Solving economic issues

THE federal budget has been passed and so have been all the four provincial budgets. In fact, the attention of the members of the National Assembly was diverted a great deal from economic issues during the debate as there was more focus on political issues. The budget debate was, as such, cut short by two days with mutual consent.

The last day of the debate on the budget, which was presented on June 9 with taxation proposals for Rs1.025 trillion, was devoted to the political issues particularly relating to the elections to be held by the end of the year.

There was greater interest in seeking a compromise between the government and the opposition on the electoral arrangements, including the setting up of a non-controversial caretaker government. Such an arrangement is proving to be difficult and yet the quest goes on amidst predictions that the elections may not be held at all and that President Musharraf may not shed his uniform before the elections. A proper budget debate is normally a reflection of the state of the economy focusing on the major problems and seeking solutions to at least some of them. The just-held budget debate in the NA was not an in-depth analysis of the economic problems the nation confronts but more of an opposition protest against official, political policies and practices and its inequity to the poor and the underprivileged. Amidst the political protests, the local problems of the constituencies of the members also figured.

Understandably, since this is the election year, the opposition is more interested in the political issues such as making new alliances and breaking old alliances. The tone of the budget debate was set by minister of state for finance Omer Ayub Khan who used one sentence to praise the present government and two sentences to damn the previous governments which should include his grandfather Mohammed Ayub Khan’s famous decade of development and which eventually led to the separation of East Pakistan.

Had the National Assembly been interested in a real debate on the economy, it would have adopted a thematic approach to major economic issues instead of following clause by clause discussion of the finance bill. It would have allotted two to three days to discuss inflation threadbare, two days to discuss unemployment and two to three days to debate poverty alleviation with various official claims of lowering the rate of poverty and the non-official denial. Such focused debates would have thrown up some positive solutions which could be applied to solve the major problems with the sanctions of the people.

But the Assembly devoted more time not only to the forthcoming general elections but also to the Karachi killings, the prolonged judicial crisis, the disappearing voters and the dominance of the intelligence agencies. If the political parties are seriously interested in the elections, they should be setting up committees of economic experts who would formulate proper economic programmes befitting a poor developing country trying to grow economically fast but, except the PPP, the political parties do not have economic expert groups.

In fact, it would be better if the opposition parties setup a joint committee on the economy and come up with their own proposals for solving the major economic problems. The economic problems of the country are not simple, nor easily soluble. They are complex and tough to tackle to meet the needs or demands of 160 million people, a 100 million of them under 25 with high expectations.

The political parties need to reach a compromise on major issues relating to the economy as neither the simplistic formulas of Islamic parties nor the demands of socialist parties can truly solve our problems at the moment. If the parties do not work out a compromise, they will be going on a collision course and hence defeating their common cause and failing the people. Providing employment to three to five million people in a year for a few years is not easy. And yet that has to be pursued and achieved. Similarly, promoting high economic growth and holding down inflation or the prices of essential supplies is a difficult exercise. There is too much money coming from various sources, half of which is illegally earned that is spent on mass consumption and pushes up the prices in spite of the fact that food imports now cost 2.6 billion dollars.

Two striking features of the budget are renaming of the Central Board of Revenue as the Federal Board of Revenue (FBR) and investing it with vast powers for taxation and providing relief, and the decision to sell a number of essential items through the utility stores.

Once the National Assembly invested the FBR with such exceptional powers, the Assembly was bypassed when it came to making announcements of new taxes or relief measures. That was all done by the government not in parliament but outside of it. Even the increase in profits of five official saving schemes, from 8 paisa to 50 paisa for 100 rupees, was done outside the Assembly. Maybe the increase in the interest rate was so small, that the government thought that the members of the Assembly would jeer at it and hence announced the increase to the press.

Anyway, for a budget which has no new taxes, the one per cent import surcharge which has now been converted to excise duty will yield a hefty Rs20 billion. The FBR has also raised import duty on 204 items and reduced and raised the duty on a number of small items. It has become a truly autonomous taxation mechanism.

