Focus on terrorism

THE eve of Independence Day saw yet more evidence of the grim war against militancy that Pakistan is fighting. In Lahore a suicide bomber targeted a group of policemen and killed at least eight people and injured many more. The day before a Pakistan Air Force bus was hit by a bomb, again killing and maiming dozens. A Tehrik-i-Taliban spokesman, Maulvi Omar, has claimed that an “open war” has begun between the Pakistani state and the militants. The militants’ attacks come in the wake of stepped-up action in Swat and the Bajaur Agency by security forces. Several leaders of the militants — including Abu Yazeed al-Masri, operational commander of Al Qaeda in Afghanistan — are believed to have been killed.

As long as Islamabad remains embroiled in a political crisis, the politicians will necessarily not be able to give the anti-militancy policy the attention it so desperately needs. The strikes inside Pakistani cities against security forces are clearly designed to bully the state into inaction in two ways. First, the state loses public support when cities are under attack. Second, the state finds it difficult to keep up its officers’ morale when they are under attack. Missiles raining down in the tribal areas from foreign forces also reinforce the notion that the country is simmering because of a ‘foreign’ agenda. So long as the political crisis drags on, effectively addressing these issues will remain impossible. Impeachment must not be allowed to become a saga. Even then the judges issue will be outstanding and may further paralyse the country politically. Pakistan needs to be woken up to the failure of the conventional wisdom of dialogue with the militants. The ANP-led government in the NWFP was the latest to get burned by the illusion of talks bringing peace. Furthermore, there appear to be lapses in basic security precautions: the policemen killed were reportedly gathered in a larger number than recommended by the police security strategy. These issues, large and small, are clearly suffering from the lack of the government’s full attention. Meanwhile, as ever, the victims of terrorism are those with no control over events.

Surging inflation

THE latest numbers on inflation are astounding. The Federal Bureau of Statistics (FBS) has announced that the Consumer Price Index (CPI) — which reflects roughly the changes in the cost of living in urban areas — increased by a record 24.33 per cent in July over the corresponding month last year. To put the surging inflation rate in perspective, in July 2007 the CPI rose by 6.37 per cent over July 2006. Worse yet, the price of non-perishable food items rose by an average of 35.40 per cent last July over July 2007; perishable food items rose by 22.87 per cent in the same period. The FBS’s Monthly Review of Price Indices clearly describes the effects of inflation: “Inflation can impose high cost on economies and societies, can disproportionately hurt the poor and fixed income groups, can create uncertainty throughout the economy and can undermine macro economic stability.” This reality is manifested in the form of long queues outside utility stores; frequent reports of poverty-induced suicides; and warnings of economic ruin by businesses, small and large.

Some of the inflation is undoubtedly beyond the government’s control, given the international dimensions of oil and food prices. China and India, economic superstars of the developing world, are also fighting inflation, though on a much smaller scale. Here in Pakistan, however, one of the additional worries is that the government and the State Bank are feuding just when every lever of fiscal and monetary policies is needed to fight inflation. In late July, the State Bank governor, Shamshad Akhtar, increased a key discount rate to 13 per cent and issued a monetary policy statement that focussed on a “totally unsustainable” level of government borrowing which is undermining a tight monetary policy. To support this, the governor gave some figures: Rs204bn borrowed by the government from January to March; Rs283.9bn from April to June; and Rs55bn in just two days at the end of July. Ms Akhtar was right in stating that government borrowing needs to come down; however, the government was reportedly angered by the suggestion that it was continuing with the profligate ways of the last government. This is unfortunate. Ms Akhtar was within her rights to issue the warning she did; however, the present government will be suspicious of the governor’s motives given that she was a silent witness to last year’s spectacular borrowings. Yet the government itself is clearly distracted from focussing on the economy by the impeachment and the judges issue. Ishaq Dar continues to remain on the sidelines while Finance Minister Naveed Qamar fire-fights the economic crisis on an ad hoc basis. It will be difficult to fight inflation if the present political uncertainty continues.

