Wooing Gulf investment

THE United Arab Emirates, the largest Gulf investor in Pakistan, is to double its investment in this country to a total of $26 billion from the present $13 billion. Qatar, another Gulf state, is to make an investment of four to six billion dollars, largely in the oil sector. Saudi Arabia is to step up its investment while it is the second largest investor in Pakistan from the Gulf region. Oman which is next door to Pakistan is also to increase its investment.

This boom in Gulf countries’ interest in Pakistan is because of the adverse political climate in the West and the global economic uncertainties facing large Arab capital moves. Pakistan is a beneficiary of these global developments and it has rolled down the red carpet for the Arab investors without reservations or the usual limitations.

Pakistan not only welcomes large Arab investment but also provides all the local capital needed and more through various floatations and the banks are ready to provide additional capital with the approval of the State Bank of Pakistan.

The open house foreign investment policy which Pakistan pursues now allows foreign firms to invest in any sector without reservations, but also to invest 100 per cent of the capital, the profits of the enterprise without limits can be repatriated freely at any time and also the total capital, however large. And the government is committed to extend full assistance to investors.

They can also raise more capital through the stock exchanges of Pakistan, once they are established here.

In addition, foreign investors can participate in the privatisation process without reservation, if their credentials are accepted. The government is going all out to woo the foreign capital and extend maximum facilities including vast lands at concessional rates for their factories or farms. In the process, the domestic capital is in a rather watchful mood.

The local entrepreneurs could have become partners with the foreign investors, but only some of them have used that option. Those who have done that like the Waziralis led by Baber Ali who are partners of Nestle are the real gainers. Some of the Pakistani entrepreneurs are now interested in the public-private partnership but how well that works remains to be seen as the local private sector tends to go its own way.

Anyway the foreign investment policy has been a success and has mobilised six billion dollars this year compared to one fourth of that two years ago. If the growth rate is sustained and there is real political stability in the country, far more foreign investment can come because of the unlimited facilities Pakistan offers them. Earlier Britain was the top investor in Pakistan as the legacy of the British empire but in recent years when the American oil companies invested in Pakistan, the US emerged as the top investor and remains so for several years together.

But unlimited foreign investment with its loose ends is not an unlimited blessing in a country like Pakistan with its political uncertainties and limited foreign exchange resources. If initially the foreign investment is a blessing it can turn into a drain of the foreign exchange resources later when the total profits are repatriated along with the capital invested.

While the FDI comes in with foreign exchange, Pakistan has to meet the varied needs of the investors. After a certain level of foreign investment, the question arises whether an investment is coming for a manufacturing unit which will create jobs, increase production and augment exports or a service unit with limited options like mobile telephones which have to be imported in large numbers along with the supportive equipment. The preference should be for the manufacturing unit with its varied benefits.

The second question that should be asked by our officials is whether the investment will promote exports or help in import substitution. We need more exports and greater import substitution so that our import bill can be reduced. If it’s a manufacturing unit, will it depend on imported raw materials or use the local raw materials? We have already a huge raw materials import bill which we cannot afford to expand unless the exports increase.

Now we are importing even cotton, not only the higher count cotton, but the kind of low count cotton we produce. We are doing that because the mill owners find the imported cotton from India cleaner and more economic. We have to encourage more and more units which depend on local raw materials. If the materials are not available readily they have to be managed.

We should also be aware of the second hand machinery bought in by the investors because as they fail, the foreign exchange has to be spent to import spare parts and replacements.

Following the present policy we may not be able to discourage many investors from their chosen sectors but preference has to be given to projects which are truly beneficial to the country.

We spend three to four billion dollars every year on shipping our goods in and very little has been done to develop the shipping industry. If some Gulf investors can be made to interest in the shipping line, it will be good for the country.

The official policy is to permit unlimited profit making that goes for the corporate sector as well including the foreign sector. The large profits earned by Pakistan companies stay in Pakistan but the profits made by foreign companies go abroad. If foreign companies employ foreign staff, a part of their salaries and their savings are sent home. All that strains the foreign exchange resources of Pakistan at a time when the foreign trade in the first 10 months of this year has produced a deficit of $11 billion.

