economy
Pressing the poor
The Federal Budget 2009-10 belies the government's claim of trying to reduce income inequality in the country
By Huzaima Bukhari and Dr Ikramul Haq
Through the Federal Budget 2009-10, our rulers have once again made it clear that they are not sincere in making the tax system equitable, or in levying taxes on the rich and the mighty, especially absentee landlords. As a result, the poor will continue to pay for their luxuries. Shamelessness is the most apt word to describe the attitude of our ruling elite in taxing the poor for the benefit of the rich. In all civilised societies, it is the other way around: the rich are taxed for the benefit of the less privileged.

In dire straits
Is it time to bid adieu to the House Building Finance Corporation?
By Dr Noman Ahmed
A visit to the offices of the troubled House Building Finance Corporation (HBFC) these days paints a gloomy picture. Banners, posters and bulletin boards are filled with slogans against privatisation. A worker, who was addressing his comrades in the office corridors, was levelling serious allegations against the successive heads of the HBFC. In an almost melodramatic tone, the speaker was warning of dire consequences if the powers-that-be decided to "sell" the HBFC as a remedy to its malignant financial and managerial ailments.

Towards regionalism
The ECO container train service project is a novel idea that needs to be put into practice at the earliest
By Sibtain Raza Khan
Communication linkages play a vital role in enhancing regional trade cooperation as well as regional integration. Like communication network of road and rail links in other regional blocks, Pakistan, Iran and Turkey can also set off a new era of socioeconomic development and prosperity in the region with the Economic Cooperation Organisation (ECO) container train service.

The Pakistani state policy of nurturing jihad factories over the decades is staring back at its architects, supporters and sponsors. Zafar Hilaly, a close aide of the late Benazir Bhutto, recently divulged in his memoirs that BB had confessed how the support to the Taliban was perhaps her most regrettable mistake. She could recognise it was more of a function of being out of the power ambit for nearly a decade. The compulsions of exercising power and playing it by the rules set by the national security obsessed state are perhaps germane to Pakistan's creation as an insecure postcolonial state that was neither prepared not committed to reverse the colonial modes of governance.

Power and its fountainhead, the grand security apparatus, is a self-perpetuating reality in Pakistan. Its reproduction in mainstream politics, academia and public opinion is now a process that has assumed a sophisticated level of proficiency. Voices of dissent, be it the anti-nuclear stance of pacifists or the anti-fundamentalism stance of liberals, until recently were construed as unpatriotic and somehow a threat to the 'ideological' frontiers defined by Gen Zia-ul-Haq and his coterie. Unfortunately, even two decades after Zia's death, his legacy survives and, dare I say, flourishes.

It is not an abstract legacy but an institutionalised reality driven by taking pride in being a US frontline ally, using sectarianism and jihad as policy tools, and above all promoting an education system that has xenophobia and paranoia at its heart. From Jews to Hindus and from internal traitors to malevolent politicians, we are a country forever being sabotaged by 'enemies' of the state. As things have crumbled, including the efficacy and capacity of the state, it is increasingly clear that the state might be the strongest enemy of its own interests.

This is why the Taliban phenomenon was erroneously, and rather dangerously, projected as a herald of a new dawn. Led by the urban Taliban and a cabal of media 'mujahideen', this view gained currency to an extent that even the foreign media picked up such stories and started to paint the Taliban as a movement poised for delivery of social justice, and redistribution of land in Swat and other areas, and as a collective expression of resentment against the state. There is no question that the state offers little hope to the Pakistani underclass, but that does not automatically translate into a violent struggle of the Wahabi-Salafi variety. At best, this is a misnomer; at worst, a propaganda tool of the erstwhile benefactors of the militias posing as the neo-deliverers.

What is even more surprising is that sections of intelligentsia, especially in Punjab, have expressed a similar view. A casual scanning of opinion pieces prior to the military operation launched in Swat and Buner would testify to that. If the problem of backlog in the formal courts was an issue, then the more likely demand for Taliban justice should be in Punjab where the performance of the courts remains the worst.

