The economic conundrum

THE continuity chorus rings loud and sonorous for all to hear. General Musharraf says he will support the new government, and adds the usual qualification about continuity of reforms. In the first instance, there is an urgent need to put the record straight, at least on the economic front: there are no reforms taking place.

The only new thing happening is that the programmes (and conditionalities) that the International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB) have tried so long to institutionalize are now being applauded by the government without reservations. So when continuity is mentioned, rest assured that continuity of policies almost two decades old is what is meant.

As the tedious wait for a government to be put together extends into its second month, it becomes even more important to understand the importance of this talk of continuity. On the one hand, the Muttahida Majlis-i-Amal (MMA) and the People’s Party Parliamentarians (PPP) dispute the Legal Framework Order (LFO). On the other hand, the Pakistan Muslim League-Q has no intention of disputing anything now in place. But the extremely important issue of continuity of economic policies seems to have been lost.

While the MMA and the PPP are content to employ run-of-the-mill rhetoric about the economic problems and hardships facing ordinary Pakistanis, they have little knowledge, and apparently, concern, about the very nature of policies that are fast pushing more and more people into the mire of poverty. Indeed, the PPP has made it clear that it will continue to be supportive of both the international financial institutions (IFIs) and the US on both the foreign and economic policy fronts. Although the MMA has made much of the issue of US presence and bases in Pakistan, it is likely to back down on its demand relating to these for expedient reasons. To it continuity of the economic agenda can only be a secondary concern.

It is another matter, however, that if either of these two parties were to sit in the opposition, they would likely oppose IFI-dictated policies tooth and nail. It is unfortunate that such a stance would not be based on any principle, but tied to the expediencies of circumstances and therefore one has to be content with what one gets, especially given our political parties’ unwillingness to resist the so-called neo-liberal economic order. That being so, it is important to understand why this particular economic agenda is a problem. It is clear that at least some people think that continuity of the military’s economic agenda is desirable. After all, everyone in the glamorous world of global capitalism seems to be extending kudos to Finance Minister Shaukat Aziz.

Put simply, the IMF is maintaining its decades-old principled stance that fiscal stabilization is the key to growth and poverty reduction. Fiscal stabilization is necessary because a high budget deficit is unviable over even a relatively short period of time, as recent history has proven in Argentina. The rest of the story is fairly simple. The burden of generating revenue falls on the poor because the state that is levying taxes comprises elite groups that most definitely will not tax themselves. Export-oriented commodities are given precedence over food security.

And since the priority of defence spending, debt-servicing and high-level government overheads is almost a foregone conclusion when the budget is drawn up — again mostly because of the unchangeability of the status quo — it is by raising prices of utilities and basic commodities, selling off public assets, and slashing public sector jobs that the deficit can possibly be contained. And so more of the same continues to happen in the name of poverty reduction (because poverty reduction must be preceded by growth which must be preceded by fiscal prudence, austerity and stabilization).

The Poverty Reduction Strategy Paper (PRSP) continues to be quoted as the document that outlines the country’s defining economic strategy for the foreseeable future. IMF representatives are quoted as having said after October 10 elections that there will be some leeway in the final shape that the PRSP takes, and that the new government will not simply be forced to toe the military line. This claim fits in nicely with a history of meaningless rhetoric, especially since the interim-PRSP (I-PRSP) has already outlined a policy matrix detailing specific fiscal targets for the next three years.

The I-PRSP also speaks of numerous other troubling plans, including that of corporate farming, extension of the mega water project syndrome, and further liberalization of the agricultural markets. There are already medium-term agreements that have been signed with the IFIs binding the government to implement such policies in the near future. The whole paradigm at work is intensifying. For example, there are more and more instances of hasty privatization taking place such as that of the United Bank Ltd. It would be unrealistic to think that the incoming government will have anything very radically different in mind.

Pakistan’s PRSP is spiced with rhetoric about participation and inclusiveness. PRSPs are also being prepared by over seventy country governments that are debtors of the IMF and World Bank. In almost all cases, there is little evidence to suggest that there is anything in the way of a substantial shift away from the long-standing adjustment paradigm. In some ways it is shocking that this uniformity of approach has not been challenged in our political discourse. On the other hand, perhaps one should not be surprised at all given the manner in which our political process continues to be manipulated by external forces and self-centred elites within the country.

