| October 05, 2008 | Sunday | Shawwal 5, 1429 |
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Strategic depth concept vindicated
Need to solve problems
Making room for democracy
Where have you left my father?
West’s double standards
Polio cases
Relocating PCSI from Karachi to Multan
Need to redefine NFC award
Readers are requested to restrict their comments to a maximum of 400 words. We reserve the right to edit letters for reasons of clarity and space. Letters, including those by e-mail, should carry the complete postal address of the sender. The views expressed in these columns do not necessarily reflect the views of the newspaper.—Editor
CONFIDENCE is the lifeblood of a financial market. Where everyone swindles, confidence dwindles. That is the crux of the biggest financial crisis since World War II which not only jeopardises the existence of Wall Street but also imperils the edifice of modern financial system.
The birth of modern financial system coincides with the birth of the medium of exchange of goods and services, i.e. money. As money possesses just a symbolic value, its acceptability, mobility and buoyancy depend on the confidence that a buyer and a seller repose in it simultaneously.
This problem did not exist when real value coins of gold and silver were bartered for goods and services in olden times. As paper money progressed into plastic money (credit cards), the value of money turned even more symbolic.
Hence, permanent confidence in the symbolic value of money (or any other modern fiscal instrument like securities, promissory notes, bonds) became the linchpin of the modern financial system.
It was the deregulated Reaganomics of the 80s that produced conducive environment for the present erosion of confidence there in Wall Street. Thus the unbridled lust for lucre was at ease to modify speculative trading into ‘leveraging’. Leveraging, by making every firm on Wall Street ‘entangled’, soon resulted in a debt web scenario.
House mortgages were traded with impunity by firms as if those were stocks. Then each party became a counter-party to multiple borrowings and multiple lendings at the same time. In this way, such risk networking emerged there wherein everyone was adept at throwing his loss on others.
Hence, windfalls and sudden wipeouts could knock at anybody’s door. The essential job of risk management was given up for risk distribution and with that the size of risk went beyond the carrying capacity of Wall Street. That is all as how confidence was eaten up there.
It was in this backdrop that untested financial instruments known as ‘derivatives’ and collateral-less transactions like ‘sub prime’ lending flourished at an amazing speed to produce that financial corporate fiasco which has just begun and may take many months to unfold into scenes more horrible than the demise of financial leaders like Merrill Lynch, Lehman Brothers, AIG, Freddie Mac and Fannie Mae. We know that the US housing sector with the present volume of $21 trillion is the hub of this sordid drama.
To instil life into the system, US Treasury Secretary Henry Paulson had placed his ‘systemic rescue bill’ of $700 billion before the Congress. Though the lawmakers have okayed the bill, they rightly feel that spending taxpayers’ money to undo the crimes of ‘casino of greeds’ in a way which has no sympathies for small ‘mom and pop investors’ is not apt.
They also have plausible concerns that $700bn would be looking like a peanut in alligator’s mouth. Their scepticism that this rescue bill is a sort of bailout for the Bush government appears quite genuine.
However, one may see it clearly that the Wall Street crisis has the potential to shake the very fabric of American society at large. Thronging of thousands of people daily to Wall Street with placards written as ‘protect our homes’ proves that aspect vividly.
As commercial banks (their losses, as of March 14, are $510bn against $250bn of investment banks) are bearing the major brunt of this ‘credit crunch’, common US citizenry being depositors will consequently be sucked into this whirlpool.
Imagine, what would happen if commercial banks also collapse and then credit cards are not honoured at shopping places, and US dollar loses its strong convertibility.
What is the prime cause of this crisis. Erosion of confidence is not a cause. That’s rather an effect. Plummeting prices of housing units are also an effect. Reaganomics was only a facilitating factor. The loud fact is that the war on terror (it has so far cost US economy $1.3tr if losses of human lives are kept aside) is the prime cause for all that ails America now. The US now seems to be bleeding through this directionless war. Has some enemy of America not hit on its Achilles’ heel?
MUHAMMAD WAQAR ASLAM
Quetta
IN several articles and an editorial published in recent days, the decades-old concept of Pakistan finding its strategic depth in a friendly Afghanistan has been implicitly or explicitly criticised.
However, one would like to draw attention to a fact quoted by a couple of correspondents over the past year. Namely, that an Indian scholar had stated over a year ago that India has its strategic depth in Afghanistan. That this has come to pass has now become irrefutable from what the former chief of Pakistan army, Gen ( r) Mirza Aslam Beg, revealed recently (Sept 30).
