The country possibly misjudged the Muslim backlash and extent of damage that its image and economy would have to bear. As the full force of Muslim fury over the blasphemous caricatures first appearing in a Danish magazine, was realised, the editor of the leash-less magazine was forced to tender an apology.
The Danish Prime Minister Rasmussen fuelled the fire of Muslim anger by offering strong worded statements, which latter began to assume a softer tone. No one knows what’s going behind the scene, but to save its pride the Danish government must have run around to other EU countries and even to the US, which admitted that the publication that hurt the Muslim sensitivities were a “mistake.”
The protests spanned across the Muslim world. The ingredient of ‘violence’ that sometimes accompanied protests went to hurt the protesting countries themselves as public and private properties were burnt and destroyed. Some Muslim countries and a sizeable portion of the Muslim population adopted another approach, —the effect of which has been time tested: to discard the products if they carried the name of that country as one of origin.
As the Danish products began to be removed from the shelf in some of the rich Muslim nations, its companies suffered a sharp dip in sales and profits. It may take a while before the offending country is able to realize the damage caused to its image by the ignoble act of a newspaper, which was covertly supported by its government. Denmark’s status as a first world nation that topped the world renowned Index of Economic Freedom is being scorned not by just the Muslims but all sensible people around the world as also ranking at the top among nations that would cross the limits of ‘press freedom’.
How much economic loss would the offending country have to bear? According to New York Times, Danish industry estimates that it has lost more than $55 million in sales in the Middle East in the first week when the turmoil began. In the second week of February, a spokeswoman for Arla Foods admitted that the Danish company had lost $20 million since consumers across Africa and Middle East abandoned its products. That represented between 8-10 per cent of the company’s annual sales revenue, which translated into loss of $1.8 million a day.
The cumulative loss to Denmark’s economy and the handful of its well known brands have not accurately been assessed. But it is surely counting the cost of its blunder The London Economist, which had mentioned Denmark as an ideal destination for business in 2006 is now faced with threats of losing not only business partners but also markets in several Muslim countries. Even its European friends have deserted it to escape Muslim fury.
Lets examine the status of Pakistan’s trading interests with those countries: European Union is the largest trading partner of Pakistan. Of the total formal exports of $14.4 billion during 2004-05, goods worth $4.1 billion were destined to that region. It works out to whooping 28 per cent of exports. Whereas of the $20.6 billion worth of total imports, about $3.1 billion amounting to 15 per cent of Pakistan’s imports originate from European nations.
Pakistan’s export structure lies very much on traditional product mix. Textiles alone account for 60 per cent of the total Pakistani exports to EU, followed by leather products.
The imports from the EU to Pakistan mainly comprise finished products like mechanical and electrical machinery, which accounts for over 35 per cent, followed by chemical and pharmaceuticals for 10 per cent of total EU imports to Pakistan. As for Denmark alone the worth of exports is believed to be $47.32 million and imports at $55.98 million.
People in Pakistan have protested in strongest terms to the official Danish approach to its newspapers’ doings. It would be worthwhile to examine the extent of pressure that has been brought about on the Danish companies and products marketed in the country? A survey of the Karachi’s major markets clearly indicated that public resentment over Danish insensitivity towards Muslim sentiments was translating into rejection of better known Danish products. Although the trend does not seem to be enormously strong, shops and super market owners hesitantly confirmed that in posh areas of Defence, Clifton and PECHS many customers were demanding lists of imported products with countries of origin indicated on them. Even in middle-income areas of Karachi such as Gulshan-e-Iqbal, FB Area, Nazimabad and N. Nazimabad retailers are avoiding sale of Danish products such as butter, biscuits and powdered milk. Leaders of retailers association, shrug their shoulders, when asked about such development. “It could be that some shopkeepers may have voluntarily removed those products from their shelves or they may be trying to be just extra cautious and do not want to attract attention of anti- West zealots who are capable of instigating an attack on their shops by the agitating mob”, said one such frontline leader of shop owners. Some religious organization have also erected banners at important road intersections and were reported to be distributing pamphlets in certain localities asking people to boycott European products.
