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DAWN - the Internet Edition


July 27, 2008 Sunday Rajab 23, 1429


Editorial


Bank versus consumers
Taliban’s propaganda
Visit Pakistan, anyone?
OTHER VOICES - Indian Press
India’s N-deal with US
Tracking Mladic not easy



Bank versus consumers


A TIMELY report by the Consumer Rights Commission of Pakistan has focused on the asymmetries in consumer finance in Pakistan that are squeezing the general public. While banks reap record profits (in 2006 the pre-tax profits of all banks was a record Rs123.4bn), the benefits that have been passed on to customers have been inadequate. Most criticised has been the interest spread — generically, the difference between the rate at which a bank lends money to customers and the rate at which it pays depositors for their money — which has remained persistently and unjustifiably high. According to the CRCP report, the spread has ranged between approximately six and 10 per cent between 1990 and 2005, and in recent years has averaged over seven per cent. The banks justify the spread on the grounds that the cost of doing business in Pakistan is high and that their lending rates are reflective of the difficult economic environment here. Consumer rights advocates reject this argument, pointing to the record profitability of banks. At the very least, critics of the banking sector argue that banks have opaque cost structures and the high spread may be hiding inefficiencies within the sector that the consumer is being forced to pay for. The governor of the State Bank, Dr Shamshad Akhtar, has since early in her tenure tried to nudge banks into lowering their interest spreads and while they have come down in the past year, the feeling persists that the reduction has been too little and occurred too slowly.

Beyond the big issue of an unfair interest spread, the CRCP report highlighted the problems in the provision of the main consumer financing products, especially credit cards, car financing, personal loans and house financing. The banks do little to explain banking terms and conditions, resulting in customers signing up for loans and other products that they may not be able to afford. For example, the report highlighted the problem with variable mark-up loans — the majority of consumer loans — which become more expensive to service even as salaries lag behind inflation. Then there are the issues with hidden charges on credit cards and ATM machines that do not function adequately. Processing delays, unsolicited banking and unauthorised debits add to the woes of the consumer. Overall, the report gives the picture of an immensely profitable banking sector that has greatly enhanced the scope of products available to consumers, but has failed in providing services efficiently and with minimal fuss to customers. This is a regulatory failure that is in part caused by a timid State Bank keen to maintain a buoyant, attractive banking sector. However, the CRPC report is a reminder that the trade-off between the banks’ interests and the customers’ interests needs urgent readjustment.

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Taliban’s propaganda


AS indicated by the International Crisis Group in a recent report, an important reason behind the success of the Afghan Taliban is the ability of the extremist Islamic movement to effectively harness its communication skills. Thus the Taliban are able to cover up their own deficiencies while influencing local populations in a manner that Kabul is not able to counter successfully. A dextrous mix of the old (‘night letters’) and the new (DVDs and the Internet) and the availability of Taliban spokesmen at all hours has, unfortunately, not seen the Karzai government respond forcefully. Moreover, while the basic motive to replace the Afghan administration with a Sharia-based order shows limited foresight, the Taliban have proved themselves adept at spreading their message with a degree of confidence and sophistication. No wonder the ICG has called upon Kabul to reinforce its own communication skills to effectively counter the Taliban strategy of enhancing the insurgency’s legitimacy in the eyes of the people.

But words alone are not sufficient to win the people over. The Taliban have been helped by appalling socio-economic conditions, increasing violence and lawlessness, and disenchantment with the foreign troops in Afghanistan. The Kabul government, whose mandate is severely limited in terms of the area

it actually controls, has much to do to establish its writ throughout the country and destroy the demons of extremism coming alive in the minds of the people. Terrorised, no doubt, by the Taliban’s barbaric ways, illiterate communities living in the movement’s shadow are nevertheless imbibing their ideals and have little access to more liberal thought. They have no reason to trust Kabul that has not been able to impose the rule of law, curtail the spiralling drug trade that fuels the Taliban movement or introduce economic development. Unless there is a concrete effort to achieve these goals, religious extremism will continue its march.

