Rising trends in exports

INAUGURATING the Expo Pakistan 2006 on Wednesday in Karachi, President Pervez Musharraf spelt out before representatives of 57 countries the official strategy to boost exports and realize its potentials that have recorded a sharp jump from $7.8 billion in 1999 to the latest estimates of $18 billion for this year. In absolute terms, the export performance has been impressive but it is not moving fast enough to outpace imports and reduce the widening trade deficits, now at record levels. Aware of the dire need to raise exports and encouraged by the positive trends, the government has set an export target of $20 billion for 2007. While the government can take credit for improving the market access and for providing the enabling environment, the exporters have also made tremendous efforts, particularly in the field of textiles, by raising productivity, value-addition, quality and by making prices globally competitive. These have been done by modernization of industrial capacity and better management practices by leading industrial groups. But more needs to be done to improve quality, enhance value-addition and productivity in view of the fierce competition in the international market and the global demand for better quality of goods at lower prices. It is the government’s responsibility to reduce the cost of doing business by revamping infrastructural facilities, including transportation costs.

But the key factor retarding faster growth in exports is that overseas sales of merchandise are concentrated in few products and fewer markets. The president has rightly observed that in the past the country was stuck in exports only of agricultural products and textiles. Highlighting the untapped potentials of exports, the President pointed out that engineering goods that account for 61 per cent of the international trade against six per cent of textiles, have been ignored. Although Pakistan is the one of the largest producer of milk, dairy products, these are not being exported in spite of the fact that there is a ready market in the Middle East. Also, a wide range of products can only be produced by accelerating export-oriented industrialization. For this the foreign investment should be encouraged to play a vital role by locating or re-locating production facilities in Pakistan for serving the regional markets. Here too, the government has shown foresight and realism by ratifying Safta along with the South Asian countries. Another factor is growing Economic ties between Pakistan and the Middle East. Pakistan has also signed bilateral trade pacts, free and preferential trade agreements with many South Asian and other countries.

In view of the changing global scenario, while expanding traditional trade ties especially with the West, Pakistan has to seize the opportunities offered by the fastest growing economies of the world. No doubt, efforts have been made to diversify the markets yet Europe and the United States still account for more than 50 per cent of our exports. For diversification efforts to succeed, the government needs to provide special incentives for manufacturing a wide range of new products for exports and for exploring new markets. The key to larger exports lies in raising productivity by upgrading of management skills and technology, by investment in human capital and in developing trade skills. As the president rightly said, the solution lies in adopting long-term strategies and innovative methods. This is the demand of the global market which exporters and government agencies must bear in mind in order to keep the momentum of exports growing.

Widening gulf

THE gulf between the Palestinian Authority and Israel seems to be widening. The victory of Mr Ariel Sharon’s Kadima party in the Israeli elections is not going to help matters. Mr Ehud Olmert, so far acting as prime minister because of Mr Sharon’s illness, will now head the new cabinet. In Tuesday’s election, Kadima captured 29 out of Knesset’s 120 seats and will need the support of other parties to form a coalition. Likud, headed by Mr Benjamin Netanyahu, a superhawk, is unlikely to join the coalition. But, when it comes to policies towards the Palestinians, there is little difference among Israeli politicians — for all of them are hawks. This means that Mr Sharon’s moribund condition and Mr Netanyahu staying out of it are unlikely to make much difference to Israel’s land grab policy. An indication of what the new government’s policies are likely to be has been given by Mr Olmert, who has said several times that Israel will draw its borders unilaterally by 2010.

Mr Olmert’s victory coincides with the assumption of power for the first time by Hamas in Palestine. The new prime minister, Mr Ismail Haniye, made a conciliatory speech, asking Israel to take “courageous steps” to ensure the emergence of a sovereign Palestinian state. But within minutes of his swearing-in ceremony, e-mail messages went out from the State Department to all diplomats and contractors, asking them not to have any dealings with the Hamas government, including Hamas legislators not members of the cabinet. Canada, too, followed suit. Meanwhile, the Arab League summit meeting in Khartoum has lent full support to the Hamas government and rejected Mr Olmert’s policy on borders, saying that this would amount to “fixing Israel’s borders in a way that fulfils its expansionist greed”. The breach between the two sides is obviously widening. Even though the US will maintain contact with President Mahmoud Abbas, cutting off all contacts with Hamas will further strengthen Mr Haniye’s extremist policies. One wishes Washington had waited for the Hamas government to settle down before taking such an extreme step. The US decision will strengthen extremism on both sides and make a revival of the peace process virtually impossible.

