DAWN - Opinion; June 2, 2005

Published June 2, 2005

Peace process: ‘deja vu’?

By Najmuddin A. Shaikh

CAUTION in assessing the state of Indo-Pakistan relations and the direction in which they are headed has been the hallmark of experienced analysts. There have been far too many disappointments to permit for anything other than a cynical view of the high sounding statements emanating from Indian and Pakistani leaders in the periods of thaw that have occurred from time to time in the history of the two countries’ troubled relationship.

The April 18 joint statement issued in New Delhi on the conclusion of President Musharraf’s “cricket diplomacy”, however, seemed to be on a somewhat different plane. The event, even among cynics used to dismissing such communiques as “deja vu”, prompted a measure of optimism about the future course of Indo-Pakistan relations and the prospects for an early resolution of such disputes as the Siachen glacier and the Sir Creek issues en route to tackling the Kashmir dispute in the light of freshly defined parameters.

There was reason for such optimism. The statement came at a time when a ceasefire along the Line of Control had been in place and faithfully observed for almost a year and a half. Allegations of cross-LoC infiltration had been muted if not entirely eliminated. The political will needed had been displayed to permit the conclusion of a sensible agreement on the modalities for the commencement of the Srinagar-Muzaffarabad bus service despite the opposition of naysayers. Responsible political figures on both sides had made positive statements and opposition parties in both countries had more or less declared themselves as stakeholders in the peace process. Pakistani political leaders, from both the ruling coalition and the opposition, had visited India and similar visits had taken place or were being planned by Indian politicians.

It appeared that there was a genuine and growing understanding between the Pakistani president and the Indian prime minister and that this understanding encompassed an appreciation of each other’s domestic constraints. President Musharraf’s statement accepting the Indian contention that one parameter for the settlement of the Kashmir dispute had to be that India could not accept any redrawing of boundaries reflected this appreciation of Prime Minister Manmohan Singh’s domestic limitations.

Similarly, the president’s insistence, presumably tacitly endorsed by Prime Minister Manmohan Singh, that Pakistan could not accept the LoC as the international border, reflected the domestic limitations of Pakistan’s leaders. His proposed solution, to make “boundaries irrelevant” was essentially an application to Kashmir of what the Indians had long been espousing — a blurring of physical boundaries as one of the ways that South Asia could meet the challenges posed by globalization.

It seemed to imply that both sides were prepared to embark on the consultations with the Kashmiris on the difficult, long and even tortuous, bilateral or trilateral negotiations needed to bring to fruition a solution that made “boundaries irrelevant”, encompassed the demilitarization of Kashmir, allowed maximum self-government and autonomy in defined regions and the retention or restoration of the overall sense of Kashmiriyat by which the Kashmiris theoretically lay so much store.

Therefore, when the statement echoing a sentiment expressed earlier by President Musharraf spoke of the peace process being “irreversible”, it carried with it a degree of conviction that had been conspicuous by its absence in earlier exchanges of this nature. Implicit, however, was the fact that along the way to the solution of the “core issue” other relatively minor issues would be resolved and that in the negotiations there would be on both sides, but primarily on the Indian side, the same realism and generosity of spirit that was reflected in the Musharraf statement on the Kashmir issue.

It is sad that the recent inconclusive negotiations on Siachen and Sir Creek suggest that the abandonment of cynicism with regard to Indo-Pakistan relations was premature. It is “deja vu” rather than a fresh start that we saw in the bland statements issued after the inconclusive talks on both subjects which could speak only of a better understanding of each other’s viewpoints and could not even indicate dates on which the negotiations would be resumed.

What exactly is involved and from where do the differences arise? In Siachen, as extensive media coverage has shown, the Pakistanis want the implementation of the agreement reached in 1989 for an unconditional withdrawal of troops on both sides to the pre-1984 positions (1984 was the year in which an Indian army general launched “Operation Meghdoot” to occupy the heights in the Siachen glacier area traditionally recognized as being on Pakistan’s side of the LoC). This 1989 agreement had sidestepped the question of where the LoC actually lay in the glacial region — the Indians argued that from point NJ 9842 the Karachi agreement of 1949 called for the then ceasefire line to proceed due north while the Pakistanis argued that north was the direction in which the line as it came up to NJ 9842 was to be extended.

