Economic links with China

PRIME MINISTER Shaukat Aziz made the most useful and productive visit to China last week and signed 27 agreements and memoranda of understanding with the neighbouring and most friendly country. The agreements consolidate the old relationship between the two countries and opens new vistas of cooperation with immense possibilities.

As a result of cooperation in space, between the space administrations of the two countries, a space satellite is to be launched for communication purposes and an earth satellite later. A notable feature of the close relationship is the expanding cooperation between the private sectors of the two countries. Of the 27 agreements, 14 are in the public sector and 13 in the private sector. So the private sector in Pakistan has a much larger role to play in boosting the economic relations with China.

Shaukat Aziz said at the BOAO conference of Asian leaders, where he made a rather futuristic speech, that he is looking forward to the shaping up of the new century as the Asian century. China, Japan, India and Pakistan are to be the lead players. The role of South Korea has to be recognised. Asia, he said, will lead not only in production but also in consumption as the purchasing power of the people of China, India, Pakistan and the Gulf countries improves. He wants the Asian countries to focus on three things – energy security, prevention of environmental degradation and development of their own global brands which will attract global consumers. He also wants the Asian countries to improve the lot of the poor as they get richer.

After offering to China an energy corridor to carry oil from the Gulf region to Western China, he has offered another energy corridor for carrying gas from the Middle East to Western China and Central Asia. But China may find it more economic to get its gas supply from the nearby Central Asian states like Turkmenistan. However, the gas reserves in the Middle East are much larger than those in Central Asia. It has now been reported that the oil reserves of Iraq are almost double of what was earlier estimated.

Anyway, China will be a major player around the Gwadar port which it helped to build. Now, it has agreed to build an airport there at a cost of $100 million. Railways minister Sheikh Rasheed Ahmed now talks of a railway link between Pakistan and China so that people from one country can visit the other with ease. He has also proposed to use Chinese signalling experts for Pakistan railways to reduce accidents. That linkup will follow the railway linkup between Quetta and Kandahar which brings together Afghanistan and Pakistan and another linkup between Zahidan and Taftan.

It is proper that while developing railway system we should have a proper linkup with the neighbouring countries, and not merely a token linkage as with India. We are seeking large-scale cooperation with China at a time when it has recorded a growth rate of 11.1 per cent in the first quarter of the year despite Beijing’s efforts to hold down the growth rate and cool its economy. Its exports are rising and its investment in the infrastructure is paying good dividends after it recorded a growth rate of 10.7 per cent last year.

China’s inflation target is three per cent which in fact was 2.7 per cent in the first quarter of the year. In the month of March however inflation was 3.3 per cent.

Meanwhile, Indian exports are to rise by 30 per cent to $160 billion this year. Last year it achieved its target of $125 billon. Next year’s target is $200 billion. With India leaping forward in exports and filling the markets which our exporters can normally exploit, can Pakistan be content with its export growth of 3-5 per cent, or even the rise in textile exports of seven per cent within 9 months of this financial year. Pakistani exporters are licking their wounds while the government is preoccupied with its own obsessions and diversions.

Can we afford such a situation, although it may be said that the Indian exports are excelling in the service sector particularly IT and call centre performance. Pakistan was supposed to make headway in the IT sector too but clearly we are not making enough efforts but making more noise. Anyway it is a matter of some relief that the textile exports have increased by seven per cent during the first 9 months of this financial year to touch a total of $8 billion. Earlier, the rise was mere 2-3 per cent.

So we are living on home remittances of Pakistanis overseas which rose to $3.936 billion marking an increase of 22 per cent over the same period last year which is a remarkable improvement. That has helped to cut down the soaring current account deficit in a big way after that has been reduced by the rapidly rising direct foreign investment which may touch $6 billion this year.

That stands in sharp contrast to the bouncing growth of 11.1 per cent of the Chinese economy with its low inflation compared to Pakistan’s eight per cent and food inflation at 10.5 per cent.

