|
| November 13, 2008 | Thursday | Ziqa'ad 14, 1429 |
For Baloch prosperity
Matter over mind?
Not-so-independent regulatory bodies
N-plant row in Syria
OTHER VOICES - Middle East Press
MANY people spend their lives living under the erroneous belief that there is magic in a free market economy and once the model is adopted all things just fall into place without further effort. One wishes this was the case — unfortunately it isn’t.
CLAIMS that traces of uranium were found at the site of an alleged Syrian nuclear reactor which was bombed by Israel last year prompted a row about politically-motivated leaks on Tuesday.
WORKERS of the Qadirpur gas field locked the company’s offices near Ghotki on Tuesday to vent their anger against the planned privatisation of part of the government stake in the firm and the proposed transfer of its operational control to the prospective buyer. Decisions made in closed-door meetings without taking the stakeholders in confidence are always bound to stoke such intense reaction. It is unfortunate that the elected government of the PPP, just like its authoritarian predecessor, has conveniently ignored the opposition to the company’s privatisation by its employees, who have been protesting for almost two months now to make their point, and others who know about this project and the implications of privatisation.
The government, which controls a 75 per cent holding in the company, has decided to disinvest 37 per cent of its stake and transfer the company’s control to the potential buyer, ostensibly to generate funds for bridging the fiscal deficit. The partial disinvestment of the government share is estimated to yield $3-4bn. The employees want the decision to be revoked because it would result in loss of jobs and huge revenues in the form of profits and taxes for the country. The PML-N and the MQM, the coalition partners of the PPP in Punjab and Sindh respectively, are also opposed to the plan and have vowed to stall it at any cost. The government says the privatisation of the company will improve its efficiency and the prospective buyer will be required to invest money in oil and gas exploration. The government, it is said, doesn’t have the kind of money to invest in the field to raise production. The opponents don’t agree with this argument. They insist that a similar justification was given before KESC was sold. But the buyer failed to invest in the company or make it efficient. Also, they fear that the private investor could demand an increase in the price of gas, which would further burden industrial and domestic consumers.
So what is the answer to this problem? The best possible solution lies in a comprehensive and informed debate in parliament on the pros and cons of the planned privatisation. The employees should also be afforded an opportunity to put forward their viewpoint before the public representatives. That will allow the government to develop a democratic consensus on the issue and decide whether or not it is in the interest of the country to sell off the family silver. Is this asking too much from the ruling party, which in the past has demanded of the previous government thorough parliamentary discussions on the sale of the country’s strategic assets?
THERE is no doubt that incidents of militancy have subsided to a great degree in Balochistan after nationalist groups previously engaged in anti-state activities declared a ceasefire in September. Targeted attacks — aimed more at former allies turned pro-government than the military — are no doubt still carried out, and last Sunday’s bomb blast in Dera Bugti is one example. But by and large some semblance of peace has returned to the province after years of strife, and the strategy now should be to take advantage of this period of calm by pursuing political reforms and undertaking extensive development work. The neglect of Baloch rights and conflict between government troops and insurgents in the province had previously combined to make this an unachievable dream. Now, the government has taken some measures to amend matters. Several Frontier Corps check-posts have been dismantled in certain areas, cases perceived as politically motivated have been withdrawn against many Baloch leaders and a reconciliation committee, formed in April, has been recently activated to look into provincial grievances. True, even these initial steps have not been without flaws; for instance there is a need to have broader representation in the reconciliation process so that input from all major tribes is included. But a start has been made and greater strides in the right direction could lead to a complete cessation of hostilities and persuade the militants to give up their goal of independence from the Pakistani state.
Of course, this sense of optimism should not be allowed to obscure the fact that injustices still prevail with feelings of alienation running high in the province. Provincial autonomy, a fair share in national revenues, the payment of long overdue royalties and socio-economic development remain elusive and subject to political indecision, while vast stretches of cantonments continue to be a reminder of the military’s sway and feelings of distrust that have yet to be overcome. The construction of Gwadar Port has elicited fears of employment opportunities being given to non-Baloch and the subsequent change in the demographic composition of the area. Meanwhile, the rehabilitation of those who fled the military operation and the tracing of hundreds of ‘disappeared’ people are pending. Unless these concerns are addressed the Baloch will continue to feel marginalised.
The enormity of the task, compounded by the recent earthquake in Ziarat that made thousands homeless, is nothing short of intimidating. But its completion through the government’s three-pronged strategy of reconciliation, reconstruction of institutions and reallocation of resources is necessary to bury differences between the state and the people and to carve out a new path of hope and prosperity for the Baloch.
