-told-you-so’ types.

Evaluation of the factors leading to the fall of Pakistan hockey is already under way. Indeed, in the first game that the team played in the London Olympics, they were shown by Pakistani experts to be battling the new blue Astroturf as much as they were trying to outdo their opponents. This had resonance with the old Pakistani explanation in which the changing face of the game has often been blamed for the ‘death’ of the Asian style we excelled in. It would have been alright had it just been an explanation, a first step towards correcting the approach and bringing it in sync with international standards. The problem is in the classical escape that finds the country and its people seeing a conspiracy against them in everything around. Hockey rules are not simply responsible for taking the beauty out of the game and turning it into a virtual wrestling bout; they are a plot against us. The Astroturf is also a conspiracy, and the refereeing is often biased, we believe. In the hockey field and in general, this victim syndrome will have to be overcome and replaced with confidence. The game is how it is. Play it or leave it. There is no other way.
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  #702  
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Khan and the Taliban

August 10th, 2012


Imran Khan wants to lead a ‘peace caravan’ to South Waziristan to protest drone strikes, but the TTP is having none of it. Speaking to the Associated Press, a TTP spokesman Ihsanullah Ihsan has condemned Khan and his ‘liberal’ politics and declared that if the PTI does try to hold his political rally in South Waziristan, the TTP shura will convene to decide how to respond. While the spokesperson did yesterday reject that he had threatened to kill Imran Khan, the crux of his accusation against the latter and the democratic system stand: the PTI chief is a liberal infidel and the democratic system is un-Islamic. To some, the TTP’s outrageous claims will be a definitive rebuttal of the oft-repeated allegation that Mr Khan is soft on terrorism and that he misrepresents the real reasons for the existence of Islamist violence in Pakistan and the region. After all, how can ‘Taliban Khan’ be a friend of the Taliban if they denounce him in emphatic terms?

But that would be to miss the point. The TTP’s loathing for the way Pakistani state and society is organised is so extreme that even flawed political narratives that are part of mainstream Pakistan are viewed as repugnant and worthy of elimination by the TTP and like-minded militants. The denunciation of the PTI’s political platform by the TTP is first and foremost about the danger that violent radicalism continues to pose in Pakistan — nobody is safe, not even those who take up causes, such as opposing
drone strikes, that would seemingly work to the benefit of militants themselves.

There is, however, another, perhaps more subtle, point at work here: the politics of Imran Khan, the religious right and even other mainstream centre-right parties in Pakistan help perpetuate the confusion and uncertainty that prevents the public from truly understanding the threat militancy poses to the state of Pakistan and the fabric of society. When Mr Khan argues that if it weren’t for the ‘foreign occupation’ of Afghanistan, militancy in Pakistan would be a virtually non-existent phenomenon — a historically and factually incorrect theory — it only serves to deepen the societal confusion about Islamist militancy that has been nurtured by the security establishment since the days of the Afghan jihad against the Soviets. The Taliban want to remake Pakistan in their own frightening and grotesque image, as TTP spokesperson Ihsan proudly stated. Until they are defeated and the mindset they represent decisively rolled back in society, Pakistan will be in danger. That, more than anything else, is the message the political class should be sending Pakistanis.


IDPs in Jalozai

August 10th, 2012


Having hosted millions of refugees over the years, especially after the 1979 Soviet invasion of Afghanistan, Pakistan should have been quite capable of looking after displaced persons by now. But the latest news from Jalozai camp, the country’s largest shelter for internally displaced persons, has once again underlined that competent and humane dealing with IDPs is far from the norm. On Wednesday, the camp located near Peshawar was the scene of mayhem as desperate IDPs dashed towards the distribution point for food and hygiene kits. The resultant firing by camp security led to the death of one person. Condemnable as the incident is, the bro-ader problem will remain unaddressed: some 16,000 families, mostly from Khyber Agency, are registered at the camp, living lives of complete uncertainty as they await news of when they can return home while their present inhabitation continues to deteriorate. With the World Food Programme reducing rations, the threat of a food crisis looms at the camp — and, judging by their record so far, Pakistani authorities are unlikely to swing into action until the crisis explodes with predictable, and tragic, consequences.

But it is not just the people in Jalozai, or even those from South Waziristan taking refuge with relatives in settled areas since 2009, whose return to their homes has been delayed. There are other casualties of conflict, such as the Baloch of Dera Bugti, who have been denied IDP status by the government, and who are far less visible on the international radar. What needs to be done to help better protect IDPs is well known: a clear national policy on displaced people, whether they have been rendered homeless by natural disaster or forced to flee conflict zones, and follow-through on that policy. Will it happen, however? The IDPs at Jalozai and elsewhere may be forgiven for not being very hopeful. And therein lies a further problem for us: uproot tens of thousands of families in a bid to fight militancy but then leave those families at the mercy of officialdom — could these camps of misery become breeding grounds for the next generation of radicals?


Far from well-read

August 10th, 2012


Reading for pleasure — as opposed to finding out about the latest crisis of governance or administration — is far from the average Pakistani’s priority. That in the average marketplace a bookstore — if it is there at all — will be thronged with the most customers is highly unlikely. Yet people who read for pleasure and the pursuit of knowledge do exist, and a sample section of this segment has voted veteran playwright Amjad Islam Amjad as their favourite author. A poll undertaken by a local organisation among 2,670 men and women in urban and rural areas gave respondents the names of five well-known writers of Urdu literature to pick as their favourite. Amjad Islam Amjad was voted favourite by 26 per cent of the respondents, followed by Ashfaq Ahmed and Nadeem Qasmi in a tie at 13 per cent and then Haseena Moin.