Shaukat Aziz has advocated the SWOT analyses – strengths, weaknesses, opportunities, threats to the Asian countries. The Pakistan government and its economy should also be put through such an analysis instead of focusing too much on the success despite the cautionary notes of the World Bank and the Asian Development Bank. Why is the economy so small in size when the population is over 160 million and why are the exports so modest and the official expenditure so high and perennially dependent on external aid.

The answer may lie in the vast manpower without skills and technical training in this technological age and going by local values while the challenges to the economy are global. We also make small use of our woman power and a great deal of our resources are spent wastefully by the idle rich, the corrupt and the tax-evading citizens. What matters is not the number of hands available but their technical skill and professional competence.

Shaukat Aziz said that Asia which until recently was the importer of capital has become the exporter of capital. China leads the way with its new external investment policy along with Japan, South Korea and Singapore and some of the oil-rich Gulf states. And that marks the beginning of the Asian century. The high rate of growth in the world is now to be led by Asia.

Pakistan is also negotiating a new trade agreement with Russia. Negotiations for such a comprehensive agreement gained greater momentum following the visit of the Russian prime minister to Pakistan last week. The corridor meant to connect Gwadar with central Asia can be used for trade with Russia as also the new transit trade agreement with Iran.

While China is negotiating a free trade agreement with Pakistan, it is also negotiating the same kind of arrangement with many other countries. An FTA agreement with Australia is to be signed during the forthcoming visit of the Chinese president to that country . That means Pakistani goods will have to compete with tax-free or less taxed goods of many countries while entering China and that can be tough.

So what finally matters is the quality and price of Pakistani goods. We should be able to reduce our cost of production and cost of doing business and lower our profit margins so that we can stand intense global competition.

Reinventing the government

AFTER undertaking administrative reforms through devolution, which in effect was the demolition of a system, the government of late has embarked upon the task of reinventing itself through the setting up of the National Commission on Government Reforms (NCGR).

The first exercise was undertaken through a general whose only likely contact with the system that he was supposed to reform was from the secure environment of the cantonments. The second exercise has been entrusted to a former civil servant who is brilliant and has given a good account of himself as an economic manager.

The proposals drafted by the NCGR are reported to be detailed and systematic, but so were the recommendations of the National Reconstruction Bureau on local government reforms. The main point missed was a reality check and past experience in administrative reforms.

In a recent newspaper report, we were informed that six existing service groups (information, trade and commerce, postal etc) have been recommended to be abolished. It is assumed that the rationale is that some of them have become redundant while the others can be merged. It is not clear what the advantage of doing away with these occupational groups would be, except that it would make the organogram look neat, and the government’s step would smack of modernisation.

We have had similar reforms by the government in the past, one of them being the de facto abolition of the office management group (OMG), with the resultant stoppage of the recruitment of section officers. The result has been that while numerous OMG officers have become secretaries/additional secretaries, the prevention of which was the apparent objective of abolishing the service, there are no section officers left to do the main foundation work in the ministries. So while we may have very competent secretaries, the quality of officers down below leaves a lot to be desired.

The government has had to take emergency remedial steps like recalling retired section officers to work on contract and in some cases, recalling even retired deputy secretaries to work as section officers.

The purpose of recounting the effects of one “reform” undertaken in the past was to highlight what actually happens to our reforms on the ground.

Another example that comes to mind was the recommendation by another high-powered commission in the past, which after months, perhaps years, of deliberation, came up with the idea of abolishing the tier of additional secretary in the federal government. It was implemented in some ‘lawaris’ ministries, while those like finance continued to have a number of additional secretaries. Over the years, this tier has again been added in most ministries, perhaps in larger numbers than before.

Coming back to the issue of the latest recommendation of abolishing certain occupational groups, while the upside is doubtful and will depend on focused implementation, the downside will be that it will ensure years of uncertainty for the incumbents, while issues like ‘dying cadre’, ‘combined seniority lists’, ‘challenged seniorities’ etc are being sorted out. It would mean diversion in the commitment of officers towards their work.