In 1989, the political leaders of the day — Rajiv Gandhi and Benazir Bhutto — appeared to have been in agreement that reckless adventurism to occupy valueless land had unnecessarily created a new point of friction, and while it would be politically impossible for India to reverse its stance on the interpretation of the 1949 agreement, they could agree to eliminate the wasteful expenditure incurred by both sides on maintaining troops in a region where more soldiers died of exposure to the cold than killed in military action. The agreement was not formally signed, it is said, because Rajiv Gandhi was persuaded that such an agreement would impinge adversely on his party’s prospects in the elections he had called for later in the year.

In the current negotiations the Indians have insisted that before such a withdrawal, both sides should authenticate on maps the positions currently being held by them. In the meanwhile, they have suggested that if this cannot be done an agreement may be reached on maintaining the ceasefire and on no further deployments in the area. Surprisingly, the Indian army chief of staff proposed on the very day that the Siachen negotiations were to commence that India and Pakistan should authenticate the LoC in the Siachen region (i.e. the entire 100 km length that the line would run from point NJ 9842) to “ensure that there are no complications after demilitarization”. This proposal is, of course, even more contentious than the authenticating of the currently held positions because it would require the reconciling of the clearly irreconcilable interpretations of the Karachi agreement.

The official Indian position is supposed to be reflecting the same distrust and suspicion that have dogged Indo-Pakistan relations and have frustrated sensible compromises in the past. It seems particularly perverse and even senseless since it is accepted on both sides that the area in question is of no strategic value. Moreover, the mind boggles at the thought of the enormous cost that Pakistan’s military would incur in trying to reverse the demilitarization of the region against a better resourced Indian adversary. It is perverse since at this time it is in India’s interest to show that it is prepared to regard the April 18 statement as representing a “fresh start” in which preconceived notions about Pakistan’s unreliability would be set aside.

This is, in fact, from India’s perspective a golden opportunity for India to suggest that it is moving towards building trust and confidence between the two countries while cutting down on the enormous expenditure deployment in Siachen involves. (For many years the Pakistani military argued against demilitarization of Siachen pointing out that because of the comparatively easier logistic situation on the Pakistan side the deployments were far more expensive for India than for Pakistan. It cost Pakistan only Rs. 100 to provide a chappati to its jawan in Siachen while the Indians had to spend Rs. 500 for the same chappati).

A perverse Indian attitude and the forsaking of an opportunity, however, makes sense if the Indian intent is what the Indian chief of army staff has, in effect, said and that is that the talks should be used to force Pakistan to accept the Indian interpretation of the Karachi agreement and to have an LoC defined along the lines India wants in anticipation of whatever settlement is reached on Kashmir.

If this is the intent it reflects short-sighted thinking. At the moment, the Indian position should be that as the two sides work towards a “borderless” solution in Kashmir no contentious issues relating to the border should be raised, and wherever possible, the prospects of eyeball to eyeball confrontation should be reduced, particularly when such confrontation involves heavy expenditure in terms of men and materiel.

It is the movement towards such solutions that will lend substance to the assertion — as quoted by the BBC — by Prime Minister Manmohan Singh in his press conference with foreign correspondents in New Delhi recently that “We (India and Pakistan) share a number of similarities and should work together at finding a solution which makes borders meaningless and irrelevant. So it should not matter whether a person is living in Srinagar or Muzaffarabad.”

In the matter of the Sir Creek, again India’s position that the land border must be taken as the middle of the creek waterway is a perverse interpretation of the Thalweg principle in international law. This principle calls for the designation of the middle of the waterway as the border between two countries that share a waterway as a border but — and this is an important — is applicable only when the waterway in question is navigable.

The pragmatic consideration behind the acceptance of this principle was that both countries should be able to use the waterway for shipping etc. In the Sir Creek this question does not arise since the creek is not navigable. If the maps agreed upon in 1914 and showing the border between Sindh and Gujarat being along the eastern bank of the creek then that is how it should be demarcated.

