Jihad and multinationals

With the rise of Islamic militancy and an increasing antagonism towards the West in many Islamic countries, questions about the future of western businesses there have assumed immense significance in western corporate circles.

Recent American incursions into Afghanistan and Iraq, and the further alienation that these policies have caused between the West and the Islamic people have only exacerbated the anxiety of global executives.

Business leaders, many of them representing corporations larger than many countries, are struggling to reconcile competing perspectives on where the Islamic world is going to go in the coming years.

On the one hand, liberalizing economies constitute profitable markets. The extremely lucrative incentives that various Third World governments are offering them for investment are also enticing.

On the other, they can feel increasing hostility, and are, therefore, reluctant to increase their investments unless the deal involves little or no exposure combined with captured rents. They want to know how pervasive and long term this hostility is, what its sources are, and above all, what to do about it.

Unfortunately for western businesses, the answers, in the medium to long-term, are not encouraging. The so-called war against terror that western governments are at present waging is likely to lead to further antagonism towards the West in Islamic markets, which, sooner or later, is likely to affect western businesses too.

Secondly, the income inequality engendered by unbridled globalization, the very process of which these businesses are a part, is also likely to further fuel the sense of deprivation that serves as an important basis for the rise of militancy.

September 11 provided a big stimulus to particular representations of the Islamic world. Western intellectuals like Samuel Huntington had already characterized the Islamic people as a separate "civilization" openly hostile towards the West. After 9/11, the media constructed Muslim people within Huntington's framework.

In the name of educating the West about Islam, the peoples of Islamic countries were represented as a coherent, ideologically motivated monolithic mass, who were anti-enlightenment. September 11 was seen as proof of the extreme tendencies that pervaded this group of people.

The extremism that these people represented was portrayed as the most regressive force in the world, impeding the progress of globalization and the spreading of western concepts of gender-equality and individual rights to these societies.

Indeed, within the West, this characterization has become so entrenched that Islamophobia has assumed a remarkable legitimacy in society. As Jeremy Sea brook recently described in the Guardian, this is the only form of prejudice to which the middle class in the UK can readily admit.

The internalization within the western people of such a discourse serves to make the actions of their leaders towards the Islamic countries more palatable to them. The Islamic people, within this discourse constitute the enemy. And at least in the short-run, the enemy must be weakened.

This particular idea has become a strong theme within American foreign policy. The following excerpt from a policy brief written by Anatol Lieven, a senior associate at the Carnegie Endowment for International Peace provides some idea of how this is likely to be accomplished.

Lieven writes, "Increasing Arab hostility and sympathy for anti-American terrorism make it even more important that the United States be in a position to exploit the deep differences between Iranians and Arabs and, more widely, between Shias and Sunnis."

He goes on to suggest, "Today, the United States needs to understand and profit from the deep hatred felt by Iranians (conservatives as much as liberals) for the Taliban and for Iraq".

Such tactics are obviously meant to create more instability within Islamic countries. While they will undoubtedly achieve their objective, such policies are not necessarily beneficial for long-term western corporate interests.

Astute business leaders value people in terms of their disposable income rather than skin colour, religious beliefs, or even political ideologies. It is in their interest to have larger middle-classes and aspiring consumers.

When and where they support this war, their thinking is often based on the erroneous assumption, propagated by their governments and much of the media, that the opposition to the West comes from a small pocket of extremists. If, somehow, we are able to root out these elements things will be well again.

This was noticeably reflected in the discussions that a group of business leaders held recently at Cambridge University's Judge Institute of Management. The purpose of the workshop was to try to come to a common understanding of Islamic extremism and the implications for western businesses.

Also participating in this workshop were "experts" on Islam, such as Karen Armstrong (the author of the best selling A History of God and more recently, Islam, A Short History) as well as other academics specializing in this field.

In terms of her insights and critical analysis, Karen Armstrong stands head and shoulders above most popular writers on the subject. Asked to open the workshop, she immediately launched an attack on the prevailing conceptions of extremism.

Rather than being a function of some inherent aspect of Islam or simply a desire to go to heaven, she argued, it derives from the sense of humiliation and economic deprivation that the Islamic people are facing the world over.

