Why forex reserves?
CRITICS of the present policy on reserve accumulation fall into three distinct categories. The first group consists of ‘I don’t accept’ type who do not wish to be bothered with any facts: for them this is simply juggling with statistics. They do not have any credibility in these numbers and do not believe that the country has so much reserves. For them, I can only pray that Allah opens their minds and allows them to see some light.
They can, if they choose to do so, verify the credibility of these statistics by looking at our weekly statements over the past 32 months particularly when we did not hesitate to announce publicly in October 2000 that SBP reserves were down to $995 million only. It is also a widely known fact that it was the Annual Report of SBP for 1999-2000 which disclosed, for the first time, a complete and comprehensive picture of the country’s external debt and liabilities including the military debt and has been publishing the updated data every year since then. We also regularly publish all the inflows and outflows of foreign exchange received or paid by the country.
For greater transparency we have for the first time since April 2001, begun to segregate the SBP deposits from those of our banking system. As the banks were allowed to retain these deposits and to manage them on their own in the best interest of their customers, it was essential that these be disclosed separately. This has assured resident and non-resident Pakistanis that the risk of freezing their deposits because of mandatory surrender requirement to SBP has been eliminated and they can safely deposit their foreign currency in Pakistani banks. But even despite such transparency and disclosure if this group dismisses the numbers we can’t do very much to reassure them.
The second group consists of those who consider foreign reserves to be ‘irrelevant’ as this has not helped the conditions of common man. They confuse the domestic budgetary resources with external resources and are not perhaps fully aware of the distinction between the fiscal and external accounts. Foreign reserves belong to the whole nation - the government and private sector while budgetary resources belong to the government alone. In theory these reserves can be transferred to the government by the SBP in form of loans. This group would like the SBP to draw down these reserves and provide the equivalent rupees to the government.
The government can then use these resources in a variety of ways (a) to increase its development expenditure and thus boost the declining investment level; (b) to insulate the general public from hikes in petroleum prices, electricity and gas prices by providing subsidies; (c) to devise special schemes such as Housing, Yellow Cab, Yellow tractor; (d) to set up programmes for direct employment creation; (e) to extend concessional loans at low rates of interest to agriculture, exports, SME and IT sectors.
What will be the consequences of this policy? The reserves will be exhausted in less than two years, the government’s domestic debt will increase by Rs 420 billion and debt-servicing component of the budget will create additional annual budgetary outlays of Rs 40 billion every year and inflation will most likely be in double digits. But none of these schemes or subsidies can be sustained after two years — i.e. after the reserves are exhausted. This government can become very popular among this group of critics by following this course of action and appeasing the general public. But the legacy to the succeeding governments will be an empty coffer, a serious risk of default, higher burden of debt and severe inflationary pressures.
Incidentally, these were the same individuals who were using the stick of level of reserves in 1999 and 2000 as an indicator of economic performance of this Government and alerting everyone to the imminent default on external debt. Now that these reserves have reached a respectable level they are pooh-poohing these as being irrelevant. It is therefore hard to convince this group. However, an attempt is made in the final section of this article to identify the links between reserve accumulation and real economy.
The third group of critics recognizes that the reserve accumulation is indeed a remarkable achievement but they attribute it mainly to non-economic factors such as the September 11 events and are sceptical about its future sustainability. In their view this is a one-off change which is unlikely to recur in the future. Some of them are also concerned about the non-traditional ways in which the reserves were accumulated in the past. This group is indeed raising the right questions and deserves a detailed response.
The more valid theoretical argument that under a free-floating exchange rate regime the supply and demand will equilibrate and thus there is no need to accumulate reserves has not been raised by anyone. In practical terms developing countries have become more cautious since the 1997 Asian crisis and believe that the sudden change in market sentiment can leave them highly vulnerable. Therefore they fall back upon reserve accumulation as a precautionary step and a first line of defence against such possible eventualities. China’s and India’s large reserves today cover more than 12 months’ imports. So do those of a large number of Asian countries including Japan. The following excerpt from a recent Reuters’ story on growth in Asian forex reserves summarizes this trend more succinctly.
