Transparency in dealings

President of the World Bank James Wolfensohn is highly impressed by Pakistan's macro-economic progress in recent years and has said the Bank would provide a billion dollars for each of the next three years.

The Bank could be ready to give more after providing 15 billion dollars in the last 50 years if Pakistan needs that and could use that well for the development of the country and for effective poverty reduction, if it abides by the time-schedules for completing the projects.

He was on a farewell call to this country before retiring from the Bank by the middle of this year. And while describing Pakistan's economic progress as "terrific" he clearly identified the various weaknesses of its economy and causes of its social backwardness.

He called for effective and speedy remedial measures to achieve the UN millennial development goals of halving world poverty by the year 2015. He focused on three major areas of weakness - pervasive corruption, poverty which afflicts 30 per cent of the people, and the social sector's backwardness, particularly in respect of education, public health and treatment of women.

Increasing the rate of economic growth from three per cent a year to seven per cent as Pakistan has done is a remarkable achievement, he says. At the same time poverty has increased in the last two years, belying official claims to the contrary. And poverty is likely to get worse now because of the double digit inflation as all food prices will rise steadily. Quality education and medical attention too have become too costly as they go more and more into private hands.

Money is no more a major deterrent for development. The Asian Development Bank, too, is ready to provide almost the same amount which the World Bank provides. It has already provided 55 loans worth a total of 5.2 billion dollars and is ready to fund the pipeline which is to bring gas from Turkmenistan via Afghanistan, and then end up in India.

It is ready to finance building of a road network connecting Pakistan to Central Asia, and then Central Asian republics with each other through far better roads than they have now.

Pakistan is trying to get a new credit through the IDA which will be at an interest rate of half to three-fourth per cent. Mr Wolfensohn is agreeable to that. If the old loans cannot be written off, as is the case with the loans to Africa, Pakistan's new loans could be at least at concessional rates of interest. That would make the debt servicing cost low.

While offering to help Pakistan with large new loans Mr. Wolfensohn, who has been to Pakistan several times, had identified a great many flaws and inadequacies in Pakistan's economic system and management.

Principal among them is corruption which has not been eliminated despite apparent efforts and strong rhetoric of denunciation. When the successive rulers say there has been no corruption at the top in recent times they only delude themselves unless they describe the top as too thin.

As far the broad mass of the people are concerned they are helpless in the face of pervasive low level corruption at the hands of the policemen, junior taxation officers, judicial staff, and other instruments of the local administration.

Often they are paying a share of the bribes to their seniors. That vitiates the whole system. So a selective approach to corruption will not do, nor will creation of new organizations like the National Accountability Bureau along with the old anti-corruption hierarchies. The NAB's name became vitiated because of its selective approach to corruption instead of an across-the-board approach to fight crime at higher and middle levels.

What the array of inadequacies or drawbacks identified by Wolfensohn underscores is that we have most of the afflictions of developing countries but the officials say the country has come to the take-off stage and can't stay down any more and be content with a low rate of growth.

A far higher growth is imperative, particularly when the population growth is 2.2 to 2.5 per cent - if the official claim is right. Until many of these problems are overcome the officials should stop talking of having arrived at the take-off stage.

After identifying corruption as one of the major deterrents to progress he has suggested four measures to eliminate it. These are: transparency in official transactions, judicial reforms, better education and devolution.

However, experience tells us that there cannot be transparency in official dealings and ministers' activities, unless they are really honest, efficient and truly above board.

Had there been any transparency in official dealings there would not have been several versions of the entourage that went with three prime ministers for umra at a cost of Rs. 42 million. Deviation from healthy and rational practices would give rise to varied speculations, right and wrong.

Transparency and good governance go together. We can't have one without the other. It is for the parliament, both its houses and it numerous standing committees, to insist on such transparency and take the press and the country into confidence.

It is the public money which the rulers are using for essential and non-essential purposes. And so the people have the right to question who spent how much, and why, if there is violation of rules.

The second pre-requisite for eliminating corruption is judicial reforms which, I presume, includes police reforms. Without a diligent and upright police the judiciary will be greatly handicapped or invariably misled and it can result in vast waste of time and delayed justice, if not miscarriage of justice.