The problem here is not so much the land border but the impact that the demarcation of the land border will have on the defining of the EEZ (exclusive economic zone) when the land border is extended out into the sea for the 200 miles that each country is given under the Law of the Sea Convention as the zone in which it has proprietary rights to all fishing and mineral resources. I am not sure of how much area would be involved though one press report suggests that if India accepts the Pakistan position it would lose some 250 square kilometres of its EEZ.

Rumours abound that in this disputed EEZ or its immediate vicinity lie enormous gas and oil resources. These rumours have a certain plausibility because of the area’s proximity to the rich gas finds in Bombay High. But so far, nothing definitive is known. This should, however, be irrelevant. If Pakistan and India are building trust and confidence they must start with the premise that where old agreements exist they shall be honoured.

I have been a strong proponent of good neighbourly relations between India and Pakistan. Both have been held back for too long by their confrontational stances. They need harmonious ties to be able to realize their full potential and play their rightful role in the region and on the world stage. Pakistan’s sense of insecurity, a legacy of how partition was viewed by Indian leaders, accentuated by India’s growing military superiority has been or should have been allayed by the “equalizer” it has developed.

India’s economic weight will need to be respected but should not be feared. It can, in fact, be an aid to Pakistan’s own economic development if economic cooperation proceeds in the right direction. But for relations to move in that direction, India must give, in negotiations like Siachen and Sir Creek, concrete evidence of the generosity of spirit and accommodation that is so strongly reflected in the statements of the Indian prime minister.

The other face of the war on terror

By Brad Adams

THE brothers Zain Afzal and Kashan Afzal, US citizens of Pakistani origin, were abducted from their home in Karachi on August 13 last year. They were released on April 22 this year, without having been charged.

During eight months of illegal detention, they were allegedly tortured by Pakistani personnel to extract confessions of involvement in terrorist activities. During this period, FBI agents questioned the brothers on at least six occasions. The FBI agents, who did not intervene to end the torture, insisted that the Pakistani government comply with a court order to produce the men in court, or provide consular facilities normally offered to detained US citizens. They threatened the men with being sent to the US detention facility at Guantanamo Bay if they did not confess to involvement in terrorism.

Pakistan’s poor record on illegal detentions and torture, well-known to the United States, should have acted as a deterrent for the FBI. Instead, the FBI abetted the actions of the Pakistani personnel by participating in the interrogations.

While the brothers were being detained, their mother and Zain Afzal’s wife attempted to lodge an abduction case with the local police. The police refused to register the case, informing them that “this was a matter involving the intelligence agencies.” The police finally registered the case on November 15, 2004, on the orders of the Sindh High Court. During habeas corpus hearings, filed by their mother, Pakistani authorities denied holding the two men. Zain Afzal’s wife made frequent public pleas for the brothers’ release and approached the US embassy, but received no help.

The 2004 US state department human rights report makes clear that embassies in Pakistan can meet their nationals in custody: “Foreign diplomats may meet prisoners when they appear in court and may meet citizens of their countries in prison visits.” Yet no such visits took place until the Human Rights Watch (HRW) intervened seven months after the brothers were abducted.

When queried by the HRW about the status of the brothers and the role of the FBI, the US consul in Karachi in March replied: “We are aware of the reports indicating two American citizens are missing, or ‘disappeared’ in Pakistan, and we are looking into them. Due to Privacy Act considerations, we are unable to provide additional information on these two individuals. The safety and security of Americans overseas is of paramount importance to us, and we continue to work both here and abroad to provide all possible assistance to our citizens. I refer you to the FBI for any information on their involvement.”

While US officials say the safety and security of Americans overseas is paramount, it appears the US government did nothing to help the Afzal brothers until their cases were reported in the international press. The US knew exactly where the brothers were all along, while their family was terrified, not knowing whether they were dead or alive. This is profoundly wrong and should send a chill up the spine of every US citizen living overseas.

