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DAWN - Opinion; May 24, 2007

May 24, 2007

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In the jaws of inflation

By Sultan Ahmed


INFLATION, which is plague for the poor and a curse for low-income groups, is expected to exceed the official target of 6.5 per cent as the financial year ends on June 30. Optimists expect the figure to be 7 to 7.5 per cent. Food inflation has risen by 17.6 per cent in the last ten months of the year, with the prices of 18 key items shooting up and staying high.

The State Bank of Pakistan on its part has tried to restrain inflation through its tight monetary policy but private sector credit expansion has touched its peak in the first ten months of the year instead of the full year and as the weather gets hotter, the vegetable prices are soaring further.

The tight monetary policy is a partial success in restraining inflation, but it is only one of the many instruments for checking inflation which includes the supply side abundance, effective administrative measures against hoarding and profiteering and social pressure against high prices and real competition in the market. Sufficient attention is not given to combating inflation through by other means as it is a very complex problem.

In India an inflation rate of five per cent was promised by the Manmohan Singh government in the new financial year beginning April 1 but now it is 5.4 per cent which is a disturbing trend and the government is looking for diverse remedies and acting promptly.

We are told that the core inflation is low and it exceeds food and energy prices which are very important in a developing country like Pakistan with a third of the people living below the poverty line. The energy prices are important as workers have to spend a good deal of money to reach their places of work and to return home and in a country with large families depending on a lone wage earner to feed so many mouths, food inflation is an important issue. In fact it becomes the core of the inflation for the poor and the low income groups.

The fact is that the tight monetary policy is neutralised by the inflow of money from many other sources. Record home remittances of overseas Pakistanis of $4.450 billion in 10 months against $3.629 billion in the same period last year, foreign investment of about six billion dollars, foreign borrowing which has raised the external debt to $39 billion or significant factors in increasing the money supply. In addition, the informal economy is very strong and tax evaded money moves faster.

Even in the area of tightening of the monetary policy the picture is not too bright. Within the first ten months of the financial year, the private sector credit meant for the whole year has been distributed. How much more will be lent during the remaining next two months has to be seen. But the private sector credit of Rs273.8 billion is far less than the credit of Rs345.6 billion provided in the same period last year.

In addition, the government borrowing for budgetary support is too heavy this year. It has borrowed Rs196 billion so far compared to Rs64 billion during the same period last year and that money is flooding the market through the currency notes printed by the State Bank of Pakistan for the government.

All that along with the inflow of six billion dollars as foreign investment, including portfolio investment and the record home remittances of overseas Pakistanis of $4.45 billion have increased greatly the money in circulation. In such circumstances it is not easy to achieve the level of 6.5 per cent inflation promised for the current year without far larger supplies than available. So the inflation figure is likely to be far above 7 or 7.5 per cent expected by the spokesman of the finance ministry Dr Ashfaq Hasan Khan. It is likely to be between 8 and 8.5 in reality. Even wheat flour prices are seen rising following the decision to export the surplus wheat. The Sindh government has objected to the export and the centre has rejected that objection. What will happen to onion prices now as onion export is to be resumed because of its abundance?

In such a situation the right remedy to increase the supply level of essential or sensitive goods through a far better supply chain than the traditional system we have with the middlemen having the best of the consumers and the growers. In India the government has promised an inflation rate of five per cent and is disturbed by the rise of inflation to 5.44 per cent and it is looking for far better supply chains particularly in the retail sector which is undergoing radical change. India is trying to overcome the supply system handicaps. At present only four per cent of the retail trade is in the organised sector. It wants to raise that to 20 per cent of the retail trade so it is encouraging industrialists to set up supply chains. New entrants to this sector include the Aditya Birla group which is investing $1.7 to 1.9 billion, the Reliance industries, the Bharti group and the Pantaloon.