For the judiciary to be effective and command the confidence of the people the judgments have to be fair and quick and not too costly and the verdicts should be enforced in good time. Now many judgments delivered after a long time are not enforced as the culprits are too powerful or had vanished.

Now a court to hear business disputes is to be set up but only in Islamabad. In fact, there should be a court for this purpose in the principal cities of Pakistan. Foreign investors too complain that the courts are ineffective or partisan, and litigations are time-consuming and costly. Their confidence in the judiciary should be restored if we want large foreign investment.

Of course, there is need for imparting education to the people at all levels, beginning with the primary schools. The emphasis should be not only on numbers but also on quality at all levels for which the right teachers have to be chosen and paid well, and trained adequately. University education should be of far higher quality than it has been. The emphasis on research should be far greater than it is.

There should be special emphasis on education for girls and on adult education. An educated woman is an asset to the family. The educated mothers will then send their children, including the daughters, to schools and we will then have an educated and trained population marked for high productivity and a large skilled work force.

The issue is how well we use the donors' funds for poverty reduction, for promoting education and public health. If we use the funds well far more will be available from the appreciative donors who want to help us.

The fourth pre-requisite to eliminate corruption is devolution of power from the centre to the provinces and from the provinces to the local governments, right down to the union council. The local bodies are now struggling to come into their own while their officer holders are not clear about their powers and limits, and their accountability.

But real devolution is not possible under quasi-military rule or with a president in whose hands power is really concentrated. And yet it is during military rule that a great deal of importance is given to the local bodies, while the parliament and the provincial assemblies are on guard and watch their steps carefully.

But the present military authorities do not mind letting the opposition make a lot of noises and stage vociferous walkouts from the assemblies as long as they know their limits.

In a quasi-military system of this kind, the prime minister and ministers are chosen by president and so are the provincial chief ministers and their major ministers.

Devolution in such a system is hence more formal than real. While there is so much talk about foreign investment, Wolfensohn called for rebuilding investor confidence so that the system was free from corruption and that the rules and procedures were not changed now and then. He spoke of investors as a whole and did not specify foreign investors.

He wanted adequate infrastructure to be built up with sufficient energy. He asked for roads and ports to be improved so that goods can move between production centres and the port easily.

He also suggested a better developed telecommunication system and technology. He wanted good roads in the cities and proper transport system to make movement of people easy. The government is committed to provide all these facilities and is seeking assistance of foreign investors in Karachi for the mass transit and mono-rail.

Above all, he has cautioned against complacency following an early success as it is a common feature of the leadership in developing countries. Evidently he has sensed that complacency or gloating over the initial success in Pakistan as well.

A country with 30 per cent of the people living below the poverty line has a long way to go to accomplish its goals, he says. The challenge now, he says, is to sustain the reforms and increase the economic growth and make its benefits available to the very poor and the vulnerable sections of the people, like women, children and the handicapped, who are large in number.

A climate of disdain

Wednesday, February 16, marked an unlikely milestone in modern history: The Kyoto Protocol on global climate change took effect, without US participation. All 25 nations of the European Union have ratified the Kyoto accord, and they have created an innovative system for trading rights to emit the carbon dioxide "greenhouse gases" that are thought to be responsible for global warming.

High-emissions Britain could purchase allocations from low-emissions Norway, for example. This "carbon trading" system will make it easier for the EU as a whole to meet the Kyoto target of reducing emissions from 2008 onward to eight per cent below 1990 levels. It will also encourage new investment in Eastern Europe to replace aging, polluting factories there.

The decisive signatory of this 21st-century treaty, as it happened, was sleepy, corrupt Mother Russia. The Russian parliament's decision to ratify Kyoto last October guaranteed that the treaty would take effect, despite the Bush administration's decision in 2001 to withdraw from it. More than 140 nations have ratified the agreement.

Kyoto is probably the best example of the differing trajectories of the Bush administration and most of its allies and trading partners. The administration decided to walk away from the treaty during its first months in office, arguing that the Kyoto requirement that the United States cut greenhouse emissions to seven per cent below 1990 levels would cost five million jobs and billions of dollars.