In any case, many studies have shown that the formal court system is hardly used by the poor and the marginalised for redress of grievances across the country. The majority of local disputes do not reach the courts because the process is expensive and there are other fora, not always the best functioning, available to the poor.

It is indeed a matter of shame that a couple of lead stories in American newspapers became an oracle and certified version of sociological truths on Pakistan. This is why the much quoted stories from abroad have figured in discussions, writings and the articulations of the chattering classes. The stories from the field, however, are altogether different.

The mass migration of affected people, admittedly smaller in scale, had started to take place much before the launch of the military operation in Swat. Our friends from Hangu had to leave their hometown because they were perceived as protectors of Shias, while the Taliban roamed the streets under tacit protection of those who were supposed to safeguard the lives and liberties of the local population.

A milk-herding family from Swat tells The News on Sunday how they delivered milk to the camps of the Taliban in the valley via security check posts of the official 'state'. And a resident of Buner, now living in Islamabad, narrates the harrowing tales of harassment and crime by the Taliban. I have tried in the last few weeks to unpack this myth of Taliban 'agenda' and 'programme', and not a single Pakhtun -- across the class divide -- has been able to confirm that. But, of course, the 'thinking' sections of our society still believe and naively argue that it is a movement for 'justice'. Who can disagree that the big Khans and the traditional political class of the war zone has to give way to a more egalitarian system? But then what about the Sindhi peasantry and the poor in other parts of the country?

The resistance to US imperialism argument is the next (il)logical refuge of the intellectual. Why the resistance is targeted against the shrines of Pir Baba and Rehman Baba? And against Sufi Islam, Barelvis and other strands of religious belief that are at variance with the puritanical fascism in the name of Islam? Why is the anger at US occupation of Afghanistan directed at the musicians of Swat and the girls' schools? Are they US agents as well?

There is no justification for the prolonged Nato presence in Afghanistan after it has failed to deliver on the security, reconstruction and development fronts. That eviction has to take place, but it is not certain what Shias, Sikhs and other sectarian and religious minorities have to do with that. The truth is that the Wahabisation agenda in Pakistan is very much a domestic project aided in full measure by the monarchy of the Middle East.

The reaction to drone attacks, as overplayed by the media gurus, is also not as simple a story as painted by the prejudiced worldviews. The truth is that they are loathsome, but it is also an undeniable reality that many tribal leaders and tribesmen are now aiding the drone-wallas in terms of intelligence sharing. After all, who wants groups of self-styled al-Qaeda troublemakers; Chinese Islamists lounging about with a band of mercenary killers in their fold?

We have no choice but to confront these realities and wage a war on all fronts, including that of the military. Why is there such uproar by marginal but insidious voices that are bent upon cracking the consensus that has emerged around the military operation. However, military phase is just one small beginning -- the next phases are more complex; they deal with federalism, rights, entitlements and social justice. But that has to roll out in the context of the federation and all its units. And it has to take place within the folds of the 1973 Constitution. The abandonment of the only agreed Constitution will mean that a new consensus will be almost impossible to effect, thereby leaving Pakistan's political space open for capture by militias and mafias.

The official recognition of different identities and constituencies, in the hope of acknowledging the multi-ethnic and complex diversity of Pakistan, would also serve well for social integration within the nation-state of Pakistan. The colonial inheritance of the NWFP needs to be transformed into Pakhtunkhwa and the tribal areas need to be acknowledged as an integral part of the Pakistani mainland, and not as repositories of a postcolonial state's game plans for adventures and misadventures.

More importantly, a consensus and impetus for reform of state organs and agencies, postponed for decades, needs to be forged at the earliest. The social change agenda has had some positive beginnings in the shape of mobilisation around the judges' issue, but in its next phase it ought to broaden its scope by focussing on citizenship and a new social contract. Otherwise, we will remain hostage to an ineffectual and callous state's propaganda of foreign interference being the primary cause for our own follies.

The main thing that US President Barack Obama has going for him is that whereas his predecessor, George W Bush, was not exactly a latter-day Einstein, or even a letter-day Jerry Lewis, Obama is an intelligent man, and that, whereas Bush was a renowned murderer of the English language, Obama is able to string ten off-the-cuff sentences together without making twenty mistakes. Even Obama, however, admits that he tends to make excessive use of cue cards and tele-prompters. This is another way of saying that I can't for the life of me imagine Obama suddenly coming out with an extempore version of a poem to rival Keats' Ode to Autumn, or even a piece of doggerel by Ogden Nash.

