| 10 August 2004 | Tuesday | 23 Jamadi-us-Saani 1425 |
The stakes are too high
Independence Day
Good governance and development
On July 30 an agreement was finally reached at a meeting in Geneva to re-launch the Doha round of trade negotiations. There was a great deal of excitement expressed by the various participants as the 147 member World Trade Organization agreed to move forward with the next round of trade negotiations.
The excitement was not so much the result of any achievements regarding the substance of a new trade order that will define the relations between all parts of the world. It was produced, instead, by the fact that the negotiators were able to overcome the setback at Cancun in 2003 and agreed to move forward.
"The Doha round is back on track, the results are good for the European Union and good for development countries" said Pascal Lamy, European Union's Trade Commissioner.
Even the developing countries were pleased with the outcome: "developed countries have recognized that agriculture trade with a heavy subsidy component is not fee trade" said Kamal Nath, Indian trade minister. However, there were still some reservations by developing countries, according to Sun Zhenyu, China's ambassador to the WTO, "the framework is not completed and the developing countries are not fully satisfied."
However, Celso Amarin, Brazilian trade minister, said that the agreement reached in Geneva was "a good deal for everybody, is good deal for trade mobilization and for social justice."
The agreement was a start towards the launch of serious trade negotiations. In his statement at Geneva following the agreement, Robert Zoellick, US trade representative, indicated that there was "a lot of work yet to be done but today's framework is a milestone."
Although the negotiators had reached an agreement, it was clear that it was not possible to complete the round by December 31, 2004, which was the original intention. That goal was adopted when the WTO ministers decided to enter into a new round of negotiations in their meeting in November 2001 held at Doha.
They had given themselves three years within which to transform the world's trading system. Even then it was considered to be a very ambitious timeframe since the previous round - the Uruguay Round - had taken a much longer time to complete.
Having already spent three years just to develop a framework for the negotiators to follow, world trade ministers were reconciled to the fact that it would take another two to three years before the final agreement could be reached.
What were the developments that made the trade ministers move forward rather than continue to voice the differences that had resulted in the impasse at Cancun? There were essentially three reasons. First, both developing and developed countries were anxious to rescue the round.
There was realization by the representatives of the developing world that although the playing field was not evenly laid out for them and would probably remain so even after the conclusion of the Doha Round, WTO offered a better framework than a regime in which each country acted to promote its own interests.
Second, the Americans threatened that they would essentially abandon the WTO in case the Doha round did not move forward. Instead of operating within an international framework for the conduct of trade, they were prepared to quickly enter into bilateral negotiations with a number of countries, including Pakistan.
They made it clear that if the Doha round did not make progress they would bring a large number of trade infringement cases before the WTO which would tie down the organization for years. This was a very scary proposition for the developing world.
Third, the decision by the European Union and the United States to move towards the eventual elimination of subsidies on agriculture provided some comfort to the developing world that the outcome likely from the conclusion of the Doha round would be more favourable for them after all.
What the Geneva accord put forward were a series of promises rather than a significant change in the way trade flows among countries. At Geneva, rich countries indicated that they will eliminate all export subsidies by a date which would be determined in the negotiations.
The European Union pledged to scrap $4.5 billion in annual export subsidies. The US promised that this reduction would be matched by the elimination of trade distorting elements in the United States' export credit and food aid programmes.
Rich countries also promised a substantial reduction in trade distorting domestic farms support programmes. It was indicated that the larger the exports the bigger would be the cuts. In the first year of implementation, levels of trade distorting aid to farmers would be cut by 20 per cent.
The Geneva accord also promised a significant improvement in market access for all farm products. In readjusting the framework for producing and trading agricultural outputs, all WTO members will be expected to participate. However, the poorest will not be expected to make a major contribution. Countries will be able to shelter some sensitive products from import competition.
Developing countries will be allowed to have lower targets for reducing tariffs on agricultural imports and longer periods for implementing these cuts. Developing countries will also be allowed to have flexible rules concerning sensitive and special products. The poorest developing countries will not have to cut their tariffs at all.
It was the quarrel over cotton that had led to the collapse of the Cancun discussions. Poor African cotton producers had wanted cotton put on a fast track as a stand alone issue.