Heartening news, and an honour for the authors — but there is another side to the coin. While 12 per cent out of the respondents answered ‘don’t know’, 18 out of every 100 were definite in their answer of ‘no one’. A mere one per cent had literary knowledge wide enough to name an author not on the list. The unhappy fact is that not enough people consider it important to inculcate in children and young adults a love of literature and also to help create access to literature. Television, movies, the Internet and electronics are now the currency of childhood among those that can afford them. For many others, the increasingly pinched purse-strings of their parents and the absence of well-stocked public libraries mean that the realm of the imagination must lie unexplored. Left unaddressed, this unhappy situation will inevitably mean another generation of children who, even if educated, have little knowledge of the great world of literature.
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  #703  
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Syrian vortex

August 11th, 2012


The foreign minister’s statement at the Tehran meeting on Syria symbolises Pakistan’s dilemma — the tightrope walking Islamabad has to do on an issue in which it finds its friends and allies divided. Foreign Minister Khar said Islamabad was opposed to foreign intervention in Syria because that would complicate a situation “already very complex”. She was also “disturbed” over reports that Al Qaeda was infiltrating Syria. Open to various interpretations, her speech could be construed as supportive of an authoritarian regime whose crackdown on democracy protesters has so far led to over 20,000 fatalities in a 17-month-old conflict. But more likely, the for-eign minister’s stand was rooted in Pakistan’s traditional opposition to foreign intervention in a country’s internal affairs. To that extent, Ms Khar’s speech was a reiteration of this country’s long-standing approach to foreign interventions: discourage them as much as possible and wherever possible, with the unspoken fear in the background being that perhaps too much international adventurism could one day lead to Pakistan itself being caught in the international cross-hairs.

Beyond that, Ms Khar’s statement was a disappointment. The savage crackdown by the Assad regime against the Syrian rebels ought to have drawn greater censure. Instead, all Foreign Minister Khar offered was this: “We would urge both the Syrian government and the opposition groups to exercise restraint for the safety and security of the civilian population.” Perhaps in deciding to stick to its long-standing policy of non-intervention and non-interference, the foreign ministry calculated that condemnation of the Assad regime would undercut Pakistan’s other, more central message. The problem is that a Syrian policy has to be located in Pakistan’s other interests. To stand in Tehran and tacitly express support for a Syrian regime whose struggle against its people has also taken a sectarian — Shia vs Sunni — hue is to be tone-deaf to the dangerous faultlines that exist in the region.

Since petrodollars and the Iranian revolution turbo-charged the Shia-Sunni rivalry between Iran and Saudi Arabia, Pakistan has played a delicate game: stay on the right side of the powerful and rich Saudi monarchy, while also acknowledging the reality of a shared border with Iran. In the Syrian case, the lines have been firmly drawn in the Persian-Arab rivalry: Iran supporting the Assad regime; Saudi Arabia backing the rebels. So while trying to show some leadership in the Muslim world or just trying to reiterate Pakistan’s traditional foreign-policy stance, the foreign ministry must be careful to not get sucked into the Syrian vortex. President Assad may soon be consigned to the dustbin of history; Pakistan will still have to deal with both Iran and Saudi Arabia.


Unprotected community

August 11th, 2012


Interior Minister Rehman Malik’s predilection for terming all negative developments in Pakistan as a conspiracy against the state was in full play on Thursday. In answer to a question on the reported migration of several Hindu families from Jacobabad to India, he said that approximately 250 visas were issued, by the Indian High Commission, ‘under a conspiracy’, a statement that led to several families — with valid documents — being stopped from crossing the Wagah border on Friday though they were later allowed to proceed. Reports of the intended migration have yet to be substantiated as a number of travellers are said to be pilgrims, and perhaps the media has sounded the alarm bells too soon. However, for all Mr Malik’s moralistic talk of the Pakistani citizen’s loyalty to the green passport, there is an escalating sense of insecurity within the country’s Hindu community. This has resulted in an increasing number of Hindus, mostly businessmen and professionals, leaving Pakistan in recent years, although the mass exodus depicted by the media is yet to take shape. Their persecution may not be as blatant as, say, that of the Ahmadis, who are routinely gunned down or lynched, or even of their poorer brethren in lower Sindh trapped in a class-based system. But increasingly, the kidnappings of Hindu businessmen, the looting of their shops, occupation of their prop-erty and the general environment of religiosity have isolated the minority community from the mainstream. Besides, they see no forum for justice and no openings to advance in national life.

Unfortunately, for all its so-called secular and democratic credentials, this government has responded to the challenge of insecurity and the culture of radicalism and fear like its predecessors. It has made no attempt to give back minorities their space or even to provide hope for a better future. Where are the mainstream parties and their declared commitment to looking after the interest of marginalised groups? As Pakistan’s minorities find themselves increasingly cornered — not only by extremist groups and an uncaring government but also by a society that shuns the ‘other’— the hands of those who reject a pluralistic culture will be strengthened.


A dubious project

August 11th, 2012


Thar coal is back in the news, thanks to a visit by Prime Minister Raja Pervez Ashraf to Tharparkar and a demonstration by Dr Samar Mubarakmand of his miracle coal gasification technology. Dr Mubarakmand claims he can produce two billion barrels of diesel from Thar coal, that he can build a 100MW power plant that will run on gas produced from Thar coal and that 50,000MW of electricity is being generated around the world from technology of the sort he is busy installing. Many of these claims strain credibility. Coal gasification is still an experimental technology around the world and is only being used in small pilot projects in a few places. The amount of gas it yields is small, the heating value of the gas is low and the pressures are inadequate for purposes of power generation.

It’s troubling to hear Dr Mubarakmand’s assertions regarding the use of the technology elsewhere, and his inflated claims of what it can achieve in Pakistan. Following the ‘water car’ fiasco, it’s clear Pakistan’s political leaders have a limited capacity to understand even simple technical matters and how easy it is for snake-oil salesmen to find gullible policymakers with taxpayer money to spend on cure-alls and fix-alls. Dr Mubarakmand has ‘briefed’ a Standing Committee of the National Assembly, and hosted the prime minister on the site of his pro-ject and secured commitments for continued government funding of his dubious venture. A comprehensive audit should be performed to account for the Rs900m consumed thus far, and the technical evaluation performed by the Planning Commission should be made public. After all, there are other, private-sector investors with deep pockets trying to turn Thar coal into commercially viable fuel but have stayed away from Dr Mubarakmand’s project.
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‘Sunshine’ policy

August 12th, 2012


What is it about the month of August that it brings such sunshine to the State Bank? It was in August last year that the State Bank threw caution to the winds and slashed the policy discount rate by 150 basis points in an effort, as they put it, to revive investment. And once again this year they have followed suit, with yet another 150 basis point reduction, also with the express purpose of reviving investment. But did investment grow in the wake of last year’s cut? No it didn’t. In fact this year’s statement even acknowledges that fact, and offers an explanation, saying energy shortages are behind falling investment, with “the role of monetary policy becoming marginal”. Throughout the announcement, caveats are sprinkled liberally saying that the slowing growth rates and falling investments are due to struc-tural weaknesses in the economy and the stalled reforms, and that monetary policy is largely powerless to compensate for these crucial deficiencies.