The World Bank and the Asian Development Bank have been cautioning Pakistan against such tendencies and the increasing current account deficit which may not be easily countered. Such an open house policy for foreign investment may be welcome in a country where there is little corruption but we have more than a modest measure of corruption which vitiates our social and cultural life.

On of the means by which the excesses by foreign companies could be checked is through the association of more and more Pakistanis with the foreign investors. But the Pakistani investors have to make real investment instead of trying to treat their local expertise as their capital, as has happened in the past.

What is happening is that while we are inviting foreigners to come and invest in Pakistan, including in real estate, Pakistanis themselves are sending their tax evaded money or fruits of corruption, crime and heroin trade to Dubai through hundi to acquire large real estate. Politicians too have acquired a number of real estate gems in Dubai. But the profits from such enterprises will not come here and even through the hundi system again. The problem is how to check that.

Foreigners say Pakistan is earning five billion dollars this year from home remittances of Pakistanis overseas. If Pakistan can earn money this way, it should not fight shy of losing money by going out for acquiring real estate.

At both ends the gainers are the rich and the losers are the poor. Pakistan’s basic problem, unlike those in the Gulf states is its large population of 160 million. It is a problem to feed people, educate them, provide medical facilities to them and provide jobs to them. Making the rich richer is not the solution for that.

We have to look more and more for the solution of our problems instead of depending on too much on foreign aid, foreign investment and foreign assistance of many other kinds.

The kind of solution to economic problems which is suitable for small states with modest population does not suit Pakistan; we need a people-oriented, people-centred solution which makes them the centre-piece of our political, economic and social as well as cultural attention.

West chooses Fatah, Palestinians don’t

IN th West, there’s a huge sense of relief. The Hamas-led government that has been causing everyone so much trouble has been isolated in Gaza, and a new government has been appointed in the West Bank by the "moderate," peace-loving Palestinian Authority president, Mahmoud Abbas.

So why then do Palestinians not share in the relief? Well, for one thing, the old government had been democratically elected; now it has been dismissed out of hand by presidential fiat. There's also the fact that the new prime minister appointed by Abbas — Salam Fayyad — has the support of the West, but his election list won only two per cent of the votes in the same election that swept Hamas to victory. Fayyad and Abbas have the support of Israel, but it is no secret that they lack the backing of their own people.

There is a reason the people threw out Abbas' Fatah party in last year's election. Palestinians see the leading Fatah politicians as unimaginative, self-serving and corrupt, satisfied with the emoluments of power.

Worse yet, Palestinians came to realise that the so-called peace process championed by Abbas (and by Yasser Arafat before him) had led to the permanent institutionalisation — rather than the termination — of Israel's 4-decade-old military occupation of their land. Why should they feel otherwise? There are today twice as many settlers in the occupied territories as there were when Yitzhak Rabin and Arafat first shook hands in the White House Rose Garden. Israel has divided the West Bank into besieged cantons, worked diligently to increase the number of Jewish settlers in East Jerusalem (while stripping Palestinian Jerusalemites of their residency rights in the city) and turned Gaza into a virtual prison.

People voted for Hamas last year not because they approved of the party's sloganeering, not because they wanted to live in an Islamic state, not because they support attacks on Israeli civilians, but because Hamas was untainted by Fatah's complacency and corruption, untainted by its willingness to continue pandering to Israel. Fatah leaders were viewed as mere policemen of the perpetual occupation, and the Palestinian Authority had willingly taken on the role of administering the population on behalf of the Israelis. Hamas offered an alternative.

In the US, Hamas is routinely demonised, known primarily for its attacks on civilians. Depictions of Hamas portray its "rejectionism" as an end in itself rather than as a refusal to go along with a political process that has proved catastrophic for Palestinians on the ground.

Has Hamas done unspeakable things? Yes, but so has Fatah, and so too has Israel (on a much larger scale). There are no saints in the Israeli-Palestinian conflict.

Palestinians, frankly, see a lot of hypocrisy in the West's anti-Hamas stance. Since last year's election, for example, the West has denied aid to the Hamas government, arguing, among other things, that Hamas refuses to recognise Israel. But that's absurd; after all, Israel does not recognise Palestine either.