This was not acceptable to the US, whose $3 billion annual cotton subsidies were the principal target by the cotton producing nations in Africa. The only concession made by the US for cotton was that the question of subsidies and other barriers will be handled separately within the overall agricultural talks and conducted "ambitiously, expeditiously and specifically."
On industrial products several objections by African countries meant that unlike the agreement on agriculture the proposed negotiating guidelines have not been accepted by all members and may be modified at a later stage. However, the agreement laid the groundwork for significant reductions in tariffs. The question of non-tariff barriers will also be addressed.
As in the case of agriculture, developing countries will have longer implementation periods and more flexibility to keep some high tariffs. However, since the tariffs on manufacture goods are already very low in rich countries, a major reduction by developing countries would mean considerable loss of advantage currently available to the developing world.
In the sector of services, which is the fastest growing part of the global economy, WTO members agreed to intensify negotiations to open their markets and set a date of May 2005 for the presentation of their offers.
The agreement in this important sector was considerably less detailed than for agriculture and industry. It appears that as a result of the rapid growth of this sector, individual countries have not been able to define their interests.
Is it beneficial, for instance, for countries such as India and Pakistan to press for the opening of the banking sector around the globe in order to take advantage of the large number of trained bankers and financial experts available to them? Or would this opening mean that the developing countries' banking sector will get swamped by the very large and financially more sophisticated institutions in America and Europe?
Should the Third World press for the opening of air space over Europe and America in the belief that their airlines are run more efficiently? What about patent rights and protection of intellectual properties? What is the appropriate length of time over which such protection should be granted? And then there is the tricky question of the movement of people and how free should that be? This issue has been complicated further by the events of September 11, 2001 and the war America has declared on terrorism.
It was decided at Geneva that the negotiations will be launched on easing the transit of goods through customs where delays and paperwork can add up to 15 per cent of the cost of selling goods.
At the same time, the European Union agreed not to press its earlier demand that investment, competition policies and transparency in government procurement should be incorporated within the framework of Doha negotiations. Nonetheless, it was agreed that these issues would stay in the WTO work programme but would not be subject to negotiations.
In agreeing to the framework at Geneva, developing countries recognized the predominant position occupied by the European Union, United States and Japan in the world trade system.
These three trading entities account for 41 per cent of total world exports and almost 50 per cent of total world imports. The expanded European Union is now the largest trading bloc with exports of $940 billion in 2002 and imports of $933 billion in the same year.
The United States, at $694 billion of exports, comes next although it is the largest importing nation with imports in 2002 estimated at $1.2 trillion or 23 per cent of the world's total.
The only developing countries that have made it to the top of the trade league are China, South Korea, Mexico and Taiwan. In 2002 China's exports amounted to $326 billion, or 6.6 per cent of the world's total. In the same year, China imported goods and services valued at $295 billion, or 5.7 per cent of the total.
It is interesting that the other three developing countries that have entered the big league are special in different ways. South Korea, with exports in 2002 of $163 billion, or 3.3 per cent of the world's total, has aggressively pursued an export oriented developing strategy for the last 30 years.
Mexico, with exports of $161 billion in 2002, or 3.2 per cent of the total, has done well as a result of its membership in the North American Free Trade Arrangement (Nafta).
Finally, Taiwan has also become a major exporting country, with exports valued at $135 billion, because of its proximity to China. These three separate circumstances offer some pointers to the rest of the developing world if it too wishes to use trade as a way for promoting growth.
How important a role has a relatively free movement of goods and services made with reference to the position these countries occupy in terms of their share in global trade? Would a further reduction in obstacles, as presented by tariff and non-tariff barriers, help global trade to expand further, increase developing countries' share in it, provide additional employment opportunities for the poor, and bring benefits to the developing world that would increase its rate of economic growth? There is a good possibility that all this may happen and the Doha round may, after all, prove to be the "development round."
The stakes are too high
The prospects for a modern social democracy look bleak. Downing Street and its outriders are setting out an agenda for a third term - individualised consumer choice in health and education - which is hard to distinguish from Tory policy and for which there is little enthusiasm among public or party.