“The reserves of Asian and Japanese central banks jumped more than 10 per cent in the first half of this year as they bought dollars to slow the rise of their currencies, giving a valuable hand to their exporters and helping to fend off deflation. The developing economies of Asia were natural importers of capital until 1997 financial crisis brought home with a vengeance the vulnerability of running current account deficits in an era of footloose global capital.
Their reserves melted away like a snowman in the sun, forcing Thailand, South Korea and Indonesia to ask the International Monetary Fund (IMF) to bail them out. Since that traumatic episode, Asia has saved more than it has invested resulting in big current account surpluses that have been partly recycled in the form of an accumulation of official reserves.”
To those Pakistanis who would like the country to be free from the influence of the IMF there is no other better option to assert our economic sovereignty than to accumulate these reserves.
Of course, there are many well-informed observers and commentators who are aware of the positive benefits to the country from pursuing such a policy and who feel good about it. The arguments presented here will reinforce their conviction and inform the rest of the community which would like to be enlightened on this issue.
I would therefore like to systematize my discussion by addressing the following three questions:- (a) Why does a developing country have to accumulate reserves? What is an optimal level of reserves for Pakistan? (b) How did we accumulate reserves during the last 32 months? (c) How does the level of reserves affect the real economy?
(a) Why does a country accumulate reserves? There are several reasons for a poor developing country to accumulate reserves.
First, reserves are used as a tool of exchange rate and monetary policy management. The inter-bank market is used to affect monetary policy by either supplying domestic currency to the market or buying it in the market against foreign currencies. This affects the domestic money market balance and, consequently, domestic interest rates.
In Pakistan where the foreign exchange market has been liberalized, the State Bank of Pakistan intervenes to affect the rate at which rupee trades. The objective of a stable, realistic exchange rate which does not erode the competitiveness of Pakistani exports can only be realized if the SBP has adequate reserves and can intervene at times to achieve this objective. In the long term we have to maintain or enhance Pakistan’s share in the world markets and this market share cannot be allowed to slip away because of volatility or violent swings in the exchange rate. A pro-active policy of reserves management helps Pakistan in maintaining the competitiveness of its goods and services in the world economy.
Second, reserves provide funds in foreign currencies for servicing external debt and liabilities. Adequate foreign currency is needed at the time when debt servicing payments fall due to avoid a default. Unlike in the past when the State Bank and the government had to raise expensive commercial loans to make these payments, gradual accumulation of reserves through non-debt creating means to a sufficiently comfortable level avoids panic in the market and obviates the need for contracting additional debt for the country.
This approach of raising resources at the time of making payments reduces credit rating agencies’ confidence in the country and also entails large open currency risks on the liability portfolio. The costs become invariably quite high when the lenders know that the country has to make payments and has very little choice. A high level of reserves provides implicit guarantee to the creditors that the country will be able to meet its obligations on time.
Third, in the case of Pakistan, reserves are held as a defence against unforeseen emergencies or as a cushion against unanticipated exogenous shocks. In May 1998, the open market exchange rate took a deep dive because the level of reserves was inadequate to meet even partial withdrawal of foreign currency deposits. Again in 2000-2001 when the SBP reserves were hardly around $ 1 billion enough for three weeks’ imports the free float of currency led to a steep depreciation of 18-20 per cent shaking the confidence of the markets. There was no economic rationale for such a free fall of the rupee. In contrast, the country had accumulated reserves up to $ 3.2 billion by September 10, 2001, and there was no speculative attack on the rupee either after September 11 or December 13 or May 8, 2002 or May 13, 2003.
To be continued
he writer is Governor, State Bank of Pakistani
Future of the rupee
THE future of the rupee or the exchange rate of the dollar in rupees has become a matter for anxious speculation particularly among those with large surplus incomes.