He is also given to fuzzy pronouncements like Jerry (captain 'Moonbeam') Brown, a former governor of California who ran for president of the United States in 1976, saying that a little vagueness goes a long way in politics. Echoing Brown, Obama says things life: "We can because we can" -- which was one of the refrains of his victory speech in Chicago, once described by Carl Sandburg as "hog butcher to the world" and by the immortal Herb Caen as "a city of wide avenues and wider butts".

That said, it also needs to be pointed out in the context of Obama's Cairo speech on June 4 that there is nothing in the speech -- and I have been though it line by line -- that unequivocally commits the United States to policies that are significantly different from those of George W Bush.

Obama says he intends to close the prison camp at Guantanamo, but he hasn't closed it yet. How long does it take to do so? Two years? Five years? Ten years? It would have been nice if he had said he was giving up the whole Guantanamo Base altogether and returning it to Cuba, from whom the Americans stole it by force a hundred years ago.

It would also have been nice if he had decided to lift economic sanctions from Cuba, which have been in force since the days of the Kennedy administration sixty years ago. Turn up with the box of Cuban cigars at a US airport and the fuss that ensues suggests that you're trying to smuggle a hydrogen bomb into the country. The late American comedian George Murphy, a lifelong cigar-smoker, who died at the age of 101 a few years ago, was only asked if he would like to go to Cuba. "I certainly would," he replied. "I haven't had a decent cigar since the Cuban missile crisis." Obama should take a leaf from Murphy's book and lift the ridiculous sanctions on Cuba.

Sanctions notwithstanding, Cuba, today, has the best school system and best medical service in the world. So it isn't just money that makes the mare go; the dedication and selfless service of those running the educational and medical services is, if anything, even more important. Today, thousands of Cuban doctors and paramedical staff are providing emergency medical care in 27 countries around them world. More than 900 of them came to Pakistan in the wake of the Oct 2005 earthquake. And Cuba said it was willing to send hundreds more if they were needed. All this assistance was provided free by Cuba to Pakistan. When the Cubans finally left, having totally won over the hearts of the Pakistani people, a spokesperson for the doctors said they were grateful to the Pakistani people for having given the Cubans an opportunity to serve them.

There is much that the mighty United States -- which enjoys the dubious distinction of being able to wipe out humanity several times over -- could learn from the small island nation of Cuba. No wonder millions of young people around the world still say "Vive Che!" and "Vive Fidel!" By contrast, how many people say "Vive Obama!"

But to revert to Obama's Cairo speech on June 4, he began by saying "As sallam aley kum" and went on to pepper his speech with a few quotations from the Holy Quran. This was a cheap shot, smacking of the kind of patronising 'Orientalism' that the late Palestinian author Edward Said decried in his 1980s' book of that name.

By using those Quranic quotes, the message that Obama was, in effect, trying to convey to his Muslim audiences went something like this: "Look, I'm quoting from your holy book. Isn't that mighty big of me as the leader of a Christian superpower? Doesn't that show my magnanimity? Doesn't that show that I've come to talk to you instead of nuking you, as many on the right-wing in my country would dearly like me to do?"

Stripped of all the patronising rhetoric, however, what did Obama's speech amount to? Did he promise to withdraw US occupation forces from Iraq within the next few months? No, he didn't. On the contrary, the fact that the US is building 12 massive military bases in Iraq suggests that it intends to stay there for many, many years to come -- an impression reinforced by the fact that Iraq has the world's second largest oil reserves after Saudi Arabia.

In this context, it should not be forgotten that the Bush administrations' original code name for the invasion of Iraq was 'Operation Iraqi Liberation'. This, however, was hurriedly changed to 'Operation Iraqi Freedom' when red-faced White House officials realised that the acronym for the original name spelled 'OIL'.

