March 25, 2003	Tuesday	Muharram 21, 1424

ISLAMABAD, March 24: Pakistan is preparing a long-term contingency plan to minimize the impact on its trade volume and increasing cost of exports and imports as Iraq war appeared to prolong.

Secretary in-charge, the Ministry of Commerce, Khalid Saeed, told Dawn the war on Iraq did not seem to be as short as expected, and hence the government was now looking into measures as to how to face the situation in the longer run.

He said since Pakistan’s more than 52 per cent exports went to the United States and the European market and another 10-12 per cent to the Middle East, the cost of exports and imports would definitely go up because of high shipping charges and perhaps yet to come risk surcharge.

He said the Ministry of Commerce had not yet estimated the total impact of Iraq war because nobody knew about the duration of the war, but the major impact would be in the form of higher oil import bill.

Stiffening resistance to the US-led invasion of Iraq has already undercut the US estimates for a brief war and has signalled that oil prices are to shoot up in days ahead. Iraq produced around 2.5 million barrels of oil per day before the US invasion and was exporting around two million barrels per day.

Mr Khalid said Pakistan would have to see how the US economy is going to respond to the war on Iraq, particularly after President Bush sought $80 billion from the Senate because the war would also impact all the economies around the world and Pakistan would be no exception.

He believed that since the cost of trade would increase for all the countries in the region, Pakistan would not be affected too much in the end.

Another commerce ministry official said the textile being the mainstay of Pakistan’s exports and that to the US and the EU, the losses could be much higher.

Khalid Saeed said the Export Promotion Bureau was already in the process of lining up alternate air and shipping routes to ensure uninterrupted export of its products.

Officials said the US invasion of Iraq would not have any major impact on Pakistani exports, but war risk insurance could go up in case it prolonged.

The government has so far no plans of any special fund to guarantee the shipment of exports in case war risk insurance increased as had been done by Sri Lanka and the UAE during the Afghan war.

Earlier, the government was considering setting up warehouses abroad for its exports but was not found feasible when discussed with the exporters.