Costlier credit

EVERYONE hates monetary tightening because it makes borrowing pricier. Manufacturers loathe higher credit price as it raises their production costs — sometimes making them uncompetitive in the market. Consumers dislike it for it increases auto lease and mortgage rates, enhancing their debt burden and reducing their chances of driving a new car or owning a new house. Other borrowers too abhor expensive credit for similar reasons.

Little wonder then that the State Bank has attracted a lot of flak for its tight monetary stance in the last two years or more. The latest round of monetary tightening — the bank has hiked its policy rate by two per cent to a decade high of 15 per cent — too has afforded critics of the policy an opportunity to question the ‘wisdom’ of enhancing the rate when the global commodity prices are plummeting on fears of recession and the countries are cutting credit rates to stimulate growth. They allege that the bank has tightened money supply to help Islamabad qualify for the IMF’s balance-of-payments support at a time ‘when the economy needed fiscal stimulus for boosting growth and protecting jobs’.

Conceded, that the interest rate might have been hiked at the behest of the IMF. But did the bank have any other choice? Finding solutions that fit the risk and sticking to it despite opposition is definitely difficult. The macroeconomic instability is not subsiding. Current account and fiscal deficits are expanding and demand is refusing to recede. Foreign-currency reserves are plummeting. Exchange rate is under severe pressure. Inflationary expectations continue to rise in spite of the fall in global commodity prices. Considering these factors, it is hard to imagine any central bank easing the monetary stance or even leaving the rates unchanged. If the existing problems are not tackled and inflation allowed to rise and exchange rate to deteriorate, it would hurt business more than expensive credit could.

That said, the bank and the government should not forget that the primary objective of fiscal and monetary policies is to boost economic growth. In the short term, therefore, the bank should try to contain the KIBOR rate at its present level of just under 16 per cent to mitigate the pain of higher credit cost to the real sector. In the medium term, both the bank and the government should try to reduce the cost of borrowing as soon as macroeconomic and price stability returns.

Diamer-Bhasha dam

ON one level at least, approval of the Diamer-Bhasha dam is good news for the country. With construction expected to begin in September next year and due to be completed in 2016 at a cost of $12.6bn, Diamer-Bhasha is expected to produce some 4,500MW of electricity per day. So robust a generation capacity will certainly go some way in tackling the country’s growing energy crunch. At the same time, the dam can also help tackle the problem of irrigation water shortages. Yet, there is cause for concern. While the government is confident that it will be able to drum up the requisite investment, it needs to be noted that the project’s estimated cost has risen dramatically in recent years — from $6.4bn in 2004 and $8.5bn in 2007 to $12.6bn today. Given that delays in the execution of large projects are routine in this country, it is difficult to say at this point what the eventual cost will be and how it will be covered. Though seemingly in the national interest, giving Diamer-Bhasha the go-ahead in these testing times is an ambitious move nonetheless.

There are other issues as well, foremost among them being the relocation of those whose villages will be flooded by the dam. Pakistan’s track record has been dismal when it comes to compensation for involuntary resettlement, with claims still pending from the construction of Mangla and Tarbela dams. Some loss-of-livelihood disputes related to the Ghazi-Barotha Hydropower Project remain unresolved as well. The authorities have also ridden roughshod over the affectees of the Lyari Expressway project in Karachi. Even when compensation is made to those displaced by mega projects, it cannot be limited to the provision of land equal in size to that which was lost and a monetary handout for construction purposes. The quality of the land provided and true value of lost assets also come into it, as do assistance for relocation and compensation for any loss of livelihood or a way of life. As the Asian Development Bank puts it, affectees must be “assisted so that their economic and social future will generally be at least as favourable with the project as without it”.

The environment loses out too. Large dams have a negative impact on river systems and the life they sustain, besides altering surrounding habitats. Among other detrimental outcomes, they trap sediment and this can affect soil productivity downstream while depriving many fish species of the riverbed gravel in which they spawn. The damage can be particularly devastating in the delta regions where a river meets the sea, leading to species loss, loss of arable land and loss of livelihood. Has the government thoroughly assessed what impact Diamer-Bhasha will have on the environment and the people? These considerations are important. We write this on the presumption that the risk factors have been studied and the dam has been found to be safe.

