Counting the poor

A NEW World Bank report makes grim reading for Pakistan: the pre-existing high levels of malnutrition have combined with high inflation to drive up the number of the poor. Unsurprising for anyone following the news recently, the real problem is what lies ahead. The first step to improve the plight of Pakistan’s poor is to produce accurate, up-to-date and credible data on the country’s poor — a failure of all previous administrations. Even today the battle over the number of poor continues. A local newspaper has reported that a tussle between the Planning Commission (which has put the incidence of poverty at 35 per cent) and the finance ministry (which claims an incidence of poverty of 22.3 per cent) has jeopardised $500m of World Bank funding. Without consistent data on poverty there is little chance that any anti-poverty policy will succeed.

The second step is politically even more difficult: acknowledging that Pakistan is a poor country and has limited resources to help its poor. Given this reality the government must be extra vigilant in ensuring that the quantum of resources set aside for the poor are used as efficiently as possible. As blanket subsidies have fallen out of favour and targeted subsidies (such as the Benazir Income Support Programme) are ramped up the government must work to ensure the new programmes deliver transparent, politically blind aid to the poor. Under the old system, general subsidies came under fire for being over-inclusive: whether rich or poor you could purchase wheat flour, petroleum products, electricity and fertiliser at the same price as anyone else. Under the new system of targeted subsidies, the purchasing power of only those deemed to be poor will be increased. While the new system is theoretically preferable it is only good for those inside the net of such social protection schemes — the poor outside the net will inarguably be worse off. So the government must be vigilant to not create a new class division among the poor: the politically ‘correct’ poor and the politically ‘incorrect’ poor as decided by the government of the day.

Finally, poverty will remain a problem in Pakistan as long as the long-term macroeconomic policies continue to produce poverty. Against the near-unanimous opinion of local economists, the previous government embarked on a consumption-led growth spurt financed by inflows of money from abroad — an approach that left the country perilously exposed. Agriculture, which employs more than 40 per cent of the labour force, and manufacturing sectors that could take advantage of Pakistan’s low-skilled labour force were left to stagnate as the services sector was fawned over. A more cautious, thoughtful process of development is needed. In every crisis is an opportunity: the present government could build a lasting legacy if it opts for major economic surgery rather than the oft-used band-aids of the past.

Prudence is the key

THE action initiated against certain money-changers late last week by the Federal Investigation Agency is a timely effort to stop the flight of capital from the country. With top state and government functionaries globetrotting in search of monetary assistance, it is only logical to ensure that foreign currency within the country remains where it is. At least it should not be moving out through illegal means. To that extent, the government effort is a welcome move as it will surely send a strong signal to all concerned that the government is serious about the business of managing the money crisis. What the authorities ought to be careful about, however, is the possibility of the move creating an unnecessary scare in the market. If that happens, it will be counterproductive regardless of all the sincerity that may be at work behind the endeavour. Since investigations are still underway, it is premature to judge the extent of illegality committed by the accused. In fact, whether or not anything illegal has actually taken place will only be known once charges are framed and proven in a court of law. The way official inquiries are conducted and the pace at which the judicial system moves in Pakistan, we are talking of an uncertain timeframe.

Irrespective of how it all unfolds from now on, if there is one lesson to be learnt from the episode, it is about the need to officially discourage speculative activity across the board and divert excess money in the market towards productive channels. For the last several years, government policies have promoted undesirable tendencies in the name of liberalisation. The decision to do away with tax discrimination to encourage the listing of private limited firms on the bourses is just a case in point. As a result of such measures, the capital started its slide from manufacturing and agriculture and moved to property and stock markets. And, with economic recession taking its toll on the two segments, it was only rational that the investors took a fancy to foreign currency in the wake of the rupee’s downward spiral. The current crisis is a logical corollary of the whole phenomenon. The bottom line, as such, is clear: markets need a certain discipline at the policy level. That is the only plausible way to pre-empt happenings that may need the kind of abrupt administrative action that the government now has to take at the risk of spreading harassment in an already fragile business environment.

Illegal trade in animals

THE illegal trade in wild animals is so brazen in Sindh that there should be no reason why the relevant authorities cannot crack down with the full force of the law. In Karachi the business flourishes, in full public view, at Empress Market and yet nothing is done to bring the criminals to book. As this paper reported on Monday, species ostensibly protected under the Sindh Wildlife Ordinance can be bought and sold in the provincial capital without even a hint of subterfuge. And according to the head of the Sindh Wildlife Department, Empress Market is just the tip of the iceberg. Admitting that the trade in protected species cannot thrive to the extent that it does without the patronage of some SWD officials, he asked for time to look into the matter as he is new to the job. But time, unfortunately, is running out. Sindh’s flora and fauna is taking a battering at the hands of not just trapping and hunting but also the decimation of habitats through deforestation, ‘development’ initiatives, pollution related to pesticides and other toxic agents, sea intrusion and related reduced river flows downstream of Kotri. Those who think that animals don’t matter when so much human misery abounds are sadly mistaken. The web of life is intricately interlinked, and to ignore symbiosis is grave folly. Similar crimes against nature are taking place across the country, particularly in the Frontier.

