Economic links with India

THE freezing of the composite dialogue between India and Pakistan which was to resume this week has come at a time when Pakistan was proposing to enlarge the range of goods importable from India in its ‘positive list.’

In fact, India had earlier sought 286 products more to be added to the long positive list of items which can be imported by Pakistan from India. And Pakistan had accepted about 240 items which would have raised the number of items tradable with India to 1013. Currently Pakistan’s positive list consists of 773 items.

While the number of items on the positive list is large the total volume of goods traded has not been that large. Anyway the size of the Pakistani list has been expanding constantly to meet its needs and the expectations of India.

A controversy has long been ranging in a muted manner over Pakistan’s reluctance to grant the most favoured nation (MFN) treatment to India under the Safta which came into operation from July 1. Pakistan prefers trading with India on the basis of its positive list. While not willing to agree to that contention of Pakistan, India is happy to see the positive list expanding from time to time and the volume of trade gradually increasing.

Apart from the growing people-to-people contact and the rising cultural exchanges and the introduction of bus services between India and Pakistan and between the two Kashmirs, a major positive development have been in the area of trade, not so much in terms of volume of goods exchanged formally, but in the enlargement of the variety of goods and the enthusiasm of businessmen on both sides to increase and escalate their cooperation.

But now it is uncertain whether 240 items will be added to the positive list and whether the expansion of the trade will take place between the two countries in the immediate future or remain suspended until the resumption of the composite dialogue.

The suspension of the peace talks between India and Pakistan has taken place at a time when the economic cooperation between the two countries was about to break new grounds. Besides, the finance ministers of the Saarc countries had met for the first time to consider enlarging the scope of economic cooperation between the member countries, raising hopes of closer links, particularly after the Safta had come in to force from July 1.

In fact, the next phase of the composite dialogue was to begin with the meeting of the foreign secretaries of the two countries followed by a meeting of the foreign ministers to review the third phase of the composite dialogue and plan the next. Now both the meetings have been put off until India is satisfied that Pakistan had no hand in the latest Mumbai tragedy which claimed about 200 lives.

What will happen to the trade in five basic vegetables and meat importable from India, apart from the sugar deals which Pakistan needs to fight the battle against inflation? Earlier, the economic cooperation was to be raised to the extent of substantial investment by India which included investors like Lakshmi Mittal and Rattan Tata, but now the prospect of such cooperation is a big question mark

Meanwhile Pakistan has formulated its trade policy which was a challenging task in view of the fact it had not been able to achieve the 2005-06 export target of $17 billion, while the imports have far exceeded the $21 billion ceiling. At a meeting presided by Prime Minister Shaukat Aziz, the officials suggested an increase of eight percent in exports in the current year over the 2005-06 performance. But the prime minister rejected that outright as that was far below all the rising economic indicators. He had earlier asked the planning commission to suggest the means to raise the exports to 15 per cent of the GDP this year from 13 per cent last year.

Ultimately, an export target of $18.6 billion has been set along with imports of $28 billion and a trade deficit of $9.4 billion. The central issue is the performance of the textile sector. The officials advised the prime minister to accept a large package of concessions and reliefs for the crucial textile sector. But while the textile exporters wanted a relief package of $50 billion, the EEC approved a package of $22-25 billion. The textile sector has rejected that package arguing it is too little too late.

The president and the prime minister had asked a conference of Pakistani ambassadors in Islamabad to help increase the exports and popularize Pakistan’s exports in new areas. The success of the ambassadors has been small and they have too many complains against the shoddy practices of some of our exporters. Such long standing complaints should be eliminated and the overall exports should be made a much more professional work than it has been.

The trade with India, still under one billion dollars is not large to have an impact on the overall export performance, but it has the potential to become large if both the countries approach it in the right way and do not make quick changes in policies and procedures.

There are two kinds of approach to increase trade between India and Pakistan. Pakistan’s view is to settle the Kashmir issue first and the settlements of other issues can follow. Pakistan argues that if the Kashmir issue remained a stumbling block between the two countries, large-scale trade between them cannot follow and any attempt to expand trade despite that could be on a small scale and subject to interruptions. Hence the initial focus of the two countries should be on Kashmir.