A likely scenario is that while the so-called reforms are being implemented, there may be a change in the political dispensation, with the result that the adversely affected parties will have an opportunity to get the initiative reversed. This will make matters worse.

On the other hand, it can be argued that the existing system was devised by equally intelligent and experienced people, and ensures that each year every specialist segment of government gets a new lot of young officers, who are selected on the basis of merit, and while merging with the culture of the department, bring a fresh and more educated look to the business.

This writer’s experience, for example, with the officers of the commerce and trade group, in his capacity as secretary commerce, was very pleasant. Because of their posting in the Export Promotion Bureau (now Trade Development Authority of Pakistan, another needless reform), their frequent visits abroad with trade delegations, close interaction with exporters in various assignments and specialised training abroad gave the officers great depth of knowledge of local and international trade issues.

It is also understood that the NCGR has recommended the reorganisation of various divisions of the federal government and have recommended an almost identical set-up at the provincial level. We can examine these issues another time.

With reference to the recommendations of the NCGR, the main question that is being asked is why it is considered necessary to knock down the edifice of the civil bureaucracy institutions and rebuild them according to the understanding of our current manager. Why is it that in the army, which is the only functioning and intact institution of the country, no need has been felt to demolish and rebuild?

We see photographs of senior serving officers placing pips on the shoulders of new colonel commandants, who are sometimes retired. Civilians do not understand the philosophy or the administrative need of these well-publicised ceremonies, but this writer for one, respects it as a continuation of a time-honoured tradition, which by all accounts could not have been started by the Mughals and can only be discerned as colonial. Then why are we so gung-ho about demolishing our civil institutions in the name of modernisation and getting rid of this ‘colonial vestige’?

While talking of government reforms, there is mention of all new bodies like the NCGR etc. But there is no mention of the establishment division, which used to be exclusively and on a whole-time basis responsible for keeping the government running efficiently and effectively. It is with regret that one uses the term ‘used to ' because one does not hear the mention of the this division in any of these reform initiatives.

In fact, the NCGR has also been placed with the prime minister’s secretariat as if to say that one does not have confidence in the abilities of the establishment division. This means that the managers have no confidence in restoring and reactivating the existing civil institutions which, in effect, have been disempowered — but to build new ones?

It is akin to believing that building a new house is better than renovating an old one because of limitations on account of the design layout, structural restrictions, inconvenience caused to the inmates during renovation, etc.

Building on existing institutions requires a close look at the inefficiencies of our staff working in the institutions that we have set out to reform and replace. It requires a SWOT analysis and consequential remedies, which would revolve around staff recruitment, training, morale and perhaps in some cases internal reorganisation — all mundane and non-glamorous steps.

Government managers may, therefore, like to consider applying themselves to the mundane task of identifying deficiencies in the existing organisation and trying to sort them out, rather than following the more glamorous path of reinventing the government.

The writer is a former interior secretary.
tasneem.noorani@tnassociates.net

Global governance

IT was first proposed, as far as I can discover, in 1842, by Alfred Tennyson. Since then the idea has broken the surface and sunk again at least a dozen times. But this time it could start to swim. The demand for a world parliament is at last acquiring some serious political muscle.

The campaign for a UN parliamentary assembly is being launched this week on five continents. It is backed by nearly 400 MPs from 70 countries, a long and eclectic list of artists and intellectuals – among them Günter Grass, Karlheinz Stockhausen, Alfred Brendel and Arthur C Clarke – several government ministers and party leaders, including our own Ming Campbell, six former foreign secretaries, the president of the Pan-African Parliament and a former UN secretary general. After 160 years of ridicule, Tennyson's crazy idea is beginning to look plausible.

