Indictment of Gilani

Thursday was a good day for rule of law but a bad day for politics: the Supreme Court summoned Prime Minister Yousuf Raza Gilani to appear on February 13 -- to be indicted with contempt over his refusal to follow a court order and ask Swiss authorities to reopen corruption cases against President Asif Ali Zardari. The premier was previously summoned on January 19, when he refused to back down on the issue. If convicted, the PM could be disqualified from public office. He may also have to step down as prime minister. If the government had hoped that choosing Aitzaz Ahsan as defence counsel would get it off the hook, it was wrong. The SC appears determined to force the prime minister to write to the Swiss. At the previous hearing, the government had argued that President Zardari had immunity from prosecution while he was head of state and Switzerland had shelved the cases in 2008 when Zardari took over the office of president. On Thursday, Ahsan was ever more obstinate. At one point when Justice Sarmad Jalal Osmany asked Ahsan whether the letter would be written if the court discharged the contempt notice, Ahsan pointedly replied that the contempt notice had to be discharged first and that he would not give any commitment on conditional discharge of the notice.

What has happened has significantly escalated pressure on the embattled prime minister and may sink his weak government deeper into crisis. But it is a crisis of the government's own making, one that was easily avoidable had the government simply complied with court orders and done the right thing. The allegations against President Zardari were frozen by the National Reconciliation Ordinance, which the courts overturned in late 2009. With the NRO having been termed null and void, the government has no option but to write to Swiss authorities and request that the money laundering cases be reopened. But the government turned the avoidable into the inevitable by constantly thwarting the court's orders. What happened on Thursday was only the logical conclusion of the actions of a government hell-bent on avoiding accountability and undermining rule of law -- something for which it already stands indicted in the court of public opinion. The government has made a habit of raising the spectre of “democracy in danger" -- an ironic gesture given that it seems the government is its own worst enemy. Now, if it wants to contain damage, it must write the letter. There is every indication that the contempt notice could be discharged if the PM simply followed orders. Will he? Or will the unnecessary defiance continue? If the government chooses to do the latter, the Supreme Court may be compelled to revisit the scope of presidential immunity itself. The government must set a good precedent for politics by writing the letter and proving that we don't yet have to read the funeral rites on sane politics in this country.

Drug tests

Tests conducted by a British regulatory agency have now established the root cause of the death of at least 127 people. They had been prescribed a contaminated medication supplied by Efroze Chemical Industries of Karachi. An antidote to the contaminated drugs has been quickly identified, is fortunately easily available and has already been administered to many of those currently suffering. The chemical causing the deaths and illness is an anti-malarial called Pyrimethamine, which adversely affects bone marrow and, if taken in sufficient quantity, causes death. It was present in Isotab, the drug prescribed to patients of PIC in quantities up to 14 times the recommended weekly dose, a level of contamination that will is inevitably has serious consequences. The samples of the drug were sent to laboratories in Karachi and Lahore but they failed to detect the contaminant, which means that even if the drug had been tested before it was distributed, the problem would have been undetected. Our testing facilities are therefore far below the required standards, as acknowledged by Chief Minister Punjab Shahbaz Sharif who promised an upgrade to international standards in the near future.

Other issues relate to the failure of quality control by the manufacturer and the continuing failure to resolve the matter of whether the necessary drugs regulatory body is to be run at federal or provincial level. Ultimate responsibility lies with the manufacturer, and the CEO of Efroze speaking on a private TV station talked of a theft of Pyrimethamine from the company last September and the possibility of a ‘conspiracy’ against the company. This is palpable nonsense. It is for the manufacturer to batch-test their products before they leave the factory. They are producing a drug that is correctly prescribed by doctors to patients whose lives may depend on their medications. There is no greater duty of care than to ensure a safe product leaves the manufacturer. It is also worth noting that it is probably unfair in this instance to penalise the doctors who did the prescribing. They would have been unaware that they were giving out dangerous medication, and the contamination is not something that would be visible to the naked eye. There may well be issues around the checking of medicines purchased by individual hospitals, but it is unrealistic to expect every doctor to check the veracity of every drug he or she prescribes. Let us hope that lessons are learned by all concerned in this most avoidable of tragedies.

In the funnel

A funnel is a conical object which narrows sharply from top to bottom, and allegorically has application to our relationships with Afghanistan and the USA. Foreign Minister Hina Rabbani Khar spent a day in Kabul on Wednesday, the day that — purely coincidentally of course — a critical Nato report that highlighted the alleged links between the Afghan Taliban and Pakistan’s intelligence agencies was leaked. Ms Khar characterised the report as ‘old wine in an even older bottle’ and swiftly moved on to other matters. The funnel is now tightening and a number of currents in the flow of relationships that make up the Afghan conundrum are starting to meld into a single stream. Ms Khar had gone on a fence-mending mission so the leak was unfortunate, but both sides seem to have sidestepped it and focused on the main event — and Afghan solution to an Afghan problem which happens to be our problem as well. President Karzai is currently playing catch-up in the peace process, and has been somewhat sidelined by the Taliban opening an office in Qatar with the blessing of the Americans who have doubtless facilitated the process.

