Reducing inequalities

Recent research, not just in Pakistan but in many other countries has highlighted the importance of reducing inequality as a critical pre-requisite for alleviating poverty. The process of economic development in mixed economies invariably creates a certain degree of inequality, but the extent to which such inequality leads to serious social and political consequences depends not only on the initial distribution of land and other productive assets, but also on the nature and direction of fiscal and other policies that affect income distribution over time.

In Pakistan, the initial pattern of land distribution was very skewed, largely due to the allocation of large tracts of newly irrigated lands to loyal nawabs, sardars, khans and jagirdars by the British in pre-partition India. The land reforms carried out by Ayub Khan in the 1960s and then Zulfikar Ali Bhutto in the 1970s did resume about 10 to 15 per cent of the total land area for allotment to landless tenants, but that did not reduce the feudal stranglehold on the economic and political levers of the rural economy.

The pattern of income distribution is even worse in the industrial sector. The benefits of high growth of the 1960s were not distributed evenly and led to the large scale concentration of incomes, epitomized by the new infamous finding that 22 families controlled two-thirds of the country's industrial assets. In the 1970s, the growth of inequality was moderated to some extent, largely by the inflow of remittances from the Middle East, but the fiscal and other economic policies followed in the past two decades have accentuated inequalities in the urban sector.

The inequality in incomes and consumption can be redressed gradually, partly through fiscal policies and partly by diverting a larger share of credit and public services in education, health and housing to low income households, but this has not happened. The present structure of the Pakistan economy, as a result of the initial pattern of land distribution and compounded by the reckless pursuit of market-oriented policies in the recent past, is now so skewed that any growth in per capita incomes automatically leads to greater inequality.

Out of every increment of one rupee in the GDP, a recent SPDC study shows, 48 paisa accrues to the richest 20 per cent of the population and only seven per cent to the poorest 20 per cent. In the face of such glaring inequalities in incomes and in income-earning opportunities, a higher rate of economic growth, though necessary, will not be sufficient to reduce poverty in Pakistan.

The poverty reduction strategy formulated by Pakistan, for the period 2001-2007, is in fact focused on growth and macro-economic stability and does not include any policies or programmes to reduce inequality and promote greater equity in providing economic opportunities to the poor. Even the acceleration of economic growth is perceived largely through the prism of stabilization measures.

Seven out of 11 components of the first pillar of the PRSP (accelerating economic growth) correspond directly with the main elements of the IMF's structural adjustment programme and assume that macro-economic stability will automatically lead to accelerated growth, and that will somehow trickle down and reduce poverty and unemployment. But this is not likely to happen because the proportional benefits of growth for the poor will continue to be less than those that accrue to the rich.

The other three pillars of the PRSP (i) improved governance and devolution, (ii) investment in human capital and (iii) targeting the poor and the vulnerable, are statements of intent and not blueprints for policies or budgetary allocations. For example, despite the emphasis on education in the text, public spending on education, even if targets are realized, will increase from 2.2 per cent in 2003-2004 to only 2.5 per cent of the GDP by 2007-2008 (compared to Iran's 4.4 per cent, India's 4.1 per cent, and Nepal's 3.7 per cent and the Unesco target of 4 per cent).

Similarly the expenditure on health is projected to rise to only one per cent of the GDP "in the long run". The average for other developing countries is already 2 per cent and even some of the least developed countries like Nepal and Bangladesh are spending 1.6 and 1.5 per cent of the GDP respectively on health services.

Micro-credit is a very effective instrument of providing self-employment opportunities to the poor. Pakistan has two complementary micro-credit programmes through the Pakistan Poverty Alleviation Fund (PPAF) and the Khushali Bank (KB) but their scale of operation is relatively limited. PPAF has disbursed Rs4 billion in the past five years and KB Rs3 billion in three years.

Thus the annual rate of disbursement is Rs1.8 billion, reaching approximately 100,000 beneficiaries each year. That means only one per cent of the 10 million households categorized as extremely poor in Pakistan. A one-time loan of Rs20 or 30 thousand can provide only temporary relief but cannot lift a poor household out of the trap of chronic poverty.

