Reviving economic growth

FOR sometime now the indicators of growth and investment appear to have acquired permanence at a low level of equilibrium, with the real sectors of the economy continuing to experience depression-like conditions. Compared with te growth rates of 5.5 per cent throughout the 1980s and the first half of the 1990s, the economy has been crawling at just over 3 per cent on average since 1998-99.

It is also instructive that a high proportion of the growth in recent years, thanks to the way national income accounts are constructed, was attributable to the increase in expenditures on public administration and defence, which grew at seven per cent, one per cent and 18 per cent over the last three years (because of the heightened tension with India and the increased allocations for defence and the impact of the enhancement in the pays of the bureaucracy as a result of the decision of the Pay and Pensions Committee) compared with 6.1 per cent and — 2.5 per cent in agriculture and a mere 1.4 per cent this year), — 0.2 per cent, 8.6 per cent and four per cent in large-scale manufacturing and — 9.8 per cent, — 11 per cent and — 2.8 per cent in electricity and gas distribution in the corresponding years. In fact, the decline in the rate of growth in production of electricity and gas, the main sources of energy, are the most telling indicators of the slowing down of the economy.

An analysis of investments, a critical determinant of future growth, presents much the same story. Total investment rattled along at around 19 per cent per annum between 1980 and 1995, falling to 17 per cent during the second half of the 1990s and has been hovering around 14 per cent since then. Not only did public sector investment as a percentage of GDP fell from 6.4 per cent between 1995-2000 (from 8.6 per cent in the first half of the 1990s) to 4.7 per cent in 2000/01 as government cut expenditures to meet IMF dictated deficit targets, private investment on which future growth is expected to hinge declined from 9.4 per cent to 7.5 per cent over the same period. Subdued investment activity of both the public and private sectors has contributed to the industrial slowdown; which, in turn, has affected revenue collections and been instrumental in adding to the woes of the government as reflected in the present disarrayed state of its finances.

Although the financial system has enough liquidity, the demand for credit by the corporate sector continues to be sluggish; notwithstanding the rather weak explanations being pedaled by Islamabad that credit to the private sector has not really declined, and that it is merely an accounting outcome reflecting the fall in price of cotton, faster processing of sales tax refunds and duty drawback claims by the CBR and the private sector opting for Term Finance Certificates to raise funds from the market (incidentally at higher interest rates) instead of credit from the banking system. It is amusing that Islamabad thinks that industry that finds its profit margins squeezed is able to generate more resources internally to finance its needs. It is not willing to concede that entrepreneurs borrow less when there is a weakening of their confidence in the potential of the economy.

The business community has been demanding reduction in interest rates for financing investments and working capital requirements to boost industrial production and investment and thereby economic activity overall. The interest rate spread of banks increased from under three per cent during the second half of the 1980s to around seven per cent in the first half of the 1990s and to eight per cent in the latter half, partly owing to the large drag of their huge portfolio of non-performing loans and high overheads — overstaffing and over-branching, and advance income taxes paid (not refunded to them even when the refund due had been accepted by the tax authorities).

Explanations for the high interest rates have ranged from the large fiscal deficit to the remaining vestiges of the administered interest rate regime reflected in the interest rate on the instruments issued under the National Savings Schemes (NSS). Earlier (at least up to the mid-1990s), the necessity of financing high fiscal deficits had forced the State Bank of Pakistan (SBP) to impose high reserve ratios on bank deposits, which in turn made it necessary for banks to have higher lending rates — made worse by overstaffing and over-branching of banks, coupled with their huge infected lending portfolios.

The situation since the mid-1990s is somewhat different and needs to be explained. It is yet another structural outcome of government policies. Interest rates in Pakistan are not market-determined but are administered — where a floor is set by the nominal rates on financial instruments marketed under the banner of the National Savings Schemes. Although, these interest rates have been lowered in recent years from 15 per cent — 17 per cent per annum to 12 per cent to 14 per cent, they continue to be high; the corresponding rates for short-term to one-year T-Bills and bank deposits for similar durations are much lower (although still high in real terms) — of the order of six per cent to seven per cent. Moreover, up until recently the effective rates were even higher because of the tax-exempt status of incomes from instruments of the National Savings Centres. Taking the nominal rates on NSS instruments as 12 per cent, the current inflation rate of around three per cent and the gap between deposit and lending rates of three percentage points, the real interest works out to around 12 per cent. The spread between the NSS rates and the weighted average lending rate of the commercial banks varies by two to four percentage points indicating real interest rates of nine per cent to 11 per cent for at least the average customers. And although bank interest rates for lending have come down during this year by almost one and half percentage points as a result of the lowering of the income tax rates of banks and perhaps some improvement in their portfolios of non-performing loans, especially because of more cautious fresh lending by banks (enabling them to operate on smaller margins/spreads), the prevailing rates continue to be among the highest in the world.