Some of the administration's criticisms were valid - especially its argument that the treaty was flawed because it didn't include limits for developing nations such as China. But by disdaining Kyoto, the administration opted out of a process that might have produced a better agreement. Perhaps the administration assumed that Kyoto would wither and die without US support; if so, it was wrong.

The Bush administration's official position is that the climate change issue is complicated and needs more study. Yet many of the administration's own scientists seem convinced that the problem is real and growing.

The Environmental Protection Agency (EPA) endorses the finding by the National Academy of Sciences that the Earth's surface temperature has risen about one degree Fahrenheit in the past century.

The EPA's website offers this blood-curdling warning: "Rising global temperatures are expected to raise sea level, and change precipitation and other local climate conditions.

Changing regional climate could alter forests, crop yields, and water supplies. . . . Deserts may expand into existing range lands, and features of some of our National Parks may be permanently altered." And yet the administration does little except study the data.

The global figure taking the lead on climate change is none other than George Bush's best foreign friend, British Prime Minister Tony Blair. In a speech last month at the World Economic Forum in Davos, he seemed to be talking directly to the Bush administration: "It would be true to say the evidence is still disputed," Blair said.

"It would be wrong to say that the evidence of danger is not clearly and persuasively advocated by a very large number of entirely independent and compelling voices." -Dawn/Washington Post Service

Who killed Hariri and why?

They buried Rafiq Hariri beside the city he rebuilt and next to the ruins of the Roman columns which made ancient Beirut famous. But his violent death on Monday has repercussions that go far further east than Lebanon or the Roman empire; for his killing is intimately linked to the insurgency in Iraq - and President Bush's belief that Syria is encouraging the guerilla war against US troops in the country.

American pressure on Syria to withdraw its military forces from Lebanon, a cause which Mr Hariri, for quite different reasons, supported, is part of Washington's attempt to smother Syria's supposed sympathy for the bloody and increasingly efficient insurgency in Iraq.

On Tuesday, as Washington announced the withdrawal of its ambassador to Damascus, it was the clearest sign so far that they are going to accuse Syria of Mr Hariri's murder.

Israel, predictably, chose the same moment to add new pre-conditions for any peace talks with Syria: expulsion of "terrorist" headquarters from Damascus, "allow the Lebanese Army to deploy its forces along the border with Israel," and "end the Syrian occupation of Lebanon."

Israel occupied part of Lebanon for 24 years, then demanded the "expulsion" of Iranian Revolutionary Guards - who in reality left Lebanon more than 15 years ago. In harness with the Americans, the Israeli threat, especially the specious references to Iranians no longer in Lebanon, represents a grave deepening of the crisis.

The Arab hero Saladin, who defeated the Crusaders, was buried in the Omayad mosque in Damascus. The billionaire tycoon Rafiq Hariri will lie just outside the almost equally large - if much less beautiful - Mohamed Amin Mosque in Beirut.

He who defeated the Middle Ages European empire in the Middle East gave inspiration to the family of the Arab whose business empire swamped Lebanon. But it is the American empire in the region which provided the setting for his death.

Iyad Allawi, the former CIA and MI5 agent appointed interim prime minister of Iraq by the United States, is himself half Lebanese, his mother coming from the esteemed Shia Muslim Osseiran family; Hariri knew him well.

The former Lebanese prime minister also privately acknowledged that the United States was threatening sanctions against Syria - and attacking its military presence in Lebanon - because of its contention that Syria was helping the Iraqi insurgents. As usual, Lebanon had become a battlefield for other people's wars.

And Hariri was a giant on that battlefield. He had many good friends in Syria, but enemies too. And he understood all too well that the Bush administration wanted - in more than one country - to combine its 'war on terror' with its campaign for 'democracy' in the Middle East.

If Iraq could be invaded for democracy while forming a front line in the 'war on terror', however deluded this was, then Syria's presence in Lebanon seemed to mirror the same set of circumstances.

Syria supported 'terrorism' - or at least, sponsored militants opposed to Israel - while occupying a neighbouring country, Lebanon, against international law. Once Bush and President Jacques Chirac of France - Hariri's close personal friend - pushed through UN Security Council Resolution 1559, calling for Syrian military withdrawal from Lebanon, Damascus found itself facing a miniature version of Saddam Hussein's predicament in 2003: submit to UN resolutions or else.