Given the volatility of contemporary politics, it is by no means impossible that Labour will lose in a reverse landslide. But the most likely outcome is that we will stumble across the line first, and, as with the Tories after 1992, the electorate may soon resent us and our fall in the next crisis could be sweeping.
Unlike the Thatcherites, we won't have transformed the political, economic and social landscape - despite the benefit of huge majorities, a pathetically weak opposition and a strong economy.
The European results are another indication that the party hierarchy does not realize what a hole it is in. They demonstrated the dealignment of political loyalties that has been accelerating under New Labour.
We know of many members (not diehard leftists) who did not vote or voted for the Greens or other parties. The government is puzzled, citing the strength of the "economic fundamentals", low unemployment and record investment in public services.
In its script, disaffection is framed in the traditional narrative of mid-term blues. If it really believes this, it is making a big mistake. The dominant feeling in the electorate is not so much that there are no differences between the parties, but rather that two terms of office with huge majorities haven't made a difference and parties don't behave any differently in power.
On the crest of a political wave unrivalled since 1945, New Labour has been unable or unwilling to change the political weather. Worse, our democracy has been eroded, there is no new politics and trust in politicians is at an all-time low.
New Labour has burnt so much political capital, but for what end? Most of the progressive policies, such as devolution and minimum wage, are first term and can be considered as much old Labour as New.
It looks as if the second term will be remembered for Iraq. None of the rationales for the war stands up: there are no weapons of mass destruction; and the country, the region and the world are not safer places.
Tragically, Tony Blair still appears to believe that if he can only explain it one more time, we will get it. But we get the message - we just don't accept it. Iraq is Blair's poll tax, a fundamental breach of trust, demonstration of arrogance and strategic blunder for which the party as a whole is paying the price.
New Labour's timidity has always been framed by certain assumptions: that Britain is a conservative country and elections can only be won from the centre ground; that the forces of global capitalism are ideologically and practically given; that markets and choice enable us to compete efficiently in the global economy, and must flourish in public and private sectors; and that the role of the modern state is to equip workers to thrive on the opportunities of globalisation.
The Conservatives, who see no active role for the state, are thus an obstacle to Britain's ability to compete in the global economy and must be kept out of office at all cost.
The strategy defines Tony Blair as the best leader in Labour's history for marginalizing the opposition. But the cost to social democrats is debilitating. Sure we have power, but are denied the means to do anything purposeful with it.
This is the Blair Catch 22. We are saddled with a historically low level of taxation to spend on public services and to redistribute, we are privatizing the public services, if more humanely than the Tories, and we are denying the possibility of a social democratic Europe, the only talk being about where we draw our "red lines" and sustaining a world order defined by Bush.
We have supported Blair's leadership. We were never uncritical Blairites, but we did think that Blair would open up spaces to renew social democracy. We were wrong. That promise of a new politics has receded and it is obvious there is no point waiting for a better Blair.
The stakes are simply too high to accept that there is no alternative for Labour supporters. What is at stake is not just the radical intent of a third term, and therefore victory at a fourth election, but the viability of the party.
Recent events echo the collapse of the Tories: first you lose your members, then your councillor base; and finally after an epiphany (such as Black Wednesday) the fall among the wider public is frighteningly fast.
Frustrated by years of neglect, clearer threats of disengagement are being made from within the unions. When sensible left-of-centre figures such as Kevin Curran of the GMB prophesy a break, we have to take notice.
The party and its supporters must ask themselves: Is this as good as it gets? The leadership's answer is "Yes - what is not on offer is the Labour government of your dreams". But it's not a dream we want: just a better Labour government.
The future may or not be bright, but will it be Brown? The social democratic successes of this government belong primarily to Gordon. If he becomes leader, then the party will be more at ease with itself, the pace of redistribution could increase and the public sector will be safer from privatisation. But questions remain. Much of the caution, particularly over Europe, is down to him.
There have been few signs that Brown will embrace a new politics. If he simply takes us on a path of more coherent Blairism, then the motive for change is greatly diminished. But Gordon does have the potential to be more radical.