The resentment towards the West, she pointed out, is not restricted to a few 'jihadi' organizations but is widespread among the Islamic peoples, who see the West as a colonizing, imperialist force, out to destroy every vestige of the Islamic culture. The state of Israel, which meant that Palestinians lost their home, has become for Muslims a symbol of their impotence in the modern world.

Significantly, the resentment towards the West is a relatively new phenomenon. At the beginning of the 20th century, most leading Muslim intellectuals could be described as being in love with the West.

Some of them went to the extent of stating that the Europeans were better Muslims than they themselves, because their modern society had enabled them to create a fairer and more just distribution of wealth that was in line with the Islamic vision. However, the experience of the West - and the havoc its government wrought in the Middle East, especially Palestine, gradually destroyed all such conceptions.

The blatant support for Israeli brutality in Palestine, combined with the systematic plantation of puppet regimes in many Muslim countries and the merciless bombing of earlier allies like Iraq, has led to growing anger, which, in the absence of any other political ideology, has become embodied in Islamic fundamentalism.

While business leaders in the West intuitively sense that present US policies of winning hearts and minds through bombing is not quite working as it should, they do not necessarily realize why these policies are wrong. Nor do they necessarily realize the role of business in this phenomenon.

For the relatively naive managers, it is a question of cultural values. They believe that as long as their advertising respects obvious Muslim values and beliefs, they will be successfully received in these markets.

To this group, it is a matter of stamping out the jihadi organizations and "terrorists." In this, they perceive their interests to be in line with those of the Bush government.

However, the more experienced and far-sighted leaders realize that much of this fundamentalism is fuelled by the political acts of the West, in particular the heavy-handed treatment meted out by the Bush government to anyone who dares oppose its hegemony.

While the suppression of the opposition in some countries its may be in their short-term interests, in the long-term these policies are likely to backfire spectacularly. Hegemony is denying others a right to exist. It is an extremist step and begets extremism.

Sadly for these people, even if a business were to adopt the so-called ethical practices, in accordance with local culture and values, the problem of antagonism would not be solved. Given the tremendous disparity between partners, free trade is likely to result in further increasing the weaknesses of the poorer country's economy.

This, combined with the wholesale privatization advice that the multilateral agencies are forcing down the throats of these countries, is likely to leave a large part of their population exposed to destitution. These people will turn to religious ideologies (in the absence of any other) and sooner or later vent their anger on the faces of globalization: the multinational corporations.

In the short term, there are signs that like politics, markets could also come to be divided along ideological lines. While Mecca Cola and other such brands, capitalizing on the anti-imperialist sentiment have effectively failed in the market, the idea has been introduced, and lives on.

We could very well see multinationals introducing their own "Islamic" brand of products, much as Islamic finance products have been introduced or, to silence anti-globalization protesters, "fair trade" labels have been put on products.

In the longer term, the anger is likely to boil over, and become organized around the increasingly transparent relationship between deprivation, humiliation and unbridled globalization. And for the first time, religious groups are beginning to participate and provide a platform for such an organization. Indeed, while the anti-globalization protesters appear to be largely secular in the West, religious ideology provides the umbrella under which anti-globalization slogans are being raised in the developing countries such as Pakistan.

Recently, we have seen signs of the religious and the non-religious coming together in the UK, as evident in the alliance between the British Muslim Association and the Socialist Workers Party.

It should soon become clear to most western business leaders that while forcibly occupying countries like Iraq will benefit a few companies, and even fewer countries, the repercussions will be faced by all.

The spectre of Islamic fundamentalism will haunt multinationals in the host countries as well as at home. The problem is not the birth of jihadi groups who refuse to see logic, but the birth of a situation where their stance, however confused and self-contradictory, has suddenly assumed an anti-imperialist tone, resonating with the everyday experience of the masses.

The problem is economic as well as political. It is economic because globalization, in its current form, restricts the development of poor countries, and is widening the economic chasm at all levels. It is political because this economics requires an end to national sovereignty.

Globalization and sovereignty do not seem to go together. But sovereignty is a double-edged sword. On the one hand it defends the national operators against global operators and on the other it provides a mechanism whereby national resentment is confined to national governments.

The choice for the business is between short-term gains or long-term sustainability. For the competing business firms it is not possible to choose long term over short term.

Only political regulators can do that. The role of the business is to realize the importance of the long-term sustainability and pressurize the regulators for such policy regimes.