Something in the air

POLITICAL violence has for long been the soft underbelly of life in Karachi. The number of targeted deaths reported by the national media in the last few weeks suggests that latent tension is once again surfacing. This, needless to say, is a horrible prospect. Those who have lost their lives had an assortment of political affiliations — from the MQM to the Sunni Tehrik; from the PPP to the ANP; and from the Haqiqi to even the outlawed Sipah-i-Sahaba. Since the beginning of the year, there have been more than a hundred deaths involving ten political outfits. This surely is as mixed a bag as there can possibly be and does make it impossible to wag an accusing finger in any particular direction except, perhaps, towards those whose job it is to control crime; any crime. Add to these political deaths all the mafia-related killings in areas like Lyari and Mochko, and those that take place out of acts of banditry and snatchings, and one gets some idea of the simmering tension in the city that feeds the country.

After years of relative peace, it had taken just one day in that fateful month of May last year to expose the net worth of that calm. If anything, it was the proverbial lull before the inevitable storm. Against that backdrop a recent report carried by this newspaper about more than 40,000 weapons of prohibited bore having been issued in Karachi since 2000, must be viewed with the seriousness that it deserves. Released against permits granted by the federal government, the beneficiaries include, among others, politicians and ‘influential citizens’. As happens often, the authorities in their infinite wisdom preferred to ignore the simple fact that Karachi needed less weapons, not more. Adding to the worries and fuelling speculation of foul play in the whole process is another fact; the list of beneficiaries does not carry all the relevant addresses. People roaming the streets with such sophisticated arms and the police trying to control them with its antiquated weaponry is hardly the stuff that may encourage the citizens of Karachi to feel safe.

OTHER VOICES - Sri Lankan Press

Way to resolve conflicts

Daily Mirror

THE emphasis that opposition leader Ranil Wickremesinghe made on the urgent need for the main political parties to reach an agreement on a political solution to the national problem deserves the attention of all concerned about achieving peace here as well as outside….

[T]he UNP leader has said if the ruling party, the UNP and the TNA could agree on a reasonable political solution to the problem it would be possible to get the other parties also to fall in line….

The exhortations of religious teachers endlessly reverberate throughout the world persuading adherents to follow the good principles and precepts. But they have little effect on most people because they lack the required courage and determination to suppress these impulses.

Most documents emanating from the United Nations Organisation ranging from its Charter on Human Rights to various conventions and agreements carry the message of brotherhood of man. The UN Charter, for instance, in its preamble states: “Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world…” Article I of the Charter states, “All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.”

An essential prerequisite for peace and order internally and internationally, as UNP leader Wickremesinghe points out, therefore, is strict observance of common laws laid down to ensure peaceful conduct of human affairs. The events in this country show that the reason for most of its problems is the scant respect that people and the political leaders show to the laws of the land. The awful menace of fraud and corruption that torments this country is a clear outcome of this lack of respect for the rule of law.

This deviation, nevertheless, is not surprising in view of the marked decline in the standards of law enforcement agencies. This decline, in turn, could be seen as one aspect of our putrid political culture. Unscrupulous politicians, whose fraternity seems to be increasing, use their power to bend even the law and influence law enforcement personnel to serve their illegal and criminal purposes. — (Nov 13)

No sanction for wife-beating

WHEN the Indian parliament recently passed a law prescribing punishment for men beating up their women, the secretary of the Muslim Personal Law Board objected, saying parliament cannot take away a man’s right to beat up his wife when the Quran allows him to do so. It was a shocking statement, indeed.

Verse 4:34 is often quoted by traditional jurists to say that the Quran allows the beating of one’s wife as a last resort. The verse has been variously interpreted and those sensitive to women’s dignity interpret it very differently. But before we discuss the verse and its different interpretations we should know the context in which it was revealed.

The earliest commentators have discussed the occasion of the revelation of every verse. Both Tabari and Kasshaf tell us that a woman complained to the Holy Prophet (PBUH) that her husband slapped her without any fault. “What should I do?” she asked. The Prophet said “Go and retaliate”. The woman was happy but it cast a gloom over the men. They came to the Prophet, asking him how could they exercise control over their families if their wives were allowed to retaliate against them. The Prophet said the ruling he gave was his opinion but that he would wait for Allah’s revelation regarding the matter.

Thus the verse 4:34 was revealed which reads as follows (usual translation): ‘Men are the maintainers of women, with that Allah has made some of them to excel others and with what they spend out of their wealth. So the good women are obedient (to Allah), guarding the unseen as Allah has guarded. And (as to) those on whose part you fear desertion, admonish them, and leave them alone in the beds and chastise them. So if they obey you do not seek a way against them.’

The word qawwam also has been variously translated: authority, ruler, etc. But it means one who maintains or looks after. It’s a functional term, not a term of superiority as usually made out by orthodox ulema.

Thus a wife who maintains her husband or runs the household can also be called qawwam. If both spouses earn and run the household together both will be qawwam. Nushuz (rebellion, desertion, misconduct) is also used in the Quran for men and women alike. Here it refers to women.

