Implications of the failure at Cancun

By Shahid Kardar


THE success of the Doha round and the deliberations in Cancun in liberalizing the global trading system was going to be necessary for Pakistan’s success in globalizing its economy and accelerating growth. Globalization has to be viewed as an opportunity to access better technology, additional markets and more foreign investment as a means to enhance the prosperity of the people.

Therefore, although the collapse at Cancun is being billed by some as a victory, I for one believe that this failure will severely set the objective of a rule-based global trading system back, thereby hurting the objective of growth and poverty reduction.

There is no doubt that we got a raw deal from the developed countries in the Uruguay round when they agreed to: (a) phase out the Multifibre Agreement (MFA) over a longer period; and (b) introduce agricultural trade liberalization in return for us accepting the TRIPs agreement on intellectual property rights.

The liberalization of trade in agricultural commodities was more in the form of an illusion while the phasing out of the MFA was back-loaded (much more gradual that than promised) benefiting developing countries after 2006; although, this writer, for one, believes that the 10-year phase-out period has helped our textile industry to prepare for the eventuality for more intensified competition that it would have found pretty difficult to cope with earlier.

Similarly, the introduction of a regime of uniform patents was highly unfair for a patent was to have the same degree of protection whether it was a process for the innovation of a product or the product was a life-saving medicine or a new toothpaste. A key developing country leader, India, was enticed by the gains of copyrights that it could see coming its way for its films.

It is also difficult to argue against those who demand an agreement to facilitate and liberalize movement of people across borders if the WTO’s stipulations on services are to the implemented in spirit.

It is true that the rich countries — the EU, the US, Japan, Switzerland and Norway — by spending almost a billion dollars a day on subsidies and providing heavy protection from competition to their farm produce are causing great pain to developing countries. But since our government is also satisfying strong political constituencies by protecting the powerful large land owners, it is not taking an aggressive position on greater market access and has preferred a gradual opening up of markets.

Such a strategy is contributing little to facilitate the objective to improve the welfare of ordinary Pakistanis. The huge army of the vulnerable poor and the oppressed small farmers and low or unskilled workers in whose name these protectionist measures are being proposed and justified have suddenly become the darlings of our rich farmers, the bureaucracy and even a significant chunk of inefficient industry.

The government makes a case for going slow on reforms in the agriculture sector on grounds of food scarcity. However, the need to tackle food scarcity problems, creates a safety net for the poor and relates to risks faced by small farmers. This group falls within the purview of domestic policy and should be tackled accordingly. Using trade policy to achieve such objectives would be far more costly and also less effective.

In the opinion of this writer, much of our inability to augment our share in international markets and attract foreign investment has more to do with the constraints within the domestic economy, including issues of the image of the country, political instability, a weak law and order environment, poor physical infrastructure of ports, roads, railways and telecommunication networks, the legal and tax-related difficulties of closing non-profitable enterprises and inefficiently operating labour markets.

At one end of the scale, labour laws, regulations and procedures continue to be in a time warp and, at the other end, textile processing units in SITE, Karachi, accounting for 40 per cent of national production get water that is less than 25 per cent of their requirement. As a result, whereas between 1990 and 2000 China’s share of labour intensive manufactured exports to the US grew 12 to 25 per cent and from three to nine per cent to EU, our overall share in global trade continues to be 0.17 per cent.

In my view, greater multilateral openness of the economy is likely to benefit the poor more since it will mark the death knell of some of the parasitic and inefficient manufacturers who became captains of industry during the years marked by permits, access to funding through nationalized banks based on connections and state patronage, and under-priced cash crops like cotton or are continuing to prosper because of continued subsidies or high protection walls for such industries as producers of automobiles, automotive parts, sugarcane, polyester and fertilizer.

We are making a mistake in demanding from the developed countries non-reciprocity and a differential treatment for poor countries. Recognizing the disparities in the levels of development, asking for special and differential treatment for developing countries should only mean a longer period in which to make the same adjustments that developed countries are being asked to make. We should only be asking for a longer period of, say, another 10 years of lower tariff levels (all countries are currently required to reduce tariffs as of 2005 that are above 15 per cent likely over five years to 15 per cent in 2010) and implementation of the same rules and commitment rather than seek a different set of rules and reduced levels of commitment.