Invoking the US Privacy Act to withhold information from a wife and mother about a husband and son who had been “disappeared” is Orwellian: the Privacy Act was adopted to protect the privacy of individuals, not to shield the state from answering questions about the whereabouts of those individuals when they have been “disappeared” by state authorities and when FBI agents are regularly meeting them. “Disappeared” persons would obviously not want the Privacy Act to stand in the way of allowing family members to know where they were. US authorities should be ashamed at the way they handled this case.

Kashan Afzal and Zain Afzal were abducted between midnight and 2 a.m. on August 13, 2004, in a raid that involved at least 30 armed Pakistani personnel. Neighbours came out of their homes to see what was happening, but were ordered to go back inside.

During the operation, the personnel specifically demanded to see the US passports and all other US government-issued identity papers held by the brothers. Once the papers were located, they handcuffed and hooded them and took them away in a convoy of jeeps and vans typically used by Pakistan’s intelligence agencies and police.

The brothers told the HRW that approximately three months into their detention their captors returned their clothes and told them that they would be going home soon. Instead, they, along with scores of others, were blindfolded, shackled, handcuffed and made to board a plane and told they were being taken to Guantanamo Bay. But the plane landed less than two hours later in a place where the “guards all spoke Urdu.”

Subsequent to the change of city, the brothers claim they were repeatedly interrogated by the FBI. “I was blindfolded and taken into another room. When my blindfold was removed I saw a Pakistani man in plain clothes and two white men who flashed FBI badges and said that they had come from the US to investigate me. They asked me my life history all over again. I told them everything. Then they showed me photographs and told me that the pictures were of Al Qaeda members.”

“‘Do you know them?’” they asked. I saw the photos and told them I recognized no one, knew nothing ... The FBI officer said, “We have been told you and your brother have Al Qaeda links.” This interrogation went on for three to four hours. I told the FBI that I was illegally detained and had been tortured. They said they would try to help but that all decisions were to be taken by Pakistani authorities and Pakistan was beyond their jurisdiction.

About 7-10 days later, the same FBI officers and Pakistani officer showed me new pictures. I asked them that they had already held me and my brother for five months and how much longer did they intend to hold us? I told them I had never been involved in a criminal act.

If you have any proof, then show it to me. Or at least tell me how long this will take. I asked to be presented in a court and to be given a lawyer.

The FBI agents did not respond to the request for a lawyer or my demand to be presented in a court and charged. They did tell me that ‘we cannot say what your crime is and how long you will be held. But you are a terrorist and you could be taken to Cuba.’ [In another session] I said if you think we are guilty of a crime please charge us in court or release us. I pointed out that my brother was very ill. They said ‘we are the court.’”

The brothers claim they were released in Lahore and dumped at the airport but only after they were threatened to remain silent by their abductors. The abductors said “Your case is almost over” and “You will be released soon. ... But we will only release you on condition that you will never speak to the press or media or speak against us. Your well-being lies in silence otherwise you and your family will be in big trouble.”

The brothers asked for their American passports and other ID papers and were told the documents would be delivered to them in Karachi. This happened on April 22. They have not received the passports and though they have requested the US consulate in Karachi to reissue the passports, they have had no response yet.

The Human Rights Watch is of the view that the Pakistani authorities must return the US passports and other personal material confiscated from the two brothers when they were illegally detained. The United States embassy should issue new passports immediately upon request if the passports are not promptly returned.

More importantly, the government of Pakistan must take immediate steps to end the practice of illegal arrest and detention of persons as part of the “war on terror” and also end the use of torture and other mistreatment. The use of secret detention facilities must cease immediately.

The HRW has also called on the Bush administration to provide full information on its role in the Afzal case. Specifically, the US must clarify whether the Afzal brothers were held in Pakistani custody at the request of the United States, and state the policy of the US government when it knows or has reason to know that persons being questioned abroad are being tortured or subjected to cruel, inhuman or degrading treatment. The Convention against Torture, to which the United States is a party, prohibits “an act by any person which constitutes complicity or participation in torture.”