Britain is not necessarily a conservative country - rather its people, like those of every country, have the potential to be either conservative or radical, progressive or regressive. What matters is the political leadership and the ambition to shift the centre of gravity to the left.
Labour needs a new direction, not just a new leader. Social democracy and capitalism cannot be triangulated - more of one means less of the other. The job of social democratic governments is to draw and redraw the lines between democracy and the market, the individual and the collective, the public and the private.
If we give in to the principle of market supremacy then we won't know where or how to draw those lines. Worse still, we end up not knowing that lines have to be drawn at all.
Social democracy cannot take root in the shadow cast by neo-liberalism. Ultimately we have to define our own agenda for a realizable radical transformation. If others offer an alternative leadership, then we want to hear their ideas. If the party is to survive, it must relearn the habits of critical debate.
Behind the scenes, the next manifesto is being posed by Downing Street as consolidators (read Brownites) v radical reformers (read Blairites). The battleground is choice, but the initial one is to be made by the party and movement.
Are we prepared to risk defeat with the bogus radicalism and burned-out legitimacy of the New Labour project, or can we remarshall our forces around a genuine social democratic programme? - Dawn/ Guardian Service
Independence Day
First generation Pakistanis, a rapidly vanishing breed, will remember how indignant we would get when a letter would be mis-addressed Karachi, India. We saw it as a conspiracy to deny the existence of Pakistan and we countered it by proclaiming from the house-top, with clenched fists, that Pakistan had come to stay!
We were prickly about our national identity and we called India Bharat as if to deny it any claims to the name that defined a geographic entity that had been unified by the British for administrative reasons.
Pakistan Zindabad became a clarion call, a highly charged, emotive slogan which was our affirmation of not just our patriotism but of our commitment to a country that had been founded in the teeth of fierce opposition. The early years had been difficult but these very difficulties sustained us. We would overcome them.
The present would melt away and there would be a tomorrow, not another day in which the sun rises and sets but one in which we would awake to a new day and the light of this new day would be brighter but not harsh and its sunset would bring not darkness but peace.
It didn't quite work out this way. Not for nothing is it said that it is better to travel hopefully than to arrive. I was a child of the last days of the British Raj, a college going student. My vision of Pakistan was a romantic one, we would be freed of the British and of Hindu domination.
But more than that we would be a free people and were being given, a God-given chance to start anew without the excess baggage of a tortured past, a blank canvas on which we could sketch any pictures we wanted, of children going to school, of the sick going to hospitals, of food on the table of every family, of courts where everyone was equal before the law, where the wealth and resources of the country would be used to obtain the greatest good for the greatest many.
The early demise of Mohammad Ali Jinnah meant that the country had lost its founding father, its ideological mentor, its helmsman, and it left a leadership vaccum. And claimants of every description emerged and I wrote in the preface of my book Black Moods, those who had sat out the battle were now scrambling for the booty. Evacuee property became the country's first scam, the original sin.
Carpet-bagger was a word used to describe those who had rushed to the defeated South in America's Civil War to make their fortunes in its reconstruction and in Black Moods, written in 1955, I feared that Pakistan was becoming a carpet-bagger state.
The people counted for nothing and were left fending for themselves. Along the way, we fought three wars against India and lost half the country when East Pakistan decided to go its separate way.
Yet the country has survived and indeed come to stay. This short-hand historical background is not meant to depress the present generation of young men and women who seem to be in a daze and wondering what will become of Pakistan. It is meant to give them some context and in a convoluted way offer hope.
We live in times of great peril and the world seems to be spinning out of control. Pakistan has not just become a front-line state in the war on terror but is in mortal danger of becoming a battleground.
The irony is that this is the second time that we have become a front-line state, the first against freedom fighters and the second against those very forces that have now become terrorists.
In the first instance we were left holding the baby and what we got in return was an arsenal of guns in private hands and a booming heroin culture. What we have got this time and so far is terrorism. And there is no mistaking that the danger is real.
Much of this terrorism is driven by anti-American sentiments who set out to win hearts and mind and found the best way of doing so was to launch full-scale invasions of Afghanistan and Iraq. What has been wrought and unleashed is there for all to see. These terrible events have impacted on Pakistan.