They will buy from the growers and manufacturers and sell to the consumers for which they see a tremendous scope. But what we are doing in Pakistan is setting up supply chains to sell to the wholesalers or wholesale buyers as Makro is doing in Karachi.This is not what the country needs now. It needs a supply chain which buys it from the growers and sells to the buyers direct and cuts out the exploitative middlemen or Artis who some time stores the fruits and vegetables in cold storages for a long period to multiply the prices. We need consumer resistance to profiteering, poor quality and gross adulteration. It has to be done through organised resistance which will not put up with the anti-consumer abuses any longer.

If the rich countries of the world with their organised trade can have proper consumer resistance assisted by the government the poor countries need that much more and the earlier that comes through the better.

The people should not rely on the government to solve all their problems or help them effectively but the district governments can certainly come to their help and not merely talk of highways and byways and underpasses. In a low wage and high priced economy the masses should get a fair deal. In last week’s Algerian parliamentary elections the voter turnout was only 35 per cent. The workers argued the election offered them no solution to their everyday problems and hence stayed away from the elections, disillusioned by the process. The same is the case in Pakistan. Elections come and go but the people’s basic problems remain unsolved. But a democratic form of government in Pakistan has not delivered either.

So the people have to take the responsibility for changing the system and find day-to-day solutions to their problems instead of looking towards the government for everything. You cannot debunk the officers as corrupt and inefficient and then expect good governance and proper economic administration from them. The people must assert themselves and prevail.

As the world price of palm oil continues to rise, its impact is felt deeply in Pakistan and there is a demand for the reduction of heavy import duty on it. But the government has been resisting the demand which India had met a long time ago.

“There is no question of reduction of import duty on palm oil. Don’t talk about it” says the advisor on finance to the prime minister Dr Salman Shah and the minister for industries Jahangir Tareen says any tax concession given by the government to the vanaspati ghee industry would not be passed on to the consumers and so there is no duty reduction.

The Malaysian government wants Pakistan to reduce the import duty. But the government is firm on its refusal. All this is happening in an election year when all kinds of hints are given about the coming tax relief. Making the inflation far worse is the report of the Asian Development Bank which says unemployment is increasing in Pakistan particularly in Balochistan and the Frontier province.

Regardless of that our GNP this year would be 150 billion dollars and per capita income dollars 950, says the government. That can attract more foreign investment and open more Makro and Metro stores. But the poor have to find their niche amidst such gathering affluence with the rich getting richer.

The six-day war is not over

By Jonathan Freedland


I AM as old as this war. Officially the war of 1967, the year of my birth, lasted for six days. In reality, it's still going on: it is the 14,600-day war. Witness the violence in Gaza, one chunk of the territory which the young state of Israel –– then just 19 years old –– conquered in that extraordinary, whirlwind victory.

In Gaza, there is fighting among the Palestinians –– a barely repressed civil war between the old Fatah movement of Yasser Arafat and the Islamists of Hamas –– but also between them and the Israelis. Hamas has resumed firing Qassam rockets from Gaza into Israel, a break in their ceasefire. On Monday, one rocket succeeded in killing a civilian, a woman in the southern Israeli town of Sderot. And Israel has resumed its targeted assassinations, including one attack on the home of a Hamas member of parliament, killing eight people. The war which marks its 40th anniversary in a fortnight may have brought Israel a breathtaking victory –– but it has brought no peace.

Ever since I first travelled properly in Israel, as a young student, I came to believe that what had been won in 1967 was as much a curse as a blessing. Yes, Israel had done something remarkable, defeating the armies of three nations that had vowed its destruction. And yes, it salved the wounded psyche of Jews all over the world to see that, just two decades after Auschwitz, the Jews were not fated to be history's permanent victims, but could defend themselves and win. I understood the pride of 1967, the sense of recovered dignity that it brought; subliminally, as a child raised in the glow it brought, I even shared in it.

But I could see 20 years ago what Israel's first prime minister, David Ben-Gurion, had seen 20 years earlier. Even before the war was over, he was advocating a conditional withdrawal from the territories just won. He understood what holding on to those lands, and the Palestinian people who lived in them, would mean: a mortal, political and moral disaster for the state he had founded and loved.

