Call for reconciliation

AT A time when the country is so highly polarised, President Pervez Musharraf’s emphasis on the need for keeping channels open with “everyone” and for holding fair and free elections is quite significant. With the Supreme Court’s judgment in favour of the Sharif brothers having enlivened the political scene further, the government should move discreetly and hold talks with the opposition. Disregarding the highly negative remarks by the minister for parliamentary affairs on the Supreme Court’s decision on the Sharifs’ right to return, Law Minister Wasi Zafar reacted positively to the judgment and said it was the government’s duty and “constitutional obligation” to accept it. A government spokesman said the judgment would be taken “in its true spirit”. All these are positive developments. It seems the government has come to realise the disastrous consequences of following domestic and foreign policies which do not have national consensus behind them. Recent events, such as the court judgments, the suicide bombings in the wake of the Lal Masjid crackdown, and the American warnings seem to have driven home to the government its vulnerability.

The Musharraf government now seems to be getting acutely aware of its isolation. Initially, the military seemed favourably disposed towards the religious right and made every attempt to ostracise the two mainstream political parties, the PPP and PML-N. While a rapprochement with the Sharifs was out of the question for obvious reasons, the generals continued to unthinkingly follow Ziaul Haq’s anti-PPP legacy — a policy that is now undergoing a reappraisal. However, things began to go awry in the wake of 9/11 and the Musharraf government’s decision to throw in its lot with the US-led war on terror. The religious right, under the MMA label, committed a mistake by endorsing the Seventeenth Amendment and thus accepting Gen Musharraf as president in uniform. The differences between the two sides came to the fore on such issues as the women’s rights bill, the higher level of force against the Taliban in Fata and the Lal Masjid affair. Suddenly, the government found itself isolated in an election year in which it has mighty plans, including Gen Musharraf’s re-election as president in uniform. Clearly, the two SC decisions seem to have upset the government’s apple cart. If, therefore, the president is talking about reconciliation, he is hardly talking from a position of strength.

Irrespective of the Sharifs’ decision to return or not, the president’s call for talks and political reconciliation must have a one-point agenda — a truly fair and free general election. All those in exile — whether constrained to go abroad by agreement or choosing on their own to evade the law — have every right as citizens of Pakistan to take part in the election. The government’s job must be to ensure the transparency of the mechanism which will organise the vote. In practical terms, this boils down to the need for setting up a neutral caretaker government and an independent election commission, which must receive the executive’s unqualified cooperation as laid down in Article 220 of the Constitution.

After the Kabul jirga

PRESIDENT Musharraf recently pledged that Pakistan would take “all possible follow-up steps” to implement the decisions taken at the tribal jirga held in Kabul two weeks ago. Taken at face value, the general’s commitment to the peace process is both laudable and pragmatic, for stability in Afghanistan is linked inextricably to rule of law in Pakistan — not just in the tribal belt but the country at large. Delivering on pledges is easier said, however, given the volatility of the situation and the trust deficit that has undermined past attempts at dialogue. The Kabul jirga, which featured delegates from some 700 tribes on either side of the Durand Line, had vowed on August 12 to eliminate terrorist camps and sanctuaries in Pakistan and Afghanistan and to clamp down on the opium trade which finances militancy. It was also decided to set up a council that would promote reconciliation with “the opposition”, a reference to the Taliban militia operating in both countries. This is a tall order by any standard. For one thing, “the opposition” comprises militants who believe they are on a mission ordained by God and would rather die fighting than settle for a compromise. Moreover, the Taliban or their representatives were not invited to the Kabul event. The idea behind a jirga, usually, is to bring opposing sides together to effect a reconciliation. When only one camp is in attendance, the exercise becomes less credible and loses much of its teeth.

Still, despite the many hurdles, an effort has to be made to end the ceaseless conflict in Afghanistan and any strategy in this regard must combine the carrot with the stick. Negotiations should head the agenda but only if they are conducted from a position of strength — there can be no repeat of the September 2006 capitulation in Waziristan. If dialogue fails to deliver, those who refuse to lay down arms will have to be pursued relentlessly and with honesty of purpose, a quality missing in both Kabul and Islamabad. Restoring peace and stability must be seen as a joint Pakistan-Afghanistan responsibility, and for this to happen the blame game must end. The trust deficit between the two presidents has to be overcome and personal differences set aside because cooperation is the key to success in the fight against Talibanisation. Too much is at stake and no opportunity too small to be squandered.