The statement which announced the decision is more remarkable for the careful hedging of every statement of optimism than for anything else. It notes the continued reliance of the government on bank borrowings, and direct borrowings from the State Bank, an act that is tantamount to printing money, saying that “[t]hese borrowings are despite the commitments announced in the FY12 budget, reassurances made during the year, and more importantly, explicit requirements of the SBP Act”. It also notes the steep fall in private sector credit offtake, “a meagre Rs18.3bn in FY12 … a drastic decline compared to a net flow of Rs173.2bn in FY11”. Drastic indeed! Also “the fiscal deficit may have reached 6.4 per cent of GDP … This excludes the debt consolidation of power and food-sector arrears of 1.9 per cent of GDP” which would take us up to 8.3 per cent of GDP.

So how do the framers of our monetary policy justify making last year’s mistake all over again? In the wake of that rate cut, investment and private sector credit offtake plummeted drastically, in their own words, and the rupee slid by about Rs5 to the dollar. What did that rate cut accomplish, other than a small reduction in the government’s debt service bill, a reduction that appears to have encouraged even more reckless recourse to banking-sector resources? It appears that the State Bank has lost the plot, that it is saying one thing and doing another, that the hand on the tiller is not firm enough to withstand the pressures which are being brought to bear upon it, that policy drift has now taken root in the country’s central bank as well.


Mudslinging matches

August 12th, 2012


Mothers, children, ex-wives, marriages of convenience — all have been paraded before a bemused public as the war of words between the PTI and the PML-N heats up. Earlier, Khwaja Asif had shown his disapproval of Imran Khan’s family affairs. On Friday, it was Javed Hashmi’s turn to come out with dirt on his exes, the PML-N. Mr Hashmi chiefly targeted Chaudhry Nisar Ali, the man the Sharifs had chosen as the leader of the opposition in parliament after the 2008 election, ignoring Mr Hashmi. Now the PTI vice president, Mr Hashmi disclosed to reporters in Lahore that Chaudhry Nisar’s mother had obtained a pardon for his son from Gen Musharraf after the coup in 1999 and the consequent departure of the Sharifs from the country. He was also critical of other PML-N leaders who he said had chosen the easy path of following the Sharifs out when the party needed them here.

The latest burst of allegations was quickly responded to by Rana Sanaullah, one PML-N politician who stayed put in Pakistan during the Musharraf regime and managed to secure a visible enough role in the PML-N government in Punjab. But Mr Hashmi chose the example of Zulfikar Khosa to elaborate the hurt and pain he himself had suffered at having been sidelined by the PML-N. Sardar Khosa, the currently estranged N-League leader, had stood by both country and party during the Sharifs’ days in exile. His rebellion now has been overshadowed by the ongoing slinging match between the PML-N and PTI, the origins and the timing of which are subject to conjecture. Why did Khwaja Asif come up with the Imran Khan diatribe when he did? Was it simply Mr Khan’s visit to Khwaja Sahib’s hometown of Sialkot? Was it because of a, as yet, hard-to-believe rumour about a caretaker set-up in Islamabad under Mr Khan? Or could the PTI chief’s flirtation with the Taliban have worried the PML-N? Whatever the immediate reason, the over-the-top slandering starring such veterans as Mr Hashmi and Khwaja Asif betrays a bitter conflict between two parties striving to capture the same territory and the same moral high-ground.


Cellphone data

August 12th, 2012


Kidnappings for ransom and extortion — in which cellphone communications play a major role — are especially widespread in Karachi. With this in mind, the Sindh High Court ordered the provincial police chief to appoint focal persons to obtain data from cellular service providers to help crack down on kidnapping and extortion rings. Currently the police do not have direct access to data and has to route requests through the ISI. Efforts to grant police greater access to cellphone data have been ongoing for the past few years. It is true that granting the police access to cellphone information is extremely important as lack of access can hamper the investigation process, especially when criminals seem to be going increasingly high-tech. Yet it is also true that the police here have an image problem; there are legitimate concerns that citizens’ data will be misused. These fears are suppor-ted by the fact that the police are highly politicised and criminal elements within the force are known to exist.

While the police should be granted access to cellphone data, this power must be coupled with a fair bit of responsibility so that citizens’ personal information is not misused. In this respect the SHC has ordered the police chief to notify the list of authorised officers to cellular service providers to avoid unauthorised access to information. However, it must also be said that while such a step is important, police reform must be a much broader exercise and it would be naïve to assume that granting the force access to cellular data will radically bring down the crime graph. Giving police access to technology will no doubt help the force stay ahead of criminals. But the police must also be reformed to restore the public’s trust.
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North Waziristan issue

August 13th, 2012


The rumour mill has been in overdrive since ISI chief Gen Zahirul Islam’s recent visit to the US: will there or won’t there be some kind of military action taken in North Waziristan by the Pakistan Army? Predictably, the Pakistani side first outright denied the leaks in the American media from US officials presumably in the know, and then introduced shades of grey. Some kind of coordination across the Pak-Afghan border against militant sanctuaries in North Waziristan is not the same as ‘joint operations’, army officials first insisted. Now, as reported yesterday, the script has moved forward some more: if any action is to be taken in North Waziristan, Pakistan will expect US and Afghan forces on the other side of the border to prevent targets in North Waziristan from fleeing into Afghanistan. The unnamed official spoke of ‘sealing the border’, though more likely it would be a variant of the hammer-and-anvil strategy that has over the years been touted as the only credible model for ensuring that militants squeezed on this side of the border don’t flee into Afghanistan and vice versa.

