Feb 21, 2011

Contours of multilateralism

The challenges WTO has to overcome on the completion of sixteen years of its existence

By Hussain H. Zaidi

On January 1 this year, the World Trade Organisation (WTO) completed its sixteen years. Created in 1995, it represents the greatest ever attempt at setting up a rule-based multilateral trading system. With the passage of time, the WTO’s membership has increased and at present it comprises 153 members, including all the world’s major economies and trading nations with the exception of the Russian Federation, which of course is in the accession process.

While the WTO may have already much to its credit and certainly the growth of its membership signifies the importance that the world at large attaches to it, the organisation has many challenges to overcome. The immediate challenge obviously is successful completion of the stalled Doha Round, which was launched in November 2001 and was originally supposed to complete by 2004. Even after the passage of nine years, there are no imminent signs that the round will complete soon. In the long-run, the success of the WTO will depend on how well it promotes the globe’s overall socio-economic prosperity.

Free trade or trade liberalisation is the very watchword of the WTO. The advocates of free trade maintain that far from being a threat to human rights or welfare, free trade promotes them. Closed economies, it is argued, are characterised by absence of democracy and denial of political and civil rights. On the other hand if governments and their people are exposed to free trade, its effect will extend well beyond commerce to other spheres of life. Thus free trade is supposed to make for democracy and social and political rights, which enhance the quality of life.

This argument, however, is not conclusive. Free trade does increase the volume of trade and thus increases the size of the cake. But the cake is remarkable for its uneven distribution. And as its size increases, the cake becomes more unevenly distributed. The higher the level of development of an economy, the greater the benefits that it draws from free trade. Likewise, the stronger economically is a group in a country, the greater are the advantages of free trade from it. Thus while free trade may increase the quality of life, the beneficiaries for most part may be those groups or nations who already enjoy a relatively high quality of life.

The relation between free trade and social and political democracy is also open to question. Generally, democracy and free trade go hand in hand. But it is possible for a government to pursue free trade policies without committing itself to democratic values. For instance, governments in many Southeast Asian countries are committed to free trade policies but pay only a lip service to democracy.

Does free trade hamper efforts to root out poverty? Or is free trade an instrument of poverty alleviation? This is a never-ending debate. The exponents of free trade subscribe to the view that by promoting growth free trade reduces poverty. Again, this is not an impregnable argument. While free trade may promote growth, the same may not be pro-poor. As already mentioned, free trade does increase the size of the pie; but for those who already have a large share of it.

Rise of Preferential Trading Arrangements (PTA) ranging from free trade areas (FTAs) to custom unions poses a most potent challenge to multilateralism for several reasons: In the first place, as argued by eminent economist Jacob Viner, a PTA can cause trade diversion by replacing a lower cost-efficient supplier from a non-member country with a higher cost less efficient supplier from a member country.

In the second place, because of their fast growth, PTAs have caused confusion the global trading system. In numerous instances, a country is member of more than one FTA, with each at different stage of implementation and having a different level of tariffs. In the third place, PTAs may block increased market access at multilateral level. Members of PTAs tend to be concerned more about preferential trade benefits than about MFN trade benefits. Finally, PTAs inject what have been called non-trade objectives into trade agreements. These include significant labour and environment standards and at times capital control.

PTAs make for reciprocal preferential treatment. The WTO also allows non-reciprocal preferential treatment, especially for developing and Least Developed Countries (LDCs) under the enabling clause of GATT. For instance, under the Generalised System of Preferences (GSP), developed countries give preferential or discriminatory treatment to exports from developing countries and LDCs. Under United States GSP scheme, for example, the eligible products from these countries enter the US duty free. The purpose of such discriminatory treatment is to encourage developing countries and LDCs to follow export-oriented rather than import substitution trade strategies as engine of development.

The non-reciprocal preferential treatment has been criticised for various reasons: One, the preferences are not really non-reciprocal. In return, the developing countries have to fulfill certain conditions imposed by developed countries. Two, benefits given under the GSP are not binding, and the same can be withdrawn on grounds that are not always strong. Three, donor rather than beneficiary country’s interest determine the products to be extended preferential treatment under the GSP. Four, non-reciprocal preferential treatment has not yielded much real benefits to developing countries. Rather it has had only a marginal effect on the country’s performance. Five, unilateral preferences make it difficult for developing countries to shed off protectionism and liberalise the economy.

A study of developing countries that benefited from the US GSP scheme between 1976 and 2000 shows that those who dropped from the scheme opened their markets more significantly than those which continued to benefit from the scheme. Finally, the GSP beneficiary countries develop a tendency to rely too much on preferences to the neglect of industrial and agricultural diversification.

The greater the gap between MFN tariffs and preferential tariffs, the more pronounced the effect of regional or preferential trading arrangements on multilateralism. Ideally if MFN tariffs are brought down to zero, the whole world will become a free trade area and there will be no need for discriminatory tariff treatment. But given the recent roadblocks to multilateral negotiations caused by the reluctance of developed countries to pursue market-based policies in agriculture and that of developing countries in case of the industrial sector, it is really a long way to go before MFN tariffs become zero.

There is an interesting debate whether globalisation in general and free trade in particular are undermining state sovereignty -- the most characteristic feature of the modern nation-state. For instance, it is argued that the dispute settlement body of the WTO may declare a national piece of legislation or an executive act incompatible with the country’s international obligations under the WTO and the same has to be scrapped or amended.

One view is that the acceptance of any international treaty involves transfer of decision-making power from a national government to some international institution. This transfer of power is based on the assumption that matters of common interest can better be safeguarded or promoted if the same are handled by the international institution rather than by individual states. The same holds true in case of the WTO.

While abiding by WTO agreements or rulings, member states exercise their sovereign power in a way that is compatible with their obligations under the organisation’s charter. Moreover, national governments still have a lot of discretion in deciding the manner in which they fulfil their commitments to the WTO charter. And importantly, if on one hand member states loss some “policy space” at the domestic level, they reclaim the same at the international level.

No doubt, globalisation or trade liberalisation has rendered the concept of national sovereignty obsolete. The greater a country’s level of integration into the international economic or trade order, the more policy space it loses at the national level. However, its ability to reclaim the policy space at the multilateral or international level is a function of its economic or trade power.

Economic giants like the US, the EU, Japan or China can without much hassle reclaim at the multilateral level more than they lose at the national level. However, for lesser economic powers, the trade off is generally to their disadvantage. If multilateralism is to safeguard the interests of all, or at least the majority of members, it must redress such imbalances. But can it?

Where’re we headed?

More than sixty years after our independence, we’re still struggling to adopt a dynamic foreign policy

By Salman Abid

Pakistan’s foreign policy has always remained very critical to our political discourse because of lots of contradictions. We seem to be stuck at one point -- our relationship with India and the United States. In Pakistan, public sentiments are always very high with regard to the US. After 9/11, people are closely watching the American and Indian actions relating to our country.

Government officials have admitted evidence of international intervention in Pakistan. Ex-Interior minister, Rehman Malik, admitted Indian intervention in Balochistan. At the international front, we have not been able to raise the issue effectively. Some sections of our society have serious reservations about the “US’ intervention” in Pakistan’s foreign policy issues -- Raymond Davis’ case is one example.

People also understand the current democratic set-up which has come into being through considerable international support and involvement. That proves that the country is still undergoing a transitional period.

US’ engagement with Pakistan is not just linked with international politics but also reflects our national policies and actions. When democratic forces take any action or decision for the larger national interests both the establishment and some political forces try to influence national agenda.

As a matter of fact, the major crisis is between the international forces, especially the US and our democratic set-up and the ‘establishment’. They all have different interests and do not understand and realise the problems being faced by the country at the national level.

There is pressure is on our government and military leadership for carrying out military operation in North Waziristan. At the moment, it seems we are trying to understand our own position in the war against terrorism. Is it that we have a major trust deficit with the US and other foreign powers?

The international media also criticises us and trying to prove that the militants have the major strength or the strategic assets in Pakistan. The country has played a very vital role and became a strong ally of the US in the war against terrorism and extremism.

The US does not seem to have appreciated our struggle against terrorism. Leading American intellectual and expert on South Asian politics, Stephen Cohen also acknowledged in a seminar “Future of Pakistan” that most of the American policies towards Pakistan were flawed, discriminatory and unrealistic and needed to be corrected such as by offering to talk to Pakistan on a nuclear deal like it did with India.

The perception in Pakistan that only religious forces criticise American policies seems to have changed, especially after the incident of Raymond Davis in Lahore. The US is still insisting that Davis has immunity and Pakistan should release him as soon as possible. Polarisation in the country is further dividing the society in the larger context.

Some educated and liberal sections of society have also held protests against Raymond Davis and that brings into focus the issue of drone attacks. Another important point relates to the Indian view of Pakistan. The Indian state and government still do not realise that Pakistan itself is facing extreme terrorism. We should understand that both the countries are facing similar crises of terrorism and religious extremism. Why we do not sit together to develop a joint strategy and mechanism to deal with elements of terrorism?

At the same time, we should know that we are also part of the problem when it comes to militancy and extremism. That is why we continue to pay a heavy price. We have at one time supported militant groups and facilitated them in creating trouble for others.