The author teaches strategy and policy at the University of Cambridge, UK.

Myth of the swing vote

For months, pundits and the press have been peddling an obviously misguided theory of the American electorate: that all the voters have chosen one side or the other and thus there are almost no swing voters left. But a funny thing has happened. Since July the presidential horse race in public polls has gone from as much as an 8-point Kerry lead to as much as a 13-point Bush lead and is back again to a close race.

The reality is that for months about a quarter of the electorate has been unsure of its choice for president, and despite the hundreds of millions of dollars of partisan advertising and rhetoric, that quarter remains in play.

The recent controversy over how many Democrats or Republicans are in public polls has obscured the fact that the largest party in America is no party - a plurality of American voters self-identify as independents, and they are the voters who will decide the election.

Why are the pundits so wrong? Because they bought into what people in both camps had a very real interest in selling. Liberals and conservatives wanted their respective candidates to believe that appealing to swing voters was ideologically weak, unprincipled and ineffective. They wanted to convince their candidates that the path to victory was to tack to the right or the left, thereby validating their own agendas on Election Day.

One result was that President Bush, who had at least run with a centrist moniker in 2000, took positions opposing popular stem cell research, pushing constitutional amendments to ban gay marriage and adopting far-out economic ideas such as cutting taxes on dividends.

After his support declined to the low 40s, Bush woke up to the reality that swing voters were in play and presented a more centrist front at the Republican convention, which featured John McCain, Arnold Schwarzenegger and Rudy Giuliani.

After winning the Democratic primaries by knocking out the more liberally positioned Howard Dean, Sen. John Kerry had a large lead and emphasized his long-standing centrist views, pointing out that he voted for welfare reform and balanced budgets despite opposition within the Democratic Party. The image of the Democratic Party soared. But after Bush changed his campaign tactics to tack back toward the centre, Kerry believed his drop in the polls could be fixed by adding more "edge" to his message. He moved to make his opposition to Bush's conduct of the war in Iraq the centrepiece of his campaign message, a message with tremendous appeal to the Democratic base but whose appeal to swing voters is uncertain.

Now there is a renewed opportunity to win back this group of voters who report that they have already definitely decided their vote, but who have repeatedly changed their minds this year.

Who are the voters swinging back and forth? They are the very ones we identified in 1996 as the most important group of swing voters: middle-aged white women. In polling we conducted for the New Democrat Network in late May, these voters were split nearly evenly between Kerry and Bush, but by September, Bush led this group by 28 percentage points.

These modern moms work, have kids and live in the suburbs. They are not concerned about party labels, Vietnam service records or the National Guard. They are voting on the basis of what they think will be best for the future of their families.

Forty-seven percent of these voters believe security is the most important issue - a reversal from late May, when 50 percent said the economy was most important and only 28 percent named security. It is not too late to turn them around again.

We might all learn a lesson from Bill Clinton in 1992. He won by making the Persian Gulf War irrelevant to the election. He focused on swing voters, with plans for welfare reform and middle-class tax cuts, and he drove the economy, not the war, as the central defining issue. In 1996 he focused on a plan to balance the budget and cruised to a landslide victory.

So what will it take to win these swing voters? A tough approach to terrorism is a prerequisite, but what will bring them back is a focus on their families, the ballooning deficits and a vision for curing the domestic ills of this country. (This is where Bush is weakest.) And above all, it will require a positive approach. These voters are looking for ideas, not insults.

With the dramatic twists and turns in the polls establishing that the swing voter is alive and well, winning this election will depend much less than people think on revving up the base and much more on who gains the confidence of these savvy independent voters. The good news for Democrats is that the latest signals from the Kerry campaign indicate that they may now be pivoting to target these voters for the homestretch. -Dawn/Washington Post

The writer, who heads a Democratic polling firm, conducted polls for President Bill Clinton's 1996 re election campaign.

Iran: unbowed by threats

The Islamic Republic of Iran has lived with the hostility of the leading world power, ever since 1979, when it overthrew the Shah, and dubbed the US as the "Great Satan." The US tried pre-emption that failed. It encouraged Saddam Hussein to attack Iran in 1980, expecting that with its internal disarray, the revolutionary regime would collapse.

