THE failure of the WTO talks in Cancun, Mexico, heralds a significant change in the world power balance. Developing countries, led by emerging economic giants like China, Brazil and India, have arrived at the world arena with enough leverage to challenge the dominance of the West. The next round of talks is scheduled for the end of the year. That an agreement will emerge at some point of time is certain.

There is too much at stake for all the countries, developed as well as developing, to allow the world trading system to collapse. Globalization has arrived and the benefits that every country in the world can derive are enormous. There are preconditions, though, to realizing the benefits. At one end, it is necessary that the world trading order be fair. This is the politics of international trade, which is what Cancun was all about. At the other end, it is necessary that developing countries and regions create and maintain the necessary political conditions that are essential to benefit from and contribute to global economic progress.

Developing countries, including those in a state of virtual war with each other, have shown a remarkable unity at Cancun. This is a tribute to their new-found political wisdom. This wisdom is also reflected in specific countries and regions of the developing world. The political leadership as well the intelligentsia in these countries has realized that globalization has placed economics at the centre of public affairs, foreign as well as domestic. Decisions are now made explicitly with regard to the primacy of economic interests, and the economic well-being of the people dominates policy-making. Not surprisingly, many countries have merged their foreign and trade ministries, because foreign policy is now a function of economic interests. Many countries have shown a unique pragmatism.

China and Taiwan have decided to foster trade and investment relations despite being in a ‘suspended’ state of war. When the Czechs and Slovaks in erstwhile Czechoslovakia could not agree on continuing their union, they did not waste their human and material resources on fighting each other. They shook hands and decided to go their separate ways. Even as long back as four decades ago, Malaysia and Singapore settled their problems in a like manner. Today, China, Taiwan, Malaysia, Singapore, and the Czech and Slovak republics are dynamic economies, with their people enjoying rapid improvements in their standards of living. South Asia is an exception to this norm and, unfortunately, insists on remaining so. The wisdom that is visible elsewhere is not reflected here domestically or regionally. A feature of the new world order is that nations are organizing into trading groups as a means of dealing with globalization. Pakistan and India do not even trade with each other. That South Asia is home to the largest concentration of poverty in the world has not yet become the number one political issue in either of these two countries.

This failure is a product of domestic political factors in both societies increasingly driven by religion-oriented ultra-nationalism and controlled by retrogressive forces. If Pakistan faces the tide of Islamic fundamentalism, India is facing the rising spectre of Hindu fundamentalism. In a real sense, though, there is no difference between the two. Both share a common vision of a world that is antithetical to the values of equality, tolerance, freedom and social progress. Clearly, the socio-political environment that is necessary to profit from global economic progress does not exist in Pakistan and has begun to erode away in India as well.

Economic development requires peace and order. It needs an environment that is conducive to investment — domestic and foreign. This investment is essential for the creation of employment opportunities and for increase in incomes. Creating and maintaining this environment requires that societal values give pre-eminence to the objective of social and economic well-being. In this respect, South Asia presents a sorry picture. Economic well-being is not a priority; ideology, politics, nationalism, religion, sectarianism, caste, tribalism, ego, pride, vanity, honour etc., etc., are priorities.

A glance at the region is enough to astound any rational observer. In Pakistan, it is more important to worry about blasphemy or to agitate about the loss of honour of our women because their ear lobe is showing, or to earn sawab by killing Shia doctors. In India, it is more important to sing Bande Mataram in schools, or to worry about religious conversions, or to discover a temple that is supposed to have existed 2,000 years ago. These issues are more important even if incidents arising out of militant responses to these concerns cause a loss of investments, export, and jobs.

Kashmir is a ‘sheh rag’ for Pakistan and an ‘atoot ang’ for India. That this characterization has cost over 60,000 Kashmiri lives and kept millions in Pakistan and India in abject poverty is mere collateral damage.

If South Asia is to emerge as a respected player in the global arena, the superficial, self-destructive values that weigh the countries down will have to give way to a rights-based value system that recognizes social and economic well-being as the primary collective aim of society and state. Clearly, the key to the creation of an environment in South Asia that is conducive to investment and growth lies in peace between Pakistan and India. And the key to that peace lies in the solution to the Kashmir dispute.