But in recent years, following the beginning of the composite dialogue and the flexibility which Pakistan has been showing, president Musharraf has been arguing that if the Kashmir issue cannot be settled immediately, a way should be found for its settlement and then trade and cultural exchanges can follow.

The Indian approach has been that non-core issues should be settled first and trade and cultural exchanges made to flourish and in that environment of increasing goodwill a solution of the Kashmir problem can be attempted. India’s stand in this regard has been consistent while the nuances of that stand may vary and hence there has been no serious and sustained attempt to grapple with the Kashmir issue that has resulted in three wars between the two countries in these first 22 years.

The Indian attempt is to increase goodwill between the two peoples and increase the cultural exchanges between them. In such an environment, India hoped that Pakistanis would tend to relegate Kashmir to the back burner, if not forget that substantially. But that is not coming to pass. If India is not ready to make concessions in Kashmir, it does not want to make small concessions in Siachen or Sir Creek issues on which there have been too many meetings.

Yet another factor of significance is the rise of the voice of the Kashmiris. They want to be heard on the future of their state after they had sacrificed almost a hundred thousand lives and that their voice be respected. That includes the voice of moderate leaders like Mirwaiz Umar Farooq. They cannot be taken for granted by Indian or Pakistan. And if they are not heard by others receptively, they will assert themselves violently as has been happening in Kashmir in recent years.

So in spite of the large number of people crossing the borders to visit the other country, the vast number of cultural exchanges and trade missions visiting each other, the basic dispute between the two countries remains unresolved. There has been talk of large scale investment in Pakistan by Indian entrepreneurs, but the prime minister says: settle Kashmir first, and all the investment needed can follow.

The big powers, led by the US, have been strongly in favour of a negotiated settlement of the India-Pakistan dispute. They want peace and mutual cooperation in the region instead of futile wars that increase the misery of the people and increase the number of the absolutely poor. They want economic cooperation between India and Pakistan, particularly in the area of energy . They want Pakistan to serve as an energy corridor, linking South Asia with Central Asia including China.

Now that the composite dialogue has been put off indefinitely, what would happen to the India-Pakistan cooperation on the gas pipeline with Iran. Both India and Pakistan have been taking a joint stand on the price of Iranian gas which has not been to the liking of Tehran. Will Pakistan go for the Iranian gas without India which will make the pipeline more costly?

What would happen to the Turkmenistan-Afghanistan-Pakistan-India gas pipeline? Will we do without India hitherto?

The fact is that whether we have trade through formal channels with India or not, trade will continue to take place through smuggling or through third countries like Dubai and Singapore and the volume of that informal trade may be larger than the formal trade. As a result the government will be a loser, not receiving all the import taxes and the sales tax and the consumers may not be the real gainers for that. The potential for informal trade is estimated at one to three billion dollars and eventually to five billion dollars.

In such an environment it is better for both the countries to do anything which promotes large scale informal trade. India and Pakistan have much to gain from a truly cooperative relationship and much to lose without that. In this area the lead has to come from India as it has suspended the dialogue with all its eventual possibilities.

The Lebanon offensive

WHO started this madness in the Middle East depends on who you talk to. Factually though, Israel killed a family picnicking in Gaza. Hezbollah reacted by kidnapping two Israeli soldiers and Israel has responded by unleashing the fourth most sophisticated army in the world on the civilian population of Lebanon.

Television brings wars into our living rooms and makes one’s helplessness to affect the situation unbearable. David Brooks of The New York Times criticises Israel being labelled as “overreacting”. Israel’s enemies, he writes, have gone “completely berserk and the Arab world has ceded control of this vital flashpoint to Mahmoud Ahmedinejad and Bashar al-Assad”. When faced with the overreacting label, General Dan Halutz, chief of staff of the Israel army, said that the issue was not the kidnapped soldiers; Israel was trying to remove the Hezbollah from southern Lebanon.

