ISLAMABAD and Washington have agreed to work together to make Pakistan a hub of economic activity between South Asia and Central Asia, says foreign minister Khurshid Kasuri following the visit of President Bush to Pakistan. He said important decisions have been taken to expand trade and economic links between the two countries.

Both the countries have agreed on institutional frameworks for initiation of a dialogue on economy, energy, education and formation of joint committees on science and technology. President Bush had lent his support to the creation of Reconstruction of Opportunity Zones from where products will get duty free entry into the US market. The minister described it as an important step towards gaining enhanced market access in the US. But he did not quantify the amount of goods, which can enter the US on such a tax-free basis.

What Pakistan needs to become a hub of economic activity in the region is massive foreign and domestic investment, access to high technology and increased market access to the US. Two major agreements in this regard have been under negotiation for long with the US officials and will be finalized after settling some key details. These are a free trade area agreement and an investment treaty. The second one was earlier expected to be signed here during President Bush’s visit. But since the two countries could not agree on some vital details the conclusion of the Investment Treaty had to be postponed.

Textile manufacturers and exporters in Pakistan say that only two per cent of the textiles that enters the US is from Pakistan. They took out an advertisement in newspapers during the US president’s visit to urge him to grant far larger access to Pakistani textile products in the US market.

Advisor to the prime minister on finance Dr Salman Shah says that Pakistan will be a major player in the textile world following the end of the textile quota system. With the US textile quota being too off, that country can facilitate larger imports of textiles from Pakistan to harmonize with the growing strategic partnership between the two countries. In the area of economic cooperation no new concrete decisions were taken during Bush’s visit, but the two presidents agreed to continue the deliberations on various economic fronts at different levels.

A major deterrent to economic growth in Pakistan is the shortage of energy for new projects and for that matter to continue many of the existing projects and expand them. To overcome that Pakistan is seeking both investment and technological assistance on a large scale from both the US and China. Detailed discussions are scheduled to begin with these two countries for energy security and they are to take place soon. China is to help Pakistan in developing new nuclear reactors, in addition to the two reactors of 300 MW at Chashma. The extensive cooperation in the energy sector is to cover hydel power, electricity from Thar coal and various forms of renewable energy including solar power, wind power and power from bio-mass.

The nature of the energy development cooperation with the US has not been specified save expecting US companies to invest more in oil and gas exploration. Further details and the economic feasibility of new projects need to be worked out. The talks with the US may not cover cooperation in the development of civilian nuclear energy because of the adverse record of Pakistan in respect of nuclear proliferation, said the US secretary of state Condoleezza Rice.

Meanwhile what happens in the US Congress to the civil nuclear cooperation between the US and India remains to be seen. The opposition to the landmark deal seems to be strong there in the light of US government’s decision to abandon its policy of opposition to nuclear proliferation.

During his visit, President Bush did not make any public issue of US opposition to the Iran-Afghanistan-India gas pipeline deal. President Musharraf has confirmed that Bush did not raise the Iranian pipeline issue privately either.

President Bush came to Pakistan at a time when it has recorded a balance of payments deficit of three billion dollars for the first six months of the financial year and a record trade deficit of $5.6 billion in the same period because of high oil prices and heavy import of machinery.

The Opec ministerial council is to meet soon to fix the next output quota and its members are talking of an over-supply of two million barrels a day which may need to be pruned to keep world oil prices high. That may mean prices around 60 dollars a barrel or even higher. And Iran is threatening to use oil as a weapon if the western world stands in the way of its nuclear programme and take the issue to the UN Security Council. It is a very uncertain oil market with the certainty of higher prices for some more time, with political uncertainties in Nigeria which heads the Opec now.

In such circumstances, the western companies looking for oil and gas in Pakistan want wellhead prices to rise by 25 per cent. The government is not ready to agree to that and that can reduce the investment of western oil and gas companies in their explorations, say chiefs of these companies. Certain Pakistani oil prospecting companies are reported to have urged the western companies to ask for higher wellhead prices so that they too can benefit from such a rise, but they deny that.

In this context, the government has at last authorized the Oil and Gas Regulatory Authority to fix domestic oil prices every fortnight — a job which was being performed so far by the representatives of oil and gas management companies. How the OGRA does this job remains to be seen. If the management of oil companies was more keen in promoting the interests of oil companies while revising oil prices every fortnight, the OGRA can be influenced by the interests of the government which wants larger revenues from the oil prices as oil development surcharge. The oil prices remain frozen at their highest level for many weeks despite a fall in world oil prices and the first oil price fixing by the OGRA may show how it intends to do its work. The high domestic prices have lasted long enough and the consumers need some real relief.