The element of extremism is isolating the country in international politics. Why do we not accept that the crisis of militancy and extremism has resulted from our own policies and actions of military command and political leadership in the past? We have failed to engage international players, including America and India in a constructive dialogue.

Before blaming it all on the US we should first admit our own faults. We should come out from the denial mode and accept our own mistakes in creating instability in the country through our actions. In this backdrop, one may ask where are we headed?

This is a major dilemma faced by us based on our internal crisis like religious and political extremism, poor governance and economy, and failure of the institutions, etc. If we remain internally weak other forces would very easily fill the space created by disharmony and economic collapse.

Ideally, political forces take strength from people’s empowerment and mobilisation on national agendas. But, unfortunately, we emphasise more on maintaining relations with international forces, especially the US.

So, our political players, common people and other groups have the right to take the US and Indian to task but only after criticising ourselves first. Without good relations with regional countries, including India, how can we bring prosperity to our people?

We all know that Pakistan has three immediate challenges: militancy, extremism, and forming good relations with other countries. Are we prepared to take the first step?

The rest of the world should see Pakistan not as a failed state but a state with weaker structure and institutions. On our part, we should build and strengthen national political institutions. This should be the time for political leadership to realise the situation and try to redefine and re-structure of foreign policy options to be discussed in the parliament.

The new growth strategy, is it?

Economic policy without being informed by history and institutions does not produce results

By Zubair Faisal Abbasi

The Planning Commission of Pakistan is developing what it calls a New Growth Strategy (NGS). The approach envisages increase in productivity, innovation, and entrepreneurship in Pakistan. It seeks to promote good governance as well as improve the structural capabilities of cities and change land entitlements in which economic efficiency is gained.

The ideals are worth-pursuing and have been adopted by many now developed countries in the past. However, these ideals were not always adopted in an ‘open economy’ fashion an idea on which the NGS has taken a hardliner position under the current economic management team at the Planning Commission.

The emphasis seems to be replica of ‘market-fundamentalism’ in which state is rolled back to the extent that it does not seem playing a role even in risk socialisation which is a necessary element in encouraging entrepreneurs to experiment for innovations in both product and processes.

What is being re-sold by economic managers is a case for near-religious belief in the social and economic effectiveness of market and competition which rests more on logic and theory than empirical evidence. An analysis of this approach in NGS is necessary, an analysis which explains rhetorical promises. It is worth mentioning here that economic policy without being informed by history and institutions does not produce results.

In fact, economic growth strategies in the UK, USA, as well as China have historically been discriminatory to promote infant industries as well as import substitution and export promotion. These economies at the comparable level of development vis-à-vis Pakistan of today did not cherish the ‘open market’ and free competition at all. They carefully nurtured local capabilities. So much so that some scholars call the US the mother of infant industry which later (in 1980s) started imposing for free trade and free market policies in less developed countries.

The now-rich countries always have had built protective barriers for local entrepreneurs to seek growth in technological capabilities, leading to innovation and productivity gains to become competitive in international markets. They carefully managed competition as in boxing matches where different weight categories divide the players according to their capabilities. The now-rich countries’ experience also tells that they did not use open market and open access approach for Foreign Direct Investment either. They carefully planned the priority sectors and discriminated against various types of FDIs to avoid disorientation in resource allocations.

Coming to the issue of good governance which is a major promise in the NGS, the economic history tells that governance improves with increase in economic growth and not vice versa. Once citizens start enjoying services provided by the state and they grow rich, they start demanding good quality government and hence good governance. In Pakistan, one can see that the country slides down on transparency standards regarding corruption once its rate of growth starts faltering.

Another point must be noted that ultimately, these are the structures of economic rights and obligations which determines ‘who gets what’ when independent system of justice is implemented. Countries can perform badly on accounts of general social and economic well-beings despite having very strict implementation of laws.

The systems of governance, especially the ones which govern the markets must protect the interests of poor individuals, labour, and local industries, otherwise under good governance the right of the powerful will be protected without any gains for social and economic equality. This aspect has not been given due importance in the NGS.

Merely aspiring to re-structure the role of the state as a facilitator for markets which return favours only on the basis of ‘ability to pay’ cannot ensure real social and economic well-being of Pakistan. This is absolutely not an answer to boom and bust cycles of the economy.

Market-fundamentalism also assumes that markets create the best economic and possibly social outcome through the medium of efficient allocation of resources. This assumption called “efficient market hypothesis” -- now making the core of NGS in Pakistan -- has seriously been challenged around the world, the current financial crisis being a glaring example of under-regulation leading to serious systemic risks.

The debate around sharing the benefits of economic productivity have re-surfaced in many countries such as US, UK and Tunisia and now Egypt while in Pakistan we are trying to avoid reconstructing the system of public finance and are more interested in inflation targeting. Trying to contain inflation without concomitant equality enhancing programmes would not serve long-term socio-economic development issues of Pakistan, the NGS team must know.

It seems that not having a party-trained economist to manage economy, anything is possible in Pakistan. Therefore, the so-called technocrats representing interests of the neo-liberal orthodoxy entrenched in the IMF, WTO, and World Bank can create NDA which is discredited elsewhere, surely at the cost of treatment which Pakistan direly needs.

In the pipeline

Absence of proper planning and documentation makes water management poor in both rural and urban areas

By Aoun Sahi

Pakistan is one of the most water-stressed countries in the world. According to a World Bank report, the per capita water availability in 1951 in Pakistan was 5,000 cubic meters per annum, which is now less than 1100 cubic meters.

Scarcity of water is not the only issue, unavailability of safe drinking water and provision of proper sanitation and sewerage facilities are also major issues making the problem more complex. Punjab, which is home to around 90 million population is among the most problematic areas of the country. According to official data, around 50 percent (44 million) population in Punjab is consuming contaminated water.

Groundwater, which is the main source of water supply, is rapidly depleting because of extensive water pumping. This is so because of lack of property rights over water usage and an absence of regulation to assign these rights. In fact, at present, there is no law in our province regarding use or abuse of drinking water. The majority of existing laws are related to irrigation water. The source of water is also being polluted by different industrial as well as agricultural activities.

Experts believe drinking water distribution system and sanitation infrastructure in most part of the province are also outdated. They are posing real threat to the health of common people in Pakistan. In many cities of Punjab, including Lahore, it has been found that water quality at the source is fit for drinking but when it reaches consumers through depleted infrastructure, it becomes hazardous for health.

World Wide Fund for Nature (WWF) released a report titled, “Pakistan’s Water at Risk” in October 2009, which states that major cities of Punjab are exposed to high levels of arsenic. “85 percent of the samples from different areas of Punjab are found unfit for human consumption. Only one percent of wastewater was treated by industries before being discharged into rivers and drains,” the report says.

The report also says the level of compliance to law related to drinking water and environment is extremely low. The environment and water laws do not clearly define the roles and responsibilities of different departments working on these sectors. Unregulated groundwater abstraction is the cause of water depletion. There are no clear guidelines, rules or regulations for groundwater abstraction.

Surprisingly, there are also no surface water classification standards in the country. “Such rules and regulations must be established at the earliest”, says Hammad Naqi Khan, Director Freshwater and Toxics Programme of WWF. He thinks strong law enforcement and compliance are necessary for the protection of freshwater resources and thus the health of people. “Approximately, 60 percent of infant deaths are due to water-borne diseases in our country. Thirty percent of all reported cases of illness like hepatitis, diarrhea, typhoid and dysentery and 40 percent of deaths in Pakistan are attributed to water-born diseases. One hundred million cases of diarrhea are being registered for treatment in hospitals of Pakistan each year,” he explains.

After the 18th Amendment in the Constitution of Pakistan water and environment have become subject of the provinces. It is now up to provincial assemblies to do proper legislation on the subject. Punjab government has been trying to take a lead on the issue of developing water policy. The government has set target for the attainment of Millennium Development Goals for improved water supply coverage in the province. Under this programme, 80 percent urban population and 64.65 percent rural population will be provided safe drinking water facility till 2015.

In 2009, chief minister Punjab formed a committee to develop water act for the province. The new act will define the role of different stakeholders both in the private and public sectors. According to the act, a regulatory authority comprising technocrats, public representatives and administrators will be made to ensure the implementation of minimum standards of drinking water and sanitation. The act will fix the responsibility of different departments and authorities regarding checking the availability of clean drinking water, provision of sanitation and sewerage facilities and checking the different sectors responsible for pollution of water.

The first draft of the water act was prepared in November 2009. In April 2010, the second and final draft of the act was prepared after making consultations with different stakeholders. The draft is now with the office of Punjab chief minister. It needs to be presented before the cabinet first for its approval and then to the assembly to make it an act.

Dr Nasir Javed, project director of Punjab Urban Unit is one of the brains behind the draft of Punjab municipal water Act 2010. He believes drinking water is going to be the most important problem for us in future if not properly managed, “There is no law or authority to address the issues related to drinking water. This is the first attempt of its kind and will help establishing a complete water management system in the province.” He tells TNS if ground water of cities in the province keeps on depleting without any check, government will have to bring canal water and treat that which is a very expensive option. “All the stakeholders will have their representation in the water commission and advisory body that will allow evolving a balanced water management system,” he says.