Those of us who want a world parliament are often accused of trying to invent a system of global governance. But there is already a system of global governance. The UN Security Council, the World Bank, the IMF and the World Trade Organisation make decisions that affect us all. They do so without our consent. The best that can be said for any of them is that they operate by means of photocopy democracy.We vote for an MP, and this vote is then deemed to communicate our support for his party. That is then presumed to legitimise the government, which in turn assumes the right to appoint a prime minister. He then delegates ambassadors and bureaucrats to represent us globally, and their decisions are deemed to express our wishes. With every presumed transfer of democratic consent, the imprint of our cross on the ballot paper becomes fainter. Though the international bodies operate in our name, we have no more influence over them than the people of Burma have over the military junta. Global governance is a tyranny speaking the language of democracy.

The purpose of a world parliament is to hold international bodies to account. It is not a panacea. It will not turn the IMF or the UN Security Council into democratic bodies - as they are controlled by the veto powers of their major shareholder and permanent members, nothing but abolition and reconstruction could do so. But it does have the potential to impose a check on them. It wields no army, no police force, no weapons, no ready-made powers. Instead, it possesses something that none of the other global bodies have: legitimacy.

One of the surprising lessons of history is that undemocratic organisations are often obliged to grant powers to democratic ones, to try to acquire some retrospective legitimacy. Why else was the European parliament established? Why else have its powers been enhanced, despite the centralising tendencies of the European council?

Those who claim, like the British Eurosceptics, that regional or global decision-making is unnecessary are living in a world of make-believe. No political issue now stops at the national border. All the most important forces - climate change, terrorism, state aggression, trade, flows of money, demographic pressures, the depletion of resources - can be addressed only at the global level. The question is not whether global decisions need to be made. The question is how to ensure that they are made democratically. Is there any valid answer other than direct representation?

Global democracy has a special problem - the scale on which it must operate. The bigger the electorate, the less democratic a parliamentary body will be.

—Dawn/Guardian Service

Prospects of US pullout

OVERT political debate in the Middle East is hostile to the American occupation of Iraq and dominated by calls for it to end sooner rather than later. No less a figure than King Abdullah of Saudi Arabia, arguably the United States' closest Arab ally, has declared the occupation of Iraq "illegal" and "illegitimate". Real intentions, however, are different.

States and local political groups might not admit it – because of public opinion– but they do not want to see the back of the Americans. Not yet. For this there is a simple reason: while the US can no longer successfully manipulate regional actors to carry out its plans, regional actors have learned to use the US presence to promote their own objectives. Quietly and against the deeply held wishes of their populations, they have managed to keep the Americans engaged with the hope of some elusive victory.

The so-called axis of moderate Arab states –comprising Saudi Arabia, Egypt and Jordan – dreads an early US withdrawal. First, because it would be widely interpreted as an American defeat, which would weaken these pro-American regimes while both energising and radicalising their populations.

Second, if the US leaves, the emergence of a Shia regime in Iraq – in itself an offensive prospect to them – would only be a matter of time. Facing Arab antipathy, this regime would be likely to look eastward and forge close ties with its Iranian co-religionists. In the view of most Arabs, this would present a formidable challenge, setting in motion a series of dangerous events – an Iranian-Iraqi alliance; political and material support from Arab countries being offered to disgruntled Iraqi Sunni groups; retaliation by Iraqi forces; and the threat of broader regional involvement.

Third, a US departure risks triggering Iraq's partition. As some Arabs see it, the occupation is what holds the country together. So long as coalition forces are deployed, a full-blown breakup can be avoided.

In contrast, with the Americans gone, the odds of partition would increase dramatically, presenting a threat to the integrity and security of regional states. Exacerbating dormant, and in some cases not so dormant, secessionist tendencies would be one concern. Perhaps more worrying would be the ensuing challenge to the legitimacy of the fundamental tenets of nationhood, state, and national borders.