Pakistan needs to win the hearts and minds of its own people and we need to demonstrate that our own war on terror has nothing to do with promoting an American agenda. When terrorists strike, they kill innocent Pakistanis, it could be any one of us, and they damage the stability of the country.
The methods used to clamp down on terrorists may appear heavy-handed and clumsy and could even prove to be counterproductive but in the face of the gravity of the threat there can be some over-reaction.
What the government needs to do is to start communicating with the people and must first of all remove the perception that it is acting at the behest of the United States and its partner, Britain. This it can do by protesting the treatment being meted out to its citizens in those two countries.
It can demand the release of those who have been put in jail without any charges, shut out from the judicial process. Not just in Guantanamo but elsewhere as well. It must make a stronger case for its own people so that these people can have their self-respect restored and go back to their normal lives.
But most of all, it must start addressing the real problems of the people in a more serious and determined way. Last week I quoted a few lines from an article I have written for an English-language magazine.
Let me quote the entire paragraph which will give some idea of the real problems of the people on this Independence Day: "For a few, Pakistan turned out to be El Dorado, for some, they were able to get rich beyond their wildest imagination and dreams of avarice but for most there are only platitudes where there should be food on the table and only slogans where there should be schools. Jinnah's Pakistan somehow got lost."
Good governance and development
Recently, in his election campaign in Tharparkar, prime-minister designate Shaukat Aziz promised to solve the manifold problems of the poor people of the most backward area of the country.
Sindh Chief Minister Arbab Rahim has been canvassing for Mr Aziz on the grounds that the dark and difficult days for the people of Tharparkar will be over as soon as they have elected the prime minister-delegate.
The problems of the people of Tharparkar are known to all but have remained neglected despite repeated studies on the region, plans, seminars, conferences and visits by our policymakers.
What has been conspicuous by its absence throughout the years has been the will to implement and act upon these studies and deliver the benefits to the people. The almost total absence of any employment opportunities, drinking water, health and educational facilities have created sub-human living conditions, and bear testimony to a serious lack of commitment.
But for the destructive style of our governance, the poor people of Tharparkar would, by now, be actually enjoying the benefits of employment of their skilled as well as unskilled workforce, along with drinking water, health and educational facilities and an extensive communication network.
Here is a test case for Mr Aziz and Mr Rahim to demonstrate the seriousness of their commitment and do something really worthwhile to eradicate the poverty and misery that the people there have been subjected to for generations.
They can show the seriousness of their commitment by reviving a well-researched, integrated, tried and tested, investor-supported, long-term and sustainable development initiative which was meant to tackle not only the problems of the people of Tharparkar, but also open up employment and economic opportunities for the rest of the country.
Here are some basic facts to get them going. Ever since 1964, when the first feasibility study for the use of Thar coal was completed, a number of similar studies have been carried out by experts, establishing the huge abundance of good quality, easily extractable coal and other mineral deposits in Tharparkar and their potential benefits for Pakistan.
(There are over 175 billion tons of proven reserves of good quality coal spread over 9,000 square kilometres of the Thar desert. Compare the figures to India's total coal deposits of 140 billion tons.) Yet, for 40 years, these reserves remained untapped, and employment and economic opportunities was denied to the people.
Water scarcity in Thar has reduced the quality of life to almost sub-human level. Yet technology exists to produce potable water from coal at the same time the mineral is utilized for power generation. Thar coal has a very large water content (over 40 per cent of its weight) which is capable of providing an abundant water supply.
Coal has been extensively used elsewhere - in Europe, the United States, Australia, China and many other places. It was employed in the industrialization of these countries in the 19th and 20th centuries. Even today, in the 21st century, 40 per cent of the total global power generation comes from coal.
In some countries, this figure is over 60 per cent. Yet, Pakistan, sitting on one of the five largest coal deposits in the world, provides for less than a pitiable three per cent of its electricity needs from the same resource.
It is a paradox that, given this situation, successive governments in Pakistan have continued to increase the country's dependence on imported fuel oil. This policy obliges Pakistan to make huge annual payments in foreign exchange from its meagre earnings, creating jobs and profits in foreign lands while denying the same benefits to its citizens in the country.