Pakistan has had little involvement thus far, in part because of the near collapse of relations with the US over the last year. But it needs to be more engaged than hitherto if it is to preserve its place at the top table in any negotiations. Perhaps in an effort to get into the tight end of the funnel Foreign Minister Khar and Prime Minister Gilani will travel to Qatar later this month and President Karzai is due to pay a visit here at around the same time. Minds are being focused by the imminent withdrawal from Afghanistan of US combat troops and the likely withdrawal of troops from other countries. In effect, the Taliban have fought the western forces to a standstill despite their protestations to the contrary. Speed is now of the essence and for its own part Pakistan needs to be securing its western flanks, not as strategic depth but as a less permeable boundary than currently exists. There is a real risk that Afghanistan will slide back into chaos and civil war post the coalition pullout, and that will have serious negative consequences for Pakistan. Karzai may be yesterday’s man, and although we deal with him in the here and now, it is his successor who is going to be the key to any future relationship — and who that may be is unclear as yet. There is much to play for in the Afghan Game and Ms Khar will need to pay close attention to her footwork in coming weeks.


The 1st quarterly report for 2011-12 released recently by the State Bank of Pakistan (SBP) paints a mixed picture. The Gross Domestic Product (GDP) growth target of 4.2 percent was optimistic and looks unlikely to be met. Gas shortages, the high and rising cost of oil and declining global prices for agricultural commodities generally are all feeding into a failure to meet the GDP target. More positively the budget deficit has reduced to 1.2 percent of GDP against 1.5 percent for the same quarter last year, in considerable part because of 29.7 percent growth in FBR revenues and a rise in the revenues generated by imports. Also there is the growth in non-tax revenues — of 50.4 percent. Despite these gains they fall short of the Rs1,952 billion that was the target, and if the government is to make the target it will be heavily reliant on payments into the Coalition Support Fund (CSF) and the sale of 3G licences which it is hoped will raise about Rs150 billion. Neither of these is a certainty, and it is going to be difficult to contain the fiscal deficit within target limits.

Where things look bleak is the shortfall on the provincial contribution. The federal government had projected a surplus of Rs125 billion on the part of the provinces, but their expenditures went through the roof, increasing by 52.8 percent. The provinces managed to contribute a paltry Rs11.6 billion surplus, which was 85.7 percent down on the same period last year. The wonders of devolution, perhaps. A severe lack of external funding has swung the weight of financing the deficit on the banks. Consequently the government has ended up borrowing Rs736 billion to the end of November last year — as against Rs336 billion for the same period last year. The ever-present circular debt lies at the root of this, and the government borrowed Rs391 billion in an attempt to end the circular debt problem — and failed. Inflation, despite how it feels ‘on the street’, fell to 9.7 percent after being double-digit for the last two years. It is going to rise again as energy costs increase in coming months and is expected to be around 12 percent by the end of this calendar year. The report is carefully non-committal about overall economic prospects. Inwards investment has virtually dried up, and the speed with which the current account has deteriorated in this first quarter is viewed with concern. Rumsfeldian known-unknowns litter the economic landscape. Will the 3G sale really deliver as expected and will the US make good on its contribution to the CSF given the parlous state of our relations? The economy is at best fragile, at worst shaky and stability is undermined by political uncertainty.

__________________
Regards,
CHAIRMAN MAO

Balochistan

As the general elections draw closer and political parties begin to lay the planks of their respective campaigns, the Balochistan crisis is back in focus, figuring heavily in the rhetoric. But is the central cause of the Balochistan’s alienation being addressed in any meaningful way? Recently, MPA Nawabzada Bakhtiar Khan Domki’s wife and daughter were brutally murdered in Karachi. Domki is very closely related to the late Nawab Akbar Khan Bugti and so was his wife. In what the Baloch Liberation Army said was retaliation, four Frontier Corps check posts near Margat coalmine area came under attack and at least 15 FC personnel were killed and dozens sustained injuries. Those who died had no role in devising the policies in our most troubled province or determining how its affairs should be handled. It is tragic that they should fall to the guns and grenades used by militants. A military source was reported to have blamed the attack on another outfit controlled by the self-exiled Harbiyar Marri. In the Domki case, police officials have so far cited a ‘family feud’ as the possible motivation behind the killings while Domki has pointedly blamed the security outfits for the killings which he says may be aimed at forcing the family to leave the country. Some have suggested that the motivation may be to send a chilling message to the Baloch militant leader Brahamdagh Bugti, currently in exile in Switzerland. The precise truth in all this is hard to pin down given the shadowy nature of operations in Balochistan and the degree of chaos that prevails there. A joint investigation team has been formed to investigate the murders but very few expect the probe to throw up anything of substance.

