DAWN - Editorial; October 31, 2007

October 31, 2007


Mixed messages

THE picture of the national economy looks rosy on the face of it, despite a worrying rise in the current account deficit and persistent inflationary risks. GDP growth, according to the State Bank’s Annual Report for 2006-07, stood at a healthy seven per cent in FY07 and the 7.2 per cent target for the next fiscal year appears achievable. The investment-to-GDP ratio increased to a record 23 per cent, attributed by State Bank Governor Dr Shamshad Akhtar to a surge in domestic private investment and unprecedented foreign direct investment inflows. ‘As a result, the economy looks well poised to continue on a high growth trajectory in coming years,’ the governor said on Monday. However, she feels that while the deficit recorded in the current account of the balance of payments — defined by one source as the sum of the balance of trade (exports minus imports of goods and services), net factor incomes (including interest and dividends) and net transfer payments (e.g. foreign aid) — is manageable in the short term, it will remain a major challenge in coming years. The $7bn current account deficit is linked to a mounting petroleum import bill, a marked slowdown in exports and a net foreign income deficit that is higher than last year’s.

Agriculture witnessed a moderate recovery on the back of a strong showing by wheat, sugar cane and gram which offset a disappointing performance by cotton and rice. Although large-scale manufacturing left much to be desired, the construction sub-sector grew by 17.2 per cent, far outstripping the target of seven per cent. This is particularly encouraging because construction is a heavy employer of labour. Despite its relatively small share in GDP, the construction industry accounts for as much as 6.1 per cent of the labour force. The SBP governor also singled out what is now a familiarly depressing showing by the textile sector. Despite concessional financing by the central bank, textiles did not register higher export growth nor was there an increase in investment.

Beyond the macroeconomic number crunching, it is the skyrocketing food inflation that is hitting consumers hardest. There is also little evidence that the benefits of sustained economic growth are finally filtering down to the poor. The Consumer Price Index and non-food inflation may be declining but that offers little comfort to the poor and middle classes. September saw a 13 per cent increase in food inflation, the highest in any month this year. This was partly due to the high consumption witnessed every year in Ramazan but extra-market forces clearly also played a role. ‘Extra-market’ is a euphemism for hoarding and profiteering, which are rampant in Pakistan under the guise of a free-market economy. Ideally, it is the correlation between demand and supply that determines price. What we see instead is manipulation of supply by a small pool of players with massive political clout. Wheat and flour have been exploited to the hilt this year. Despite a bumper wheat crop of 23.5m tonnes — a figure endorsed by the SBP on Monday — hoarders were successful in creating a shortage that sent prices spiralling. Going against State Bank advice, the government allowed wheat exports earlier this year, only to be forced to import come September. Building strategic reserves and planning that transcends the ad hoc will remain a dream so long as vested political interests continue to call the shots.

A small win for Iran

TEHRAN scored a point over the White House hawks the other day when the chief of the International Atomic Energy Agency, Mohamed ElBaradei, said that he had no evidence of efforts by Iran to make nuclear weapons. Mr ElBaradei’s words carry weight considering that he had voiced a similar opinion during the height of the Iraq WMD crisis, while the US had insisted that the Iraqi regime had stockpiled weapons of mass destruction. Washington’s allegations were subsequently proved wrong, but the havoc that was unleashed on Iraq after the US invasion has heightened fears that chaos in the region may worsen if Iran’s nuclear facilities — which it insists will be developed for peaceful purposes — are attacked. Although the US has maintained that it would consider a diplomatic solution it has also emphasised that it was debating all options, a stance that has much to do with Israel’s increasing unease in a hostile neighbourhood.

It is time for the US to listen, for once, to the IAEA, and not to push forward its own point of view in a belligerent way. Whatever its real intentions, there is no doubt that its manner has not only hardened Tehran’s posture on the nuclear issue but has also caused anger among ordinary Iranians who have been disenchanted with US policies since well before the revolution of 1979. Certainly, President Mahmoud Ahmadinejad has not felt the need to keep a low profile on the nuclear question. The recent appointment of Saeed Jalili as chief nuclear negotiator has not been taken well, especially as he has replaced the less hawkish Ali Larijani. Mr Jalili’s stance can be judged by his recent accusation that the US is supporting terror groups in the Middle East. By not toning down such rhetoric, Iran will only weaken its position — even in the eyes of countries like Russia that, despite supporting sanctions against it, do not take an inimical view of Tehran. Under the NPT, Iran has the right to develop its nuclear programme for civilian use, but for it to do so it must first rectify its negative image, cooperate fully with the IAEA and follow a more moderate route.