However, the foreign aggression produced a closing of ranks to confront the aggressor, and consolidated the revolution, instead of undermining it. Iran continues to face internal divisions, between the conservative religious elements around Ayatollah Ali Khamenei, who enjoys the final authority as the "Rahbar" or "Supreme Guide", and the democratically elected president and parliament, who want change.

They tend to come together, whenever any foreign threat materializes. Enough of the revolutionary fervour has survived to encourage a principled stand where national dignity and survival are involved.

Over its 25-year history, the Islamic Republic of Iran has many achievements to its credit. A visit to Tehran of today highlights the progress made since 1979. From the proselytizing zeal of the first decade under Imam Khomeini, the country has matured and adopted the conduct and diplomacy of a major player with a rich historical legacy. It has been able to develop friendly relations with all countries, except the US.

Applying his doctrine of pre-emption, President Bush has maintained steady pressure on the Islamic Republic of Iran, whose humiliation of the US following the Islamic Revolution of 1979 has never been forgotten.

Bush included Iran in the list of countries described as the "axis of evil" in his State of the Union address of 2002. Guided largely by Israeli perceptions based on Iranian support to the Shia Hezbollah militia in Lebanon, the US has remained hostile to the major non-Arab power on the Gulf that not only has rich oil deposits but is also strategic any located and has a large population.

Though the advocacy of pre-emption had lost its momentum after the US got bogged down in Iraq, Libyan leader Qadhafi's decision to abandon his last symbol of defiance to the west, namely his weapons programme, together with all research facilities and documents in December 2003 boosted the morale of the neo-cons around Bush again.

Fearing that the US might indeed proceed further on its threats, Tehran tried to ward off possible pre-emption by submitting to demands for more rigorous inspections by the IAEA. Iran also provided documents that implicated Dr. A.Q. Khan that led the government of Pakistan to take action against him.

This phase of submission to western pressure lasted virtually till the middle of 2004. There were reports of feelers to the US to initiate a dialogue to end the estrangement, since Tehran recognized the need for collective action to deter terrorism.

Steps taken by the US to give the Shia majority in Iraq its proper representation, for instance by naming Ayad Alawi as interim prime minister, produced a positive response in Iran.

Furthermore, Iran disclaimed any links with Al Qaeda, and did not appear to be involved in the movement of militants into Iraq. Influential analysts in the US saw the advantages of a rapprochement, especially as the Europeans appeared to be capitalizing on their formal links with Tehran. Pro-Israel elements vetoed the idea.

As the insurgency intensified in Iraq, and even Afghanistan, mainly in response to US tolerance of Israeli atrocities against the Palestinians, Iran also felt the need to stand up, in response to public sentiment in the country.

The Iranians cannot forget the eight-year war with Saddam Hussain's Iraq from 1980 to 1988 when they lacked a deterrent, and had to suffer enormous damage and casualties.

With Israel openly advocating pre-emption, and the US engaged militarily in Iraq and Afghanistan, both neighbours, the clerics in control of the Islamic Republic feel that persisting with its nuclear programme is necessary for national morale and survival.

Iran had negotiated an agreement with Britain, France and Germany in October 2003 to restrict its uranium enrichment programme in exchange for opposition to a move by the US to raise the issue in the UN Security Council. The one-year period of the validity of that agreement is due to expire soon.

When its Governing Council considered the IAEA report based on the visits of its inspectors to nuclear sites in Iran in early September, the US tabled a resolution to take the matter to the UN Security Council, on grounds of violation of the NPT by Iran.

The Iranians pointed out that there had been no violation of the provisions of the Non-Proliferation Treaty, as Iran's nuclear programme was peaceful, and was open for inspection by the IAEA inspectors. The conducting of research to exploit uranium enrichment for power generation neither violated the NPT nor posed a security threat to any other country.

The head of IAEA stated that the time-table of inspections would be completed in three months and only then could the agency pronounce itself on whether Iran's nuclear programme was peaceful or not.

The US found itself alone in its desire to bring Iran before the Security council, and the matter would come up again towards the end of the year. The Bush administration is under pressure by the Israeli lobby as well as the neo-cons to target Iran, which has been a thorn in the flesh of the sole superpower since the Islamic Revolution ousted the Shah in 1979 moved towards recognized norms of international diplomacy. It has revived ECO, and plays an active role in the OIC. Except for the US, it has developed mutually beneficial relations with most countries.