After the breakdown at Cancun we could now see a slowing down of the WTO machinery which will contribute to growing protectionism in developed countries and more vigorous and fast track pursuit of bilateral trade deals and pacts. The largest importers in the world — the US, EU, Japan and S.E. Asia — are already establishing free trade areas without Pakistan’s representation in any of these associations. Once these are fully functional it would be difficult for our exports to enter these markets while having to compete with those with preferential arrangements within these trading blocs.

Taking the case of Pakistan’s textile industry, it has encountered a host of problems in recent years, ranging from technological backwardness, excess capacity built with expensive funds, loan defaults, etc. Resultantly, their ability to expand and modernize has been restricted, affecting the productivity and quality of their products. Its new challenges include the trend to create regional trade pacts and the consolidation of retailing power in major export markets.

With changing consumption patterns and fashion trends, there will be demand for greater variety and higher quality value-added products and services, much shorter production cycles and reduced prices from a more competitive post-quota world. Many large multinationals are also shifting their production facilities to low cost countries like Bangladesh with arrangements for buyback of output. In contrast, there is hardly any foreign investment in our textile sector. At the same time, ten former economies of Eastern Europe will join the EU next year and several of them are already major suppliers of textile products.

With the stakes growing sharply, our textile industry requires major systems integration and supply chain efficiencies to establish commercially viable links with customers. To be fair to the textile sector, it is preparing itself for the emerging challenges but much remains to be done for all sub-sectors of the textile industry in the value chain to be able to face international competition in the post-2004 world.

Hence, a more sensible strategy would be for us to push for multilateral liberalization that results in bringing down the tariffs as close to zero, as possible so as to reduce to minimum the advantage for others in these trading blocs.

The writer is former finance minister, Punjab.

Loose uranium

DESPOTS and terrorists seeking nuclear weapons need not produce their own bomb materials. Nor do they need the cooperation of a government. The frightening reality is that highly enriched uranium suitable for weapons can be found at more than 130 sites in 40 countries, many of them lightly guarded or supervised by poorly paid and demoralized officials.

Last month the United States and Russia quietly eliminated one of those targets, transporting 30 pounds of weapons-grade uranium from a nuclear reactor facility in Romania to Russia, where it will be converted into a form not suitable for bombs. The secret operation, paid for by the U.S. Department of Energy, was the second such recovery mission in a little over a year, and a praiseworthy example of U.S.-Russian cooperation.

Yet compared with the overall threat, the Romania extraction was a drop in the bucket. At this rate, it will take a quarter-century to recover all the bomb-grade materials at the two dozen sites identified by the State Department as most urgent _ not to mention those scattered around the rest of the world. In the meantime, they offer a temptingly soft target to terrorists seeking a short cut to a bomb. The Bush administration has been slowly awakening to this huge problem, but it needs to accelerate its efforts and do more to overcome resistance at home and abroad.—The Washington Post

Plans for agitation

By Anwar Syed


PROFESSING to be tired of the government’s evasiveness and procrastination in ten months of negotiations concerning the LFO, the MMA says it is ready to turn to “direct action” to bring General Musharraf and his government down. It will contact the masses, tell them how the general has denied them “real democracy,” bring them out on the streets to shout that they will no longer tolerate this violation of their rights and, if he still does not see the light of reason, they will drive him out of power. One may wonder if the MMA’s plan will work.

Taking power away from a dictator without resort to violence is often said to be impossible, that is, until it happens, and then observers are likely to say that it was bound to happen. There are instances in which mass movements have secured regime change and others when they have been suppressed. “People’s power” was mobilized to overthrow Ferdinand Marcos in the Philippines and General Augusto Pinochet in Chile. But proponents of democracy who had gathered in the Tiananmen Square in Beijing, and those who followed Madam Aung San Su Kyi in Burma, got nowhere.

While we cannot claim to have a sure prescription for the success of mass movements, it is possible to identify certain facilitative agents: (1) freedom to speak and assemble; (2) attainable goals that will invite the allegiance of large segments of the population; (3) issues capable of arousing passions; (4) presence of second-ranking leaders who may keep the movement going if and when the top leaders are arrested and removed from the scene; (5) ability to create splits within the ruling group; (6) financial support of merchants; (7) possibility of accusing the regime of betrayal of national independence and/or vital interests.

A protest movement is not the same as an armed revolt even though it may, on occasion, develop into one. The MMA is not contemplating a “mutiny.” It is talking of a non-violent movement that will defeat the government by clogging its wheels and bringing it to a grinding halt. It is planning to launch a movement of “passive resistance” and “civil disobedience.” But one should be aware that even when such movements are intended to be non-violent, they do often pick up elements of violence along the way.