Lebanon's forthcoming elections - in which anti-Syrian candidates fear the pro-Syrian Lebanese government will gerrymander electoral boundaries to deprive them of parliamentary seats - dovetailed neatly with the US neo-conservative demand for 'democracy' in the Arab world.

That this also served Israel's interests - a substantially demilitarized Lebanon, the disarmament of the Hizbollah guerrilla movement and the humiliation of Syria - was never allowed to become part of the narrative.

In Beirut, there were shocking scenes at Hariri's Koreytem palace as a grief-stricken woman ran shrieking and crying among the mourners paying their condolences to the Hariri family.

The dead man's sister Bahiya, a broken woman partially carried by her relatives, agreed with Hariri's children that he should be buried not in his native city of Sidon, south of Beirut, but in the capital for whose reconstruction he became a symbol.

They are discussing the design of the tomb but decided that it should remain in the open - and alongside the more modest graves of the bodyguards who died defending him and the junior medical officer who always travelled with the somewhat overweight ex-prime minister.

Tuesday's Beirut newspapers carried dozens of photographs which showed Hariri's influence - with George W. Bush, the Pope, the late President Hafez el-Assad of Syria and his son and now President Bashar, with the kings and emirs of Saudi Arabia, Kuwait, Oman, Bahrain, with President Khatami of Iran, with Mubarak of Egypt, Chirac and Mikhael Gorbachov and President Clinton.

But there was one snapshot which stood out above all others, a picture of Hariri in deep conversation with the former head of Syrian military intelligence, the sallow-faced Brigadier General Ghazi Kenaan, with whom, according to one paper, Hariri had "a friendship of long-standing."

Kenaan, like his successor General Rustom Ghazali, was a man with whom any Lebanese politician needed to have a long-standing friendship. 'Sister' Syria rewarded loyalty - but never tolerated anyone whom it regarded as a traitor. - (c) The Independent

Reforming pension system

The need for reforming the current system of pensions for government employees is now widely accepted among policy-makers in Islamabad. Hence, not only has an exercise for the actuarial valuation of the pension liability of current employees but also the revision of its structure that would apply to new entrants has been launched.

The existing pension system covers close to 3.5 million government employees (of which 0.6 million are in the armed forces. Pension payments to them, because of their shorter working lives, account for more than 45 per cent of total pension expenditure), representing a mere two per cent of the population and under 10 per cent of the labour force.

Civil servants receive what is called a defined benefit. After 25 years of service they are paid a particular pension per month, which is linked to salary drawn at the time of retirement and the number of years they were in service. This amount is then revised periodically to adjust for inflation.

Under the pension entitlement rules, they can 'commute' 80 per cent of their pension in lump sum at the time of retirement. This is a generous benefit, since the amount paid as commuted pension is not discounted to adjust for the interest cost borne by the government for the advance payment of an amount that the retiree would have received as the monthly pension over several years in the future.

This provision is, in fact, even more liberal, since the amount commuted can be restored, after 15 years of having availed of the commutation, to the pension receivable per month, as if no amount was ever paid as commutation to the retired employee. Family pension is also payable to the spouse or dependent children after the death of the civil servant, although at a reduced rate.

On retirement civil servants are also paid a gratuity, equal to 40 times the last drawn salary. Under the current pension system, existing civil servants are not required to make any contribution to their eventual pension or gratuity benefit.

Their cost is borne entirely by the government. Moreover, the government has not built up a fund that it has invested in income-generating assets from which it can settle its pension obligations or the gratuity that it pays to its employees in a routine manner.

Instead, it settles its liability for gratuity payable to its employees and the annual pension payments from the revenues generated during each year, not the most reliable and prudent manner of discharging these liabilities.

Civil servants are also entitled to a provident fund to which only they contribute, but on which they have historically been paid an interest rate that was substantially higher than even the interest rate that the government paid to public investments in instruments like the Defence Savings Certificates.

It is instructive that even the contributions to their provident fund made by employees, which the government holds essentially in the capacity of a trustee, are not set aside and invested in a separate fund but used to finance annual government expenditures and paid to retiring employees from the revenues for the year.