One of the points Obama made in is speech was this: "The sweeping change brought by modernity and globalisation led many Muslims to view the West as hostile to the traditions of Islam." In fact, the vast majority of Muslims have nothing against modernity and globalisation, subject only to the caveat that in the case of globalisation Muslim nations -- like many other developing countries -- want a global trade regime based on equity and fair play, where the dice are not loaded against them in advance, especially when it comes to access to the markets of rich countries for agricultural produce from developing countries. This access can only be achieved when the United States, European Union countries and Japan agree to do away with the massive subsidies they are paying to their own farmers.

These subsidies are currently running at a staggering $350 billion a year, or ten times the total aid given to poor countries by rich countries. The subsidies issue has been the main hurdle in the way of a successful conclusion to the Doha Round of the World Trade Organisation (WTO) talks, which have been bogged down for this very reason since 2000. Did Obama's speech address this vital issue? No, it didn't.

In fact, it hardly addressed any specific issue at all, except to say the continuing construction of Israeli settlements on Palestinian land was "intolerable". Even on this point, however, Obama had nothing to say about all the illegal Israeli settlements that have already been built. Will they be dismantled? Or will they be allowed to remain? Obama did not say. No wonder the speech has sunk without a trace across Muslim lands. The only taste it has left in one's mouth is that of yet another example of American hypocrisy.

Swat District Nazim Jamal Nasir Khan was born in 1966 in the Sherpalam village. He hails from a well-off family that owns huge tracts of land in the Swat valley. His family's role in politics dates back to the 1950s. Jamal's uncle, Fateh Muhammad Khan, remained member of the West Pakistan Assembly thrice and the National Assembly twice. He also served as provincial minister twice. Jamal's father, Shujaat Ali Khan, remained district chairman, provincial minister and senior provincial minister. In 1997, he was elected to the National Assembly.

Jamal Nasir graduated from the prestigious Edwards Collage Peshawar. Elected as the district nazim in 2005, he has been facing a tough time because Swat has remained in turmoil during most of his tenure. He had planned major development projects for the valley, but could not execute them due to the ongoing militancy. Jamal opposed Maulana Fazlullah's violent campaign and spurned his offers to reconcile with him. As a result, he and his family had to bear the brunt of militancy the most.

The Taliban have so far made three unsuccessful attempts on Jamal Nasir's life. He escaped a suicide attack by only two minutes when the bomber's car was intercepted by police at Takhtaband. In Oct 2007, the Taliban burnt down his house after plundering it. Due to persistent life threats, he had to leave Swat with his family. The News on Sunday interviewed Jamal Nasir Khan recently. Excerpts follow:

The News on Sunday: How will you describe the Swat valley before the onset of militancy?

Jamal Nasir Khan: The Swat valley was prosperous and its people were well-off. It had a huge infrastructure of education, health and communications. In its fertile land, there were orchards of plums, peaches, apricots, cherries and apples. Agricultural and financial activities ensured round-the-year employment opportunities and profit for the local people. In fact, we had to import labourers from other districts of the NWFP. Moreover, about 500,000 tourists visited the Swat valley annually to see panoramic views of the picturesque side-valleys, forested mountains, lush green landscape, meandering rivers and beautiful waterfalls. Due to this huge influx, 500 to 600 hotels in Swat would remain filled to the capacity and the local people even rented out their houses to the tourists. Thousands of people had jobs in hotels and thousands more earned indirectly because tourism generated economic activity. We had schools for both boys and girls, even in the remote mountainous areas, and, thus, had a good literacy rate. In short, before the onset of militancy, Swat was much more developed than any of the other districts in the Malakand division.

TNS: And what is the situation in Swat now?

JNK: After the arrival of the Taliban, the huge infrastructure of education, health and communications, which was developed over decades, was destroyed in a few months. As a result, the economy now is in tatters. Thousands of orchards, which were grown over years, have been uprooted and the remaining have dried up because of being left unattended. Thousands of teachers, labourers, development workers and shopkeepers have lost their jobs. The hotels have been closed. Tourism has been turned into terrorism and our good image into a bad one.

TNS: When and how did this happen precisely?