It is a key, not because the so-called defenders of respective national interests in the defence and foreign policy establishments in Islamabad and New Delhi say so. It is a key issue because, in Pakistan, the Kashmir dispute is a festering wound that has provided a breeding ground for religious extremism.

Kashmir has provided religious extremists with a cause that has allowed them to claim a considerable degree of legitimacy. It has served to undermine the liberal-progressive-secular platforms and constituencies, with consequences for women and minorities in particular. In the event, religious fundamentalists have managed to make inroads into Pakistan’s military and political establishments and India’s policy stances and actions vis-a-vis Pakistan have only served to strengthen and extend their hold.

Herein arises India’s primary responsibility in ensuring peace and order in the region. Unfortunately, India has historically failed to behave in a responsible manner. Despite aspirations towards a global role, it has not been able to shed its petty mindset. Immediately after independence, it blackmailed Pakistan into accepting the distribution of Indus waters on its terms. It has dealt about the same manner with Bangladesh and Nepal with respect to water or trade. Its role in the training and arming of the Tamil Tigers in Sri Lanka and its arm-twisting methods in dealing with Colombo is now well documented.

This will have to change for the sake of regional peace and for India’s own enlightened self-interest. India needs peace and stability in the region in order to achieve its global economic and political aims. But just as the United States is discovering in Iraq, it has to learn that it cannot impose peace in South Asia on its own terms alone.

India’s enlightened self-interest demands that it should have a vested interest in ensuring that the Pakistani state does not collapse a la Afghanistan. Instead, it has of late followed a policy just to the contrary. India needs to keep in mind that its Muslim population at least equals that of Pakistan. If one per cent of that population is radicalized and one per cent of that one per cent is radicalized enough to take up arms, India will have a home-grown Islamic terrorist force of between 10 to 20 thousand. This process appears to have been already set into motion, as the identity and characteristics of those behind the Mumbai bomb blasts tend to indicate.

Hindu extremists are already mobilized and are likely to respond by forming their own such force and Bal Thakery has already called for Hindu ‘counter-terrorism’. Bangladesh has well-organized religious parties and Sri Lanka has a sizable Muslim population too. They will not remain unaffected by the religious radicalization that appears to be on the horizon. If the period around 1947 saw large-scale communal rioting, the years ahead hold the danger of South Asia descending into religious/communal civil war spanning the region from Afghanistan to Bangladesh.

Should such a situation materialize, all hopes of reaping the economic fruits of globalization will have ended for all of South Asia. The Indian economy, currently billed as the growing powerhouse of Asia, will spin into a nosedive, as investors — including Indian investors — take their capital to safer countries. This is a prospect that will not bother religious nationalists in any of the South Asian countries. In fact, they may relish such a possibility as it will enhance their own power. But it should bother all enlightened elements that are concerned with humanity and with social and economic progress of all the people.

If Pakistan and India wish to become productive members of the global community, they will have to create and maintain a socio-political environment where the prosperity of every family in South Asia is a common goal and from where no investor stays away for fear of a nuclear war in the region.

The political leadership and the intelligentsia in Pakistan and India have to decide whether we want our mothers to be proud that their daughters and sons are among the best scientists, economists, architects, musicians, engineers, or artists in the world. Or whether we want them to be proud that their sons are martyrs in the cause of their religion or their country. We have to decide whether we want our mothers to stand tall and cheer as their daughters and sons claim world honours for their achievements. Or whether we want them to kneel and offer flowers at the graves or samadhis of their sons.

RITUALS are woven deep into the warp and woof of our society. But I could never imagine that Mahatma Gandhi’s birthday too would become a mere formality within 55 years of his death.

As in the past, October 2 — his birthday — is a public holiday. The prime minister would place a wreath at the Rajghat where Gandhi was cremated and prayer meetings would be held in different parts of the country to commemorate his memory. Somewhere essay competitions might be held to recall his philosophy of non-violence. Probably, that is all.