Is the drip-drip of leaks meant to prepare the country for a U-turn in policy on North Waziristan or is this just another game of cat and mouse with the US? On the ground, in North Waziristan itself, there is no sign of an imminent military operation. While the security forces in the agency number over 40,000 – two army divisions, a Frontier Corps force and sundry local security personnel – and the national and Fata disaster management agencies have long been told to prepare contingency plans for an outflow of IDPs, at the moment the reports from the area do not indicate any signs of a military operation about to be launched. Similarly, on the Afghan side, where Khost, Paktia and Paktika are the obvious destinations for militants fleeing from North Waziristan, there is no sign yet that American or Afghan forces are gearing up for a battle with militants who may soon arrive.

In trying to determine the likelihood of a military operation in North Waziristan at the moment, it may help to recall what the Americans have pushed Pakistan to do: one, squeeze the flow of money to the Haqqanis; two, sever the information links that keep the Haqqanis one step ahead of the Americans; and three, dismantle the Miranshah hub that the Americans are convinced exists. So perhaps if not a major military operation, some other measures are being contemplated on the Pakistani side. But then, are half-measures in North Waziristan really in the interest of Pakistan?


Dam funding

August 13th, 2012


The country’s perennial water shortages notwithstanding, there is little evidence of a concerted push by the state towards speeding up projects that could contain the crisis. On Friday, a Senate Standing Committee on Water and Power said that the World Bank would rather fund the Dasu power project in Khyber Pakhtunkhwa than the Diamer-Bhasha dam in Gilgit-Baltistan on account of India’s objections rooted in Gilgit-Baltistan’s territorial status. This reported preference appeared acceptable to the presiding senator but not to the Wapda chairman who emphasised that the Bhasha dam would remain a priority. Both stances have merit — alternative projects should not be rejected if there are difficulties in undertaking others, while Bhasha, which would be the first mega dam after Tarbela was completed in 1976 and would generate 4,500MW of electricity, is of primary importance.

However, the core problem, that of debilitating water scarcity, is glossed over in such a debate. India has not made its objections formal, and in any case its concerns are hardly tenable when its own water security is not threatened by the Bhasha project. It is important, then, to look at other factors which may be causing potential donors to blink, and hampering the government’s plans. The apparent absence of a comprehensive business plan, with the names of all donors and lenders, comes immediately to mind. How does Pakistan propose to fund the huge venture of at least $12bn? The government is still looking around to complete a consortium of committed financiers, while interested parties willing to invest in the costly project are concerned that a partnership of public and private entities including governments, banks, investors, lending agencies, etc. has yet to take shape. It is only the active pursuance of such a plan that will send out the right signals so that even dithering financiers can shake off third-party objections and place confidence in the government’s intentions. Doubts have been cast on the capacity of the authorities, right from the Planning Commission to the Ministry of Finance, to see the project through. But the cost of not doing so can prove heavy for the country in the long run.


London Olympics

August 13th, 2012


The curtain came down on the magnificent London Olympics on Sunday with the United States of America and China dominating the show, rather emphatically, followed by hosts Great Britain that finished third on the medals table. Over 10,000 athletes from 204 countries participated in the extravaganza which was the third hosted by London after the 1908 and 1948 editions. To the credit of the organisers, the Games were kept incident-free and, for once, politics and terrorism took a backseat as the world focused on the triumphs and tears of sport. Michael Phelps, arguably the greatest swimmer in history, soaked up the limelight as he ended his Olympic career with 22 medals, 18 of them gold. Usain Bolt of Jamaica was the other star: his unprecedented defence of his 100m and 200m sprint gold medals capped off with trademark exuberance and style. There were many others who did their respective countries proud by reaching the podium and by entering the record books as the outstanding sportspersons of their time.

The Games, however, were a sad reflection on the state of affairs in Pakistani sport. For a country of over 180 million people to not be able to fetch a single medal in the Olympic Games is shambolic. Even worse perhaps, it was expected. The complete Pakistan contingent comprised just 20 athletes, 16 of which were hockey players, and none could make the finals of their events. Following the dismal faring of the national contingent, there have been calls for replacing people at the helm of sports federations, for better planning and incentives for athletes and uplift of infrastructure. But so long as the will to excel and the determination to achieve something is lacking among the athletes and officials, nothing will really alter the dismal status quo.
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Makli degradation

August 14th, 2012


Owing in large part to the state’s apathy, Pakistan’s historical treasures are slowly crumbling. And if a change in attitude does not come about immediately, we may soon be globally recognised as a country that neglects its heritage. A report in this paper on Monday says the Sindh government may get some respite before the World Heritage Committee adds the Makli necropolis in Thatta to the list of world heritage sites in danger. The authorities’ optimism is based on recommendations made in a report based on the findings of a Unesco team that visited Makli in May. Among the report’s recommendations, it has been suggested that the necropolis’s boundaries as well as a buffer zone be identified, while the experts have also called for a conservation and management plan to save Makli not only from the vagaries of nature, but also neglect by man. Meanwhile, according to earlier reports, a recently deceased Sindhi poet was buried in the Chawkandi graveyard, despite there being a ban on fresh burials on the site.

It has been noticed that ever since devolution, Sindh’s heritage sites have fared worse than when they were under the centre’s watch. The Unesco report appears to reinforce this view. While it says that following devolution the provincial government’s administrative and technical capacity needs to be enhanced, it also adds that hardly anything has been done to address the degradation of Makli. What should serve as a wake-up call is the observation that damage and loss at the vast necropolis due to pilferage has reached “colossal proportions”. While many may rightly ask if we deserve more time before Makli is listed as endangered — thanks to our own negligence — the state should take this as a final warning. The recommendations of foreign experts are there; it’s just a matter of following procedure and more importantly, having the will and common sense to preserve heritage.


