Another blow to peace

WITH renewed fighting in Swat, the peace deal inked between the NWFP government and Maulana Fazlullah’s militants in May has virtually collapsed. How could it not when, in total disregard of its terms, the Taliban continued to act as a law unto themselves, targeting girls’ schools and public property, displaying weapons and mouthing threats to start a spate of suicide attacks? Compromises are required by two warring sides when a peace agreement is signed and when there is no clear winner or loser. But there is every reason to question the nature of the deal that the government struck with the militants, especially when it contained controversial conditions such as the imposition of Sharia law in the district. One wonders whether by agreeing to introduce Sharia law the government realised the damage that it was inflicting on a largely tolerant society or that it was giving a further fillip to Talibanisation. Other peace deals in the restive north have not achieved the desired results either, and with the collapse of the Swat agreement it is time to realise that the agenda of the militants goes way beyond their stated purpose of establishing an ‘Islamic’ society. It is a quest for raw power to be used according to whatever orthodox interpretation of religion they provide themselves with. Public welfare is the least of their concerns as demonstrated by their destruction of girls’ schools. Even if these were carried out by the more obscurant among them, the failure or unwillingness to stop the destruction challenges the militants’ commitment to the deal.

What should the government be doing in this situation? Obviously taking on the Taliban militarily appears necessary if the militants continue to target government installations and disrupt life. But should it be done if the cost entails hundreds of civilians being killed, maimed or rendered homeless? Caught in the crossfire, the civilian population is always the first casualty. A number of people in Swat have died in the past few days. Hundreds have fled their homes. Unemployment has gripped the area with the crumbling of the tourism industry and inflation has worsened their hardship. So, obviously military strategy has to be designed in such a way as to cause minimum collateral damage. It is not always the final solution, especially when it fails to quell the extremists. Stronger political and socio-economic measures have to be worked out if the population is to feel that the government is genuinely interested in its welfare. Also, future peace deals will prove more workable if negotiated from a position of strength and without compromising on essentials like democracy and individual freedom. No doubt this is easier said than done but a genuine attempt in this direction might earn the government the public goodwill it needs to root out militancy.

Far from the finish line

FOR a country that has often been long on rhetoric and short on results, particularly with regard to education goals, it is not surprising there is scepticism about the latest effort to promote universal education in the federal capital territory. This may be the first time that a door-to-door campaign is being launched by the education authorities in Islamabad to try and enrol in public schools all out-of-school children aged 5-7 years, believed to number 5,590 in the capital, mostly in the katchi abadis and rural areas. This measure, however, should have been implemented at least six years ago to complement the 2002 presidential ordinance making primary education compulsory in Islamabad. The ordinance provided for punishment in the form of fines for parents who do not send their children to school as well as for people who employ children of primary school-going age. To be effective, the door-to-door campaign to encourage school enrolment in Islamabad coupled with any law on compulsory education will need to go beyond rhetoric.

Particularly if we are to move on to launching similar campaigns in the rest of the country as part of the effort to achieve by 2015 the main quantitative goals under the 2000 UN Education for All (EFA) initiative. This supposedly aims at attaining free and universal primary education, eliminating gender disparity, halving of the level of adult literacy and improving the quality of education. But a prerequisite is an adequate infrastructure in the form of an easily accessible school network which is so far missing. It is therefore not surprising that the EFA finish line for us remains as distant today as it was six years ago. According to the 2008 EFA Global Monitoring Report, Pakistan is one of the 25 countries which are farthest from achieving EFA.

Despite international aid for education and some progress made, we still have one of the highest school dropout rates and lowest girl enrolment rates in the world. Adult illiteracy is still pervasive and the quality of education remains a big challenge. If anything is to blame it is the lack of continued commitment to tackling these education problems, the failure to follow measures through and funding for education which is persistently among the lowest in the world in terms of percentage of GDP. Unless we make amends in all these respects, the door-to-door enrolment campaign, or any other such noble initiatives, will not be able to make any considerable impact on our ability to move nearer to the EFA finish line.

