| 07 December 2004 | Tuesday | 24 Shawwal 1425 |
Ukraine's orange revolution
Revisiting the past
The world moans as Iraq bleeds
How is Pakistan likely to fare in a world free of quotas on textiles and clothing exports? To answer this question we should first ask four other questions. What has been happening to global trade in these products in the last couple of decades? How has Pakistan performed in these areas during the same period? What opportunities are available to the country as the world moves towards a quota free regime? And, what policies should the government adopt in order to maximize benefits for Pakistan?
Global trade in the textile and clothing sector has undergone major structural changes in the last decade or two. There was an uneven increase in exports of the two main items produced by the industry. While the value of textile exports increased at the annual rate of 5.3 per cent in the 1980-2000 period, that of apparel grew by an incredible 8.1 per cent.
Most of the restructuring took place in the five-year period between 1985 and 1990 when the export of textiles increased by 15 per cent a year and that of apparel by 17 per cent.
That was the time when the apparel industry began to globalize with several large buyers shopping around the world for the cheapest source of supply they could find within the quotas available to them.
It was during this period that the clothing industry established itself in such non-traditional places as Bangladesh, Mauritius and the Caribbean. In 2000, world trade in textile and apparel amounted to an estimated $356 billion.
Textile and clothing exports accounted for 2.5 per cent of the total world trade and 3.4 per cent of the world trade in merchandise. In keeping with past trends, it is safe to assume that the trade in these products would grow at rates higher than the increase in overall trade.
And, while the rich countries will continue to be the major consumers of these products, several parts of the developing world will also become significant consumers. This will be the case particularly in the rapidly growing countries of East Asia.
There are some distinct trends within this trade. The products coming out of this industry can be divided into three broad categories: textile fibres, textile yarn and fabrics, and clothing and apparel.
Textile fibres barely accounted for six per cent of world imports of the products of this sector; textile yarn and fabrics accounted for another 39 per cent. The remaining 55 per cent was made-up apparel and garments.
The developing world holds a natural advantage in the production of these products since it produces the bulk of the world's output of cotton - the most important raw material for this industry - and has an abundant supply of cheap labour to work in an activity many components of which are labour-intensive.
And yet, developing countries account for only 30 per cent of the total trade of this sector. With the end of the MFA regime the share of the developing world is bound to increase.
Within the developing world, the sources of supply have changed quite significantly as wages have increased in several countries. Using $1 billion worth of exports as a threshold for defining major suppliers in 1980 only China, Honk Kong, South Korea and Taiwan made it to the list.
In other words, textile and clothing industry was concentrated in the countries in East Asia. This pattern of supply changed in the 1980s as deep structural transformation occurred in several East Asian economies.
By 1990, Indonesia, Malaysia, Thailand, India and Pakistan had entered the league of major exporters. By 2000, there was further expansion in the major league as the Philippines, Vietnam, Bangladesh and Sri Lanka also emerged as major suppliers.
According to some estimates, over one-half of production capacity in the apparel industry moved from rich countries to those in the developing world. This shift was the consequence of two factors one of which was the distortions introduced by the adoption of restrictive trade practices under a regime known as the Multi-Fibre Agreement, or MFA. The other was "globalization" which in the context of the textile and apparel industry meant the slicing up of the production chain.
This provided an opportunity for developing countries to specialize in the labour-intensive stages of the manufacturing process. Since the apparel-manufacturing component of the industry is considerably labour intensive, it is in this part of the industry that the developing world has performed well.
The remarkable success of Bangladesh, Cambodia, Mauritius, Sri Lanka and Vietnam as garment producers and exporters is one indication of the way the industry has restructured on the basis of shifting comparative advantage.
Textile is Pakistan's oldest industry. Investment in it began after the first trade war with India that began in 1948 and resulted in the total cessation of all textile imports from the neighbouring country.
Pakistan had depended on Indian supplies; with the trade war raging with India, the country quickened the pace of industrial development particularly in textiles. Initially, Pakistan concentrated on cotton spinning with the yarn manufactured by the new industry used mostly by small looms that produced low quality fabrics.