Among other things, he said India and the US had signed an agreement for strategic partnership after which Washington declared Afghanistan to be a part of South Asia. Consequently, India has been able to establish a very strong intelligence network in Afghanistan, “which works against all countries in its neighbourhood. This network is supported by CIA, Mossad, the German intelligence, MI6 and the French intelligence.”
Gen Beg said all the neighbouring countries in general and Pakistan in particular were feeling the impact of the network. He further said that only last week New Delhi and Kabul have signed a defence pact allowing India to deploy nearly 150,000 troops to Afghanistan by the end of next year.
The former chief also said that the EU involvement in Afghanistan, where Nato forces, including French troops, are stationed, resulted in a very intimate working relationship with India, whose repercussions can well be imagined. He observed that the pact between the US and India had also involved France through Nato and its two declared objectives were very sinister.
The first was to contain the rising economic and military power of China and the second was to curb the rising influence of the Islamists in the area. Besides, the very recently inked Indo-French nuclear agreement would enable India to build at least 40 to 50 nuclear warheads yearly and get access to nuclear technology for application in many areas.
To sum up, Gen Beg warned that Pakistan was being ‘encircled’ by the United States, India, Nato and the European Union under a well-thought-out plan and called upon Islamabad to review its defence and foreign policies to deal with the challenges ahead.
All of this goes to show that our concept of strategic depth has been fully vindicated and we must give due credit to those military strategists who had formulated it. Now, the consequences of losing that option have become frightfully clear. Imagine what the situation would have been if the US had not invaded Afghanistan. With Taliban still in power over there, we would have escaped many headaches. China, too, would have been better off.
Another telling new development is that not only Hamid Karzai but even the western powers, including America, now appear keen to hold negotiations with the Taliban and have reportedly sought Saudi and, perhaps, even Pakistani facilitation for the process (Sept 29). Many of us in Pakistan had been advocating such talks for years.
K. NAQSHBANDI
Karachi
THIS is with reference to the news report: ‘US, Pakistan need to solve problem: Rice’ (Sept 27). To say this in words is desirable, to convert this desire into deeds is required : and required immediately. This desire gets defeated when they say one thing and do another.
Even a less than intelligent person would agree with US Secretary of State for Foreign Affairs Condoleezza Rice that there is need to deal with border incidents between US and Pakistan forces. Secretary of State for Defence Robert Gates claims that the US has a right to conduct military operations inside the Pakistani territory. Who authorised his speech : has he got the permission from the commander-in-chief of the US forces, the president?
Earlier and on the same day also when Ms Rice said so, President Bush assured the visiting Pakistani president that territorial integrity and sovereignty would be respected.
This assurance has come about, I am sure, in view of the curt statement by the Pakistan Army chief and other leaders that any incursion into Pakistan by the US, Nato or other allies would be retaliated against.
The retaliatory action would not be meant to save militants, as has been inferred before, but to safeguard the territorial integrity and sovereignty of Pakistan for which the Pakistan Army is fighting the militants.
I wonder why is this confusion of one person saying one thing and the other contradicting it? Why can’t they a draw up a permanent policy and everybody says the same thing : or not say anything at all?
REHANA NAQVI
Karachi
SIXTY-one years after Jinnah changed the course of history, modified the map of the world and created a nation state, Jinnah’s Pakistan is precariously placed in the world. We started poor but were blessed with fertile land, large gas and mineral deposits, water from rivers, a commercial city port, strategic location, a clear vision and ideology from the founder but a weak political will and process and an ambitious army even during Jinnah’s lifetime which led him to quote chapter and verse on the duties of the armed forces and their oath of office in 1948.
It was obviously wrong political decisions of our leaders of relying too much too often on the US for aid, armaments, food and intelligence for survival in the world of politics. We have never come out of the US camp and have always been living on US handouts. Efforts to break away have led to disastrous consequences.
For the past eight years what we said and did was dictated by the US. There is probably no other country which is visited so often by US officials who meet a cross-section of leaders and issue a variety of statements that concern Pakistan’s external and internal affairs and we lump it all.
It seems like a long-playing record to say that our future depends on our democratic dispensation and our ability to have a representative government which takes decisions not in a room but on the basis of the collective wisdom of parliament.
A country that has a truly elected civilian government that functions in accordance with the constitution and a truly independent judiciary which protects fundamental rights of citizens, human rights and is the final arbiter of disputes between a citizen and the state and between a citizen and another citizen while simultaneously upholding and protecting the constitution is one which achieves respect and credibility.