Police torture continues

YET another case of death as a result of alleged police torture led a number of people to stage a violent demonstration in Faisalabad on Thursday. Police deny that they tortured Tariq Mehmood, who had been detained by them for allegedly possessing liquor, and insist he was handed over to prison authorities on judicial remand. But until an honest inquiry substantiates their claims it is unlikely that the police version will be believed — so tarnished is their record on the treatment of detainees in their custody. With scarcely any attempt to bring culpable police officers to justice, it is no surprise that harsh interrogation tactics at police stations continue to be reported as a matter of routine. Laws prohibiting torture are flouted with such impunity that one can be forgiven for wondering why the Police Order 2002 was passed when the law-enforcers themselves cannot follow it. With around 150 cases of torture and 65 of death in police custody reported last year alone, it is clear that the use of barbaric methods in extracting confessions is so deeply entrenched that it will take more than the fear of the law to discard them.

Pakistan finally signed the UN Convention Against Torture this year which will bring it under greater international scrutiny with regard to the measures it adopts to discourage the cruel treatment of individuals by public officials. One can only hope that such a commitment does not fall by the wayside and that it leads to greater police accountability. Here is where civil society pressure comes in. Violent demonstrations that quite frequently follow custodial torture and death may not be the best way of opposing police high-handedness. But they do underscore the point that public anger at such excesses is on the rise. These sentiments have to be channelled in a positive way so that no violence is involved in putting pressure on the law enforcers to behave as the law demands. One of the ways of doing so is by activating public safety forums to redress grievances against the police. Only then can legislation prove more effective than it is at the moment.

OTHER VOICES - Indian Press

Grave point

The Telegraph

THE commonest pastime of Indian politicians in any serious situation is to indulge in conspiracy theories…. The latest of such theories has come from Sushma Swaraj … of the Bharatiya Janata Party. According to Ms Swaraj, the bomb blasts in Bangalore and Ahmedabad were deliberately caused to “divert attention from the cash-for-votes scandal” and they were an attempt to win over the Muslim votes that got alienated because of the government’s unequivocal support to the Indo-US nuclear deal…. Bombs have been exploded in India’s two major cities, lives have been lost, property damaged and people injured, and all that a leader of Ms Swaraj’s stature can think of is how the events can be used to score a point or two against the government. What can be more shameful and irresponsible than this?

What Ms Swaraj does not realise is that she has trivialised an extremely grave matter. The bomb blasts represent a threat to the entire nation…. There exists enough evidence to suggest that the bomb blasts are part of a plot hatched outside India and executed within India by extremist groups.

It is also clear what the blasts are aiming to do: they are trying to create a sense of panic and terror in India…. This is not quite the situation which a politician of Ms Swaraj’s seniority should use to score points against her political rivals…. The situation demands not division and bickering but unity and action…. The BJP should not encourage Ms Swaraj and her line of thinking. — (July 30)

Numero uno

The Times of India

DO girls really fare worse than boys when it comes to studying science, or … doing mathematics? Most people … seem to think so…. [T]he president of Harvard University, Lawrence Summers, reiterated the same thing a few years back when he suggested that the lack of innate aptitude of women was a factor behind their low numbers in science and engineering…. [A]nother ‘authority’ … psychologist Steven Pinker, argued that Summers’ remarks were scientifically justified….

Well, too bad for them because it’s official now: girls are apparently just as good at math as boys. That was the finding of a study — the largest of its kind ever — released … in the journal Science. In it, researchers … said a comparison of standardised mathematical test scores of approximately seven million students showed girls did as well as boys at virtually every grade level…. This reverses study reports from some 20 years ago when girls were found to be lagging behind boys….