The draft proposes formation of a municipal water commission that would be responsible for regulating conservation, protection, utilisation, development of water resources, and water services. The act also makes it essential for every service provider to treat the waste water before discharging it. The act also defines a fine not exceeding Rs50,000 or an imprisonment of maximum of one year for appropriation of municipal water without a water permit and imprisonment, on unauthorised obstruction of a canal or waterway or failure by any person to furnish information required by the water commission in 30 days.

A fine of Rs5 million or imprisonment of maximum six years can be awarded to someone for distribution of municipal water for public consumption which adversely affects the health and safety of the public. Similar punishment can be awarded for dumping industrial waste into river or waterway without permission.

Aamir Butt, a member of Punjab Urban Resource Center believes the act is a good attempt for evolving a proper water management system in the province, albeit with some constraints, “The law does not take up the issue of capacity building. The government should first focus on capacity building of the existing departments because with the present infrastructure and manpower it will not be easy to promulgate this law,” he says adding that representation of civil society organisations and academia should also be made essential in water commission and advisory body.

Nazir Wattoo, President Anjuman Samaji Behbood Faisalabad and chairman of the committee formed by Punjab government for preparation of draft of Water Act, admits that there are issues not taken up in the draft, “The presentation of four secretaries of different government departments in the water commission is itself a problem. It should be made clear whether water act is to be finalised by the local government ordinance 2001 or 2010 because the municipal limits are described differently in both the ordinances. An awareness campaign should also be launched about the act, otherwise it is not likely to make much difference like other legislations on the subject,” he tells TNS.

Wattoo thinks making an act is a good step towards sustainability of water resources and provision of services to the people, “But the main issue that needs to be addressed in water and sanitation sector is absence of proper planning, documentation, and management. Documentation of investments has not been carried out. In the absence of this documentation, rational economic solutions at the town and city level cannot be developed. It is because of the absence of mapping that treatment plants have been placed far away from locations where sewage is actually disposed of,” he says adding that physical infrastructure for water and sanitation should be mapped in the city, tehsil/town and union council levels for urban and rural areas.

Troubling trends

A look back at what made our economic condition even worse during the last fiscal year

By Afsheen Naz

Our economy was hit by the worst attack of inflation in the first two quarters of fiscal year 2010-11 consecutively. The country at present is suffering from two major types of inflation i.e. demand-pull and cost-push as both are prevailing in the economic sector. Persistent increase in general price level over a period of time is called inflation.

With this the rise in prices of goods and services implying a trend of decline in real value of money are observable facts, consequently purchasing power of the people decreases. There are three price indices, Consumer Price Index (CPI), Wholesale Price Index (WPI) and Sensitive Price Index (SPI) for the computation of inflation while in Pakistan generally Consumer Price Index (CPI) is being used to measure and represent the inflation.

The country’s CPI calculated in 71 markets of 35 cities across the country while 374 items were selected from these markets, according to the Federal Bureau of Statistics (FBS).

In the first two quarters of current fiscal year, the inflation increased by 14.61 percent on an average in comparison with the same period of last fiscal year according to the Federal Bureau of Statistics. There are several factors behind this rapid increase in inflation rate, to name a few, high devastation to the economy by recent floods, high input cost, trade deficit, heavy government borrowing, and tight monetary policy.

Recent floods hit hard at Pakistan’s fragile economy as the country lost one-fifth of its total land. The victims of these floods were mostly those whose livelihood was dependent on agriculture and livestock. The economy of Pakistan then had to suffer tremendous aftershocks from the calamity, hence; the country witnessed an insufficient supply of food items, which can be judged by the fact that only in the month of October there was a rise in overall food inflation of 20.06 percent in comparison with the same period of last year.

During the first quarter of current fiscal year, the Large Scale Manufacturing (LSM) sector also noticed a declining trend as it lost its growth by 1.5 percent, which is mainly attributed to high input cost. This was caused by factors such as shortage of electricity together with rising per-unit cost, gas load-shedding, high petroleum prices, etc.

Gas load shedding was caused by bad governance and absence of proper planning to resolve this problem. About the pricing of petroleum products it is also being said that these are not fixed in a transparent manner. It has been reported that factories are closing down due to incompatibility with high input cost. This has resulted in lower production and aggravating problem of unemployment. One of the important factors responsible for the recent rise in inflation was said to be shortage of supply of products in the economy.

Foreign Direct Investment (FDI) along with domestic investment has also decreased due to deteriorating law and order situation in the country and also because of rising cost of production on account of political and economic instability. Foreign Net Investment that comprises of FDI and Portfolio Investment has reportedly decreased by 36 percent in the first four months of fiscal year 2010-11 as compared with the quantum during same period of last year.

The devaluation of rupee alongside the low production capacity of the economy is causing decrease in the exports of the country. The delay in meeting the target time for the exports has also contributed greatly in its decline since importers are losing the faith in getting the delivery of goods and services on time.

In the backdrop of this scenario, Pakistan’s exporters are considered incompetent at meeting the agreed deadlines for the absolute delivery of the product. Although, a single factor that is of devaluation of rupee cannot be considered as only feature responsible for the ineffectiveness of export sector, while natural calamities, lawlessness and poor governance are also valuable for this incompetence.

A heavy government borrowing both internal and external is also considered to be an important factor in escalating current inflation rate. According to the State Bank of Pakistan (SBP) government borrowing is over Rs1.5 billion per day from internal resources. Government of Pakistan is printing money to finance its expenditures, which is escalating the inflationary pressure in the economy.

A common economic phrase “too much money chasing too few goods” holds true in the context of inflationary trends in Pakistan’s economy. The deficit financing by the government is mainly made to meet the non-development expenditures. In addition, with the increase in supply of money, demand-pull inflation is gradually increasing as production of goods and services is not rising in line with this supply of money.

To cope with the inflation anxiety, a measure of tight monetary policy is being adopted by the SBP. According to the monetary policy statement of January 2011 “policy rate had been increased from 12.5 percent to 14 percent gradually”. With these high policy rates by SBP, private investors are reluctant to get loan for the investment and resultantly phenomenon of crowding out of the private sector has been observed.

Studies have shown that only monetary policy alone does not help to curb the inflation while there are several factors responsible for sharp rise in inflation. In the context pf Pakistan’s economy, gradual removal of subsidies by the government is amongst the several factors being responsible for price hike.

There is a general apprehension amongst the masses that Reformed General Sales Tax (RGST) will increase the inflationary pressure in the economy, which will affect more adversely the vulnerable group of the population.

The sharp rise in prices in the wake of low economic growth has been adversely affecting the economy, which is reflected in high rate of unemployment and increase in the number of population below the poverty line.

The right-wing juggernaut

The media and religious parties deflect attention from the issues that really matter so as to maintain their monopoly over ‘public opinion’

By Aasim Sajjad Akhtar

If this were not Pakistan one might be surprised at the overnight transformation of Shah Mahmood Qureishi from a dithering foreign minister into a heroic son-of-the-soil who will proudly defend his country till his dying breath. But in this day and age it is impossible to even feign surprise at the media’s epic about-turns — I almost find myself waiting for the next outrageous turn of events.

This is not to take anything away from the ex-foreign minister who did all he could to be put on the media pedestal. Qureishi has a penchant for drama at the best of times, and he has milked this particular occasion for all it is worth. Just exactly why his ‘conscience’ decided to bare itself at the present time is a matter of conjecture; in any case, the alliance of the Pir from Multan and our rambunctious TV media has dramatically raised the stakes in the ongoing Raymond Davis affair.

On the one hand President Zardari is right in suggesting that this is a complex matter and needs to be dealt with accordingly. The reactionary forces within the media and our ever willing religious parties are depicting this as nothing more than an American stooge government pandering to its patrons’ every demand. They conveniently neglect to mention the fact that our army — the real fountainhead of power in this country — continues to stock up on American dollars and weaponry whilst playing the dubious game called ‘strategic depth’, which also happens to be the most immediate cause of social fragmentation. The right still thrives on a warped narrative in which Pakistan is a bastion of Islam that is in perpetual danger from a nexus of Hindu-Jewish conspirators. Perhaps most importantly, the media and religious parties deflect attention from the issues that really matter so as to maintain their monopoly over ‘public opinion’.

On the other hand, however, Zardari knows as well as any other seasoned political player that Washington does exercise inordinate influence over Pakistan. This has been the case since 1954; the military regimes of Ayub, Zia and Musharraf capitulated in the face of American pressure more than any elected government could dare to do. Zardari also knows that General Headquarters (GHQ) is the real seat of power in Pakistan, and that it was behind the media frenzy drummed up in the wake of the Kerry-Lugar bill just as it is backing the right-wing juggernaut at this particular juncture.

But the imperatives of power politics preclude Zardari announcing to the world that he is caught between the American rock and the Pakistani military hard place. For more than three years Zardari has managed to keep himself in the presidency and his party in government by gambling on the balance of power between GHQ and Washington. It is a dangerous game, and one that he continues to play. Time will tell whether or not he can avert outright contradiction over Raymond Davis.