The only mass movements that pulled down a regime anywhere in the Muslim world were the one that ousted Ayub Khan in March 1969 and that which drove out the Shah of Iran in February 1979. It should be useful to take a quick look at them. First the Iranian case, because here the ulema played a central role in accelerating the movement.

The Shah’s ouster, and secondarily the end of the monarchy, became the protesters’ goal because: (1) he was a cruel tyrant, entirely disdainful of democratic values and processes; (2) he allowed his family and cronies to plunder the nation’s wealth; (3) he directed national resources to ill-conceived, foreign dominated, and wasteful “development” projects; (4) he sponsored living styles that many regarded as offensive to Islam; (5) he oppressed the ulema, exiled or killed some of them, seized control of the lands and other resources endowed to their seminaries, with a view to destroying their autonomous role in society and subordinating them to his own will; (6) he made his government and his country mere puppets of the United States.

It should be understood that the anti-Shah movement was supplied and managed not only by the ulema but by a coalition that included Islamic militants (“Fidayeen-i-Islam”), Islamic moderates (such as Mehdi Bazargan, Abolhassan Bani Sadr, Sadek Qotbzadeh) and liberal democrats assembled in the National Front, varieties of socialists (“Fidayeen-i-Khalq” and “Mujahideen-i-Khalq”), and communists (the Tudeh). The ulema by themselves could not have brought the movement to fruition.

The goals of the anti-Ayub movement in Pakistan included the removal of a specific ruler and systemic change. Some of the deeper causes of the resentment against him were: (1) he had been in power as an autocrat for ten long years; (2) the political system he had imposed on the country was based on the offensive premise that even educated Pakistanis were not good enough to elect directly their president or members of legislative assemblies; (3) having told the people that Pakistan had won the war with India (1965), he returned from the peace conference at Tashkent with nothing better than a return to the status quo ante bellum, causing the widespread impression that he had surrendered vital national interests for personal gain or out of sheer incompetence.

(4) Rewards of the “decade of development” (celebrated with great fanfare in the summer of 1968) had not trickled down to the common man; (5) students all over the country were severely alienated because their unions had been banned and put out of commission for several years; (6) the ulema condemned his tampering with the traditional versions of the Islamic personal law and his encouragement of innovative interpretations of Islam issuing from the Institute of Islamic Research headed by Dr. Fazlur Rahman.

Among the more apparent causes one may mention: (1) reported rise in the price of sugar; (2) revival of the students’ demand for the restoration of their unions and its rejection; (3) Zulfikar Ali Bhutto’s repeated threats to reveal the secrets of Ayub Khan’s alleged betrayal at Tashkent; (4) killing of two students, as a result of police firing, outside a polytechnic institute near Rawalpindi (November 7, 1968); (5) Sheikh Mujibur Rahman’s trial in the Agartala conspiracy case; (6) Ayub Khan’s own critical illness (October 10-24,1968) and its debilitating effects.

Ayub Khan gave up office towards the end of March 1969. We can omit reference to the Anti-Bhutto mass movement in the spring and early summer of 1977, because it was General Ziaul Haq, and not the PNA, who overthrew his government.

Keeping the above in mind, what shall we say about the prospects of any mass movement that the MMA may choose to launch? What are its goals? It says that above all it wants to restore the pre-LFO version of the 1973 Constitution, which it identifies with “real” democracy. Towards that end, it desires a clear reassertion of the military’s subordination to civilian authority. Since General Pervaiz Musharraf is the man who botched up the Constitution, and since he will not undo his mischief, he must be removed from office. An autocrat at home, he is a vassal of the United States. Moreover, he is not true to Islam. This is pretty much the MMA’s case against the general.

It is difficult to name the political forces that will join the MMA in mobilizing the people in behalf of its agenda. Many of those who concede that its case is sound may be distrustful of its own credentials and ultimate intentions. Benazir Bhutto and Nawaz Sharif have also been talking of an anti-Musharraf mass movement. But they want to oust him not because his commitment to democracy is dubious but because he has excluded them from politics. Their alliance with the MMA, if they made one, would be vulnerable to temptations that the general might send their way. Secular-minded parties, such as the ANP, are also unlikely to jump on to the MMA’s bandwagon.

