| 06 March 2005 | Sunday | 24 Muharram 1426 |
Pressure on Syria
The government seems to have decided at last to use the massive fiscal space that has emerged as a result of the extra generous debt rescheduling and equally generous bilateral and multilateral aid flows over the last five years for the socio-economic uplift of the masses. Understandably, with the IMF out of the way, the government seems under no compulsion to continue with its tight-fisted policies which, while yielding macroeconomic stability, has only deepened economic stagnation.
Therefore, the impressive allocation amounting to over two trillion rupees for the next Five-Year Plan (2005-10) announced the other day by Prime Minister Shaukat Aziz at the National Economic Council meeting came as no surprise. However, it is one thing to make allocations and yet another to utilize them within the stipulated period and that too judiciously, efficiently, effectively and honestly. At the same meeting, it was revealed that as many as 78 projects out of the 190 listed for last year were behind schedule owing to lack of funds, bad law and order, inter-departmental differences and land acquisition problems.
This is an unacceptable situation and if not corrected urgently the very aim of making Pakistan a developed, industrialized, prosperous and just society within our lifetime would remain a daydream for the official planners and a nightmare for the people at large. The systems that matter at the implementation stages and the intellectual and technical capabilities of the manpower that runs these systems at this stage need, therefore, to be improved speedily to achieve the desired results.
The plan's priorities appear to be just right. We do need to enlarge our water resources, energy production, infrastructural facilities and human resources to be able to lift the masses out of the mire of abject poverty within a reasonable timeframe. However, before finalizing the Rs. 293 billion plan to improve water availability from 135.68 MAF to 150.35 MAF, it is important to see if wastages amounting to almost half the available water through theft, leakages and seepages can be minimized.
On the energy front, more attention needs to be given to the domestic pricing policy along with ensuring supply commensurate with demand. There was possibly some justification for inflating the domestic oil prices on the excuse of a hike in the international oil prices as long as the surplus income was going into the government's coffers to make up for the shortfalls in revenue collection.
But to allow this practice to continue even when the domestic oil marketing sector has been deregulated by permitting oil marketing companies to form a cartel and to fix prices arbitrarily to increase their margins of profit is not only undesirable from the economic point of view but downright dishonest.
The argument that some officials of the government sit on the cartel, and therefore, it is actually the government which is fixing the prices is hardly convincing. This cartel should be immediately disbanded and the responsibility of oil price fixing should be given to the Oil and Gas Regulatory Authority (OGRA). In order to ensure that the growth rate is not choked off before the economy can take off, we need to improve our social and physical infrastructure well in time. Here it would not be out of place to warn that with the savings rates hovering around just 19 to 24 per cent, there is no way that the economy can grow at a sustained rate of eight per cent by 2010 and beyond.
According to one universally accepted economic equation, there is a correlation between the savings rate, population growth, capital output ratio and the overall growth rate. If the population growth rate is assumed to be two per cent and the capital output ratio 3.5 per cent, then for achieving a growth rate of eight per cent we would have to have a savings rate of about 35 per cent.
Since the plan does not make any mention of foreign investment flows, one would expect that the government proposes to fill the gap between the envisaged savings rate and the rate required by designing its economic policy so as to attract enough foreign investment. One more thing - in order to push the poverty line below the 20 per cent mark from today's 33 per cent, the trickle-down from the growth rate of eight per cent per annum will not be enough.
We will, at the same time, need to introduce distributive justice as an essential objective of growth and development without bothering about the hardship that such a policy might cause to the better-off sections of the population. To digress, it is more than possible that a hefty component of the projected seven per cent growth rate for the current year is related to agriculture which is expected to shine brighter this year because of the highly favourable weather. Therefore, the officials who had been attributing the low growth during the three years between 1999 and 2003 to the long cycle of drought should have the courage to give credit where it is due for the current year's high growth.
Pressure on Syria
American pressure on Syria seems to be mounting by the day. On Friday, President George Bush gave Damascus a deadline for withdrawing its troops from Lebanon - May. This demand, he said, was non-negotiable. To this newly-found urgency for a Syrian withdrawal, Britain's Labour Party government has added its voice. Speaking to the BBC, Foreign Secretary Jack Straw said Syria would become "a pariah" if it did not pull out of Lebanon. It should be news for all lovers of peace the world over that Mr Straw considers an 'occupying power' a pariah.
Whether Syria is an occupying power or not could perhaps be a matter of opinion. But the only Middle Eastern country that has been in occupation of foreign territory for 37 years is Israel. The UN, too, recognizes Israel as an occupying power and has demanded its withdrawal from the occupied territories. However, far from being considered a pariah, the Zionist state seems to be a role model for good neighbourly relations in the eyes of the US and Britain.
Syria moved its troops into Lebanon during the civil war (1975-1990). They were also there during Israel's invasion of its northern neighbour in 1982. Under the Taif formula worked out by an Arab League summit in 1989, the withdrawal timetable for Syrian troops was left to the two countries to decide. Over the decades, Syria has cut down its troops from a peak of 40,000 to 14,000 now. President Bashar al-Assad has agreed to withdraw, and Arab countries, especially Saudi Arabia, are advising him to get out of the country.
Lebanon has no armed forces to speak of. With emotions running high in the wake of former prime minister Rafik Hariri's murder, a sudden Syrian pullout could create chaos in Lebanon and lead to a lot of bloodshed. Nobody would profit from this anarchy more than Israel, which has for decades dreamt of a Lebanon that would be its vassal. Because there is no countervailing power that could keep America in check, Israel considers the present moment ideal for achieving all its objectives in the Arab world.
There have also been darker hints from Washington and Tel Aviv about taking military action against Syria. Seen against similar threats being hurled at Iran, these jingoistic policies could throw the entire Middle East into turmoil. Instead of threatening Syria, the United States and Britain would do well to leave the withdrawal issue to be worked out by Lebanon and Syria.