JNK: The destruction of Swat started when a cleric named Maulana Fazlullah launched an illegal FM channel in 2005. Initially, he talked only about Islam, making people believe that he was just another preacher. But, with the passage of time, he started opposing music, television, polio vaccination drives and girls' education. Translating Fazlullah's words into action, his followers started burning CDs and TV sets. They also forced people to stop sending their daughters to schools. After the illegal FM channel did wonders for him, he started using strong-arm tactics. After teaching 'morality' to the people, Fazlullah asked them to train for 'jihad'. As he was becoming a growing threat, the district administration took notice and called in police to launch an operation for dismantling his illegal FM channel. It was the right time for action, because a stitch in time saves nine.

TNS: Who is responsible for not taking timely action against the Taliban?

JNK: The Muttahida Majlis-e-Amal (MMA) was in power in the NWFP at that time and all the parliamentarians from Swat belonged to the six-party religious alliance. The MMA government intervened and stopped the district administration from taking action against Fazlullah. Instead, it said the issue would be settled by MMA legislators, who concluded that stopping the illegal FM channel amounted to banning the preaching of the Holy Quran. The MMA government's support emboldened Maulana Fazlullah. The provincial government bypassed the local administration and directed its members to reconcile with Fazlullah. After signing the first peace deal in 2005, the MMA government said it was following a carrot and stick policy. After the collapse of the first, the second peace deal was signed in a similar fashion in 2006. Fazlullah was asked both times to stop opposing girls' education and polio vaccination drives, and training people for 'jihad'. However, he was allowed to continue operating the illegal FM channel, the root cause of all problems. As a result of these peace deals, Mamdheri was declared as a no-go area for law-enforcers. However, Fazlullah never stopped his activities; rather, he intensified them. Through Maulana Gul Naseeb of the Jamiat Ulema Islam-Fazl (JUI-F) and Muhammad Javed, the suspended commissioner who was the district coordination officer (DCO) of Swat at that time, the MMA government also struck a third peace deal with Fazlullah in 2007, seven months before the end of its tenure. By that time, the security forces had encircled Mamdheri to flush Fazlullah out and dismantle his illegal FM channel.

TNS: What made Maulana Fazlullah so powerful?

JNK: The recurring peace deals and the lack of action by the government buoyed him up. Each time, the government lost and Fazlullah gained in peace deals. He projected these deals as his victory and grew stronger than before. This also increased support for him and the number of illegal FM channels increased from one to about a dozen. As a result, the people got demoralised; they got the impression that the government does not want to counter Fazlullah. After the collapse of the third peace deal, Fazlullah and his armed men also started launching attacks on the security forces. More than 200 cops were killed in different attacks, but not even a single Taliban was arrested in any case. This resulted in desertion in the police force and in collapse of the local administration. The Swat DCO, who used to meet with Fazlullah in his office, was asked not to launch operation during the last seven months of the MMA government's tenure, even if the situation deteriorated. This inaction on part of the NWFP government turned Fazlullah into a monster and the issue reached a point of no return.

TNS: Why did the Taliban target politicians and influential people in Swat?

JNK: The Taliban first target CD shops and other businesses they deem un-Islamic. This is aimed at getting public support by giving the impression that they are working for an Islamic cause. It is followed by attacks on police and other government officials to weaken the system. Finally, they target popular leaders. There are three powerful and influential families in Swat; that of Wali of Swat, Afzal Khan and ours. Each of us was targeted. The elected representatives and other well-off people were targeted. Sixty families are still on their hit-list. The purpose of their action against top leaders and influential people was to terrorise people and to convey to the masses that no one could withhold their wrath. The Taliban proved to be the most barbarian people after Changez Khan.

TNS: Why the local people did not rise against the atrocities of the Taliban?

JNK: They did but got no support from the government. Pir Samiullah in Mandal Dag, Abdul Kabir Khan in Shawar, Shershah Khan in Koza Bandai, Sher Afzal Khan in Bara Bandai, Saifullah Khan in Totano Banda and Afzal Khan Lala in Drushkhela did resist them. The powerful families of Swat, including ours, were also ready to take on the Taliban, but the government did not extend the support we had requested for.

TNS: Are you satisfied with the previous military operations against the Taliban?