In many countries the system of pension prevailing in Pakistan, generally referred to as the Pay As You Go (PAYG) system is in serious trouble. This writer understands that even in countries like Germany, France and Japan the net present value of social security benefits not set aside in the form of specific funds to discharge such liabilities was more than 100 per cent of the national incomes of each of these countries.

Hence, the reforms being proposed in most countries to shift from this PAYG system to one fully or partially funded system based on contributions of both the government and its employees.

In our case, the annual burden of just pension payments has ballooned, having touched the Rs.55 billion mark, and threatening to become unmanageable as large cohorts of civil servants retire, largely owing to the bunching that is expected to occur of retirees recruited first in the 1970s and then in the latter half of the 1980s and the early 1990s, during periods of civilian rule.

It is also interesting that in the armed forces there are now more pensioners than active personnel. Moreover, as average life expectancy rises, government functionaries as a group will live even longer than the rest of the population.

This will push up the future pension payment bill even further. The burden of pension payments is particularly worrisome for provincial governments which have a large workforce on their payrolls and scarce resources from which to finance them.

Therefore, the proposed new system of a contributory pension scheme to which both the government and the employee will make equal contributions to the retirement of an employee is a move in the right direction. It is proposed to be mandatory for new employees and voluntary for the existing ones.

Under this system employees will have individual pension fund/retirement accounts, rather like the current individual provident fund account. The details of withdrawals that would be allowed from such accounts, what will have to be retained in these accounts so that individuals are able to buy annuities/arrange for a specific monthly stream from insurance companies (since if full withdrawal were to be permissible, it would defeat the purpose of the new pension system) and the tax incentives that would be on offer for encouraging savings into retirement schemes will have to be worked out to provide an incentive for this shift, although this fiscal incentive would not attract those civil servants who do not earn enough to be liable for income tax.

However, the natural rate of attrition/retirement being under three per cent it will take almost 40 years before any change in the scheme will apply to all civil servants, even if younger existing civil servants are incentivized to switch to the new scheme in which they will also be contributors and the provision relating to the restoration of commuted pension is also withdrawn.

In other words, a slow rate of transition into any new scheme will not ease the pressure on the budget of pension payments. So, the immediate future does not look propitious and perhaps the only pragmatic way open to the government to discharge its obligations pertaining to commutable pensions to retiring civil servants would be tradable interest-bearing bonds.

Symptom of a deeper malaise

Today's Balochistan is not a problem; it is only a symptom. The real problem is the undemocratic system developed by the feudal-army-mullah collusion over the last 57 years. The problem syndrome is strictly following the law of nature.

This is the second symptom. The first was East Pakistan in 1971. At that time the ailing limb was not treated properly by the nation to heal the problem. It was simply amputated (through a mock war and quick surrender) to save the system.

The system won, but the nation was reduced to half. That made the system stronger, but also made the problem bigger, bringing up another symptom of the advanced stage of ailment so soon after the first.

This system reached its zenith with the fourth military take-over in October 1999. In the ecstatic over-confidence gained from three previous innings it began to dig in till eternity.

In the process it broke all the remnants of constitutional, legal, financial, administrative, ethical and moral foundations of the state. The most extensively used tool was the free-for-all opportunism.

Its avowed pragmatism justified corruption under honest names, and a king's party in the garb of reforms pushed by coercion, arm-twisting, political bribes, floor crossing, horse-trading, unethical incentives, illegal financial benefits, dis-information and broken promises. Though succeeding outwardly, these operational guidelines internally damaged the immune cells and the system is now beginning to crumble, as described below.

For 57 years, our docile society was suffering a manipulated metamorphosis for changing it to an extended military barrack with minor features of jagir and madressah. But all along, the inexorable law of nature was also changing the internal chemistry of the manipulators.

In the earlier euphoric phases the three partners were individually happy with "my share of the cake." As the selfish bargaining became more aggressive, unhappy greedy glances were cast at "your share".

At the same time each partner assumed to be indispensable. Over the years this assumption became the sole binding force, firstly raising expectations, then the bidding prices, and finally the inevitable misgivings.

The misgivings have reached saturation point due to the following reasons. (a) One partner has spread its tentacles everywhere downgrading the other two. All spheres of life, including the constitutional, political, administrative, business, and corporate (even real estate) activities were monopolized by the serving or retired military persons, reserving the right to throw some crumbs to others. (b) The system was primarily designed to rule, and not to govern.