Too often those who think and write about power politics in Pakistan — myself included — neglect to dwell upon China’s evolving role. It is a well-known fact that Ayub Khan turned to China to increase his bargaining power with Washington in the early 1960s, and that, since that time, Beijing has had a significant bearing on the power calculus within Pakistan.

In recent times, China has undertaken numerous initiatives that demand serious attention. First, a significant amount of Chinese capital — both financial and human — has been invested in Pakistan over the past 10-15 years. Most mega development projects, including those in Balochistan, involve considerable technical and monetary input from China. One of the fastest expanding mobile phone network in the country is owned by China Mobile (only Arab companies have put as much money into Pakistan’s telecommunications industry as the Chinese). China’s cheap consumer durables continue to flood Pakistan’s markets. Put in a nutshell, China is a big-time player in Pakistan’s economy, and its influence will only grow in years to come

Second (and this should already have caused many raised eyebrows), the Chinese Communist Party (CCP) has over the past couple of years built up a close relationship with the Jamaa’t-e-Islami (JI). Big JI delegations have visited China on at least two occasions on the invitation of the CCP, and these visits have been reciprocated by CCP leaders spending time in Mansoora. Now in case anyone does not follow the irony here, the JI was at the forefront of anti-communist campaigns in Pakistan for five decades. Even today, Pakistan’s long-suffering left is consistently targeted by the JI (and other religious parties) for its alleged lack of faith.

While Washington’s consistent patronage of the military establishment far exceeds Beijing’s, there should be no doubt that the Chinese have cultivated long-term relationships with the top brass of the Pakistani military and that the latter continues to think of China as an important bargaining chip in its relationship with the United States. It is also important to consider the wider geo-strategic environment: India is now one of Washington’s blue-eyed boys while its traditional rivalry with China is very much intact. In short, China is a major actor in regional politics and no understanding of the domestic-international dialectic can be complete without reference to Beijing and its long-term strategic interventions in Pakistan. In this regard, the budding friendship between the JI and the CCP is surely not just a happy example of the ‘irrelevance of ideology’ in the Post-Cold war world.

If and when Raymond Davis does eventually return to the US, and regardless of what happens in the interim, Pakistan will still remain a bulwark of American strategy in the wider region, the Pakistani military will continue to take American dollars while talking itself up as the guardian of sovereignty, and the right-wing juggernaut will continue to heap pressure on the weak elected government. The Pakistan Muslim League-Nawaz (PML-N) has generally shown itself to be weak and opportunistic whereas the Pakistan People’s Party (PPP) has only little more to show for three years in government. Yet it is still there, and until and unless we can muster up the necessary ingredients for a revolutionary rupture in the prevailing structure of power, ensuring the sanctity of the political process is the best we can manage. If this process is disrupted, the reactionary triumvirate of imperialism, the military establishment and the religious right will only grow stronger.

Feb 13, 2011

Secularism, or something like it

Would we be any less Muslim if we lived in a secular state?

By Shehryar Sheikh

It is interesting to note just how religiously (pun intended) Pakistani students are taught about Pakistani history and identity itself, their books often scattered with the slogans that begin with the question such as: “What’s the meaning of Pakistan?” Jinnah, had he heard such a definition of the state he so proudly created may well have fainted on the spot (in concert with Iqbal and the rest of his close supporters).

For a man who proclaimed with such fervour, “But make no mistake; Pakistan is not a theocracy or anything like it,” (February 19, 1948), there would be something very wrong indeed with Pakistan being defined using, verbatim, the phrase that is used to define the principal tenant of Islam. The injection of theology into the state came, the story goes, during the time of Zia and his popularly termed “Islamisation” campaign. But what has become of the status of Islam in Pakistan ever since? Is today’s Pakistan secular, theocratic, or something in between?

There are, indeed, those that would claim with pride that Pakistan is a Muslim state. Indeed, when the country has the word ‘Islamic’ in its name, the evidence seems rather damning. But what’s in a name? In its sixty years, Pakistani society has not once been able to bring itself to execute an individual for fornication, adultery, or homosexuality. Are we to assume then that Pakistani society has never committed such ‘crimes’?

That we have made a tenacious and deliberate effort to shut our eyes to such matters is significant. Pakistani society has, believe it or not, been far too humane to allow for such punishments to be dispensed to supposed ‘moral criminals’. When the video of the Swat lashings became public, there were no social networking groups to rally for the upholders of virtue as they beat a poor girl half to death. There were, however, protests across the country against such doctrines. Throughout the country, the cry of “this is not Islam” echoed in quaint harmony, in tandem with extensively branched media campaigns along the lines of ‘yeh hum nahin’. Whether the lashings were or were not justified under Islamic doctrine is debatable, but that the average Pakistani refused to accept such dogma as a social norm is clear.

Where trends of a more modern and liberal interpretation of Islam within Pakistan are abundantly clear, opposing views are all too common, perhaps nowhere better exemplified than the case of the blasphemy laws. Pakistanis are proud to claim that they would sacrifice their lives for the honour of the Prophet (PBUH), and though such claims are easily understood by the average Muslim, it remains to be demonstrated that the blasphemy laws as they exist accomplish such an end.

When this question is posed by a prominent politician, however, he is murdered. Some groups sprout up in support of the murderer. On his way to court, individuals shower him with roses. The clergy refuses to offer the politician’s funeral prayers. The civil society looks on in disbelief and disgust. Why, one may ask, in a society that prides itself on the liberalism that differentiates them from those extremists that whipped the Swati girl, is there such intolerance about a man-made law being criticised? Since when has a Pakistani begun to think of murder as, if not justifiable, at least ‘understandable’?

There’s a clear argument for the existence of a secular model within Pakistan that draws heavily on the case of Turkey. Slogans of “Where’s our Ataturk?”, however, will always meet with the same kind of rebuttal. A society where the Shariat is practised in its true essence, the argument runs, is a happy one. When we cut off the hands of a thief, he doesn’t steal again. There, you can leave your shops open wide during prayer time without fear of burglary. How does one answer such appealing social conditions? By considering the price at which they came. It’s the fundamental question of basic appeal: is a low crime rate worth moral dictation?

When the ‘third’-gender became recognised in Pakistan, I think a lot was said about just how accepting the Pakistani people could be. Though the group concerned may frequently be the subject of crass attempts at humour in popular discourse, the fact remains that the ‘highest court in the land’ was able to grant them a position that would have been altogether impossible in a state where a stricter adherence to religious doctrine was practised. More encouraging still was the relatively frictionless trajectory that such acceptance emerged through.

Whether it’s our reluctance to enforce the more severe punishments of religious law, our sympathy for Salmaan Taseer, or our acceptance of the third-gender legislation, there seems abundant proof that the Pakistani people are not nearly as great fans of the theocratic state model as one might be lead to believe by the name the state bears. There remains, nonetheless, a resilience to remain citizens of an Islamic republic. One might begin to wonder, would we be any less Muslim if we lived in a secular state?

Young and directionless

With 63 percent of the population below the age of 25 years, the government has an urgent task at hand

By Dr Noman Ahmed

On 25 January 2011, the Centre for Poverty Reduction and Social Policy Development (CPRSPD) and Planning Commission Government of Pakistan organised a round table to address issues of youth from various perspectives. The discussion held in Islamabad, was attended by people from different cross-section of society, including diplomats, UN bodies, donor agencies, large and small scale NGOs, entrepreneurs, and members from bureaucracy contributed to the deliberations.

Education, skill development, social networks, economic entrepreneurship and urban development were the core themes around which the discussions revolved. Outcomes from the day-long event need a serious review.

Pakistan is a country of young folks at present. The projected statistics inform that 63 percent of the population is below the age of 25 years. This figure alone offers many derivatives. The youth requires certain essential inputs to make their large numerical count worthy and positive for themselves and the society. Literacy as a skill and means to access education is the foremost. An extremely gloomy scenario is observed in this respect. At the very outset, the youth gets divided at the doorway to education on ideological and socio-economic grounds.

There are multiple options and avenues of education existing in the country. Religious seminaries that are spread far and wide in the country are the basic and perhaps most accessible educational system for youth hailing from least developed locations. Barring a few well-managed madrassas, the others offer rudimentary skills. Rot-learning, outdated teaching methodologies, denial to contemporary tools and means of communication leaves this vast lot of young people unprepared to face the normal challenges of life. No wonder, ignorance and frustration -- common in this section of the youth -- are easily exploited by our religious leaders.

Those who study in government schools are at a natural disadvantage. Such ill-equipped and poorly-staffed outfits barely prepare their pupils to face the daunting challenges of practical life. With little or no motivation from family or schools, very few of them are able to swim against the tide to achieve a respectable status in working areas.

Children who study in private schools do normally well due to corresponding inputs in the form of education, grooming, motivation and favourable circumstances. However, this last group is a drop in the ocean. And then there are those who do not enroll for education or drop out at an early stage. Expectation of such disadvantaged lot to become a useful member of society further diminishes.

The trends and dynamics of globalisation show that creative ideas and their translation into practical innovations constitute a most desirable pursuit. In contrast to developing a mindset of job-seeker in the public or private sector, young people must be guided to take up challenges of most extraordinary kind. The conditions in Pakistan are also ripe for the most unusual and radical of enterprises.