The war on terror cannot be won by resorting to illegal detentions and torture. It is time for the US to decide whether it will continue to be complicit in criminal activity in its fight against terrorism, or whether the rule of law will prevail. And if President Musharraf wants to convince the world that he is indeed an enlightened moderate, he needs to immediately order an end to such abusive practices.

The writer is executive director of the Asia Division of the New York-based Human Rights Watch.

Assault on the media

By E.J. Dionne Jr.

So it turns out that the FBI has documents showing that detainees at Guantanamo Bay, Cuba, complained about the mistreatment of the Holy Quran and that many said they were severely beaten.

The documents specifically include an allegation from a prisoner that guards had “flushed a Quran in the toilet.” And, Pentagon officials said investigators have identified five incidents of “mishandling” the Quran by military guards and investigators. It was the first time Pentagon officials had acknowledged mistreatment of the Muslim holy book, though they insisted that the episodes were minor and occurred in the Guantanamo facility’s early days.

What, then, is one to make of the Bush administration’s furious assault against Newsweek magazine for bringing allegations about the abuse of the Quran to popular attention? Let’s be clear: Newsweek originally reported that an internal military investigation had “confirmed” infractions alleged in “internal FBI e-mails.”

The documents made public last week include only an allegation from a prisoner about the flushing of the Quran, and the Pentagon insisted that the same prisoner, reinterviewed on May 14, couldn’t corroborate his earlier claim.

But it’s also clear, to be charitable, that not all was well in Guantanamo. That’s why the administration and its apologists — more about that word in a moment — went bonkers over the Newsweek story.

The war on Newsweek shifted attention away from how the Guantanamo prisoners have been treated, how that treatment has affected the battle against terrorism and what American policies should be. Newsweek-bashing also furthered a long-term and so far successful campaign by the administration and the conservative movement to dismiss all negative reports about their side as the product of some entity they call “the liberal media.”

At this point, it is customary to offer a disclaimer to the effect that my column runs in The Washington Post, is syndicated by The Washington Post Writers Group and that The Washington Post Co. owns Newsweek. I resisted writing about this subject precisely because I do not want anyone to confuse my own views with Newsweek’s or The Post’s.

I write about it now because of the new reports and because I fear that too many people in traditional journalism are becoming dangerously defensive in the face of a brilliantly conceived conservative attack on the independent media. Conservative academics have long attacked “postmodernist” philosophies for questioning whether “truth” exists at all and claiming that what we take as “truths” are merely “narratives” woven around some ideological predisposition. Today’s conservative activists have become the new postmodernists.

They shift attention away from the truth or falsity of specific facts and allegations — and move the discussion to the motives of the journalists and media organizations putting them forward. Just a modest number of failures can be used to discredit an entire enterprise.

Of course journalists make mistakes, sometimes stupid ones. Dan Rather should not have used those wacky documents in reporting on President Bush’s Air National Guard service.

Newsweek has been admirably self-critical about what it sees as its own mistakes on the Guantanamo story. Anonymous sources are overused. Why quote a nameless conservative saying a particular columnist is “an idiot liberal” when many loyal right-wingers could be found to say the same thing even more colourfully on the record? If the current controversies lead to better journalism, three cheers.

But this particular anti-press campaign is not about Journalism 101. It is about Power 101. It is a sophisticated effort to demolish the idea of a press independent of political parties by way of discouraging scrutiny of conservative politicians in power. By using bad documents, Dan Rather helped Bush, not John Kerry, because Rather gave Bush’s skilled lieutenants the chance to use the CBS mistake to close off an entire line of inquiry about the president. In the case of Guantanamo, the administration, for a while, cast its actions as less important than Newsweek’s.

Back when the press was investigating Bill Clinton, conservatives were eager to believe every negative report about the incumbent. Some even pushed totally false claims, including the loony allegation that Clinton aide Vince Foster was somehow murdered by Clinton’s apparatchiks when, in fact, Foster committed suicide. Every journalist who went after Clinton was “courageous.” Anyone who opposed his impeachment or questioned even false allegations was “an apologist.”