In this context, therefore, the decision of the government to lower the return on the National Savings Schemes by two and a half per cent points is a step in the right direction, which should facilitate the downward movement of the lending rates of banks. That these schemes have historically also served as substitutes for absent social security schemes/welfare payment systems and safety nets in Pakistan is a subject that has to be addressed and which I would like to dwell upon in a future column.

However, lower cost of borrowings is, at best, only one of the factors influencing investment. Even if it is viewed as a necessary condition for increased economic activity, it is not a sufficient condition. There are several elements missing in the overall policy framework and its implementation arrangements for lower interest rates to have the desired effect. For investment activity to pick up requires the government to put in place other policy and administrative measures that have kept business confidence low.

Weak business confidence has not only adversely affected current investment and output decisions, it has also resulted in the postponement of projects and a slowing down of credit applications for fresh investments. The steady growth in bank deposits (in the absence of other opportunities and the purchase of foreign exchange from the inter-bank market by the State Bank) with reduced off-take of credit has induced liquidity in the system. Fears of accountability by NAB have also rendered banks shy of either lending or rescheduling or writing off bad loans. The softening in the inflation rate from the 9.7 per cent in the 1990s to 3.6 per cent in 1999-2000 and around four per cent since then reflects largely the role of the banks explained above, slackness in domestic demand (consumer and investment-related), the low inflation in internationally traded manufactures and a more open trade regime in Pakistan. Even the more comfortable level of foreign exchange reserves (having crossed $6 billion) also appear to be the result of a slackening in demand for imports due to slump-like conditions for industrial production.

The reduction in investment demand by the private sector is partly also owing to over expansion of capacities (built in the 1980s to satisfy the public sector demand for goods and services) and the rise in real interest rates because of the decline in the rate of inflation. The compression in the government’s expenditure programmes, growing external competition and acquisitions and mergers of domestic enterprises has all taken their toll. In view of the sharp cutback in government expenditure (which translates roughly to a reduction in overall demand in the economy of around Rs. 200 billion at current prices), a chorus is building up, advising the government to enhance its spending to drag the economy out of the trough that it finds itself in.

It is customary for governments to refer to external factors to explain the slowdown in growth. However, this time around September 11 did play its part, although there has been a marked downward shift in our trend of growth, suggesting that that the Pakistani economy will have to learn to live at a low-level equilibrium, and remain stuck with a low-growth and relatively high-poverty pattern of development. Is the economic slowdown due to cyclical factors, as some seem to believe? If so, then the management strategy to address this issue, in the face of declining investment and savings rates, could involve stimulation of demand, tax reductions and increased government spending — the latter on the plea that additional fiscal space has been created through the re-profiling of external debt and lowering of interest rates on government borrowings.

However, although some space has been created for additional government spending on infrastructure and other capital investments, because of the developments referred to above, there is one school of thought which argues that it is too early to view these outcomes as permanent; since expenditures on roads, dams, ports, related physical facilities, etc. will have to be made over several years to complete the schemes and the gains made to date are recent and too fragile to allow for comfort on their durability and sustainability. And if the factors are structural then the solution may not be that simple because: a) Remedies for cyclical factors may well conflict with remedies for structural factors; and b) The solution for cyclical factors depends not only on what happens in Pakistan but also what happens in the rest of the world.

This writer is of the view that some of the key problems that are afflicting growth in general and investment in particular are structural, and hence deep-rooted, in nature. The cyclical factors have got superimposed on it. So, if only the latter are addressed recovery will not be sustained through pump priming of the economy.

Polls in held Kashmir

THE six-year term of the current state assembly in Occupied Kashmir will expire in October this year. Its administration has announced that the next elections will be held soon. The All Parties Hurriyat Conference (APHC) has refused to participate in the forthcoming elections. It maintains that the poll exercise in the occupied territory had been initiated by India in 1951 only to mislead the world opinion by projecting it as a “political process” or elections as a substitute for plebiscite.

It, therefore, adopted a resolution on March 30, 1951, stating that any such action “would not constitute a disposition of the state” in accordance with the principle of a free and impartial plebiscite, to be conducted under the auspices of he United Nations as envisaged in its resolutions which were agreed to by Pakistan and India.