Weaving came afterwards as did refining and finishing. Garment and apparel manufacture came even later.Textile policy during the period of Ayub Khan determined the structure of the industry for decades to come.
In order to spread the ownership of the industry as broadly as possible, the government issued licences for establishing spinning units with only 12,500 spindles. This was well below the economies of scale even at that time.
With the spinning industry segmented in such small units it took time before scale economies could be developed and the industry could get vertically integrated. This began to change as the government eased its licensing policy for the establishment of new units and expansion of the existing ones.
At this time the sector comprises most activities associated with the industry. These include spinning, weaving, processing and finishing, knitted fabrics and clothing, woven garments, and woollen spinning and weaving and garments.
Textile enterprises include both vertically integrated units, large concerns dealing in exclusively knitting and woven garments, and small factories involved in finishing dyeing and knit wear exports.
Textile is the largest component of the manufacturing sector of Pakistan. In 2000, it accounted for 40 per cent of direct employment, 30 per cent value-added by the manufacturing sector and 60 per cent of the total merchandise exports.
The country's textile and apparel exports in 2001 comprised cotton yarn, fabrics, ready-made garments, and textile made-ups. Fabrics exported by Pakistan include, in order of importance, cotton fabrics, knitwear (hosiery), art silk and synthetics and tents and canvas.
Made-up textiles include bed ware, linen, and towels. Pakistan is not a major exporter of garments and apparel. Its relatively high-value exports are mostly made-up textiles although the share of garments has been increasing steadily. Made-ups and apparel accounted for slightly more than half of the country's total exports.
Pakistan's textile and clothing exports are highly concentrated in terms of market destination. The United States and the European Union account for more than 70 per cent of the total.
Some changes are occurring as exporters have begun to penetrate such markets as South Africa, Turkey and Mexico. The last market is particularly attractive since Mexico's membership in the North America Free Trade Area (Nafta) allows exporters indirect access to the US on preferable tariff terms.
In anticipation of the end of the MFA regime, Pakistan's textile industry has made a significant amount of investment in modernizing its plants. In fact much of the private investment in the last five years was accounted for by textiles. Once the dust settles down following the end of the MFA, the textile producers will discover whether they have invested in the right sub-sectors.
At this time it appears that a major shift will not occur in the sources of apparel since some of the countries that currently dominate this part of global trade will continue to benefit from lower tariffs in the importing countries even after the end of the quota regime.
The end of MFA does not mean that all textile and clothing exporters will be playing on a level field; some of the exporters will continue to enjoy tariff preferences. These include Bangladesh and a number of poor countries in Africa and the Caribbean.
In the light of this, it would be prudent for producers in Pakistan to concentrate their attention on industrial fabrics. The short staple cotton grown in most parts of Pakistan is suitable for these products; the demand for these products is also increasing rapidly as new technology and manufacturing practices increases the popularity of cotton fabrics for automobile and aircraft seats, drapery and household furniture. Also, these lines of product don't face tariff discrimination that will continue to affect the trade in garments.
There has been a reasonable amount of activity in Islamabad in recent years as policymakers have begun to address some of the problems faced by the textile industry. Four areas are receiving the attention of policymakers. One, the government is working on establishing a regulatory system that would require standardization of cotton for both domestic and foreign markets.
This should help to improve the reputation of Pakistan's cotton exports for both quality and consistency. Two, the government has allowed the import of superior grade cotton that would help add value to the finished products produced by the domestic industry.
Third, the government no longer requires permission for setting up new enterprises, shifting the burden of investment decisions on to the shoulders of the private sector.
This reverses the policy bias developed during the period of Ayub Khan and preserved for a long time even after his departure. Four, there is now greater recognition that exporters need financial support from the banking sector. The setting up of the Pakistan Export Finance Guarantee Agency covers a gap that has existed for a long time.