The US hostility is based partly on its amour propre over the year long siege of the US embassy in Tehran, and partly on the anger found in Israel over the consistent support extended by Iran to the cause of Palestine.

The basic policy of Israel is that no Islamic country should acquire nuclear capability. Israel destroyed the Osirak nuclear reactor near Baghdad in 1981 by a pre-emptive strike, and may do likewise against Iran, if given the green light by Washington.

However, with its pre-emption bogged down in both Afghanistan and Iraq, US policymakers may be less keen to get involved in other countries, especially if they possess credible military deterrence.

Iran is insisting on its right to build up peaceful nuclear technology, since it is cooperating with the inspection of its facilities by IAEA inspectors. It remains to be seen whether the US accepts the advice of such leading analysts as Ray Takeyh of the Council on Foreign Relations, who wrote in the Washington Post of September 10, 2004, advocating a bilateral dialogue with Iran, instead of pre-emption, directly or through Israel.

One would have to wait for the result of the US election that tends to cause paralysis in diplomatic initiatives, unless President Bush is persuaded that an adventure in Iran would improve his chances for re-election as a war president.

Why is poverty chronic and acute?

Two points seem indisputable to me. First, the proportion of the rural population in poverty is too high, reportedly close to 40 per cent. Second, poverty in the rural areas does not seem to have strong links to agricultural growth. Agricultural growth is necessary but not sufficient for poverty reduction.

In terms of the links of agricultural growth to rural poverty, we should look at not only the rate at which the agriculture sector grows but the structure of the growth process itself: What is produced? Who produces it and at what cost to the society? And who benefits from it.

In Pakistan the weak link between agricultural growth and poverty reduction should be seen in this perspective. What is even more important is that other factors matter as much if not more.

Successive governments have either paid lip-service to these factors without implementing policies consistent with the rhetoric or used policies that have undermined the interests of the rural poor. Outcomes matter more than the claims about inputs.

Let us start at the beginning. Perhaps the most significant failure of governments has been the lack of reform in the rights to ownership and use of agricultural land.

Several important indicators clearly reflect this failure. They include (i) high concentration of land ownership, (ii) unclear, hence highly contested, land titles and messy records of ownership and tenancy contracts, (iii) weak and unprotected rights of tenancy for sharecroppers, and (v) high incidence of land fragmentation.

There is substantial evidence that these factors inhibit the growth of an efficient agricultural system and contribute to persistent poverty in rural areas. These factors, combined with perverse incentives (such as access to subsidised loans, irrigation water, fuel and machinery and tax exemption on agricultural income), have been responsible for both inefficiency and inequity in the agriculture sector and account for the high level of migration of people to urban areas to mitigate household poverty.

The history of land reform is marked first by betrayal in the early years of Pakistan: the leaders of Muslim League promised reasonably radical changes in the agrarian structure but never delivered.

They also ignored similar changes recommended by the planning commission in the first five-year plan. The land reform programmes of the Ayub regime in the early 1960s and Bhutto regime in the early 1970s were seriously flawed in design and implementation. In both cases, they were intended to serve each regime's need for political legitimacy and settling scores with the real or perceived opponents.

The issue of land reform has been off the agenda of all governments since the early 1980s, even though the World Bank has been drawing attention to it in the context of reducing rural poverty in Pakistan.

In fact, thanks to the lack of access to data on land ownership since the early 1980s, we have little knowledge about changes in the extent of land lessness and concentration of land ownership.

One of the reasons for this is simply the extent to which land records have deteriorated. I should add that the data collected every ten years through the agricultural census are not a good source of information on the incidence of land lessness and distribution of land ownership.

Numerous studies have shown that the lack of access to ownership and use of adequate agricultural land is a major source of household poverty. It is exacerbated by still a more important factor: low and uncertain return to raw labour given the low level of education or skills among the rural poor.

The demand for labour without skills is both low and unstable and the opportunity to develop new skills in the rural areas is absent, or severely limited.

There are at least two ways in which the problem of rural unemployment (both hidden and open) and low wages can be alleviated. The first way is to implement a well-designed and effective public works programme (PWP) - to maintain and improve the rural physical infrastructure - that can absorb part of the labour time of the landless poor and pay a wage level (in cash and food) that attracts the unemployed.