The great promise of the budget to reduce the prices of a number of essential items and seek price stability through their sale at the utility stores has not come to pass. Instead prices of essential goods particularly those of edible items have gone up. The disruption caused by the rains has pushed the price of tomato to 100 rupees at places. Even wheat prices have risen by 30 to 40 rupees for 40 kg despite its abundant supply following a crop of 23.5 million tones and the continuing ban on exports.

A thousand utility stores, mostly where the government officers live, is too small a number through which the essential supplies can pass. We have been promised 500 more utility stores, one in each union council area within 4 months, but that is too ambitious a target for an official agency.

While the FBR has been invested with vast powers, the World Bank has asked it to undertake a study of the taxation reforms that it has carried out so far and their results particularly in respect of the large tax payers unit. And with the current account deficit rising to 7.3 billion dollars in the first 11 months of the year, the World Bank, IMF and the Asian Development Bank have cautioned Pakistan that it may not be able to sustain such large deficits and maintain high growth.

Meanwhile, oil prices in the world are rising and have gone above 70 dollars a barrel in both New York and London. And there is distinct possibility of a rise in prices of power and gas in Pakistan, while the POL prices may be reviewed. There is also a possibility of a rise of half a percent in interest rates of banks with the approval of the State Bank of Pakistan to help its tight monetary policy.

Meanwhile, the free trade agreement with China has come into operation and the Russian consul-general in Pakistan has spoken of the advisability of a free trade area agreement between Pakistan and Russia. There is such an agreement between Russia and India and so Indian goods are cheaper in Russia. If an FTA agreement is signed between Pakistan and Russia, Pakistani goods will become cheaper and more popular in Russia.

Textile exports of Pakistan have been inching up and during the last 11 months rose by six per cent to nine billion dollars. The Social Policy and Development Centre has brought out three handy booklets to help exporters to the European Union with whom we have problems. They are the Elimination of Textile Quotas and Pak-EU trade, ABC of the Economics of Tariffs and Import Quotas and the Elimination of the Textile Quotas and Pak-EU trade – a policy brief. They are timely publications and very handy to its users.

A questionable appointment

FORMER British prime minister, Tony Blair, has been named special envoy to the Quartet of Middle East Peacemakers, comprising the United Nations, Russia Federation, the United States and the European Union.

In a statement issued on June 27 the Quartet said that Tony Blair would “bring continuity and intensity of focus to the work of the Quartet in support of the Palestinians, within the broader framework of the Quartet’s efforts to promote an end to the conflict in conformity with the roadmap.”

As expected, Israel welcomed Tony Blair’s appointment but there has been an unfavourable reaction against it throughout the Muslim world. Barring the expression of cautious optimism by President of Palestinian Authority Mahmoud Abbas and the foreign ministers of Egypt and the UAE as well as the secretary-general of the Arab League about the success of Tony Blair’s mission, no other Arab or Muslim leader has so far welcomed his appointment. The Hamas leadership in Gaza has denounced Tony Blair’s nomination accusing him of being partisan in favour of Israel. Hamas spokesman, Fawzi Barhum, told AFP in Gaza that Blair’s appointment was not acceptable to Hamas as he would support Israeli occupation of the Palestinian territories.

It may be mentioned that Tony Blair has always been very biased in his approach on the Palestinian issue. He even refused to recognise the democratically elected government of the Palestinians. Political analysts, therefore, believe that Tony Blair’s controversial appointment as the quartet’s envoy would be counterproductive.

Tony Blair’s appointment is also regarded with a certain amount of scepticism in the Muslim world because of his close alliance with President George Bush on the invasion of Iraq and the war between Israel and Hezbollah in Lebanon last year.