One troubling aspect of the textile industry in Pakistan is the lack of interest by foreign companies in the country. With the exception of China, no major cotton exporter has developed a presence in the world market without the active involvement of transnational corporations.
Lack of interest in Pakistan persists in spite of the fact that Pakistan has a more open investment regime in South Asia than most other countries in the region. According to the Asian Development Bank's index of openness to foreign direct investment (FDI), Pakistan scores 2.0 compared to 3.0 for the rest of South Asia.
A lower score indicates more openness. It is obvious that the perception that Islamic extremism has taken hold of Pakistan has taken a toll in terms of scaring away foreign investors from a sector in which the country has a clear comparative advantage. Getting rid of that perception therefore has to be high government priority.
Ukraine's orange revolution
If he had a face to lose, Vladimir Putin, that Darth Vader of the post-Soviet empire, has lost it over Ukraine. Having congratulated Viktor Yanukovich, the Ukrainian prime minister, on his "victory" two weeks ago, Putin has now conceded that the vote was flawed and that a recount should be held quickly, on the opposition's terms. If this is the "soft imperialism" Putin is accused of, it is very soft indeed.
Moscow's weakness could not be in sharper contrast to Washington's ability to project its power and its proxies into the post-Soviet world. Every central Asian regime must now be wondering whether the tactic of parallel counts in a dodgy election will be turned on them if they fail to toe the line.
Ukraine's orange revolutionaries are making large claims about the victory they achieved recently when the supreme court annulled the presidential run-off. Viktor Yushchenko declares that Ukrainians have emerged as citizens of a western nation.
But take the tone of moral righteousness out of the great Ukrainian debate and Yushchenko's democrats will find their path blocked in two directions - westward and eastward. The orange revolutionaries have only to march a few kilometres westward from Lviv before they hit a 3m-high electrified fence fortified by watchtowers.
The barrier running along Poland's borders with Belarus and Ukraine was originally erected in Soviet times, but it has been enthusiastically reinstated by the EU, the very author of an enlarged Europe that now professes to run to Kiev's aid.
The Poles shuddered when ordered by Brussels to re-establish a new line of division across eastern Europe. They were especially sensitive to shoring up the Ukrainian border where the cauldron of the Second World War is still warm.
The idea that Europe, in its current xenophobic state, will embrace 48 million Ukrainians on an average salary that makes Romanians rich by comparison, is an absurd illusion.
It may give an inner glow to those who believe that Europe's power lies in its ability to radiate democracy to its darker, outer fringes. But the hope that the union will be in any hurry to abandon those watchtowers would be a serious mistake for the fledgling citizens of a free Ukraine.
The second barrier facing them lies to the east and south. There are more than 10 million Russian-speaking Ukrainians here in an industrial belt that produces 80 per cent of the country's national income. The exports from the Donbass coal mines, steel mills and factories go northward and eastward, not westward.
These 10 million Ukrainians may be just as fed up as Kiev and Lviv are with the post-Soviet oligarchs and with the corrupt semi-authoritarian regime of Leonid Kuchma, the outgoing president.
They may have groaned at Putin's cack-handed appearances on the campaign trail and the blatant attempts to fix the vote for Yanukovich in the east (as also certainly happened in the west for Yushchenko).
But are 10 million people who did not vote Yushchenko all to be dismissed as latter day Soviet clones? Do they only jerk into life when Putin and the revamped KGB press the remote control? What do they want? How do they think they are going to get it? Virtually no one has bothered to find out.
The entire western media coverage of the Ukrainian upheaval has been limited to Kiev. There have been few if any camera crews in the cities of Kharkov, Donetsk, Dnepropetrovsk. These are streets through which western champions of the well-funded orange revolution should walk before declaring Yushchenko and his friends tribunes of freedom.
There is a faultline running through Ukraine that is a product of its history and people. To talk about the history of Ukraine as simply one of Russian occupation is to disenfranchise the voice and identity of a large chunk of its population.