It is apparently now a fashion statement amongst the nouveau riche to flaunt private zoos replete with exotic birds, large cats and ferocious reptiles such as crocodiles. Somehow, and only the intrinsically boorish and condemnable can grasp how, this elevates social status. What such people do not see is the ultimate cruelty and hubris involved in preventing birds and mammals from roaming free, as nature intended. They assume jurisdiction in an area that should be off-limits to mere mortals. As for the authorities, some raids have been conducted in recent weeks and animals recovered. But the fines are paltry and the law must be made more stringent on this count. Violations of the law are all too obvious. It is time to act, forcefully.

Resurrecting the state

THE first priority of the administration headed by President Asif Ali Zardari is to find sufficient external resources for Pakistan. The administration needs to do that in order for the country to continue to meet its foreign obligations.

Pakistan must also continue to import the goods and commodities in the quantity required by its economy. Islamabad is discussing its resource needs with the IMF and with some of the countries that have large surpluses into which they could dip in order to aid a friend in distress. It appears that the approach to the IMF for resources might yield some capital flows for Islamabad.

The Fund is able to put in place processes that would provide fast-disbursing resources to a country faced with a serious situation. This was done for Ukraine a few days ago when that country was provided more than $18bn of quick-disbursing funds. The eligibility of Pakistan for this kind of dispensation would depend in part upon how the Fund reads Pakistan’s policy performance in the past as well as in the present. If the conclusion is reached — as was the case for Ukraine — that Pakistan’s current problems are mainly the result of external developments such as the sharp rise in the price of oil and agricultural commodities and not because of policy mistakes, Islamabad could get a quick infusion of the Fund’s resources.

Once the needed foreign flows have been secured to close the financing gap, the government must turn its attention to another matter of high priority: to rebuild the institutions of the state so that the economy can be placed on a sound footing. The state must be resurrected. What does this mean?

I use the word ‘resurrection’ quite deliberately since a series of past administrations, for a variety of reasons, reduced — sometimes totally destroyed — the government’s ability to support the economy and provide the citizenry with a number of services critical to their well-being. It is important that a different attitude is adopted by the current leadership and that the various institutions of state are brought back to life.

The Pakistani state must be able to perform a number of functions. It must be able to understand the environment in which the country finds itself today. This means developing the analytical capacity to evaluate the changes that are occurring not only in the global economy but also in the way political power is likely to be redistributed as the US gives up some of the authority it has accumulated since the collapse of the Soviet Union in 1991.

Based on that understanding and also on a better appreciation of the country’s many advantages, the state must be able to strategise for the future. It must redevelop the capacity to be able to guide public as well as private resources into the areas that can contribute the most to accelerating the rate of economic growth and bring about a better distribution of the income generated by a growing economy.

Pakistan and its economy must also be better integrated into the global economic and political systems. These systems are changing rapidly as a result of what economists call the process of globalisation as well as the recognition that the structure created in 1944 is not up to the needs of a very different world from the one that emerged after the end of the Second World War.

The world now has a number of new players the Bretton Woods system of 1944 did not recognise. The need for a new international structure was felt after the global economy plunged into a crisis that began in the US and then spread to other parts of the world. The global economic order will begin to be reshaped.

The first step in that direction will be taken by the summit of 20 countries that will convene on Nov 15. Pakistan will not be attending. Its absence, in spite of the country’s large population, a reasonably large economy and the fact that it occupies a geographical space that is important for maintaining global security, is a vivid reminder of the lack of respect Islamabad commands internationally.

The state must be able to delegate decision-making and resource-generation authority to the governments at the sub-national level. In spite of the provisions in the constitution promulgated in 1973 and the promises made by the authors of that constitution, the Pakistani state remains highly centralised. This does not ensure efficiency or equity.

In a federal system of government, which is what Pakistan is, the provinces must have considerable policymaking and implementation authority. There must also be an effective system of local government. Pakistan’s provinces are just too large in terms of population or area to be able to serve the people. For this a representative system of government is needed at the local level.

Decentralisation and devolution will help to achieve many objectives. The two processes should increase the amount of savings in the national economy, bring government closer to the people, make the state more responsive to the citizenry and bring greater dynamism to the economy.

The state must take responsibility for improving the distribution of income among its citizens and among different regions of the country. The most effective ways of doing this are the fiscal system and the Public Sector Development Programme (PSDP). For both, economic growth should not be the only goal to be pursued. It should be coupled with the objectives of poverty alleviation, bringing women into the mainstream of the economy, reducing the income gaps among the provinces and between the more-developed and less-developed regions within the provinces.