The word daraba has several meanings. It can mean to beat, chastise, strike off (remove) and, according to Imam Raghib in Mufradat al-Quran, ‘daraba ‘ala’ means when a camel goes near the she camel. But what exactly does it mean in this verse is the real question. If we interpret wadribuhunna in the light of hadith it means striking lightly.

Tabari maintains that when the Prophet was asked how much to beat one’s wife (if one must), he struck lightly with his kerchief and said no more than this, or that he was brushing his teeth and struck with the brush and said like this and no more. But if we try to understand this verse in the light of other verses about treatment of women, it is certainly not for beating them.

The Quran repeatedly tells men to treat wives with ma’ruf or ihsan (kindly or in a good manner). ‘Even when retaining her or divorcing her, treat her kindly’ (2:229). A woman enjoys equal rights and dignity with men and hence she cannot be treated in a manner which will hurt her self-esteem. Striking her, howsoever lightly, will also hurt her dignity and imply authority of men over women. It is un-Quranic in spirit.

The Quran frequently uses the word zawj for both husband and wife, implying one of the couple and clearly indicating that the husband is just one of the couple, not an authority figure. The Messenger of Allah (PBUH) never physically or mentally harmed his wives, let alone beat them.

We find this in the verses 33:28-29 and 66:3, that when his wives made demands on him he simply remained aloof, yet he always allowed them to argue with him. Thus we come to know how the Prophet treated his wives with dignity and never even implied that they should not argue with him.

One must reflect on the meaning of ‘wadribuhunna’ and accept it in the sense of ‘separating’ or ‘removing’ or in the sense in which Imam Raghib tells us. In that case it would mean that if a woman rebels, deserts or misbehaves then first persuade her; after that leave her alone; even then if she is not persuaded strike her off (divorce her). Or go near her (if we accept Imam Raghib’s meaning) after she has been persuaded to change her behaviour.

There is a great need today to read the Quranic verses from women’s standpoint if we have to restore to them the rights the Quran has given them.

The writer is an Islamic scholar and heads the Centre for Study of Society and Secularism, Mumbai.

Washington’s U-turn on bailout

THE US government has staged a ‘U-turn on its plans for bailing out the country’s financial system, saying that it no longer intends to buy the toxic mortgage assets at the heart of the credit crisis.

The announcement came less than six weeks after the Treasury won a gruelling battle with Congress for the authority to conduct the purchases. Hank Paulson, Treasury secretary, said that the remainder of the $700bn bailout fund will instead be used to buy more direct stakes in banks and other financial firms.

As he spoke, the Federal Reserve and other banking regulators made an unprecedented joint statement urging banks to use money already received from the government to issue new loans, rather than hoarding the cash to pay dividends and staff bonuses. The change of plan reflected the speed with which the credit crisis has overwhelmed government efforts to restore order to debt markets. They continue to be gummed up in a way that is starving businesses and consumers of loans and are throttling the US economy.

Mr Paulson’s new statement did little to reassure markets, which remain confused over the scope and ultimate effectiveness of government intervention. “I will never apologise for changing an approach or a strategy when the facts change,” he said. “During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on 3 October that we needed to act quickly and forcefully, and that purchasing troubled assets — our initial focus — would take time to implement and would not be sufficient given the severity of the problem.”

The Treasury’s original plan was based on the assumption that removing toxic mortgage assets from banks’ balance sheets would finally establish how much they were worth, thereby restoring confidence and enabling companies to raise private money.

But Mr Paulson said the Treasury would spend an initial $250bn buying direct stakes in banks before it turned to the mortgage purchases. Economists had argued that directly recapitalising the banks was more efficient, because institutions could leverage the new money to make many times that amount in new loans.

Although the Treasury Secretary said on Wdnesday that there would be a pause to assess the success of the initial $250bn investments, he said that more capital infusions were likely. The scheme would also be extended to non-bank institutions which operate in the securitisation market, buying and selling portfolios of credit-card debt and student and car loans. This securitisation market has also ground to a halt, with knock on consequences for consumer spending, and for colleges and the car industry.

However, Mr Paulson stopped short of agreeing to Democrat demands that Tarp funds be used to inject money into near-bankrupt car makers. He said other programmes should be used for helping companies such as GM and Ford, as they struggle to cut jobs and retool factories to make more popular, fuel-efficient cars. The first tranche of Tarp funds were handed to nine of the country’s biggest banks on October 14, but the money came with few strings attached, and critics say the firms have hoarded. The regulators’ joint statement on Wednesday was an attempt to cajole banks into responding.

— © The Independent