Implications of the N-deal

ON JULY 27 the world’s oldest and the world’s largest democracy, to quote US undersecretary of state, Nicholas Burns, reached an agreement on the terms and conditions of a civil nuclear cooperation accord, known as the 123 agreement. The Americans have termed it as the “symbolic centrepiece of a growing global partnership between our two countries.”

Going through the details of the agreement and the explanatory briefing provided by American officials and seeking to reconcile its provisions with the American Atomic Energy Act of 1954 and the more recent Hyde Act, I could only marvel at the negotiating skill and tenacity of the Indian officials. They got everything they wanted and more, leaving it to their American counterparts to find the convoluted language that could somehow suggest that the agreement was in line with the letter and spirit of current American law.

Current American law requires that all nuclear cooperation must cease with any country that carries out a nuclear explosion. The Americans insist that even while this has not been specifically stated in the agreement American law will apply. The Indians have insisted that they must not be subject to any restriction on this account. The Americans have promised under the agreement to help India build a strategic fuel reserve so that Indian nuclear activity can continue even if there is disruption in fuel supplies.

They have added that if under American law they are required to stop fuel supply themselves and to ask for the return of the fuel and technology that they have supplied they will work with India to find it alternate fuel supplies.

On carefully reading the text of the agreement, it appears that even this American law may not apply to the Indo-US agreement. The agreement states that “Consistent with the July 18, 2005, Joint Statement, the United States has also reaffirmed its assurance to create the necessary conditions for India to have assured and full access to fuel for its reactors. As part of its implementation of the July 18, 2005, Joint Statement the United States is committed to seeking agreement from the US Congress to amend its domestic laws and to work with friends and allies to adjust the practices of the Nuclear Suppliers Group to create the necessary conditions for India to obtain full access to the international fuel market.”

It is possible that the change in domestic law may be an India-specific provision that allows nuclear cooperation to continue even if India carries out a nuclear explosion.

Such an interpretation may appear far-fetched but is supported by the provision in the agreement for the termination of the deal. This states that either party can give a year’s notice for terminating the agreement. It must give the reasons for this and be prepared to hold consultations on the subject.

In other words, there may be no immediate cessation of nuclear cooperation and American law may be amended to delay the cessation, even if India does carry out a nuclear explosion in response to the resumption of testing by China or Pakistan.

The Indians, however, have been careful to guard against the possibility and have insisted that the Americans help them negotiate an India-specific agreement with the IAEA which would allow them to withdraw the civilian reactors from safeguards if there was an interruption in fuel supplies rather than retaining the usual “perpetuity” safeguards provisions that are part and parcel of IAEA safeguard agreements. The Indians had been adamant from the start that they did not want to return the spent fuel from their safeguarded reactors because they wanted to extract the plutonium from such fuel for use in their breeder reactors. Given their own problems with the storage of spent fuel, the Americans did not want the spent fuel back. As far as I know the Americans have not yet taken back the spent fuel from the Tarapur reactors which they had supplied and for which they had provided the fuel.

The Americans claim that the breakthrough for the agreement came when the Indians offered to build a reprocessing facility and to place it under IAEA safeguards. Why this was so is not clear but it is apparent that the Americans are also prepared to amend the 123 agreement in future to provide the equipment and technology for the state of the art reprocessing facility that the Indians have undertaken to build.

The Indians have got a “sweetheart” deal. Without detracting in any way from the negotiating skills of the Indian team it reflects largely on the Bush administration’s desperate need to chalk up at least one foreign policy success in a record of disastrous failures. There is also, of course, the vision of a strategic partnership, though not shared by all parts of the American foreign policy establishment. This will help cement the alliance that the US is seeking to build to “contain” China.

In that context it could be said that all the concessions that India won were those that had to be made if India was to achieve the same “nuclear status” as China. It may also be the expression of a hope that India would cooperate in isolating Iran and thus would withdraw support for, or delay, the proposed Iran-Pakistan-India pipeline.

The question is whether this agreement will win the consent of the Indians, the NSG, the IAEA and the American Congress.

The Indian Left, the allies that keep the Congress government afloat, has raised a ruckus about the agreement, maintaining that it restricts India’s sovereignty. The starting point for their objection is a non-binding clause in the Hyde Act which directs the US president to determine whether India is cooperating with American efforts to confront Iran about its nuclear programme.

Most observers, however, believe that the Left, now required to fight the Congress in two state elections is using this as a pretext to justify a parting of ways necessitated by the realities of the domestic political situation. The Bharatiya Janata Party’s Jaswant Singh has condemned the agreement stating that “a strategic partnership is not a synonym for strategic subservience, and that’s why we are opposed to it,” but he has apparently not provided any details of how this agreement makes India subservient.