But the question is how long we can sustain this violence as the situation in Balochistan, our largest province, worsens by the day and what impact this will have on the rest of the country. Public anger in the province is immense. We need to see more action, more interest, in the events taking place there. The federal government needs to step in and state why the package it had announced so many months ago for the rights of Balochistan has not been implemented. But we must move even beyond this. It may be too late for the traditional thinking — that the Baloch could be persuaded to forget, under the mantra of development, the hurt and humiliation they have suffered for decades - to work. Unless there is an end to corpses turning up on roadsides and unless the ‘disappearances’ stop, the progress towards normalisation may be impossible. Indeed, the state needs to stop looking at Balochistan only through the security prism, just as a strategic asset with vast natural resources. All parties and groups need to be brought together to talk so that grievances can be aired and a viable formula worked out to bring peace. If the US can sit and talk with the deadly Taliban why can’t we sit with our own people and talk? This is the need of the hour.

The US State Department has issued an altered advisory for American citizens in Pakistan, modifying the guidelines it last set in place in April 2011. The more stringent warning is a reflection too on the change in the relationship between Washington and Islamabad, and the new tensions that have crept into it. The latest advisory stresses that since the November 2011 Nato air strike inside Pakistan animosity towards Americans has grown and they would be well advised to stay away from demonstrations and gatherings protesting this incident or others similar to it. This of course is a matter of common sense. It would obviously be unwise to venture into a situation where people are protesting the killing of citizens by the US forces or by the unmanned drones that hover over northern skies. But the advisory also cautions against other more insidious action directed against the US – such as the labelling of diplomats or others as intelligence agents, followed by possible action against them. Such events have of course occurred. Warren Weinstein, an aid expert, said to be close to 70 years in age, was abducted in August 2011 from his home in Lahore – soon before he was due to leave the country. Information surfacing in December last year indicates he may be in Al-Qaeda’s hands. Nationals of other western nations have disappeared from other places, presumably picked up by extremist forces, and have yet to be recovered.

The deepening distrust of the US in this country is hardly surprising, given its policies that are perceived to be consistently undermining Pakistan’s sovereignty. What is ironic, however, is that these should rank among the actions of a nation that is also regarded as a key ally. Pakistan’s dependence on the US is well established. Yet over the past year or so we have seen a swift decline in trust; it is hard to work together with a country which is held in such low esteem by our own people, and which in turn, as this advisory clearly states, feels threatened by them. The entire issue of relations with the US is one our government needs to very carefully assess, given the enormous implications it has and the fact that much that happens in our future is dependent on this matter and the manner in which it is handled over the coming months and years.

__________________
Regards,
CHAIRMAN MAO

Qatar overture

With Prime Minister Gilani, Foreign Minister Hina Rabbani Khar and their respective teams in Qatar for three days, the inevitable focus is on Pakistan’s engagement with the infant Afghan peace process and our part in it. The opening by the Taliban of an office in Qatar, the emergence of Qatar as a regional broker and ‘safe space’ along with the resources that Qatar has and which we have an interest in, all make for a complex layer cake. Pakistan’s interest in the peace process is a given, and the government must ensure that it keeps a place at the table and is part of any negotiation; as whatever the outcome, it is going to have medium- to long-term implications for our economy and security. The Afghan peace process aside, the Pakistani teams in Qatar have a number of other pressing matters to discuss, with energy being at the top of the list.

The crisis which has crippled our energy sector over the last four years is tipping towards the existential and we need a solution more durable, sustainable and affordable than that provided by the likes of ‘power ships’. Qatar produces 77 million tonnes of Liquefied Natural Gas (LNG) per annum and has vast reserves. Pakistan is interested in importing 500 million cubic feet per day and in feeding this through to its anaemic gas-fired power stations, with the possibility of them generating 2,500 MW to feed into an equally anaemic national power grid. There are protocols to be agreed upon, to allow the transnational transfer of Qatari gas, but it might be assumed that the PM would not be there unless there had been some preparatory spadework on the deal. An agreement will likely be signed between the Water and Power Development Authority and the Qatari ministry of energy. In the other direction, Pakistan has skilled labourers that Qatar is short of, particularly as Doha is to host the FIFA World Cup in 2020 and is to embark on a vast infrastructure building programme to support this most prestigious of international tournaments. Exporting our labour means a boost for remittances at home, and with Pakistanis already comprising 33 percent of the population of Qatar our linkages may run more than skin-deep. Vital as the Afghan peace process is, our other needs and interests must not be ignored — and any possibility in the near term, of mitigating the energy crisis, should be welcomed.

Plunder

The level the curse of corruption has reached under the Gilani government is mind-boggling. New records have been set; we wish they had been established in a different sphere, avoiding the kind of damage Pakistan has suffered. Adil Gilani of Transparency International Pakistan (TIP), in an interview with this paper, has put the losses on account of corruption at a colossal Rs8,500 billion, accumulated through poor governance, tax evasion and other forms of corruption. It does not take much imagination to know what could have been done with this massive amount in a country where people still yearn for the most basic needs, and the economy continues to crumble — a fact depicted in the falling GDP and the soaring inflation.