We must also acquire the ability and adopt the golden principles of equality of citizens, tolerance for the views of each other, discipline in our ranks, unity in our approach and faith in our future. If we only stop mischievous machinations, greed for power and political infighting, much can be achieved on most fronts and this country can have a good future.
We lost out on four occasions when the country had democratically elected governments. We endured eight years of authoritarian rule which was portrayed as good but turned out to be disastrous. We now have another chance. Let the majority govern the country at the centre and other majority parties or coalition in the provinces.
Trying to dislodge and grab power absolutely in the whole country may be tempting but should be avoided as it will lead to internal turmoil and adverse consequences for democracy in future. The political parties which are not in a majority in the centre must be content with playing the role of a constructive opposition.
Since we have a parliamentary form of democracy, let us follow the Westminster type where the opposition is treated with respect and dignity and there is a shadow cabinet and the leader of the opposition is treated as a prime minister-in-waiting. Encourage the elected representatives and bureaucrats to play the role of serving the people who should be treated as the ultimate sovereign.
LIAQUAT H. MERCHANT
Karachi
“WHERE have you left my father?” I heard these innocent words from a little child of Javaid Masih Sindhu, who was a victim of Marriot Hotel bombing, after his funeral in his ancestral village in Faisalabad. His two daughters and a son of six, four and three years are without the shelter of their beloved daddy.
During the funeral ceremony I saw them closely while they were trying to touch their daddy who was in a sealed coffin box.
They were trying to talk to him though he was no more in the world. They did not know that he loved and kissed them before leaving for the Marriot Hotel on the seventh of this month to earn living for them. They wanted to be loved and kissed by their beloved daddy but …………
There were hundreds of people to salute the gentleman who gave his life for others. Reverend Father Aftab James said in his sermon: “There must be sympathy in the hearts of the hardliners for the innocent people. The great sacrifice of Javaid Sindhu is a proof that people of all religions are victim of terrorists.
“We are all the defenders of Pakistan but it can only be possible when we will have respect for human life without any discrimination. Life is a gift of God, so it must be protected. We must all be united to counter terrorism. Hunger and bombings are killing people. We want a peaceful Pakistan for prosperity.”
It has been observed that most of the times suicide bombers are teenagers. They do not have wives or children.
Due to this they are merciless. There is no value of life for them. They can spend their lives in a positive way but unfortunately they are dismayed. They are not ready to face the challenges of the world boldly.
They are unable to understand that one can go to heaven or hell only through one’s acts but not by just killing innocent people who are God’s creature.
YUMNA HASSAN
Karachi
AFTER the signing of the nuclear accord between France and India, similar to the one already being worked out amidst New Delhi and Washington, which will enable India to buy latest nuclear power reactors and fuel from France, the French president made an observation.
He said that the world needed India in its fight against global warming but he could not see “How India can fight global warming without nuclear energy, which is a clean energy. That would be totally incoherent” (Oct 1).
Shouldn’t the same logic and same standard apply to Pakistan, which is a country of 170 million and has a severe shortage of electricity? But the western countries don’t seem to think so. Does that mean we should burn all the dirty sources of power, such as the low-grade coal deposits in Thar and add to global pollution?
Similarly, the American defence secretary, Robert Gates, has said that international laws allow the US to take unilateral military actions inside Pakistan, in response to Islamabad’s contention that Washington has no right to violate our sovereignty (Sept 30).
When it comes to the treatment of Muslim prisoners being held in Guantanamo Bay and other places, most of whom couldn’t be charged which any crimes even after the passage of several years, the same Bush administration doesn’t give a damn about what the international law or the various human rights organisations have to say.
In the end, here’s advice for our prime minister. Following his assertion before the media (Oct 2) that the Pakistanis should not worry about the Indo-US nuclear deal because we, too, will ask Washington to give us a similar deal, senior US official Nicholas Burns rejected this on the same day and said Pakistan, due to its bad proliferation record, can’t have it (BBC, Oct 3). Dr Khan’s network is an old story but will perhaps be used as a convenient excuse and a stick to beat us with for a long, long time.
Mr Gilani is reminded of the trouble Pakistan has had with the US about procuring F-16s, despite firm orders. Similarly, even if America signs an agreement with us reluctantly, it could back out any time, leaving us high and dry. Therefore, we should only count on our trusted friend China and, perhaps, France, for this matter. Even the Russians can’t be relied upon because India’s objections to their military or strategic sales to Pakistan always influence their policies.
A. MUNSIF
Karachi
POLIOMYELITIS is an acute viral infection of the nervous system. Worldwide more than half of the infections are found in children under five. One in 200 infections leads to permanent paralysis, usually in the legs. In five to 10 per cent of these cases the victims die when the breathing muscles are paralysed.
