New planning strategies

PRIME MINISTER Shaukat Aziz wants to convert the Planning Commission (PC) into a “think-tank” with much wider responsibilities. Coming soon after the Medium Term Development Framework (MTDF) 2005-2010, the move signals the strengthening of the long-term planning process, indicating a paradigm shift from centralised planning made redundant by the worldwide dominance of capitalism. Now, human capital and the private sector will be the engine of economic growth with an enlarged Public Sector Development Programme (PSDP) designed to “crowd in the private sector” and to act “as a catalyst for functioning markets”. Over the next five years, the MTDF stipulates that public sector investment would be increased from about one-third to about 40 per cent of the overall investment. Apart from preparing short, medium and long-term sector-wise development strategies to avoid duplication and economic waste, the PC has been mandated to provide inputs for the government’s policymaking. It will also be required to ultimately shed its own responsibility of micro-managing projects by guiding federal ministries and provincial governments to build their own capacity and manage projects efficiently. Its mandate also includes a vibrant role for achieving food, energy and water security and transforming Pakistan into a knowledge-based economy and an industrialised entity under Vision 2030. But it is obvious that the PC’s new role as a think-tank and facilitator would require its own restructuring and the upgrading of its professional skills to improve the quality of strategic planning and the execution of projects on time, while avoiding the problem of cost. Much of the funds for development projects are currently disbursed in the last quarter of the financial year, bringing into question whether it is prudent spending.

Over the years, long-term strategic planning has been frequently interrupted with governments engaged in crisis management and in efforts aimed at bringing about macro-economic stability, the 1ongest pause being 1971-78. The planning process was once again disrupted after the nuclear tests in May 1998. It was only in June 2004 that the present government mandated the Planning Commission to formulate a five-year plan. The Medium Term Development Framework was approved by the National Economic Council in May 2005. The absence of long-term planning, an integrated approach and harmonised inter-sectoral growth has created many imbalances in the economy. This is evident from the growing disparities in regional and household incomes. Private sector investment is handicapped by the inadequacy of power and trade skills. Both shortages and surpluses in the production of commodities create problems. Despite its valuable contribution to industry, agriculture’s share in GDP is declining fast. To tackle these imbalances and to ensure that the fruits of economic development are not monopolised by a few, long-term development goals need to be properly defined and supported by appropriate policies, programmes, strategies and plans of action.

To reduce regional disparities in incomes, it is essential that the PC has proper representation of all four provinces. Currently, Sindh and the NWFP are not represented on the Commission. To ensure national support for the long-term development plans, it is not enough for the prime minister to head the Commission. The broad strategy for development should be presented to the Parliament for debate and approval. No doubt, the MTDF working draft was discussed with various stakeholders from the private sector, civil society organisations, the provinces and various federal ministries before approval by the National Economic Council. But it was not presented before the Parliament as originally stipulated.

Another donors’ conference

AS rehabilitation efforts continue in last October’s earthquake-hit areas of Azad Kashmir and the Frontier, Pakistan has called for a second international donors’ conference to be held in October to further the process. The deadly quake had left over 80,000 dead and nearly wiped out several cities, with the AJK capital Muzaffarabad having suffered no less than a 70 per cent destruction of its built-up area. The cities of Balakot in the Frontier and Rawlakot and Bagh in the AJK were all but razed to the ground. The extent of the destruction caused in Muzaffarabad has necessitated the relocation of much of the state capital, because the task of clearing up the existing site of massive debris is not economically feasible. The international community last year had pledged some $6.2 billion towards the rehabilitation of the hundreds of thousands displaced by the tragedy and for infrastructure building. A colossal task still lies ahead: entire new cities have to be rebuilt and the infrastructure reconstructed from scratch for the affected people to pick up the thread of normal life again.

The complaints by people that they have not been given any help in the aftermath of the tragedy are many but these, too, are linked to the paucity of funds — money that was pledged by the international community but not fully paid yet. This is not to say that bureaucratic delays and ineptitude are not to blame for help not reaching some of the most deserving. Tent cities established after the tragedy have long been dismantled. Many in need of shelter and left to fend for themselves are now falling into destitution, especially after the flashfloods caused by the recent heavy monsoon rains. That said, the other factor contributing to the need for more funds is the rising cost of reconstruction which, now as the process has begun, has gone much beyond the amount earlier estimated. There is again a dire need for the international community to step forward, make fresh pledges and ensure that these are fulfilled within the required timeframe to ease human misery and suffering in the quake-affected areas.