The TIP representative pointed out that the figure he put out was based both on TIP’s own annual corruption perception index and a string of concessions made by senior bureaucrats and government officials and members to wrongdoing. As for the scale of tax evasion, it is uncertain if we even have any idea of the true figure given the inaccurate declaration of assets and the flawed process of scrutiny. Although a government spokesman has tried to personalise and trivialise the colossal extent of corruption, it is deeply disturbing that the rating of corruption given by TIP rose to an alarming Rs1,100 billion in 2011 — the highest figure during the period under review. Clearly, there is still some space left in pockets – and accounts — and no lessons have been learnt. The truth is that the situation can only be described as plunder. Controlling corruption is, then, an ideal we must work toward. No nation can and should live with corruption on this scale. It can only end if we are able to establish a system of accountability.

__________________
Regards,
CHAIRMAN MAO

Black lies

The minister for water and power has spoken. According to Naveed Qamar country-wide loadshedding has come to an end from Tuesday onwards. Understandably, power consumers have been left more than a little perplexed by this statement. Looking at Pakistan from the outside, militancy and terrorism may be the big worry, but with no electricity to switch on lights at home, and no job because the factory you worked in has been shut down, the power crisis is the biggest problem for the average Pakistani and one that permeates his or her everyday existence at every level. So when our dear minister tells us that there won’t be any loadshedding from tomorrow, we’re very, very suspicious. How, after all, will the issue of circular debt of Independent Power Producers be resolved within the next few days, as Naveed Qamar says it will be? What are the ‘reforms’ introduced to resolve the power crisis overnight? What do we know about this mysterious plan ‘to produce to 88,480mw power in the next 14 years’ and why should we trust it? For a country which has an installed capacity of more than 18,000MW, producing less than 10,000MW at a time when demand is nearly 17,000MW is a terrible indictment of the state of the power sector. What is this government up to?

Naveed Qamar’s predecessor, Raja Pervaiz Ashraf, also made many such statements about how there would be no more loadshedding from this or that date. But broken promises seem to be the government’s forte. The energy crisis is a self-inflicted problem that has been allowed to reach dire proportions even though the country lacks neither energy resources nor the opportunities to exploit them meaningfully. Among the greatest tragedies the power sector has suffered is the lack of vision by the government and the unwillingness of the political leadership to shoulder responsibility. This government, like those of the past, tends to rely on makeshift arrangements instead of working on long-term, goal-oriented projects. The pursuance of personal and political interests, political interference in energy departments, financial and administrative irregularities, corruption and nepotism seem to define how this government has ‘managed’ the energy crisis. As the general elections roll in, it makes perfect sense that the government would try to cover up its lack of vision and sound policy with temporary ‘solutions’ that will placate the voter in the short-term but be a betrayal of his trust in the long-run. Indeed, we can’t help asking: how will you go from loadshedding for 20 hours a day in many parts of the country to no loadshedding at all? Indeed, why did we go through so much misery if the problem could just be solved with one statement from a federal minister? While these questions remained unanswered, facts on the ground belied the minister’s claim on Tuesday as loadshedding continued just as it was before his announcement. So much for lofty claims!


Syria’s slide into anarchy continues seemingly unchecked. The veto of the UN resolution by Russia and China has been widely condemned and has been followed by an escalation of violence on all sides. The city of Homs is currently the epicentre of the fighting. Activists claim that over 200 people were killed in shelling at the weekend and another 50 on Monday. The Assad regime claims that ‘tens of terrorists’ were killed in Homs on Monday. An oil pipeline feeding the main refinery in Homs was hit on Monday for the second time in a week and on to the scene on Tuesday morning, in the wake of the Americans closing their embassy in Damascus comes Sergei Lavrov, the Russian foreign minister. He will be meeting with President Assad and urging him to implement as swiftly as possible the reforms he has promised, but this is extremely unlikely. The UK and Belgium have recalled their ambassadors for ‘consultation’ and London is said to be seeking further European Union sanctions against Syria. President Obama has said that military intervention is not an option and that diplomacy is the best course.

The Russian and Chinese veto was exercised in the light of their deep suspicions that the western states ‘did the dirty’ on them after they had signed up for the Libyan intervention by going into an air-war. Russia argued that the UN resolution amounted to siding with Assad’s opponents and was designed with regime-change in mind, a change that would see the ouster of Assad who has long been supported by both China and Russia. Russia will be seeking to keep a toehold in the Middle East based on its historical military ties with Syria, but may feel conflicted by the need to tell Assad that if there is no discernible change, then external military actions may be possible and Russia in that event may just throw up its hands. China would probably follow the Russian lead in that event. The western states may not want another expensive back-garden war – but thus far diplomacy has not dented Assad and Lavrov has little that would tempt him towards moderation.

