Donors and good governance
By Sultan Ahmed
PAKISTAN is entering the second phase of its economic reforms after having achieved substantial macro-economic stability, the director general of the Asian Development Bank for South Asia, Yoshihiro Iwasaki, said following a recent visit to Islamabad. He said he was hopeful of Pakistan achieving success in the second phase, since while the world economy is still sluggish, Pakistan’s economy is “on the path of great recovery”.
And to help Pakistan move ahead the Asian Development Bank is coming up with larger assistance and delivering it quicker. It has already announced a package of 2.4 billion dollars for three years to reduce poverty in Pakistan to 25 per cent of the population by the year 2006 from around 35 per cent presently. And the Bank is now to raise the assistance for the year 2003 by 200 million dollars from the earlier committed 800 million dollars.
The centrepiece of the ADB strategy for achieving the kind of steady transformation in the economy it seeks is good governance. It is good governance in every sector, in administration, in public sector working, in the social sector, and the financial sector as a whole, particularly the banking sector. And it wants true decentralization of the administration to carry the reforms to the rural areas. Hence it has announced a package of 300 million dollars for decentralization of the administration and 250 million dollars for rural development to help farmers.
Much of the new aid committed is not for large projects like the 2.5 billion-dollar Ghazi Barotha Dam funded by the World Bank. The progress of such large projects could be measured by the people or the intelligentsia. But not how well the 150 million dollar aid from the Asian Development Bank is used for judicial and police reforms. Or for that matter how well the $50 million aid from the US for the promotion of education and democracy.
The forerunners for such sector development and quest for reforms were the Social Action Programmes I and II; but much of that was wasted. We were left with too many ghost schools and ghost hospitals, and too many ghost teachers were getting paid regularly. The good school buildings became the guest houses of the waderas and the bad school buildings the cattle sheds of their underlings. When the then Sindh governor, Moinuddin Haider, ordered that the buildings be vacated immediately he was advised by the deputy commissioners not to do so because otherwise the doors and windows of the schools would vanish immediately. He fell in line reluctantly to save the buildings for the time being.
Much of such aid has come in the form of loans on which interest is payable. And they add to the debt burden of the country which even after the recent reduction and relief given by the donors is over 36 billion dollars. What is exasperating is that such aid obtained in the name of the poor and to reduce poverty and improve our low social indicators has been wasted in this manner and instead used to make the rich even
richer.
The ADB has announced 250 million dollars for building roads in Baluchistan and connecting it with the rest of the country. A hundred million dollars out of that is to connect Baluchistan with Central Asia via Afghanistan. How well will the money be used because road-building in Pakistan is known for its scandals, and for high costs and low construction quality of the highways.
The president of the World Bank, James Wolfensohn, has recently said that a low growth rate, tax administrative reforms and restructuring of the power and agricultural sectors are the major challenges facing Pakistan’s economy. The problems are easily identified and effective solutions have been suggested; but making a success of the remedies is a different ball-game.
Even ample aid is available. The ADB says that if the aid is used well far more of that could be available, but if badly used the committed aid could be with-held, as is happening in respect of the World Bank-funded Ghazi Barotha project.
Look at the other mega project completed in a hurry — the Lahore-Islamabad Motorway which has come to cost finally Rs. 60 billion after the initial estimate of Rs 27.9 billion. Expansion of the motorway and additional work eventually made it cost more than three times the original cost. Such cost overruns have become common for not only large projects but even for modest undertakings. The interest cost of the motorway alone is now Rs 2 billion a year. And that is payable to Daewoo of South Korea which funded the project.
Look at the diversity of aid committed by the ADB. It has offered 300 million dollars for a decentralization plan, 150 million dollars for Punjab’s roads, 266 million dollars for reforms in the non-bank financial markets, 355 million dollars for the energy sector, 150,000 dollars to cover political risk for projects, 20.9 million dollars for a micro-finance development plan, and 150 million dollars to fund the development of small and medium enterprises.
Are we going to make the best use of such diverse aid, and in such large measure? But the current picture is pretty bleak and discouraging, if not demoralizing. How has all this distortion in social sector development taken place? In Dadu, for example, 187 schools are lying closed since long. In Lahore 604 schools have no electricity. In the latest of the scams in the Utility Stores the National Accountability Bureau has exposed mis-spending worth Rs 10.43 million on buying computers.