Over the years I have witnessed the enthusiasm for his teachings waning and popular participation in his name lessening. For the youth — I held a small survey — Gandhi is a wispy figure, way out in the past as someone who led the independence movement for the country. The whole spirit of reverence and dedication is missing. It looks as if the celebrations of Gandhi Jayanti have lost their elan and become a simple ritual to be gone over year after year.

Even otherwise, Gandhi has receded into the background. Seeing India of today, talking in terms of military power and glittering plazas, his words seem to be out of place. A person who gave us freedom and dignity is followed by a few whose number is decreasing day by day. Wardha, from where he fought the independence movement, is an abandoned place today. Not even curious visitors drop in to see the cottage from where he waged his war against the British.

Probably, this is the kind of phenomenon that takes over the liberation movement the world over when it becomes old. The negligence is on the part of the government which turns its back on heroes because they do not belong to the ruling party. It is a slur on the country if the founder, the father of the nation, is allowed to disappear in the shadows. He represents the country’s ethos. Yet, I have seen the best of traditions — and sacred memories — getting politicized.

Take Bangladesh where the Khaleda Zia government has pushed out the portrait of Sheikh Mujibur Rehman, the father of the nation, from public gaze. She enacted a law to remove his photo from government offices and public places. It is nothing except politics because opposition leader Sheikh Hasina is the daughter of Mujibur Rehman. Ideologically opposed to the Gandhian thoughts, the Bhartiya Janata Party (BJP) after coming to power at Delhi saw to it that the photo of Gandhi would gradually disappear from public buildings, government offices and airports. It is not visible even at a sequestrated place. Hindu Mahasabha leader Shyama Prasad Mookerjee, not Gandhi, beams at the visitors to the rooms of the BJP ministers.

If at all, the BJP pays lip sympathy to Gandhi who was never enshrined in the same way that Rana Pratap Singh and Shivaji, the two Hindu heroes, figure in the Sangh Parivar’s pantheon. The RSS headquarters at Nagpur does not display the photo of Gandhi. Nor does it observe a holiday on his birthday. Even the fact of his assassination by a fanatic Hindu was first deleted from the textbooks which the parivar’s human resource development minister Murli Manohar Joshi got rewritten on the pretext of “dropping bias” from Indian history.

If it is not politics, then what is it? The Hindu Rashtra (state) is the BJP’s plank which, it believes, earns it votes. Gandhi was, however, opposed to a state religion. He wrote in The Harijan, a weekly he edited, on September 22, 1946: “The state would look after your secular welfare, health, communications, foreign relations, currency and so on, but not your religion or my religion. That is everybody’s personal concern.”

Pakistan’s founder, Mohammad Ali Jinnah, too redefined his two-nation theory after partition. It was no more on the basis of religion — Islam and Hinduism. Instead, he said: “You may belong to any religion, caste or creed — that has nothing to do with the fundamental principle that we are all citizens of one state. Now I think we should keep that in front of us as our ideal and you will find that in course of time, Hindus would cease to be Hindus and Muslims would cease to be Muslims, not in the religious sense, because that is a personal faith of each individual, but in political sense as citizens of the state.”

Gandhi always held that religion did not make the basis for nationhood. He once told Jinnah that if a person were to embrace another religion, he would not become a member of a different nation. A little bit of that thinking still resides in the hearts of most Indians. In spite of the demolition of the Babri masjid or the happenings in Gujarat, there is a strong subterranean feeling among the people for diversity.

The Sangh parivar has been trying hard to change this thinking: to turn a secular India into a Hindu India. But it has failed in its efforts. Whatever its onslaughts, we are still fighting to keep our society pluralistic. Fanatics in both the communities are making the task difficult. Yet whatever is left of the Gandhian values, they are standing us in good stead.

In fact, Gandhi’s assassination gave us 40 years of communal harmony. People would snub those who talked about the Hindu Rashtra. The Sangh parivar was then careful not to open its mouth. The climate was such that BJP or its earlier brand, the Jana Sangh, never crossed a double-digit figure in the

Lok Sabha elections those days. It is another matter that the forces, which should have consolidated the pluralistic society, failed us.