Normally, the perception … is that boys are better at math and, as a conditioned reflex, girls keep buying into that. By believing the stereotype they wind up avoiding harder math classes which keep them out of a lot of careers…. However, according to the new study, programmes promoting girls’ participation in mathematics and science … is the ideal solution because the more girls are encouraged to take advanced math classes, the better they do…. This clearly suggests that cultural and social factors, not gender alone, influence ability to understand mathematical concepts … — (Aug 1)

The oil pricing formula

AFTER yet another price hike in petroleum products, people reeling under the burden of a constant and seemingly endless inflationary spiral are legitimately asking the question whether such sharp increases in petroleum prices are necessary?

An increasingly vigilant media having dissected the different components of the retail price of petroleum products has challenged the government’s decision to keep taxing petroleum products and for allowing the refineries, the oil marketing companies (OMCs) and dealers to rake in huge profits at the cost of the consumer by linking their returns to international oil prices.

A number of these concerns are valid. However a focused analysis of the different components of pricing is necessary to understand who gets what and at whose cost. It is also necessary to understand the compulsions of the government in light of the external and internal imbalances it is confronted with.

There are essentially four elements that constitute the price that the consumer pays on petroleum products. The import parity price is the first element. This comprises the import price, adjusted for government subsidies and duties. To this cost is added the Inland Freight Equalisation Margin (IFEM) that is charged by the OMCs to sell petroleum products at a uniform price across the country. To these two elements is added a 3.5 per cent margin for the OMCs, and four per cent for dealers, of the combined cost of the two elements described above. The sum total of the above three is then subjected to 16 per cent general sales tax by the government.

The frequent lament in the media is that a large chunk of the retail price is the sales tax. The magnitude of taxation in the prevailing price of petroleum and high speed diesel comes to Rs11.95 and Rs8.92 per litre respectively. Moreover, an increase in the international oil price automatically increases the revenue yield of the government.

For the government to forsake revenue through the sales tax in given conditions will be a folly for two reasons. Firstly, once we factor in the subsidy the government provides, the relevant figure to look out for is net taxation (sales tax minus subsidy) rather than sales tax per se. For instance, in the fiscal year 2007-08, the subsidy on petroleum products was Rs175bn, whereas revenue from sales tax was Rs118.2bn. Net taxation in the outgoing fiscal year was, therefore, Rs56.8bn. If the government had reduced or removed the sales tax, the amount of subsidy would have been proportionate to the foregone revenue.

It is important to emphasise that subsidies are not a free lunch. State subsidies are generally financed either through bank borrowing (in other words by printing money) or by borrowing from international or domestic capital markets. If the subsidy is financed through printing money — as the Musharraf government did in the outgoing fiscal year — it creates an inflationary spiral in the economy and wipes out the benefit provided through the subsidy.

Alternatively, if the subsidy is financed through borrowing from capital markets, it creates a future liability on the taxpayer in the form of debt servicing. Now if there are good tidings expected in the future — in the form of a more favourable international environment and high GDP growth domestically — then it may be worthwhile providing a generalised subsidy. But if the future is uncertain, as it certainly is presently, then this becomes a risky proposition.

Second, for a revenue-starved state (remember Pakistan’s tax-GDP ratio at 10 per cent is one of the lowest in the developing world) the petroleum sector is a source of least resistance for tax collection. Until the state broadens its tax base to devise a truly progressive taxation structure and reallocates its expenditure away from territorial to human security, removing the sales tax on petroleum products will only amount to enhancing the fiscal deficit which will have to be paid by present or future taxpayers, perhaps at even more onerous rates. In the present milieu, it only makes sense to provide targeted subsidies to the most vulnerable sections of society rather than subsidise everyone.

The margins of OMCs and dealers, however, have rightly come under fire and in the recent price increase their margins have been frozen. But this is not enough. The formula of linking margins to a proportion of the import parity price and the freight equalisation margin is fundamentally unjust and irrational. It is irrational because distribution or dealership has no link whatsoever with fluctuations in international oil prices.