These are days of high prices of essential goods all around. So much so that the core inflation (minus the oil and food inflation) rose by eleven per cent in the first six months of this financial year and the normal inflation rose by 8.4 per cent against the target of eight per cent for the year. Sugar prices are still above Rs 40 a kilo after touching Rs 50 at places and the frustrated economic committee of the cabinet has now decided to monitor the price of basic consumer items every weak. The utility store are selling sugar at Rs 27.5 per kilogram after its supply had been raised from 11,000 tones to 32,000 tones per month. The prime minister has also ordered a medium to long-term strategy in consultation with the provincial government to ensure the availability of sugar at sustainable prices.

The prime minister has ordered legal action against those sugar mills found indulging in profiteering, irrespective of the status of the owners. This is important as several cabinet ministers are said to be owning more than one sugar mill and they had attributed the short rise in sugar prices to soaring international prices as if Pakistan had no sugar industry of its own and no stocks. Nineteen sugar mills are reported to have profiteered a great deal not only through the locally manufactured and hoarded sugar but also by importing raw sugar and processing them for sale at high prices and also profited by the import of processed sugar. It will be interesting to see how they are brought to book.

It remains to be seen how a committee which will work permanently to monitor prices will function effectively, keep a watch on prices and empty the hoarded stocks and bring down prices. Meanwhile, one would like to see how certain ministers are exposed and punished for profiteering.

Meanwhile, hoarders and profiteers are moving towards wheat about which over-production and under-production are reported. Anyway it is now certain that wheat production would be one million tones higher than last year’s 22 million tones due to the recently improved weather. The prime minister has asked the provincial governments and Pasco to buy wheat at a procurement price of Rs 415 for 40 kilos. The Punjab government had earlier proposed to export the surplus to make space for new arrivals and reduce the burden of bank credit on the old stocks. Meanwhile, the opposition parties have dubbed the enquiry into the sugar scandal as an eyewash to cover up the ministers.

Meanwhile, the National Economic Council sees the economic growth this year at 6.5 to 7 per cent and the Asian Development Bank confirms the growth at seven per cent. India has set a target of ten per cent economic growth for the next financial year beginning on April 1.

The Federal Bureau of Statistics has reported a fall of six to seven per cent in poverty in Pakistan. In the rural areas poverty is said to have come down by 7.2 per cent to 31.8 per cent from 39 per cent. In urban areas poverty has been reduced by 5.5 per cent to 17.2 per cent on the basis of caloric consumption of food and not the universal dollar a day formula. The FBS also states that unemployment came down by seven per cent last year but the figures are debatable. As a truly autonomous FBS, as proposed, is yet to come up.

If Pakistan wants to become the hub of economic activity between Central Asia and South Asia, our businessmen will have to move away from their preoccupation with making big money unfairly or illegally and will have to become entrepreneurs in true sense. They have to set for themselves and the country bigger targets and then achieve them. The foreign countries whose assistance we seek or whose investment we solicit will not be impressed by the small preoccupations of our entrepreneurs to make big money quick.

After all, the economy is getting more and more privatized and it is the performance of the private entrepreneurs which matters and will determine the kind of economy we will be developing with foreign assistance or foreign investment. They have to make sure the economic activity, of which Pakistan wants to become a hub, is a healthy and truly beneficial to the country.

GLOBALIZATION scares people. Security threats scare people. By fusing these fears during the Dubai ports flap, demagogues have had a field day. Now, having demonstrated this formula, the demagogues are poised to strike again. Their next target will be arriving soon, in the person of President Hu Jintao of China.

For a fear monger with a club, next month’s Chinese state visit is a self-teeing golf ball. China accounts for more than a quarter of America’s astonishing trade deficit, and the country has become a proxy for all globalization anxieties: It’s painted as a low-wage threat and simultaneously a high-science threat, a piratical menace to technology patents and simultaneously a challenge to America’s scientific preeminence.

Meanwhile, China constitutes a security threat, too: It’s spending billions on an arms buildup. If demagogues can turn a tiny ally such as Dubai into a villain, you can bet they’ll do the same for China.

Politics makes this irresistible. Democrats talk bravely of taking back the House this fall, but they acknowledge that, despite the Iraq mess, Republicans retain an edge on national security. The way to neutralize that advantage is to link security to pocketbook concerns, on which Democrats are more trusted. If security means fighting terrorists, President Bush’s credentials remain difficult to challenge. If security means standing up to foreigners despite commercial temptations to make nice, voters are more likely to back Democrats.