Opponents of the MMA’s campaign are not to be dismissed lightly. PML factions that have recently come together, Altaf Hussain’s MQM, smaller pro-government parties in Sindh and elsewhere may be counted upon to oppose the MMA’s drive. It is possible also that the extensive network of ‘nazims’ and local councillors will act as Musharraf’s constituency and work against those who want to oust him.

Leaving aside the intermediaries, one may wonder how the “masses” are likely to respond to the MMA’s call. The constitutional issues it raises may be much too esoteric to excite the “common man.” He will probably not want to miss work and wages to come out on the streets to insist that the proposed National Security Council should be authorized by a statute and not by a constitutional provision. Nor should we expect him to get agitated over the question of whether judges should retire at the age of sixty-five or sixty-seven. The matter of Musharraf’s uniform could possibly be phrased so as to arouse intense popular disapproval, but the task would certainly pose a daunting challenge even to those of us who had a way with words.

Let us take a look also at the other side of the general’s profile. Nobody is saying that he is personally corrupt. He may be sceptical about certain types of democracy, but he is not disdainful of the people’s right to be governed by their consent. Instead of reducing the scope of their political participation, as Ayub Khan had done, he has enlarged it by lowering the voting age. No charge of betrayal of the nation can be placed at his door; there is no Tashkent hidden in his closet. The economy is doing no worse than it did during the tenures of Nawaz Sharif and Benazir Bhutto.

The conclusion would seem to be inescapable that the MMA’s package of grievances, as unveiled so far, is not lethal enough to ignite a popular revolt against the general. As the MMA’s movement gets under way, its principal directors and managers will be taken out of circulation. Even if they remain free but their movement fails to pose a credible threat to the present government, they will most likely invoke Islam to bolster their position, as they had done during the movements against Bhutto and Ayub Khan. The consequences of using Islam as an instrument for advancing their political goals have been disastrous for the country’s cohesion, solidarity, and stability. There can be little doubt that they will be similar if the MMA chooses once again to adopt the same old tactic.

The writer is professor emeritus of political science at the University of Massachusetts, USA.

E-mail: ssyed@cox.net

Brutality, terror and talks

By Kunwar Idris


IN politics, they say, the longest distance between two points is a straight line. India and Pakistan appear to believe in this more than anyone else. For 56 years, the two neighbours have been going round in circles in a bid to resolve their differences. This approach only complicates them. With three wars behind them, both countries are now contending with the rising tide of militancy and communalism.

Mr Vajpayee’s unexpected offer to resume talks and its instant, enthusiastic acceptance by Pakistan did not put an end to the Indian chorus of cross-border terrorism nor to Pakistan’s accusation of the brutal suppression of the freedom struggle in occupied Kashmir. The goodwill that the Indian prime minister’s “peace initiative” had generated dissipated fast under the pressure, or fear, of extremists in both countries.

Coming in its wake, President Musharraf’s emphatic reiteration of Pakistan’s known stand on Kashmir in the UN General Assembly and Prime Minister Vajpayee’s retort to this as “terrorists blackmail,” could give comfort only to the extremists.

The following day an Indian expert on national strategy participating in a BBC discussion suggested that India should not reason with Pakistan nor fight it but instead subvert its existence as America did Russia’s as Pakistan’s theocracy and army will remain a source of threat to India as Soviet Communism was to America. Here, retired General Hamid Gul who has learnt his politics in the ISI and waged jihad in Afghanistan, paid a tribute to President Musharraf for his courageous speech at the UN.

The bellicose retired general, it seems, saw in it a reversal of the Kashmir policy from dialogue to arms. The encounter in the UN, thus, has caused glee to extremists in both countries but made the vast majority, who are neither pacifists nor cynics, worry about the effect it will have on the Kashmir dispute. And, in a wider perspective, on the stability and economy of Pakistan itself.

The contents of the President’s UN speech and his exuberance apart, the question to be contemplated is whether it will hasten or hinder dialogue at the summit that Pakistan has been seeking and India avoiding. Secondly, will it persuade the UN, US or any other power or organization to intervene in a bid to resolve the Kashmir dispute? The obvious answer is that the dialogue will be delayed and nobody would intervene. Neither, it can be seen, has Pakistan won any new adherents to its cause nor has any one censured India for its brutality in Kashmir or for denying the right of self-determination to the people of the valley.