Hamas is accused of not abiding by previous agreements. But Israel's suspension of tax revenue transfers to the Palestinian Authority, and its refusal to implement a Gaza-West Bank road link agreement brokered by the US in November 2005, are practical, rather than merely rhetorical, violations of previous agreements, causing infinitely more damage to ordinary people. Hamas is accused of mixing religion and politics, but no one has explained why its version of that mixture is any worse than Israel's — or why a Jewish state is acceptable but a Muslim one is not.

I am a secular humanist, and I personally find religiously identified political movements — and states — unappealing, to say the least. But let's be honest. Hamas did not run into western opposition because of its Islamic ideology but because of its opposition to (and resistance to) the Israeli occupation.

A genuine peace based on the two-state solution would require an end to the Israeli occupation and the creation of a territorially contiguous, truly independent Palestinian state. But that is not happening. Fatah seems to have given up, its leaders preferring to rest comfortably with the power they already have.

Ironically, it is Hamas that is taking the stands that would be prerequisites for a true two-state peace plan: refusing to go along with the permanent breakup of Palestine and not accepting the sacrifice of control over borders, airspace, water, taxes and even the population registry to Israel.

Embracing the "moderation" of Abbas allows the Palestinian Authority to resume servicing the occupation on Israel's behalf, for now. In the long run, though, the two-state solution is finished because Fatah is either unable or unwilling to stop the ongoing dismemberment of the territory once intended for a Palestinian state.

The only realistic choice remaining will be the one between a single democratic, secular state offering equal rights for both Israelis and Palestinians — or permanent apartheid. ––Los Angeles Times

The writer is a professor of English and comparative literature at UCLA, US.

Ayub’s self-serving account

IT is impossible to be both a diarist and a statesman: each has a different focal length. One observes the minutiae of a day's activities while the other views the broad sweep of contemporary history, leaving its chronicling to others. The most successful and famous diarists have been those who have stood on the periphery of their times, involved and therefore informed, yet detached and perceptive.

The 17th century produced Samuel Pepys and his contemporary John Evelyn, the twentieth century Harold Nicolson and Sir Henry 'Chips' Cannon, and more recently Alan Clark (a Conservative but maverick MP who held junior ministerial posts in Mrs Margaret Thatcher’s government in the 1980s), and H. R. 'Bob' Haldeman (Nixon's White House Chief of Staff). Their jottings provide us with telling details that would otherwise have escaped the notice of history.

Those who make history such as presidents and royalty often feel a personal responsibility to maintain a record of it for reasons of state as much as for their own personal purposes. This was Queen Victoria's motive, as it is Queen Elizabeth II's, who maintains a hand-written journal meticulously at the end of each day. Presidents by contrast tend to subcontract such a task to their underlings.

An exception would seem to have been President Ayub Khan. His diaries have recently been published, covering the years 1966 to 1972 – from his decline in power to his descent from it. In a manuscript note dated September 1, 1966, (reproduced on the book's cover suggesting that the entire diary was also handwritten), Ayub Khan gives two reasons for starting a diary – in case he decided to write a sequel to his autobiography Friends, Not Masters, and as a reference tool.

Ayub Khan deferred the publication of this 'sensitive material' until such time as 'it ceases to be part of contemporary history.' The manuscript was, therefore, ‘impounded for thirty years’, although it is not clear by whom.

Today, 33 years after Ayub Khan's death, there are few left alive whose sleep is likely to be disturbed by its revelations. Those who are dead (wherever they are) must have expressed their own remonstrances to him already. To his intended audience of modern Pakistanis, though, Ayub Khan's diaries will cause a queasy discomfort. One uncorks them expecting a vintage, and instead flows a stream of acidic personal opinions, rancid biases, and vapours of oracular prophecies whose subsequent accuracy make one suspicious of their source.

Was Ayub Khan the 'onlie begetter' of these diaries? That is what his editor and publisher would have us believe. And yet every page reveals fingerprints that clearly do not belong to the author. On March 7, 1971, for example, Ayub Khan is admitted to hospital with a severe attack of angina that makes him “not afraid of death, but terrified of living in such a condition”. Despite his pain and his life-threatening trauma, he nevertheless finds the time to write (or dictate) over 500 words on the situation fomenting in East Pakistan and its sinister implications for both wings.