Similarly, if all the new employment opportunities created through the public sector development projects are aggregated, they would not exceed 200,000 or two per cent of the target group. The number of unemployed has already increased from one million to four million in the past 10 years. The projected employment of 200,000, even if achieved, will re-employ only about five per cent of the pool of unemployed for a limited period.

The real challenge facing Pakistan is in scaling up useful initiatives like micro-credit or employment intensive infrastructure projects, and at the same time, evolving a series of policies that can reduce inequality and empower the poor to claim their due share in national resources.

In drawing up an alternative policy framework, it will be useful to look across our eastern borders where the platform of 'Shining India' supported by a growth of over six per cent over six years was not sufficient to guarantee the BJP's success in the 2004 elections. Congress which won the election largely by winning the votes of the rural poor, has now formulated several pro-poor policies and programmes including a Guaranteed Employment Programme, under which Rs45 billion (or $1 billion) will be allocated every year through 200,000 village level organizations (panchayats) for local infrastructure.

In this way substantial funds will flow regularly and directly to the poor and provide additional employment opportunities for 7.5 million households at a cost of Rs6000 per household. At the same time, elected institutions at the village level will be able to strengthen their capacity to prepare and implement projects and determine their priorities.

In Pakistan, on the other hand, the decentralization of development functions to district governments is not accompanied by the social mobilization of the poor or a substantial transfer of resources to the grassroots level. As a result only a small proportion of development benefits will accrue to the poor.

The in-depth analysis of the determinants of inequality and options for poverty reduction can lead to an alternative framework for poverty reduction with four main pillars: a) Accepting the principle of "right to food" for everyone; b) A pro-poor growth strategy with a focus on agriculture and other sectors which directly benefit the poor; c) Reducing inequality through redistribution of incomes and assets on a substantial scale; d) Sustained human and social development of the poor segments of the population.

The principle that everyone has a right to adequate food was formally adopted at the 1966 World Food Summit in 1996. An intergovernmental group set up by the FAO has adopted in September 2004, "voluntary guidelines to support the progressive realization of the Right to adequate food in the context of National Food Security."

Pakistan has to carefully study the conceptual, legal and political issues in implementing the principle of right to food through a comprehensive strategy for food security with a focus on three main elements: direct impact of agricultural growth on real farm incomes, off-farm employment opportunities and a policy of stable food prices.

The concept of pro-poor growth is no longer confined to academic discussions but has moved to a full-fledged strategy under which a favourable strategic framework consisting of pro-poor policies and pro-poor support organizations are given operational meaning through strategic interventions at national, state and local levels to ensure the participation and empowerment of the poor.

Under such a strategy, the process of growth gives special attention to sub-sectors on which the poor depend for their livelihood, namely crop agriculture, livestock, fisheries, forestry and small-scale rural industries. The infrastructure necessary for accelerated development is developed largely through a decentralized governing structure, but decentralization is accompanied by social mobilization of the poor, to ensure that decentralization does not end up creating opportunities for vested interests to monopolize power and resources for their own advantage.

Similarly, macro-economic stability, so necessary for accelerated development is achieved by cutting out non-essential current expenditures and not by reducing development expenditures that lead to employment and other benefits for the poor. The temptation to raise the cost of utilities and services for the poor is also curbed to the maximum possible extent.

(To be concluded)

The writer is vice-chancellor of Beaconhouse National University, Lahore.

Holding leaders to account

President Musharraf says he always acts in public interest. But what is in best public interest only he determines. Similar is the contention of the sardars of Balochistan in their current row with the federal government over the status and rights of the province.

While the positions of the government and the sardars are categorical, doubts characterize public opinion. The president's assertion is backed by his own sense of self-righteousness and military might and that of the sardars by their hereditary influence and large fiefs. No one is speaking for the people nor a mechanism exists to ascertain their wishes.

It is a sad and shameful failure of Pakistan's politics that in over half a century it has not been able to evolve a credible multi-party political system. The parties arise, split and fade away and new ones are born without offering clear-cut alternatives. The people have been voting for one party or another without knowing what it stands for nor their votes bring about any change in public policy or priorities.

The present era is one of coalitions formed to govern and alliances forged to oppose them. Both remain weak and loose because the driving force behind them is not an agreed agenda for public weal but factional or personal advancement. Even in single party governments of the decade of nineties the dominant force was the personality and will of the leader rather than the organization and manifesto of the party.