In sum the resurrection of the state must accomplish a number of objectives. It must allow the formulation of economic strategies based on a better understanding of the country’s geopolitical situation, a better reading of the restructuring of the global economic and political systems, integrating the country more fully into the global system, a better appreciation of the roles various levels of government can play in promoting development, and developing a better capacity to look after the underprivileged people and regions.

The rebuilding of the Pakistani state will require at least two types of moves. As the economist Douglass North has emphasised in his path- breaking work, institutional development entails more than the creation of new organisations. It means developing a structure of both formal and informal relations among people and between the state and the people. These relations must be so structured as to create confidence that people’s rights and properties are protected according to rules and regulations for which they have respect. The work on resurrecting the state must begin immediately.

Buying new homeland

THE Maldives will begin to divert a portion of the country’s billion-dollar annual tourist revenue into buying a new homeland — as an insurance policy against climate change that threatens to turn the 300,000 islanders into environmental refugees, the country’s first democratically elected president has said.

Mohamed Nasheed, who takes power officially today (Nov 11) in the island’s capital, Male, said the chain of 1,200 island and coral atolls dotted 500 miles (804km) from the tip of India is likely to disappear under the waves if the current pace of climate change continues to raise sea levels.

The UN forecasts that the seas are likely to rise by up to 59cm by 2100, due to global warming. Most parts of the Maldives are just 1.5metres above water. The president said even a “small rise” in sea levels would inundate large parts of the archipelago.

“We can do nothing to stop climate change on our own and so we have to buy land elsewhere. It’s an insurance policy for the worst possible outcome. After all, the Israelis [began by buying] land in Palestine,” said Nasheed, also known as Anni. The president, a human rights activist who swept to power in elections last month after ousting Maumoon Abdul Gayoom, the man who once imprisoned him, said he had already broached the idea with a number of countries and found them to be “receptive”.

He said Sri Lanka and India were targets because they had similar cultures, cuisines and climates. Australia was also being considered because of the amount of unoccupied land available.

“We do not want to leave the Maldives, but we also do not want to be climate refugees living in tents for decades,” he said.

Environmentalists say the issue raises the question of what rights citizens have if their homeland no longer exists. “It’s an unprecedented wake-up call,” said Tom Picken, head of international climate change at Friends of the Earth.

The 41-year-old is a rising star in Asia, where he has been compared to Nelson Mandela. Before taking office the new president asked Maldivians to move forward without rancour or retribution — an astonishing call, given that Nasheed had gone to jail 23 times, been tortured and spent 18 months in solitary confinement.

— The Guardian, London

OTHER VOICES - Sindhi Press

The public interest in privatisation

Kawish

DESPITE protests and opposition by the people and workers the privatisation committee of the federal cabinet headed by Prime Minister Yusuf Raza Gilani has approved the sale of the profit-earning Qadirpur gas field. Out of the 75 per cent share owned by the government, a 37 per cent share is to be sold along with the transfer of operational control. The privatisation process will be completed within one year.

The sale of profitable industrial and commercial units was expedited by the previous government which sold a number of such units. If the Supreme Court of Pakistan had not rejected the sale of the Pakistan Steel Mills, the previous government might have sold all such units and the incumbent rulers might have been deprived of this ‘honour’.

The people strongly believed that the PPP government would not share in this crime of privatisation of national assets. This belief had some historical basis and relied on the party’s pro-people stance. The party’s founder and chairman, the late Zulfikar Ali Bhutto, not only nationalised industrial and commercial units of national importance but also set up new ones to provide jobs and other facilities to the people. The present government was claiming to follow in the footsteps of Z.A Bhutto and Benzair Bhutto but on the contrary it is selling national assets.

As the government announced the privatisation of the Qadirpur gas field workers and different sections of society launched a series of protests. Elected representatives also opposed the privatisation move. Reports published in the media suggested that the Ministry of Petroleum and Natural Resources has also opposed this privatisation. Industrial and commercial units in the public sector are set up with the objective of providing jobs as well as maximum services and facilities to the people.

Though the minister for privatisation has assured employees that their jobs will not be lost, the assurance is a traditional one given at the time of privatisation but never fulfilled. After the sale of a unit the reality on the ground changes altogether. We witness downsizing, sacking of employees from their jobs, reduction in facilities for employees and increases in the prices of services or products.

The government is claiming it will safeguard the interests of the people. Everybody knows that the interests of the people lie in not selling these units because these units and assets are built from the taxes of the people and are now earning a profit. If this is the case then how can privatisation be in the interest of the people? When a unit does not remain under the control of the government how will the interests of the people be ensured and served? — (Nov 9)

Selected and translated by Sohail Sangi.