But the question that must then be answered by the MMA, PPP and even the obeisant PML (Q) is how they will face up to the challenge of increased rich-poor polarization that is bound to ensue if this economic policy agenda remains unchanged. Remember that politicians and democracy itself have been dragged through the mud by the military and their political collaborators over the past three years. It will not take long for the people to start putting the blame on the politicians again when it becomes clear that higher foreign exchange reserves can not cover up the structural deficiencies of the economy.

It is the establishment that continues to perpetuate economic inefficiency, disparities, rent-seeking, and corruption. People cannot support policies that legitimize these bad practices and allow for more failure. The history of policy adjustments over the past two decades is a history of failure.

Socio-economic disparities are the sign of a sick economy, and potentially of a very sick society. And the inability, or worse still, unwillingness, of those with the means to challenge such a situation is a definite indicator that the sickness is at an advanced stage. Because our sovereignty is now circumscribed by the political and economic interference of the US and the IFIs, there is even a greater need to understand the predicament.

The fact that everyone seems to be ignoring is that the military’s ability to introduce sweeping amendments and ordinances to consolidate its role in politics in the name of policy and reform continuity is premised on the stamp of approval it gets for the economic policies prescribed by the IFIs and western governments. The interplay between Pakistan’s reinduction into the gentlemen’s club of global power politics and the close relationship between the military and the IFIs has be seen and understood in perspective.

Political parties need to recognize the importance of resisting the dictates of the IFIs. They need to do so even if they are not particularly committed to the welfare of the Pakistani people. They need to do so because it will help their own cause. There is a major vacuum in the policy discourse within the country and in the world for that matter. If we choose to live with this, we are accepting the fact that decision-making about our lives is not in our hands. If and when the PRSP comes to the parliament and if and when the parliament has the time and inclination to focus on it — it is essential that the issues relating to our economic future are debated seriously. We are being carried along by the global tidal wave of neo-liberalism and if we do not take a stand on it now, we may lose whatever little grip we still have on our fate and future.

Licence to kill

IN the fifties there was a poet in communist-ruled Hungary, who said: “We are living in cannibal times”. I was reminded of the observation the other day when an eyewitness said that the Ansal Plaza shootout in Delhi was no encounter but a straight murder of the two ill-fed men without arms. In one sense it is a sad commentary on the environs where people can be bumped off without trial.

The witness, Dr Hari Krishna, was afraid for his life after he contradicted the police. Officers had given a detailed account of how the encounter took place and how the two terrorists armed with the AK-47 guns were killed before they could harm any of the hundreds of Diwali shoppers. Krishna phoned me frantically that the police had threatened him with dire consequences if he did not withdraw his version. Harsh words were used after he rejected several entreaties. His wife and son felt unsafe. If such a sequence of events does not constitute cannibal times, then what does?

But I must admit that most people have not liked my submission to the National Human Rights Commission for an inquiry into the shootout. In fact, the Vishwa Hindu Parishad has demanded my arrest under POTA. Most of criticism is on two counts. First, why I relied on the doctor’s statement and did not verify the facts myself. My explanation is that the doctor, who had no axe to grind, is as credible as anyone else. Why should the doctor be telling a lie? He happened to be in the parking lot of Ansal Plaza’s basement at the time of the shooting. It requires courage for someone to contradict the police version. It impressed me.

The charge that I did not verify the facts is neither here nor there. With whom could I check? The police were ruled out. The Ansal Plaza shopkeepers were so afraid, after having found that the terrorists were in their midst, that they were all praise for the police. They went to the extent of giving one lakh rupees to the police for their courage.

Incidentally, the person who presented the purse of one lakh rupees is the one against whom a criminal case is pending for the death of 65 people during a cinema tragedy.

Another point of the criticism is: why I had asked in my petition for the transfer of the two officers who had carried out the encounter. It is but fair that those who are suspect should be kept out till the inquiry is complete. However, I had one point against them. They are the same officers who had recently picked up some human rights activists from a closed-door meeting and had detained them for 72 hours without warrants or any explanation.