No end to the polio curse

PAKISTAN had hoped that by 2008 the curse of polio would become a ghost of the past. Since January, the malaise has returned with a vengeance to haunt both children and health departments. Reports reveal that six polio cases have come to light this week. Disturbingly, one of the victims, an 11-month-old infant, had missed the last dose of the polio vaccination. In another instance, a child specialist near Faisalabad has been suspended for spilling the beans about the rise in polio cases to the media; especially when the concerned area of Samundhri tehsil has received millions of rupees for immunisation of under-fives. The government’s crackdown on an ‘errant’ doctor is being seen as a warning to health practitioners to keep polio statistics under wraps. As expected, a polio-free state is far from a mean task as 45 per cent of the country’s population comprises children with approximately over two million children in Karachi alone. In May, Sindh’s health department announced that it would field its own team to monitor the dispensation of anti-polio vaccines in its ‘mop-up’ campaign for 3.7m children in 14 districts of the province. Meanwhile, the Expanded Programme on Immunisation (EPI) also issued directives to heighten the surveillance of the disease. But repeated incidents of polio and the suspension of the doctor question the sincerity of governmental initiatives. Increasingly, health experts are laying the blame for the recurrence of cases on poor supervision, absence of collective commitment and pilfering of funds. Their scepticism stems from the fact that, despite official claims of unleashing close to 20,000 teams for door-to-door visits, residents complain that numerous houses are overlooked and if children in a particular home are away, the designated staff rarely revisits them.

At this stage, many dark shadows loom over our polio drives. There is mounting concern that refugees from northern areas may be carriers of the virus and ample uncertainty about the efficiency of health personnel as little can justify cases in impoverished areas of urban centres. There is a need for a body to oversee the EPI and WHO, evaluate their activities, implement accountability and ensure security of funds. Also, dispensation methods involve a cold chain; vaccines require storage in ice boxes and deviation from prescribed temperatures renders them ineffective. But while there is plenty to tabulate numbers of the ‘immunised’, precious little ascertains the adequate preservation of shots. As the battle enters its 14th year, every ‘excuse’ only stirs disdain.

OTHER VOICES - Pushto Press

Deterioration of law and order

Wahdat, Peshawar

WHILE talking to elders from different parts of the province NWFP Chief Minister Amir Haider Khan Hoti said that his government would fulfill the commitment of bringing about peace in the province, come what may. The chief minister added that the people of the province should cooperate with the government to make the province a cradle of peace and prosperity.

The chief minister’s statement has come at a time when a … gun-battle rages between the security forces and the Taliban in Swat and Bajaur. …[A]fter the attack on the Badaber Sheikh Mohammadi grid station, the Mathani police station came under rocket attacks by unknown assailants. These attacks resulted in a number of deaths and material loss. The casualty figure in an alleged suicide bombing on Kohat Road the other day has reached more than two dozen.... In the wake of these attacks, security in Peshawar and its adjoining suburbs has been tightened.

Pakistan is facing the consequences of its active participation in the war on terror.... The deteriorating law and order situation in Pakistan compelled the people to vote for the ANP, PPP and the PML-N that had promised to bring about peace in the country. The people of the NWFP in particular voted for liberal and secular parties like the ANP and PPP to allow them to usher in an era of peace and prosperity…. The ANP leadership is aware of the expectations of the people and that is the reason that almost a week before Mr Hoti took the vote of confidence from the provincial assembly, he enumerated the priorities of his government. On April 3, 2008 Mr Hoti said that his government would keep four main issues on its high-priority agenda after assuming power — restoring peace in the war-torn province, eliminating extremism, fostering provincial autonomy and [good] governance. The chief minister reiterated his commitment to these priorities in his policy speech in the NWFP assembly after taking the vote of confidence.