Where India has failed Gandhi the most is the style in which the 200 million people — one fifth of the country’s population — are living. His asceticism does not fit into the yappy culture of consumerism which is taking over the urban areas. Simplicity is no more a virtue. The weak are looked down upon. It is the survival of the fittest. Gandhi’s concept of the rich being the trustees of the wealth they earned has not worked. The rich are getting richer and the poor, poorer. Villages, where Gandhi said God lived, are more or less the same even after 55 years of independence. Development has not benefited them much. Cities have all the comforts.

Gandhi would have also been disappointed if he were living today to see how his basic belief that “wrong means will not lead to right result” had been flouted in every way possible. He would say that if the methods were vitiated, the ends would be vitiated. Not many Indians believe in this dictum any more. What matters to them is success, not how they achieve it. There is increasing contempt for what might be called the moral and spiritual side of life.

Against this background, Gandhi’s method to evolve a non-violent way to resolve conflicts has been rejected not only by the world but also in India. We cannot expect others to follow Gandhi when we have shunned him. That may be the reason why the Kashmiri students at Srinagar resented my observation the other day that if their movement had been non-violent, it would have made an impact on the civil society in India and elsewhere.

The writer is a freelance columnist based in New Delhi.

RECENTLY the Privatization Commission announced a welcome change in its policy for big state-owned enterprises (SOEs) like OGDC, PTCL, PSO and HBL. It announced that instead of selling entire units to one investor it would gradually sell their shares in the market. This policy is being pursued with respect to OGDC, NBP and PTCL but the commission has now announced that it will sell PSO and HBL to one investor.

In case of PSO the government owns only 25 per cent of its equity whereas it has undertaken to sell 51 per cent of its equity. This change in strategy in respect of PSO especially by undertaking to sell a larger share of its equity than it owns is difficult to understand. PSO is Pakistan’s biggest corporate entity. It is the only Pakistani firm included in Fortune Asia’s 500 biggest firms. It is the jewel in the crown of Pakistan’s economy.

Its performance despite being an SOE has been tremendous. It has market share of 71 per cent of POL products with Shell having only 20 per cent. It has 3,820 retail outlets as compared to 1,230 of Shell. Its storage capacity is 734,000 tons compared to 144,000 tons of Shell. It has been investing about Rs 1 billion per annum in capital expenditure for the development of additional new vision outlets complete with convenience stores, business centres and internet kiosks. It has successfully implemented voluntary separation schemes reducing the company’s staff by 26 per cent from 2633 to 1955 employees.

It has been giving more than 100 per cent dividend on its Rs 10 share for the last five years. During the year ending June 2003 its profit after tax increased by 26.4 per cent to the staggering figure of Rs 4 billion. A dividend of Rs 7 per share or 70 per cent was announced to its shareholders resulting in a total dividend of 160 per cent for the whole year. Its latest balance sheet is rosier than that of Dow Jones component companies.

Its shareholding of 143 million is very diversified. The government owns 25 per cent, ICP and NIT have 26 per cent, other financial institutions 28 per cent, individuals 15 per cent and the remaining 6 per cent is owned by foreign investors and others. At its present market value of Rs 290 per share the total worth of its 143 million shares comes to Rs 41.47 billion.

PSO has tremendous potential for growth as the per capita consumption of POL products in Pakistan is only 0.14 tons whereas in Thailand it is 0.56 tons. With growth in incomes and population, POL consumption will continue to increase sharply and PSO’s profits will soar higher. PSO does not face a cyclical market and like other utilities the demand for POL products does not fluctuate. Its profitability is assured. Profits vary according to growth in the overall market and PSO’s share in the growing market.

PSO is the sole POL supplier to the armed forces, KESC, WAPDA, IPPs, and other major levers of the economy. It is therefore a strategic asset which should not be sold to foreigners. The people of Pakistan should be the owners of strategic assets as their foreign ownership can expose the country to indeterminate risk. In time of crises Shell, Caltex and a foreign owned PSO could cripple the economy and also delay supply to the armed forces and power stations.

Secondly, the present geo-political and economic situation of the region is the most inappropriate time for PSO sell-out. Internal politics in Pakistan has not stabilized. The situation in Afghanistan and Iraq is far from normal. In this scenario the foreign investors would like to maximize returns in the shortest possible time and will not plan to generate returns over the long run in a geographical area which is prone to instability.