For better hospital supervision

SOME good has come of the Sindh government’s decision in March 2005 to set up management boards to govern the affairs of public hospitals. Thursday’s meeting of the board of governors at the Civil Hospital Karachi took note of allegations against the government’s works and services department and constituted a body to probe the charges. The department is being charged with not carrying out repair work, or doing shoddy repair jobs and using delaying tactics on repairs that were needed at the hospital. A short visit to the CHK is ample proof of the deteriorating conditions of a public hospital that sees around 4,000 patients a day, many from far-flung areas. This makes it necessary for the board to look into these — and other allegations — and take stern action against those found guilty of any wrongdoing. It is criminal to short-change patients already deprived of good facilities. Hospital management committees should be finding ways to improve the healthcare system but seem to be preoccupied with removing corrupt influences, which while important, cannot be their sole responsibility. They must find new ways to deal with problems in as short a time as possible.

The neglect of a hospital building is reflective of the low priorities given to healthcare. One estimate says that there is one doctor for 5,000 patients in Karachi and its surrounding areas. The patient-doctor ratio in the rest of the country is no better which is deplorable and unacceptable. The problem is that healthcare is not treated as a patient’s right but as a privilege. This attitude has to change, starting from the top. Policymakers need to allocate more funds to the health sector to bring a significant change in it. It should also encourage more public-private partnerships — like at the SIUT — where all members can play a role in removing hurdles.

Heavy borrowing and large write-offs

PAKISTAN borrowed from external sources $15 billion during last four years and the government banks and financial agencies wrote off loans worth Rs33 billion in three years. This has happened not during the civilian rule by the politicians but under a military dominated regime.

If the bank loans had been productively and profitably utilised along with the large loans written off earlier, the need for such heavy external borrowing would have been far less instead of an average of almost four billion dollars a year for four years.

These figures were placed before the Senate by the minister of state for finance Omer Ayub who held back no punches. The massive write-off on an ascending scale began with Rs5.6 billion in 2003, and went on with Rs10.42 billion in 2004, Rs9.908 billion in 2005 and Rs19.338 billion in 2006.

The industrial sector was the major beneficiary with Rs25.82 billion. The trade sector’s write-off was Rs3.21 billion and the agricultural sector got away with Rs2.83 billion. The total number of borrowers who got such write-offs, he said, was 11, 220 in 2003, 17, 869 in 2004, 45,249 in 2005 and 19,378 in 2006. Eleven investors from the industrial sector got away with a write-off of Rs12.37 billion in 2003.

They were the beneficiaries of thousands of sick units in each province. So, in addition to the Rs33 billion loan write-off, they also got subsidies totalling Rs24 billion which makes a total of Rs7 billion.

Trading in Pakistan is said to be substantially profitable particularly in imported goods. That is why most industrial houses have opened their own trading houses for foreign goods and services. Yet they got a loan write-off of Rs.21 billion.

Big agriculturists are famous for their defaults as they follow the bigger agriculturists who have political clout and can get away with almost anything. So, it is difficult to understand why the agricultural sector loan write-off was the smallest with Rs2.83 billion. Anyway, many farm lords obtain loans with no intent to repay and eventually get it written off.

What is striking is that along with a loan default of Rs33 billion which was written off in three years, they also got subsidies of Rs24 billion to make it doubly profitable. Clearly, the outflow of public funds is a continuous process under any system of government.

Such loans were given by government banks and financial institutions often under political pressure or to reward some politicians and often written off following the same kind of political bargaining. Many of the sitting members of parliament are beneficiaries of such write-offs. They include Chaudhary Shujaat Hussain and his family members.

The loans were also given to the friends and relatives of senior officials in Islamabad who controlled the banks and later written off under their influence.

A remarkable feature of such transactions is that the bank officials who give such loans do not suffer any disgrace but the ones who write them off come under a cloud. So the officials are reluctant to both write off the loans and carry the dead load of bad loans in the books year after year. As a result of such transactions, three major banks came to grief, the first was the National Development Finance Corporation, the resources of which were misused and after it was bankrupted it was merged in to the National bank of Pakistan. The second is the Industrial Development Bank struggling under a mass of bad loans, the third was the largest private sector investment bank, Bankers Equity, which folded in a rash of scandals. At its peak, the non-performing loans were around Rs250 billion. Some part of that money has since been recovered.

Some of the borrowers had no intention to repay or planned to repay one or two instalments and then default as they were a large company.