Water conservation

THE early completion of the K-3 water project might be a feather in the cap of the Karachi Water and Sewerage Board, but one wonders whether it is the right time for the authorities to prepare for yet another costly project aimed at enhancing the city’s water supply. There is no doubt that even with the K-3 in operation, the gap between demand and supply will not be completely plugged, although an additional 100MGD of water will be made available to the residents. Moreover, every year a sizable number of migrant workers from upcountry settle in Karachi, putting pressure on existing resources. These factors necessitate a yearly increase in water supply to meet the growing demand. However, implementing expensive projects does not have to be the only way of solving water problems, and the KWSB should recognize this fact before launching another major scheme. It should keep in mind that with water already scarce at source, projects depending on supply from the Indus river or Hub dam might not be viable in the long run.

Instead, the authorities should place greater significance on water conservation and take steps to ensure that water is not lost through leakage and theft, and, where possible, it is recycled. About 30 per cent of the water supplied to Karachi is lost through a faulty network and theft. Besides, there is also carelessness at the consumer end and very often much more water is used at home than the amount actually needed, without any thought being given to the needs of those who are deprived as a consequence of inequitable distribution. One reason for this wastage at the consumer level stems from the poor billing system of the KWSB which has not been able to collect much of its dues. It must correct this anomaly if it is to prevent wastage by consumers.

US nuclear policy in South Asia

THE US Assistant secretary of state for South and central Asia, Richard Boucher, told the South Asian journalists that “Pakistan’s energy requirements and economic needs are different from those of India”. Therefore, he concluded that that the country should not expect similar arrangement the US had made with India. When asked when Pakistan would be able to share the nuclear technology with the US for civilian purposes, the answer was “now, in ten years, 20 years or 50 years. No, I don’t see anything like that on the cards for Pakistan”.

This seems to be the affirmed policy of the US which is based on the perception that India is emerging as an industrial country whose consumption of energy will be doubled during this decade. Therefore, it will have to diversify its source of energy supply by having recourse to alternative fuel. Justifying the nuclear deal with India George Bush argued that it was a boon for the environment and a way to cut the US gas price. Given George Bush’s opposition to the Kyoto Treaty, one is rather surprised to see that the deal has made him an enthusiastic environmentalist.

The US president and his team do not think that the transfer of civilian nuclear technology to India without fool-proof safeguards would accelerate India’s weaponisation programme because even if it were to bring 65 per cent of its nuclear plants under the non-proliferation regime, the remaining 35 per cent would be able to manufacture 50 nuclear bombs annually. But Richard Boucher thinks that once India opens 65 per cent of its civilian nuclear reactors for international inspection, the IAEA regime would ultimately cover 90 per cent facilities.

What is the basis for this optimism, especially when India has refused to stop its production of fissile material-plutonium and highly enriched uranium during the negotiations culminating in the July agreement with the US over the nuclear cooperation, one may ask. Further, the Bush administration dropped its insistence on India’s submitting all its power-generating nuclear reactors to IAEA safeguards, leaving only two breeder reactors outside the NPT regime.

Even this arrangement, opines Robert J. Einhorn, the former assistant secretary of state, during 1999 and 2001, would have enabled India to produce sufficient plutonium for making seven to ten bombs annually. Again, under the March 2 India-US nuclear agreement, India can construct reactors in the future and they will be outside the international safeguard regime.

What havoc the US-India nuclear energy cooperation agreement can play with the NPT can be judged by the fact that Russia has agreed to supply fuel to India’s Tarapur plant, a deal that was blocked by the US but has come through, thanks to the above-mentioned agreement. It is ridiculous for the Bush administration to remonstrate against Moscow for not holding up the deal until the Senate ratification of the India-US agreement. For George Bush has sought to stay the 45-member Nuclear Suppliers’ Group until the Congressional clearance.

The US administration has been pushing the Congressmen to approve of the controversial agreement without any condition for fear that any reopening of the negotiations might derail the agreement itself. Clearly, quite a few American lawmakers have voiced their concern over the transfer of nuclear technology to India because of its implication for the non-proliferation regime.