Although it is the most harmful disease, the parents of 24,000 children in northern Pakistan refused to allow health workers to administer polio vaccinations last month, mostly due to rumours that the harmless vaccine was an American plot to sterilise innocent Muslim children.
However, the tale has a deadly sting. Even though only 24,000 children missed the vaccine, the WHO officials said the failure to vaccinate in the small pockets of the country gave the virus a fresh toehold to spread.
BISMA ABBASI
Karachi
THE decision of relocating the Pakistan Cotton Standards Institute (PCSI) from Karachi to Multan seems to have been taken without considering vital and critical issues associated with the textile industry. Apparently it seems to have been taken to accommodate a few cronies residing in Multan.
The PCSI was established with the international funding from the Asian Development Bank and the World Bank and with generous technical support from UNDP and FAO. While negotiating with these international agencies, this was categorically declared that the head office of the institute would be at Karachi with two regional offices at Sukkur and Multan. Accordingly, this fact was incorporated in the Cotton Standardisation Ordinance 2002.
This decision would seriously jeopardise the credibility of our decision-makers in the eyes of international agencies. Besides, it will put this prestigious organisation at a distance with the trading and financial of hub of Pakistan. On the other hand, a large number of employees would find it difficult to relocate their families in other city in this time of skyrocketing price hike and inflation.
I would like to request the prime minister to look into the matter and take corrective action so that this prestigious organisation could be saved from ensuing losses associated with this decision.
FRAZ AHMED
Karachi
UNDER the 1973 Constitution the National Finance Commission award aims at distribution of financial resources among the provinces of Pakistan by the federal government on an annual basis. Certain types of taxes collected in each province are pooled, then redistributed according to the NFC formula.
Pakistan has had five NFC award formulas. The fifth NFC award, adopted in 1997, was supposed to be valid for five years but failure to reach agreement on a sixth one has meant that the fifth is still in operation.
Taxes included in the pool are: (1) income taxes, (2) general sales tax, (3) wealth taxes, (4) capital gain taxes and (5) custom duties. The inclusion of custom duties started with the 1997 award. In the 1991 award custom duties had gone exclusively to the federal government.
Collections for the workers’ welfare fund remain in the province where they are collected. Resource royalty is collected by the federal government and distributed to the provinces, based on independent agreements.
NFC award 1997 specifies that 63 per cent of the pooled taxes will go to the federal government and 37 per cent will be distributed among the four provinces.
Sindh province is contributing 63 per cent to the total revenue generation of the federal government annually. In fiscal year 2007-08 the aggregate country collection of revenue was Rs1,485 billion wherein Sindh’s share to the federal government in the context of sales tax was 63 per cent, in port duties 86 per cent, in industeries 43 per cent, in services and income tax 78 per cent. In the last year’s distribution of resources Sindh got only Rs94 billion out of the total revenue generation of Rs1,485 billion.
It is assumed that Sindh gets 23 per cent of the total revenue generation but in fact it gets 17 per cent after paying off debts and salaries to the federal government, like Rangers etc. In all actuality, it gets a meagre amount.
The situation becomes grim in the background of the fact that Sindh makes proportionately highest contribution to the national growth; and its contribution to national revenues is the highest no matter how it is calculated.
Exclusive of the revenue transfers received on account of natural resources, Sindh’s existing share under the divisible pool cannot even meet the government’s wage bill. The sole criterion for distribution of finance is population, and Sindh still gets its share on the basis of 1998 census, which shows its population as 29 million although our population in the past 10 years has increased sharply.
A new NFC award can-not be announced because the four provinces have failed to develop consensus. Consensus has not been reached because Punjab insists on resource distribution on the basis of population alone, whereas the other three provinces, namely NWFP, Sindh and Balochistan, demand giving importance to the revenue generation by each province, level of poverty in smaller provinces and other related factors as well while distributing the national resources among provinces through the National Finance Commission.
In the last Sindh Assembly session on Sept 4, I had presented a resolution on the floor of the house that we have to recommend to the federal government to give the NFC award on the basis of multidimensional factors, but the resolution was deffered to the next session. As a member of the Sindh Assembly I would suggest to the Sindh government to present a strong case on multidimensional factors for the next NFC award.
It is time the provinces and the federation arrived at a consensus formula for resource distribution. The PPP has also highlighted in its manifesto 2008 that the NFC award should be multipurpose and declared sales tax as an entirely provincial subject.
HUMERA ALWANI
Member, Sindh Assembly
Thatta
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