MENTAL strains and illnesses are lamentably never the subject of half as much public discourse as, say, seasonal epidemics. However, these are not only just as destructive and rampant but can be triggered by the most imperceptible of causes. A recent international symposium on ‘Tropical medicine and hygiene’ called for devising initiatives to tackle emerging problems of public health and infectious diseases that are the cause of human morbidity and mortality. Interestingly, aside from the oft-debated issues of our flagging economic and physical environment, rising crime and violence and the fact that “weak public institutions overall failed to keep pace with the increasing population of Karachi”, a mental health expert laid significant emphasis on factors that were causing stress, distress, disorders and other mental illnesses. Lead levels in the atmosphere around traffic hubs came up as major catalysts of mental turmoil and retardation. The leading psychiatrist also pointed to human rights issues as reasons for strained lifestyles, which in turn breed mental and psychosomatic illnesses. Even noise pollution, which is not widely recognised by people as a key factor in environmental degradation, can lead to health problems apart from hearing loss.
It is indeed high time that environment agencies intervened in a more aggressive manner with measures that make the distressing environment of the metropolis conducive to psychological well-being. These must include joining forces with the transport department to fight air and noise pollution. It is disconcerting that relevant ministries such as the ministry of culture do not see inexpensive recreational activities as a dire need of our fraught times. Lawmakers must be compelled to focus on providing the people with avenues of constructive and creative escape such as theatre, cinema and music. Meanwhile, it can hardly be refuted that, where momentary distractions will serve a definite purpose, predicaments such as lack of basic rights — from amenities, housing, education to employment — form the core of the city’s collective anguish. Perhaps there is no better time than now to recognise that sheer negligence may propel Karachi towards becoming the ungovernable animal it was in the early nineties.
The free market model calls for the government to set clear rules through legislation and also to introduce mechanisms for their enforcement primarily through specialised regulatory bodies. These regulatory bodies, staffed by specialists, act as mini legislatures when rule-making and mini courts when performing adjudicatory functions. The raison d’etre for the setting-up of these specialised bodies is to establish their independence from the government so as to isolate them from day-to-day political pressures.
Free market reforms started in Pakistan in the early nineties. Today, specialised bodies are in place in all the important segments of the economy, including the banking, corporate, oil and gas, telecommunication and power sectors and even the media. In some cases brand new specialised bodies like the oil and gas, telecommunication, electricity and media regulatory authorities were established. In others old regulatory bodies like the State Bank of Pakistan, which regulates the banking sector, and the Securities and Exchange Commission of Pakistan (previously the Corporate Law Authority), which regulates the corporate sector, were completely revamped.
There is, however, one theme common to all the regulatory bodies in Pakistan — none is structured to work independently. Thus, in the relevant legislation establishing each authority there will be clauses allowing the government overriding control through policy directives or guidelines or notifications. In any event the classic technique of exercising control through key appointments in the regulatory bodies is always available to the government, which it generously exercises.
Since the economy, in particular foreign exchange, is currently a burning issue it is instructive to take up a few examples from related areas to illustrate how the relevant regulatory body, i.e. the State Bank of Pakistan, failed to perform certain required functions and the dynamics of such failure.
The Foreign Exchange Regulation Act, 1947 (FERA), the principal legislation dealing with foreign exchange in Pakistan, has a unique structure. As opposed to typical legislation which would permit or prevent certain acts, FERA in essence demarcates areas within the sphere of foreign exchange and then allocates powers either to the SBP or the federal government to impose or remove any restrictions pertaining to those areas.
As FERA mainly provides just a framework any restrictions or relaxations under it are contained in a foreign exchange manual issued by the SBP. This manual consists of an amalgamation of the instructions issued under FERA from time to time by the SBP and the Government of Pakistan. Periodic changes that occur in the FE manual are communicated to the general public through the SBP’s FE circulars and FE letters which are also posted on the SBP’s website.The 7th edition of the FE manual was published in December 1992 and contained all the instructions issued under FERA by the SBP and the Government of Pakistan mainly in the context of economic liberalisation. Interestingly, six months prior to its publication the government of Nawaz Sharif had promulgated the Protection of Economic Reforms Act, 1992 (PERA) which not only removed all and any restrictions on the transfer of foreign exchange from and into Pakistan but also provided complete immunity to all foreign currency accounts maintained with banks in Pakistan from probes by income tax and other governmental authorities besides declaring these accounts tax exempt. PERA was further provided an overriding effect over other legislation, specifically FERA and the income tax and customs laws.
PERA, whose preamble claimed protection of economic reforms, in effect ended up legalising all forms of money laundering and tax evasion by making redundant and taking the teeth out of other foreign exchange, tax and customs legislation. These incentives naturally received an overwhelmingly response where, between 1992 and 1999, more than $11bn was deposited with banks in Pakistan (what eventually happened to these dollars and the role of the SBP therein can be the topic of another article).