From basic production to sophisticated knowledge-based outputs, there remain infinite opportunities that await imagination and application. Numerous examples can be cited to derive inspiration. Some non-governmental organizations are active in generating social and political consciousness among the young people.

The Youth Parliament of Pakistan is a vibrant organisation that is preparing the youth to understand the social and political situation of the country. It is also making efforts to tap energies of the youth to debate and ponder over matters of common interest. Many organisations facilitate young entrepreneurs to expand initiatives of social and cultural value.

Most of them have learned to survive and function with very little state support. The state must ensure peace, maintenance of law and order, and political stability to let youth explore their potential lest the youth becomes fodder of extremist elements.

The clock is ticking fast. The youth of today will become the aging population after three decades. The demographic dividend can be only reaped by enabling the youth realise their potential through support of state and private stakeholders. At a limited scale, NGO-led projects aim to support individuals with creative ideas in enterprise development. Our youth has all the potential to take risks and accept challenges that are usual in commercial environment.

From media, fashion, information technology, travel, tourism, food, to more complex and demanding sectors such as manufacturing, exports, and trading can be utilized for youth through a focused approach. The sooner we realise this the better it would be for us as a nation.

Learning difficulties

The problem of dyslexia has not been taken seriously by successive policy makers

By Ashba Kamran

The problem of learning difficulties is rising among children, particularly in rural areas. Parents of these children need timely information about the problem. The prevailing ignorance has dragged many children to the abyss, as parents mix up mental retardation with learning difficulty. The drop-out ratio from public schools, merely due to learning difficulty, is on the rise, as there is no arrangement to understand the strengths and weaknesses behind reading mechanism among children.

A majority of children facing the problem of slow learning are incapable of attending their schools properly because of their lack of abilities. The problem of slow learning seems to be increasing as the latest data shows that two out of ten children are facing such difficulties nowadays.

It is, indeed, becoming a great challenge for many in our society to deal with their offspring passing through the problem of dyslexia. The problem of dyslexia has not been taken seriously by successive governments, as no school, academy or centre is set up in the country to deal with it. Only a few scattered efforts are being made here and there, putting the parents of these children into a difficult situation most of the time.

Inattentiveness, distractibility, and learning disorders interfere with academic progress despite the presence of a normal IQ. If the child does have special learning difficulties, he will have harder time learning than his intellectual peers will. To learn, a child must tolerate frustration, as some subjects are hard to understand and cannot be mastered without stick-to-itiveness. In addition, a child must pay attention to learn, as intelligence is not enough.

If the child cannot pay attention to what is being taught, he is, for all practical purposes, not there. Elementary school requires a good deal of boring repetition, practice, and drill. A child who cannot force himself to complete tedious, disagreeable school tasks will have trouble in learning reading, spelling, and arithmetic. A slow-learner child is highly likely to fall behind and become an underachiever. As the child gets further behind, he will experience more frustration and criticism from teachers, parents, and fellow students. His parents will nag him for not doing his homework. He may be placed in a catch-up class or a special learning difficulty class. He will regard himself as stupid and may be taunted as a “retard” by other children.

The absence of proper schools for training of slow learning children, facing the dyslexia problem is a worrisome situation. The non-availability of proper schools for slow learners in the country is costing the parents heavily, as they have no option but to hire private trainers on high fee. The private schools are not entertaining the slow learners and shunting them out on account of their slow learning pace. Resultantly, these children become ineffective resource of the society because of the neglecting attitude of the schools and finally parents.

Only the well-off families can afford private trainers and consultants to train and up-bring their children. But a large number of children, especially those from the poor families, are left with the ignorance of society. A large number of slow learners are living at the edge of devastating future because of the shortage of proper training facilities in the country.

Parents and teachers should help institutions in identifying slow learners for their proper education and training. Parents should reassess their attitude toward their child’s difficulty and start supporting them with positive behaviour. Psychiatrists should not discourage kids or their patents about their potential to achieve success in school and career. Any discouraging attitude develops negative thinking in children with learning difficulties that there is something horribly wrong with them because parents approach their difficulty with fear… or maybe even anger.

Parents must develop patience to tolerate frustration on the part of children with learning difficulty, as some subjects are hard to understand and cannot be mastered. The elementary school requires a good deal of boring repetition, practice, and drill. A child who cannot force himself to complete tedious, disagreeable school tasks will have trouble in mastering reading, spelling, and arithmetic. This is the area where the role of parents starts for growth of children with learning difficulties.

No doubt, care of special persons is primarily a responsibility of the state and all efforts to this effect are always proved as insufficient. It is an irony that no particular attention is extended to the welfare of special persons in the society and present step of setting up a centre with all the necessary facilities would be a great favour to this highly neglected segment of the society.

Unfortunately, the problem is not being taken seriously either by the parents or the respective governments, as no school, academy or centre is set up in the country to deal with this problem in children. Only a few scattered efforts are being made here and there, putting the parents of these children into a troublesome situation for most of the time.

The Punjab government deserves appreciation for announcing setting up of Rs1 billion state-of-the-art centre for the welfare and rehabilitation of the special persons. It is a right step in the right direction. The need of looking into the problems of slow learners besides considering the plight of mentally retarded children is needed in the society.

The government should set up information centres for parents on the nature, causes, and treatment of Attention-Deficit Disorder (ADD) in public schools. Standardisation tests are established worldwide to assess the learning strength of children. Most standardised reading tests access competency by comparing actual skill with age-based expected skill. Other tests compare actual skill with expected skill based on a closely related skill.

The government should appoint ADD trained experts in public schools to save children from drop-out. These experts would educate parents on the concept of ADD and advise them to take their children to schools and educational institutions working on rehabilitation of slow learners.

The government should address the problems of slow learners and help out the parents by setting up schools for special children in major cities of the country.

Oppressive taxation and poverty

Our tax-to-GDP ratio can rise to 25 percent in one year if we tax absentee landlords, real estate developers, and assets created out of untaxed money

By Huzaima Bukhari and Dr Ikramul Haq

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable -- Adam Smith, 1776. There is a direct link between growing poverty in Pakistan and income inequalities due to distortion in the tax base. The lack of judicious balance between direct and indirect taxes and levy of regressive taxes in the garb of income tax and petroleum development surcharge has pushed an overwhelming majority of Pakistanis towards, and a substantial number, below the poverty line.

According to various studies, especially one conducted by the Centre for Research on Poverty and Income Distribution (CRPID), there are 63 percent of poor in Pakistan in the category of ‘transitory poor’. This has also been observed by the State Bank of Pakistan (SBP) in its various annual reports that the standard definition of ‘transitory poor’ includes those households that are below the poverty line for most of the time but not always during a defined period. The rest of 32 percent and 5 percent of the population that subsist below the poverty line were found to be ‘chronic’ and ‘extremely poor’, respectively.

Chronic and extremely poor are households that are always below the poverty line, all the time during a defined period. Similarly, on the other side, 13 percent and 21 percent of total non-poor (above the poverty line) were classified as ‘transitory vulnerable’ and ‘transitory non-poor’, respectively. This portrays a frightening and shocking situation as more and more people are moving from transitory category to chronic category, courtesy regressive tax system that is the main cause of income inequalities. In egalitarian societies, tax is used as a principle tool of income redistribution to reduce inequalities amongst different socio-economic strata.

Strangely, neither the CRPID nor SBP has tried to interlink growing poverty with prevalent oppressive tax system. It is an undeniable fact that in Pakistan, ill-directed, illogical, regressive and unfair tax system is widening the existing divide between the rich and the poor. Look at the sprawling bungalows coming up fast, especially in urban centres, and growing number of people having either no shelter or living in subhuman conditions in ghettos. By taxing the rich (living in sprawling houses) houses, the money could have been collected by the state for providing basic facilities of housing, transport, education and health to the poor. No government in Pakistan -- civil and military alike -- has ever thought about it seriously. There is lot of lip service but no action.

The sole stress on indirect taxation without evaluating its impact on the life of poor is a serious cause for concern. The contribution of direct taxes as percentage of GDP was merely 2.2 percent in 2009-2010, whereas in 2007-2008 it was 2.9 percent. The pathetic state of affairs in respect of tax-to-GDP ratio in Pakistan from 1990-2000 to 2009-01, highlighted in Table A, not only confirms inefficiency of Federal Board of Revenue (FBR) but also depicts poor share of direct taxes in overall economy.

Disastrous impact of indirect taxes (on an imported article of public consumption, the effective rate of tax before any further supply is 32 percent] and levy of surcharge on POL products has crippled the purchasing power of the people. Resultantly, a large segment of the lower and now even middle class is being pushed below the poverty line.

Achieving revenue targets by keeping the rich outside the ambit of personal taxes is a criminal act. Our revenue potential is not less than Rs4000 billion but Federal Board of Revenue (FBR) is not even collecting half of it (it collected merely Rs1328.6 billion during fiscal year 2009-10). The government is not making necessary efforts to improve productivity and economic growth. Resultantly, Pakistan is facing a dilemma: neither can it afford to give any meaningful tax relief package to the common people, trade and industry due to huge fiscal deficit nor can it achieve a satisfactory level of economic growth due to retrogressive tax measures.