Further, where is the wisdom in increasing the country's dependence on external energy sources over whose availability, transportation and price Pakistan has no control? Especially when a rich indigenous source of energy has been lying untapped for decades? If the surface is scratched, one can see why the Thar coal project never materialized.
After many arguments, discussions and delays, a breakthrough was finally achieved when a detailed and long-term development initiative through private foreign investment was completed for the extensive exploitation and development of Pakistan's coal reserves through its Thar coal fields.
It was envisaged that this would spearhead major economic development and employment generation activities throughout the country. With over 200,000 jobs flowing from it over the years, the project could have ranked right at the top among all investments made in Pakistan - domestic or foreign.
The project, which was widely marketed to investors from many countries, attracted $1.8 billion in direct foreign investment and included the development of coal mines, power generation of over 5,000 MWs, the construction of infrastructure including roads and railway lines and a port at Keti Bandar.
This port would also be available to handle the country's other international trade at extremely competitive rates. All funding was in the form of direct foreign investment. There was no funding required for the project - in rupee or foreign exchange - from the government of Pakistan.
The Thar coal/Keti Bandar project received the approval of all related federal and provincial authorities. The Keti Bandar port project was also cleared by the Joint Chiefs of Staff Committee headed by ACM Farooq Feroze Khan in a briefing in early 1997, and an NOC was issued.
Despite the fact that after detailed research and extensive marketing, a major labour-intensive investment project had finally materialized for one of the poorest regions of the country, work on the project was abruptly cancelled by the Nawaz Sharif government within a few months of its induction. No reason was given.
The investors (by then an Atlanta-based American company had purchased from the original investor - Hong Kong tycoon Gordon Wu - the Asian segment of his company covering investment projects in Indonesia, Thailand and Pakistan) were forced to abandon the project, close their offices and leave the country.
Since the investment project was being closed for no reason other than the insistence of the government, the latter was obliged to pay the investors $5 million of their performance guarantee deposited with the Sindh government.
The poor people of Tharparkar had lost again. Only this time, their pain and resentment was so much greater. Although the project had cleared all hurdles of scrutiny and independent assessments by two reputed investor groups from different parts of the world, who had committed nearly $2 billion in the project, it was shot down by the then government interested more in settling scores than serving the people.
If Mr Shaukat Aziz wants to help the people of Tharparkar and indeed step up economic activity in the country, he would do well to revive this important project on which so much work had already been completed rather than let another round of delaying tactics start all over again.
Foreign investors have grown so wary of our style of governance that whichever group is attracted to this project would require the government to provide credible guarantees for responsible governance under recognized provisions of international investment laws and settlement of investment disputes, in accordance with internationally recognized dispute resolution mechanisms.
Ultimately, however, all investments, and indeed every claim to "development" must translate into the peoples' well-being and prosperity. Balancing the accounting books, controlling waste and corruption, improving efficiency, curbing nepotism etc are good management practices and must be done fairly, objectively and across the board. That is good management. But that alone is not good governance.
The concept of governance is much larger and more inclusive than mere administration or management. The "good" in good governance comes from the utilitarian concept of "the greatest good of the greatest number".
In the corporate sector, good corporate governance maximizes the value for the shareholders - who are the owners of the corporation. That is the ultimate test of good corporate governance and all strategies and internal and external control factors are "good" measures only in so far as these contribute towards the ultimate objective of corporate governance i.e. increasing benefits to the shareholders.
Similarly, in public governance; sound administrative measures and management practices must contribute to good governance, as these are the means towards achieving the end - increasing the well-being and prosperity of the people.
Therefore, "governance" must be seen in the context of the benefits flowing to the governed from all these and other good management practices. No claim to good governance can be taken seriously unless it is measured on the index of the benefits and prosperity it brings to the governed - the people who are the owners of the state.
It is about time that the people got an opportunity to benefit from good governance, not in the shape of a few crumbs marketed as "development projects", but in the swift and honest implementation of the Thar coal/ Keti Bandar project.
The writer is a former federal secretary.
Email: smshah@alum.mit.edu.