That the means to this end is killing civilians seems to be totally glossed over. A large number of Lebanese civilians have died, the country’s infrastructure has been weakened and the pounding continues. With the graphic woes of war comes the collateral damage of watching world leaders and the notably powerful make fools of themselves.

President Bush says for the umpteenth time: “Israel has the right to defend itself and the world cannot deal with terrorists like the Hezbollah, Syria and Iran.” As far as the Middle East is concerned there is no partisan politics; it is one of the few issues in which you cannot separate a Republican from a Democrat. Money filling campaign coffers is like a nuclear missile to consciences.

The greater tragedy is that there is essentially no representation of Muslims in the US Congress. The few Christian Arabs that are elected have no sway in terms of the larger agendas of the two parties. The United States and Britain are expected to be partial. Germany seems to have joined them. Russia is appropriately neutral and still able to call for calm, and France states clearly that Israel’s was an overreaction and civilians should not be attacked. Perhaps the last is powered by the six million Muslims in France and their political clout.

The Saudi Foreign Minister Saud Al-Faisal said, “Hezbollah’s acts are unexpected, inappropriate and irresponsible. These acts will pull the whole region back to years ago, and we cannot simply accept them.” The American media uses this to say that the Muslim world is with Israel.

Wolf Blitzer of CNN interviewed Imad Moustapha the Syrian ambassador to the United States. This article is an unabashed tribute to his articulate voice in all this cacophony. Blitzer quotes President Bush saying that we needed to get to the root cause of terrorism. Moustapha’s response: “I was so happy to hear the president say that we needed to get to the root cause of terrorism, for the root cause is the occupation of Palestine and the humiliation of Palestinians by Israel. But no, he immediately blamed Syria and Iran. He never goes to the root cause of terrorism. We need peace and it can only be achieved if the Israeli occupation of Palestine ends as well as the daily infringements on Lebanese sovereignty.”

Syria is painted as a villain and yet it has opened its borders to hundreds of thousands of people fleeing Lebanon and Americans are allowed into Syria without the usual hassles of visa constraints. Syria is helping Lebanese-Americans but appreciating Syria for this gesture is out of the question.

“Does not Syria provide training to the Hezbollah?” asked Blitzer. “No we don’t. This only serves to ignore the big elephant in the room which is the aggression and atrocities of Israel against Lebanese civilians.”

Undaunted Mr Moustapha continued: “President Bush says that he is the friend of Lebanon. When Lebanon moved the Security Council to stop the massacre, the United States objected.”

“Does Syria allow the transshipment of equipment from Iran through Syria into Lebanon?” asked Blitzer equally persistent. The answer was, “While the whole world’s attention is focused on the massacre in Lebanon, Israel is trying to change the paradigm and trying to refocus the attention by saying Damascus-Tehran, Damascus-Tehran. Stop this! Damascus and Tehran are not the problem; it is Israel’s aggression on its neighbours.”

A particularly powerful point in the interview came when Blitzer read out a State Department statement accusing Syria of funding Palestinian militant groups, Hamas and Hezbollah. The ambassador said that this was just as credible as the US allegation about Iraq’s WMD and Saddam’s relations with Al Qaeda. Then he turned directly to the camera, as it unwittingly closed in on him and said, “Stop bluffing the American people, the issue is the occupation, help us end the occupation, you are the closest ally to Israel, you have influence and leverage on Israel. Convince the Israelis to end the occupation of Palestine and peace will be achieved in the Middle East.”

Whenever Mr Moustapha hit sensitive issues or became superbly articulate, Wolf Blitzer would say “we are almost out of time”. The world is certainly running out of time as the conflict escalates and the blood of innocents finances the agendas of the stone-hearted.

Savagery of Israeli attacks

“What they really need to do is to get Syria to get Hezbollah to stop doing this shit, and it’s over,” said President George W. Bush over an unnoticed open microphone at the St. Petersburg summit on Sunday, but it isn’t really that simple. There are two sides in every fight, and Israel is doing some shit too.