This is a vicious circle in which our policymakers find themselves trapped. Time and again in these columns we have presented ways and means to come out of this tangle; to make Pakistan a place where economic growth takes place with development for all and not just a handful few.

The total amount of income tax collected for financial year 2009-10, according to FBR, was Rs528.6 billion. If we subtract tax collected at source on goods and services/contracts/supplies which being full and final discharge is in substance, indirect levy, the real direct tax collection comes to 325 billion. After this adjustment, direct tax-to-GDP ratio for 2009-10 at less than 2 percent is pathetically low -- FBR has wrongly claimed share on direct tax as 40 percent in total tax collection.

In reality, 70 percent collection is indirect. It proves beyond any doubt that the tax system is directly contributing to rising poverty as people who possess enormous income and wealth are not being subjected to income taxation in Pakistan. Thus, the very purpose of redistribution of wealth as the main object of taxation is being defeated.

It is pertinent to mention that in 2010 the government of Sweden collected taxes at 50 percent of GDP, almost twice as high as the total tax revenue of America and Japan, with both collecting around 25 percent of GDP. In the Euro area, tax revenue, on average, reaches 40 percent of GDP.

It hardly needs any further evidence to show that the FBR has been single-handedly destroying Pakistan’s trade and industry and contributing to rising poverty by:-

levying exorbitant sales tax and forcing the importers for forced value addition even before actual sales take place;

imposing indirect taxes on goods and services under the presumptive tax regime in the garb of Income Tax Law, which violates Constitution of Pakistan;

imposing withholding tax obligations without any facilitation and then taking punitive action or using the same as revenue collection tool;

blocking undisputed refunds under one pretext or the other;

making excessive tax demands which in 99 percent cases do not stand the test of appeal; and

resorting to all kinds of negative tactics and highhandedness to meet budgetary targets.

These actions of the tax machinery are detrimental to economy, social justice, business and industry. If a given amount of revenue is needed to finance public services, then each taxpayer should contribute in line with his ability to pay taxes. Those who possess more economic power (income and wealth) should contribute more to the public exchequer and vice versa. Article 3 of the Constitution categorically holds that “State shall ensure the elimination of all forms of exploitation and the gradual fulfillment of the fundamental principle, from each according to his ability to each according to his work”.

It is tragic that in a country where billions are made in real estate business alone, tax-to-GDP ratio is pitifully low (below 10 percent). The definition of ‘business’ given in section 2(9) of the Income Tax Ordinance, 2001 covers even speculative transactions being “adventure in the nature of trade” and yet the apex revenue authority is sitting idle, causing colossal loss to the national exchequer by not bringing such adventures in the nature of trade in real estate and stock markets into tax ambit. Our tax-to-GDP ratio can rise to 25 percent in one year if we tax absentee landlords, real estate developers and assets created out of untaxed money by deleting section 111(4) of the Income Tax Ordinance, 2001.

Teach me how to fish…

By Syed Bakhtiyar Kazmi

There is a proverb which, in my opinion, succinctly explains the theory of economic growth, if there ever was one. “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime”.

Apply this now to our country and the continuing dependence on aid and soft loans becomes clearer. The inability to do a hard day’s labour culminates in the desire to make quick money which gives birth to corruption. However we digress, the point here is that while in a calamity of humongous proportion it may be acceptable to give cash payouts to the refugees to sustain them till rehabilitation, continuity of such interventions will result in the creation of an interest group comparable with beggary. While there maybe current political gains, there will be future economic drains.

Having accepted that aid is necessary in extreme situations and that handouts are destructive in the long run, what then is the preferable form of assistance? The proverb hints at the solution. Teach our man to fish! The problem with this solution is that our man needs to be near a lake or the sea where he can fish; otherwise teaching him to fish serves no purpose.

The analogy refers to aid for training in vocations where employment is not available. Training for the sake of training may pacify the philanthropist within us, but it will breed further unrest in the form of increasing unemployment. Going back to our fish example, if our man does not know how to fish or alternatively while fishing can’t find a lake he will again starve or steal the former being synonymous with extremism and unrest.

Finally, in our fish example even if the man is trained in fishing and also provided a lifejacket and a lifebuoy but he still can’t find the lake, he will again starve or steal, but will probably feel worse than before. Notwithstanding, we are still not sure how to help our man, if that is our intent. The probability that giving the man a fish a day may have been a strategic decision to keep him subservient is discounted solely for the purpose of sticking to our hypothesis. Accordingly, we assume that the grantor is sincere and committed and actually intends to help the starving man.

We can now safely conclude that if our man is to be fed for a lifetime it is necessary that he is trained in fishing and, more importantly directed towards a lake. At this juncture, substituting the man for IDPs in Pakistan, the lake with employment, and the fish with aid, we deduce that the long term solution for IDPs is the provision of employment. No wonder that employment remains the primary objective of any government.

While the necessity of schooling and health facilities in the impacted areas cannot be underscored, in the absence of provision of employment for the bread-earners of the family these will remain ineffective in controlling dissent.

Observation of urban areas shows that quality of education and health is directly proportionate to the earning capacity of the populace, as per capita income rises better schools and hospitals crop up to meet the demand. Consumption of these facilities is dependent on the remaining disposable income after accounting for basic necessities such as food, clothing, and shelter.

Willful migration towards city occurs with the sole objective of employment. In a hypothetical experiment, setting up of a world class university and a hospital in a remote area should not be expected to flourish into a metropolitan. Substitute these with a center for trade and industry and the resultant growth will overshadow all projections.

Interestingly, as the city grows, world class hospitals and universities will be a natural outcome. Demographics of any city are, therefore, dependent upon its employment and trade opportunities as also confirmed by numerous historical examples of expansion and contraction of cities purely on this basis. Civil unrest again is an outcome of unemployment proven by the recent upheaval in Tunisia and Egypt.

But how do we create employment? Unfortunately, there is no simple answer except that it is a universally recognised truth that creating employment is the sole domain of the risk taker. While the presence of resources and capital are a prerequisite, exploitation thereof emanates from the profit-oriented mind of the entrepreneur alone.

Governance opportunities are a by-product of business. Mysteriously, more qualified and experienced management is likely to fail in a public sector or development sector environment as compared to the private sector. To my mind, the difference is that in the latter case success enhances personal property and failure is fatal. Motivating the risk takers, however, is complicated since their appetite for risk is directly proportionate to reward. The decision to invest in Swat rather than in Karachi, as an example, will only be considered if it results in super profits.

There is then a need to enhance profitability for projects in targeted geographic areas to excite our risk takers. This methodology has already been adopted in the power sector where higher returns were offered to entice investment. A variant of this policy can be the solution for the problem under consideration. Aid can be the catalyst for mobilising private investment under a well thought out mechanism. Again, this is not a revelation; there are examples of grant funds being offered in other countries for subsidizing project costs with the sole objective of creating employment. The criteria for funding being the level of employment created. With consequent higher profits entrepreneurs may tend to consider projects which were earlier ignored due to the level of associated risk.

The optimum mechanism will need brainstorming in our specific environments. Tax-free zones can be another option where grants subsidize tax. One acknowledges that such schemes will require stringent monitoring to avoid abuses which are more than likely. Nonetheless, the benefits far supersede the costs. Subsidizing interest rates on micro-financing can also be considered keeping in view its growth in the country.

Micro-finance, however, assumes that the borrowers will be able to deploy funding in a manner which creates sustainable future earnings even when the loan is repaid. This may not necessarily be true particularly in the aftermath of a devastating natural calamity. Consequent subjective write-offs then result in our man again getting comfortable with free fish with zero commitment to pay future debts.

Honest employment is a pre-requisite for self esteem. Our man will eternally be grateful to the means responsible for providing honest employment. It is our culture. The mileage gained by the respective donors from providing jobs will be much more than that achieved through free fish and life jackets.

Acknowledging the absence of a quick fix the suggestion is to at least move in a new direction for aid utilisation. The onus lies on the government of Pakistan to engage and convince the donors in taking a more holistic view of development. The focus needs to be on employment creation which will ensure directing the energies of the population towards productive activities.

Rethinking agriculture policy

Availability of farm inputs has to be adequately increased to increase productivity

By Tahir Ali

In an effort to improve agriculture growth and increase income of farmers in the province, the Khyber Pakhtunkhwa government intends to reconsider provincial agriculture policy that was enforced in 2005. The review and reshaping of agriculture policy is the need of the hour as it has failed to address major issues confronting the farmers and farming in the province.

The main goal of the agriculture sector, as per the 2005 agriculture policy, is to ensure food security and alleviation of poverty, but the low per acre yield, land erosion, negligence of livestock, especially milk/meat-farming, failure to prepare and disseminate better animal fodder, outdated farming and lack of water/soil conservation practices and poor agricultural marketing and lack of a crash programme for the uplift of agriculture have made it impossible.

The sector has been ignored and allocated insufficient funds -- ranging from one to two percent -- in the provincial Annual Development Programmes (ADPs) by successive provincial governments despite the fact that it accounts for over 20 percent of provincial gross domestic product, accounts for 45 percent of the total labour force and it is the main source of income for about 80 percent of its population.