Thirdly, the present situation regarding competition among PSO, Shell and Caltex is ideal as there are strong efforts by all the three firms to win the consumers. If PSO is privatized the government will lose its ability to ensure price stability. The POL import products have been completely deregulated but the government has a yardstick of purchases by PSO to compare the prices at which Shell and Caltex import POL products. If PSO is privatized a cartel will be formed by foreign companies to import POL products at the highest rate because the experience of import deregulation has shown that the government was importing at cheaper bulk rates than oil companies.

Fourthly, after initial benefits of direct foreign investment in the first year Pakistan will be perpetually remitting foreign exchange from its reserves for increasing profits of PSO. In financial year 2002 the profits remittances of foreign companies were $2.4 billion. If PSO and HBL are privatized the annual remittance figure of profits by foreign firms would reach $4 billion in a few years, which we cannot afford. Like IPPs this will be another lock around Pakistan’s economy.

Fifthly, in order to sell 51 per cent equity the government will force ICP and NIT to sell its shares of PSO although it has no right to tell ICP and NIT to do so. PSO’s shares are most valuable in the ICP and NIT portfolio and if these shares are sold ICP’s and NIT’s share price will be adversely affected and the present extremely buoyant stock market could go into a spin.

Sixthly, no developing country has fully privatized the distribution of POL products as it is a money spinner for any government of a developing country which is always short of resources for socio-economic development. India does not have any foreign company in its oil and gas sector and the attempt to privatize two oil concerns has been stopped by its Supreme Court acting under the doctrine of judicial activism.

Wrong policies are promoted either by wrong ideas or vested interests acting without regard to national interest. The wrong idea comes from IMF which considers privatization as its theology. However leading development economists like Amartya Sen, Nobel Laureate for 2000, and Joseph J. Stiglitz, Nobel Laureate for 2001, are opposed to privatization after studying its effects on a a cross-section of the countries. Stiglitz states “In contrast to what it was supposed to do, privatization has made matters so much worse that in many countries today privatization is jokingly referred to as briberization.” However Pakistan has to follow IMF’s dictation even though we get only $119 million per quarter which we do not need. Ever since we started following IMF’s advice, GDP growth has slided and poverty has soared.

But it is also vested interests which are pushing this wrong policy. The parties which have bid for PSO are Kuwait Petroleum Company, Al-Kharfi and Sons, Saudi Arabia and Fauji Foundation. The credentials of Al-Kharfi of Saudi Arabia are not known but the Kuwait Petroleum Company has the resources to buy PSO on the condition that it will import deficit POL product from Kuwait only. This will result in transfer pricing with deregulated import of POL products. The government will have no authority to control its purchase prices from its parent company and the consumers and the economy will suffer due to collusion in price fixing.

It seems that privatization of PSO is an exercise to sell it to Fauji Foundation. However, selling it to Fauji Foundation will not be privatization in any sense of the word. The management by khakis will not improve from the present and is likely to deteriorate. Secondly, the government will lose tax revenues of more than Rs 2 billion as all enterprises of Fauji Foundation are exempt from corporate income tax, if profits are spent on welfare.

Prime Minister Jamali in a recent visit to the Steel Mill hit the nail on the head by stating that the management of state-owned enterprises should be depoliticized. The present political interference in PSO’s management can be eliminated if government gives up its privilege of appointing all the directors and the managing director. The government should only appoint two directors, ICP and NIT should appoint a director each, other financial companies should appoint two directors, the private owners should elect another two and the foreign owners be also allowed one director. Similarly the managing director may be nominated by the government but finally approved by a board in which government nominees are 25 per cent. This would be the ideal path for PSO given its importance in the national economy.

Following Prime Minister Jamali’s directive PSO’s management should be privatized as outlined above. Selling PSO to either Kuwait Petroleum Company or Fauji Foundation will be totally against the national interest. It will be another saga of policies being pursued in the furtherance of vested interests and wrong economic ideology to the detriment of the welfare of the country. PSO’s motto is “National company giving momentum to the nation.” Let us keep it as national if we are all true nationalists.

The writer is a former secretary, planning.