__________________
Regards,
CHAIRMAN MAO

Iranian gas

There is a growing convergence between the needs and interests of Pakistan and the needs and interests of Iran. Pakistan’s external relations with neighbouring states are currently in a dynamic phase. In the last two days we have agreed to import gas from Qatar and now rising to the top of the agenda is the Iran/Pakistan gas pipeline, and despite pressure from the Americans who view this project with the most jaundiced of eyes, it is beginning to look like it might become a reality. There is considerable potential for expanding Pakistan’s trade links with Iran, and is looking at the possibility of liberalising the trading environment by eliminating the tariff and non-tariff barriers that currently exist and freeing up the issue of multiple-entry business visas on a reciprocal basis. The banking sector of both countries is under the scrutiny of a Joint Working Group which will explore opportunities for enhanced trade cooperation.

Trading opportunities aside, it is Iran’s gas and the upcoming visit of the Iranian President Ahmadinejad that is of geopolitical importance. The world watches as Iran and the Americans and Israelis spar around the issue of the development of an Iranian nuclear programme. The western nations – and some Arab states – suspect that Iran has military nuclear developments in mind not just civil, and sanctions have been imposed on Iran. Iran for its part has responded by threatening to close the Strait of Hormuz through which almost a third of the world’s oil passes every day. Iran and Pakistan if nothing else have a need of friends in the world, and it makes strategic sense for them to firm up ties. Both have an interest in outcomes in Afghanistan, and the visit of the Afghan President Karzai to coincide with that of President Ahmadinejad to constitute the Third Pakistan-Iran-Afghanistan Trilateral Summit may be one of the hinge-moments in the nascent peace process. Although Iran has no direct part to play in this, it has a vested interest and at least should be accorded ‘observer’ status as matters develop. Consolidating dialogue between three of the key players ahead of formal talks opening with the Taliban in Qatar is good strategic housekeeping. Cementing Pakistan’s relationship with Iran through an important infrastructure project and a trade-not-aid relationship with a friendly neighbour – is likewise. The Americans may carp about Pakistan’s alleged linkages with Taliban groups both here and Afghanistan, but those very linkages may be key to future dialogues and negotiations. By the same token, an Iran that is comfortable with Pakistan may find that there are other ways to talk to the Americans than by megaphone across the Strait of Hormuz. The physical link of a gas pipeline will be a hook on which other matters may be hung, and although there will be tensions with the Americans around the issue in the short-term they, as we, ultimately play the pragmatist. Our energy needs are never going to be met from a single source. A basket of providers and a network co-dependent states with common interests relating to energy and mutual security may well shape a more peaceful future for all of us.

Health warning

The recent meeting in Davos between Prime Minister Gilani, Foreign Secretary Hina Rabbani Khar and representatives of the World Health Organisation (WHO) has potentially far-reaching implications for the people of Pakistan. Pakistan is a nation of travellers, much of it international, and it is this that has given rise to concern in the WHO. The WHO representatives delivered what is being described as an ‘informal warning’ – a warning that unless we made serious attempts to curb the spread of polio, hepatitis and HIV/AIDS then we could find ourselves on the WHO watchlist. Were that to be the case all international travellers from Pakistan would be required to inform the WHO of their movements. It takes little imagination to see the possible consequences. Countries which are polio-free could in future require documentation for all incoming passengers from Pakistan that they are appropriately vaccinated. Some countries already want our citizens to be certified TB-free before issuing a visa.

In the matter of HIV/AIDS there are particular difficulties; in large part because Pakistan has no accurate database of HIV/AIDS patients, and the disease anyway has a ‘sensitive’ cultural aspect to it that is going to make data collection and collation difficult. As to polio, we are the world leader in polio cases. There were 198 cases diagnosed in 2011, up on the 144 of 2010. Afghanistan had 80 last year, Nigeria 45 and India 1. WHO director Margaret Chan voiced ‘apprehensions’ about what were termed the ‘lacklustre attitudes’ of some officials tasked with polio eradication here, and the inefficiency of their offices. PM Gilani responded with all the usual platitudes about difficulties of illiteracy, outdated local customs and beliefs and the problems of eradicating the disease in conflict zones. All of which may be true – but if India, which at the last count had 15 armed insurgencies going on within its borders can reduce polio to a single case; then why not Pakistan? The WHO was at pains to point out that they were not out to make trouble for Pakistan, but that if it did not get its house in order then it would have little choice but to impose restrictions on Pakistan, limiting access and egress with consequences. This is no idle threat. The WHO is a powerful global regulatory agency, and if it decides to impose sanctions on Pakistani travellers then the world is going to comply.

__________________
Regards,
CHAIRMAN MAO

Pakistan’s relationship with Russia goes back a long way, to May 1, 1948 when we first established diplomatic relations, but they have not been uniformly happy. Down the years there have been numerous instances of mutual antipathy - Russian criticism of Pakistan’s position in the 1971 war with India; Russian vetoes of the UN resolutions regarding what was then East Pakistan that Pakistan took to the UN General Assembly; Russian support for India and the sale of billions of dollars of arms and material to the Indians at preferential rates; the 1960 U2 incident in which the Americans flew a spy plane from one of Pakistan’s airfields over Russia and the Russians shot it down - and then the invasion of Afghanistan and its dreadful aftermath. There have been attempts to improve relations, most notably in 1974 when ZA Bhutto made a state visit to Moscow and there was a ‘sunny’ period through to 1979 but tensions rose again in the 1980s and relations stayed in the freezer until the turn of the century - and then there was 9/11 and the world changed.

