Imperatives of higher exports

ACCORDING to a report in this newspaper, efforts are being made to consolidate the gains in diversification of products and markets and to explore new avenues for exports. In a fast changing global economic and trading scenario, the need for an aggressive export policy, programme, strategy and plan of action cannot be over-emphasized. No doubt, overall exports have picked up sharply despite a slowdown in economic growth momentum in the United States and the outlook of the EU market, including dumping duties on home textiles and apparels. Yet, in spite of the sharp jump in the past three years, exports continue to remain confined to a few products and a few countries. The EU and the US account for over 54 per cent of Pakistan’s total exports. Though goods sold to India registered an impressive increase from $195 million to $288 million, the overall volume is still small. Similar is the case with other non-traditional markets. Foreign exchange earnings from non-traditional items are still relatively low. Among the fastest growing exports are machinery, transport equipment, plastic goods and household equipment. Foreign sales of engineering goods have soared to $71.3 million in fiscal year 2005 from $394 million in the previous year. But their contribution in the total export earnings of over $14 billion is rather small.

The production of export items has remained restricted and more or less unchanged for the past nearly half a decade. Combined with more market access after 9/11, the recent shift from import substitution to export-oriented industrialization has given an impetus to traditional items after a longer period of stagnation. But the inability to quickly diversify the domestic production base to cater to international demands raises questions about sustainable growth in exports. A positive trend is that exports are catching up with the regional trend, with Asia emerging as the top buyer of Pakistan’s merchandise with a share of 28.6 per cent followed by the EU’s 28.3 per cent and America’s 23.9 per cent. While the export performance so far has been good, a number of challenges are emerging on the global front. Oil prices are slowing down the pace of global economic growth and international trade expansion is shrinking. The current business cycle is inducing protectionism as indicated by prolonged WTO negotiations on the Doha round, EU dumping duties, imposition of textile quotas by EU and the US on Chinese textiles and the global imbalances caused by trade and current account deficits in the United States.

These challenges can only be met if the export-oriented industries cut costs and improve quality in view of a fiercely competitive export market. In this endeavour, the industry needs to be facilitated by the government. Exporters complain of dumping duties and rising production and capital costs as a result of soaring interest rates. The government needs to focus on reducing the cost of doing business which, among other things, is also dependent on cheaper and efficient energy, transport, port handling and a good network of roads and railways for quick and timely movement of exportable goods. Skilled labour, badly needed to improve quality and cut costs, is also in short supply. Lastly, management efficiency also leaves much to be desired. In short, Pakistan needs a strategy for exports that embraces improvement of human skills, cost effective infrastructure facilities, diversification of production and exports with a systematic effort to access international markets.

Curbing antiques smuggling

THE foiled attempt on Friday at Port Qasim by smugglers to ship Gandhara antiques out of the country points yet again to the existing menace in this area. Thankfully, the artefacts seized this time by the custom officials included only a handful of Buddha statues and figurines dating back to 200-400AD. Earlier in June, a much larger consignment containing 1,482 antiquities of the Gandhara and pre-Harappan periods was intercepted at Karachi’s East Wharf. Seizures of this kind by the authorities are rare; thousands of antiquities are shipped out of the country undeterred from time to time. It is believed that many unnamed but powerful parties involved in the illicit trade have made a career out of robbing the country of its historical relics, making this an organized racket. One says this because most of the antiquities are smuggled out not through porous borders but via the officially guarded exit points at airports and seaports. The smugglers use these channels to avoid detection in a third country en route to the final destination — often auction houses or private collections in the UK, the US or Japan. Last year, US custom authorities seized a big consignment of Pakistani antiquities at New York, among them stolen museum pieces, the fate of which is yet unknown.

There is a dire need for the federal and provincial archaeology departments, which oversee museums and historical sites, and the custom officials manning the exit points to formulate a common strategy to come down hard on smugglers. Also, if the past is any guide, the problem starts at the source: the museums and the protected sites. While thefts at museums — the Lahore Museum, the Badshahi Mosque gallery and the Lahore Fort museum being recent examples — are recorded, those taking place at excavation sites are seldom reported. It is an open secret that there is hardly a diplomat serving in Pakistan who leaves the country without a bagful of original Gandhara ‘souvenirs’ gifted to him by officials and friends. This, too, must be stopped.