The mortal threat is clear to this very day. The victory of 1967 turned Israel into a military occupier, and occupied people will always fight back eventually, as the Palestinians did in earnest with the first intifada that erupted in 1987, through the suicide bombings of the 1990s and the second intifada that began in 2000. Of course, the 40 years since 1967 have been most painful for those who have lived under occupation, the Palestinians of the West Bank and Gaza. But the inevitable consequence of that pain has been danger and perpetual conflict for the people of Israel.

The political threat is less visible, but just as obvious. Ben-Gurion understood what even Ariel Sharon would see three and a half decades later: that if Israel was to live up to its own ambition of being a Jewish, democratic state, it could not rule over a Palestinian Arab population that would one day be its numerical equal. Yet that is the statistical situation today, with equal numbers of Jews and Arabs in the historic land of Palestine.

If Israel is truly democratic, and grants all those people the vote, it will no longer have a Jewish majority. If it remains Jewish, by excluding those people, then it is no longer democratic. This is the so-called demographic argument, the unavoidable choice for Israelis left by 1967: either you hold on to the West Bank and Gaza or you remain a democratic state with a Jewish majority: you can't do both.

The moral threat was doubtless furthest from the minds of those celebrating the reunification of Jerusalem, and the return of Judaism's holiest sites, 40 years ago next month. But occupation corrodes the occupier, slowly but unmistakably. Every time an 18-year-old Israeli conscript stops a man or woman at a checkpoint or presses the button for a "targeted assassination", the moral core of a country becomes a little bit smaller. Hard to believe that when Israel went to war in 1967, it enjoyed the sympathy of world opinion, who saw it as the plucky David against the Arab Goliath. In the 40 years that have passed, Israel's standing has plunged and the admiration of those days has turned into suspicion and worse.

For Israel's enemies, these changes are all causes for celebration. But not me. As someone whose family history is bound up with Israel, who wants to see that country survive and thrive, I lament what the "prize" of the West Bank and Gaza has brought. My great fear is that Israel is like a homeowner who has built two extra rooms on shaky ground: in wanting to keep hold of the extension, he risks losing the whole house.

The events of the last few days only lend that argument more force. The Palestinian Authority is in a desperate state, fighters nominally allied with the two main wings of its supposed "unity" government slaying each other on the streets of Gaza. The president's writ does not run; starved by an international embargo - maintained not just by Israel, but by the US and European Union - the society is grappling with deprivation. Those close to it warn that the PA is on the verge of collapse.

That could see Gaza fully transform into what it already resembles: a lawless, failed state, a Somalia on Israel's southern border. The kidnap of Alan Johnston and the Fatah-Hamas feud could be a harbinger of things to come, as warlords and militias slug it out ever more lethally. Some warn that into this vacuum could step those angels of death, Al Qaeda, ready to mount a third intifada bloodier than anything Israelis have ever witnessed. "You're too late," says former EU mediator Alastair Crooke, "Al Qaeda's already there."

Until now, Hamas has held the Islamist franchise in Gaza, fending off Al Qaeda attempts to come on to its turf. But the latter is gradually acquiring a toehold, with the appearance of new groupings which give off the strong whiff of Bin Laden. The current violence in Lebanon, where a Palestinian group linked to Al Qaeda is waging war from the refugee camp of Nahr al-Bared, is a warning of Gaza's future.

Even if Al Qaeda does not supplant Hamas, by gaining momentum it could oblige Hamas to move in its direction. What is currently a grievance-based, nationalist movement with an Islamist hue - its main cause shaking off occupation - could become more rigid, more ideological, beyond the reach of reason and negotiation. This is a lesson Israel has failed to learn these last 40 years. If you refuse to deal with a group because it's too extreme, you don't get to deal with a more pliant, moderate alternative. On the contrary, you eventually confront a force that is even more extreme. It happened when Fatah was eclipsed by Hamas - and it could happen again.