Pakistan’s standpoint on Kashmiris is well known and needed no renewal. The occasion at the UN should have been used to win the support of the General Assembly for immediate resumption of talks without linking them with the charges of terrorism or barbarity. That support has not come forth. In fact the reverse has happened. President Bush has been quoted by senior US officials as having asked President Musharraf (in their meeting which followed the Assembly session) to “clamp down on cross-border infiltration” not in Kashmir alone, but also in Afghanistan (Karzai too was there, complaining). No mention is made of Bush having “advised” Vajpayee as well.

It has, thus, turned out to be a double whammy for Pakistan. To boot, a delegation of Conservative British parliamentarians visiting occupied Kashmir found “overwhelming evidence” of Pakistan’s involvement in terrorism there. Though a one-sided verdict, it will carry weight as Pakistan’s credibility on this account world-wide is quite low.

The fact known to all and grudgingly recognized by India is that popular discontent in central Kashmir (generally referred to as the Valley) is old and widespread and an armed revolt against the Indian authorities is not a new phenomenon either. It is conceded by Pakistan that the freedom fighters of the Valley are reinforced by their kinsmen living in Pakistan’s part of Kashmir.

Pakistan also concedes that some fighters from Pakistan and other parts of the world may also be crossing over but the border is too long and terrain rugged to be scaled completely. The Indians allege that Pakistan trains and sends the fighters across. The Americans say Pakistan is not exerting pressure hard enough to stop them. Were Pakistan not an ally of America in its war on terror, the US would, perhaps, endorse the Indian allegation.

President Musharraf’s eminently sensible suggestion that the Line of Control be jointly patrolled by Pakistan and India under the supervision of a strengthened UN mission is not acceptable to India as that would internationalize a dispute it considers bilateral. The crucial question whether the violence on unarmed citizens is perpetrated by the Indian troops numbering half a million or more (which means one soldier for every ten inhabitants of the troubled area) or by the freedom fighters can never be categorically answered. Nor would it be possible to say whether the local insurgency will subside or extinguish if it were not to be buttressed by the fighters going in from Azad Kashmir and elsewhere. Pakistan contends that the insurgency started on its own 13 years ago and would go on irrespective of Pakistani support. The Indians may argue that the elements accepting Indian rule, or at least acquiescing in it, won a majority in an election which, the world agrees, were by and large, free and fair. In the absence of a plebiscite which has faded away even from the distant horizon, these contentions will persist unsettled.

The essence of the experience of the past many years confirmed once again by the 58th session of the UN General Assembly is that Pakistan and India themselves have to find a solution to the Kashmir dispute. The Security Council will not enforce its resolutions of 55 years ago, America will not mediate, nor would any other country or organization, least of all OIC, help. Since Pakistan cannot capture Kashmir by force and India cannot quell the insurgency by force and the insurgents cannot make a UDI (unilateral declaration of independence), a solution can emerge only out of the consent and goodwill of the three parties involved.

The violence should abate as soon as these talks begin. The politicians must not continue bickering over brutalism and terrorism when human beings are dying daily by the dozen. Here the onus lies entirely on India for Pakistan, the Hurriyyat Conference and Mufti Saeed, the Chief Minister, are all pressing for it.

The tumult in Kashmir and the stress and anguish it causes, hurts India. But it hurts Pakistan more for the simple reason that while India, despite the murderous rise of Hindu nationalism, is recognized as a functioning democracy poised for rapid economic growth, Pakistan’s political institutions are still shaky. As the London Economist put it “Pakistan, though it has bits and pieces of democracy, is largely run by a military dictator.” India has overtaken Pakistan economically. Now the buying power of an average Indian is about 20 per cent more than that of a Pakistani (it used to be the other way round) and the gap is forecast to widen faster.

If trade talks at Cancun have driven home one lesson, it is that the developing countries should organize themselves into economic blocs to get a fair share in the world trade. Competing with each other or individually trading with the rich countries, they would be swamped in a free market regime. Pakistan has 2.5 per cent of the world population but only 0.2 per cent share in the world trade. A cow in the European Union gets a subsidy of two dollars a day which is the average daily income of one half of the population of Pakistan. This sad reality will not change even if Musharraf’s pipedream to lead the Umma because of Pakistan’s geostrategic position were ever to come true.

Pakistan and India, along with the other countries of South Asia, form a natural and viable economic bloc. The Islamic countries don’t. The war ahead is economic and not political or religious. Even the Palestinians for their rights to land and freedom look up to America and not to the Muslim countries all around them. Kashmir by comparison is distant and obscure. The Umma has never shown much concern for its fate and there is no indication it ever will.

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