With the hazards of sending out illegally or improperly earned money on the increase, those with surplus incomes are looking for avenues to park their money safely and profitably at home. That has become all the more necessary when interest rates abroad have come down sharply and the rewards for the hazards of sending money out safely are small.
Finance Minister Shaukat Aziz says if the rupee had been left untended it might have gone up to fifty five to a dollar instead of the current exchange rate of 59.50. And if the foreign exchange reserves of the country were not heading towards seven billion dollars the rupee might have gone up to seventy to a dollar from 64.20 before September 11. Both the statements are more or less true. The increasing foreign exchange reserves do prevent a run on the dollar in the country. And its exchange rate is going up while international factors ease the demand for more and more dollars.
The coming down of the dollar by about eight per cent is good for the country. The people welcome that and the importers are delighted as that means cheaper imports but the exporters are unhappy as they get less rupees for their dollar earned so are those sending home remittances from abroad and their beneficiaries at home. They want more rupees for their dollars. But the government argues that it is being made up by lower inflation at home and cheaper import prices.
But the people largely like cheaper dollars for their medicines particularly when there is a fifteen per cent sales tax on most of them. The intellectuals hope for cheaper imported books. The government has a mixed approach. A stronger dollar means higher rupee cost of imports and more customs revenues in sales tax as they are collected on the rupee value of the imports. But it has to also spend more on servicing the foreign debt and to meet the cost of defence equipment and other varied official needs. Diplomatic missions abroad and financing VVIP trips around the world which are becoming more frequent will cost more.
If the dollar had gone up to Rs. 70 without the large foreign exchange cushion we have now, everything imported would have cost far more for the government and the people. These include medicines, food items like milk products and cars. So the cheaper dollar is good for us all around except the exporters and those who send and benefit by home remittances.
But the fact is that a strong rupee or a steady exchange rate for the dollar is good for exporters as well eventually. If India can export all it wants at the exchange rate of 48.83 to a dollar, 25 per cent less than Pakistan and BD can do well enough at 57.45 takka to a dollar, we need not follow the Sri Lankan pattern of having 94 rupees to a dollar. Which makes only the tourists love it. So in the long run a steady rupee is good for the exporters as well. There will be less smuggling out of the country for the fear the rupee may go down further.
The question is asked cynically how the country has moved towards building up more than six billion dollars as foreign exchange reserves? One-third of that belongs to the banks and the public and the rest to the State Bank of Pakistan. Some of that money came in the form of increased aid (seven hundred million dollars from the US), through old loans that are rescheduled, swapping of a part of the aid for use of social development and through a doubling of the home remittances last year.
The State Bank of Pakistan also bought large amounts from the open market including two billion dollars last year and it made the figure public after its purchase. The State Bank has very large reserves of a total of Rs. 582 billion which include deposits of various government bodies. Its reserves alone is eight billion rupees and the provincial governments have deposits of 20.6 billion rupees. So it has made use of only a small fraction of its ten billion deposits for buying dollars from the market.
And now it is trying to put the dollar to profitable use by consulting fund managers abroad as to where to invest that dollar fund. These are days of low interest rates and high risk investment. So if the State Bank incurs any loss through investment abroad there can be a big protest within the country. A seven billion dollar foreign exchange reserves are good for attractive foreign investment and to seek short-term loans. And it presents a better image of the country than when it had reserves of less than a billion dollars.
Those who scoff at the new foreign exchange reserves of Pakistan should look at China’s reserves of 237 billion dollars and of Hong Kong which is 112 billion dollars making a total for China of 349 billion dollars and yet China says that it is a developing country and it admits it has vast problems of unemployment and poverty. And it is not liquidating its foreign exchange reserves through quick spending. India has a foreign exchange reserves of 54.7 billion dollars and it is not liquidating these reserves to cope with its problems of massive unemployment and poverty.