Multinationals are by nature tight lip on offering comments on controversial matters, but a Danish telecom company Telenor is known to have taken the brunt of public outrage in Pakistan. Its sales, service centres, franchises and base stations were attacked at many places. In its statement posted on its website the company has deplored the targeted incidents of violence and projected itself as a responsible entity. “For us as a company, the principle has always been to be respectful of local norms and values. The sad reality remains that how much we condemn this act it is not (the name of the company) that can resolve this issue”, said Syed Hasnat Masood an executive of the company. The company has experienced drop in sales but attributes it to lack of consumer confidence in general because of strikes and street violence.
Another stock market listed milk and dairy Danish company saw a sharp plunge in the price of its stock. Whether that was due to investor fear about a hit on company’s sales or profit would be difficult to speculate. One may yawn at the prospects of damage to the offending country’s economic interests in Pakistan. But the fact remains that where absolutely justified protests are turned by some miscreants into violence and arson, they are bad for business. Pakistan registered its official protest by recalling its diplomat from Copenhagen and sending a strong message to United Nation and European Union to prevent recurrence of such reprehensible act. Fearing a mob onslaught, Denmark has also closed its diplomatic offices in Pakistan for the time being.
It would be of interest to ponder over the economic impact on Pakistan over the demonstrations that turn to violence. The government higher ups were tight lipped when contacted by this scribe: “It is too early to comment on the impact of protests on the economy, if any”, said a senior civil servant based in Islamabad.
“I do not think there is going to be that big an impact in the long run”, commented an economist from Islamabad when contacted over telephone.
But some Pakistani business tycoons could not hide their grievances over the series of strikes and violent protests. “It takes years to build a business friendly image so as to attract foreign investors and just a few hours of teeny baffoonary to tarnish it”, said an executive of a business forum.
“We are hurting no one but ourselves by scaring investors”, commented another businessman of Karachi. “Where even your personal security is at risk you tend not to commit your capital there. It is really a sorry situation again.
It will again be long time before images of fire and destruction on electronic media are forgotten and overseas investors take interest in Pakistan as destination for their next big investment”, blasted another sore businessman whose prospective foreign business clients changed their mind at the eleventh hour to travel to Pakistan after seeing images of arson and violence on TV screens. In the wake of on-going protests many European governments have issued strong worded travel advisories.
Diplomatic community in Pakistan is reported to have issued red alert to all its nationals and not just their employees. “We have been advised to keep our bags packed and ready to be able to leave the country on an hour’s notice, if need be”, a British national of Pakistani origin told this scribe.
The hotel industry that was enjoying a boom period with a stream of foreign visitors, so as to have full occupancy and a long waiting list has also been affected. The representative forum: Pakistan Hotels Association (PHA) responded in writing to queries in this regard. They said that they have not yet calculated the full impact but thought it to be substantial.
“The impact is severe with daily cancellation from overseas visitors”, wrote back the Association, adding: “Protests have affected the hotel industry due to reduced travelling by Europeans and red alert by many European countries banning their nationals to visit Pakistan.
Large number of confirmed reservations of groups and individuals travelling from Europe have been cancelled, resulting in decline in occupancy in all five star hotels in the country”, the association stated.
A wholesale importer and a leader of Jodia Bazar Association, Jafar Kundia was furious over the Danish insensitivities to Muslim feelings and expressed his support for the protests.
He, however, felt that it would be more appropriate to “hit where it hurts most”. Explaining, he said: “It would be more appropriate to reject European products and services than to burn our own property and assets”. He said that a proposal is under consideration of the association to ask its members to cease imports of products from Nordic countries and also to avoid shipping lines of those countries”, he told this scribe.
Where business interests collided, a few traders and businessmen also suspected some personal vested interests in the campaign against European companies.
“The initial outburst was spontaneous but there were some incidents that should be investigated”.
They claimed that the decision to boycott certain goods and companies were more than a matter of personal consumer preference. “Some local competitors are also pushing it to promote their economic interests”.
The deeply condemnable Danish act lends credence to the view that at this juncture of human history, level of human understanding and development of political thought is outpaced by the events.
As a result, for most part, leaders are faced with unexpected situations and their activity is focussed more on damage control than on giving a lead and a direction to the society.
It also points to the fact that ignorance is not necessarily a product of illiteracy or poverty and diplomatic blunders are not exclusive domain of leaders of Third World.
If such were the case, the magazine coming out from Denmark and the approach of its government would not have been such as to forget the limits of freedom.