The NWFP government started a dialogue and jirgas with the Taliban and even released some well-known Taliban leaders to initiate the peace process in the province. It is a well-known fact that the resolution of the people’s basic problems cannot take place until peace is restored in the whole country.... Peace can only be restored if the causes of violence are determined in a genuine manner and solutions are sought. It is also a matter of great significance that the common man is taken into confidence to give validity and credibility to all peace initiatives as peace will remain a far cry without the active cooperation of the common people. — (Aug 10)

— Selected and translated by Khadim Hussain.

Islamic equity funds

ISLAMIC finance signifies financial services, mechanisms, practices, transactions and instruments that comply with provisions given in the fundamental Islamic texts. Thus, Islamic finance not only includes banking, but also capital formation, capital markets and all types of financial intermediation.

In recent years, Islamic finance has not only increased in size. It has also become complex as finance professionals compete furiously to produce new Sharia-compliant transactions and instruments. Becoming a segment within the global financial market, it has gained considerable interest as an alternative model of financial intermediation.

However, in the 1980s and most of the 1990s, Islamic finance did not have much of this dynamism. On the asset side, the activities of Islamic financial institutions mainly involved ijara, mudaraba and musharaka. The need for liquidity, portfolio and risk management tools, and derivative instruments was strongly felt, and there were numerous calls for the promotion of financial engineering and the introduction of new products.

Along with other developments, this resulted in the introduction of Islamic equity funds (IEFs). Overall, IEFs have been the most popular among all Islamic investment funds. According to FTSE, IEF assets are forecasted to increase from $15.5bn to $53.8bn by 2010. According to other reports, the assets have already reached $20bn.

The industry is dominated by Saudi Arabian funds and fund managers, accounting for more than 70 funds out of about 300 IEFs globally. In fact, Saudi British Bank’s Amanah GCC Equity Fund was reported as the best performing Islamic equity fund in 2007. On the other hand, Bahrain is becoming the centre for IEF registrations because of the kingdom’s efficient regulatory system. International investment firms with Islamic divisions are focusing on Dubai.

IEFs are different from conventional equity funds because they select their placements on the basis of their compatibility with the Sharia. In order for a stock to be considered Sharia-approved, it must satisfy certain requirements set by Islamic scholars. These standards may differ in different jurisdictions depending upon how strictly the Sharia is interpreted.

However, the basic condition is the same throughout the Muslim world: an enterprise must not conduct business activities prohibited by Islamic texts. These include gambling, alcohol, pornography, etc. Financial ratios (debt-to-equity ratio, cash and interest-bearing securities-to-equity ratio and cash-to-asset ratio) and cleansing mechanisms (to purify investments that are tainted by forbidden activities) are also used by various Sharia boards and authorities.

It must be mentioned that a country may or may not have a national screening body. For instance, in Malaysia, it is done by the Securities Commission; whereas in the Middle East financial institutions prepare their own list of Sharia-approved stocks.

One of the factors that gave an immense boost to IEFs was the introduction of the Dow Jones Islamic Market Index (DJIM) in 1999 as a subset of Dow Jones Global Indexes (DJGI). DJIM Indexes intend to measure investable equities that fulfil Sharia requirements. At present, with more than 70 Islamic indexes (which include regional, country, industry and market-cap-based indexes), it is one of the most comprehensive families of Islamic market indexes.

Other conventional index providers have also entered the field. In 2000, FTSE launched the FTSE Global Islamic Index. Unlike Dow Jones that has an independent Sharia Supervisory Board, FTSE indexes are evaluated by Yasaar Research Inc. In 2006, Standard & Poor’s (S&P) introduced the S&P Sharia Indices, followed by in 2007 the S&P GCC Sharia Indices and the S&P Pan Asia Sharia Indices. S&P has contracted with Ratings Intelligence Partners (RI) to provide the Sharia screens and select the stocks based on these standards.