So the Dems are going to play the China card, and the Bush administration, which will be in the uncomfortable position of hosting Hu’s visit, will be thrust onto the defensive. Congressional Republicans, who have stopped betting their job security on the president’s prestige, won’t listen to the administration’s pleas for statesmanlike restraint. When Democrats attack China, Republicans will scramble to sound equally aggressive.

You can see this process playing out already. Sen. Chuck Schumer, one of the chief brewers of the Dubai storm, is sponsoring a bill that would impose a 27.5 per cent tariff on all Chinese goods unless China revalues its currency. This tariff would be illegal under the rules of the World Trade Organization, but Schumer doesn’t mind: His bill isn’t going to become law, but it will advance the electoral prospects of the Democratic Party. Meanwhile, Republicans are readying their response. Sen. Chuck Grassley, the chairman of the powerful Finance Committee, is cooking up his own anti-China legislation.

So the stage is set for competitive China-bashing, and it’s not clear that the administration will be able to keep the lid on. So far the Bush team has been responsible on China, coaxing it to revalue its currency for its own good while holding off Schumer-style pressure for a trade war. But there are signs that this forbearance may be running out.

The Treasury may be getting ready to brand China a currency manipulator in a report that’s due out around the time of Hu’s visit, and the administration recently produced a “top-to-bottom” review of trade with China that was designed to sound macho. The scary thing is that if protectionist pressure mounts, China’s response won’t follow the Dubai playbook. We’re not dealing with a private company that wants to know how high to jump. We’re dealing with a brittle dictatorship that has limited space to accommodate American demands, even if it wanted to.

Strange though this may sound, China’s policy toward the United States resembles US policy toward China. The Chinese leadership, like the Bush administration, has tried to make economic relations go well, tackling domestic lobbies in the process. Since China’s accession to the WTO five years ago, it has changed thousands of statutes and regulations in order to comply with WTO rules, so much so that the United States has brought fewer WTO cases against China than it has brought against Europe.

But there is a limit to what the Chinese regime feels able to do, just as there is a limit to the political risks that the Bush administration will run to head off a trade war. The Bush administration isn’t doing the main thing it could do to bring down the US trade deficit: get serious about balancing the federal budget.

—Dawn/Washington Post Service

VISITS by modern world leaders of the stature of the president of the United States are no different from the royal progress of ancient monarchs, with one important difference. Earlier rulers expected to receive tribute proffered by their vassals; nowadays, a visiting dignitary is expected to give, rather than to receive.

During his recent South Asian tour, President George W. Bush visited three countries. In Kabul, he gave Afghanistan the reassurances that it craved; in New Delhi, he gave India what it wanted; and in Islamabad, he gave Pakistan what it deserved.

Pakistan’s establishment would have done well to have remembered the advice of an earlier president “read my lips”. Had it done so, it would have understood more clearly the message that the present president brought with him after his talks in New Delhi. President Bush articulated it the following day on March 4 during the press conference he held jointly with President Pervez Musharraf at the Aiwan-e-Sadr. Pre-empting any last-minute supplications by Pakistan to be granted the same favour he had just conceded to India on its civilian nuclear programme, Bush said that ‘Pakistan and India are two different countries with different needs and different histories.’ US strategy in the region would take into account ‘those well-known differences.’

And in that one dismissive remark, an American president who found it difficult to locate Pakistan when he was elected for his first term, achieved something that the British could not resolve in 1947, and that every subsequent government in India and in Pakistan has been unable to since. At a stroke, he severed the gristle of history that has connected the two nations. He has liberated them from each other, like amputated Siamese twins, and told them to learn to lead their lives separately. Physical neighbours now find themselves standing at uneven arm’s length from the United States.

It was symbolic that during the longer time he had allocated to India, President Bush visited Hyderabad a centre of the IT industry upon which the US is now so dependent. It was equally symbolic that during the precious little time that he allotted to Pakistan, he should have spent part of it learning how to play cricket, a game bequeathed to it by a previous imperialist power. To paraphrase John F. Kennedy, the torch was being passed to a new generation of imperial superpower, in the form of a cricket bat. At a pitch created within the US embassy compound (a Fort Knox in Islamabad), President Bush was taught by local schoolboys how to bowl and how to bat. Later, at the official banquet given in his honour by President Musharraf, Bush disarmed his audience by saying that he had been bowled a ‘googly’. If he could indeed have been able to distinguish such a delivery, he must have learned the game faster than his hosts have done, for they are still shouting ‘no ball’ at the US-Indian nuclear deal.