There is an obvious lesson in this for the Pakistani government which has problems similar to those which the Karzai administration faces. It, too, could benefit from a deeper understanding of how the local Taliban operate, and offset their means of communication (including hate-spewing FM radio stations) by interacting more closely with local communities and taking an active interest in their welfare. Extremism in both thought and deed are increasing. Yet, the only measure to combat this phenomenon has been either the military option or shoddy political deals with the Taliban. With stronger institutions and a vast communication network, Pakistan is better placed than Kabul to counter the Taliban propaganda. It has now to prove that it also has the will to do so.

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Visit Pakistan, anyone?


THE news of two Italian mountaineers being rescued from the ‘killer peak’ of Nanga Parbat may once again bring the issue of tourism in Pakistan into sharp focus. Among the many hare-brained notions that have been put forward by the government was declaring 2007 as the ‘Destination Pakistan’ year. Ironically, where the tourism ministry had set the target of a minimum of a million foreign tourists for the year and planned over 50 events across the country to woo visitors, their number was far less than in the previous year. There is much to be said about the poor timing of the endeavour given the presence of violent religious elements in the most scenic regions as well as the weak projection of Pakistan as a ‘destination’ as good as any other on the globe. The number of tourists is expected to fall further this year owing to turbulence in the country.

Pakistan offers archaeological, cultural and natural wonders that had once held the world spellbound, attracting sightseers in droves and that too without effort on Pakistan’s part. However, if the current insurgency is allowed to persist, tourism initiatives can hardly venture beyond mere rhetoric. From the murder of Daniel Pearl to Mullah Fazlullah’s rabid oratory, Pakistan’s historic and picturesque value has been eclipsed by the dark shadow of terrorism, which has to be addressed with aggressive campaigns as well as actions. The government must also focus on foreign missions in the country to soften their travel advisories that warn potential tourists to stay away from the ‘hub of fanatics’ that is Pakistan. These steps must be supported by adequate infrastructure that caters to the middle class and not just the rich. Foreign tourists require both security and convenient, affordable lodging facilities and transport, the presence of which is almost negligible outside the urban centres. Needless to say, a booming tourism industry not only promises foreign exchange earnings for the country it also promotes economic activity and creates employment — all the right elements to alleviate poverty. Pakistan can no longer afford to be ‘the world’s best kept tourism secret’.

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OTHER VOICES - Indian Press


PM’s hour of glory

Deccan Chronicle

THE Congress-led United Progressive Alliance government of Prime Minister Manmohan Singh on Tuesday evening won the Lok Sabha’s confidence comfortably, with many votes to spare. The outcome belied the deep apprehensions within the ruling establishment over the past few days of a possible defeat at the hands of the combined opposition or of a too-close-for-comfort division of votes. The combined opposition’s numerical strength had been bolstered by the 59-strong Left bloc and many smaller groups that had changed allegiances partly out of pique and partly because of genuine reservations over the Indo-US nuclear deal. The expansion in the opposition’s size was a good enough ground for the Congress managers and UPA partners to anticipate the outcome with a measure of anxiety, with estimates on both sides fluctuating from hour to hour till the moment Speaker Somnath Chatterjee put the prime minister’s motion to the vote. In the event, the result suggested that the concerns over a possible loss of both the government and the nuclear deal were somewhat exaggerated.