The media, particularly in the Arab and Muslim world, has also reacted to Tony Blair’s appointment with cynicism and questioned his credentials for the job because of his total commitment to Bush’s pro-Israel policies on the Middle East. The media has asserted that Tony Blair lacked the credibility and confidence of the Palestinian people which was an essential pre-requisite for the success of his mission. Tony Blair’s appointment is, therefore, widely regarded by the media in the Muslim world as a political setback for the Arabs and a negative measure for the peace process in the Middle East.

According to some press reports, Prime Minister Gordon Brown is also not happy with Tony Blair’s appointment which, as he said, had been made without consulting him. Similarly, German Foreign Minister Frank-Walter Steinmeier, the current holder of the EU presidency, has also expressed dismay at the manner in which Tony Blair has been appointed as the quartet’s envoy. There are reports that the Russians were also not in favour of Tony Blair’s appointment but they caved in as a result of immense pressure put on them by President Bush.

The Quartet, has been trying, without any success, to advance the roadmap for Middle East peace on the basis of two states. The policies and practices persistently followed by Israel, with the acquiescence of the western countries, particularly the United Sates, have been an impediment to achieving a comprehensive, just and lasting peace in the Middle East.

As a result, the proposed roadmap for the Palestinian statehood still remains in the doldrums. It seems that the United States wants a solution to the Middle East problem on its own terms and those of Israel, and Tony Blair has deliberately been appointed to fulfil this desire.

Israel’s policies towards the Palestinian people are rooted in its insatiable desire for expansion. Since 1967, it has carried out a colonisation campaign throughout the occupied Palestinian territory, including East Jerusalem and the Golan Heights in Syria. As a result, the Palestinians continue to live either in exile as refugees or under the illegal occupation of their land by Israel which also continues to defy countless UN resolutions and the verdict of the International Court of Justice that unequivocally affirmed the illegality of settlements on occupied Palestinian lands.

Israel must, therefore, terminate its occupation of the Palestinian territories and allow the creation of an independent and sovereign Palestinian state, as envisioned by the Quartet. Israel’s illegal settlement policy must also be halted and reversed forthwith. These are the real imperatives for peace in the Middle East. The Quartet should warn Israel that any attempt to create a Bantustan system will backfire. Its policies of segregation and separation, at the expense of the Palestinians, cannot ensure peace and security for it.

The responsibility to advance the peace process in the Middle East now rests with the Quartet who initiated it. It should now fulfil its responsibilities towards that goal. The Palestinian side was ready to immediately undertake final status negotiations, and, therefore, the peace process must be resumed urgently without conditions. It should, ask Tony Blair to address the root causes of the conflict and intensify his efforts to ensure a negotiated settlement of the Palestinian problems based on the two-state solution, otherwise peace in the Middle East will remain as elusive as ever.

The writer is a former ambassador.

Brown’s grand ambition

RARELY has form reflected content more perfectly. Gordon Brown used his first parliamentary speech as prime minister to announce a grand plan to change the balance of power in Britain –– one that would give greater weight to the House of Commons –– and he did it in, of all places, the House of Commons.

He had not outlined the key points in a TV programme, nor had they been splashed in selective chunks all over the Sunday papers. As if to ram home his point that the Commons should matter, the Commons got to hear it first.

That he chose to make his maiden prime ministerial speech on this subject was replete with significance. For many long years, constitutional reform has been the poor relation of British politics. Academics liked it, nerds in anoraks loved it, and the odd celebrity could be lured into it –– but the mainstream steered well clear. Yet now Brown has declared that it counts, that he means to spend serious political capital on it.

Why? The wide-eyed will say that Brown's a true believer, that he was giving Charter 88 lectures on this subject a full 15 years ago. They'd be right. But it pays to remember that Brown is all politician: he may be a philosopher, a man who used to bust his airline limit on excess baggage with a holiday suitcase packed with books, but he is more interested in being a king.

That's the context in which he comes at the constitution, starting with what he regards as the Blair government's greatest weakness, the quality it lost and which he is determined to regain –– trust. Brown reckons that the surest way for a politician to win back the public trust is to give away power.