If you are not a Uniate Catholic from western Ukraine, you are likely to be Russian Orthodox from the east or south. Remember that Kiev was a Russian city - the Orthodox church traces its roots to the baptism of Kiev in 988 - before Moscow was even thought of.
If Ukraine's regional polarization continues as a result of the political crisis, the future for Ukraine does not look bright or orange at all. One model for what could happen in Ukraine is Moldova, Europe's poorest state on Ukraine's south-western border.
Two regimes - both now communist, but one facing westward to Romania and the other facing eastward to Russia - fought a bitter if brief war 12 years ago. The Romanian-speaking Moldova is largely a rural economy.
The Russian-speaking Transdniestr is an industrialized enclave. Twelve years on, two parts of a riven state are still staring sullenly at each other across a river, defying every conceivable formula for power sharing.
This is not a path that Ukraine wants to travel. If Yushchenko's revolution is to work, it will have to be one that works in all parts of Ukraine. Only by running Ukraine as a multi-ethnic state facing both east and west does it stand a chance of becoming a real democracy.
But if the inheritors of the post-Soviet quagmire are using popular frustration as a cover for ethnic revenge, the fruits of this revolution will be sour indeed. - Dawn/Guardian Service
Revisiting the past
I got an e-mail from someone in London who said that he was writing a dissertation or research paper on the political history of Pakistan and wanted to know where he could get a copy of my book Home to Pakistan.
I was a little surprise because it is not a political book and is autobiographical and deals with Pakistan in the 1950s and the start and progress of my career.
I had written the book one chapter at a time and had been involved in the final revision but I had not read the book as a book. I decided to read it. When I was writing it, I tried to make sure that there would be no benefit of hindsight and my observations were here and now as I adjusted to a new country. I have never been a political person but I was a journalist and thus not totally blind or insensitive to what was happening.
In Home to Pakistan there are some throw-away comments about what was happening on the political front. It is quite remarkable how little has changed. Here are some of my observations and they relate to the early 1950s.
The first of these: "Already it had become apparent that there was going to be large element of hit and miss in the political system and nexus between the feudals and the bureaucrats was consolidating. There was an assembly of sorts but it had not been chosen through a general elections.
"There is an appearance of government and there is the reality of where real power lies. The people had no say on either count and that would be pattern for the foreseeable future, and possibly beyond it, one could have got disillusioned very quickly.
It did not take long to discover that there seemed to be no common interests beyond an emotionalism that we mistook for nationalism, a display of indignation when one received a letter mis addressed as Karachi, India and the invocation of the defiance that "Pakistan Has Come To Say" which our political leaders (loosely such as they were) would declare, as if to allay their own doubts.
The impression one would get was that every Pakistani (who mattered) was a Pakistani for his own reasons". As I read on I came upon this paragraph: "Pakistan had neither been stillborn nor had evaporated at the first touch of reality. It had, as the cliche went, survived and come to stay.
As a country, it was a geographical oddity, two wings separated by over a thousand miles of a distinctly hostile country. Hundreds of thousands of refugees streamed in imposing an intolerable burden on a resource-strapped country.
"No other country had ever come into under such adverse conditions and against such heavy odds. Clearly Pakistan needed strong leadership but there is the tendency to confuse strong with autocratic and despotic and one could sense a kind of suffocation and the mind was not without fear. It was hard to put a finger on it but just as one feels an unease, a floating anxiety for no reasons at all.
"There was this foreboding that while Pakistan was independent, it was not free. There was a chill of intolerance in the air. I had serious doubts that we would become an open society and that democracy would take root.
To be sure, there would be assemblies and elections but already an elitist class was beginning to emerge with all the airs of masters and it seemed a settle issue that some were born to rule and the many were born to be ruled ".
This might suggest some despondency. On the contrary, there was much optimism and some allowance had to be made for birth-pangs and my own personal life, young as I was then brimmed with optimism.
In an Asian Conference that had been held in New Delhi in 1947, Mrs. Sarojini Naidu (the nightingale of India) had declared: 'We shall not cry for the moon but pluck it from the skies and wear it upon the diadems of Asia's freedom'. Heady stuff but inspiring and uplifting but poor lady, it was moonshine, the home-grown brew which may intoxicate but can also make one blind.