However, the satisfaction over the positive end to a debate that remained largely out of focus for two long and exasperating days and often strayed into noisy contention over unexpected controversies cannot overshadow the deplorable fact that Tuesday was a day of eternal shame for India’s parliamentary democracy. The day’s happenings sullied the fair image and reputation of the Indian parliamentary system earned over six decades. In an unprecedented development, some aspects of which are baffling and mysterious, bundles of hard cash allegedly received by three BJP MPs as bribes in return for abstaining from voting were brought into the Lok Sabha…. Senior BJP leader and prime ministerial candidate Lal Krishna Advani admitted to allowing the money to be carried into the House amid allegations by his party men and associates of [the] Samajwadi Party’s involvement in the attempt at bribery and corruption. That the disclosure of the alleged cash transaction was made not by the media, as is the general practice, but by the BJP was mystifying enough, but even more intriguing was the fact that the bribe-takers took Mr Advani instead of the speaker into confidence about how the confidence debate was sought to be derailed and parliament’s image assaulted.The high-level inquiry ordered by the government and the speaker will no doubt probe the circumstances in which the sinister deal was done and fix responsibility, but it will be a while before we as a nation can live down the experience…. [I]t was a day of … unsavoury events following one another in quick succession inside the Lok Sabha, as if a pre-scripted play was being enacted on the floor of the House. It began with allegations by the SP that six of its members were kidnapped overnight and held hostage in New Delhi’s Uttar Pradesh Bhavan, and then was topped by a story of how a CBI investigator had allegedly threatened BSP MPs with UP Chief Minister Mayawati’s arrest if they failed to vote for the UPA. The ‘cash-for-abstention’ scam came as the climax. — (July 23)

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India’s N-deal with US


By Tariq Osman Hyder

THE US-India agreement for cooperation in civil nuclear energy is the high-water mark of the US-India strategic partnership.

Only a few isolated voices in the international arms control community, particularly in America and India, have voiced concerns. George Perkovich of the Carnegie Endowment perceptively noted inter alia two US objectives: that a more powerful India would balance China’s growing power and influence in Asia, and that changing national and international laws on nuclear cooperation would also help bolster India’s strategic capabilities, including nuclear weapons and ballistic missiles, which will further balance China’s strategic power.

India would get access to nuclear fuel, technology and reactors for its ambitious nuclear power development programme which was already facing problems due to limited uranium reserves. The chairman of India’s Atomic Energy Agency, Anil Kakodkar, stated on July 4 that India’s long-term energy security faces a huge gap if India is unable to import nuclear reactors or nuclear fuel under international cooperation. Alternatively it would be required to import 1.6bn tonnes of coal in the year 2050 alone.

The opportunity was missed to introduce a criteria-based non-discriminatory system which would have brought both India and Pakistan fully into the global non-proliferation regime and given both fossil-fuel deficit countries access to civil nuclear energy under IAEA safeguards, while encouraging strategic restraint in South Asia and furthering global non-proliferation objectives. India should have been asked to sign the Comprehensive Test Ban Treaty. While India has pledged to work towards a fissile material cut-off treaty, the agreement enhances rather than restrains its fissile production capabilities.

Of India’s 22 power reactors, six of which are already safeguarded, only an additional eight will be placed under safeguards, not immediately but progressively up to 2014. If run for that purpose, the eight un-safeguarded reactors can comfortably produce 1,400 kg of weapons-grade plutonium a year, which is sufficient for around 280 nuclear weapons. As all safeguarded reactors would have access to imported fuel there is no economic rationale for excluding these reactors.

Even when run for power generation alone, the un-safeguarded reactors would provide reactor-grade plutonium, in lesser quantities, which could be used for nuclear weapons and for India’s ambitious breeder reactor programme which has also been kept outside safeguards. The first Indian breeder reactor would be able to produce 135 kg of weapons-grade plutonium every year. Four larger breeders are planned which eventually could produce some 500-800 kg of weapons-grade plutonium a year. In comparison, the annual production of India’s existing military reactors is estimated at 33 kg.The Indian separation plan presented to its parliament on May 11, 2006 states that India would include in the civilian list of facilities under safeguards only those determined not to be relevant to its strategic programme. Hence the agreement, while fulfilling India’s energy requirements, frees its limited 60,000 tons of uranium reserves for its strategic programme and objectives, an outcome lauded by India’s leading strategist K. Subrahmanyam. The US justification that the agreement is placing additional Indian reactors under safeguards amounts to scraping the bottom of the non-proliferation barrel.

India is moving fast towards a nuclear submarine-based second-strike capability, as well as an ICBM capability which will require plutonium for missile warheads. Bharat Karnad, professor at the Centre for Policy Research, New Delhi, is of the opinion that India’s new ‘cold start’ doctrine will give it the ability to wage limited war against Pakistan, secure in the fact that its growing strategic capabilities will neutralise Pakistan’s deterrence. The fact is that strategic stability is under threat and an unnecessary arms race may result.

