War and oil supplies

THE State Bank of Pakistan through its quarterly report on the state of the economy released on Thursday has warned of a loss of a billion dollars due to higher oil import bill in the wake of the Iraq war which incidentally began the same day. However, the report hastens to add that it would be possible to absorb the impact of this loss by drawing upon the foreign exchange reserves of over $ 10 billion. On the face of it, the SBP’s assessment about the estimated losses to the country’s economy and its ability to absorb it appear to be correct. But then, more than the import bill, what should be a matter of real concern for the country today is the prospect of disruption in supplies as shipping in and through the war zone may be seriously disrupted if the war continues, say, for a week. In the event of further prolongation, the country would face serious shortages of oil as it does not have the capacity for more than three weeks’ reserve stock. In such a situation Pakistan may face the problem of obtaining supplies at a price much higher than the market rate. In fact, the price is not a matter of serious concern for Pakistan because it is already getting bulk of its oil supplies from Saudi Arabia at highly concessional rates and that too on a deferred payment basis. Some other Gulf countries too are supplying oil to Pakistan at concessional prices.

If oil supplies are disrupted, say, beyond three weeks, things may become pretty serious for the country’s already recession- ridden economy. This is what should now be worrying the official economic managers who should be concentrating their efforts and attention on exploring alternative sources of supply in order to avoid serious jolts to the economy. In that context, the present sizable foreign exchange reserves may not be of much help except in terms of its cushioning effect for a while. The official economic managers do deserve credit for managing to accumulate over $ 10 billion in the FER. But what have they done with this record reserves of foreign exchange? The dollar is losing fast against all other hard currencies, more so in the wake of the war. This will bring down the purchasing power of the forex reserves. Also, by not investing part of the accumulated dollars in projects such as those for expanding the existing oil storage capacity, we have rendered the reserves unproductive.

There were enough warnings of what was to come because for the last one year so President Bush was blowing hot and cold about Iraq and the ‘axis of evil’. By neglecting to put the accumulated dollars to some productive use, the planners and economic managers have only made the situation more uncertain for the country’s economy. Now, faced with the possibility of a long spell of disruption in oil supplies, it would be advisable for Pakistan to get in touch with Iran to probe the possibility of obtaining supplies from that country by sea or by land route through the Balochistan-Iran border. This should not pose a big problem, because the route is already in use for smuggling of oil from Iran to Pakistan. Iran is not very happy over this clandestine oil trade and Pakistan too loses a lot of revenues as a result. An opportunity has been offered by the Iraq war now to regularize this supply route for mutual benefit.

Anti-war protests

HUNDREDS and thousands of people across the country have been taking part in demonstrations against the US-led war on Iraq — part of a global wave of anger and resentment aimed chiefly at America and Britain. The Muttahida Majlis-i-Amal (MMA) has been in the forefront of the protests, organizing demonstrations in major cities. Mobilizing supporters for them seems to be not a difficult task since the issue is a highly emotive one, with a distinct religious overtone. Representatives of secular society and non-religious groups such as students, activists, lawyers and journalists have come out on the streets but in far smaller numbers — quite unlike the trend in much of the rest of the world. While leaders of most major political parties have spoken out against America unequivocally inside parliament, most of them have not been seen protesting on the streets, with the exception of the MMA.

As the war and the bombing of Iraq linger, the magnitude of the rallies could well rise. So far they have been orderly and peaceful with no reports of violence. However, emotions run high and it is important for the protesters to remember that the point of taking part in an anti-war rally is to show support for, and solidarity with, the Iraqi people. There is bound to be immense anger and frustration, and perhaps hatred, directed towards America and Britain, but no purpose would be served if these were to lead to acts of violence or vandalism inside Pakistan. Calls have been made by some religious leaders for launching a jihad against American interests. However, it needs to be remembered that most past attacks inside the country on western interests have caused more harm to innocent Pakistanis than to anybody else. So over-zealous protesters would do well not to adopt such a course of action. People have every right to express their feelings and support for the people of Iraq in their time of crisis but in a peaceful and non-violent manner. The last thing Pakistan needs at this time is a law and order situation.

Checking food adulteration

INADEQUATE laws and poor enforcement remain one of the biggest hurdles in the way of checking food adulteration in Punjab. The pure food laws are not stringent enough. What is more, with the introduction of many new food items in the market, the rules have generally become outdated. Failure to check counterfeit beverages and substandard ice cream can be attributed to this problem. But the tragedy is that many items of daily use whose purity can be checked if there is proper enforcement are also freely adulterated. Data available with the Lahore city district government’s food laboratory show that in recent years almost 40 per cent of the samples of cooking oil, food colour, ghee, biscuits, curd, chillies, pastries and chocolates were found adulterated.

The problems do not end here. Customs officials release imported foodstuffs carrying no expiry dates without observing the formality of getting the quality and purity of the merchandize checked and certified by food officials. Unfortunately, the practice of food magistrates and inspectors inspecting manufacturing units producing foodstuffs has been discontinued since the establishment of district governments. One proposal is to make ISO certification compulsory for foodstuff manufacturers. However, such legislation has not been enacted to date. Adding to the complications is the deplorable condition of food laboratories in the major cities. The shortage of qualified analysts and inspectors to collect and test samples has made the task even more difficult. However, in view of the grave hazards posed to public health by rampant adulteration, it is necessary to update the rules, strengthen the infrastructure for enforcement and rigorously implement the law.