Then in Home to Pakistan, I come to a defining moment in the political life of this country and which was to serve as a pattern and whose repercussions and ramifications have stayed with us, like malaria in our blood-stream: "A country too comes to a fork and must decide which road to take.
But once embarked, there is no turning back. On October 24, 1954, Ghulam Muhammad, the Governor General issued a proclamation dissolving the Constituent Assembly. The wording of the proclamation would, in years to come, become a familiar text, as it would be used, almost verbatim by others, who would seize power."
But even in October 1954, when it can be said that we were politically innocent and, therefore, likely to be gullible, Ghulam Muhammad's proclamation seemed to be an exercise in doublespeak.
It read: "The Governor General having considered the political crisis with which the country is faced, has with deep regret come to the conclusion that the constitution has broken down.
He, therefore, has decided to declare a state of emergency throughout Pakistan. The Constituent Assembly as presently constituted has lost the confidence of the people and can no longer function".
It promised that election would be held as soon as possible and until then the administration of the government would be carried out by a reconstituted cabinet. The reconstituted cabinet, including among others, Chaudhry Muhammad Ali, Major General Iskandar Mirza, M. A. H. Isphani, Dr. Khan Sahib, and surprise, surprise General Muhammad Ayub Khan who became Defence Minister.
It was, by any definition, a coup d'etat, a civilian one and was seen as a conspiracy hatched by the civil servants, the first of its kind in the annals of modern government.
The speaker of the Constituent Assembly, Maulvi Tamizuddin Khan, challenged the Governor General's action in the Chief Court of Sindh. I will write later on this case and its fate in the Supreme Court but almost historians and the students of politics see this action of Ghulam Muhammad as Pakistan taking the wrong road when it came to a fork.
It marked the end of Quaid-i-Azam's Pakistan, which was to have been founded on the rule of Law. Yeats had written of the Easter Uprising in Ireland that "a terrible beauty is born".
No such things could be said of this civilian coup except that the door had been opened wide for interlopers and usurpers. The public, as such, seemed unconcerned. It was another day on the footpath".
The political process follows its course and dies. Then it re-incarnates itself. People ask me why I don't write on present day politics. I tell them that I have already done so, many times. The past has never left us and is, after all, not another country!
The world moans as Iraq bleeds
On his victory in the Presidential election Bush told a news conference, "I earned capital in the campaign, political capital, and now intend to spend it." Would he use this political capital to solve problems by political means? Would he try to find a political way? When he proudly describes himself as a "War President" one begins to think that it is military means rather than political that Bush intends to use.
Almost immediately after George W. Bush got re-elected, the order was given to the American forces in Iraq to attack Fallujah. Around 20,000 US troops along with a token number of Iraqi soldiers launched a full-scale military offensive, "Operation Phantom Fury".
Weeks ahead of the invasion, the city was flattened by "Daisy Cutters" and other heavy bombs weighing between 500 kg and 1,000 kg. The fear that the US will use increasing force became a reality. The attack on Fallujah was perhaps the most concentrated military action against a populated area in recent times.
The American military officials compare the attack on Fallujah with the American capture of the Vietnam city of Hue in the late 1960s. Sgt. Maj. Carton W. Kent, the top enlisted Marine in Iraq, told troops: "You are all in the process of making history".
Kent told some 2,500 marines, "this is another Hue City in the making". The Americans may have won the battle but are likely to lose the war. Is it surprising that a significant section of the international community is characterizing the American attack as a "war crime and a crime against humanity."
Both the US and the interim Iraqi government are not signatories to the Statute of International Criminal Court. The United Nations Charter permits the use of armed forces only in self-defence, if authorized by the UN Security Council. Iraq was never a threat to the United States.
UN Secretary General Kofi Annan had warned the Bush administration about the dangers of launching a military assault on Fallujah. He had said in a letter addressed to President Bush and British Premier Tony Blair that a full-scale attack on the city would fuel further divisions and instability in Iraq, and undermine the electoral process.