Enabling talks

August 14th, 2012


Captured in Karachi in 2010 and kept in Pakistan despite requests from the Afghan government to hand him over, Mullah Baradar has often been brought up as an example of Pakistan’s real or perceived reluctance to cooperate with Afghanistan and the US in facilitating talks with the Afghan Taliban. Reports appearing yesterday that Afghan government representatives may have met the jailed Taliban commander in Pakistan add a new twist to this narrative. It is always hard to determine exactly what is going on behind the scenes when it comes to Pakistan’s relations with Afghanistan and the US, particularly in the realm of counterterrorism and Taliban reconciliation, and this report too has been met with denials from Kabul. And Mullah Baradar still remains in Pakistani custody. But if true, these latest reports, along with the travel of Taliban leaders from Pakistan to Qatar earlier this year for talks with the Americans, suggest that Pakistan is perhaps more willing to cooperate than is normally publicly acknowledged by either Afghanistan or the US.

But the news about Baradar also raises some of the same questions that previous instances of contact with the Taliban have: who speaks for the Taliban, and who will the Taliban talk to? For one, the level of Mullah Baradar’s influence over the Taliban at this point is an open question. Ultimately, it is Mullah Omar who calls the shots, and his former deputy has been out of the game for two years now. Second, additional reports indicate that Mullah Baradar did not seem particularly keen to talk to the Afghan government representatives. This is not new; Taliban leaders have said they will not negotiate with the Karzai administration, which they consider a puppet regime controlled by the US. Mullah Baradar’s reported dismissal of his interlocutors would only confirm this.

It is unclear, then, how fruitful this contact was. But this is in line with previous reports about talks with the Taliban, about which little seems clear or encouraging. The Qatar round of talks aimed at building confidence still appears to be stalled. There is noise about a potential Pakistani operation in North Waziristan in response to American pressure, and if that takes place it will likely have its own impact on the Taliban’s willingness to cooperate. And there are real limits to Pakistan’s ability to bring truly influential Taliban leaders to the table. But it is also important for Pakistan to do what it can and send the right signals to the world about its commitment to stabilising the region. If it did arrange talks with Baradar, it moved in the right direction.


Egyptian transition

August 14th, 2012


Unless there is an unexpected backlash from generals addicted to power, Egypt’s President Mohammad Morsi seems to have succeeded in making his electoral power felt when he sacked the three services chiefs and retired the all-powerful Field Marshal Mohammad Hussain Tantawi. Even though the latter and chief of staff of the armed forces, Sami Anan, have been retained in the cabinet as advisers, Mr Morsi’s decision constitutes a blow to the military’s power and an end to Mubarak remnants. Mr Morsi combined this move with the annulment of the perverse decree which the Supreme Command of the Armed Forces issued on the eve of the presidential election. The decree had limited the president’s power barring him from controlling military affairs, and reserved budget-making for Scaf which arrogated to itself the right to legislate. This reduced Mr Morsi to the position of a ceremonial head of state. Sunday’s decision will hopefully reverse the balance of state power and reduce the military to its professional role.

While civilian ascension to supremacy was in the fitness of things, it was the situation in the Sinai that precipitated the matter and seemed to have goaded Mr Morsi into action. The military felt humi-liated for the way the militants attacked the Egyptian patrol guards, killing 16 soldiers and then attempting to cross into Israel. This focused world attention on the civilian-military equation in Egypt and highlighted the generals’ preoccupation with politics instead of their profession. Field Marshal Tantawi and Gen Anan had both appeared invincible and managed to rule for a year after Hosni Mubarak’s overthrow. The Aug 5 incident in the Sinai undermined their position, and Mr Morsi didn’t hesitate to make use of it. In explaining his action to his people, Mr Morsi went out of his way to reassure the army that he was not taking action against any institution, nor targeting any individual. Unless there is an unexpected power struggle and the generals try to sneak back to power through unconstitutional means, Mr Morsi’s action could turn out to be seminal, for it is a logical consequence of the Arab Spring and heralds the establishment of civilian supremacy deriving power from the people’s mandate.
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Kayani’s remarks

August 15th, 2012


There was much that should be acknowledged, and much that was left unexplained, in Gen Kayani’s Independence Day speech at Kakul on Monday. The army chief made it clear that the fight against militancy and terrorism is Pakistan’s war and recognised that it involved fighting one’s own people. These are important messages; there are still many in Pakistan who think the country is only fighting other people’s battles or that ‘foreign hands’ are responsible for violence in the country. By accepting that this is a Pakistani problem with a Pakistani solution, Gen Kayani’s speech marked a welcome change from the persecution complex and denial of responsibility that so often colours both the state’s and citizens’ discourse on militancy.

What the security establishment has yet to explain, though, is who the enemy is. And that has been unclear since 2001 and the ostensible reversal in Pakistan’s security policy, when it appeared to join the global alliance in what was then known as the war on terror. Is there a reason Hafiz Saeed is able to hold public rallies while Baitullah Mehsud was considered an enemy, as is his successor, Hakeemullah Mehsud? Why are Baloch separatists picked up while the outlawed Lashkar-i-Jhangvi is able to get away with trying to eliminate the Shia Hazara community there? What makes Mangal Bagh a target for the Pakistan military while members of the Haqqani network seek shelter this side of the border? If the different approaches to these groups break down along the lines of militants who act inside Pakistan versus those who could be useful for protecting Pakistani interests in the region or whose targets lie outside the country, the security establishment should by now know better. For one, the activities of potentially ‘useful’ groups have created a host of foreign-policy issues for the country and provided a reason for many outside the counry to turn us into an international pariah. But elements in some of these groups have also turned inward.

It remains true, as Gen Kayani said, that law-enforcement is made more difficult by the weakness of the civilian administration in parts of the country and by the lack of legislation designed to address a new age of militancy. Without modifying the laws that govern admissible evidence and defining clearer rules of trial and detention, it will continue to be difficult to put militants behind bars. But that is only part of the story. The other part is the continuing lack of a clear position against armed militancy in all its forms, and of an outright rejection of the notion of ‘good’ or ‘useful’ militants.