The state, therefore, abandoned its governing duties and threw the people at the mercy of its favourite exploiters and profiteers. (c) The system guaranteed very high returns to a few at the cost of all others. The people felt left out of the undefined political structure designed to accommodate the ruling elite only.

The law of nature does not allow any triangular relationship to become uni-polar, without developing devastating internal strains. So did happen here. In spite of the fact that the banished people are incapable of causing any dent, and foreign powers are fully backing it, the system is beginning to collapse from within due to these strains and its inherent contradictions. There are many tell-tale signs.

The rapidly failing writ of the government is just one such sign. Scores of others can be seen in openly serving and safeguarding the vested interests of the three partners at the cost of the citizen, rule of law, good governance and state obligations, because this is the tripartite deal.

None of the state organs (legislature, executive and the judiciary) is delivering the way it should do. They stand discredited among increasingly alienated people with heaps of unsatisfied grievances. In the backdrop of these signs, and many more, we should focus on Balochistan.

The Baloch sardar is the feudal of a sublimated breed. Both display the same attitude to their oppressed people but different attitudes to the rulers. The wadera was a British creation and his servile collaborator, but the Baloch sardar was the beaten adversary - ruthless in resistance, composed in obedience and demanding in dealings.

The civilian British ruler, with his shrewd genius for governance, had discovered it, and his bureaucrat administered accordingly, with his army playing second fiddle, as and when needed.

This perception created a balanced working relationship of rights and duties between the state and the sardar around the principle of tribal responsibility enforced by tribal levies, with clearly defined privileges for the sardar. But the gun-wielding Pakistani military dictator, or his installed nazim, with their manipulative system of rule-without-governance and contempt for civil society, could not comprehend this.

Instead of either levelling down the sardar to liberate the people, or binding him to a disciplined role in the state, our system kept on nibbling at the state structure, and buying him for its own perpetuation.

The purchase price was really high (millions paid for crucial votes, right of embezzlement of official funds, and exploitation of their own people with impunity). For half a century the system kept growing. So did the sardar, the mutually corrupting relationship and the misgivings.

The crunch came when one partner of the triple alliance monopolized the multi-billion mega projects, Gwadar port plans, and the consequential real estate transactions in a non-transparent manner, to the exclusion of others under the threat of proposed cantonments.

The triangular relationship was thus turned into a uni polar dictation in a decisive, arrogant and un repenting manner. A US weekly (the Times, Feb 7) quoted Nawab Akbar Bugti: "The armed forces think, they are a superior nation.

They do not observe the laws of us lowly people". The handling of the rape case of Dr. Shazia Khalid appears to be, rightly or wrongly, strengthening this perception.

It is ironical that the people of Balochistan do not figure anywhere, except as an 'intended' pretext to start a quarrel for a bigger piece of cake. If the right price is settled (as has been happening in the past), then the so-called "deprivation of the people" will be claimed to have been redressed, though their misery of half a century will continue.

In that case the royalty of Sui gas, other mineral resources, funds for development, and political bribes will continue to line up the pockets of sardars, and the system will continue to prosper as before.

The 'un-intended' direction according to the law of nature, however, appears to be moving beyond the saturation point towards the breaking point of the system. The main reason is that the over-confidence and hubris of one partner is asserting to be the permanent apex of the triangle.

In addition he wants to keep the people of entire Pakistan banished forever from the triangular deals. Surprisingly, he is happy with the foreign intruding elements as a substitute for the supporting people.

In the presence of so many conflicting crosscurrents even the deepest waters cannot remain calm. This system is too shallow to avoid a turmoil of many waves, known as "warlords" in the jargon of history.

It happened so in China from 1916 to 1928 when, according to the American historian John King Fair bank, "In early 1900s the Chinese ruling strata was very much on the move, but not the Chinese people."

The noteworthy factor is that the ruling strata of China in those days had similar operating guidelines as our system has today, and there were 11 foreign powers freely intruding in their system. How can that be avoided? The only way out is the unfettered democracy instead of that invented by military dictators, or desired by the US.