Exporters in Pakistan who clamour for cheaper rupee and stronger dollar should look at what is happening in Turkey where a dollar is now equal to 1.695 million lira — a large drop after drop after it was 1.325 million lira a year ago. And such cheap Turkish currency has not given Turkey an export boom; instead it has a host of problems including a negative balance of trade of nine billion dollars and yet it safeguards its foreign exchange reserve of twenty-two billion dollars. And it often suffers from political instability as it does now when the prime minister seems to be going out of office.
The rupee is an index of the strength of Pakistan’s economy. When inflation is high and balance of trade is too adverse and balance of payments are no better, its exchange rate will be down. Even the strongest currency of a country like that of the US can suffer when its economy becomes weak as it is now while the Euro is relatively stronger.
The Pakistanis feel unhappy that their currency is weaker than the Indian and the Bangladeshi ones while not long ago it was far stronger than theirs. It has happened under pressure from the exporters and yet the exports have not increased significantly.
So the exporters should be helped through other means including cheaper energy, lower interest rates, and quicker refund of the taxes paid on exports. Shaukat Aziz wants such repayment to take place within forty-eight hours of exports. That is the line of approach that is more helpful to the economy than making the rupee cheaper.
Democracy and the press
EVER noticed how the Press in Pakistan suddenly becomes the darling of the person dismissing an elected government? His advisers go into overdrive to cull together any bit of damning evidence they can lift from newspapers and magazines for the boss to lay his claim for seizing power.
Added to this is a serious-face, properly perturbed, deeply sincere and unarguably convincing for the benefit of the ordinary people. Addresses by the usurpers (starting with Ayub Khan and still counting) to the nation via the state-controlled PTV — replete with media references — have certainly given the press its moments of glory.
More recently, the 2002 Human Development Report (HDR) launched by the UNDP has given a ringing endorsement to the role of the Pakistani press in reporting misdemeanours of its elected leaders. “The press in Pakistan has done a wonderful job in exposing corruption,” says Omar Noman, co-author of the HDR. The Pakistan-born UNDP deputy director says that because of the “general disillusionment of the public” and an “excellent exposure” of corruption by the press, the man in the street hardly raised an eyebrow when Musharraf’s coup overturned Nawaz Sharif’s elected government in 1999.
Yet, when trawling through the ‘Freedom of the Press’ column in the HDR, Pakistan still scores poorly: it is ranked 57 by the Freedom House survey that designates countries with a score between 0-30 as having a free press; 31-60 as having a press that is partly free and 60-100 as not being free. While the Pakistani print media is free and vibrant, what it has to lug as extra baggage is the electronic media (TV & Radio) which is state-controlled and needs liberalizing if Pakistan has to improve its ratings.
Compiled by an independent team of experts, the UNDP has, since 1990, been commissioning the HDR in a bid to explore major issues of concern. I remember, one year, the late Mahbubul Haq, a UNDP adviser, launched the report in Islamabad that he himself had authored on the proliferating arms bazaar. Pakistan and India along with the Saudis figured as the top buyers while the US and UK ranked as the top arms sellers. No surprises there. Dr Haq rang the alarm bells and presented a scary scenario in which the money grabbing West was seen exploiting the security jitters of the starving subcontinent and feeding on their frenzy encouraging an arms race. The rest of the world slept easy. Sound and fury there was none.
The frills adorning the report this year again target the West. (Maybe it’s become a UNDP practice). In a hand-wringing brief write-up, the report notes: “Nearly half of the voting power in the World Bank and the International Monetary Fund (IMF) rests in the hands of seven countries. Although all countries have a seat and vote in WTO (World Trade Organization), decisions are made by small group meetings heavily influenced by Canada, Europe, Japan and the US.”
Sticking out its neck an inch further, the report addresses the imbalances between the developed countries and the developing countries and orders: “Eliminate the UN Security Council veto and reform the selection process of the heads of IMF and the World Bank (currently controlled by Europe and the US).”
The above tweaks, like Dr Haq’s lamentations, will predictably generate nothing more than the pouring of scorn by the peripatetic West, which will dismiss it as a political minutiae or a mere blip on their radar screen while continuing to romp in search of more pelf and power aimed at directing the destinies of the developing countries.