A common feature of Pakistan's politics through all its phases - democratic, dictatorial or half-way between the two - has been one towering figure and many weak parties marked by flair for the spectacular rather than a low-key but a strong and consistent commitment to public service. This ethos has manifested itself in the nuclear explosion, the motorway, devolution plan and Kargil adventure on the one hand and increasing poverty, sectarian violence and state oppression on the other.

For once, the government should now be made to account for the essential, day-to-day service it is expected to render to the people, and the opposition should also come forth with its plans on how, given a chance, it would improve upon that. The guiding factor in this should be the conditions on the ground and not the rhetoric of good governance by one or Sharia rule by the other. A few specific instances are being cited here as a litmus test.

To justify a horde of ministers sworn in some six months ago, Prime Minister Shaukat Aziz then undertook to review their performance every quarter and relieve those among them who fail to achieve the targets they themselves set.

No minister has been relieved. In fact, more have come in. It is hard to believe that all of them had achieved their targets. More likely, neither the targets were set nor reviewed, otherwise the ministers of defence (civil aviation) and religious affairs wouldn't have been there for the enormous hardship our "miskeen" hajis had suffered in the holy land this season.

The harsh fact is that both Rao Sikandar and Ejazul Haq don't have to work to stay in the cabinet. They are in it for a purpose wholly unrelated to their ministerial responsibilities.

If the need and performance were to be the criteria, Shaukat Aziz, like Liaquat Ali Khan, should have been presiding over a cabinet of ten or less. In any case, the people should be informed by the prime minister about the targets the ministers had set for themselves in the first quarter of his term and the result of his review.

For a second illustration of the government's performance, reliance has to be placed on a press report alleging that the selection of each of the 20 or so trade officials for posting in missions abroad in Zafarullah Jamali's times was based entirely on nepotism, favouritism or bribe.

Despite that, the present prime minister had turned down a proposal by the commerce ministry for judging their competitive merit through the public service commission. The wonder is not that the officials were arbitrarily chosen under a political prime minister but that a technocrat prime minister wedded to merit should keep the same door open for cronies and nieces.

Further, the two previous prime ministers, again according to press reports, allotted hundreds of official quarters in Islamabad to the waiting government servants out of turn. Since the prime ministers are not appointed to act as estate officers, the expectation is that the current prime minister wouldn't. The estate office, left to itself, would perhaps be more equitable.

For the third illustration one has to go to the NWFP where the chief minister is said to have doled out Rs.33 million out of public funds. Among the recipients of Akram Durrani's largesse were madrassahs and bar councils. Not surprisingly, half of the amount went to the chief minister's home district of Bannu.

The auditor-general and the federal shariat court should jointly be called upon to determine whether the public money thus spent by Mr. Durrani, as also carting of relatives and hangers-on for umra at state expense by the prime ministers is permissible in sharia or under the rules of the government.

Next comes an instance from Sindh where 3,000 files are awaiting disposal by the chief minister for three months now. It is not long ago that chief minister Aftab Shaban Mirani would send back a file the day he received it. Qaim Ali Shah (with whom this writer worked) took a day or more but seldom a week. They were no less busy or harassed than Arbab Rahim is. Disposing of files is the first duty of every public servant. The chief minister is no exception. Politicking and protocol are secondary.

The shame and violence at Sui and other instances recounted here at random from other parts of the country pose a variety of questions to all leaders - more to the president and the prime minister. Some are: what kind of good governance through devolution is this in which 3,000 files sit on the desk of one chief minister for three months and another treats public money as if it was a booty, and the prime ministers do the job of estate officers? And what worth are a thousand ministers, advisers and nazims when the army alone had to face the crisis at Sui and carry all of its obloquy? Not long ago the political agent at Sibi in whose jurisdiction Sui then lay would have braved it better alone.

The message going out to the political and religious leaders and to the Baloch sardars and nationalists elsewhere is that if they want to see the army out of politics they have to agree to seek peaceful and friendly relations with India and also support the moderate elements in Afghanistan. Democracy will not come to the country, nor autonomy to the provinces, while we need a million professional armed men to guard its frontiers and installations, and in addition a lashkar of the same proportions to wage jihad to liberate Kashmir and return Kabul to the Taliban.