He had emphasized that an attack would cause high civilian casualties and further alienate the Iraqi people from the interim administration in Baghdad, making the prospects for smooth election in January even more difficult.
The Bush government, however, continues to insist that the destruction of the city and killing of the insurgents is a necessary step for holding of fair and free elections in Iraq and the strengthening of democracy.
The United States has decided to expand its military force in Iraq to the highest level of the war - even higher than during the initial invasion in March 2003. United States military planners, obviously, did not foresee the strength and resilience of the insurgency when the Saddam government was toppled in April 2003.
According to Brig. Gen. David Rodriguez, deputy operations director of the staff, the American force will expand from 1,38,000 troops to 1,50,000. The previous high for the US force in Iraq was 1,48,000 on May 1, 2003, when President Bush declared that major combat operations were over, and most soldiers thought the war had been won.
The moves for an increase in forces are in line with expectations - a combination of holding some troops in Iraq longer than scheduled and sending some fresh reinforcement.
As far as establishing and strengthening democracy is concerned, a BBC survey suggest that in battle for world public opinion, the US-led coalition has done a fairly poor job of convincing the world its effort in Iraq for a new healthy democracy are working.
A wave of insurgent violence continues to sweep Iraq ahead of the polls with many cities under curfew and a state of emergency declared in much of the country. It looks as if Fallujah was a necessary but not a final operation in the American plan to establish control over the whole of the country.
So far the civilian death toll in Iraq is reported to be 1,00,000 or more since the 2003 invasion. More than half of these deaths caused by the occupation forces were reportedly women and children.
The capture of Fallujah has not broken the insurgents' will to fight. Instead of ending bloodshed the killings all around have increased. The Iraqi resistance is only gaining strength. After Fallujah there has also been a lot of trouble in the northern city of Mosul where a proper operation had to be carried out by coalition forces.
As a result, US forces in Iraq are now involved in a bitter and seemingly interminable conflict. The armed resistance in Iraq is based on the belief that resistance against the occupation troops and their Iraqi allies was a legitimate right.
Reaction to the re-elected US President George Bush has ranged from caustic to cautious. There has been no rejoicing. The anti-American mood is not a recent phenomenon. It did not start after 9/11. There seems to be little chance that this will change as long as Bush is there, unless the policy to use military might undergoes a paradigm change.
The appointment of Condoleezza Rice as secretary of state brings no hope of respite to the suffering and plight of the Muslims. She is considered as a very tough and inflexible hardliner as compared to her predecessor Colin Powell.
One hopes, however, that Bush does not opt for more military might and intervention and bullying abroad. Will the Bush government stop giving open licence to kill and oppress the Palestinian people? Will they try and find a peaceful, political way to establish a Palestinian State? President Musharraf has quite rightly emphasized the need for the settlement of Palestine and Kashmir disputes, for that is the only way to address the root causes of strife and terror which make the world an unsafe and dangerous place to live in. The resolution of these disputes in a meaningful, just and equitable way will usher in an era of peace and harmony in the World.
As far as Iraq is concerned, there is an urgent need to consider seriously the recommendations made by a recent international conference held at Sharm-el-Shaikh in Egypt. This conference was attended by six neighbours of Iraq, G8, European Union and a representative of the Arab league.
Kofi Annan, secretary-general of the UN was also present. Apart from other recommendations, the importance of a UN role in holding elections in Iraq and preparation of the constitution was emphasized.
Way back in 1920, Fallujah was a symbol of Iraqi opposition to British rule. In August 1920, T.E. Laurence wrote in Sunday Times "The people of England have been led in Mesopotamia into a trap from which it will be hard to escape with dignity and honour.
They have been tricked into it by a steady withholding of information. The Baghdad communiques are belated, insincere, incomplete. Things have been far worse than we have been told, our administration more bloody and inefficient than the public knows."
The writer is a retired major general.