In a blatant violation of the UN Security Council resolution, a “Kashmir Constituent Assembly” was, however, elected in September 1951 to which the National Conference candidates were returned unopposed in all but two constituencies in which they defeated the independent candidates. The “Constituent Assembly” ratified Kashmir’s accession to India on February 15, 1954, and thus the UN Security Council’s apprehension came true. The UN Security Council rejected the “Constituent Assembly’s” ratification of Kashmir’s accession to India and adopted yet another resolution on January 24, 1957, reaffirming the principle that the final disposition of Kashmir would be made through a plebiscite under UN auspices.

The sham elections of 1951 have been followed by many more similar farcical elections which were also boycotted by the APHC which objected to their being held by the Indian election commission under the Indian Constitution. The APHC’s stand has been that the elections held under Indian occupation can neither be an expression of the Kashmiri people’s free will nor can they be a substitute for the UN-supervised free and impartial plebiscite.

India claims that a plebiscite is no longer needed as the people of Kashmir have already expressed their will in the elections. This argument is not, however, tenable as the elections never offered to the people of Kashmir the choice of whether they wanted to accede to India or join Pakistan. These elections cannot, therefore, be considered a substitute for a plebiscite pledged by both Pakistan and India to the international community. The mass uprising in the occupied Kashmir is, however, a manifestation of the Kashmir people’s total rejection of the continued illegal occupation of their territory by India.

One fails to understand by what quirk of logic India claims Kashmir to be its integral part when it has been proved beyond a shadow of doubt that the majority of the Kashmiri people wants to have no truck with it. India also knows that its favourites in Occupied Kashmir rule from the sand bunkers despite the presence of more than 700,000 troops there. They cannot even move freely in the territory they are supposed to govern for fear of public wrath. Yet, India has the audacity to claim that Pakistan is fighting a proxy war in Kashmir, a hoax fabricated by it only to conceal the Kashmiri people’s antipathy towards it and also to justify its repressive measures.

The people in Occupied Kashmir are so disenchanted with India that they have even rejected a costly development project that was announced by the prime minister, Atal Behari Vajpayee, during his recent visit to Srinagar. The Kashmiri people described this project as an election gimmick only to woo the voters in anticipation of the forthcoming polls to the “Kashmir Assembly.”

The people of Kashmir who have been cheated repeatedly through rigged elections feel betrayed and are outraged. They are convinced that through these “elections”, India has attempted to dampen their demand for self-determination. India, however, remains insensitive to the sentiments of the Kashmiri people and proposes to hold another farcical election in September/October this year, in a yet another attempt to hoodwink the international community. The whole world, however, knows that all the previous “elections” held in Occupied Kashmir have been manipulated. People were herded to the polling stations at gunpoint to cast their votes.

Apparently, India has not learnt any lesson from its past experience and continues to pursue its myopic policies as during the last fifty years or so. It does not realize that the drama of farcical elections enacted by it in Occupied Kashmir since 1951 has proved counter-productive. It has miserably failed to establish its credentials as a democratic and secular entity. Its consistent policy of hypocrisy, deceit and intimidation in Kashmir has backfired. Its obstinacy has become proverbial. Its state-sponsored terrorism and genocide in Kashmir have actually hardened the resolve of the Kashmiri people to struggle more vigorously for the attainment of their right to self-determination. The people of Kashmir are crying out for justice. they are neither terrorists nor “separatists” as India portrays them.

India ought to realize that, because of its ruthless repression in Occupied Kashmir and other dilatory tactics, the Kashmir problem has been aggravated further. The suggestion once made by Mrs Gandhi to convert the Line of Control into a permanent border was rejected by the APHC as well as by Pakistan. Recently a senior Vishwa Hindu Parishad leader has put out a feeler that the state of Jammu and Kashmir may be divided into three parts. Such innovative and impracticable ideas would only complicate the matter further and should, therefore, be avoided. The only viable option for India is to give up its obduracy and take bold steps to resolve the Kashmir dispute on the basis of the UN Security Council resolutions which still are the only legal foundations for a just and honourable solution of this conflict.

The writer is a former ambassador of Pakistan.

Citizenship Act violates women’s rights

AFTER browsing through the Citizenship Act 1951 of Pakistan the inescapable conclusion one draws is that ‘man is the fulcrum’ of and ‘woman an exclusion’ in the law governing citizenship in Pakistan.