Militancy is an antithesis of democracy. If we let the militants rule our minds and policies, we can still have democracy but of a type which will be administered for us by the generals and bankers.

A Muslim cry for justice in Palestine

Three myths need to be demolished. One, Muslims are anti-Jewish. Not true. Our lament is that the state of Israel has surreptitiously, determinedly, overtly and covertly eroded the rights of another nation: a nation with the same deep roots, pride (and prejudices) as the Jewish nation. It just so happens that Israel is a Jewish state; if any other nation were to occupy the West Bank, our animus towards the occupation would be no different.

Second, only a lunatic fringe among the Muslims (and Palestinians) are determined to drive Israel into the sea. The Jews too have a lunatic fringe who would wish to push the West Bank Palestinians into Jordan or Egypt or West Bank 'Bantustans'. Amos Malka, chief of intelligence under Barak, dismissed as "total nonsense" the charge that Arafat conspired to eradicate Israel. Third, the so-called clash of civilizations is regarded by most thinking Muslims as an attempt to make a death wish come true.

Historically, persecution of the Jews since the Middle Ages has been a European idea (except in England). We forget that even in the United States, Jews were openly discriminated against until as late as World War II. In the last three hundred years or more culminating in the monstrous attempt to physically destroy the Jewish people by Nazi Germany, the Jews have suffered an actual plan of physical annihilation en masse in gas chambers and historical discrimination that any people have endured.

Yet, in the same period Jews flourished in Muslim lands. The life, liberty and religion of the Jews were secure in the Ottoman lands and North Africa. As far as one knows, never was there anti-Jewish pogrom in a Muslim country - until WW-II.

The state of Israel and its supporters in the United States have little appreciation of this tolerance.

The latest bone thrown at the Palestinians is the unnegotiated withdrawal by Israel from the Gaza strip. This seems to be designed to produce a state of anarchy in Gaza, a spectacle for the world to see how utterly incapable the Palestinians are to rule themselves. Prima facie one should be inclined to put a benign gloss on Sharon's decision to withdraw from Gaza, but Dov Weissglas, Sharon's closest friend, colleague, senior adviser and chief of staff has different ideas.

In an interview appearing in Haaretz on October 11, 2004, he bluntly asserts that the idea of the withdrawal was intended to prevent the peace process, consign Bush's road map to the dustbin and to preclude the emergence of a Palestinian state of any kind. (Henry Siegman: New York Review of Books, December 1, 2004). That in the end "realities on the ground" would prevail.

And what are these realities? Israel's Peace Now Settlement Watch reports that a new infrastructure is currently taking shape in 474 settlement sites in the West Bank and Gaza, including 50 sites where new construction deviates from existing boundaries.

Israeli expansion in the West Bank is no longer a crawl, but a gallop, and, apparently, the design of the peremptory Gaza withdrawal, apart from creating chaos, is to obfuscate international opinion.

In this state of utter despair, confusion, helplessness, poverty and disease, a Palestinian population psychologically tormented having to confront day in and day out the terror within and terror without.

The stone-throwing youth of yesteryears have given way to the suicide bombers of Hamas and others, which in turn has galvanized the entire Muslim world against Israel. The tragedy of Palestine is the true genesis of 9/11.

America must realize that its own homeland safety lies in promoting, indeed forcing, an equitable solution. Such a solution involve compelling the Israelis to withdraw as far as possible behind the 1967 Green Line sanctioned by the UN; negotiating the retention of West Bank parts by compensating the Palestinians with equal land from Israel; stopping Israel from creating "Bantustans" in the West Bank; reaching a sensible settlement on the Haram-al Sharif as earlier agreed on a "horizontal" division of this sacred site.

One fears that a move towards an acceptable settlement will be vehemently opposed mainly by two groups: one, by the powerful Jewish political lobby in the US and the other, West Bank settlers. It is reported that the latter group is claiming "sovereign" rights over the West Bank land encroached by them. One may well ask: are we dealing with one Israel or two? The silver lining on the horizon is that a rising number of concerned citizens within Israel proper are keen in reaching a settlement with the Palestinians.