Similarly, when he hears of the election results on December 8, 1970 that propel Mujibur Rahman into electoral prominence in East Pakistan and Zulfikar Ali Bhutto in the West, he can foresee that “Bhutto and Mujibur Rahman would soon get together to chalk out a joint plan if possible. In any case they are bound to agree on demanding declaration of the assembly as a sovereign body and forcing their cabinet on Yahya. Bhutto would demand foreign affairs and the defence ministry.”

Before the day is out, he alters his tune: “Whatever the cost to the country and to the people, he [Bhutto] may even precipitate a war with India and spoil our relations with countries like America and the Soviet Union. Mujib is no less dangerous and reckless. If my assessment is in any way correct, then December 7, 1970, will prove to be the darkest day in the history of Pakistan and an unmitigated tragedy.”

In fact, it was Ayub Khan's misreading of events and more particularly assessment of his subordinates that proved to be his undoing. He was once asked: “How is it that I could assess men and their character on casual association and contact?” He replied: “It has been my lifelong profession.”

Yet, his diary reads like a shopping list of his more spectacular failures. Sharifuddin Pirzada, his foreign minister? “Very suspicious by nature …chases small things most of the time and frightened of taking a stand on any issue.” Syed Ghiasuddin, a defence secretary? “A skunk.” Ghulam Faruque, his governor in East Pakistan, then commerce minister and defence advisor? “...has doubtful scruples [and] is very expensive, especially with public funds.” Pir Dewal Sharif, his spiritual mentor? “A skilful fraud.”

Ayub Khan saves his vitriol though for the two persons who were to succeed him – General Yahya Khan and Zulfikar Ali Bhutto (whose name he misspells throughout his dairy). He accuses them of conspiring to ease him out of his presidency in March 1969. The entries for those fateful days are of value if only for their reticence.

On March 13, less than a fortnight before he quits, Ayub Khan receives Marshal Grechko, the Russian defence minister. Grechko expresses the concern of the Soviet leadership about Pakistan and about Ayub. “I, who had put the country together, given it recognition in the eyes of the world, why did I decide not to fight the next elections when the armed forces and a vast majority of the people were behind me? I gave him my reasons.” We must wait for Marshal Grechko's diaries to reveal the reasons: Ayub Khan withheld them from his own diary.

On March 24, 1969, Ayub Khan signs his own suicide warrant. 'Today, I have written a letter to General Yahya explaining how the civil machinery has ceased to be effective and why it is necessary for me to step aside and hand over to him [as Commander-in-Chief] so that normalcy and decency can be brought back.” The word “decency” was to haunt him during Yahya Khan's presidency.

Less than two years later, he complained in his diary of his hand-picked successor: “What surprises me is that Yahya indulges in such laxities and debauchery when the country is facing such critical problems [.] I told someone that if this is the way to run the presidency of the country then I wasted my time working day and night and leading the life of a hermit and ruining my health in the process.”

For Zulfikar Ali Bhutto, whom he hand-picked with his other hand as commerce and then foreign minister, Ayub Khan scours his Thesaurus: “The damage done by Bhutto is deliberate, incalculable and unforgivable. He is past master of disruption and agitation. He has shaken the roots of the country by simply posing as a socialist and a friend of the have-nots. And this is believed by an enormous amount of people despite the knowledge that he dresses and lives like a millionaire, drinks like a fish day and night, misbehaves with women, is a mimic, a clown and a liar, unfaithful and thoroughly disloyal.”

Forgetting his own lapse in choosing such a confederate in the first place, Ayub Khan asks rhetorically: “What can you do with people who put their faith in such a man? They will get only what they deserve – chaos, deprivation, and suffering.”

One could go on, but it is best to let this self-serving chronicle collapse under the weight of its own, all too obvious inconsistencies. Ayub Khan's diaries have to be read, if only to be disbelieved.

In 1983, more than 30 years after Hitler's death, the German magazine Stern published extracts from 60 volumes purporting to be the Fuhrer's diaries. Although authenticated by the British historian Professor Hugh Trevor-Roper, they were later discovered to be the imaginative work of a Stuttgart scribbler Konrad Kujau. He was sentenced to a prison sentence of 42 months in jail. One wonders whether he might not have found another assignment after his release.

