Tony Blair’s empty rhetoric

MORE of meaningless rhetoric poured forth from Mr Tony Blair’s lips as he arrived in the Middle East on Tuesday on his first visit after being named the Quartet’s envoy. As is typical of all western diplomats when they speak about the Arab-Israeli conflict, the former British prime minister merely beat about the bush when he discovered a “moment of opportunity” and a “sense of possibility” for … for nothing. Here is what the longest serving Labour prime minister had to say: “whether that sense of possibility can be translated into something, that is something that needs to be worked at and thought about over time”… Brilliant diplomatese! What he simply could not utter was the truth — that Israel should withdraw from the occupied territories so that a Palestinian state could come into being. If he were to say that, Israel’s doors would be closed on him forever. More of the rhetoric: “I am just trying to have a sense of what’s happening here…” This is from a leader who was actively involved in Middle Eastern affairs for his long 10 years in office and who in January 2003 called a conference in London to find a solution to the Arab-Israeli conflict. Now, in his post-prime ministerial days, he is “trying to have a sense of what’s happening here…”

In his heart of hearts, Mr Blair must be a happy man, for the brief given to him by the Quartet does not entrust him with the task of doing anything concrete. The brief itself is a vegetable. It asks Mr Blair to concentrate his efforts on the occupied territories’ economic development, governance and institution building — but mention of the real issue is at stake. As chief Palestinian negotiator Saeb Erakat wondered, how can one speak of economic development and institution building while “the settlements, the wall, the denial of movement, the obstacles, and the road blocks are eating up the whole idea of a Palestinian state? Let’s be realistic.” That is where Mr Erakat is wrong. Mr Blair’s brief does not authorise him to be realistic.

Mr Blair is not alone: besides Israel and the pro-Israeli lobby in America and Europe, the Quartet is behind him. His job is to obfuscate the Palestinian question with non-issues. The process of sidetracking the real issue began in Yasser Arafat’s time. For instance, one of the tricks for bypassing the real issue was to ask Arafat to have a prime minister and reform the Palestinian Authority. He did both, but there was no progress on the question of Israel’s withdrawal. Now again Mr Blair will concentrate on ‘institution building’ at a time when the Palestinians themselves have gladdened their enemy’s heart by fighting a civil war and turning the West Bank and Gaza into two warring cantons. Israel could not be happier. Clearly, it is futile to expect Mr Blair or the Quartet to do anything substantive, when between them Hamas and Fatah have scuttled the Palestinian cause. Irrespective of how the US, the European Union and Israel view Hamas, both President Mahmoud Abbas and Mr Ismail Haniye have acted very irrationally. President Abbas has received fulsome praise from America and the EU, and aid has started flowing in, but that is not going to take him and the Palestinian people any closer to the goal of liberation of the Israeli-occupied territories and living in freedom and dignity in their own areas.

Revised but still flawed

A REVISED draft of the Transplantation of Human Organs and Tissues Ordinance, 2007, that aims at curbing the increasing number of kidney sales in the country, will soon be put before the federal cabinet for approval. However, as pointed out in a report in this newspaper, the new draft “contains many flaws and few improvements”. There was strong criticism of the earlier version by eminent doctors who had pointed out several loopholes in the proposed law that could, in fact, legalise kidney sales in certain aspects, instead of outlawing them altogether. It is true that the recommendation of Law Minister Wasi Zafar and legal counsel Sharifuddin Pirzada to allow “compensated donations” to foreign patients has not been included in the revised draft. But a clause that has been incorporated allows organ donation by a non-relative in return for compensation if a close relation is not available. In contrast to the spirit behind the ordinance to encourage voluntary and cadaver donation and to halt any form of commercialisation, this move will make it easier for those in the business of selling kidneys to continue with their nefarious practices. What is more, the ordinance retains the provision not to prosecute those who have “acted in good faith” even if their actions have proved detrimental, thus providing an effective cover-up for erring doctors.

Our health authorities and politicians should explain why they have not acted on the advice of well-known physicians who have long been agitating for a law to eliminate the racket of a mafia comprising doctors, hospital owners and middlemen who are making huge profits on kidney sales. The sufferers are those who make a kidney available for monetary reasons, not realising that without proper after-care they can suffer from health complications. Cases of kidney theft on the operating table and forced organ removal are not unknown either. In this scenario, such a piece of legislation can hardly serve as a deterrent for operators of the kidney trade or for those who come from abroad for renal transplantation. These are factors that must be kept in mind before the new draft is finalised.