The BJP will have a hard time opposing the agreement further since in the minds of most Indians the BJP government was the architect of this agreement.

For the most part the Indian establishment is solidly behind the agreement, which requires ratification only by the cabinet and not the parliament. This process has been completed. Even though a crisis atmosphere appears to prevail in New Delhi and a raucous debate can be expected in parliament, I doubt if this is an issue on which the coalition government will collapse requiring fresh elections.

In my view, Congress will make some token concessions such as delaying the commencement of negotiations with the IAEA and provide some more briefings to their coalition partners and win their neutrality if not assent. They will then proceed to woo the NSG and the IAEA using domestic opposition as a tool for getting them to endorse the unique concessions it has secured in the Indo-US agreement.

What is likely to happen in the NSG, the IAEA and the US Congress and what Pakistan can or should do will be the subject of my next article.

A directory of the corrupt

WHOEVER happens to be the prime minister in this country often ignores the moral and financial waywardness of his political companions — ministers, MNAs and MPAs — and prefers to put the blame for corruption squarely on the bureaucracy.

I remember how Ms Benazir Bhutto, when she was the PM, once described senior officers as selfish, arrogant and greedy and obsessed by the lust to grab assignments that carry clout and illegal income. I think an exception can be made in the case of Mr Shaukat Aziz who has never expressed such views.

The fact is that corrupt officers, even if they are good administrators, are popular with political rulers because they are useful in so many ways. A columnist of a mofussil Urdu daily, while endorsing all that is said about top public servants, has advised the prime minister to publish a booklet in which the names of 5,000 corrupt or immoral officers should be given along with their photographs so that the people of Pakistan should know what they look like and what they do. I wonder how he arrived at the figure of 5,000 — neither more nor less.

The columnist did not suggest who should compile this list of the 5,000 bad guys (maybe he is angling for the job himself) and which agency of the federal government should bring out the book. Also he did not say whether the photographs of the “corrupt and ill-reputed” officers should be supplied by the self-confessed crooks themselves or secured by the government through its own sources. Maybe he wants this done by the Intelligence Bureau.

Anyway, it is surprising that no newspaper has thought it fit to comment on the columnist’s proposal, nor has any correspondent of a foreign paper or agency wired it back home as an example of the odd and the bizarre seen in Pakistan. It’s a pity that the External Publicity Wing in the Ministry of Information too has not taken steps to get the item published abroad. It was a rare opportunity to get Pakistan’s name in the foreign media. People in the West love crazy news from Asian countries.

Prospective investors from abroad whom the prime minister has been courting all over the world would find the book invaluable. Pakistan already enjoys the reputation that you can’t get anything officially done here without applying grease.

If published the book could serve as an easy guide for the foreign entrepreneur. Just as an example, if you want to get a false identity card made, turn to Mr X on Page 420.

The most frequent query that I come across in my daily life, in fact which most of us who hold some position in society confront is, “I say, do you know anyone in the Economic Affairs Division or the Bait-ul-Maal or the Traffic Police?” – just to mention three of the hundreds of government agencies which the public has to deal with to get something done. Believe me, I was once requested for a recommendation to the School for the Blind in Islamabad.

Since the people are willing to pay even to secure their legitimate rights, the directory is bound to become the bible for the common man, and especially for the trader and the industrialist. In course of time such a publication may come to occupy an important place in the day-to-day functioning of society. Just as you dial 17 to ask for the telephone number of an official, similarly, to meet a public need, PTC may advertise a two digit number to answer queries from the book of the corrupt.

I wonder what it should be called. The government may announce a reward for the best name and give a copy free to the winner. In view of the Islamisation of everything, (including Islam itself) I would propose an Arabic name like “Lughat-us-Shayateen” or Directory of Scoundrels.

In a way though this name would not be fair. These 5,000 persons will be the people who actually run Pakistan and without whose consent and concurrence nothing dares to move. It would not be nice therefore to call them scoundrels, whatever their character and the nature of their activities.

Also, I’m sure the number 5,000 is woefully short, unless of course the intention is to give the names of the top men only. But that would be a wrong policy. The top man everywhere will get inundated with importunate requests and will have to share the work – and the spoils – with his underlings. And he is not going to like that.

I don’t want to delay the project by making new proposals, otherwise I would call for an expansion of the list to serve the purpose for which it is to be compiled. You see, 5,000 may barely cover the Central Board of Revenue if everyone deserving is to be included. Don’t forget that the CBR contains income tax and customs, the most enterprising departments in this line. And if you have to go to the top man for everything he may get annoyed and raise his price. But I do hope that somebody has the sense to give the telephone numbers of the people in the book, especially residence numbers and their home addresses. Some deals can’t be discussed in office.