Car sale premiums

ACCORDING to a report, car production in the first four months of the current fiscal year has risen by 26 per cent. In fact, even this jump in production and a 23 per cent rise in sales is such that a gap between demand and supply still remains. All this must make car manufacturers in the country very happy and explains their high levels of profitability. Unfortunately, the same cannot be said for car buyers. The compulsion of having to pay a premium amount on new models — which in some cases is as much as Rs 150,000 — is still there and in fact the situation has only worsened. To cope with the high demand and to ensure that vehicles are delivered in time, manufacturers have allotted booking quotas to their dealers. But the only effect these quotas have had is that genuine car buyers are being pushed to buy vehicles in the open market, where a car can be immediately purchased on payment of a hefty premium.

To make matters worse, buyers who wish to avoid future debt and do not opt for leasing are discouraged by the dealers. The objective of the quota system, which is to keep the delivery period reasonably short, is therefore not being achieved given that numerous cases have emerged of vehicles being delivered well past the stipulated date. The whole system is heavily tilted against the buyer, especially since full payment has to be made at the time of booking though the vehicle may well be delivered after half a year or more. Also, the incidence of defects in even new cars is on the rise with the buyer having no forum to register a complaint. The ministry of industries and production which oversees this sector has made many promises in the past to put an end to this racket but to no effect. It is time it took steps to help car buyers.

The beginning of the end?

PRIDE and arrogance comes with power and influence, for by its very nature, power corrodes and debases the noblest instincts. It is this universally acknowledged truth that led man to move away from authoritarian rule and opt for elected representative governments.

But human nature being what it is, even when leaders are elected for a fixed term of office, they acquire a belief in their own omnipotence. Thankfully, the institutional arrangements in a democracy, with its system of checks and balances, ensures that those carried away by their disdain for law and justice, end up being caught in a trap of their own making.

We see this time and again, the world over. In the case of the US, it is a historic fact that presidents re-elected with massive majorities trip up over seemingly innocuous incidents, and then failing to realize the enormity of their misdeeds, suffer far-reaching consequences. We do not have to go far to recall how President Nixon’s attempt to cover up the burglary attempt at the Democratic Party’s election office by his low-level aides led to the biggest ever political crisis in the US, forcing him to resign in disgrace.

President Reagan’s administration, too, within months of being massively reelected was caught in the trauma of Irangate, which led to the imprisonment of many of his senior aides, including the defence secretary, Caspar Weinberger. Bill Clinton, too, had to suffer the ignominy of impeachment over his attempt to cover up his dalliance with the young intern, Monica Lewinsky. And now, we have the first formal indictment in what has come to be known popularly as Plamegate. Its first victim is Lewis Libby, the powerful chief of staff to Dick Cheney, widely recognized as the most influential vice president in US history.

On a technical level, the case relates to the leaking of the identity of a CIA operative, Valerie Plame, whose husband ambassador Joseph Wilson was sent to Niger in 2002 to ascertain if Iraq had made purchases of uranium from that country. Though Wilson’s report ruled this out, President Bush and his senior aides continued to accuse Saddam Hussein of having done so as evidence of the Iraqi strongman’s ambition to acquire nuclear weapons. Outraged by what he perceived was a deliberate attempt to galvanize support for the invasion of Iraq, by engaging in deliberate lies, Wilson decided to speak out publicly.

In retaliation, well-known conservative journalists were informed of his wife’s identity. This was not only a violation of American law, but it also destroyed her career and compromised many of her contacts in the US and abroad. Thereafter, the administration’s attempt to deny any involvement in the episode, led to the special prosecutor initiating his investigation into the role of Lewis Libby and others in this cover-up. The five count indictment against Libby include perjury and obstruction of justice, which could result in a long prison term. More ominously, investigations are also continuing against Bush’s alter ego and most important political adviser, Karl Rove, and he may eventually be indicted as well.

Beneath this episode lie far more fundamental issues that are even more disturbing to the Americans. Did the president and his administration knowingly lie to Congress and people, when they sought to drum up support, on false pretensions, for the invasion of Iraq? Only time will tell us the full story. With more than three years left of the Bush presidency, even by American traditions, he should have had at least another two years of vigorous and productive leadership, before entering the lame-duck phase.

But we can already see evidence of an administration that is in a state of disarray, reeling from a series of mistakes that have dismayed its traditional supporters and greatly encouraged its opponents. The White House that had been run as a tight, disciplined and efficient unit, is showing unusual lack of command and control. Even Bush’s committed adherents in the conservative right have expressed their displeasure and that too publicly. In fact, one political commentator has characterized it as “the most horrible week of the Bush presidency”.

Only a few days earlier, the president’s nominee for the supreme court, Harriet Miers, withdrew her nomination, in view of the intense criticism from Bush’s closest conservative supporters, who accused the president of nominating a person whose academic qualifications were not only inadequate, but whose political orientation was suspect as well. It soon became obvious that in nominating his personal lawyer, the president was showing not only poor political judgment, but also engaging in blatant cronyism. This, coming from a president who always prided himself on being on the same wavelength as his core constituency, was most surprising.