Now, Foreign Minister Hina Rabbani Khar is in Moscow and there is a fundamental realignment of foreign relations between the two countries - a part of which is a strengthening of bilateral ties with Russia . In 2011 Russia signalled a change in its own attitude towards Pakistan and President Putin publicly endorsed Pakistan ‘s bid to join the Shanghai Cooperation Organisation. He said that Pakistan was ‘a very important partner in South Asia ‘ and now we are seeing flesh on the diplomatic bones. On Wednesday Pakistan agreed to enhance bilateral relations in a range of fields including trade and energy and contact between parliamentarians from both countries. The Russians appear interested in looking at the possibility of breathing life into Pakistan Steel, in which they have a long historical interest, and in the development of the Thar coalfields. Russian investors have expressed interest in our energy sector and all in all Pakistan ‘s position vis-à-vis the Russian Federation is a world away from where it was a decade ago. This is a change that is a reflection not only of Pakistan ‘s own realignments, but of an emerging new world order, of a rebalancing of the global scales. Yesterday’s enemies may prove to be tomorrow’s friends in a world where America is no longer the only game in town.

Overvalued rupee

As if there was not enough for our economic managers, bankers, investors and savers, large and small to worry about, the International Monetary Fund announced on Wednesday that the Pakistan rupee was overvalued by as much as 10 percent against the US dollar. The rupee has been dropping against the dollar and reached a low of 90.78 to the dollar on January 9. It is an inescapable truth that since the current dispensation came to power in 2008 the rupee has lost 45 percent of its value. The IMF country report notes that our recent export-sector performance has been weak. The sector generally has been in decline since the mid-1980s so this is not exactly a new trend, but there has been a sharp uptick in the decline since 2007 as a spin-off of the global financial crisis. Slightly paradoxically our percentage share of world exports has been fairly stable since 2007, a situation helped by a recovery in cotton prices.

It is the old enemies that are eating away at us. An ongoing decay in the security situation which feeds through to a loss of confidence by potential domestic investors, the ‘unreliability’ of the energy sector, poor governance, political preoccupation with preservation of positions rather than effective management of the country, poor labour-market efficiency; deficits in higher education and training and a decrepit infrastructure generally. The IMF argues that there needs to be greater flexibility in the exchange rate in order to protect the external position. There has been some recent easing and the IMF has reclassified our exchange rate as ‘floating’. As with most external analyses of our financial and macroeconomic position, the view is generally negative. The government has failed to make the reforms that would allow the economy to strengthen. Unless our politicians grasp the nettle of reality then we are never going to perform as a state at anywhere close to our actual potential. And the prospect of devaluation must send a shiver up the collective national spine.

__________________
Regards,
CHAIRMAN MAO

Blaming others

As presidential performances go it was up there with the best. Or worst. The president has never been much of a public speaker, veering between flat platitude, flat-out incoherence and a declamatory style of delivery. The occasion of his latest oratorical outing was a dinner he hosted for the outgoing senators at the Aiwan-e-Sadr on Thursday night. There was a starry guest list and the Chairman of the Senate Farooq Naek, assorted ministers, parliamentarians and of course the outgoing senators themselves were his captive audience. As is usual on these occasions there was much mutual back-slapping and congratulation and the president delivered himself of a number of pearls of wisdom. He spoke of the senators’ wisdom and selflessness and of the senate as being the ‘fountainhead of political reconciliation’ – a statement that surely flies in the face of reality as perceived by anybody living outside the privileged bubble of the upper and lower houses. Equally puzzlingly he talked of senators and parliamentarians as having ‘enhanced the trust of the people, not only in politicians but also in the parliamentary democracy’ – which again is at variance with how the majority of the populace view a group of men and women who have been found to be economical with the truth in the matter of their academic achievements if nothing else.

But it was his comment to the effect that Pakistan would be a developed country were he and his party ‘allowed to work’ – by inference saying that whatever mess we find ourselves in today it is all somebody else’s fault and none of his or the party he co-leads – that took the biscuit. This takes the denial of reality to fresh heights. Has our president failed to notice that the rupee has lost 45 percent of its value against the dollar since his party took the helm? Or that a slew of state enterprises collectively bleed the country dry whilst stuffed with political appointees? Or that the number of people who are food-insecure is increasing almost exponentially? The blame, the responsibility, is all in the lap of others, and his audience would perhaps have thought no different. If our president had stood up before the wider public and said with honesty that his government had made a number of mistakes then he may just have garnered scattered applause, but admitting inconvenient truths is not easy for political leaders anywhere and, in the case of our president, it is downright unnatural.