Paradoxically, the competing axis of so-called rogue states made up of Syria and Iran also wants the US to stay. So long as America remains mired in Iraq's quicksand, they think, it will be difficult for it to embark on a similar adventure nearby. This is true not only politically – the quagmire standing as a stark reminder of the invasion's failure– but also militarily: US capabilities will remain stretched for as long as the occupation continues.

Moreover, American forces in Iraq present relatively soft targets for retaliation in case Iran or Syria is attacked. In short, whether or not Syria and Iran are correct in their calculations, the occupation of Iraq is seen as the most effective insurance policy against a possible US attack against them.

For Turkey, America's presence ensures that the national aspirations of Iraq's Kurds will not metamorphose into a fully fledged independent state, a strict red line for Ankara, which has its own irredentist Kurdish problem. By containing Kurdish ambitions, the US diminishes the probability of a costly and uncertain Turkish military campaign to thwart them. Nor is Turkey attracted to the prospect of an Iraqi Shia state allied to Iran and tolerant of Kurdish aspirations - an outcome it hopes the occupation will make less likely.

For Israel too, an American withdrawal could spell disaster. Already, nothing has dented Israeli deterrence more than America's performance in Iraq - an inspiration to Israel's Arab foes that even the mightiest can be brought to heel. An early withdrawal, coming in the wake of last summer's Lebanon war, could put Israel in a dangerous position, handing a victory to Iran – the latest putative threat to Israel's existence – and providing a boost to Syria which may be considering military options to recover the Golan Heights.

There are risks for the smaller Gulf states too. With their large Shia communities and heavy dependence on American protection, they would be threatened by an early US departure from Iraq. In Bahrain, home to an unhappy Shia majority, the fallout could be imminent.

Inside Iraq, this is a period of consolidation for most political groups. They are building up their political and military capabilities, cultivating and forging alliances, clarifying political objectives and preparing for impending challenges. It is not the moment for all-out confrontation. No group has the confidence or capacity decisively to confront rivals within its own community or across communal lines. Equally, no party is genuinely interested in a serious process of national reconciliation when they feel they can improve their position later on. A continued American presence is consistent with both concerns - it can keep clashes manageable and be used to postpone the need for serious political engagement.

Shias in government would like the US to stay long enough for them to tighten their grip on the levers of state power and build a loyal military. Those Shias who are not in power would like them to stay long enough to avoid a premature showdown with their rivals. Militant Shia groups can simultaneously blame the occupation forces for their community's plight and attack them to mobilise further support. Pro-Iranian Shias, meanwhile, retaliate against anti-Iranian US moves with attacks on Americans in Iraq.

Al Qaeda and its affiliates arguably benefit most from the occupation. They established themselves, brought in recruits, sustained operations against the Americans and expanded. The last thing they want is for the Americans to leave and deny them targets and motivation for new members. Other Sunni armed groups need the Americans for similar reasons and for protection against Shias. For Sunni politicians, the occupation prevents a total Shia takeover of state institutions and helps increase their influence.

Of all ethnic groups, the Kurds have made best use of the Americans. Protected by the US from their powerful and ruthless historical foes, Arab and Turk, they have built quasi-independent institutions and prospered amid relative security. They have no reason to want this situation to end.

In common with neighbouring states, Iraqi Shias, Sunnis and Kurds are united in being able to use the Americans' presence to pursue separate and often conflicting political agendas. The grand disconnect in the region is between the political sentiments of ordinary people, which are overwhelmingly for an end to occupation, and the political calculations of leaders, which emphasise the benefits of using the Americans and consequently of extending their stay - at least for the time being.

In this grim picture, the Americans appear the least sure and most confused. With unattainable objectives, wobbly plans, changing tactics, shifting alliances and ever-increasing casualties, it is not clear any longer what they want or how they are going to achieve it. By setting themselves up to be manipulated, they give credence to an old Arab saying: the magic has taken over the magician. ––Dawn/Guardian Service

The writer is a senior associate member of St Antony's College, Oxford