Hezbollah certainly started the fight (by crossing Israel’s border and taking two soldiers hostage), but it is not clear as to who is the mastermind (Syria or Iran) behind the operation although Sheikh Hassan Nasrallah, the leader of Hezbollah, is perfectly capable of taking this initiative on his own.

True, the rockets that have been raining down on northern Israel (2,000 so far, leaving 16 Israeli civilians dead) were made in Iran. But then the F-16s and Apache gunships that are pounding Lebanon (130 Lebanese civilians dead so far) were made in the United States, and that doesn’t mean that Washington ordered the Israeli offensive against Lebanon.

Nasrllah knew that the Israeli retaliation for the kidnapping would fall mainly on innocent Lebanese (because they are much easier targets than his elusive guerillas), but he doesn’t care. He had a few surprises up his sleeve, like longer-range rockets that could strike deep into Israel and radar-guided Silkworm anti-ship missiles to attack the Israeli warships that used to shell the Lebanese coast with impunity. And if he manages to fight Israel to a draw, he will come out of this the most popular Arab leader since Nasser.

General Dan Halutz, the Israeli Chief of Staff, was also spoiling for a fight. His major concern has been that Israel’s “deterrent power” has gone into decline, and he wanted to re-establish it. Some Israeli defence analysts, like Prof Gerald Steinberg of Bar Ilan University, believe that the plan for the massive strikes against Lebanon has been sitting on the shelf for several years, awaiting a provocation that would justify putting it into effect. But what does “deterrent power” actually mean?

Understand that, and you understand the remarkable savagery of the Israeli attacks on Lebanon. Of course they are a “disproportionate use of force”, as French President Jacques Chirac called them the other day. That is the whole point. Israel’s “deterrent power” lies in its demonstrated will to kill and destroy on a vastly greater scale than anybody attacking it can manage. Its enemies must know that if one Israeli is killed, a dozen or even a hundred Arabs will die.

This has been the dominant concept of Israeli strategy from the very foundation of the state, and the “kill ratio” in all of Israel’s wars down to its invasion of Lebanon in 1982 conformed to that pattern. The first time it didn’t apply was in the struggle between Israeli troops and Hezbollah during Israel’s prolonged occupation of southern Lebanon in 1982-2000, when the Israelis were managing to kill only a few Hezbollah guerillas for each of their own soldiers who died.

That steady drain of lives was the main reason the Israeli army pulled out of southern Lebanon six years ago, but many people in the Israeli defence establishment were concerned at the time that Israel’s “deterrent power” had been gravely eroded by Hezbollah’s victory. And subsequent clashes with the Palestinians did not see the old ratio restored: during the years of the so-called “second intifada”, only three Palestinians were dying for every Israeli who was killed.—Copyright

Creating a good image

GOVERNMENTS seem to believe that the image of a country is created by either having a press which does not report anything negative or by an efficient advertisement lobby.

Journalists and academics, as well as other articulate members of civil society, can be charged with treason if they report the truth or even their own opinions. Conversely, if they lavish praise on every government policy they are called patriotic.

Those in the advertisement and public relations business assiduously cultivate foreign politicians, journalists, academics and other prominent people. These, in turn, become a kind of lobby or pressure group which helps to boost the image of the country.

The lobby works well, provided the country has not flouted international norms and opinions too flagrantly. A few deviations here and there are explained away by spin doctors and cracks are papered over by cash. But if the country trips every time it takes a step, it does not have an “image problem”. It is plain bad — the reality, not the image.

The establishment in Pakistan, however, feels that journalists need to be bribed or tamed. It also feels that spending millions on gifts for foreign decision-makers and lobbyists is enough. It is not enough. Even more wrongly, and dangerously, the establishment feels that it is dissenting journalists, columnists, academics, NGOs and rights activists who give the country a bad image.

This is wrong because all such people give the government a good name simply by existing. It is because of their writings, critical as they are, that Pakistan is said to have a fairly free press. It is this which makes military rule almost like flawed civilian democracy in the eyes of most foreign observers and Pakistanis themselves. One often finds foreigners coming across a report in the English-language press and exclaiming with amazement and admiration that they did not expect this under military rule in a Third World country.