JNK: The people garlanded the soldiers when they routed the militants in the first operation in 2007. The morale of the masses was very high at that time and everyone, including me, was satisfied. However, after defeating the Taliban in urban areas, the army made the mistake of not going after them into mountains where they regrouped. The first peace deal struck by the Awami National Party (ANP) did rest of the damage, because the Taliban again infiltrated into urban areas, and established recruiting and training centres in every village. The subsequent military operations were all unimpressive, because the Taliban did not receive a severe blow.

TNS: How do you see the ongoing military operation in Swat?

JNK: Backed by the nation, the president and the NWFP government, the army is doing well. There is no doubt that this time both the army and the political leadership are sincere in defeating the Taliban.

As the war against the Taliban rages on, the economic and social casualties of operation Rah-e-Raast -- some three million displaced people -- arrive in ill-equipped refugee camps in thousands each day. That these ravaged men, women and children have already earned an official moniker -- 'internally displaced persons' (IDPs) -- is in itself an ominous signal that the fallout from this war will pose an economic, social and political challenge the government may have to contend with for some time to come.

The scramble for foreign humanitarian aid began some weeks ago through government and non-government channels, but the results thus far have been surprisingly dismal. In comparison with the swift response of foreign governments and people in the aftermath of the 2005 earthquake, only $43 million of the total $450 million appeal have been realised. Other than the United States, Japan and Germany, the rest of the world appears to be largely indifferent to the humanitarian crisis unfolding in the Swat valley. Relief agencies in Pakistan also recently announced their inability to deal with the situation owing to insufficient resources.

Could it be that aid agencies and foreign donors have become skeptical about the effective utilisation of aid money in Pakistan? Recalling their experience from the relief effort organised for the victims of the 2005 earthquake will certainly not add to their confidence. In that instance, vast sums of money and equipment were received by government agencies and NGOs, but with little happening in the way of respite for the afflicted.

One may argue that disasters pose unique challenges of resource mobilisation and distribution, not in the least owing to the minimal time frame available to plan a response. That was the case in the first few months following the 2005 earthquake, when donor agencies accordingly relaxed their demands for strict compliance with administrative and financial regulations. As the relief efforts moved beyond the first quarter, however, it was expected that their execution would have been informed by careful financial and administrative planning and ongoing review of the ground situation. The stories of administrative inefficiency, resource wastage and misappropriation of funds, however, paint a different picture.

Looking at the two conduits for aid dissemination in Pakistan, the charity sector and the government, the key internal and external factors that prevent the effective utilisation of resources may be summarised as follows:

For the charity sector in Pakistan, the primary issues are accountability and good governance. To begin with, there is a plethora of outdated legislation under which a charitable institution may be set up in Pakistan, with a multitude of ambiguities and loopholes offered by each to escape accountability. This is further compounded by the absence of a central monitoring body for the charity sector, such as the Charities Commission in the United Kingdom. As a result, charities view their compliance with even the basic requirements posed by external regulation as being discretionary and thousands are able to set up shop and function below the radar indefinitely.

The second line of defence against resource wastage comes in the form of administrative and financial requirements associated with grants and donations. The problem here lies primarily with the donating agencies. Three decades of experience with development in Pakistan should have been sufficient to inform these international organisations that financial and narrative progress reports laden with pictures of poor smiling families standing under the banner of the aid agency are meaningless, particularly when they are largely the product of self assessment by the recipient charity.

Neither does the answer lie in intrusive external auditing, because such exercises are only detective in nature and often take place after the damage has been done. What is required, instead, is an objective technical assessment of financial systems and controls prior to disseminating funds; practical steps to design and implement or re-engineer such systems and controls in the local perspective; and the need to evaluate the numbers in financial reports without being swayed by accompanying stories of remarkable achievement.

Once systems and controls are in place, charity management, if they are unfamiliar, must be instructed in the art of sound budgetary control. A budget is an important tool of management control and, contrary to practices prevalent in most charities in Pakistan, cannot be the financial equivalent of unrealistic wish lists devised by departmental heads to hoard resources. Without placing any doubts on the motives for such hoarding, budgets prepared in such a manner, with no backing plan of activities and a timetable for performance, are a disaster waiting to happen.