Man is allowed to marry a non-citizen woman (though with the permission of the government in the case of government employees under the Government Servants (Marriage with Foreign Nationals) Rules 1962) and the wife acquires the status of the citizen after complying with legal provisions and procedures without delay. Fair enough. And their issues will be regarded ‘citizens by descent’. Section 5 of the Act reads: ‘Subject to provisions of section 3 a person born after the commencement of this Act shall be a citizen of Pakistan by descent if his father is a citizen of Pakistan at the time of his birth’. A woman citizen of Pakistan is also allowed to marry a non-citizen man but the Act bars her husband to get the citizenship of his spouse, a right given to man and denied to woman.

The contemplation of the Act on the legal status of non-citizen spouse of Pakistani woman has a number of implications and reflects ‘multi-layered discrimination’ against women in the Act. The Act restricts the right of woman to free choice of marriage, confining its exercise to the borders of Pakistan only. In case she steps out of the limits set by the law, she has to choose between two options: to leave her country of origin migrating to a country where her spouse resides or subject her spouse to the subordinate status of non-citizen in her country, no matter how long he stays in Pakistan. The Act does not care for it. The Act dissuades foreigners to marry Pakistani women in and from outside Pakistan, impairing women’s right to marriage. This is not the end, the effect trickles down to the children of female parent: they are not citizens of Pakistan either by birth or descent since the determining factor in their citizenship is the father’s nationality.

The Act is not only discriminatory prejudicing the rights of women but is also in conflict with the Constitution of 1973.

The Act goes against the grain of Universal Declaration of Human Rights the Convention on the Nationality of Married Women 1957 which has been signed by Pakistan in April 1958 (not ratified so far) provides in article 1 that ‘Neither the celebration nor the dissolution of marriage between one of its nationals and alien, nor the change of nationality by the husband during marriage, shall automatically affect the nationality of the wife’.

Pakistan has ratified the Convention on the Elimination of All Forms of Discrimination against Women 1979 and all its provisions are binding on the domestic courts in Pakistan. The only reservation Pakistan has made to Women’s Convention is that any provision conflicting with her Constitution shall not be binding but the reservation is of less significance for article 25 of the Constitution stands for the equality of men and women before the law and prevents discrimination on the basis of sex, the thrust of Women’s Convention. Article 25 of the Constitution absolves Pakistan of its international obligations undertaken under article 2 (a) of Women’s Convention that States Parties shall undertake to embody the principle of equality of men and women in their national constitutions. However, Pakistan defaults on the core issues of ending ‘discrimination against women in all its forms’ and ‘to modify or abolish existing laws ... which constitute discrimination against women’ contained in the same article.

The Act is in contravention of article 9 of the Women’s Convention.

Women are not treated equally in the Act because denying citizenship to alien husband of Pakistani woman amounts to ‘forcing upon her the nationality of the husband’. And also the children of woman married to non-citizen are not treated at par with that of man for the words used are in the Act are ‘father’ and ‘grandfather’ instead of ‘parent’ and ‘grandparent’. The children of woman married to non-citizens are outside the ambit of the Act.

The Act needs major overhauling to bring it in line with the Constitution and human rights law. The Constitution is the supreme law of the land making subservient all other laws to itself and any law that clashes with it shall stand null and void. The Act as it stands now clashes with article 25 of the Constitution and the conflicting sections of the Act should be amended. This will be doing the first phase of obligation under the Constitution and Women’s Convention: providing equal treatment to men and women in the letters of law. The second and most important is the implementation of the equality on paper to real situations of women in the country. The end of the first is the beginning of the second resulting in bettering the lot of the suppressed and the so far ignored segment of society. Pakistan has yet to begin in a number of areas, citizenship law is just one example.

Curbing the drug patent tricks

Patients suffering from anxiety disorders should have been able to get an affordable generic equivalent for the brand-name drug BuSpar when the patent on the drug expired in November 2000. They didn’t. Just hours before the deadline, BuSpar’s manufacturer, Bristol-Myers, filed a “secondary patent,” saying beneficial effects come from a metabolite produced by the patient’s body after BuSpar is taken.

The company’s ownership claim on the metabolite effectively barred the release of a generic version of BuSpar that would produce the same metabolite.

As outlandish as they may be, such bogus claims are common as drug companies increasingly resort to tricks aimed at delaying generic competitors.