He thinks back to the economy of the mid-1990s, and the cynicism that greeted all politicians' decisions on interest rates, especially after Black Wednesday. The only remedy, he concluded, was to give away that very power by making the Bank of England independent.

Now it's political trust that needs to be repaired, after it was shredded by spin and Iraq. And once again, Brown believes, it will be the ceding of control that will do the trick. Hence yesterday's list of 12 executive powers whose pleasures he will deny to himself, from the power unilaterally to declare war, ratify treaties, and dissolve and recall parliament, to the power to appoint bishops and judges.

Much of that list amounts to a promise not to repeat Blair's missteps: no Downing Street rush to war, though MPs had the chance to vote against the invasion of Iraq but voted for it; and no more cronyism, with all public appointments coming under "effective scrutiny".

But his aim is not simply to shed some of Blair's negatives; the ambition is larger than that. Brownites used to speak of their determination to establish Labour's economic competence not as an end in itself but to "rehabilitate tax and spend". They needed to restore public belief in the very idea of activist government.

The constitutional project outlined yesterday is in the same vein. If people can be persuaded to believe once more in the legitimacy of government, then Brown can get on with deploying it as a tool for political change.

There is a third motive, one that would have been missing back in the early 90s. Brown believes that a constitutional settlement serves far more than its direct, mechanical purpose –– that it can act as a binding agent, a cultural document that ties islands of individuals together into a society, a nation. He sees the magic that the Bill of Rights, the constitution and the Declaration of Independence have worked in the United States over the past two centuries, turning waves of immigrants into the American people, and wants some of that same alchemy here. Forging a "stronger shared national purpose" was essential, he said yesterday, for dealing with "the new challenges of security ... of communities under pressure". That was a coded way of expressing Brown's hope that a new, written constitution will serve as a statement of British identity, one that British Muslims, among others, will be able to sign up to.

If that was the aim, how did Brown do? Put it this way: the constitutional reform crowd were tossing their anoraks in the air yesterday. To hear the prime minister rattle through the list of powers which have made the British executive the most over-mighty in the democratic world, and then declare that such excessively centralised control has "no place in a modern democracy", was almost too much.

Pam Giddy, formerly of Charter 88 and now director of the Power inquiry, was, er, giddy with it all. "It's a unique constitutional moment for this country," she gushed yesterday. When she heard Brown talk about the three key power relationships of parliament and executive, local and central, people and the state, she wondered if he'd been bugging her office.

It's quite true that merely listing the powers available to a prime minister under the crown prerogative is enough to make their retention indefensible. These are powers suited to an autocratic monarch that had simply been tied up in purple string and passed to Downing Street, which makes it all the more amazing that a Labour government had held on to them, unchanged, for 10 long years.

Of course, as so often with Brown, the small print contained the odd disappointment. MPs who thought the PM had promised to surrender his right to call a general election whenever he chooses had to listen up to hear that, in fact, he will simply get his MPs to dissolve parliament rather than doing it all by himself. That's not such a big deal. Similarly, it was refreshing to hear about his battery of plans for more direct democracy, including ballots to set local budgets, but worrying if Brown is merely keen to devolve away power from already power-sapped local councils, when he presumably would not let a citizen's jury or public vote anywhere near his own, central budget.

While he was strong and explicit when it came to shifting muscle from the executive to parliament, he was more vague, promising only consultations and proposals, on the shift from central to local and from state to individual. It's easy to feel frustrated at that, wanting him to announce it all, now, in one go.

But that is to misunderstand the very nature of the project: a prime minister cannot restore democracy with a dictator's fiat. In launching a process, Brown recognised that he cannot do this all alone. That, says Robert Hazell of UCL's Constitution Unit, is proof that "Brown has a deep understanding of these issues that Blair never had".