The Ad Hoc Public Accounts Committee has exposed a series of frauds and embezzlements in government in recent years. It spot-lighted irregularities of Rs 15 billion in official spending but could recover only Rs 250 million. In such an environment the 250 million dollars approved by the Asian Development Bank for rural economic development can go down the drain or into the pockets of the feudal lords who have come into power following the elections. And that has to be guarded against. But by whom, when its traditional beneficiaries and traditional wielders of power are back in office, if not themselves, their sons and nephews and grandsons. Will they make a success of decentralization and good governance, eradication of poverty and promoting the social sector development so that the masses are able to face the challenges of the future?
In the private sector the sugar industry has been a major problem. Many sugar millowners are not ready to pay Rs 43 for 40 kilos of the cane as they have large stocks of sugar. So there is constant friction, which sometimes degenerate into outright clashes, between growers and millowners. The government has decided to buy the surplus sugar through the Trading Corporation of Pakistan and export it. A subsidy package of Rs 6 billion may be needed to clear the stocks in view of the low world prices of sugar.
The cement sector has been ailing for long. Heavy taxation has hampered the industry for too long. Demand for cement in Afghanistan has helped factories situated close to the Afghan border. Cement from Iran and Central Asian countries is cheaper for the Afghans in Western and Northern Afghanistan.
The fact is that while the Karachi Stock Exchange 100-share index has been booming and has crossed 2500 points again the larger sectors of the KSE led by the textile industry and followed by sugar and cement do not reflect that boom, except in isolated cases. Hence, it is premature and misplaced for us to rejoice over the KSE boom since these large sectors should do far better so that small shareholders can benefit.
It is easy for the donors to call for good governance, decentralization and financial reforms. But they cannot enforce them lest that be dubbed as interference in the internal affairs of the country. The donors can give larger aid for good projects and urgently needed reforms after specifying the conditions and reduce the aid if these conditions are not honoured by Pakistan. But that does not solve the problem. They had done that often in the past without producing great results when successive governments did not break away from the practices of their predecessors. So the issue is who is will bell the cat now following the elections and the uncertain democratic set-up that has come into being?
Failures of past governments, erratic policies and an over-riding concern that taxes must be collected from the manufacturing sector has left us with over 4,000 sick industrial units. Nothing should now be done to add to that number while the maximum effort should be made to rehabilitate as many of the viable industrial units as possible.
Soon parliament’s composition will become complete with the election of the senate. This means that the standing committees of both houses of parliament should be set up soon, and the public accounts committee should come into its own. But it is the non-feudal members of the parliament and of such committees who have to assert themselves to ensure good governance and decentralization of the administration. The three tiers of the local bodies must be enabled to play their role effectively and deal with the problems of the people at the grass roots level.
The problem with many of the new members of the parliament is they are not aware of the intricacies of the economy and restructuring of the administration and the financial structure. But they have to learn fast, and their parties should impart their members the necessary instruction and training. Otherwise the country will continue to accumulate more external debt but gain too little in reality for that.
Good governance must become their supreme motto and guiding principle. The country which had been declared the second to the fifth most corrupt country in the world by Transparency International has to break with its sordid past and make a new beginning. The elections are only the first step towards good governance. All other essential steps must follow now and be sustained. There is enough knowhow in this area and if more is needed that could be acquired. What is needed is real political will and a determination to succeed, overcoming the evident obstacles and familiar handicaps.


Chronic imbalance of our provinces
By Mirza Jawad Baig
SINCE the establishment of Pakistan, all three power groups within the political framework — politicians, bureaucrats and the army — have got ample opportunities, one after the other, to rule the country as they wished. All of them, however, have failed to achieve the basic objectives of removing instability, eradicating provincial prejudices and welding the people into one integrated nation. Instead, the last 52 years of our national life have continuously been marked by unstable conditions.
During this period attempts have been made from many quarters to identify the reasons for Pakistan’s periodic convulsions. Some have blamed the immature and corrupt politicians, others have held the bureaucracy responsible for intrigues and high-handedness, and still others have blamed the military for usurpation of power. Many others have held the USA, Russia, India and foreign agents responsible for our failures. The solutions demanded and offered are also naive: hold elections give more provincial autonomy, remove economic disparities, control the bureaucracy, give the army a role in politics, eradicate corruption and social evils and similar other cliches.