As reported by the Financial Times, these indexes do not enjoy complete acceptance by Muslims. The screening principle allowing total debt ratios of up to 33 per cent is considered objectionable by some scholars. They claim that it is akin to declaring a kind of food that has a small quantity of pork in it as halal. The indexes maintain that their legitimacy comes from the concerned Sharia authorities. In other words, as long as their Sharia supervisors agree with these practices, the indexes need not change them.

The future of IEFs does not look gloomy at all. However, Muslim scholars need to be careful while interpreting and applying the Sharia. They need to make sure that Islamic principles are properly observed and that they don’t present or accept an un-Islamic idea as Islamic just because there is more profit in it.

A tale of US expansion

THE outcome of six grim days of bloodshed in the Caucasus has triggered an outpouring of the most nauseating hypocrisy from western politicians and their captive media. As talking heads thundered against Russian imperialism and brutal disproportionality, US Vice-President Dick Cheney, faithfully echoed by Britain’s Gordon Brown, declared that “Russian aggression must not go unanswered”.

Could these by any chance be the leaders of the same governments that in 2003 invaded and occupied — along with Georgia, as luck would have it — the sovereign state of Iraq on a false pretext at the cost of hundreds of thousands of lives?You’d be hard put to recall after all the fury over Russian aggression that it was actually Georgia that began the war last week with an all-out attack on South Ossetia to “restore constitutional order” — in other words, rule over an area it has never controlled since the collapse of the Soviet Union. Nor have there been much more than the briefest references to the atrocities committed by Georgian forces against citizens it claims as its own in South Ossetia’s capital.

Might it be because Georgia is what Jim Murphy, Britain’s minister for Europe, called a “small beautiful democracy”. Well it’s certainly small and beautiful, but both the current president, Mikheil Saakashvili, and his predecessor came to power in western-backed coups, the most recent prettified as a ‘Rose revolution’.

Saakashvili was then initially rubber-stamped into office with 96 per cent of the vote before establishing what the International Crisis Group recently described as an “increasingly authoritarian” government.

The long-running dispute over South Ossetia — as well as Abkhazia, the other contested region of Georgia — is the inevitable consequence of the break-up of the Soviet Union. As in the case of Yugoslavia, minorities who were happy enough to live on either side of an internal boundary that made little difference to their lives feel quite differently when they find themselves on the wrong side of an international state border. Such problems would be hard enough to settle through negotiation in any circumstances. But add in the tireless US promotion of Georgia as a pro-western, anti-Russian forward base in the region, its efforts to bring Georgia into Nato, the routing of a key Caspian oil pipeline through its territory aimed at weakening Russia’s control of energy supplies and conflict was only a matter of time.

The CIA has in fact been closely involved in Georgia since the Soviet collapse. But under the Bush administration, Georgia has become a fully fledged US satellite.

But underlying the conflict of the past week has also been the Bush administration’s wider, explicit determination to enforce US global hegemony and prevent any regional challenge.

Over the past decade, Nato’s relentless eastward expansion has brought the western military alliance hard up against Russia’s borders and deep into former Soviet territory. American military bases have spread across eastern Europe and central Asia, as the US has helped install one anti-Russian client government after another through a series of colour-coded revolutions. Now the Bush administration is preparing to site a missile defence system in eastern Europe transparently targeted at Russia.

By any sensible reckoning, this is not a story of Russian aggression, but of US imperial expansion and ever tighter encirclement of Russia by a potentially hostile power. That a stronger Russia has now used the South Ossetian imbroglio to put a check on that expansion should hardly come as a surprise.

Despite Bush’s attempts to talk tough, the war has also exposed the limits of US power in the region. As long as Georgia proper’s independence is respected that should be no bad thing. Unipolar domination of the world has squeezed the space for genuine self-determination and the return of some counterweight has to be welcome. But the process of adjustment also brings huge dangers. If Georgia had been a member of Nato, the conflict would have risked a far sharper escalation.

— The Guardian, London