Focusing attention on democracy, the main theme of the 2002 Human Development Report is Deepening Democracy in a Fragmented World. Why now? Because, argue the authors: “The big lesson of this period is never to ignore the critical role of politics in allowing people to shape their own lives. Political development is the forgotten dimension of human development”.
Undoubtedly, this theme is right up one’s street. (Wonder if the UNDP had Pakistan in mind when it picked democracy as its theme). With elections only two months away, Pakistan prepares itself to invite democracy back in its fold. And should President Musharraf raise the spectre of an attack on national security or domestic mayhem to delay elections, the report has a ready answer for him: “Around the developing world — from Malaysia to Pakistan, Colombia to Kazakhstan — more populist or authoritarian leaders have argued that there is a trade-off between national stability and personal freedom. The claim that very poor countries need to concentrate on building peace and economic prosperity first — and human rights and democracy later — Human Development 2002 provides strong evidence to the contrary.”
Journalist-turned UN powerhouse, Mark Malloch Brown, who once rubbed shoulders with hacks like us when he was a reporter for the Economist on a family planning study tour of China in 1985, is today the supremo of UNDP. He cautions countries like Pakistan that “terrorism feeds on failed states and poor governance as much as failures of national security: we cannot successfully address one without the other.” Well said. But if we continue with the status quo in Pakistan, then chances of our ‘national security’ being safeguarded are good. However, if we opt for a democratic polity, what then is the guarantee that corruption and poor governance will not revisit as they have been doing without a break in the past?
Unfestive, meanwhile, is our performance in the Human Development Index (HDI), which forms the backbone of the UNDP report. The HDI ranks 173 countries by a composite measure of life expectancy, education and income per person. We rank 138 and are unceremoniously placed in the ‘low development’ column as opposed to India that has barely made it to the ‘medium development’ column and ranks 124.
After Pakistan comes Sudan and other African countries in the sub-Sahara. The last on the list of 173 is Sierra Leone. And where is the world’s sole superpower? Number six. Norway comes out on top of the list, with Sweden and Canada closely behind.
Another downer for Pakistan is the ‘Gender Empowerment Measure’ (GEM) which measures the participation of women in political decision-making. The greater the gender disparity in participation, the lower the GEM. As expected, the US and Europe have a low GEM, while India and Pakistan have the highest which is 60.
The report especially mentions the US media being controlled by just six major corporations. The pro-corporate tilt in the coverage and ownership is so blatant that many wonder about the role of leading editors and reporters at influential news organizations who “appear more trusting of large corporations and economic globalization, and less concerned about guaranteeing access to health care to all Americans” (a major cause of general concern in the US today). Watching the Wall Street meltdown only points to the glaring bias in the news. Both print and broadcast media have betrayed an ‘uncritical, if not reflexive, cheerleading of CEOs, mergers and acquisitions’ while the stock market headed due South.
An online web site, Fairness and Accuracy in Reporting, edited by Normon Solomon puts it well: “When the mass media in some foreign countries serve as megaphones for the rhetoric of their government, the result is ludicrous propaganda. When the mass media in our country serves as megaphones for the rhetoric of the US government, the result is responsible journalism.”
What would one call The New York Times report on the Gujarat massacre splashed all over the page on the day Secretary of State Colin Powell landed in New Delhi? It was hardly news since Arundhati Roy and many others had written the same story some months earlier and were published in Dawn. Going by the NYT stratagem, sure enough, to cover Powell’s hop to Islamabad, the next day, we saw sensationalized on its pages the Jhugiwala rape. Two terribly stale stories on two consecutive days.
Would one call this “responsible journalism”? Or just strategic timing? Was this intended to provide much needed leverage to the Secretary of State in delicate manoeuvrings he had to achieve in the two countries? After all, let us not forget that the NYT wields considerable clout in influencing US foreign policy and as a quid pro quo, has to smoothen the tracks of the State Department by exposing apparent vulnerabilities of countries that need to be coerced into toeing the American line.