In fact, there has been no notable success for the president in his second term. His domestic agenda is in the doldrums, with little hope of overhauling the social security system. The administration’s plan for reshaping the estate taxes has been stalled and even other pieces of domestic legislation lie unattended to in the various congressional committees. And, of course, the president’s credibility and reputation have received a massive battering from Hurricane Katrina, when he was shown to be not only slow and inefficient in his response to the disaster, but insensitive and callous to the pain and suffering of fellow Americans, who, incidentally happened to be blacks and Hispanics.

Meanwhile, the booking on felony charges of house majority leader, Tom DeLay, in a Texas court, was a real shock for the administration, which will find it increasingly difficult to find a replacement for this much feared party discipline enforcer.

Then we have Iraq, a festering wound that refuses to heal. While administration officials may speak in terms of unwavering commitment to seeing the occupation through, large sections of US public opinion have come out in opposition to the American presence in Iraq. Polls find that 54 per cent of Americans believe the administration made a mistake in invading Iraq, up from 24 per cent in March 2003, at the start of the conflict.

This shows that the casualty tolerance in Iraq is lower than in Vietnam, with not only Democrats and independents, but now even Republicans voicing their unhappiness. Some weeks ago, the influential Republican Senator Chuck Hagel of Nebraska, warned that the longer the US remained bogged down in Iraq, “the more it looked like another Vietnam.” Hagel, a Vietnam veteran himself, can hardly be dismissed as a peacenik.

Simultaneously, many senior US military commanders have also been speaking of their fears that the Iraq engagement is “not winnable”. The Americans have already spent over 300 billion dollars and lost 2000 lives in what they claim is their goal of bringing democracy to Iraq. But the only thing they have to show for all the money spent and the bloodshed, is growing insurgency all over Iraq, with terrorists finding it one of the safest places to operate from.

Senator Russ Feingold, who is among the Democratic Party’s aspirants for the presidency, called on the White House recently to withdraw all US forces from Iraq by the end of next year and criticized fellow Democrats for being too “timid” in challenging the administration’s Iraq policy.

Where does Plamegate fit in all this? It would be wrong to simply see this as the loss of one trusted aide. The indictment is evidence of a deeper malaise, for it exposes the whole philosophy and orientation of this administration as deeply flawed. As the former presidential candidate Howard Dean commented: “This is not so much about Libby or Rove. This is about the fact that the president didn’t tell us the truth when we went to Iraq.”

The Niger uranium story was simply one of the many conspiracies the administration engaged in, to manipulate or “cherry-pick” intelligence that would support their case for going to war. Whether it was the accusation of possessing nuclear weapons or of having linkages with Al Qaeda, (with no evidence of either) it was Dick Cheney who was spearheading this campaign. In fact, Cheney and the neocons had long wanted to destroy Iraq, because this is what Israel had desired and also because Iraq was to be the first step in the region’s American inspired march towards democracy! An administration with pretensions of making America a beacon of light for others to emulate and the ambition to make it the world’s sole indispensable power, is instead shown to have disdain for domestic laws and contempt for international treaties and conventions.

The only practical and acceptable way to improve the image of the US in the world is for the administration to abandon its doctrine of pre-emptive war and its advocacy of regime change and to renew its pledges to the various international treaties and understandings. While this may appear as a radical departure from current US policy, it is not as far fetched as it may sound. Similar sentiments are being expressed within the US itself.

For example, Richard Hass, a former official in both the Clinton and Bush administrations, calls this “the integration doctrine”. In his latest book, The Opportunity: America’s Moment to Alter History’s Course, Hass suggests that it would serve America’s interests to abandon hubristic ideas of her indispensability and to temper its unilateralism by pragmatic, mutually beneficial cooperation with emerging centres of power, such as the EU and China. Hass also points out that while “the US does not need the world’s permission to act, it does need the world’s support to succeed”. And, another former ambassador, Peter Galbraith, condemns this administration’s “arrogance and ignorance”.

In a recent speech, Lawrence Wilkerson, who was former Secretary of State Colin Powell’s chief of staff for four years, has provided fresh and incontrovertible evidence of this trait. He revealed that some of the most important decisions about US national security, including on Iraq, were made by a secretive, little known group, led by Cheney and Rumsfeld and charged that the “insular and secret working of this cabal was efficient and swift — not unlike the decision making one would associate with a dictatorship rather than a democracy”. Little wonder, this administration is so comfortable dealing with authoritarian regimes.