Adding to distrust

THINGS positive and negative, even dangerous, are happening at the same time. While the shocking news of a failed attack on the prime minister’s motorcade stunned the nation on Wednesday, the political front continued to be turbulent. There was

Mr Gilani telling the Senate in his maiden appearance that the 17th amendment, which includes article 58-2(b), would be done away with, the sacked judges, including Iftikhar Chaudhry, would be reinstated and his party would make no attempt to destabilise the PML-N-led Punjab government. Similar views are expressed by the Sharifs, who say they have no intention of wrecking the PPP-led government at the Centre. Nevertheless, the chasm between the two seems to be widening. The PML-N has quit the federal cabinet, but Syed Yousuf Raza Gilani said his party had not yet decided whether to accept the PML-N ministers’ resignations. At the same time, the PML-N is asking the PPP to leave the Punjab government. This means the PML-N does not like PPP ministers within its ranks, suspects their motives in staying on in the Punjab cabinet and would like to get rid of them. In a nutshell the Sharifs seem determined to part company with the PPP yet insist they have no intention of destabilising the federal government.

What should send shock waves through the PML-N circles is the reopening of the corruption cases against the Sharifs by the National Accountability Bureau (NAB). The resurrection of the cases about Hudaibia Paper Mills, Ittefaq Foundry and Raiwind assets means that the entire Sharif family is in the dock. Astonishing as it appears, Information Minister Sherry Rahman claimed not only that her party did not believe in the politics of vendetta, she denied that NAB was reopening the cases. Her denial flies in the face of official facts, because on Tuesday the NAB prosecutor general filed a petition in the court of special judge central, Rawalpindi, seeking to reopen the cases. The same day Nawaz Sharif told a Gulf paper that he was determined to get elected to the National Assembly. The reopening of the cases should rule this out and serve to embitter the Sharifs further. With Zardari’s likely election as president, the new post-Musharraf set-up will be complete. Will that bring stability to Pakistan? What does one make of the political situation now? Is this the beginning of a new round of confrontation between the two major parties? The PPP government may deny it, but it is difficult to believe that the Sharif cases have been retrieved from NAB’s archives only to meet the ends of justice.

Budget deficit

IT was already well known that the federal government’s fiscal performance in the last financial year, which ended on June 30, 2008, was dismal. Just how bad the situation was has been revealed in the provisional budgetary figures released by the ministry of finance. The numbers are sobering: a Rs777.2bn budget deficit on the back of record revenues — and expenditures. The deficit target for last year was set at 4.2 per cent of GDP; it ended up as 7.2 per cent. Revelations in Islamabad since the change of government have made clear some of the reasons for the extraordinary deficit: the previous government doled out vast sums of money to the oil and power sectors to keep the prices paid by consumers low, resulting in a total subsidy bill for the federal government in the Rs400bn region. For the populists proposing that petrol and electricity prices still be kept artificially low, the question is: how will the government foot the subsidy bill? Budget deficits — which occur when government expenditures exceed revenue — of the size that Pakistan built up last year are devastating for a developing economy.

For one, budget deficits are financed in the short-term by borrowing, either locally or internationally. Last year, the federal government borrowed Rs625.9bn domestically, of which Rs519.9bn was bank borrowing. This is a staggering amount of money for the government to be diverting to itself and away from private investment. Worse yet, such was the scale of the government’s needs that it had to turn to the State Bank of Pakistan for the bulk of its domestic borrowing, essentially pouring more money into the economy, which has helped fuel inflation. This at the same time that the State Bank has been trying to fight inflation by ratcheting up the discount rate — with another hike expected at the end of the current month. There is an urgent need then to rationalise the subsidies the government provides — and an equally urgent need to save those who are at the bottom of the economic ladder from falling off it. So far the present government has appeared better at paring down oil and power sector subsidies than in providing targeted subsidies to the poor.