We now know that the conservatives’ admiration for a crusading and investigative press carried an expiration date of Jan. 20, 2001. When the press fails, it should be called on the carpet. But when the press confronts a politically motivated campaign of intimidation, its obligation is to resist — and to keep reporting. — Dawn/ Washington Post Service

Need for social change

By Sultan Ahmed

THERE has been extensive speculation in respect of the areas where the budget for 2005-06, to be presented on Saturday, will provide tax relief. The range of such areas is, indeed, very wide, though the overall tax collection is rather small. Foreigners are of the view that we are a rich country with a poor government, but the people at the top live very well.

There has been little speculation in respect of the areas from which large additional resources would come to make up the lost revenues as well as meet the additional expenditure, like the Rs40 billion as enhanced pay scales and pensions of retired officials and armed forces.

It has been reported that the target for additional revenues is about Rs70-80 billion over the current year’s tax revenue tax revenue of Rs580 billion, which has been enhanced by Rs10 billion. Let apart the Public Sector Development Programme of Rs306 billion, funded largely through aid and extensive borrowing, money has to be found to raise the outlay on higher education by 50 per cent and public health by 72 per cent.

At the same time, it has been asserted officially there would be no new taxes. That does not mean that an old tax, like the hefty 15 per cent sales tax, cannot be extended to new areas, as had been done in the past while withdrawing that from other sectors partly, like the textile sector which faces intense competition abroad. Prime Minister Shaukat Aziz considers sales tax as the tax of the future.

The prime minister has promised to deliver a great many things through the budget. He has promised to improve the quality of the life of the people. That is promising a lot, beginning with potable drinking water, which even in Karachi is available only in some parts. It means a clean and safe environment, quality education, and dependable public health services. Of course, that begins with law and order.

He has promised enhanced economic growth, which is to be sustained, along with new investment opportunities and job creation. He says the higher economic growth of 8.35 per cent had made Pakistan not only one of the five high growth nations of Asia but one of the three. He said reduction of the import tariff would continue, but the number of slabs would not be reduced.

While the measures to sustain the high economic growth are being devised, the debate is on to determine whether high growth rate would be sufficient to reduce poverty, if not eliminate it. The governor of the State Bank of Pakistan Dr Ishrat Husain has come up with a radical analysis of the iniquitous structure of our feudal society with its class complexion in the cities. He says “our system provides leverage to the privileged class, but deprives the poor of their basic rights.”

He wants a “major surgery” of the system so that the evils could be eliminated once for all and a society based on honesty, merit, truth and professionalism could be created. Addressing a pre-budget seminar in Islamabad he termed the disparity between the rich and the poor a serious social evil, and stressed this was a good time to say good-bye to injustice and develop a quality-based society to make every one feel that he or she is as important a member as anybody else.

Dr Ishrat was speaking less as the governor of the conservative central bank and more as the author of the book “Pakistan - Economy of an Elitist State” published by OUP. The issue now is: if the old wealth cannot be redistributed because of the supremacy of the feudal order, which resists such moves, where is the new wealth generated by the 8.35 per cent growth? The masses face the problems of unemployment and low wages with double digit inflation instead of the five per cent inflation projected by the current budget.

He strongly demanded the elimination of the unjust system to make the poor feel they are as important members of the society as the VVIPs.

He said the culture of ‘thana and kuchery’ was making the life of the people miserable in the rural areas and its continuity would mean more misery and terrible difficulties for the down-trodden segments of society.

Who will change this iniquitous social order, and how, and when? Radical small political parties can’t change it, however hard they try in this age of market economy. The army and the bureaucracy stand for status quo with marginal improvements where the abuses are excessive.

In a democratic system, parliament can be an agent of change. If it fails to play that role, then it becomes a roadblock to change. That is what the present parliament in Pakistan is. It is dominated by feudal lords and tribal chiefs, their sons and daughters, nephews and nieces. All of them are keen on preserving the existing order. They have their eyes on larger privileges and prerogatives and are hardly conscious of the needs of the poor.