It is now high time that we made a sincere attempt to define and identify the real and basic cause of the continuous trauma, with a view to establishing a relationship between the structural framework of our federation and the consequential behaviour of its sub-systems, the provinces.
Provinces in the subcontinent were a creation of the British colonial power, for its own imperialistic needs. They were maintained by field officers and were made large because they were parts of a very large system. After independence, the sizes of the two newly formed overall systems, India and Pakistan, obviously became smaller. Eight provinces, including a divided Bengal and Punjab, went to India, while four provinces came to Pakistan. The Indian leaders, as wise statesmen, balanced their overall system by increasing the number of their provinces to the present 34. However, we in Pakistan are still clinging to four provinces just as they were transferred to us at the time of partition, without realizing the fact that the size and number of these provinces bear a particular ratio to the original whole, the subcontinent, and that when the whole has been split to one-fifth, the size of our provinces should have been pruned and their number increased so as to keep a natural and rational balance among the constituents of our federation.
What actually is important is the proportion and not the absolute size which any constituent part should bear to the whole. In a larger system, one can have relatively large parts or sub-systems, but when the size of the whole is by itself small, the constituents/sub-systems should always be proportionately small. Now, after partition, the size of our total overall system became much smaller than the whole. However, we insisted on retaining the chronically disproportionate and giant units that we had inherited, thereby creating internal imbalance and permanent turmoil in our overall system, the federation.
Since there are only four unequal sub-systems, the stresses and strains cannot properly and evenly be distributed, and there is always an inherent danger of their collapsing and separating through centrifugal forces. In a political entity, this is disastrous and does not in any way fit in any form of democracy. However, if we insist on retaining our unique system in its present greatly unbalanced form, this can only be done by bounding it with some strong external force, that is, converting the country permanently into a police state, ruled either by military or political dictatorships. That is precisely what we have been experiencing throughout.
We have to realize the hard fact that the impact of imbalance in our sub-systems is so intense that in the present form any measures of constitutional guarantees or any amount of autonomy or even our common bond — religion — may not be able to control and check the inherent centrifugal forces operating in the country.
The static boundaries of our provinces since 1947, has encouraged unworthy aspirants, having no economic or social programmes, to enter the political arena on regional and ethnic prejudices. They pronounce the existing provincial boundaries as inviolable. Provinces all over the world, without exception, are actually administrative boundaries of a country’s political units, which are always fluid and remain changing every now and then, according to the growing needs of a nation.
The break-up and re-formation of provincial boundaries is a continuous process everywhere, which fact completely belies and negates the ill-conceived belief of “nationalities” drawn from the “sacrosanct” theory. In a national identity, if provinces would have constituted “nationalities”, the US would have 51, Japan 47, Egypt 44, Iran 24, France 22, Bangladesh 21, Mexico 32 and so on. Every country in the world, big or small, is sub-divided into sub-systems and their number varies according to their sizes and needs, however, none of the people living in its sub-systems claim a separate nationality.
The boundaries of all our four provinces have already undergone changes in one way or the other. Sindh was separated from Bombay and became a province in 1936, while the present province of Balochistan never existed much after partition and was only formed as late as in 1954, by amalgamating the erstwhile British Balochistan with the four princely states of Kalat, Kharan, Makran and Lasbela.
Punjab and the NWFP once constituted a single province and were separated by the British rulers for their administrative needs. Again, the present Punjab does not retain its original boundaries and is the result of the partitioning of the Punjab in 1947.
It is high time that we accepted now rather than later that political instability in our country exists, due greatly to the direct consequences of the horrible imbalance in our provinces and their very small number; which in turn has created a monopoly of a few families in our political arena. It is often that such monopolies thrive in the countries where provinces are very large and unwieldy. A large number of relatively smaller and proportionate units balance and strengthen the federation and allow people of all areas to enjoy democracy in their own way, resulting in accelerated growth of all regions alike.
Hence, if we sincerely wish to establish democracy deep down in our society and achieve political harmony, we will have to reconstitute the boundaries of our present provinces by making them smaller and increasing their number, so as to balance our overall-system, the federation.


Whither Arab countries?
By Eric S. Margolis
NEVER has the old maxim ‘hang together or be hanged separately’ been more fitting than for the Arab states now quailing in fear before President George W. Bush’s evangelical crusade against Iraq. The Arab world’s startling weakness and subservience to the West has never been more evident than in its open or discreet cooperation with Bush’s plans to invade ‘brother’ Iraq.