While the agreement is between the United States and India, a draft umbrella safeguards agreement between the IAEA and India will be examined, as per requirements, by the IAEA’s board of governors at the end of July. It remains to be seen how far it will accord with global non-proliferation objectives. This also holds true for subsequent discussion in the Nuclear Suppliers Group. Now is the time for the board of governors and then the NSG to use their leverage to get it right. If the board of governors succumbs to pressure, as is likely, even more responsibility devolves on the Nuclear Suppliers Group, which was set up to prevent or at least restrict proliferation. If it is to retain any credibility, the group must do the right thing.

The IAEA has different models of safeguards agreements. Almost all are based on facility-specific agreements, which apply safeguards in perpetuity and extend safeguards on the material produced. There are no conditionalities. The five permanent members of the Security Council have voluntary offer agreements, placing certain facilities under safeguards, which they can withdraw at any time for reasons of national security.

The draft India-IAEA agreement is a hybrid of the two models. India retains the right to take unspecified corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of a disruption in foreign fuel supplies. A high-level Indian team briefing the board members in Vienna recently was unable to clarify what this meant. The agreement would also subsume existing and stricter safeguards agreements on Indian reactors. Moreover, the accord with the US has been brought into the preamble of the draft India-IAEA agreement. Since military nuclear facilities and programmes are mentioned in the former, it is clear that India seeks legitimisation to further its military programme.

India’s concurrence to safeguards is dependent on continuous access to fuel supplies as well as a strategic reserve of fuel over the lifetime of India’s reactors. There is no mention of moving towards an additional protocol with the IAEA, which is another requirement of the agreement with the United States. No list of facilities has been listed, although the separation plan is a public document. There is no safeguard against the transfer or replication of imported nuclear technology to the benefit of the military. In effect the draft agreement is a blank cheque. It should be brought in line with the unconditional permanent safeguards model, with no room for interpretive ambiguity.

The objective of the international community should be to link support for India’s legitimate energy needs with extending safeguards to all its power generation and breeder reactors, leaving a limited military capacity, and to use it as a model for other non-NPT states. To do otherwise would be a grave disservice to non-proliferation objectives, and to regional and international peace and security.

The writer, a former diplomat, headed Pakistan delegations in nuclear CBMs talks with India from 2004 to 2007.

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Tracking Mladic not easy


By John Hooper

THE Bevanda fish restaurant sits at the end of a residential street in old Belgrade. It was here in late April or early May of 2001 that a startled Belgrade resident realised that one of his fellow diners was Ratko Mladic. He had met the general on several occasions before Mladic became one of the world’s most wanted men.

“He was sitting at a table with some others I didn’t recognise. All I can tell you is he kept his head down as he ate. I decided it would not be wise to stare,” said the man, who does not wish to be identified. With the arrest this week of Radovan Karadzic, the pressure is on Serbia to track down his former army commander and fellow alleged war criminal. It will be no easy task.

In the past eight years, the 66-year-old Mladic has transformed himself from an insolently public fugitive into a phantom. Mladic made his last public appearance at a football international in March 2000. Two years after that, he was seen at a wedding at Valjevo in western Serbia and there were reports subsequently of him using a summer house nearby, at Pricevici.

In 2006, however, the part of the Serbian security apparatus that was genuinely searching for Mladic achieved a breakthrough when several people were rounded up and charged with aiding and abetting him, though they have not since been tried. A report in the newspaper Politika said that those arrests had enabled investigators to pinpoint seven addresses where the general had lived. All were in Belgrade.

It is certainly no coincidence that Mladic has proved to be more elusive prey than his political master. Unlike Karadzic, the general remains hero to the majority of Serbs.

Karadzic, the exhibitionist politician, could not resist inventing a flamboyant new identity as a bearded New Age healer. Mladic, said the source, would have far less difficulty respecting the fugitive’s first and golden rule — to remain inconspicuous.

He is known to have been treated for kidney stones before he went on the run. He also suffers from high blood pressure.

—The Guardian, London

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