I do not understand why the BJP and the police have tried to confuse the incident. At issue are not the “so-called human rights activists” or their “anti-national stand”. Nor is the past record of Krishna’s “frauds or dacoity” as alleged by the police relevant. I am concerned only with the eyewitness account he has given. The point to ascertain is whether the “encounter” was genuine or not.

The version of the police is that the doctor reached the shopping complex two hours after the shootout. I doubt if there is any technology which can trace the movement of a person on the basis of mobile telephones or calls. Still the police have stuck to their stand that it was an encounter and that the doctor did not witness it.

I have become sceptical about the encounters after reports from Kashmir and Punjab where innocent people have been bumped off by the hundred. Many cases challenging the veracity of encounters are pending before the courts and the National Human Rights Commission (NHRC). In the name of eliminating the Naxalites, the Andhra Pradesh police have committed atrocities beyond words. In Guwahati, two people were recently killed outside the chief minister’s residence, and the story given out was that they were terrorists. In Ahmedabad, a person in police custody was killed. In Punjab, a person by the name of Kalra has not been produced in the Supreme Court even though a judge ordered his presence some eight years ago.

Even when I saw some clips of the shootout on television I felt that the police story had many gaping holes. Reports in the print media only heightened my doubts. Still I left the matter at that. But when the doctor’s eyewitness account appeared in two newspapers, I decided to follow up the story. I met Justice A.N. Verma, chairman of the NHRC, to request him to order an inquiry to find out the facts. He saw my point and ordered an inquiry.

The question to ask is why the BJP spokesman rushed to defend the police when the inquiry was in progress. And why he should get irritated if I am one of the “so-called human rights activists” and “the overground face of the underground”. If he or his government has any proof, let them move against me. Maligning people because they are critics is neither legally nor ethically correct.

The problem with most of us is that we do not hold any discourses dispassionately. Those who constitute the establishment do not use arguments to defend themselves but resort to abuses to cover up their deficiencies. The BJP spokesman’s spat made the Foreign Office in Islamabad say that the Indian media had suggested that the evidence of terrorists’ nationality was “fabricated”. There has been no such discussion in the media. There is enough evidence that they were terrorists. They may well be from Pakistan because it has not stopped cross-border terrorism. The Lashkar-i-Taiba still has its headquarters in Pakistan.

My concern is with my country which is open and democratic and where the rule of law has pre-eminence. The doctor’s charge is a serious one, not to be belittled or ignored on the ground that the police morale would be affected if the allegation was pursued. When there are persistent voices that law protectors have become law violators, the government must sit up and ponder. The state can frame as many laws as it requires for fighting terrorism. But it has to stay within the limits of the law. It can’t become a law unto itself.

Human rights activists are as much against state terrorism as against terrorists. The activists do not want the voice of dissent to be muzzled. Nor do they want the right to differ misused. But no governance is worth a dime if human rights are not an integral part of it. I am surprised that those very people who suffered during the emergency at the hands of the police are defending them.

Some people — even television networks — have warned me that my credibility would suffer if the doctor’s story turned out to be false. I do not know about my credibility. But it would definitely hurt the credibility of eyewitnesses. The point to consider is how to impress upon the police not to kill even terrorists without proper trial. At stake are the law and law courts.

Still the courage to stand up and be counted, which is lessening in the country day by day, should be applauded. People are afraid to tell the truth lest they should land themselves in trouble. Such an attitude does not portend well for a democracy.

The writer is a freelance columnist based in New Delhi.

China’s new face

China’s Communist leadership has spent the past few days bombarding the country’s long-suffering population, and anyone in the outside world who will listen, with skull-numbing speeches about the supposed philosophical breakthrough of President Jiang Zemin.

In fact his “Three Represents” policy is bold, but not particularly philosophical or hard to explain: It pragmatically proposes that the Communist Party preserve its dictatorship by co-opting the business elite that increasingly drives the country’s economy. Party leaders have been duly unveiling concessions to their new clientele at the party congress, promising to allow entrepreneurs more access to capital and better terms for competing with state-owned industry.

Though Mr. Jiang and other senior leaders are expected to step down from their party positions Friday and be replaced by a new generation of leaders, there has been no discussion, during the many hours of televised proceedings, of the change or how it was decided.