Gul Nawaz Khatak, chief planning officer in KP’s agriculture ministry, says they now would assess the performance and identify the achievements, shortcomings and bottlenecks in the policy’s implementation and requirements for the future, “The re-examination will help us reshape the agriculture policy, bring in improvements in it as per requirements and take remedial measures to develop agriculture, livestock and other sub sectors in the province.”

Khatak agrees that the main problem confronting the agriculture sector in the province was poverty and inability of small farmers to buy quality inputs. “They have been neglected in the 2005 policy. They will now be listened to and empowered,” he adds.

To a question, Khatak says prices of inputs were beyond the jurisdiction of agriculture ministry as these were determined by the market forces and inflation. “We will ensure timely and easy availability of the commodities to farmers. For this purpose, farm services centres have been established and more such bodies would be formed in the hitherto uncovered areas,” he informs.

To enable them buy inputs at their hour of need, Khatak says, the banks are already providing agriculture credit to small farmers at 8 percent mark up in the province to buy inputs and services.

“And the provincial cooperative bank and its cooperative societies have also been revived this year. The government would provide Rs1 billion seed money to the bank to give easy farm and non-farm loans to small farmers and rural women to increase their incomes. The Bacha Khan Poverty Alleviation Programme (BKPAP) has also been started in some districts which would provide farm inputs and financial, technical and educational support to thousands of farmers,” he explains.

Farmers’ income can be increased by ensuring improved marketing of their products, “We intend to establish more regulator markets province-wide. At present, these markets function only in two districts. These markets will have market committees comprising 6-10 farmers plus one official. They will weigh, assess and sell farmers’ produce. Farmers will get good price for their produce and hard work,” Khatak hopes.

Niamat Shah, Vice president of Anjuman-e-Kashtkaran Khyber Pakhtunkhwa, says cost and unavailability of farm inputs is one of the major problems, “Though the seed research farms have developed quality seeds for different crops but their timely and easy availability has always been a problem. About 80 percent farmers have no access to quality seeds and modern agriculture technology,” he claims.

“The government has so far failed to streamline input distribution. Mass availability of under-weight and fake fertiliser/seeds varieties will have to be checked as these are adding to problems of farmers,” he points out.

The department seems to be focussing on the Farm Services Centres (FSCs) for improving input availability. But unless these bodies are expanded to each union council or village and their number and membership is increased -- there are only 60 FSCs province-wide at present which have only around 45000 members while millions of farmers are out of its ambit -- and their weaker financial position of the bodies is improved by giving them financial support as they have to buy and sell inputs through their revolving funds, the idea may not work.

The BKPAP can solve some of the basic problems of farmers but more funds will have to be allocated to increase its area of application. Shah argues that the agriculture sector should be allocated five percent of ADP for the time being, which should be gradually increased later as without funds and robust attempts nothing can be achieved.

“Sufficient money should be earmarked to do research on, and development of, seeds. High-yielding seed varieties must be imported as was done during Ayub’s era. Also, easy and timely availability of seeds and other inputs should also be arranged for through improved distribution network,” he suggests.

“To cope with decreasing agriculture land for its unprecedented consumption by real-estate sector, the government will focus on bringing vast cultivable wasteland under cultivation by leveling and developing it through bulldozers and tractors,” Khatak explains.

Increasing the acreage demands more irrigation water which is already scarce. “This problem will be tackled by efficient management of available water for which schemes have been suggested and through extension of irrigation infrastructure in the province by building new dams which is what the irrigation department is doing,” he adds.

“The department is also working out on how to cope with new and bigger responsibilities following the devolution of the some departments to the provinces,” Khatak says.

Lack of coordination between farmers and the government and non-governmental organisations has also affected the farmers, “First, we will be identifying and removing problems in inter/intra departmental coordination and then it will be worked at with farmers and their associations,” he says, adding, “Rs240 million have been earmarked for the purpose which would be paid to farmers soon through district coordination committees as nominations have been made.”

If expert advice, machinery and marketing support are provided to farmers, it will shift their farming from subsistence to commercial/modernised one. Household farming should be developed. The role and impact of the middle-men in agri-businesses must be minimised to increase farmers’ incomes.

Livestock accounts for 50 percent of provincial gross domestic product but it continues to be neglected. It still has no separate secretary and is being supervised by agriculture secretary. There should be special plan for livestock farmers in rural areas.

Promotion of agriculture is the most effective tool for eradicating poverty and, therefore, terrorism and extremism. But traditional methods, paltry allocations and weak commitment cannot develop the sector. The government will have to opt for out-of the-box solutions to develop the sector.

Flooded with problems, still

A first-hand account of flood affectees who remain
off-limits to the process of rehabilitation

By Irfan Mufti

Government’s performance to recover flood losses, reconstruct damaged infrastructure, and resettle displaced population has been dismally slow during the last six months. Ironically, no clear plan has been announced to do so in the coming weeks and months. The crisis caused by floods may continue for months, with remaining flood waters not expected to recede for another three to six months.

At the same time, efforts to rebuild 1.6 million homes are being compromised by infighting between federal and provincial authorities. Some rightly blame the government for inaction, as thousands of families still remain camped out on roadsides in makeshift tents. Huge swaths of Sindh province in the south and Western districts remain underwater. Just outside the villages of Johi and Jacobabad, families languish under tents overlooking fields submerged in water, clamoring for relief that they say has failed to arrive in the months since the disaster occurred.

Villagers returning from relief camps on donkeys found their homes still flooded or destroyed. My recent visit to devastated villages in Rajanpur, Muzaffagardh, Kashmore, Jacobabad, Ghotki, and Dadu confirms the plight of millions waiting for the promised support. A chair balanced on a rubber ring was the only way to ferry people across a flooded street. Villages after villages tell the stories of devastations caused by floods. “We’re very worried about our income because our land is submerged under water. Nobody has helped us,” says a 45-year-old Mohammad Khan, who has returned to his home with seven children to find a pile of rubble. “Please rebuild our homes. We don’t have anything,” says an old woman sitting under a thatched roof-house not sufficient to provide shelter to more than 3 persons but is occupied by a family of eight.

Critical infrastructure, including health clinics, power stations, roads, bridges and water supply systems were destroyed and have still not been repaired. The education infrastructure has been badly disrupted with the result that for many children returning to school in the near future is now not possible.

Reconstruction needs assessed by the World Bank and Asian Development Bank stand at $6-9 billion depending on what model for long-term reconstruction was adopted and the government expected the international community to provide ‘fresh, additional and new cash disbursement’ of about $3 billion. Although seeking an additional foreign aid of $3 billion for flood-related reconstruction, the government has started outsourcing project management and allowed international agencies to directly implement rehabilitation schemes in the name of ensuring transparent use of funds. The transactional cost (of such arrangement) will be exorbitant.

There has to be one development agenda (spearheaded by the government). Government being the protector and benefactor of its population must take the responsibility. International agencies also want to outsource project management and get directly involved with contract award process to ensure transparent utilisation of funds.

The required $3 billion were to be used for the rehabilitation of 20 million people affected by floods. International agencies, however, were to re-prioritise existing portfolios instead of additional funds. The government in the meantime wants to let go the $3 billion offered by the ADB and World Bank through re-allocation of their existing projects.

These funds were already committed by the institutions for social sector development and ought to be used for such projects. In the meantime, the government hasn’t announced any intention to shift some of its development budgets for rehabilitation and reconstruction. Besides Punjab and KP governments that have shown some promise to prioritise needs of affected population, the federal government and other provincial governments haven’t announced any such plans. This makes questionable all the claims of the government to rehabilitate 6 million people waiting to restart their lives.

Despite promises of foreign aid the flow of funds has been slow, below expectations, and unclear. There can be multiple reasons for this disappointing pace. Among the key reasons are the government failure to ‘market’ its agenda of rehabilitation, recovery, and reconstruction to its international allies and donors. Mismanagement and misuse of cash is also seriously hampering relief efforts with nearly $60 million in the Prime Ministers Fund remaining unspent. Foreign donors have stumped up just half of a UN appeal target of $1.93 billion, sparking fears for 6.8 million displaced populations as farmland could remain flooded for another six months.

Total receipts of foreign aid, from both bilateral and multilateral sources, is around $1.8 billion which is less than 40 percent of the total promised aid. Some of the main aid contributors are UN, US, UK, Germany, Saudi Arabia, Turkish government, China, European Union, the World Bank, Asian Development Bank and humanitarian agencies including Oxfam, IRC, Islamic Relief, Internal Medical Corp (IMC), Red Cross and other international organisations.

The German government raised its initial donation from $1.3 million to nearly $20 million. Many aid groups are increasing their efforts as the scope of the disaster is still largely unresolved. The International Federation of Red Cross and Red Crescent Societies began an appeal for more than $16 million, of which about 60 percent has been donated, but now expects to double the appeal. International Rescue Committee generated $5 million and Saudi Arabia had contributed more than $40 million.

The UN and its partners have received less than half of the $1.94 billion they requested for flood relief, and called on countries and international organisations to provide the rest. The United Nations also released an extra appeal for $460 million for food, clean water, shelter and medical care for an estimated six million people, many of whom have not been reached with aid. The UN has released $200 million, or nearly 44 percent, and pledged $43 million more in the next few weeks. China delivered on its previous commitment of an additional $200 million in unconditional aid to the flood-stricken country, bringing China’s total commitment to $250 million. All these and other smaller contributions are respectable and must be commended.