It is unjust because this formula enables the OMCs and dealerships to rake in profits on the basis of exogenous developments (international oil prices) at the cost of both the state and the consumer. If there was ever an example of blatant profiteering — devised by the Musharraf government, small wonder — as a consequence of collusion between self-appointed policymakers and the corporate sector, this was it. Rather than arbitrarily freezing the margin as has been done now, the formula needs to be altered and margins should be determined on the basis of actual costs and ‘reasonable’ profits to the companies and dealerships.

Rent-seeking by the OMCs, however, is not limited to margins only. The freight equalisation margin is another source of dubious profiteering by these entities. The IFEM is used to equate the prices of POL products across Pakistan and covers primary transport costs incurred by OMCs to transport petroleum products. IFEMs are recommended by the Oil Companies Advisory Committee (OCAC) and are subject to adjustment on the basis of actual monthly freight computations. Since IFEMs are added to IPPs to calculate OMCs’ and dealers’ margins, it creates incentives for OCAC to set IFEMs at higher than actual levels, which not only increases their actual reimbursement but their margins as well.

To illustrate the extent of rent-seeking on the pretext of freight equalisation consider the fact that between Sept 1, 2007 and July 1, 2008 freight margins were increased by 348 per cent for motor spirit, 319.5 per cent for HOBC, 304.2 per cent for kerosene, 81.4 per cent for light diesel and 82 per cent for high speed diesel. This increase in freight charges is nothing short of daylight robbery on the part of the OMCs. Thus, where the government is rightly moving in on curbing the margins on distribution and dealerships, a serious review of the policy on freight equalisation margins is also required.

Another element in the pricing formula that adds to the windfalls of the refineries is the deemed duty benefit that they receive in the import parity price, primarily for diesel but also for other products. In 2001, it was decided to allow the refineries to retain the duty that was charged on local finished products for one year to upgrade their capacity. While some products have been taken off the list, seven years later the refineries are still charging this amount on diesel which constitutes the bulk of the volume consumed in the market. There is no justification, therefore, in allowing this pilferage on the part of refineries to continue.

While the fact remains that the bulk of the price increase in domestic prices is driven by surging world oil prices, some relief can be provided if the pricing formula adopted by the Musharraf-Aziz combine to benefit big business at the expense of the consumer is altered. Lately the OMCs and the refineries have adopted a threatening tone with regard to reduction in their illegitimate profiteering. It is high time their bluff is called and for the sake of the consumer, this relic of the past is undone as soon as possible.

New abuse in Iraq

BRITISH soldiers forced a Shia militia commander to listen to pornographic videos, deprived him of sleep, repeatedly beat him, and kept him in solitary confinement for more than five months, according to fresh damning allegations against the conduct of UK troops in Basra.

A detailed account of the latest claims of unlawful treatment by British soldiers are contained in a 20-page witness statement of Ahmed Jawad al-Fartoosi, a leader of the radical Shia cleric Moqtada al Sadr’s militia, the Mahdi army. The British Ministry of Defence (MoD) said on Friday that the military police were investigating the allegations. Fartoosi was detained for more than two years, including nearly six months in solitary confinement. He was arrested in his Basra home in September 2005 and released late last year after British forces agreed to an Iraqi-sponsored deal with the militia.

He says he was beaten with rifle butts and blindfolded before he was put in a tank. For 12 hours he and his fellow detainees given no food and were prevented from going to the toilet.

He says he was taken to the British base at Shaibah, on the outskirts of Basra, where he spent 72 days in solitary confinement in a small cell with no ventilation, though he says he was provided with three cooked meals a day. On the third or fourth night, he says, soldiers brought a laptop and placed it on a window sill just outside his cell.

“It was playing at the loudest possible volume. Thereafter for the next month the porn movies were played all night.”

—The Guardian, London