The late Katharine Graham, publisher of Washington Post was perhaps more up-front: “We live in a dirty and dangerous world. There are some things the general public does not need to know, and shouldn’t. I believe democracy flourishes when the government can take legitimate steps to keep its secrets and when the press can decide whether to print what it knows,” she said in a speech to CIA recruits in 1988. Her paper did print what it knew on Watergate and sent a sitting president packing in August of 1974.
anjumniazusa@yahoo.com
Tired but not quite retired: NOTES FROM DELHI
PRIME Minister Atal Behari Vajpayee is tired. This is official. Senior ministers are now opting out of any euphemism and are happy to attribute exhaustion as the reason for the non-appearance of the prime minister at any meeting. However, Prime Minister Vajpayee has not retired. Emphatically not.
This is not to say that no one wants him to retire. He might have heard a few such voices within his own party. Such people will of course be hopeful, but they would be wise not to be optimists.
The proposition that the prime minister is tired invites, as is said in parliamentary language, supplementaries. Tired is a word that bends in more than one direction, leaning upon the auxiliary. Is he tired of something? Is he tired of someone? The easy answer is that advancing age and failing health leave him tired. The easy answer rarely amounts to the full truth. It is certainly a half-truth. Age is a fact of life, and the prime minister’s health was a cause of concern even when he took the oath of office for the first time. But facts are more complex than the obvious.
We will for the moment ignore Dhirubhai Ambani’s remark (which should be more famous than it is) that anyone who works for 18 hours a day is clearly a slow worker. Broadly, leaders have two kinds of styles. One might be called the Rajiv Gandhi mode. He would be a great detail man, stretching his schedule to the early hours of the morning and expecting virtually every serious decision to pass through his microscope before it was sent to the cabinet or converted into law.
Depending on which issue was at the fore, Rajiv Gandhi was therefore minister of everything in addition to being Prime Minister of India. When India negotiated a treaty with Sri Lanka he became the de facto foreign minister; when Indian troops landed in the neighbouring country he became the de facto defence minister; when Ayodhya or Shah Bano appeared on the agenda he was the real home minister, and there was more than one occasion when he became a chief minister of some state or the other as well. That is the attitude of a workaholic who is more certain of his own judgment than that of his ministers.
Atal Behari Vajpayee belongs to a totally different school of thought, and that phrase is used deliberately despite being a cliche. His concept of work is more Brahmanical. His job, he certainly believes, is to do the thinking — only as and when required — and let those down the line to fulfil their assignments. There will be unevenness but that is a law of life: nothing is equal because every mind is not equal, and every birth is not equal, and every destiny is not the same. Vajpayee will involve himself with decisions that open, or shut, doors, and are therefore correctly known as key decisions. He takes time over them, for rumination and consideration are of necessity time-consuming.
Left to himself he would have permitted foreign direct investment in the print media two years ago, but he permitted time and debate to prepare the climate before he took the final step (and only he took that final step, no one else). Once he was convinced in his mind he left the paperwork and the political passage of the decision to the relevant minister, in this case Sushma Swaraj.
Similarly disinvestment is now the headache of Arun Shourie. Rajiv Gandhi would in all likelihood get involved in each particular case of disinvestments after having pronounced the broad policy. Vajpayee has no time for the details; that is the proper job of the designated minister. He is not a physical worker. It stands to reason therefore that his daily routine cannot be particularly tiring, except in the sense of being tiresome; which is more a function of boredom rather than a physical burden. Prime ministers younger than Vajpayee have been known to sleep on the job, and Vajpayee, to his credit, has kept his eyes open through the worst instances of tedium. If he now feels that he does not really have time for tedium, can anyone really blame him? But that does not mean that the Prime Minister is tired. That only means that he is tired of the unnecessary, as in his scheme of things.