Court and contempt

The Supreme Court on Friday threw out an appeal by embattled Prime Minister Yousuf Raza Gilani against contempt charges, paving the way for him to be indicted next week. So there’s another court decision and more mounting anxiety. But the rejection of the prime minister’s intra-court appeal by the eight-member bench did not come as a surprise. The learned counsel was able to offer nothing that was new on Friday. He ventured to some degree towards the related issue of presidential immunity, but then backed away from this and held steadfastly to his client’s old mantra of not implementing the NRO verdict handed down by a full bench of the Supreme Court. Still, despite the fact that the brilliant Aitzaz brought none of his brilliance to the proceedings, he was given a patient hearing by the larger bench, a fact also ceded by him. Legal arguments notwithstanding, the court also offered every possible opportunity to the prime minister to walk away from a possible eventual conviction by performing the simplest of acts: placing obedience to rule of law over party loyalties; doing the right thing over doing what the boss would approve of. Clearly the premier’s priorities are different.

Now, the next step will be the formal framing of contempt of court charges on the prime minister come February 13. If the court rejects Aitzaz’s pleadings at that stage, as is expected, we will see a full blown trial. It is indeed unfortunate that politics is being played by the ruling party in what is clearly a straightforward judicial matter that has attained legal finality. The ruling party’s dilemma, that the implementation of the NRO verdict will harm the PPP’s co-chairman, is certainly understandable but it is in no way condonable. If anything, it has thrown the country into another unsettling storm of what-ifs. Indeed, while the prime minister may emerge a political hero within his own party ranks. whether he is spared or speared by the court, Pakistan will inevitably be damaged by these destabilising flurry of events. The country needs political stability, economic certainty, an anxiety-free polity and, above all, a system based on the inalienable principle of the supremacy of rule of law. The buck stops with the prime minister to make all this happen. And he can still do the right thing by implementing the apex court’s verdict. It is still within his grasp to prevent the political system from descending into another needless spiral of uncertainty, the consequence of which will be a certain contempt conviction. Will better sense prevail? While everything about this government’s track-record suggests no, the well-wishers of Pakistan can’t help but keep praying.

__________________
Regards,
CHAIRMAN MAO

Sunday, February 12, 2012

Back on rails

The Memogate Express is back on the rails and Mansoor Ijaz, one of the main characters of the drama, has vowed to put the truth on the table through his video testimony to be recorded in the Pakistan High Commission in London on February 22. It is not clear why during the initial hearings — when things were rather cloudy — the Qazi Issa commission had taken off the table the option of the commission going abroad to record testimony. But the wrong, if it was one, has been corrected. It seems the government has been playing politics over the physical appearance of Mansoor Ijaz in Pakistan — offering him full security on the one hand and scaring him off through different tactics on the other. However, there was no reason for the commission to focus on anything else but getting the evidence from whoever had it.

While the PPP-dominated Parliamentary Committee on National Security may still be concerned about the political consequences of Ijaz’s testimony — as it has announced that testimony only given inside Pakistan will be accepted – the memo commission has done the right thing by deciding to use the latest technology to get the evidence and also keep its dignity and respect intact. Thus the decisions taken by the commission on Friday not only make sense but also revive the issue when many were writing it off, with some declaring that the military establishment had backed off, others saying that the Supreme Court had thrown it on the backburner and many believing that the petitioners including Nawaz Sharif had realised they had made a political mistake. But it seems the only change is that Husain Haqqani has been allowed to leave Pakistan — after giving an undertaking that he will return within four days if summoned by the memo commission or the Supreme Court. Even if he is not present physically, his testimony, through a videoconference, could still provide the commission with the necessary data and evidence to form an opinion about who may or may not be the author of the controversial memo – in addition to Mansoor Ijaz, who admits that he wrote it and sent it to US military leaders, but — as he alleges — at the specific request and with active help of Husain Haqqani.

That this case must reach its logical end is important because the top army and ISI leadership has committed in writing to the Supreme Court that Haqqani compromised national security, that the evidence Mansoor Ijaz had was credible and that it must be determined whether Haqqani was alone or had the backing of his bosses. If the army and the ISI had reached a wrong conclusion, it will have grave consequences and reflect poorly on their competence and their conceptions of national security. And they must be made to pay for it. If Haqqani is found involved, he must be made to answer why he did it. If he seeks asylum in the US, which he may if indicted, he must be pursued. If Mansoor Ijaz turns out to be a publicity-seeking bully, Haqqani and others must sue him and seek adequate compensation. Someone, somewhere, somehow must pay.


The government and the opposition parties have reportedly put the finishing touches on the draft of the 20th Constitutional Amendment bill which will be tabled in the National Assembly on Tuesday, giving constitutional cover to the by-elections held between April 2010 and July last year when the Election Commission was not in complete shape. The bill will also enable the parliamentarians recently suspended by the Supreme Court to be reinstated. The government seems to have capitulated to the demands of the opposition including no extension to the Election Commissioner, raising the tenure of members to five years, giving the party head the power to change the list of reserved seats for women and implementing the 18th Amendment. The one bone of contention between the government and the PML-N was the issue of the caretaker set-up and that issue also stands resolved now under the formula that the leader of the house and leader of the opposition would suggest the names of the members for the interim government and a six-member committee with three members each from the PPP and PML-N would be constituted to resolve any differences in case the prime minister and the opposition leader could not reach consensus. Even the last minute hurdle — of the MQM demanding participation in the committee — has reportedly been resolved with the government conceding that the three members from the treasury benches could be from any of the allied parties or the number of members could be raised to include other political allies also.