So, the liberal press actually works to give Pakistan a good image. However, there are people in the administration who do not seem to be aware of this. Recently, they have started tarnishing the image of the country by attacking journalists. If journalists are found dead or if they disappear, the government cannot pretend to be anywhere close to a democracy of any kind. It is true that many governments around the world have frequently resorted to muffling the press in their country but they have not earned respect for doing so.

Admittedly, in Pakistan state-sponsored attacks on the press are fewer when compared to regimes such as Saddam Hussein’s Iraq or North Korea. But they should not be there at all. It is a question of principle. Even the slightest deviation from the accepted norms of political behaviour can give the country a bad image. Moreover, once illegal practices are condoned they threaten to become the norm.

Guantanamo Bay is an example of how the American justice system has been corrupted. If the US now has a bad image, it is because of a reality that is grim and not because it cannot invest enough in individuals and groups to enhance its image. This is not to say that it does not have a loyal press. Indeed, the failing of the American press is that, whether embedded or otherwise, it is prone to toeing the government line. This gives it far less credibility than the British press.

So, if the present regime in Pakistan really wants a good image it must dismantle all apparatuses and extra-legal powers which deviate from the spirit and the letter of the law in matters concerning the life and liberty of its citizens. If it wants an even better image, it should prevent any intrusions into Indian-held Kashmir and invite the United Nations observers to certify that Pakistan really wants peace with India, thus forcing India to either demilitarise Kashmir — as Pakistan rightly demands — or face international embarrassment.

An even better image will come from a declaration by General Musharraf that he will contest the elections as a civilian presidential candidate in accordance with the spirit of the 1973 Constitution. This will make him popular and provide him with exit strategies which are not open to him at the moment.

For good measure, he can deal legally with the reported corruption of the sugar mafia, the perceived misconduct of his military colleagues in locomotive deals and the charges of over-spending and buying luxury items by those in government. Doing all this will make him popular and, therefore, less dependent on any one lobby for votes.

It is true that such steps may backfire simply because the lobbies which will lose are so powerful that General Musharraf may face electoral defeat. However, it will be safer and more honourable for him to find an exit now than to be further embroiled in appeasing lobbies which will make him increasingly unpopular. Moreover, the country will certainly benefit if there is a resulting good image. It will achieve moral clout and, possibly, more investment of the kind which will create employment.

An even better image will be created by looking at the redistribution of wealth and the human cost of globalisation with regard to the current privatisation policies and the withdrawal of subsidies. At the moment, poor people are losing their jobs while those heading organisations have fabulous salaries that are contributing to a rising sense of anger and a feeling of being cheated among those who are poor. Moreover, as the irregularities of privatisation are exposed, this anger spreads to the articulate middle class, making people feel that the country is a banana republic whose functionaries are bent upon robbing it and that its assets are being sold for a song. Can something be done about this reality that is creating a bad image.

The conflict in Balochistan and Waziristan also give a bad image to the country. Whatever the reality, the common perception is that the government has been less than sensitive in Balochistan. A more conciliatory attitude along with real justice in the distribution of resources and power will certainly produce good results. But this will mean talking to the Baloch and maybe a new deal in both Gwadar and Sui.

As for Waziristan, this is seen as America’s war and the immediate reaction of increasing troops after US Secretary of State Condoleezza Rice’s visit seems to strengthen this perception. The government should explain clearly and with the help of neutral journalists that this is Pakistan’s war. It should adopt a consistent policy towards religious extremism and violence and not use the religious lobby for any of its purposes. It should also eliminate extremist messages from its textbooks and media. Then maybe its claims will be credible. Otherwise, they will be taken as justifications for one of America’s wars.

In short, sound policies are not only good in themselves. They are also good because, at the end of the day, they strengthen the state and make its citizens safer from the tyranny of both the state’s functionaries and foreign exploiters.