But I have my fears too, and they are genuine. Just to ensure that the list of the useful corrupt is comprehensive, how far can you go on enlarging its size? And you can’t have a really helpful book like this in a number of volumes. So, ultimately the government will have to reverse the plan altogether.

I honestly believe that it will be simpler and cheaper to bring out a directory of the useless honest only – officials who don’t let things run smoothly. This short directory could be called “Government of Pakistan: Officers to be Avoided like the Plague.”

That would hardly require more than fifty pages and could go into the pocket.

Generating employment

FIGURES on employment from a draft report from the ministry of labour confirm what most analysts already recognise: how disadvantageous women’s positions are in the work force. Despite increasing the minimum wage to Rs4,000 in 2006, it is disturbing to see that two-thirds of women and one-fourth of men are making far less than that.

A domestic servant who earns Rs2,500 a month with no medical or other benefit, is going to live hand-to-mouth, in serious debt, and his/her children will have no chance of improving their lives, from an education and health point of view. Although tall claims are made on poverty alleviation and how micro-credit schemes have empowered so many, the ground reality is that the vicious cycle of poverty has not been broken. Nor has the liberalisation of the economy and privatisation of state assets benefited the vulnerable, especially women.

A report on gender and poverty by ADB in 2006 showed that women’s labour force participation rate (LFPR) in the country was 15.9 per cent of the total rate of 43.7 per cent for both sexes. In the formal sector of the labour force it was 10 per cent, a rather low figure given the advancements in female education, rise in the marriage age and greater awareness of women’s rights.

Company laws on paper do not discriminate against women, yet the fact is that they are not paid as well as men, nor do they enjoy the same benefits. In the agricultural sector it is worse starting with women being denied their right to own and manage lands. For the women employed in hazardous conditions like brick-kilns or mines, it is the sorriest state of affairs. They are probably unaware of any minimum wage let alone worker rights. As the report rightly stated, “Pakistan’s economic development alone does not guarantee human development.”

What then does?

The government needs to make certain legislative changes in labour laws that end discrimination, be it in implementing non-wage benefits or in protecting workers’ rights. It needs to take harassment at the workplace very seriously: be it in the corporate world, in the government where a five per cent quota in government jobs is not being observed, or in other parts of the country where women are subjected to all kinds of abuse.

Because agriculture employs around 40 per cent of the total employed and contributes to 60 per cent export earnings, it particularly needs the labour ministry’s attention when devising any employment generating schemes. A debate on land reform needs to be desperately initiated but until that exercise is undertaken, policymakers need to devise ways where people without land can generate income.

The great game goes on

THE last time that it was played in the 19th century, the ‘great game’ had two players — imperial Russia and the British empire. This time three big players are already holding centre-stage — the US, Russia and China. Three mid-level players can also be identified — Turkey, Iran and Pakistan sitting at the gateposts of Central Asia.

Last time, both imperial powers competed for influence in this heartland of Asia. This time, they are playing for the rich hydrocarbon resources lying underneath the region. Last time, Rudyard Kipling called it the ‘great game’ because, while it involved diplomacy, espionage, buying, bullying, betrayals and every other trick in the bag, it avoided direct war. How will it be this time?

At stake are over four trillion dollars worth of untapped oil and gas deposits that have attracted everybody to the region. Although Russia is the second largest oil producer and exporter and the largest producer of natural gas in the world, its own industrialisation and commitments to supply energy to meet the rising demands of Europe can be satisfactorily met when it has access to the Central Asian energy deposits.

Besides, Russia has had a close association with this region and is keen to maintain its relations as its political strategy shows.

The sleeping giant China has also woken up and its amazing industrial growth needs ever more energy to sustain the momentum. Its rapid industrialisation has already made China the second largest consumer of energy in the world. It is estimated that by 2020, China will also be importing 70 per cent of its energy demands and will thus be seeking access to large energy markets.

The US — which is already the largest energy consumer in the world — would also be importing over 65 per cent of its energy demands by 2020, it is predicted.

The European Commission believes that the demand in Europe, which now imports 50 per cent of its energy needs, will rise and 70 per cent of its demands would have to be imported in the future.

Since the biggest untapped energy resources of our time lie in Central Asia, everybody is working overtime to take a seat at the high table of rich resources. But all aspirants — other than neighbouring Russia and China — for Central Asian energy will have to take on board the three gatekeepers of Central Asia — Turkey, Iran and Pakistan that are situated at the exit points of the pipelines going west to Europe and beyond and south to everywhere else in the world including the United States and Japan.