Some see the leadership transition from Mr. Jiang to successor Hu Jintao as a modest step forward, because it is the first in Communist Chinese rule not precipitated by a leader’s death or accompanied by violent upheaval. Mr. Jiang is credited with having established a powerful consensus during his 13 years in office behind policies of rapid economic modernization, the embrace of global capitalism and the maintaining of stable relations with the United States. Little is known about Mr. Hu and the other new leaders, but they are widely expected to continue this course. Yet Mr. Jiang, who will retain considerable influence through allies he has installed in the party Politburo, has also frozen what had been a slow crawl toward greater democracy by the Chinese leadership before 1989. His alternative is the cozy alliance between bureaucratic and economic elites, shielded by an authoritarian umbrella, that for decades has served such regimes as Malaysia and Singapore _ not to mention Taiwan before its recent democratization.

So far this seems to be working reasonably well: Chinese growth remains high, foreign investment is pouring in, and dissident movements such as the Falun Gong religious order have been crushed with relative ease. Yet the leadership still feels insecure enough to round up dissidents of all kinds and ship them out of Beijing before staging its congress. Signs of potentially serious economic problems lie just below the surface: Without a working rule of law, corruption threatens to become overwhelming. So do the bad loans by the state-run banking industry, which could bring on a financial crash if growth should falter. These threats could be greatly reduced if Mr. Hu were to pursue even modest political liberalization, such as greater press freedom, the expansion of multi-candidate elections from villages to larger jurisdictions, and tolerance for independent civil and religious movements. Such reforms seem to be regarded as too risky by most Chinese leaders; yet history _ including that of Taiwan _ suggests that Mr. Jiang’s authoritarian strategy is even less likely to succeed.—The Washington Post

Three key challenges facing the Muslim world

THE Muslim world which includes more than 50 independent states, accounts for one fifth of the world population but less than five per cent of its wealth. The states where Muslims are in a majority extend from North-West Africa to South-East Asia. The Muslim world is part of the Third World and is plagued by poverty, illiteracy, lack of health services, economic and social turmoil and other ills generally associated with the underdeveloped world.

But the Islamic world, which includes a nuclear power, a NATO member and oil rich nations, is important in its own right. Lately this region has been brought to the forefront of international politics because of the vital role the governments in this region are grudgingly playing in the war against terrorism.

This Islamic or the Muslim world is economically, culturally, racially and ethnically diverse. Each Muslim majority state faces a unique set of economic, social and political challenges to which it must find solutions suited to its own culture, tradition and beliefs. But in doing so they must not undermine the human values common to all nations as recognized by the United Nations.

Discussed here are three key challenges facing the Islamic world that must be met in order to improve the plight of its citizens and to reverse Islamic world’s perpetual slide into misery, despair, fanaticism and extremism and to ensure a better future for its people. I would submit here that the war on terrorism will only be won when Islamic nations face up to the following challenges.

These key challenges are: (a) Respect for human rights; (b) democratization of society; and (c) liberalization of economy.

Governments in the Islamic world must be pressured to enact policies that promote human rights, democracy and free markets for sustainable growth, development and progress of the Muslim states.

No human development is possible in an environment in which human dignity and rights are not protected and respected. Though the Islamic world has made some progress in this regard by officially banning slavery, but these are just the first steps and a lot more needs to be done.

The people of the Islamic world have been denied freedom, peace and justice. They are struggling for basic human rights. This region desires equality for all, justice that is based on compassion, and peace that is founded on tolerance, humanity and dignity.

The quest of human rights in the Islamic world is a secular struggle that transcends the bounds of all religions, nationalities and regions. Many of the people in the region are living under oppressive, authoritarian, dictatorial regimes or royal theocracies that derive their power by denying people their legitimate rights. These regimes loot and plunder their nations’ wealth and resources and then let loose religious and ethnic forces to turn majority communities against communities in minority to distract people from their own wrongdoings and corruption. for a better life for the people these regimes must be replaced by democratically elected governments because denial of human rights and the lack of democracy are twin phenomena which threaten one and the same human value.