A plan to create two Palestines

THE utter confusion did not last long. For a few days, the key players in the Middle East conflict were simply too stunned by last week's events to react.

They could see that the landscape had changed completely — that the Palestinian national movement had split in two, with Hamas seizing Gaza, leaving Fatah in charge of the West Bank, thereby stumbling into a "two-statelet solution" no one ever planned. But what this meant for the historic conflict between Israelis and Palestinians, no one was sure.

Now they've had time to regroup, the United States, Europe and Israel think they've worked out a response. Not only that, they reckon they have seen a flicker of light in the gloom. Part of the perversity of their trade is to see opportunity where lesser mortals might see only crisis, and so it is now.

The western strategy, endorsed not only in Jerusalem and Washington but by European foreign ministers at their meeting in Luxembourg on Monday, is to set up an elaborate demonstration exercise for the Palestinians. They will be offered two alternative Palestines and asked to choose which one best represents their future.

On the West Bank shall arise Fatahland, soon to be showered with cash from the very western tap that stayed shut as long as Hamas were in the picture. President Mahmoud Abbas will not only receive money but multiple goodwill gestures from Israel: an easing of roadblocks, cooperation on security, a glimpse of the "political horizon", meaning the prospect of negotiations aimed at an eventual Palestinian state. If things go well, a high-ranking Israeli government official told me yesterday, Israel could once again return chunks of West Bank territory to Palestinian control, as it did during the Oslo process.

In Gaza, meanwhile, would fester the new land of Hamastan, an Islamist-ruled hellhole shunned by the rest of the world, starved of all but the most emergency humanitarian aid. Where Fatahland would feel the warmth of the West's open arms and deep pockets, Hamastan would know only its cold shoulder. Pretty soon Palestinians would draw the obvious conclusion. As that Israeli government insider puts it, "They'll understand that moderate policies bring home the bacon, while the other road brings only pain."

You can see the appeal. If all went to plan, either Gazans would eventually rise up and eject Hamas from power, or Hamas itself would realise it had to change course. After all, if the Palestinians of the West Bank were marching towards prosperity and statehood, Gazans would not want to be left behind. The upheaval of last week could surely bring another happy benefit.

For years Israel and the US have urged the Palestinian Authority to uproot the "infrastructure of terror" and crack down on Hamas - without much success. Now though, runs the thinking, Fatah are amply motivated to do the job. After they watched Hamas militants execute Fatah fighters in the street, loot Yasser Arafat's home and hurl Abbas's personal cook from the 18th floor of a building to his death, Fatah are only too eager to flush out Hamas from the West Bank.

It sounds logical enough. Nurture a flowering Fatahland while pariah Hamastan withers away. But it is surely a delusion. The first and most obvious danger is that the more generous the west is to Abbas, the more his credibility will be destroyed. Every dollar or euro he takes will confirm him as the lackey of foreign powers, casting him alongside Hamid Karzai of Afghanistan, Nuri al-Maliki of Iraq and Fuad Siniora of Lebanon as a mere western proxy.

Each bouquet from Israel will tarnish him further, establishing him as the servant of the enemy. Already the Arab press is comparing Abbas with Antoine Lahad, the strongman whose hated South Lebanon Army served as Israel's policeman. As has happened so often before, in seeking to boost "moderates," the west only hugs them to death.

Besides, the whole idea rests on a series of faulty assumptions. First, it assumes that Israel will indeed come through with the goodies it promises. On this, the record is not encouraging. Ehud Olmert has repeatedly met Abbas and promised the release of tax funds or greater freedom of movement, only to do nothing. Second, even if Israel does hand over the cash, there is no guarantee that Abbas's Fatah-dominated administration could translate that into improvements on the ground. Again, past experience is not encouraging. Put crudely, Fatah has shown itself to be either corrupt or incompetent or both.

But let's be optimistic and imagine the new approach did indeed bear fruit on the West Bank. Do we imagine that Hamas would calmly sit by, watching itself being pushed out of the Palestinian future?

––The Guardian, London