Boiler blast tragedy

THE explosion of a boiler in a factory which caused its destruction and the death of nine people is a reminder of the occupational hazards people face especially when there is a disregard for safety rules. Though most such accidents have been the result of malfunctioning in gas supply mechanisms, the boiler explosion is the second such incident to have occurred this year in the city. It is now becoming evident that many factories do not have trained boiler handlers. This must be investigated by the labour department as it is highly irresponsible and dangerous on the part of factory owners to have untrained personnel handling equipment. Moreover, owners are legally required to follow safety rules and ensure that their equipment is regularly cleared for safe use. This was not the case in Tuesday’s blast as the factory owner produced an invalid boiler clearance certificate which had expired in Dec. 2006. However, prosecuting him for the tragedy will not be enough. The administration has to own up to some responsibility too. Why, for instance, did no one bother to check why the certificate had not been renewed? On a different level, how was this factory operational in a residential locality, albeit a katchi abadi? The blast caused the destruction of 10 adjoining living quarters, injuring its residents as well as others. This issue must be taken up seriously.

Despite so many tragic incidents caused because a factory did not have proper emergency exits, ventilation systems, first aid kits and so forth, it is clear that no lessons have been learnt from such occurrences in the past. How many more people have to die before factory owners and the relevant agencies act responsibly and ensure that workers are properly protected? In this regard, labour laws need to be reviewed and provisions made for better safety at work. Profits cannot take precedence over precious human life.

High growth and large deficits

THE fiscal year 2007 has ended with, as was feared, a current account deficit of over seven billion dollars. It is over two billion dollars or 41 per cent more than the current account deficit of the preceding year which was 4.90 billion dollars.

What is worse is that the current fiscal year threatens to be worse according to many indicators, and may end up with a deficit of over 9 billion dollars destabilising the entire financial structure.

International aid agencies have warned Pakistan against accumulating such huge deficit which is neither sustainable nor helpful for maintaining the economic growth. But the government appears to be helpless as it does not want to revise or reconsider its policies as these are part of a larger structure.

There are four major causes for the expanding current account deficit, while the foreign exchange reserves have now reached $15 billion. But this amount is almost equal to this year’s trade deficit of $12.8 billion and this is indeed a critical issue which dwarfs the foreign exchange reserves amount which itself is some achievement.

But of the four major causes for the large deficit, the government can barely exercise influence over one-year exports. Oil prices are soaring and reports from Saudi Arabia talk of the impending 90 dollars a barrel oil price before it moves to fulfil the prophecy of 100 dollars a barrel. Foreign loans have to be serviced and the repayable part to be repaid. Remittances of the profits of foreign investment have to be made promptly. And payment on the services account has to be made in full to keep the wheels of the economy moving.

Imports projected at $32 billion can be reduced but that could mean curtailing the industrial activity, reducing employment and emasculating the official revenues beginning with import duties, sales tax and withholding tax and all that can slow down economic growth. So the government is averse to a cut in imports although a number of them are dispensable items.

Now the government will have to concentrate on increasing exports far above the target of $19.2 billion dollars although last year’s target was missed by 10 per cent. And the focus has to be more on the value added exports instead of physical bulk.

Prime Minister Shaukat Aziz, reportedly wanted a 20 per cent increase in exports but the commerce minister Humayun Akhtar khan was content with 18.7 per cent increase. Ultimately a target of 19.2 billion dollars was agreed and that means a 6.78 per cent rise over the last year’s figure.

Three major inflows which eventually determine the pattern of balance of payments can be subjected to changes and are not under the control of the government. They are the foreign direct investment, portfolio investment and home remittances. The FDI which hit the peak of $6.95 billion last year is subjected to political and economic changes in Pakistan. The foreign investment can increase substantially even over $ 6.95 billion if some of the large public sector projects could be privatised this year. But there is opposition to privatising profitable companies like PSO, PPL and the refineries and even the loss-making Pakistan Steel which is now making profit.

Portfolio investment depends on the climate in the stock exchange in Pakistan and how well the Karachi stock exchange index fares after 14,000. It is a come and go affair depending on profitability. Portfolio investment comes for profit in Pakistan and not for real investment.