Without democracy in the Islamic world it cannot hope to make progress towards human rights or its citizens succeed as people in any other measurable way. For this reason democratization of Islamic society is essential for the progress and development of this region and for the triumph of human dignity and decency in the Islamic world.

Democracy is the single most important factor in any nation’s sustainable progress. Even when economies in a region collapse because of external or internal factors, the nations that are democratic come out of economic disintegration faster and stronger than nations where democracy is not prevalent.

It is well understood that progress on democracy leads to progress on human rights, and the upholding of human rights makes democracy inevitable. The rulers who deny human rights to their people are mostly not democratically elected and do not tolerate dissenting opinions. With democracy comes tolerance of each other’s views and a free flow of ideas which is essential for progress and prosperity. Without democracy we have crises of good governance which lead to a culture of corruption in which no government is answerable to the people they are supposed to serve.

The Islamic world has miserably failed to deliver on democracy for its people. Countries that are democratic are mostly in name only.

The Muslim world should strive for democracy at every level — from national to the village. Democracy in this region should not be in name only but should be characterized by good governance. It must be participatory (where men and women participate equally), consensus-oriented, decentralized, accountable, transparent, responsive, effective and efficient. It should be equitable and inclusive and follow the rule of law enforced by an independent judiciary. Democracy in the Islamic world will ensure that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable communities in society are heard in decision-making process. Democracy will make the citizens responsive to the present and future needs of society they live in. It would mean freedom of association and expression and a civil society in which the rights of minorities are protected.

For democracy to be successful it must be transparent and responsive to the needs of the people. Governing under democracy is unlike a spectator sport. Every citizen living in a democracy is a stakeholder in the democratic process, so its success is the success of every individual living in that democracy. This is possible in a culture in which ownership and individual responsibility and initiative are encouraged. Countries that adhere to the principles of free market economy are best suited to make this possible.

It has been proven time and again that nations fare well economically when people rather than states have ownership of lands they cultivate, property they live in, and businesses they run or work at. But unfortunately economies in the Islamic world are mostly state-controlled. All industries, banks and agriculture is either run by state or is in the hands of a few individuals that belong to the royal family or the privileged class. Liberalization of economy means that the government or state must withdraw from the economy, and the capital market and capitalists are given a free hand under the law to own businesses and property and develop and profit from enterprise and ideas.

Large segments of the Muslim world’s economies need to be privatized as a way to improve industrial performance and attract further investment. This will help the Islamic world’s financial stability and improve business environment. Muslim world’s scientific and technological potential and talent cannot be preserved in the absence of free market economy. And without this it cannot expect to see improvement in its people’s living standards. With free markets would come increased competition for goods, services and financial assets and that would ensure continuous improvement in quality of their products which would further lift their living standards.

Like in democracy the emphasis in economy for the Muslim world should be on decentralization. Each village should be allowed to run its own economic affairs as it sees fit. The power to change his/her life for the better should be placed in the hands of each and every individual in the Muslim world.

In essence, human rights, democracy and free markets are the pillars on which the Islamic nations need to plan to and build their future. As each pillar supports the other, nations in the Islamic world will embark on the path of durable peace, prosperity and progress.

The writer is a research engineer who works in Dallas, US.

Rebuilding Afghanistan

The Pentagon’s shift from bombing Afghanistan to rebuilding it recognizes that although much has been done to provide emergency food and shelter for Afghans, longer-lasting remedies are needed. Doubling to more than 300 the number of civil affairs troops dispatched to bases around the country would allow for the building of more roads, bridges and schools.

Afghan President Hamid Karzai has pleaded for months for troops from the 19-nation International Security Assistance Force to be stationed in cities other than Kabul. Broadening the presence of the force would protect villagers, let relief agencies work without fear of attack and counteract warlords who continue to resist the central government’s control.

Karzai also is trying to get nations that promised billions of dollars to come up with the money to help reconstruct the country. Expanding the international force, which does not include US personnel, would provide protection for US Agency for International Development teams to undertake large-scale projects such as building power plants and clearing waterways, supplementing the work of military engineers carrying out smaller projects.

While waiting for expansion of the international force, the U.S. military civil affairs teams are doing most of the important rebuilding.—The Washington Post