Congress has a chance to slow the tricksters. Senate Bill 812, by Sens. John McCain, R-Ariz., and Charles E. Schumer, D-N.Y., and scheduled to be considered today in a Senate committee, would make it tougher for brand-name drug companies to keep generics off the market beyond the original patent. Brand-name drug companies have been fighting the measure tooth and nail. They assert, reasonably, that they are entitled to the law’s full patent protections for genuine innovations. The bill, however, wouldn’t undermine the sort of profit incentive that drove Swiss drug company Roche and the North Carolina biotech firm Trimeris Inc. to develop their promising anti-HIV drug T-20, unveiled Monday at an AIDS summit in Barcelona, Spain.

The bill does not alter the patent code. All it does is help get generics to market. Firms’ ability to collect triple damages for infringement of legitimate patents would remain. Generic drug introductions are automatically delayed for 30 months if a brand-name company files even a trivial patent claim. The McCain-Schumer bill would require companies to persuade a judge that their claim had merit before triggering any delay.

Since any wide-ranging prescription drug benefit for Medicare recipients seems dead for the year, the most that patients can hope for are actions around the edges, including the McCain-Schumer bill.—Los Angeles Times

Nazi elite in post-war Germany

Hamburg: It promises to be a hot summer in Germany when public television airs a five-part documentary series claiming to depict how a “Nazi elite” helped build post-war West Germany.

West Germany’s miraculous rise from rubble — the “Wirtschafts Wunder” or Economic Miracle of the 1950s — was due in large part to Nazi era figures in industry and government, according to SWR broadcasting, producers of the series to be aired on national television.

The fact that luminaries from pre-1945 Germany were able to step into positions of power and influence after the war was well documented at the time but has been swept under the carpet in subsequent decades, say the producers.—DPA

Corporate scandals hit US leadership

ONE White House official argues that Bush’s popularity is far more enduring than the fleeting support his father had during the Persian Gulf War. “Nine-eleven had a huge, deep, social-psychological effect unlike anything since the Kennedy assassination or Pearl Harbour,” the official said. But the stock market has disproved this claim. It has recently gone down to the levels of post September 11 days. A falling stock market leads to a fall in the savings and in the investments and never to a rise in the popularity index of President Bush.

The danger for Bush, said GOP pollster John McLaughlin, is that 70 per cent of voters who owned stocks supported Bush and the Republicans in 2000. Now those voters have seen their savings shrivel.

During the Gulf war, senior Bush was quite popular. But the repercussions of war resulted in the weakness of economy. That led to his failure in elections and he could not continue as the president of the United States for the second term despite his military victory in the war. A similar fate appears to be waiting for his son.

Bush had an approval rating of over 90 per cent during the Afghanistan war. Thereafter, it started sliding downward. Still the approval rating for George Bush is more than 70 per cent. It is still a high percentage for winning the incoming elections for the GOP candidates in November. Democrats have been looking out for some non-terrorism issue. They have found one now in the the increasing scandals in corporate America.

“You see now what it means to have an administration that’s that committed to fighting and working on behalf of the powerful, and letting the people of this country get the short end of the stick,” Al Gore told his supporters at a Manhattan fund-raiser. It was his strongest attack yet on Bush’s economic policies and a preview of the likely Democratic strategy for ensuing elections. “What we see now is a lack of confidence in our national economic policy, in the integrity of our accounting system, in the way the government is being run,” Gore told in Lot 61, a trendy Chelsea night spot. The private companies, he said, “are not telling the truth about their future liabilities so they can shovel money out to executives at the top. That is exactly what the Bush-Cheney tax plan will do. They are misleading the country about the extent of the liabilities they are putting on us ... on you.”

The concerns of the voters in the countryside are completely different from the terrorist scare Bush is trying to stir up to boost his popularity ratings. From sparsely populated Montana and North Dakota on the Canadian border to booming Arizona and Texas on the Mexican line, in all, 13 plains and mountain states provided Bush with 99 of his 271 electoral votes. He needs them all for re-election in 2004. But there are rumblings among his farmland faithful that the president has become too globally concerned at their expense — Afghanistan, Israel and the Mideast, India and Pakistan. Terrorist threats everywhere. Here’s what was found uppermost in the minds of the people in a dozen Midwest and western states:

* Natural disasters, from fires and floods to droughts and tornadoes.

* The price of corn and cows, soybeans and sows.

The revelation of massive bookkeeping fraud at the telecommunications giant is unlikely by itself to be particularly harmful to Bush, the Republican and Democratic strategists agree. At the same time, however, both sides believe accumulating economic bad news may be reaching a critical mass, creating public disenchantment that could stick to the Bush administration and congressional Republicans in November.