The ethanol experiment

THE recent move towards ethanol-blended fuel makes both environmental and economic sense. Also known as ethyl or grain alcohol, ethanol is a potentially cheap and relatively clean biofuel most commonly derived from sugarcane or corn, crops that are plentiful in Pakistan. A similar initiative, announced by the president in February 2005, failed to materialise. The sugar industry, which invested heavily in molasses-based distilleries in the wake of the president’s directive, was incensed by the delay and accused the oil marketing companies (OMCs) of launching a “conspiracy” against ethanol. The OMCs are sceptical even now and it remains to be seen if the plan will indeed materialise.

The ethanol experiment has long been overdue in a country where crude oil and petroleum products now account for nearly a quarter of the import bill. While oil imported for the production of gasoline is just one component of the petroleum category, even a 10 per cent ethanol blend can result in considerable foreign exchange savings. On the environmental front, ethanol’s chief merit is that it comes from a renewable source. It burns more completely than gasoline, reducing emissions of carbon monoxide and other air pollutants. Since the plant or ‘biomass’ used in ethanol production consumes carbon dioxide as it grows, burning the fuel adds no net CO² to the atmosphere. Taken in conjunction with stricter emission controls and large-scale conversion of public transport vehicles to CNG, ethanol can play a major role in reducing air pollution. The flip side of the coin is that the energy requirements of ethanol production can, paradoxically, outstrip its benefits. However, newer and more efficient distilleries are now yielding net energy gains, and the ultimate goal should be the creation of production units that are powered by the very biofuel they produce. The Brazilian model is proof of ethanol’s viability. The government’s latest initiative must not be allowed to die a premature death at the hands of vested interests.

Doha Round in doldrums

THE Doha Round World Trade Organisation talks was launched in November 2001 as a development round. Earlier rounds, including the Uruguay Round, did not target the trade problems of the developing countries. In this round international trade was to be liberalised to promote the growth of developing countries and reduce their poverty levels.

The first ministerial meeting of the Doha Round in Seattle, America, was scuttled by the NGOs as they regarded WTO, IMF and multinational corporations as agents of international capitalism which espoused policies which have a negative impact on the poor around the world, especially in the developing countries.

In the second ministerial meeting held in Cancun, Mexico, in 2003, the developing countries walked out as the developed countries had raised extraneous issues like labour and environmental standards. In 2004, the ministerial meeting held in Hong Kong was successful in the sense that the extraneous issues were kept out and the EU and the US made meaningful offers for resolving agricultural issues. The EU undertook to abolish all subsidies by 2013 and the US agreed to duty-free status for the least developed countries.

The ministers kept on meeting in Geneva but they got a big boost during the G-8 meeting held in St. Petersburg in the second week of July where the leaders agreed to reach a deal and asked their negotiators to finalise the outlines of the deal by the end of July 2006.

Unfortunately, the negotiators failed to reach an agreement on the main issues of the deal and Mr Pascal Lamy, head of the WTO, declared that “failure would send a strong negative signal to the future of the world economy and the danger of the resurgence of protectionism.” The World Bank had estimated in its detailed report that if the Doha Round had succeeded the gains to the world economy would be about $290- $520 billion depending on the coverage and depth of cuts in tariffs and subsidies. It had also estimated that about 200 million people would be lifted out of poverty by 2015.

Agriculture was the stumbling block in the Doha Round. Contrary to the advice to the developing countries to practise free trade in all the sectors, the agricultural sector in the EU, US and Japan is heavily protected. The protection takes two forms. Firstly, the agricultural commodities are heavily subsidised by both giving production and export subsidy.

Secondly, heavy tariffs are imposed on imports. It may be pertinent to point out that the developing world has a competitive advantage in agriculture and textiles. The exports of agricultural goods of the developing countries cannot penetrate the tariff and subsidy walls of the EU and the US.

However, the talks failed because of acrimony between the US and EU over farm payments. The EU, which had already given an undertaking to remove all farm subsidies by 2013, was flexible on reducing import tariffs but the US did not agree to the phasing out of its agricultural subsidies.

The contribution of agriculture to the GDP and in providing employment is less than five per cent in both the US and the EU. However, agriculture has a very strong political lobby in both these regions.

The US had a trade imbalance of more than $200 billion in 2005. Moreover, the administration is facing the likelihood of losing control of one or both Houses in the mid-term elections.

Finally, Mr Bush, as the proverb says, has changed horses in mid-stream. The US trade representative in the first term of the administration was Mr Zoellick. He was replaced in the second term by Mr Bob Portman, an ex-congressman of sixteen-year standing. A few months ago, Mr Portman was replaced by Ms Susan Schwab, who, according to all commentators, was poor in networking with both the Congress and fellow trade ministers.