While it is commendable that the government and opposition parties have gone to such lengths to reach consensus on this important amendment, it is also unfortunate that these long and tiresome negotiations have come and consensus reached only after the humiliation of the Supreme Court suspending the membership of 28 parliamentarians elected in the by-polls. Why couldn’t the creases in the bill been smoothed out earlier? Also, given the tone and tenor of the talks, one can’t help wondering if the backdoor interactions are simply to negotiate political gains between the two leading political parties or if there is a genuine push for institutional reforms and the constitution of an independent accountability infrastructure to oversee the upcoming general elections. As constitutional amendments are not everyday affairs and a two-thirds majority in each house is not easily attainable, why can’t other issues, such as an independent accountability setup and the proposed cut in the life of the lower house to four instead of five years, be also voted on. Will the politicians demonstrate selflessness and do something that could show them to be more than just self-seekers and defenders of personal interests?

__________________
Regards,
CHAIRMAN MAO

Warnings unheard

When the express train is coming down the track with its horn blaring it is a good idea to get out of the way. The horn will have been heard when the train was still far away. Other warnings of its approach will have sounded. But the government stands there bland-faced and smiling, and the impact is imminent. The horn in today’s scenario is the State Bank of Pakistan and the train it is attached to is the economy. Government finance is not a simple matter of ‘in one pocket and out of the other’. It is a complex weave of educated guessing, outright gamble, calculated risk and sober book-keeping and prudent and thrifty housekeeping. ‘Prudent’ and ‘thrifty’ are not part of the script for the current dispensation. The SBP has reiterated what financial analysts have been saying for months — that our financial woes are in large part driven by the government borrowing from itself, from the SBP, and that this is increasing inflationary pressure with a rise to 11 or 12 percent by the end of this year now inevitable.

The gamble for the government is whether support funding which will slow or halt the erosion of forex reserves will come to the rescue. It is too late now in this term for the structural reforms that might have averted the current crisis, so hopes are being pinned on payment of $800 million into the Coalition Support Fund; and the auction of the 3G licences which is expected to bring in $850 million. Even if these gambles pay off, they are short-term solutions to a chronic problem. International oil prices are unlikely to fall and may rise sharply if the face-off between Iran and the US worsens; and our own imports of oil and oil products rose by 33.7 percent to a value of $19.7 billion in the last H1 FY12. The government has borrowed (from itself, remember) Rs197 billion between July 1 last year and Feb 3 this year, a 25.8 percent growth year on year, and tax collection falls far below the target alongside ever-shrinking inwards investment driven by domestic insecurity and a lack of confidence by investors. How we finance the fiscal internal and external current account deficits is a massive challenge, and the SBP has blown the horn as loudly as it can. Whether the government has heard the horn is entirely a matter of speculation. Is it even capable of hearing, embroiled in the ear-deafening din of massive corruption and a stampede for its survival?

National tragedy

The failure by successive governments to invest in education lies at the heart of much of the dysfunctionality we face. The Annual State of Education Report 2011 was recently launched at the Planning Commission auditorium in Islamabad, and the assembled dignitaries were treated to the recitation of a litany of failure. Panel members talked of the failure of the public sector to provide basic services to the populace, and the need to curb the demographic disparities in order to ensure access to education for all. The numbers speak for themselves. Enrolment for 3-5 year-olds was 51.3 percent in Punjab but 29.4 percent in Gilgit-Baltistan. The urban picture is brighter — 68.9 percent in this age group in Karachi but most of these are enrolled in private schools. Girls lag behind boys in enrolment in rural areas, but the urban trend is much healthier. In Karachi in the 6-16 range 52.4 percent of girls were enrolled against 47.6 percent of boys, and the girls displayed a higher level of functional. Madressah-based education is a small part of the picture — the highest enrolment is in Balochistan at 5.2 percent.

The quality of education is where the tragedy is most starkly illustrated. Learning levels are low. On average 47.4 percent of children in class 5 can read Urdu/Sindhi which may sound encouraging, but weigh this against the reality that 52.6 percent of children who complete their primary education will be unable to read simple class 2 level stories in Urdu or their mother tongue. As for English — 40.6 percent of children in class 5 have some knowledge of basic English, but 59.4 percent of children completing their primary education will not be able to read simple class 2 stories in English. Most children struggle with three-digit long division everywhere. One wonders how anybody anywhere in our education system thought it might be a good idea to teach children Chinese. Any talk of a knowledge-based economy seems far from the educational reality. The government has in the last year made a commitment to education for all through Article 25A. One cannot fault the aspiration, but it needs to be backed by money and most of all by political will. Unless those that rule this country decide to invest in an educated future, there is little hope of things getting better.

__________________
Regards,
CHAIRMAN MAO