It is the pipelines that are the lead players in the new great game and everybody is pushing for them so that they can channel energy through their favourite routes.

Russia has been developing northbound pipelines overland through its territory to Europe through Ukraine and across the Baltic Sea to northern Europe. China prefers eastbound overland pipelines taking energy supplies directly into its territory and has been building accordingly. The United States is following up on two routes, both avoiding Iran, that take energy through the Turkish and Pakistani gateposts.

But while pipeline developments have been progressing over a decade on all other routes, southbound energy pipelines through Pakistan’s Arabian Sea ports have remained in the doldrums as much a victim of our destructive internal politics as of the inability to interpret the external moves being made on the world energy chessboard by several shrewd players who know exactly what they want and how to go about achieving their ambitious goals.

After the demise of the Soviet Union in 1991, the best window for Pakistan opened during the mid-1990s when all major powers were backing oil and gas pipelines passing through Pakistani ports. A great deal of work was completed on negotiations and the development of projects which were endorsed by serious investors from the East as well as the West — leading to bright prospects for the country’s economic future.

The energy pipelines taking Central Asian oil and gas through Pakistan to global markets, along with rail and road links, were part of the portfolio of investment projects coming up for formal signing at the CASA economic summit that was to be held in Lahore in 1997 in collaboration with the World Economic Forum of Davos.

As the second Benazir Bhutto government was overthrown, energy corridor projects linking Central Asia to global markets through Pakistan also fell victim to needless political vendettas. The second Nawaz Sharif government, too busy settling scores with its rivals, turned its back on the work already done, and investors associated with these projects were snubbed and the projects were allowed to fall by the wayside.

Thus while the east- west- and north-bound pipelines were moving ahead, plans for the southbound pipelines through Pakistan, although the shortest and most profitable ones, remained unimplemented for several years until 9/11 overtook all other developments.

By wasting years of a golden opportunity, Pakistan lost a ringside seat in the decision-making circles of Central Asian energy markets. Now the big players would be taking direct charge of the game where the stakes had risen very high, far more than there did a decade ago when Pakistan was provided with an ideal opportunity to capitalise on the energy game and reap rich dividends in the future, but failed to do so.

The southbound route for energy projects still remains blocked. If there has been any progress on the two initiatives of the Iran-Pakistan-India (IPI) pipeline and the Turkmenistan-Afghanistan-Pakistan (TAP) pipeline discussed from time to time, it has been in fits and starts over the last five years.

The IPI pipeline that recently was seen to be breaking the logjam imposed by the wars in Afghanistan has again hit snags, this time created by the Iranians who are reviewing the pricing structure which actually achieved the breakthrough in the first place.

The TAP pipeline remains a high-risk venture because of the continuing conflict in Afghanistan. This position remains unchanged despite Islamabad springing a surprise on everyone a few days ago by announcing a $10 billion contract for the construction of the TAP and extending it to India when even the basic routing of the pipeline is mired in deep difficulties.

Pakistan’s potential remains high as the country sits at the crossroads of the energy routes. A north-south pipeline taking Central Asian energy through Pakistani ports to global markets and west-east pipelines taking Iranian or Qatari gas towards South Asia would meet each other in the Pakistani province of Balochistan. That would put the country at the centre of overt and covert moves being made on the global energy chessboard under various labels.

The urgency of energy security for future growth needs to be much more seriously addressed than it is being done at present. Not only do energy supplies to meet Pakistan’s own demands and South Asian markets remain checkmated, our plans of making Gwadar the focal point for supplying Gulf energy through the overland route to China also stand to be seriously affected by our inaction and clumsy planning of the issue. That project has great strategic benefits as it would cut the distance to the booming Chinese markets by 12,000 miles, reduce the fee by 25 per cent and journey time by one month — a great saving in terms of time, money and distance.

But all these possibilities depend upon our ability to sift through the foggy recesses of our unenviable national planning and the distracting diversions that confront us in order to handle the currents and cross currents of energy moves in an organised manner with a view to gaining maximum mileage.

Negotiating energy security for the country in this great game carries great opportunities for and, at the same time, poses serious challenges to Pakistan, especially as it does not appear prepared to utilise opportunities and compete gainfully. It would fully test the wisdom of our leadership and the quality of our economic diplomacy. One hopes that this time we will be able to handle issues that are of national interest with greater maturity and responsibility than we had displayed 10 years ago.

The writer is former head of Board of Investment and federal secretary.
smshah@alum.mit.edu