The main negative impact of the breakdown of the Doha Round will be the weakening of multilateral rule-based trading system and giving a new impetus to the already soaring network of preferential bilateral trade deals. These trade deals already number in excess of 250 and are double the number 10 years ago. They are estimated to account for more than half the world trade and this cocktail of different bilateral rules is increasingly making trade more difficult, especially for the exporters from the developing nations.

The rich countries have formed strong trading blocs like EU and Nafta whereas the developing countries have not been able to form any such comprehensive trading blocs to promote intra-trade.

The importance of WTO will diminish after the failure of the Doha Round and its role will be confined to the judicial function of arbitrating in trade disputes between member countries.

Pakistan, ably led by its commerce minister, has played a very active role in Doha Round negotiations. We initiated the formation of the G-20 group of developing countries for negotiating with the EU and the US as part of a bloc led by India and Brazil. Pakistan also hosted a meeting of the G-20 trade ministers at Bhurban more than a year ago.

Unlike India, Pakistan did not want any exemptions from free trade in agricultural products and we would have gained from an open regime in agricultural commodities as, unlike India, we are not giving any agriculture subsidies and have zero tariffs on agricultural imports. Our manufactured exports would have gained from a reduction in import duties across the globe as many developing countries like Bangladesh enjoy duty-free status in the EU.

On the other hand, if the talks had succeeded and the tariff- free treatment given to least developed countries like Bangladesh was also given by the US, our exports would have suffered. The EU had given duty free status to Pakistan for two years, because of the strain on our economy imposed by the war on terror, which was withdrawn without justification.

After the failure of the Doha Round, we need to press the United States for a free trade agreement, to urge the EU to restore the duty- free treatment and work more actively for trade-creating and export-promoting regional and bilateral deals.

The writer is a former secretary of planning.

This is worse than Iraq

AS I speak to my constituents in Tooting and people elsewhere in London, of all faiths, races and backgrounds, I hear views that are almost identical: “This is worse than Iraq.” It is not easy for Muslims to watch, every night, TV pictures of the destruction that Israel has wreaked in Lebanon.

We find it difficult to understand why our government has steadfastly supported the US in giving a green light to Israel, allowing the killing to continue.

I recently took part in a televised appeal for donations to help victims of the attacks. Callers found it difficult to understand why we couldn’t avert this man-made humanitarian crisis, and even more difficult to argue against those who bundle Iraq and Lebanon together to denounce British foreign policy in the Middle East. It is also difficult to understand why Tony Blair, who led the way on Africa last year, appears to have lost his way on the Middle East. British foreign policy is not anti-Muslim, but that is, increasingly, a challenging argument to make.

In the past two weeks Hezbollah has killed dozens of innocent civilians in Israel. At the same time Israel has killed around 10 times as many in Lebanon, and forced a fifth of its population to flee their homes.

One principle separates a sensible and humane response to terror from a policy that simply feeds a cycle of violence. That principle is that military attacks, whatever their justified purpose, should never cause disproportionate harm to civilians. That is what the Geneva conventions and international humanitarian law are all about.

On Tuesday, the 14th day of this dreadful conflict, I attended a meeting in the House of Commons with a number of international lawyers. They had no doubt that Israel’s attacks, on such a huge scale, were a clear violation of international law. The UN has said the same. They also suggested that the UK’s tacit support for Israel’s campaign raised painful questions about the legality of Britain’s own policy. And we have since learned that Prestwick airport has been used as a stopover for aircraft carrying bombs to Israel.

Since 9/11 British foreign policy has failed to stand up against an increasing trend to brutal, and usually ineffective, counterinsurgency around the world. This is unfortunate because, as in Lebanon, the UK could play a more useful role. Moreover, if it doesn’t then Labour could lose more supporters than it lost over the government’s decision to go to war in Iraq.

The Labour government in the past has played a far more honourable role. It has seen that Britain can gain from a safer world, not just from promoting a narrow national self-interest. The prime minister in particular has long argued that the international community has a “responsibility to protect” people threatened by genocide and war crimes around the world. Last year he helped win the UN’s agreement on this point. Labour said it would never turn its back on “another Rwanda”.

Lebanon is not “another Rwanda” but Israel, like Hezbollah, is committing war crimes in Lebanon. And what is Britain doing to protect the victims of these war crimes? What happened to Britain’s responsibility to protect them?

The people being killed happen to be mainly Muslims. But that is not the point. The point is that war crimes should be condemned no matter who commits them, or whom they are committed against, and whether they are committed in the name of some evil racism or a misplaced sense of what will defeat terrorism. If British foreign policy cannot command greater respect among its own citizens, what chance is there in the Middle East? —Dawn/Guardian Service

The writer is a Labour MP in Britain.