Then there is the expenditure side. When faced with budget deficits, all governments in Pakistan — civilian or otherwise — take the scalpel to the development budget first. The PPP stridently criticised the PML-Q government for its ‘anti-people’ cut in the Public Sector Development Programme (PSDP) last year; now, two months into the new financial year, a Rs100bn cut in the PSDP has been made — with no guarantee that this figure will not increase later this year. Desperate times no doubt but must development always come second?

Chinese at the receiving end

WITH the local Taliban claiming to have kidnapped the two Chinese engineers who had gone missing five days ago, the time-honoured friendship between Islamabad and Beijing is set to undergo yet another trial. The two, who we now know were kidnapped along with their Pakistani security guard and driver, were in Dir Lower to oversee the installation of a communication tower for a cellular company. A list of demands is now being prepared by the kidnappers that the government would be expected to pay as ransom for the release of the four hostages. It is somewhat surprising that of all the foreigners that visit Pakistan, the Chinese are the ones who face the wrath of the hostile more often than the others. From the Saindak days to the episode that triggered the Lal Masjid fiasco, and right up to the latest incident, there have been a number of tragic happenings involving Chinese consultants. And religious fanatics are not the only ones behind the activity; tribal and nationalist forces have also had their share in such acts, especially in Balochistan. Even against such a bleak backdrop, there is little doubt that the traditional friendship between the two countries will survive its latest trial. The Chinese have over the years shown remarkable empathy with the various currents inside our borders. Having said that, there are valid fears that while political and strategic aspects of the comradeship may remain intact, the economic component may have to bear the brunt.

The cellular company for which the kidnapped engineers were working, for instance, has already invested over $700m and was planning to more than double the amount. That the firm may have a rethink is a perfect possibility. Likewise, the rising number of incidents against the Chinese may also affect the target set in June by the two countries to take their bilateral trade from the current $6bn to $15bn by 2011. Once that begins to happen, all the rhetoric of ‘shared perceptions’ and ‘commonality of interests’ may come to nothing. The security plan of last November has certainly not worked. It needs to be replaced with something more result-oriented.

Zardari his own nemesis?

WILL Asif Zardari’s presidency be better or worse than Musharraf’s? Will it lead to the fall of the PML-N government in Punjab and a full-scale confrontation with Nawaz Sharif? Will it be a replay of the ineptitude and corruption that characterised the civilian governments of the 1990s?

Will Zardari be able to provide the kind of leadership that is required to face the violent insurgency in the NWFP and Balochistan and a precarious economic situation? Will he be able to work with the establishment? The list of questions is long. He would probably restore the judges, and that may turn out to be a non-issue in the much larger scheme of things, if he gets elected as the president of Pakistan on Sept 6.

Is it a big ‘if’? Yes if you read reports that discuss the growing murmurs among the army officers and the comments of ‘senior’ members of the establishment. But it seems highly improbable that an establishment that is so heavily dependent on the United States for both its military and financial needs would support Nawaz Sharif whose past is tainted by a record of collaboration with rightwing extremists and accusations that he received $10m from Osama bin Laden in exchange for the pledge that he would turn Pakistan into a Sharia state and become its amir-ul-momineen.

Assuming that Zardari wins the presidential elections, his biggest challenge may not be the ‘war on terror’, or the economic crisis, or for that matter Nawaz Sharif. It could be himself unless he can overcome his shortcomings. There is little doubt that there were many accusations of corruption against him. The argument that the charges were never proved does not carry any weight in Pakistan’s context. How many past rulers have been tried and convicted on corruption charges? None. But does it prove that they did nothing wrong and there was no corruption?

Sons of former generals openly boasted about having hundreds of millions of dollars but were never touched by the establishment. The truth is Zardari’s court cases were kept alive by the establishment because it wanted to use Asif as a tool to pressure and blackmail Benazir Bhutto because she deeply cared about his life and because he was the father of her three young children.