Though 99.99 per cent of Arabs bitterly oppose an American-British attack on Iraq, their authoritarian regimes, which rely on the US for protection from their own people and their neighbours, are quietly digging Iraq’s grave. Every Arab leader knows the US will crush Iraq, so none will support unloved megalomaniac Saddam Hussein and risk ending up on Washington’s hit list.
In order to deflect the coming fury of their people over the almost certain invasion of Iraq (barring a last-minute coup against Saddam Hussein), Arab rulers have ordered their tame media to launch broadsides against Iraq and lay blame for the impending Gulf War II on Saddam. Never has the Arab world’s chronic disunity, back-stabbing, and petty tribalism been more pathetically on display.
Particularly so because Arab leaders are keenly aware the strategy for the US attack on Iraq, and attendant propaganda campaign — the biggest since World War II — were drawn
up in 1998 by American neo-conservatives linked to Israel’s rightist Likud government. The plan was then made Bush administration policy by its three champions — Richard Perle, Paul Wolfowitz, and Lewis Libby.
Early last month, the establishment Washington Post published a remarkable article revealing how this cabal of neo-conservative hawks within the Bush administration had stealthily engineered a war against Iraq. “Many (neo-conservatives) were also strong supporters of Israel,” wrote Post staff writer Glenn Kessler, “and they saw ousting Hussein as key to changing the political dynamics of the Middle East.”
Translation: the war on Iraq was designed to leave Israel dominant and unchallenged in the Mideast, put an end to Palestinian resistance, exact revenge on Hezbollah, and to ensure that Arab regimes would be subservient to Israel and the US. Control of Iraqi and Saudi oil by the US, Israel and Turkey might follow.
Yet in spite of knowing full well that their bitter enemy Israel was pressing the Bush administration into a war against one of their ‘brothers’, a war whose stated objective is to redraw the Mideast map, topple some of its regimes, perhaps even Saudi Arabia, and loot Iraq’s oil, Arab rulers and potentates remain paralyzed like deer in the headlights of an Abrams tank.
If ever Mideast regimes have shown an utter lack of legitimacy, it is now. Arab governments are ferocious at internal repression, but fainthearted and inept when it comes to facing external threats.
In contrast to Israelis, who are clever, organized and determined, Arab rulers appear a frightened, dithering bunch of hand-wringers, whose interests rarely transcend personal power, wealth and extended family.
What could Arabs do to prevent a war of aggression against Iraq that increasingly resembles a medieval crusade?
Form a united diplomatic front that demands UN inspections continue. Stage an oil boycott of the US if Iraq is attacked. Send 250,000 civilians from across the Arab world to form human shields around Baghdad and other Iraqi cities. Boycott Britain, Turkey, Kuwait and the Gulf states that join or abet the US invasion of Iraq.
Withdraw all funds on deposit in American and British banks. Accept payment for oil only in Euros, not dollars. Send Arab League troops to Iraq, so that an attack on Iraq is an attack on the entire League. Cancel billions worth of arms contracts with America and Britain.
At least make a token show of male hormones and national pride.
But the Arab states won’t. They will cringe, temporize, then join the vultures who will feed on Iraq’s bleeding carcass, while vying to prove their loyalty to Washington. The brutally efficient Arab security forces will crush popular uprisings caused by the US attack on Iraq, particularly in Egypt, Morocco and Jordan. The Arab states will continue torturing and executing those who protest their craven policies. Self-proclaimed Arab champions, like Libya and Syria, have gone mute. No wonder Osama bin Laden remains so popular.
The only Arab leader to show any gumption over the past decade is Saddam Hussein. However cruel and disastrous his rule, Saddam alone stood up to the Mideast’s modern colonial power, the United States.
Saddam’s refusal to surrender in 1991, and his continuing defiance of Washington, is why the US and Britain have bombed Iraq for the past ten years, and why President Bush is so determined to crush Iraq and kill its leader. It is not about weapons of mass destruction, it’s about defiance. The US is determined to make an example of Iraq to teach the rest of its client Arab states the terrifying cost of disobedience.
‘Good’ Arabs that cooperate will be rewarded with more money and arms. Those that fail to join the Bush’s crusade may face ‘regime change’ and ‘liberation’. Palestinian resistance will be crushed.
Nadir is an Arabic word, meaning the lowest point. The Arabs are about to reach their nadir. — Copyright Eric S. Margolis, 2003