For the purpose of this article one needs to, however, take note of two important points: (i) while the relevant regulatory bodies like the SBP, income tax and customs authorities were forcibly being made redundant under PERA not one voice was raised against it, either privately or in public, by these purportedly specialised and independent bodies; and (ii) though these bodies did exactly what PERA / the government wished them to do, i.e. lay their hands off, these bodies did not formally make the required changes in their regulatory structures to give effect to PERA.
A glaring example in this regard is the 7th edition of the FE manual that came out six months after the introduction of PERA and totally ignored all provisions of PERA. Interestingly, most immunities and the complete freedom for transfer of foreign exchange under PERA were withdrawn in 1999 through an amendment in this law, however, the SBP again chose to ignore this major development in its foreign exchange regime as the 2002 edition of the FE manual continued to follow the pattern of the 1992 edition.
Chapter six of the current and previous editions of the FE manual bars resident Pakistanis from maintaining bank accounts outside Pakistan where the balance in such accounts exceeds $1,000. The SBP has so far issued no circular to change it. When this restriction recently came to public attention on account of the rapid outflow of capital taking place from Pakistan and the SBP came in the spotlight for not enforcing its own regulations the SBP came out with a strange explanation stating that this restriction was removed when a notification/SRO issued in 1979 was repealed by the government in 2003.
What is important to note is that the 1979 notification did not refer even once to the foreign bank accounts of resident Pakistanis. Clearly, the SBP has been blindly following the dictates of the government in violation of its own regulations and when caught is trying to find refuge behind a legislation that was changed as early as 1999.
The lesson to be learned from the above narrative is that our regulatory bodies are neither independent nor possess the will to become independent. In a free market economy independent specialised regulators exercise constant vigilance in the interest of the respective sector of the economy which, for reasons explained above, is not the case in Pakistan.
This is just one of the holes that needs plugging — till such time that all such holes are plugged the country will continue to face one economic crisis after another and after each bailout the country and its people will go further in debt .
The writer is an advocate of the Lahore High Court specialising in commercial laws.
Mohamed ElBaradei, head of the International Atomic Energy Agency, said the UN body was taking very seriously allegations that Syria has a hidden atomic programme. But he declined to confirm that uranium had been detected.
Unnamed diplomats said on Monday that samples taken by UN inspectors from Kibar in northern Syria contained traces of uranium combined with other elements. The uranium was processed, suggesting some kind of nuclear link.
“It isn’t enough to conclude or prove what the Syrians were doing, but the IAEA has concluded this requires further investigation,” said a diplomat with links to the Vienna-based watchdog.
Melissa Fleming, an IAEA spokeswoman, said the agency was drafting its first ever report on Syria and had put it on the agenda of the agency’s governors meeting at the end of this month. But she added that the IAEA’s evaluation of findings from the June visit to the site was not finished and that a public verdict was unwarranted until then.
“We regret that people are trying to prejudge the IAEA’s technical assessment,” she said. “We are, however, accustomed to these kinds of efforts to hype and undermine the process before every meeting of the IAEA board.”
The IAEA did not challenge the substance of Monday’s revelations about the uranium traces. The concern is that the leak of confidential information could jeopardise future Syrian cooperation.
Syria has repeatedly denied being involved in any illicit nuclear activity. The US says the site, close to the Euphrates river and the Iraqi border, was a secret nuclear reactor that was almost completed before it was attacked. Israel has never publicly acknowledged carrying out the raid but Israeli officials say privately that the attack helped restore its deterrent capability.
The writer is The Guardian’s Middle East editor.
—The Guardian, London
Listen to Hamas
Haaretz
HAMAS leader Ismail Haniyeh, the ousted prime minister of the Palestinian Authority, described “the territories of 1967” as the territory of the Palestinian state “at this time.” He told Haaretz correspondent Amira Hass that the Hamas government had previously made it clear that it was willing to accept a Palestinian state that followed the 1967 borders and to offer Israel a long-term hudna, or truce, if Israel recognised the Palestinians’ national rights….
Haniyeh’s comments are imbued with special significance against the backdrop of recent events in … Gaza … along with the [US] … election … and Khaled Meshal’s statements that Hamas is willing to negotiate with the new American government. This is also the case in light of the efforts to foster a reconciliation between Fatah and Hamas and the nearly completed term of … President Mahmoud Abbas….
The Israeli government remains staunch in its position that it will not hold political negotiations with Hamas — even though it is conducting indirect talks with Hamas that brought about a lull and are intended to lead to the release of Gilad Shalit. For its part, Hamas is not offering to recognise Israel or make peace with it. A long-term hudna and the establishment of a state along the 1967 lines … are the most to which the organisation is willing to commit.
The cumbersome and slow political negotiations with Abbas, and the Israeli foot-dragging, even when it comes to minimal humanitarian gestures toward the Palestinians, are not testaments to Israel’s sincerity. — (Nov 11)
