| 18 October 2004 | Monday | 03 Ramazan 1425 |
Rising cement prices
German Chancellor Gerhard Schroeder has categorically rejected suggestions that his country might be considering sending troops to Iraq. This, in a small way, marks a reassertion of the principled position that Germany, France and 'old Europe' generally had adopted against the US-led attack on Iraq. In recent months, the European Union as a whole has watched with a sense of helplessness events in occupied Iraq spiralling out of control. Its intervention should count, but the Bush administration is in no mood to scale back its operations in Iraq.
It is also uncertain how much of a role the EU will be allowed in the reconstruction of Iraq: America wants its own firms to corner most of the contracts. At the time of the Iraq war, the EU's opposition, led by Germany and France, had kindled the hope in Third World countries that Europe might finally he able to emerge as a countervailing force to US domination.
The need for such a balancing force has been felt ever since the collapse of the Soviet Union, with Russia yet to overcome its economic and political problems and emerge on the international scene as a major player. The US might not have attacked Iraq as unilaterally and arrogantly as it did if the Soviet Union had still been in existence.
Unfortunately, the hopes attached to the European Union's political role have not materialized. Britain has succumbed too easily and supinely to American domination. Other European countries too are finding that ultimately many of the rest of the western world's economic and strategic interests are too closely linked with America's to permit a sustainable independent position. The post-9/11 resurgence of the right-wing in some European countries has created its own political dynamics.
The eastward expansion of Nato has brought into the fold many countries that look for guidance and protection, not to France or Germany, but to the United States. This has created contradictions within the European community that block a more unified stand on international issues. This does not mean that the EU is lily-white perfect; it has its own commercial interests where ideology or principles do not always figure very prominently.
Nevertheless, on many occasions it has represented a voice of sanity and reasoned argument in contrast to Washington's domineering airs. But the Europeans have to understand that what is happening in this region creates fears of long-term instability and upheaval. American policies that are being currently pursued are unsettling not only for Muslim countries but for the entire international order.
Perhaps the EU recognizes much more clearly than the US ever will that the single most obvious source of trouble in the Middle East is Israel, to whose oppressive colonial policies much of what we have seen in the 9/11 attacks and Afghanistan and Iraq is due. European diplomats may feel that they have no effective role to play in this regard since Israel will listen only to the US and do only America's bidding.
The inability of the so-called Quartet - which includes, besides the US, the UN, EU and Russia - to force any progress by Israel on the roadmap to peace reflects this reality. However, as an Israeli government report published on Friday itself points out, if the 25-nation European bloc manages to set aside internal differences in the coming years and forges a united foreign policy, it could cut into the influence wielded by the US.
The report worries that as the EU grows more influential, Israel could find itself more isolated and face international sanctions. Should the EU wait longer to adopt a more independent position? Even if a change of administration takes place in the US following the November elections, it is unlikely that America's Middle East policy will undergo any positive change. The EU must interpose itself now between the US and the Middle East to help in the search for political solutions to the crises created all over by the reckless use of military might and discredited imperialistic tactics.
Rising cement prices
The record growth in the cement sector during the first quarter of the current fiscal year is very encouraging. Figures released by the All Pakistan Cement Manufacturers' Association this week show that the sector posted record growth of 24 per cent in the quarter as compared to the corresponding period last year. Total sales of cement rose to over four million tons in this period, with a 70 per cent rise in exports. Most of the cement is exported to Afghanistan, where it is in great demand.
The impressive performance of this sector has led to high profits for cement companies as well as higher capacity utilization of their plants. It is estimated that plants would be running at 100 per cent capacity utilization in the next couple of months if the current trend holds.
There has also been heavy investment in this sector as more plants are being set up while the older plants are being modernized so that production can be further increased. Despite such a rosy picture in terms of production and sale, cement prices continue to be a damper for the housing industry. Prices have risen in the last quarter despite assurances by the APCMA to the contrary.
The benefit derived from economies of scale of the cement industry have not been passed on to the consumer. Over the past year, cement prices have gone up from 15 to 20 per cent per bag and there is a shortage now in some parts of the country because of smuggling. Despite several attempts by the government to bring down cement prices and ensure uninterrupted supply, this has not happened so far.
The APCMA has been side-stepping the issue of the price for some time now. Earlier this year, it had promised that prices would remain stable in the near future following a number of budgetary concessions granted to cement industry by the government. This did not happen. The APCMA had also said that prices would come down once capacity utilization at cement plants rose. What we have seen, instead, is that despite an increase in local cement production, prices have continued to rise. Cement is an important input for the housing and construction industry and a rise in its cost has a widespread impact.
In the absence of a rise in the prices of other inputs, one wonders why cement prices continue to climb. An explanation in the market is that a cartel of cement producers has been formed to hike prices for profiteering. While the Monopolies Control Authority has been investigating the matter, it has not taken any step yet to regulate prices.
The housing and construction industry continues to suffer as a result of the rise in cement prices. Many housing and construction projects have been shelved for the time being. This in turn affects the government's plans to generate employment through this sector. It is important for the government and cement manufacturers to sit down and hammer out an agreement under which cement prices can be brought down and kept at a reasonable level. If this is not done, the government's plan to alleviate poverty by generating jobs in the housing and construction sector will remain a non-starter.