In several countries, the experience is that PWP, if well designed and effectively implemented on a sustained basis, can play an important role in supplementing significantly the income and consumption levels of the poor households.

In Pakistan, however, the experience of PWP - labelled as the Rural Works Programme by the Ayub regime and the People's Work Programme by the Bhutto regime - is that it was erratic and wasteful, hence its effect on employment, income and infrastructure was at best negligible.

The second and more important way, with long-term consequences for poverty reduction, is to build human capital in the rural areas through increased literacy among adults and education among children of both sexes. So far public policy has not focused on broadening and deepening of education that integrates literacy and technical skills.

This is well reflected by the low level of adult literacy, particularly among women, low rate of school enrolment, high rate of school dropout, lop-sided structure of rural education, and poor quality of skills acquired by those who go to school.

Public investment has been low and badly managed. Numerous studies have shown that mass literacy and basic education are valuable equally to develop an efficient economic system and enhance the quality of life of people.

A major incentive for making education relevant and effective in the rural areas is to reduce its cost to parents: this should be done by integrating basic nutrition and health care (immunisation, etc.) with schooling for children from the age of 5 to 16 years.

Experience elsewhere shows that it works well for building human capital since it focuses simultaneously on basic health and education: the former increases the gain from the latter. Why has this not been tried in rural schools in Pakistan?

There is a popular misconception that a major cause of persistent and high level of rural poverty is the large family size or high rate of growth of population. Numerous studies have shown that the link is from poverty to family size and not the other way.

Parents in poverty with almost no other asset than the raw labour of the family - each mouth has two hands - have preference for children, particularly male children, to supplement their current income and to insure income support in the old age.

If the poor can acquire or build other assets-like land and financial and human capital-that reduce their poverty or improve the quality of life, their preference will shift from the number to quality of children. This shift comes more quickly in those families in which females have had access to basic health care and education.

In Pakistan, unlike their counterparts in urban areas, the rural poor have had no social safety net except the informal and individual charity that tends to expose them to humiliation and indignity. They have never received subsidised food or fuel through the public sector.

Similarly, they have so far received little if any attention by the burgeoning not-for-profit sector. The zakat and ushr scheme, first introduced in the 1980s, and similar welfare programmes initiated by governments since the mid-1990s, seem to have excluded the rural poor.

Their presence in the urban areas has reportedly made no more than a marginal impact on the lives of the poor. Successive governments have failed to provide some form of safety net to the rural poor.

A well-targeted programme of food vouchers, cash transfers and meals in schools should and can be designed and implemented through the voluntarily constituted and participatory (rural) community organizations (COs). This brings me to the role of participatory organizations of the poor in rural areas.

The two most important characteristics of poverty are deprivation and powerlessness that tend to interact and reinforce each other. The rural poor have little if any influence on their environment and remain dependent largely on the moods of nature, landlords, tribal leaders, village chiefs, and the state functionaries (police in particular).

They serve as vote banks in the elections of their so-called leaders and as passive respondents to whoever claims to possess the coercive machinery of the state. They do not participate in decisions that affect their daily life.

The experience in Pakistan is that, no matter what name was given to the state-sponsored experiments in rural development, the poor have stayed at the margin at best: the local elite and state functionaries have been the designers, implementers and major beneficiaries of all projects and programmes.

The much touted devolution plan seems to have made no difference in the scheme of things for the rural poor in terms of the choice of leaders and extent of participation in the design and implementation of projects.

Good governance means that the governed have the right and responsibility to participate in the decisions that affect their daily life and those who govern (and their agents) are accountable to the constituents.

In this context, the experience of the rural support programmes (RSPs) in Pakistan since the 1980s is both important and relevant. It shows that the participatory COs, formed by the rural people themselves, can be an effective vehicle to reach the rural poor and allow them the opportunity to make decisions that benefit the individuals and community alike.

These COs can be used as the basic institutional entity to enable the rural poor to harness their own resources and claim from the rest of society, through the private and public sectors, their fair share of resources, infrastructure, capital, and much else.

People's participation in the COs facilitates their sense of ownership of and responsibilities for the infrastructure and services, hence reduces the cost of construction and maintenance and improves the quality. More importantly it assures that the access to resources, infrastructure, capital, and social services is available in an equitable manner at the community level.