–– The Guardian, London

The Fourth of July

BETWEEN its uplifting beginning ("We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights . . . ") and its resolute conclusion (". . . we mutually pledge to each other our Lives, our Fortunes and our sacred Honour"), the Declaration of American Independence contains a long list of allegations concerning King George of England that might be said to make up the bulk of the document.

In Wednesday’s Washington Post, John Fabian Witt of Columbia University lists some of the more lurid accusations against George III: He has "plundered our Seas," "ravaged our Coasts, burnt our Towns, and destroyed the Lives of our People" and committed other acts "scarcely paralleled in the most barbarous Ages."

But there is more, much more, most of it a good deal less compelling. At times it reads like the complaint of a good-government organization rather than an indictment of a bloody-minded tyrant. George III has, it is said, "refused his Assent to Laws, the most wholesome and necessary for the public good," "forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them," "called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records," "obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary Powers" and "made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries" -- among many other things.

Clearly, despite all his faults, King George wasn't exactly Stalin in a powdered wig. Indeed, as with another middling monarch with III after his name, he's had to sacrifice much of his historical reputation to the interests of some very talented writers: Richard III to Shakespeare's desire to do a popular play and George III to the need of Thomas Jefferson and his co-conspirators to justify what was, in the English-speaking world, an alarming act of rebellion.

Fortunately, few schoolchildren memorize any of this list, and few Americans, young or old, are even aware of it. The nation's first founding document is remembered not for resentment, fears and ancient grudges but for the promise of opportunity and the guarantee of liberty. Its opening chords and its concluding pledge are still what bring people flowing into this country by the hundreds of thousands every year.

But while we're on the subject, there is one item on the indictment of the king that's worth recalling here: "He has refused to pass . . . Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only."

By George, that is outrageous, but come to think of it, it's still going on today, here in the nation's capital, a large district of people with no voting representation in the House of Representatives or in the Senate. Somebody ought to send up a rocket or two.

–– The Washington Post

Lucky Libby

PRESIDENT Bush’s carefully calibrated decision to commute the prison sentence of I. Lewis "Scooter" Libby without granting a pardon may prove politically wise. But it epitomises the moral obtuseness that has so handicapped his administration.

Bush is correct that Libby's sentence of 30 months in prison for perjury and obstruction of justice was harsh; a shorter sentence ordinarily would have been appropriate for a first offender and an unlikely recidivist. Yet a federal appeals judge let the harsh sentence stand for the same reasons that Martha Stewart spent five months in prison for similar but lesser offences: No meaningful investigation is possible if high-placed people can get away with lying to investigators. And prison time is the only meaningful deterrent to perjury by the rich and powerful.

Bush's presidential statement brushes aside the enormity of the offences that merited such a sentence: perjury in an attempt to obstruct a national security investigation. In order to convict Libby, the jury had to conclude not only that he knowingly and repeatedly lied to the FBI and to a grand jury, but that he leaked classified information about a CIA operative to reporters on orders from Vice President Dick Cheney. Such obstruction and obfuscation are particularly heinous offences when committed by a senior government official — and a lawyer, no less — to serve or protect his boss.

The larger problem in commuting Libby's sentence is the message it sends to his unfortunately unindicted co-conspirator, Cheney. The message isn't precisely, as the Democrats claim, that the administration in general, and the vice president and his office in particular, are above the law. It is that the laws can always be finagled so as not to apply unfavourably to them.

This administration has a dismal record of abrogating legal and congressional authority — in its shocking repudiation of habeas corpus, its withholding of information from Congress, its overreaching presidential signing statements — while asserting, in its incessant claims of executive privilege, the broadest possible authority for itself. Yet in the Libby case, it lessens the standard of accountability for senior officials who wield that authority. That Cheney and his backers managed to obtain a presidential commutation before Libby served even a Paris Hilton-sized stint behind bars reinforces the perception of favouritism. Bush's refusal to rule out a pardon for Libby makes things worse.

— Los Angeles Times