But that was the past. Today, like it or not, he is the leader of the largest and the only truly national party of Pakistan but he has not done any favour to his reputation and credibility by repeatedly reneging on his public commitments and pledges to restore the judges. He shrewdly used Nawaz Sharif because he needed him to get rid of Musharraf but he may ultimately have to pay a heavy price for his apparently wily tactics and over-confidence. Even Maulana Fazlur Rehman, that master of doublespeak and Byzantine politics, could not digest Zardari’s somersaults.

However, concerns about Zardari should be kept in perspective. For those who believe that Musharraf and members of his establishment protected the security interests of Pakistan and acted responsibly should do their homework and learn from history. The following quote from the US State Department report of April 30, 2001, titled Patterns of Global Terrorism, highlights Pakistan’s number one problem — the use of militancy as a policy tool:

“Pakistan’s military government, headed by Gen Pervez Musharraf, continued the previous Pakistani government support of the Kashmir insurgency, and Kashmiri militant groups continued to operate in Pakistan, raising funds and recruiting new cadre. Several of these groups were responsible for attacks against civilians in Indian-held Kashmir, and the largest of the groups, the Lashkar-i-Taiba, claimed responsibility for a suicide car-bomb attack against an Indian garrison in Srinagar in April.”

It also noted: “The United States remains concerned about reports of continued Pakistani support for the Taliban’s military operations in Afghanistan. Credible reporting indicates that Pakistan is providing the Taliban with materiel, fuel, funding, technical assistance, and military advisors. Pakistan has not prevented large numbers of Pakistani nationals from moving into Afghanistan to fight for the Taliban. Islamabad also failed to take effective steps to curb the activities of certain madressahs, or religious schools, that serve as recruiting grounds for terrorism.”

The bitter and most unpleasant truth is that the Pakistani establishment has been its biggest security risk due to its faulty judgment and adventurous policies. There are two reasons why Pakistan today is considered the epicentre of global terrorism and security threats; the Taliban and nuclear proliferation. Pakistan’s nuclear programme, even its cold test in 1983, was tolerated by Washington but what really set the alarm bells ringing was the reckless idea of selling nuclear weapons and equipment to the countries that the US considered unfriendly.

The establishment conceived, formulated and pursued policies that have brought Pakistan to a stage where both issues threaten the security of Pakistan. Gen Aslam Beg reportedly told Benazir Bhutto that Pakistan could make hundreds of millions by selling nuclear technology to Iraq, Iran and Libya. Chaudhry Nisar told Sunday Times’ journalist Adrian Levy that Gen Beg suggested that Pakistan could earn billions of dollars by selling atom bombs to Iran.

The issue, therefore, is not whether Mr Zardari’s rule would be any more of a threat to the national security than a military ruler’s was but whether he would demonstrate enough maturity to build the consensus that is vital to rein in the “reckless and irresponsible” establishment which has played havoc with grave national security issues for decades.

His initial success in consolidating his grip on the party and more recently his victory against Musharraf has given him a misplaced sense of over-confidence. He would be well advised to understand that the power was bequeathed to him by that larger than life figure, Benazir Bhutto, and Musharraf’s exit had more to do with the policy of the US that never really trusted Musharraf in the first place and had become increasingly frustrated with his double-dealing particularly since Feb 2007.

Zardari started out with the right ideas and spirit but his performance has fallen short of his often lofty and grandiose pronouncements about changing the system and strong institutions. His government has been paralysed for months due to a highly personalised style of government that is full of rhetoric and short on delivery. It seems to have woefully inadequate intellectual and administrative capacity due primarily to Zardari’s biggest weakness — his tendency to rely on old friends and place loyalty above competence. This together with his over-confidence could mean Zardari may turn out to be his own nemesis. For Pakistan’s sake, I hope not.

Vietnam’s baby ‘trade’

THE trade in Vietnamese babies, kidnapped and stolen from their parents and effectively sold to families in the US and elsewhere, has killed off an adoption scheme following exposure of the corruption involved.