A very good example of this was the way he dealt with Uttar Pradesh issues. He was too tired to meet an MPs’ delegation, spurring once again speculation that he was vacating space for his new deputy prime minister Lal Krishna Advani. But when the BJP leaders of UP like Rajnath Singh and Vinay Katiyar took a decisive step into what they thought was vacated space, and tried to break the coalition with Mayawati which is in power in Lucknow, they found the prime minister himself there. He moved in, snuffed out the revisionist line, and went back to his “tired” self. All that the prime minister has done is that he has reserved crucial and critical areas for his concern, and told the others to get on with life without him.
This is also useful when it comes to issues on which he may not be totally in agreement with most of his party. The sharpest difference is over Narendra Modi. How do we know this? From the speech made in the parliament by none other than the prime minister himself, when he admitted that he had made up his mind to change the chief minister of Gujarat but was prevailed upon by the majority view of his party to let Modi stay. And so when Gujarat resurfaced in the parliament, the prime minister decided that Advani should defend in public what he had defended within the party. Fair is fair. If you want the bouquets within the party you must also be ready to pick up brickbats in the parliament. Nothing personal about it.
Actually Vajpayee and Advani probably understand that better than any of their loyalists who feed speculation in the hope of some indecipherable reward. The two are closer friends than they readily let on; they have, quite simply, worked together longer than any other comparable team of leaders. They were even together (albeit accidentally) when arrested during Emergency and shared the same jail, as Advani’s prison recently republished jail diaries narrate so well. Sentiment apart they know the eternal value of good-cop-bad-cop in public life, and hold up the party using contradictory poles. Of this much they are sure: neither is going to move so far away from the other that the party’s tensile strength gets seriously tested. That is the way the BJP works, for better or for worse.
The two also know the hierarchy. Vajpayee has created more space for his deputy, at least partly because the deputy prime minister is not getting any younger either. But as he leaves more of the domestic agenda to Advani (in effect, only reinforcing the natural constituency of a home minister), the prime minister is likely to spend more of his own time on issues that motivate him. He would like to define his years in power with one great issue, and that clearly is a resolution of the problems with Pakistan, if that is at all possible.
American involvement in the problem is now a transparent fact, and one that offers both risk and opportunity. It will be a complex dance in an open barn, but the dance has begun. Colin Powell’s latest message to the subcontinent is that the time has come for a resumption of dialogue. The first anniversary of the Agra Summit has gone so quietly that you may not have noticed, but hopes were higher than the temperature in June and July last year.
The only way you will never be disillusioned is if you have no illusions to begin with. Neither hope nor reality could find their correct level last year. Since then we have tasted the dangers of life on the precipice. Everyone will tread more carefully now. There is no other rational way to walk through the minefields of history. The prime minister will not be tired when the time comes for that walk to restart.
The writer is editor-in-chief, Asian Age, New Delhi
A new INS
SOMEWHERE, the fuse on the next terrorist strike against the United States quietly sizzles. Agencies scramble to cut it before the all-but-inevitable bang. And so the Justice Department this week announced a plan to enforce a law requiring all noncitizens to promptly report any change of residence to the Immigration and Naturalization Service. And so, predictably, some immigrant advocates cried foul.
In the months since 9/11, Americans have grappled with the delicate balance between individual rights and the need for security. Troubling questions continue to arise over complex matters such as when, if ever, immigrant suspects can be legitimately detained without due process.
Whether foreigners should let their host country know where they’re living, however, hardly ranks as a tough call. But even such a common-sense policy will lead to increased chaos until the INS tackles a more imminent threat to the nation’s safety: the agency’s own incompetence.
The residence reporting law, which has been on the books largely unnoticed for 50 years, will apply to all immigrants in the United States. But just processing the updates from the 10 million here legally — more than 1 million just in Los Angeles — is a massive job. Today’s INS would almost certainly botch it, creating even more of a bureaucratic nightmare for immigrants already plagued by the agency’s sloppy paperwork and erratic policies. —Los Angeles Times