The government also announced cash compensation scheme, 1.6 million for the worst-off families, Rs85,450 rupees for each family, to rebuild their homes using Watan Cards. World Bank and other multilateral donors have refused to back the scheme until the use of fund is made more transparent and accountable.

Slow flow of aid can be attributed to failure of the government to show destruction and the urgency to international donors. There are two intrinsically inclusive issues on lack of international response for aiding flood affectees. First is the slow response of aid to Pakistan and, secondly, government’s failure to utilise the aid received for flood affectees. Recently, it has been announced that more than $60 million in Prime Minister’s Fund and $190 million aid by the US government are still unused.

This money is sufficient to pay second the installment of Watan Cards and provide for the basic needs of poor farmers to sow their kharif crops. Timely payment of the next installment will enable millions of affectees to reconstruct damaged houses and to recover from immediate affects of flood.

There is still a great deal to do, as people are still experiencing an acute emergency situation that requires domestic and international attention. Humanitarian access continues to be a problem in some areas because of governmental worries about the security of aid workers amid continued conflict.

The government must address these problems through immediate, intermediate and longer plans. The needs of six million most vulnerable people will be addressed through multi-sector integrated programmes in a sustainable manner.

Saving the commanding heights

It is time our intelligentsia went beyond the privatisation mantra and started thinking seriously about feasible proposals to rehabilitate PIA

By Aasim Sajjad Akhtar

The complete breakdown in relations between the management and workforce of Pakistan International Airlines (PIA) once again underlines the serious structural malaise in our public sector institutions. The PIA strike is yet another bitter pill to swallow for the embattled elected government at a time when labour unrest is already on the up: tens of thousands of Pakistan Post workers have been campaigning against the planned privatisation of their organisation for some weeks, whereas latent tensions in Pakistan Railways, Islamabad Electricity Supply Corporation (and a number of its sister agencies), and the two main oil and gas companies are threatening to bubble over.

It is amazing that the government continues to open up new fronts for itself at a time when it can scarcely afford to do so. At times like these, Pakistan People’s Party (PPP) die-hards insist that it is the ‘bureaucracy’, or the ‘establishment’ that is unilaterally making decisions on corporatising/privatising state enterprises and that the elected government then gets saddled with resolving the subsequent stand-offs between workers and management that inevitably result. While the weaknesses of this elected regime vis a vis the permanent state apparatus are plain for all to see, it is unbelievably disingenuous for the PPP to claim that it is not willingly towing the privatisation line.

Let us not forget that there has been serious unrest in Pakistan Telecommunications Company Limited (PTCL) virtually since the PPP came into government almost three years ago. While PTCL was privatised by the Musharraf junta, the PPP has been weak in its dealings with the Arab oligarchs who purchased the company, has ordered the use of force against peaceful striking workers, and has been careful not to publicly acknowledge the scandalous decline in PTCL performance and share values (profits have decreased 200 percent while the share price has fallen from more than Rs70 to less than Rs20).

Soon after the last general election, the PPP announced the privatisation of the Oil and Gas Development Company Limited’s (OGDCL) largest gas field in Sindh (Qadirpur), only to be forced to retreat in the wake of an uproar within the province and across the length and breadth of the organisation itself. More recently, the Privatisation Commission released a list of almost 30 public sector enterprises to be sold. In short, purportedly pro-labour elements within the PPP should quit claiming that their party remains committed to even a social-democratic agenda.

It was the first Benazir government in 1988 that set in motion the privatisation process; the daughter of Zulfikar Ali Bhutto more or less admitted that times had changed and that the PPP could not longer espouse the same socialist principles that it once did (critics will even call into question the extent to which ZAB was committed to socialisation of property). It goes without saying that the Pakistan Muslim League that jostled with the PPP throughout the 1990s was even more gung-ho about privatising state assets -- PML cronies were major beneficiaries of the sale of public banks. However, there is now almost no meaningful distinction between the two major parties when it comes to implementing neo-liberal policies.

It was not so long ago that the prime minister actually conceded that the nationalisations that took place in the 1970s were a mistake (he was referring specifically to educational institutions but there is little doubt that he holds the same position across the board). There was virtually no attempt made by PPP stalwarts to refute the PM’s positions, which reflects that times really have changed.

PIA is a particularly striking case. Trade unionism within PIA has long been dominated by left-of-centre forces, and till today the PPP retains substantial influence within the organisation. This is why it makes no sense that the government -- or the current management team which has been installed virtually by presidential fiat -- made no attempt to take the unions into confidence over the proposed ‘outsourcing’ of European routes to Turkish Airlines.

Of course, it is important to bear in mind that the immediate stand-off is between the management and a segment of pilots, rather than the more blue-collar staff and workers. Of course, as is always the case in such situations, the latter have been at the forefront of the protests, given that their more influential colleagues are actually in the trenches with them, for a change. The interior minister’s efforts to lobby the pilots on Thursday clearly reflect a strategy to divide the staff. And it would not at all be surprising if this strategy eventually worked.

Either way, the fact of the matter is that our public sector institutions are begging to be restructured, and all the PPP, PML-N and other mainstream parties can come up with is to privatise them. Granted they face tremendous pressure from the World Bank, International Monetary Fund, and Asian Development Bank, but this is by and by. At a time when Western governments are putting in hundreds of billions of dollars in a virtual nationalisation of financial institutions, our elected leaders should be willing to say no to the donor orthodoxy.

That they have not till now done so, and continue to help push state enterprises, such as PIA, towards complete insolvency, is indicative of a lack of political will and imagination. The strike will not last very long, but it proves just how bad things have gotten. It is time that our intelligentsia also went beyond the privatisation mantra and started thinking seriously about feasible proposals to rehabilitate PIA and other enterprises whilst keeping them in public hands.

PTCL is a great example of how rigid neo-liberal thinking exacerbates our already bad economic situation while subjecting workers and consumers alike to untold misery. PIA is already in a bad way; the government should acknowledge that it cannot unilaterally enforce decisions upon employees and then come up with new restructuring initiatives that have broad-based consent. The same sort of approach is required in Pakistan Railways and WAPDA. The commanding heights are a trust of the Pakistani people. On this basic principle there should be no compromise.

Feb 12, 2011

Rummy on 9/11

James Ridgeway
In her interview this week with former Defence Secretary Donald Rumsfeld, author of a new autobiography, Diane Sawyer asked him about a tough decision he had to make on the morning of 9/11. Was it not difficult, she asked, to order military pilots to shoot down passenger jets that the government believed to be hijacked and headed targets in Washington - maybe the White House, maybe the Capitol. For a moment, Rumsfeld dropped his generally arrogant stance, and instead looked as if he were about to cry as he recalled the agony he went through in making the decision.

It might have been a poignant moment, were it not for the fact that Rumsfeld didn’t make the decision. It was Vice President Dick Cheney who made the decision. And it was Cheney who was running the country with a confused Rumfeld watching from the sidelines.

When the nation is threatened, it is the president, the commander-in-chief who must make the decision to engage the military. Under law, he orders the secretary of defence to implement his commands down through the military chain of command. While President Bush was being shuttled around from bunker to bunker, on the morning of September 11, 2001, supposedly out of cell phone contact at times, Rumsfeld was next in line. But Rumsfeld’s role on 9/11 has always been a mystery. In his new book, on page 339, the former secretary of defence casts a little light on what he did that morning.

He writes, “The vice president reached me by phone.’’ Cheney reportedly told Rumsfeld, “There’s been at least three instance(s) here where we’ve had reports of aircraft approaching Washington...A couple were confirmed hijacked. And pursuant to the president’s instructions I gave authorisation for them to be taken out.”

In fact, there is considerable doubt as to when Cheney actually received “the president’s instructions,” and considerable evidence that he acted on his own volition, as even the timid 9/11 commission report makes clear. But in any case, his orders clearly violated the military chain of command - something Rumsfeld failed to point out.

The defence secretary is directly charged under law with putting into action the orders from the commander-in-chief. The vice president is nowhere listed in the chain of command and has no authority to act. In the above passage, Rumsfeld himself describes how he essentially was a bystander that morning, with little or no input in the crisis. Our multi-billion-dollar defence department and its chief were unprepared, incompetent, and ignored as Cheney seized the reins and ran the country.

Later, before the 911 commission, Rumsfeld provided a rather astonishing explanation for his behaviour: The Department of Defence...did not have responsibility for the borders. It did not have responsibility for the airports....And the fact that I might not have known something ought not to be considered unusual. Our task was to be oriented out of this country...and to defend against attacks from abroad. And a civilian aircraft was a law enforcement matter to be handled by law enforcement authorities and aviation authorities. And that is the way our government was organised and arranged. So those questions you’re posing are good ones. And they are valid and they ought to be asked. But they ought to be asked of people who had the statutory responsibility for those things.

In his book, Rumsfeld laments the fact he did not resign after Abu Ghraib. In truth, he should have resigned or been fired for failing to protect the nation in the face of the worst attack since Pearl Harbour.