The two-year-old adoption agreement between the US and Vietnam expired on Sept 1 after each side failed to resolve disagreements over the programme. The scheme is to be suspended indefinitely, and up to 1,700 US couples with adoption applications in the pipeline are likely to be disappointed.

But the Vietnamese authorities pledged to continue processing adoptions for parents already matched with orphans.

The adoption plan began in 2006. A previous programme was stopped in 2003 because of fraud and corruption. Despite stronger safeguards the Vietnamese authorities were unable to police the new scheme and stamp out the irregularities.

An investigation by the US embassy in Hanoi, unveiled in April, revealed a host of ways whereby corrupt district officials were subverting the rules and duping illiterate and impoverished parents so as to make themselves big profits.

The six-month investigation of 300 cases unearthed disturbing situations, including hospitals sending babies to orphanages for overseas adoption in the wake of parents being unable to pay medical bills for the birth. Health officials also got financial inducements. In one case a grandmother sent a baby girl for adoption without the knowledge of the parents, though in that instance the baby was reunited with her mother.

“In five provinces,” the report said, “the embassy has discovered unlicensed, unregulated facilities that provide free room and board to pregnant women in return for their commitment to relinquish their children on birth. Women ... report receiving up to 6m Vietnam Dong [$355] as payment for their children.”

Parents were often persuaded by health officials or orphanage staff to leave their babies and invariably were told, wrongly, their offspring would visit then return and stay permanently at the age of 11 or 12. Most were unaware that they would never see their child again.

Last year 828 Vietnamese children were adopted and taken to the US. In Britain the number amounted to about 10 a year. The figure for US adoptions was set to top that of last year before the Vietnamese government halted all new applications in the wake of the investigation.

— The Guardian, London

OTHER VOICES - Middle East Press

Understanding reality

Oman Tribune

PALESTINIAN President Mahmoud Abbas made a valid point during his visit to Beirut … when he said that Palestinian refugees in Lebanon should not be permanently resettled there … Israel would be delighted if the 400,000 Palestinians living in 12 Lebanese camps became citizens of Lebanon….

The right of return has been one of the main demands of the Palestinians along with the establishment of a free state in the Gaza Strip and the West Bank, sans settlements, with East Jerusalem as the capital. In other words, the free state must be on pre-1967 borders. Israel may be willing to compromise a bit on some of the Palestinian demands but it has repeatedly refused to even consider the right of return. The Palestinians will never drop the demand for the right of return in any peace deal. This would be a betrayal of the rights of hundreds of thousands of Palestinians who had to flee Israeli terror during the establishment of the Jewish state….

With Israel sticking to its stand, the chances of a deal in the immediate future are remote. Israel would certainly like a wishy-washy deal that would dilute Palestinians’ demands. Even the Americans would like this.… But that dream will remain just a dream for a long time unless the Americans shed their pro-Israeli bias and act in accordance with historical realities. — (Aug 30)

Unemployment and stagflation

The Jordan Times

…IF it is true that economic growth at the rate of six per cent achieved in 2007 was responsible for reducing the unemployment rate from 14 to 13 per cent … it means that we have to wait for 13 years of sustained economic growth, not less than six per cent a year, to remove unemployment.

One of each seven new jobs created in 2007 was taken by guest workers. This is an important factor that must be considered. It is able to reduce or reverse the effect of economic growth on job creation.

It is possible to have a positive economic growth … while unemployment continues to rise, especially if the growth is taking place mainly in the construction sector, which is dominated by non-Jordanian labourers….

Normally, inflation does not come simultaneously with unemployment. In an unemployment environment, workers are unable to exert pressure on employers to raise salaries and wages. Supply of labour exceeds demand.

The problem facing policymakers is that measures to deal with inflation and unemployment are contradictory. If the two happen simultaneously … [it is] like a patient suffering from two illnesses and ... medicine needed to treat one would cause the other to worsen. — (Sept 1)