The home remittances which reached the peak of $5.5 billion in the last fiscal year can increase further if the overseas Pakistanis develops a perception that the West particularly America is basically ant-Muslim. So if that perception gains ground then few Pakistanis would want to retain their earnings abroad and may prefer to send them home where they enjoy a higher interest rate.

Last year had been the best year for the FDI, portfolio investment and home remittances. Can that be repeated this year as well despite uncertain conditions and a continuing rise in violence in the country? Besides, this is the election year which may see political convulsions. So can we have more foreign investment in the months ahead? If it does not come, the balance of payments position of Pakistan can become far worse.

Foreign companies as well as Pakistani concerns are now making large profits and that is equally true in case of banks. That the foreign banks are remitting profits home means a heavy demand on the foreign exchange resources of Pakistan and that consumes a large part of the foreign investment.

The real bottleneck in the area of the current account is the services sector. While the expenditure on this account is $ 4.51 billion, the revenue is 937 million dollars resulting in a service sector deficit of over three billion dollars which is indeed a very large gap. Shipping consumes a great deal of the money. The import of goods worth $32 billion would need a great deal of shipping which contributes to the inflated services sector payments.

Despite the handicap and the competition abroad the textile industry has been able to export textiles worth over 10 billion dollars last fiscal year which is 10 per cent more than the exports during the preceding year. Although the exports last year fell below 10 per cent, the textile exports rose by 10 per cent in the preceding year but it was below the 20 per cent target growth. But the textiles have improved their share in the overall trade by four per cent and raised their total to 59 per cent of the total exports.

Evidently the future of Pakistan’s exports depends largely on the future of the textile exports in an exceedingly competitive area but the textile industry is dissatisfied with the incentives announced by the government in the new trade policy, particularly the spinning mills and they are talking of a shutdown strike to drive home the point that they can throw a lot of workers out of employment.

Even the minister for textiles Mushtaq Ali Cheema does not want to give far more financial concessions to the spinning mills keeping in view their elementary performance but he has promised an overall package for the industry.

It is a matter for debate whether the country is gaining more foreign exchange through the spinning mills or losing more foreign exchange. A proper commission should study this issue and come out with its recommendations. Meanwhile the textile mills want the import of three million more bales of cotton from India over what was imported last year. So the net gain to the country should be clear before the cotton import spree gains greater momentum.

Exports of Pakistan face tough competition because of the conditions at home where the goods are produced. Exporters face a high cost of production. Power supply is as fitful as the prices are high and the water supply presents similar challenges to the industrialists in major cities.

Inflation is high in Pakistan and industrial inflation is higher than consumer inflation of eight per cent. Production dislocations are too many, the holidays are quite many and strikes are frequent for political and other reasons. Transport is too costly and the Karachi Port Trust is an expensive port. Workers are not literate and skilful enough and not quite disciplined. Their productivity is very low compared to the wages. All these enhance the cost of production and transportation.

The new trade policy offers no major incentives, say the businessmen. The leather industry in particular feels shabbily treated. There is nothing new in the trade policy, they say, as positive incentives are needed. This is not the atmosphere in which far higher exports are possible.

Now instead of financial concessions to the industry, or in addition to them, the government makes payment for research and development and now each industry wants that. But the government has to be careful in the WTO as it may be accused of subsidising the exports. We need instead an export economy that depends less on the government and more on its own devices instead of a constant demand on the government for more concessions and their frequent denial.

The fact remains that we plan to have imports of 32 billion dollars and meet the currently planned 19.2 billion dollar exports target which leaves a large gap of 12.8 billion dollars. The World Bank and the Asian Development Bank have been cautioning Pakistan that it won’t be able to sustain such heavy deficits and also maintain high growth rates. They want Pakistan to do far more in the area of exports. We have signed a free trade area agreement with China under which bilateral trade is to increase to 15 billion dollars within five years. If we export enough to China from now onward, the trade deficit can be reduced.

We have finally landed in a situation in which a prime minister wants a higher export target and then try hard to achieve that and fail and a commerce minister Humayun Akhtar Khan who wants a modest target and achieve that in full and declare his policy a success. But instead of the 20 billion dollar increase in exports which Shaukat Aziz wanted and 18 billion dollar which Humayun Akhtar preferred, they have struck a compromise on 19.2 billion dollar exports which means an increase of 6.78 per cent which is in consonance with the rate of economic growth.