A wave of corporate scandals — WorldCom, Tyco, Global Crossing, Adelphia Communications, Andersen, and Enron — has hammered consumer confidence and plunged stocks deeper into a bear market. The employment picture is sluggish, the federal budget has returned to the red, and the Congress must pass a law to borrow more money. The trade deficit is growing, the dollar is falling, and health care costs are rising.

The Democratic Party, hoping to build this sentiment, circulated an editorial from the Des Moines Register stating that “President Bush’s economic policies aren’t working. The government is plunging deeper into debt while the stock market falls, corporate scandals mushroom and the economy seems to be in a state of limbo.”

Besides, Bush advisers also acknowledge that the economic bad news could eventually be damaging to the president. “Obviously, if events in the economy and the stock market don’t improve and there are not a lot of barometers of victory in the war on terrorism, those can have a cumulative effect,” said Matthew Dowd, polling coordinator for the Republican National Committee. “In the long term, things like that will have an effect.”

In the Pew poll, 35 per cent of those who approve of Bush said they would vote for the Democrats in the fall — a greater percentage of defectors than the 24 per cent of Clinton supporters in 1998 who said they planned to vote the Republican. And slightly more voters said they planned to back a Democrat in November than a Republican.

An independent pollster, John Zogby’s latest survey gave Bush a support level of 69 per cent — but only 51 per cent said Bush deserved to be reelected. At the same time, polls indicate fewer Americans think the country is headed in the right direction. A poll released recently by Democratic pollster Stanley Greenberg found that the Americans, by 10 percentage points, think the country is on the right track; late last year, the margin was as high as 38 points.

People are feeling that there is another crisis of stunning proportions unfolding before them, this one a crisis of confidence in the markets and the economy. Enron, Global Crossing, Tyco, and now WorldCom have all become household names — not, however, for the reasons that corporations routinely spend millions to make their names into brands. But Bush, the nation’s CEO, has had little to say about it, in public at least.

Bush has a chance to be the Teddy Roosevelt of his time. It was 100 years ago, and Roosevelt, a Republican president, stood up to the most powerful businessmen of his generation — J.P. Morgan, John D. Rockefeller, James J. Hill — and declared that the giant financial and industrial trusts had to be stopped. Roosevelt pounded the table, drafted legislation, and directed his justice department to sue to break up the trusts run by men whose ambition had grown into a threat to the nation.

“He was willing to put the whole power and prestige of the White House on the line,” says presidential scholar Douglas Brinkley of the University of New Orleans. “It took extreme courage to do what Roosevelt did. He never cared about public opinion polls.” But unfortunately Bush is not like Teddy Roosevelt. He cares for the opinion polls. He cares for the interests of the big business. He and his Vice President are both big businessmen. He has planned a $200 billion tax cut to favour the big business in the name of the fiscal stimulus. But the weakening of demand caused by lower share prices will offset both the effects of the presumed fiscal stimulus as well as of the further reductions in interest rates. Both these weapons of boosting the economy will become ineffective. Only the rich will be benefited by tax cuts in a depressed stock market atmosphere.

By threatening to go to war against the countries which have never attacked the United States, and boasting about his power to dispose of any political regimes not to his liking, Mr. Bush has lost the respect of both America’s military enemies and its allies. Now the loss of international respect for the United States is moving a step further.

America has forfeited its global military leadership by blustering against President Saddam Hussein and failing to curb Mr. Sharon. It has forfeited its global diplomatic leadership by abrogating treaties on climate change and criminal justice. It has forfeited its global economic leadership by protecting its steel companies and increasing subsidies to farmers. Now America is forfeiting its global business leadership by failing to enforce proper financial practices and ethical standards. This loss of American leadership will probably be the most enduring legacy of the scandals on Wall Street.

Push is on for AIDS vaccine

Barcelona: Development of a vaccine against the deadly AIDS epidemic is moving closer to reality, according to discussions at the 14th International AIDS conference that came to a close on Friday.

But much of the focus of the conference was on the world’s 40 million people currently living with HIV/AIDS, particularly in developing countries where up to 25 per cent of the prime work force and parents suffer from the disease.

The epidemic has already reduced life expectancies to less than 40 years in seven countries in Africa, the US Census Bureau reported earlier this week.

Botswana, for example, in southern Africa, would have had a life expectancy of 72 years, but that has fallen to 39 since the AIDS pandemic began. That figure is expected to drop to 27 years by 2010.—dpa