It should also be admitted that one of the major reasons for the large defaults was the very high interest rate charged earlier during Moin Qureshi’s caretaker regime which was 23 per cent and, in fact, 25 per cent by certain banks. The borrowers, even the honest ones, were not able to pay such heavy interest and the default went on multiplying. Heavy interest rate is, often, an invitation to default.

Many industrialists do not want to invest their own money in new projects as the Central Board of Revenue may ask them where they got it from since they had declared small income earlier and no profitability on their earlier projects. They prefer to borrow money from banks and pay interest thereon while keeping their own money in banks on a long-term basis and earning large profits. This ought to be discouraged and more and more investors persuaded to invest their own money.

Some of the defaulters got their loans by bribing senior bank officials and later got off the hook by the same process.

So there has been pressure on the government to privatise banks and it has been forced to yield despite resistance by some officials. Now Habib Bank has gone to the Aga Khan Foundation, United Bank to a UAE group, MCB to Mansha group, while some Pakistanis own Allied bank. And several foreign banks have also come, such as Hongkong Shanghai Banking Corporation. Several Islamic banks have also come in and the most prominent among them is the Dubai Islamic bank.

Meanwhile, the government has borrowed $50 billion in four years -- an average of almost four billion dollars a year. The country’s foreign debt which had gone down to $35.47 billion in the year 2004 has risen again to $40.172 billion which includes some foreign liabilities. In the year 2006 Pakistan borrowed $3.014 billion. This has happened in spite of the record home remittances of overseas Pakistanis of $6.5 billion and the record overseas direct investment of $6.4 billion.

In addition, Pakistan borrowed dollar 3.64 billion last year.

The heavy oil import costing over seven billion dollars and the large trade deficit have cost a current account deficit of over seven billion dollars. The World Bank and the Asian Development Bank have cautioned Pakistan that such a large current account deficit is unsustainable and the government cannot depend too much on the home remittances and the overseas and the foreign direct investment for balancing its external accounts. It has to take positive measures to bridge the gulf.

Dr Salman Shah, advisor to the prime minister on finance, says that Pakistan cannot lag behind India in its economic growth rate and has to maintain a growth rate of 7 to 9 percent but that has to be done without excessive borrowing and making the best use of Pakistan’s own resources and without excessive borrowing and loan write off.

Islam and democracy

BARRING some unforeseen event, Abdullah Gul, a devout Muslim who once flirted with Islamism, will become the president of Turkey next week. In a parliamentary vote on Monday he failed to win the prescribed two-thirds majority, but he will almost certainly secure victory in a later ballot where only a simple majority is required.

Mr Gul, who is currently foreign minister, was first nominated for the presidency back in April by the prime minister Recep Tayyip Erdogan, the leader of the ruling Justice and Development party (AKP). The army –– which regards itself as the guardian of Ataturk’s secular revolution and suspects Mr Gul of still harbouring an Islamist agenda –– objected. Undaunted by the military, Erdogan called an early general election in July, which his party won handsomely.

In anticipation of becoming president, Mr Gul has made some reassuring noises and even called in an Austrian couturier, whose clothes have adorned Catherine Zeta-Jones, to redesign his wife’s politically charged Islamic headscarves. The military, if it is wise, will let parliamentary events take their course. The army has toppled four Turkish governments during the past 50 years, and to do so again would be bad for the military itself (since the AKP has a clear mandate), bad for Turkey and, indeed, bad for the rest of the Muslim world.

Despite the AKP’s core of religious support, it has behaved in power with remarkable pragmatism, pursuing economic and political reforms that should pave the way for eventual EU membership. Tellingly, the party’s victory was greeted by record prices on the Turkish stock market. Secularists and the military fear a hidden agenda, but the Turkish brand of secularism has its unattractive side too, associated as it is with the wealthy elite and politics that at times can be far from progressive.

Beyond party politics there are certainly religious tussles taking place in Turkey, such as the attempt by municipal officials to ban posters advertising skimpy swimsuits from the streets of Istanbul earlier this year. Turkey has also become the main propagation centre (with encouragement from Christian fundamentalists) for an Islamic version of creationism. But according to one study, only 9 per cent of Turks want an Islamic state.

From a European liberal perspective, some of this is worrying, but in parts of the Middle East –– among reformers in Egypt, for example –– it is often seen as a model. If Islam and democracy can be proved compatible in Turkey, why not elsewhere? Mr Gul’s coming presidency, and the army’s response to it, will make waves far beyond the Bosphorus.

––The Guardian, London