For instance, Rep. Henry J. Hyde, the Republican chairman of the house international relations committee, believes that the members of Congress “may seek conditions for its approval” while the Democrat Rep. from Massachusetts has openly opposed the treaty because it may trigger the proliferation of nuclear weapons with China, Iran and others following suit. To quote him, “It is a domino effect that will lead to complete collapse of the nuclear proliferation regime”.

The question is: when George Bush is opposed to allowing Iran to conduct research in the minimal enrichment of uranium under the IAEA inspection, why is he abetting India in incremental production of nuclear weapons? One can understand the US concern about what it calls the clandestine nuclear weapons manufacturing activities of Iran and Democratic People’s Republic of Korea, but one fails to understand the US refusal to provide nuclear technology for peaceful purposes to Pakistan. To say that Pakistan’s need for nuclear fuel is not the same as that of India does not sound convincing.

A cursory glance at Pakistan’s rising oil import bills and their impact on the country’s balance of trade and foreign exchange reserve would indicate its pressing need for alternative sources of energy. Pakistan’s total need for crude oil is about 240,000 barrels a day and it imports around 177,000 barrels of oil while it produces 63,000 barrels per day.

In addition, Pakistan imports 45,000 barrels a day from Dubai, 15,000 barrels from Qatar and 6,000 barrels from Iran. Thus oil was the second largest item to be imported at the cost of 3.033 billion dollars in July-December, 2005. It was next to machinery that cost 3.496 billion dollars.

Thus, it is crystal clear that our existing foreign exchange reserves of 12.5 billion dollars can ill afford to meet our total import bill for six months amounting to $13.65 billion. Pakistan will be needing 8,800 megawatt electricity soon. As compared to this, India’s position is not as precarious. In the light of this balance sheet, it is Pakistan and not India that deserves cheap nuclear energy producing facility.

Another argument against transfer of nuclear energy technology to Pakistan is that its track record of proliferation is such that it cannot be trusted with any dual-use technology, especially the nuclear one. This argument has some force, given the shady deals with foreign powers in certain components and the blueprints for making the bomb, but the Musharraf government has taken prompt and stringent measures to bust the racket.

However, the US and western powers are not satisfied with the action taken by the government. Nor are they convinced about Islamabad’s counter-terrorist operation against the remnants of the deposed Taliban regime in Afghanistan allegedly hiding in Pakistan. In vain did the Musharraf government go to extreme lengths to catch, kill and deliver the suspects to the US amidst accusations of violation of human rights and extradition laws. It is a constant blackmail of the Musharraf government by its allies. It is about time this blame game stopped.

The West knows how Israel got the bomb and has, according to CIA estimate, piled up 400 atom bombs and keeps threatening its neighbours to strike. When Mordechai Vanunu, an Israeli nuclear technician, made a sensational disclosure in 1986 about the Israel’s bomb-making, it was as scandalous a news as that of Dr Qadir’s network. But neither the IAEA nor the standard bearers of non-proliferation took any notice of the crime. Instead, poor Vanunu was abducted from London via Rome en route to Israel, tried for high treason and sentenced to 18 years in prison by an Israeli court.

Neither the US nor its western allies admonished Israel for its clandestine bomb-making and violation of human rights. No chancellery of the West ever demanded of Israel to sign the NPT and dismantle its nuclear weapons industry. Why would they do so when France and later the US had helped Israel make the bomb?

Another tale of proliferation is of India. According to Joseph Crincione of Carnegie Endowment for International Peace, Canada provided a nuclear reactor to India on the latter’s pledge to use it only for peaceful purposes but it reneged on its undertaking and took out fuel rod and detonated its first nuclear device in 1974, denying that it was a bomb. Later, it developed its nuclear weapons surreptitiously and exploded the bomb in May 1998, overturning the balance of power in the region.

Thus imperilled, Pakistan had to counter it in kind amidst the outcry of Islamic bomb by the western media. So much about India’s trustworthiness about the super-bomb. Now the US with its discriminatory nuclear policy in South Asia, is deliberately contributing to India’s nuclear weapons manufacturing programme in order to put it against China.

This is a dangerous policy which will unleash nuclear arms race not only in Asia but further afield involving Brazil, Argentina, Venezuela and others.

The Pakistan foreign office and the foreign minister have refused to accept the discriminatory US nuclear policy which they see as a prescription for proliferation and arms race.