This is, however, not to belittle the moral repulsion caused by suicide attacks on the Israeli population. We join the civilized world in condemning this terrorism. We deplore the fact that Arafat tended to acquiesce in this terror from time to time. The new Palestinian president Mahmoud Abbas appears to be convinced of the diminished returns of terrorism.

The safety and well-being of the Jewish and Muslim peoples and indeed of the West lies in taking bold steps towards an honourable solution. If President Bush in his second term of office rises to the occasion, he may well be the 'De Gaulle of America' in this moment of promise.

The writer is a member of the National Assembly.

E-mail: murbr@isb.paknet.com.pk

How to move Iraq forward

The success of the January 30 elections in Iraq has created an exciting moment of opportunity. It matters greatly that Iraq's transition is a success. I am determined to make certain that the United Nations will play its full part in helping the Iraqi people achieve that end.

But it also matters that the international community, which has been angrily divided over Iraq, now recognizes that we all share a common agenda: to move Iraq from the starting point - its successfully completed elections - to a peaceful, prosperous and democratic future.

Even the scars left by past differences can be turned into opportunities. Precisely because the United Nations did not agree on some earlier actions in Iraq, it now has much-needed credibility with and access to Iraqi groups that must agree to join in the new political process if peace is to prevail. Now is the time for us to draw on that capital. I want to capture this moment, and I encourage the international community to come together around Iraq through the United Nations.

No one can fail to have been moved by the Iraqis' display of courage at the polls. The United Nations is proud of the assistance it was able to give them, both in developing the political base for elections and in the technical preparations. We helped to draft the electoral law and to form the Independent Electoral Commission, which ran the elections.

A U.N. electoral team of more than 50 staff members in Baghdad, Amman and New York supported the commission. The United Nations trained the commission's members and several hundred other electoral workers, who in turn trained thousands more, and we have advised and supported them throughout the process.

I believe we can also help in the next stage: building a constitution. There, too, our help must be both political and technical. Politically, my special representative, Ashraf Jehangir Qazi, is engaged in efforts to reach out to those groups - mainly Sunni Arabs - that stayed away from the elections but are willing to pursue their goals through peaceful negotiation and dialogue.

Success in this effort is crucial. Some groups are bitterly resentful of the occupation and believe that they have been excluded from the political process. Every effort must be made to bring them in.

The wider the spectrum of Iraqis that can be brought into the tent, the greater the chance of success. The new constitution will, of course, be an Iraqi constitution, and Iraqis will decide its shape. But if they ask for advice - and I believe that they will - we do have considerable knowledge and experience to draw on.

Once the draft constitution is agreed on, a referendum is to be held in October to give all Iraqis the chance to pronounce on it. We would expect to be able to help the electoral commission in organizing the referendum and the subsequent parliamentary elections, just as we worked with them in preparing the Jan. 30 elections and are still working with them to tabulate and verify the results.

We can also give technical assistance to the new ministries. Many people seem to think that because, for security reasons, we have only 200 international staff members in Iraq (three-quarters of whom are guards), the United Nations is not present and active there. This is wrong, first because the United Nations has many Iraqi staffers and second because much of our work - training, advice, coordination, acting as a conduit for funds - can be done from outside the country.

In fact, about 23 U.N. agencies, funds and programmes are working together to coordinate international aid and to help rebuild the country. Forty-six projects have been approved and funded to date, for a total of $494 million.

In Basra, for instance, the U.N. Development Programme is providing $15 million worth of spare parts to rehabilitate the Hartha power station. Similar projects are planned for power stations in other Iraqi cities, while engineers from the ministry of electricity are being trained in Japan in a programme jointly funded by Japan and Belgium. Meanwhile, in Fallujah, a group led by UNICEF has distributed some 7 million liters of potable water to more than 70,000 people displaced from their homes in the recent fighting. This can help Iraqis improve their daily lives in many tangible ways.

Let's not pretend that it will be easy. Iraq is in a complicated region of the world, and has had a tortured recent history. I believe that with international help, such a society can use democratic institutions to build itself a stable and prosperous future. That hope and that vision offer us in the outside world a real opportunity to start again - together - and support the Iraqi people in their great experiment.

We have a mandate from the Security Council to take the lead in bringing that support together, and we intend to do it. - Dawn/Washington Post Service

The writer is secretary-general of the United Nations.