In a true democracy which has a parliament formed as a result of fair and fair elections the situation can be quite different. A seminar addressed by economists and social workers in Islamabad was of the view that the government is not capable of presenting a pro-poor budget as it is bound down by the structural adjustment programme of the IMF and the demands of the World Bank and the Asian development Bank. After the resources had been spent on the four million government employees at the centre, and in the provinces and local governments, defence and debt service there is little left to be spent on the poor who form one third of the population of the country or are over 50 millions.

We have to wait for liberal or radical parties to emerge and come to power and be able to use that power effectively with the support of the dominant armed forces. Unfortunately too many parties seek support of the armed forces to come to power, and when they succeed to do so, they do the latter’s bidding as has been the case since 1958.

What do the people want? They want employment, decent wages, reasonable savings and good return on their savings. At the moment they are the losers on all the fronts. And they are not able to break out of the shackles. Of course, the employment opportunities are increasing.

Apart from the expanding private sector enterprises, the Public Sector Development Programme next year is to total Rs. 306 billion, excluding the outlays of Wapda and National Highway Authority by raising financial resources of their own with government guarantees. The expanding agricultural sector is also providing employment in the rural areas. Commercial banks and the Zarai Taraqqiati Bank are to provide loans worth Rs100 billion to the farmers which should increase farm employment and expand farm production by about seven per cent.

But the wages are still low as the employment seekers are too many, and the workers could be hired on low wages. The double digit inflation erodes the purchasing power of the rupee a great deal, although the government may talk of the rupee’s tremendous purchasing power parity. The new PSDP envisages an eight per cent inflation next year compared to the current budget’s projection of five per cent initially which in reality has meant 11.1 per cent so far. Judging by that criterion next year’s real inflation should be far above eight per cent as economic growth is expected to exceed seven per cent, while President Musharraf wants an above eight per cent growth for some years to consolidate the economic progress.

The low wages and high inflation have resulted in very poor savings with the workers. The fact that the wage earners have too many dependents also undermines the savings. Far worse is the nominal rate of savings. And they get one fourth and one fifth of what they have to pay as interest on deposits when they deposit their savings in banks. Hence, the banks are prospering and declaring large profits and banks’ share prices are very high. As a result, over Rs63 billion has been withdrawn from the National Saving Schemes by the disappointed depositors.

In addition to such gains, banks are to get three per cent relief in income tax payments in an effort to bring down the income tax on them to 35 per cent by the year 2007. No wonder more and more banks have been opening in recent times.

The PSDP target has been reported differently because of the addition of some funds to that. One newspaper report puts it at Rs319.4 billion and another says it will be Rs306 billion excluding the special funds to be set by Wapda and NHA. Anyway it is a large addition to Rs202 billion allocated for the current year’s Annual Development Plan. Out of that the federal funds will cost Rs204 billion and provincial projects Rs68 billion. The provincial share is too small.

Infrastructure is to get Rs99.3 billion, social sectors Rs78.9 billion and other sector Rs25.8 billion. The next year is the first year of the five-year Medium-Term Development framework and should be given a good start for the facility which will end by 2010.

A new beginning is also to be made for public-private partnership. Another Rs one billion has been set up, prompted by the World Bank and the Asian Development Bank who want such partnership play a large role in the economic sector.

But what matters is the actual use of the development funds, and completing the project by the set deadline. By that standard only 49 per cent of the PSDP allocation of Rs202 billion had been used in the first ten months of the year and that was disappointing. But now Mr Akram Shaikh, deputy chairman of the Planning Commission, says that in the first ten months of the current financial year Rs96 billion had been utilized and he was confident that by the end of the current financial year 100 per cent of the allocation would be utilized.

But utilization is not the same as merely earmarking funds to the departments concerned. Far more important is spending the money and speeding up the projects economically. That is all the more imperative when the funds are borrowed ones and the donors are expecting a better performance from us.

The country should be provided with quarterly reports of progress in this regard which should be discussed by parliament and its relevant committees. Political vigilance or monitoring in this regard is essential to get the best of such vast borrowed funds and to meet the real needs of the counting.



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