The impasse continues

August 15th, 2012


President Zardari used his Aug 14 speech to take a swipe at the judiciary, lamenting “new forms of assault on the constitution and parliament” though stopping short of directly mentioning the Supreme Court. Given that the dogged pursuit by the court of the so-called Swiss letter directly only implicates the president himself, Mr Zardari’s comments could be seen as self-serving and partisan in the extreme. But that is a view likely to only be shared by the staunchest supporters of the Supreme Court’s incredible judicial activism. Set aside the debate on who is to be blamed for the impasse between the judiciary and the PPP for a minute and examine the knock-on effect of politics in a state of suspended animation as the country waits for the wheels of justice to trample another prime minister. A government that at the best of times has been clumsy and indifferent to governance has since January — when the NRO implementation case once again cast its shadow over politics — essentially operated with the head of government having an uncertain lease of political life. Since neither Yousuf Raza Gilani nor Raja Pervez Ashraf will be remembered by history as great administrators or policymakers, it’s not hard to imagine the impact of leaving them under the political guillotine for months on end.

The argument can and has been made that were it not for the government’s stubbornness, the matter of the Swiss letter would have been settled a long time ago and the government could have turned its attention to strengthening institutions and serving the public — which is what the democratic project is supposed to deliver here in Pakistan. The sins of commission and omission of the present government are well known. They definitely do bear repeating — but within a political framework and at the time of an election. Quite simply, the continuity and strengthening of the democratic project in Pakistan ought to be the lens through which the actions of all institutions should be judged. Have the Supreme Court’s actions strengthened the principle and practice of democracy? Unhappily, the jury may not have to deliberate that question very long today.


Local government

August 15th, 2012


The president’s announcement that the local bodies system will be introduced in Fata next year is welcome and should take the tribal areas one step closer to joining mainstream Pakistan. Yet it is fair to ask what the central and provincial governments are doing to revive elected local bodies in the rest of the country. Pakistan has been without representative local governments for about three years, and as things stand it is unlikely that LG polls will be held before next year’s general election. The Sindh government has pleaded before the provincial high court that it cannot hold polls for a number of reasons, while indications from Punjab are that the provincial government wants to hold LG polls after the general election. Balochistan has also yet to set a date. In fact, Khyber Pakhtunkhwa is the only province which has given a tentative time frame — October or November — for holding polls.

In Fata it will take time to evolve a system. Though LG polls there would be a positive step, local councils will initially only be introduced in major population centres. But in the rest of Pakistan the basic infrastructure of local governance exists. It may be imperfect and in need of improvement, but it is there and if the political stakeholders wish to make positive changes to it, they should do so through legislation instead of perpetually suspending the system. The main issue, it seems, is that of having the political will to finalise legislation and announce a schedule for local polls. Any petty considerations political parties may have — such as controlling local governments to influence polling in general elections — should be dismissed so that people can have a representative set-up at the local level. Laying the groundwork for a new system is commendable, but suspending an already working system makes no sense.
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Interim set-up

August 16th, 2012


Including the non-parliamentary opposition in the consultative process on the establishment of a caretaker set-up to oversee general elections is a positive idea and should broaden the dialogue space. Speaking to Dawn on Tuesday, Yousuf Raza Gilani said the ruling party had decided in principle to involve the Jamaat-i-Islami and Pakistan Tehrik-i-Insaf in talks to decide on the establishment of a pre-election interim cabinet, and that consultations would begin “soon”. Coming from a former prime minister, who is also the PPP’s senior vice chairman, the initiative deserves to be welcomed in a crisis-prone country that lacks strong constitutional institutions and democratic traditions. The JI and the PTI should welcome the offer, because both of them have a stake in the coming election and in the kind of set-up that will organise it. Even though these two parties boycotted the 2008 election — and they may well be ruing their decision — both of late have been reaching out to the people in a way that appears to give the impression of an election campaign. Their ideas and suggestions, therefore, deserve to be heard and made part of the consensus on a truly neutral prime minister tasked with organising an election whose transparency would not be questioned.

Against this background, opposition leader Chaudhry Nisar Ali Khan dwelt more on technicalities when he said there was no need at this point for talks with the government because the 20th Amendment had clearly laid down the procedure for choosing a caretaker set-up. Yet he said his party would hold consultations after Eid on the same issue with opposition parties, including those outside parliament. If the 20th Amendment does not stand in the way of the PML-N’s talks with the PTI — despite the “bitterness” he spoke of — there is no reason why it should stop his party from talking to the government in an amicable manner to sort out an issue in which all parties have stakes.

What matters here is not so much the technicality of the constitutional procedure as the overriding need for creating a tension-free atmosphere that would be conducive to the holding of a fair vote. The ease with which the two leading parties agreed on a chief election commissioner should serve as a model in other matters, including the choice of caretaker prime minister. For that reason, the opposition should respond positively to Prime Minister Raja Pervez Ashraf’s offer of dialogue. Mr Ashraf said the aim behind his offer was to ensure an orderly transfer of power and “the supremacy of democracy”.


Telecom saga

August 16th, 2012


It's always easy to presume guilt, to shoot first and ask questions later. The National Accountability Bureau has taken this easiest of all roads in its dealings with the Federal Board of Revenue and the telecoms on the question of the alleged tax liability of Rs47bn that the FBR raised recently. Against a relatively routine application of executive power contained in Section 65 of the Sales Tax Act of 1990, NAB took startling suo moto action in July, and placed the names of three FBR officers on the Exit Control List. Then it summoned the telecom companies to ask why they should not be liable for the relevant taxes, and tacitly accused both the telecom companies and certain FBR officials of corrupt practices in trying to implement Section 65. The said section allows an FBR chairman to waive arrears and penal charges on a tax liability that can be shown to be revenue neutral. This means that no additional tax would accrue to the government were the liability to be implemented since it would be eligible for refund in any case.

