| 15 March 2004 | Monday | 23 Muharram 1425 |
Sharon's annexation plan
Striking a balance
Privatization Minister Hafeez Shaikh told the National Assembly the other day that 38 government-owned entities would soon be sold under the country's privatization programme.
These entities include Pakistan Telecom, Pakistan State Oil, National Investment Trust and the Karachi Electric Supply Corporation. The exercise is an ambitious one and brings into debate once again the whole issue of selling profitable public sector entities along with the loss-making ones.
By all accounts, privatization is a complex exercise with multi-faceted implications for the economy. The process has to be absolutely transparent with full legal safeguards and watertight procedures; otherwise, valuable public assets may be sold at throwaway prices.
Privatization gives tremendous patronage clout to the government in power which may be exercised to favour special interests rather than to serve long-term national objectives, thus negating the basic aim of improving economic management and efficiency.
Another imperative is the sequencing and timing of privatization. It is necessary that all assets should not be sold in a short period, because the buying power of the domestic private sector may not be adequate to compete with international investors.
A lot of lessons need to be learnt from the process conducted so far, like the credentials of those to whom the units are being sold and their plans of what to do once they acquire them.
Buyers may not be interested in running the concerns they purchase but more in stripping off its assets. Such an approach only complicates matters. While the thrust for privatization is the belief that private sector units are more efficient than public sector units, this is not true across the board.
Changing ownership from public to private is neither a necessary nor a sufficient condition for more efficient operation of specific industrial enterprises.
On the other hand, due to political interference and over-staffing, the efficiency of public sector units is reduced. One wonders why correctional exercises should be undertaken only in the private sector.
A favourable fiscal impact of privatization is expected as a result of the sale proceeds being used to retire national debt, as well as eliminating the drain on the budget caused by covering public sector unit losses.
Privatization is also viewed as an exercise to encourage direct foreign investment. But direct foreign investment in profitable public units is not likely to be beneficial for the economy, as against the gain from an initial purchase price one has to calculate the recurring remittance of profit in foreign exchange for years and decades to come.
Direct foreign investment therefore should be attracted by policy and design into new and risky ventures rather than through the purchase of profitable enterprises. In fact, purchase of the existing operational units by foreign buyers is not an addition to new productive capacity.
In conclusion, it can be said that the whole privatization process should not just be seen as a means for the government of the day to generate more funds and get rid of loss-making entities. Public interest in terms of jobs as well as prices of the goods and services these entities deliver should also be taken into consideration.
Sharon's annexation plan
Reports that senior US officials have discussed with the Israeli prime minister's close aides his unilateral plan to annex Jewish settlements in the West Bank in exchange for dismantling those in the Gaza Strip are indeed disquieting.
If true, these point to the Bush administration's total submission to the whims of Mr Ariel Sharon, even if this has to be at the cost of the roadmap to peace unveiled by Mr Bush himself last April.
The plan envisages a two-state solution; it requires Israel to stop building more settlements in occupied territories and dismantle those that already exist. It promises an independent Palestinian state by 2005, leaving the status of Al Quds to be decided by discussions between the two sides.
The Israelis and Palestinians both have accepted the roadmap in principle, but Israel's bellicosity has time and again disrupted progress on key issues. The other major irritant has been the building of the controversial fence by Israel around Jewish settlements in the West Bank, which the Palestinians say is aimed at appropriating more of their land and will render a future Palestinian state non-viable.
Annexation comes naturally to the Zionist state. The very genesis of Israel was based on annexing Arab land. Palestine was occupied, and after the 1973 war, even Syria's Golan Heights were annexed.
Mr Sharon's new plan is in keeping with the Zionist quest for Lebensraum. It seeks to barter Gaza settlements for those in the West Bank. They are spread over a much larger area.
It is the responsibility of the UN, Russia, and the EU, the other three members of the Quartet besides the US that framed the roadmap, to ensure that American collusion at this point does not destroy this last hope for peace in the Middle East.
Striking a balance
The consensus at a conference in Karachi that most public sector organizations and agencies do not carry out environmental impact assessments (EIA) before beginning work on a project hardly comes as a surprise, given the bureaucracy's lack of sensitivity in such matters.
A number of major projects around the country, including such major infrastructure undertakings in Karachi as the Lyari Expressway and the Northern Bypass and the Gwadar Port development project in Balochistan, have been initiated without carrying out an EIA.
According to the Pakistan Environmental Protection Act of 1997, any organization wishing to construct an infrastructure project must first obtain a certification from the provincial environment protection agency concerned. This all sounds good in theory, but there are several practical problems.
The most obvious is the capacity of the provincial EPAs to process such EIA reports, given that most of them are headed by non-technical bureaucrats and lack resources to properly evaluate an environmental impact report.
Must the EPA have a veto on every project? The answer depends to some extent on the urgency of the project. For instance, the Karachi mass transit plan has been criticized by some who think that it will cause great harm to the city's environment.
Instead, their proposal is to have more buses with bigger passenger capacity. But when (and if) it is built, the mass transit scheme could reduce the number of buses and rickshaws that poison Karachi's air everyday, and with that perhaps the city's air could actually become relatively clean.
So, a balance has to be struck between the need for infrastructure development and the right that citizens have to a clean and hygienic environment. Projects like the mass transit scheme cannot be delayed much less shelved because environment experts come up with arguments that do not quite fit a Third World setting.