It would be tempting to compare Bush’s visit to India with his stay in Pakistan, tempting but unfair. The two visits were conducted at different planes, with differing levels of seriousness and with different objectives. One was to establish a bedrock of substance that would support the sky-scrapers of future US-Indian relations and the official US recognition that India has been elevated to the level of a regional power and put on the short-list for promotion to superpower status.

The trip to Islamabad by contrast was no more than a froth of form suspended over a mirage of elusive substance. If it had a purpose, it was to tell Pakistan that the US interests in the region had matured, even if Pakistan itself had not. Pakistan — a predominantly Sunni Muslim country with nuclear capability — was in effect being placed on probation, on a watch-list one notch lower than a predominantly Shia Muslim country with nuclear capability, Iran.

Everything that occurred before and during President Bush’s visit to Islamabad sadly has confirmed the direst of suspicions nurtured by political pessimists, from the ill-timed attack on the US consulate in Karachi to the ill-advised boycott by the opposition parties of the banquet given by President Musharraf in honour of Pakistan’s American guest. The opposition leaders were understandably annoyed that they had not been allowed to complain privately to Bush against Musharraf. Instead, like supplicants at a Mughal fort, they went to the US embassy, rang the bell and petitioned their remonstrances.

Imran Khan may conceivably have been miffed that he had not been invited to coach the US president at the crease. After all, he is the man who led the national cricket team to victory in the World Cup tournament, just as he hopes now to lead a national electorate to victory in the next general elections. Like his fellow oppositionists, he should have read Bush’s lips. Asked about the likelihood of democracy in Pakistan, Bush said that he and Musharraf had “spent a lot of time talking about democracy in Pakistan and I believe democracy is Pakistan’s future”, and then left it to President Musharraf to speak for himself on this issue, knowing that Musharraf’s answer would be: Jam yesterday, jam tomorrow, but no jam today.

An older generation of Pakistanis that witnessed Eisenhower, Kennedy and Johnson endorse Ayub Khan, Nixon support Yahya Khan, and their successors sustain Ziaul Haq would not have been surprised at Bush’s paeans of praise for Musharraf. One forgets looking at the two presidents standing side by side, dressed in business suits with their national flags pinned on their lapels, that one of them is a president who is also the commander-in-chief of his nation’s forces and the other is a chief of army staff who is also the president. The first does not need a uniform to exercise his authority; the second admits that he cannot function without it.

To those millions of Pakistanis who had hoped that this visit by President Bush might have enabled him to get a better, freer understanding of their country felt a sense of embarrassment bordering on mortification watching the arrival of Air Force One at Chaklala airport on the evening of March 3. He and the first lady were not greeted by his host or by the prime minister augmented by his phalanx of 59 ministers (surely there must be some safety in such numbers?). Instead, they were received on behalf of 160 million Pakistanis by the foreign minister and then marched briskly past a guard of honour consisting of empty buses, lined up like circus elephants, nose to tail, in a protective arc around the Boeing aircraft.

From then until his departure the next evening, President Bush remained cocooned within the US embassy or the presidential palace, where a parody of protocol was performed for the benefit of television audiences. To many watching the news coverage, President Bush seemed at times less like a visiting head of state than an ageing boy secluded in a plastic bubble, sealed off from the environment outside, and ingesting only what he was being fed to him by his spin doctors. If security was the issue, then former Indian Prime Minister Atal Behari Vajpayee was a braver man, for having travelled to Islamabad in January 2004 within months of the assassination attempts on Musharraf’s life, and then daring to be seen in public with him, despite the hazards to his own life at the hands of a Pakistani assassin.

Many years from now, chroniclers of this day in Pakistan’s history will have to find ink black enough to express the dark, deep anguish felt by a nation of hospitable Pakistanis at this furtive visit by such a VIP guest, who arrived by night, almost by stealth, and then left under the cover of darkness the following night.

Bush arrived empty-handed, and he left behind empty promises. One of them was a prospective visit by his energy secretary, Sam Bodman. Will Mr Bodman’s task be, one wonders, to throw a shard of light on future US-Pakistan relations, to replace the ray of hope that was encouraged by Bush’s Pakistani hosts to flicker on March 3, and then extinguished so decisively by him the next day?