What should Israel do? Right now, its leaders' sole objective is protecting civilians from rocket attacks: when Prime Minister Ehud Olmert visited Sderot on Monday he was booed. So his ministers speak of escalation, more targeted killings, perhaps even hitting the Hamas premier, Ismail Haniyeh. It's the same old mistake. Surely Israel's friends can begin to point in another direction: to seize on the hints from Hamas of possible compromise, to capitalise on the fact that Hamas too has an interest in defeating Al Qaeda - and to begin a dialogue with the enemy. The aim would be to end the war that never ended - because the alternative is always so much worse. ––Dawn/Guardian Service

Why the best are being lost?

By Tasneem Noorani


AN outstanding functionary of the state was killed with a shot to the head in his bedroom in front of his wife during the wee hours of the morning some time ago in Pakistan’s so-called safest city — Islamabad. The immediate reaction of the police was that it was a robbery.

This instinctive reaction to point out a “safe” direction for the deed defies logic. Why should four men waste their time in trying to rob an officer with an honest reputation and living in spartan conditions when they have far more lucrative alternatives?

Investigations being supervised by the apex court of the country — the deceased being an officer of the Supreme Court at the time of his demise — will hopefully reveal the culprits soon. Any conclusion other than the one that the police have come to is too horrendous to visualise, and one hopes that the allegations of his widow are not correct. Any other conclusion would destabilise one’s faith in the state.

Hammad Raza was an officer of the District Management Group, and who, even though domiciled in Punjab, was content to serve in the tough environs of Balochistan for 13 long years without cribbing like some others, because he had a youthfully exuberant sense of duty towards the state. He reportedly never asked for a posting to more comfortable locations until his requisitioning by the Supreme Court a few months back. The exacting standards that he had set for himself are vividly portrayed in his last e-mail written three days before his death.

Talking about corruption to a friend he wrote “Before putting someone else to the test, I tried it on myself with horrifying results. May I then submit my own case:

“1.Not every minute of my time spent in the office has been in discharging official duties.

“2. Not every call from the official telephones provided for use has been official.

“3. Not every litre of fuel provided to me officially has been used for strictly official purposes.

“4. There have been certain occasions during field postings when I have not paid my utility bills. These are some of the charges that came up against me during the investigation of “introspection”. And I plead guilty on each count and await your verdict as to where I stand.”

Such a high standard of self-rectitude should be a beacon for the rest of the state functionaries. Why is it that the best are being lost?

Some months ago, there was the case of another outstanding and brave man, a police officer by the name of Malik Saad, dying in a suicide attack in Peshawar.

Are we trying to stamp out the little good that exists in our midst by making a horrible example of the upright ones? On the contrary, we should be making heroes of such individuals, if not in life then at least in death, so that our youngsters are inspired to emulate them, specially their values.

The state has a responsibility towards rewarding and recognising state functionaries with such high moral values and a record of selfless service so that the good in the system has an outside chance of not being stamped out completely.

The pain of the brutal death of a young idealistic judicial officer has even pushed the horror of the macabre blood-letting in Karachi to secondary position. All in all it has been a depressing time.

The happenings of May 12 in Karachi were both a failure of political as well as administrative planning. On the political plane, anyone associated with this game, could have told the government that dead bodies are something that the opposition always wants in such a situation.

That is just the kind of thing which fuels the public’s passion against the incumbent government, and in this case, the government walked into the trap and readily obliged the opposition.

The restraint shown in the march between Islamabad and Lahore had by all accounts won kudos for the government. Public memory is short for peaceful events which do not leave a scar on the heart.

Planners for the government should realise that the government’s position currently is like that of a boxer pushed against the ropes and bearing the onslaught of the opponent. This is the time for the government to defend with its guards up rather than to attack if it wants to survive the current situation to fight another day.

Administratively, it was obvious to all who watched the punch by punch fight on television that the government had decided to hand over the city to its MQM component to sort out the Chief Justice and his supporters who wanted to show their strength.

The argument given must have been that if the government machinery itself tries to block the Chief Justice’s procession; it will be blamed for any violence that may ensue. Such tactics usually backfire as they did in this case.

In the good old days, when administrations were strong, they would not have taken any nonsense from anyone, even the sitting government, when it came to preventing a riot or potential blood-letting. The district government would have negotiated with one of the two parties to postpone their rally.