NAB claims that the powers of Section 65 cannot be wielded by the FBR chairman alone and that the notification requires vetting by the law ministry first, which was not done in this case. Telecom representatives say they are not a party to this dispute, which strictly speaking is between NAB and the FBR. They are offended at being summoned to testify and to furnish explanations regarding the liability calculated by the FBR. It’s puzzling to see how NAB has allowed its intervention in the affair to grow, from originally taking notice of the failure of the FBR chairman to get the law ministry to vet a routine notification, to asking the telecoms to provide explanations on allegations of tax evasion. The mission of NAB itself raises questions. The public is entitled to ask what is really going on. We believe that instead of getting so deeply involved in the matter, NAB should step aside and allow the FBR or finance ministry to deal with it.


The award list

August 16th, 2012


In a list of 192 — the number of honours conferred by the Pakistani state on its landmark 65th birth anniversary — there are names which appear worthy of celebration. Saadat Hasan Manto is one. He is a happy-sad reminder of the progress Pakistan has made in over six decades of suppressed existence. He is a rebel who has not ceased to bring out irony long after his departure, and justifies the cliché about a person bringing honour to an award. And then Manto has not quite gotten over his habit of creating a little controversy. If he is the standard, other choices may suffer in comparison and a long argument on merit may ensue — who else should get the award and who should be made to wait a little longer to help the roll of honour retain or regain its brevity and prestige?

Medal choices, subjective as they are, are easier to defend in fields as open to interpretation as literature. Gallantry, often proven at the cost of life or grievous hurt to a person, is another area where the choice is easier to accept, sentiment being a vital ingredient that goes into the making of a medal. But there are still other selections from other areas which must walk to the hall of fame with their stature over-politicised. The present government loves to give out awards and has received its share of criticism for drawing heavily on the boxful of decorations reserved for its own people and allies. The president’s Aug 14 list again includes some well-known government functionaries among allies who could have perhaps been permitted a bit of modesty in office. As members of the award-giving authority, they are liable to appear to be blowing their own trumpet. Their biggest award must come not from the rulers but from the people.
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Airbase attack

August 17th, 2012


The attack on the air force base in Kamra has raised disturbing — and disturbingly familiar — questions. That only one security personnel was killed as opposed to nine dead militants is only a small consolation: the first and foremost question is, how were militants able to yet again infiltrate a high-security armed services’ base and engage security forces inside for many hours? Given that some kind of military operation in North Waziristan against at least the Pakistan-centric militants is in the offing, the possibility of pre-emptive strikes by the militants is high. Had the warning of a blowback only been made at the policy level without it filtering down to the security forces likely to be in the cross-hairs of the militants? Already, the very specific threat against PAF bases in Punjab by the TTP in revenge for the killing of a militant leader earlier this month had been picked up by the intelligence apparatus. Surely, then, at this stage of the fight against militancy, the security apparatus should be able to repulse attacks on at least critical sites with more efficiency, particularly with both the circumstantial and direct forewarning appearing to have been available.

As with previous attacks, the possibility of insider help to the militants in the assault on Kamra is also very high. From sympathisers of radical Islamist thought to direct supporters of militant groups, the army appears to have a militancy problem, the severity of which is hidden from the public because investigations and court martials are often carried out in secret. The wider concern going forward ought to have the army’s screening procedures: how robust and effective is the surveillance and vetting of the armed forces’ personnel to prevent an incident before it happens? Clearly, as recent history suggests, not robust or effective enough — but what will it take for a more serious and sustained effort? Finally, the question that has bedevilled the fight against militancy: when will the state, both the army and the political government, drive home the message to the Pakistani public that the war is real, it is against a radicalised fringe of Pakistan and that unless the war is fought with total commitment and purpose, the state and society itself will spiral towards irreversible disaster? Gen Kayani’s Independence Day message contained the first strands of that message but it has to be sustained and spread to the farthest corners of the country. The ones shouting ‘this isn’t our war’ — many on the political right — need to be countered, firmly and unequivocally. Delay that battle any longer and the already manifold complications will grow yet more complicated.


OIC’s Syria decision

August 17th, 2012


Besides adding to the Baathist regime’s regional and international isolation, the suspension of Syria’s membership by the Organisation of Islamic Conference on Wednesday is unlikely to have much effect on the situation in the Levant if the aim is peace. The 57-member bloc coupled the suspension with a call for the development of a peaceful mechanism that would build “a new Syrian state based on pluralism” and a “democratic and civilian system” — ideals that are in keeping with the spirit of the Arab Spring. However, ignoring the plea by Pakistan, Algeria and Kazakhstan that the insurgents be also blamed for the bloodshed, the 57-member body’s final statement said the “principal responsibility” for the fighting lay with the government of President Bashar Al-Assad. The statement coincided with a UN report which said there were “reasonable grounds” to believe that both government forces and the rebels had committed war crimes and “gross violations” of human rights, including “unlawful killing, torture, arbitrary arrest and detention, sexual violence, pillaging and destruction of property”.

Unless there is an agreement on a ceasefire, the Syrian conflict, which has led to 20,000 dead, could expand. Lebanon is already in a state of tension and fear, with reports that four Arab countries have asked their nationals to leave the country following a string of abductions of some Sunnis by a Shia group. The OIC and the Arab League, which suspended Syria’s membership last year, ought to have a uniform policy on dissent in Muslim countries. Their attitudes towards Bahrain, for instance, are in sharp contrast with their Syria policies. While in the former case the Gulf Cooperation Council sent troops to crush the uprising and save the monarchy, in the case of Libya and Syria they have pursued an active regime-change strategy. What happens if tomorrow there is a democratic stir in Arab monarchies, some of which have not given their people even a semblance of constitutional rule? The Syrian situation deserves to be addressed with all sincerity, but as Pakistan’s foreign minister said at the recent Tehran moot, moves that could lead to foreign intervention need to be avoided.


Less aggressive now?

August 17th, 2012


Droplets of light rising from candles are gradually taking effect at Wagah. They are a metaphor for a future that must be explored and discovered, a vindication for the activists who are so often blamed for taking Pak-India peace as little more than a holiday trip. The light as a people’s collective offers a mild, soothing contrast to the thunderous war theatrics the border between Pakistan and India is famous for. The two have learnt to coexist. In fact, the battle routine the soldiers so proudly display each evening at the lowering of the Pakistani and Indian flags amid nationalist chants by the crowd gathered there is undergoing modifications. A dialogue has been opened to rid the drill of some of its more offensive gestures. Soldiers are talking, enabled by the new mood the peace activists have helped shape.