Broadcast bites

THERE is little dead air in the NWFP. The hills are alive with the sound of hundreds of rogue radio stations that are prime mouthpieces of extremism. There are more than 50 in an area such as Swabi and the populace remains glued to them as clerics are familiar. Illegal radio transmitters are not only pivotal in pious gatherings but also air religious sermons at prayer time. Suitcase radio outfits also serve as handy hate machines, which are used by one sect against another to spark hostility. Take the sectarian violence in the Khyber Agency that began with a battle on these air waves. Another example is the anti-polio campaign, where a barrage against it resulted in an attack on a polio vaccine provider. They have also ignited a ‘jihad’ against educating the girl child in the NWFP. Rebel radios also hinder satellite signals and pose a direct threat to security by operating on frequencies allotted to security agencies and therefore interrupt police wireless systems. The Frequency Allocation Board (FAB) has not sanctioned any facilities to these stations.

Although over a 100 stations were shut down by Pemra last year, the laws of the land do not apply to Fata where rabid broadcasts continue to boom. Interestingly, Maulana Fazlullah’s FM radio station roared for nearly four years in Swat, which falls under Pemra. In September, Governor Orakzai promulgated the Pemra Ordinance 2002 in the province, stating that it would be applicable in Provincially Administered Tribal Areas (Pata) as well. Pemra maintains that the legislation is still underway for Fata. Hopefully, the current turmoil should serve as a catalyst to bringing insurgent radio into the fold of the law. The dire need to muzzle rebel and illegal voices must not fall on deaf ears any longer and the most significant step for Pemra would be to crack down on the local manufacturers of cheap radio equipment.

OTHER VOICES : American Press

‘The protector’

AMID the succession of sad milestones that come with war, one of the more poignant came last week when the late Lt. Michael Murphy became the first Medal of Honour recipient for combat in Afghanistan. The award was presented posthumously to Murphy’s parents, Maureen and Daniel.

Daniel Murphy, who received a Purple Heart for his service in Vietnam, told the New York Times, “What Maureen and I always worried about was that he would put himself in danger to help someone else, which turned out to be true.” Even as a boy, his parents called Murphy ‘the protector’.

Murphy’s last mission ended on June 28, 2005. In search of a Taliban leader, the 29-year-old Murphy and three other US Navy Seals were manoeuvring across a rugged, enemy-controlled mountain ridge, when 30 to 40 Taliban fighters surrounded them. All four Seals were shot.

Murphy knew that none would survive without help. Although wounded, he deliberately moved into open space to transmit a call for help. Murphy was shot several times, yet continued to communicate in a heroic effort to save his men.

Murphy could have chosen a different path. He grew up on Long Island, N.Y., and graduated from Penn State University with honours and was accepted to several law schools. Instead, he chose the Navy. We may disagree with President Bush on the war in Iraq, but we share in his assertion that this country owes Murphy ‘a debt that will not diminish with time — and can never be repaid’. — (Oct 29)

Regime change target: Cuba

THIS week, the UN General Assembly is expected to overwhelmingly approve a resolution condemning the US embargo of Cuba. Similar resolutions have sailed through annually for at least a decade. No other government in North, South or Central America honours the embargo. Yet President Bush reiterated his strong support last week for continuing the ban on virtually all trade, travel, family remittances and sales of medical products.

In a speech described by aides as the administration’s vision for Cuba’s future, Mr Bush openly encouraged the overthrow of Fidel Castro’s regime. He even asked Cuba’s military to side with the people when they ‘rise up to demand their liberty’. US policymakers haven’t changed their tune for almost half a century. Consequently, the communist regime that ousted the pro-American Batista dictatorship has found it convenient — and politically rewarding — to blame its problems on the punitive Yankee policy.

Mr Bush’s latest salvo comes more than a year after the ailing Mr Castro transferred ‘temporary’ control to his brother, Raul.

A better sense of proportion in Washington would be wise. Cuba doesn’t exactly pose an existential threat to the United States. If we want freedom to shine in Cuba, let’s try loosening the embargo on travel and investment, which is what we did towards China. Let’s also remember that, as bad as communist Cuba is on human rights, conditions are as much worse in many countries. — (Oct 29)

© DAWN Group of Newspapers, 2007