If the Chief Justice’s group had not agreed they would have certainly convinced the ruling party to desist in the interest of peace. Then they would have made arrangements to prevent processions from getting together, under the legal cover of Section 144, and perhaps used containers (what a wonderful gadget of the modern world; you can now block processions, build stages for rallies within hours and in the future perhaps cart protestors away by the hundreds from the scene of demonstrations) to prevent the Chief Justice’s procession.

A few torn shirts and a few broken bones would not have had the electrifying impact that the opposition has been able to get out of the event. But unfortunately, the status of professional administrations has been hammered into the ground, without yielding any apparent benefit to either the public or the rulers.

What is unfolding in our living rooms, thanks to the advent of numerous TV channels, is a match between the rulers and the public that we in Pakistan get to see regularly at the end of seven to 10 years of military rule.

This time, however, the coverage is more vivid and blow by blow, because of the wonders of the newly developed electronic media, credit for which has to be given to Gen Musharraf.

One only hopes that both sides play by the rules in the current contest between the government and the opposition, both for the sake of the Pakistani public and our already tarnished international image.

The writer is a former interior secretary.
tasneem.noorani@tnassociates.net

The Cutty Sark

NOT since retreating German troops torched a museum containing two of Caligula's imperial barges, near Rome in 1944, has fire destroyed such an important vessel. The blaze that reduced the Cutty Sark to a blackened iron core on Monday was cruel in many ways: to the team restoring it, to the many people who grew up loving it, and to the ship itself, which always carried with it the air of a trapped and vulnerable creature, like a tiger in a zoo, caught in a stone dry dock by the Thames.

The Cutty Sark was the one of the most refined of all ships, the Concorde of its day, fast, delicate and elegant. Its curved lines showed it was not some salt-crusted carrier but a whippet of the seas, designed to race from China with tea. Never quite the fastest or happiest of ships – beaten for speed by the Thermopylae, the greatest clipper of all – it was none the less the last to survive.

The sight of its great masts and sharp bow jutting towards the Thames in Greenwich was a reminder that London was once a great port. The good news is that both have survived, the rigging, along with much else from the ship, in storage while the vessel was worked upon and the bow untouched by the flames.

Enough remains to rebuild the Cutty Sark. It will cost millions: surely a moment for the billionaire bankers at Canary Wharf across the river to dip into their pockets. And when the work is done, must it remain caged on land? The Cutty Sark in full sail in a gale off Portland or the Scillies – now that would be a wonderful return to life.

––The Guardian, London

Falwell’s America

TELEVANGELIST Jerry Falwell is being remembered (depending on your worldview) as an inspiring religious leader, a shrewd political tactician or a demented demagogue who blamed 9/11 on "the pagans and the abortionists and the feminists and the gays and lesbians." But perhaps the best epitaph for Falwell is, "Only in America."

Falwell rode to political influence on Christian resentment of secular culture. But in breaking down what he once called "the psychological barrier that religion and politics don't mix," Falwell was preaching to the converted. For good and sometimes for ill, the United States is and always has been a religious nation. Faith matters not just on Sunday but also on election day.

After Sen. John F. Kerry was defeated by President Bush in 2004, analysts blamed the "God gap" between the president who once named Jesus as his favourite political philosopher and the cerebral Catholic senator whose faith was perceived as lukewarm. Though the truth is more nuanced, there is no doubt that "values voters" helped elect Bush, just as Falwell's Moral Majority helped Ronald Reagan's landslide victory in 1980.

The continuing influence of Christian conservatives on the Republican Party can be seen in Bush's religiously tinged rhetoric and the three presidential candidates who said during the first GOP debate that they did not believe in evolution.

Some Democrats of late have striven to root their own political agenda in the Christian faith. With a nod to the religious underpinnings of the civil rights movement and opposition to the Vietnam War, an increasingly assertive "religious left" has challenged the administration on both the war in Iraq and poverty at home.

––Los Angeles Times



© DAWN Group of Newspapers, 2007