Gathering on either side of Wagah each year for a joint celebration of the Independence Day, peace activists have themselves come some distance. They were berated and threatened with isolation when they first decided to hold the border candle vigil some years ago. Today, the trends have changed sufficiently enough for the media to give a positive spin to the talks that have in recent past been held to make the border drill less aggressive, and to not miss the ceremonial exchange of sweets between the soldiers of the two countries. It appears, and appears so vividly on the television screen, that the old prediction about peace having a market in the subcontinent has also been vindicated. Tensions sell, too, and it is not that the issues have been resolved and a friendship bond established forever. There will always be some matters pending — even if the alternative route to resolution is lit up for more and more people to see and traverse.
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Shia killings on the rise

August 18th, 2012


Thursday’s execution-style killing of Shia citizens in Mansehra district and the killing of Hazaras in Quetta were only the latest incidents in what is now a clear trend: targeting innocent members of the sect — not necessarily members of any political or religious organisation — and killing them for no reason other than their religious affiliation. The Mansehra attack had a particularly disturbing aspect to it, with passengers made to show their identity papers and those suspected of being Shia, on the basis of their names or tribal affiliations, being picked out and killed. Like other recent sectarian killings in Balochistan, Kohistan and Orakzai, the approach used resembled ethnic cleansing in its chilling focus on identifying and killing innocent citizens simply because of their membership to a particular community. And while the Hazara community under attack in Balochistan is relatively small and powerless, the same is not true of Shia communities elsewhere in the country. If not arrested, this trend could well spiral out of control, turning the issue into a much larger conflict.

Meanwhile, where is the outrage from the security forces and politicians? We know these groups are willing to launch aggressive messaging campaigns when they wish to. Take, for example, the army’s response to Salala, the PML-N’s reaction to the government’s refusal to write the ‘Swiss letter’, the ruling party’s defensive posture on threats to democracy or the PTI’s campaign against drone strikes. And while it is unclear what judicial activism can achieve in such cases beyond raising their profile, where is the judiciary that otherwise takes suo moto notice of everything from the price of sugar to violence in Karachi? As each of these groups tries to focus on topics they think will boost their populist or nationalist credentials, the campaign to eradicate a minority community continues to receive less official attention than it should.

Beyond the messaging failure, little appears to have been done to confront the physical danger. Providing security escorts to pilgrims’ buses and changing the routes Shia travellers take has not been enough. Whether combating the problem is a matter of improving intelligence-gathering to prevent attacks, pre-emptively going after the groups that are carrying them out, improving policing in vulnerable areas or other intelligence or security measures, further delays are inexcusable. The state needs to demonstrate what it is doing to combat this threat. If not, Pakistan may as well give up any pretence of being a state for anyone other than its majority religious community.


Zia’s legacy

August 18th, 2012


Precious little happens in Pakistan that cannot be traced to the man who ruled over this country for 11 dark years of its existence. On the morning of Aug 17, exactly 24 years after his death, Gen Ziaul Haq’s presence was felt all the more poignantly. ‘Terrorists attack Kamra airbase’, ‘19 pulled out of buses, shot dead in sectarian attack’ at Babusar Top, ‘Zardari seeks Muslim countries’ assistance’ on Afghanistan. Rulers either side of Zia have contributed to this mad, unending dance of death that Pakistanis have been subjected to. But while the dictator may have found the soil fertile for cultivating his brand of hatred, he was so thorough in his execution of the self-assigned job and so heartlessly committed to his creed that he ensured that generations after him will find it impossible to escape his influence.

Zia’s figure looms large over a Pakistan where, ostensibly, no popular political party stands by his ideals — just as none has dared to declare a war against his legacy. The parties which he fathered, and the ones which were born of circumstances of his making, have all turned their back on their mentor. Yet, the ghosts of intolerance the general let loose on society with a ferocity previously unseen are not only very much around and kicking, they have spread far and wide and today use various disguises. Zia used Islam, originally, as a tool to secure the moral high ground against the politicians he had thrown out and that tool later became his convenient ideology, a justification for his rule. Most dangerously in the present context, he played an able facilitator to a process which was destined to superimpose the interests of the people of the country with the perceived interests of the Islamic ‘millat’. Inevitably, this was a prelude to a long, violent campaign for the hegemony of an interpretation, a sect over others. This cannot be effectively countered unless those who now disown Zia — and this includes almost all political parties here — gather the courage to actively fight his legacy. The standard catharsis through Zia-bashing will not be enough.


Stock market rally

August 18th, 2012


The Karachi stock market’s recent spectacular gains have left some feeling giddy. The sharp increases amid economic and political gloom are bringing back memories of 2008, when the market shot through the roof in a similar situation. Brokers are quick to remind us that this time things are different. Some point to ‘healthy profits’ being made, and the expectation of equally healthy dividend payouts. Others say that in 2008 leverage was strong, much of the investment in stocks was through borrowed money, and this time that favoured instrument of borrowing, ‘badla’ in brokers’ lingo, is outlawed. Others point to the higher-than-expected interest rate cut by the State Bank, saying that the money saved from debt-servicing cost will be available for shareholders instead.

Yet there is good reason to be cautious. It is worth recalling that the same brokers hyping up the present rally were also hyping up the 2008 rally till the very end. Indeed, it is a rarity to meet a stockbroker sceptical of these rallies, a fact that inspires scepticism itself. Pakistan’s stock markets are famous for the ‘suckers’ rallies’ and in every case, it is the small investor who loses at the end. Some of the claims made by the brokers do indeed ring true. It’s particularly important to note that this time round there are no specialised ‘business’ TV channels cheerleading the rally, and announcing dubious news with an eye to influencing investor behaviour on the trade floor. Most of the rally thus far has been centred on what they call ‘penny stocks’, small outfits that nobody had heard of until recently. It is hard to see how fundamentals are driving this surge, and small investors would be well advised to exercise caution. This could easily be another bull run that leads straight to the abattoir.
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