This brings us to good governance. Systems and controls are only as good as the people responsible for running them. In particular, the attitude of senior management is largely responsible for determining the organisational culture. Looking at charities, large or small, local or international, the need for accountability is still surprisingly a widely debated issue. Financial discipline is considered restrictive and frowned upon, and finance departments are relegated to the role of cash disbursing and record keeping units.

In doing so, the managements of such organisations choose to turn a blind eye to the exigencies of personal ambition and economic gain. In such an atmosphere, hiring expensive professionals to head finance departments of charities, a practice which was in vogue about a decade or so ago in the charity sector in Pakistan, is nothing more than window dressing. The importance of checks and balances must be reflected in the tone at the top.

With government agencies, the hurdles are of a different nature. The current scarcity of resources and aid is hopefully momentary, and given the amount of attention the operation against the Taliban and its humanitarian repercussions are receiving in the local and international media, it is likely that the world will eventually rally around this cause. This, therefore, is the least of the problems Zardari's administration faces. Its key dilemma is the lack of organisation, skilled human resources, and good systems and facilities accessible to the common people; deficiencies that are the hallmark of the NWFP provincial administration, not to mention the hopeless complacency and corruption endemic to its officials, departments and institutions.

The operation has made its contribution to further decapitating the local infrastructure. Gas and power lines and units have been blown up, buildings reduced to rubble or lying vacant with equipment ransacked, important documents lost and communication lines down. Law and order has deteriorated with a demoralised police force reduced to inaction owing to continuing desertions and broken wills suffered by the remnants of its rank and file. Medical facilities have similarly sustained extensive damage and resource constrained hospitals in the region are having to turn back the injured and disabled.

To add insult to injury for the IDPs, the federal government does not have a plan. With each passing day, it becomes apparent that while American egging forced the government and the army into a Blitzkrieg-type response to the Taliban's flouting of the peace deal, no time was put aside for forecasting the social and economic implications of an extended military operation in densely populated areas. In this scenario, the role of charitable organisations cannot be discounted, and one hopes that the delayed response from foreign donors and aid agencies is in part due to the development of a well thought out and long term plan for relief and rehabilitation of the IDPs.

The Malakand division was once not only the hub of tourism and unique biodiversity, but it also contributed substantially to the national economy. However, violence has rendered long-lasting losses to its biodiversity, besides hampering socioeconomic activities in the area. More importantly, it has also tarnished the image of Swat and Malakand as tourist-friendly sites.

The Malakand division comprises seven districts: Chitral, Upper Dir, Lower Dir, Swat, Shangla, Buner and Malakand Agency. Because of the variation in elevation -- ranging from about 1,300 feet in Malakand Agency to 25,000 feet in Chitral -- the area supports unique biodiversity in its valleys and foothills. Mineral potential, abundant wildlife and fish resources, commercial fruit orchards, rice production, and recreational resources have been value-added commodities of the Swat valley having large watershed for agriculture and power generation.

By virtue of their socioeconomic and ecological importance, forests play an important role in providing both tangible and intangible benefits to people. Of the country's natural forests, 40 percent are located in the NWFP and 16 percent in the Northern Areas. It is worth mentioning here that the Malakand division has 29 percent forest cover. But these forests have been facing the threat of rising socioeconomic demands, deforestation, agricultural expansion in hilly areas, livestock grazing and fuel wood collection.

The forest resources in the area were already under heavy pressure due to the reasons mentioned above. However, the current war-like situation will have many additional negative implications for the local biodiversity and ecosystems. It is estimated that with the return of the internally displaced persons (IDPs) to their native areas, a large quantity of timber will be required during the rehabilitation phase for the construction of houses destroyed during the ongoing military operation.

This is expected to take a heavy toll on the area's degrading forests, which in turn will severely impact the ecosystem and natural regeneration. This warrants that concerned agencies and organisations adopt stringent measures to handle the situation through comprehensive resource management strategies well before hand, so as to facilitate the returning IDPs. Management authorities will have to work out things to facilitate the smooth return of the displaced people by providing them with others means to living and housing, so as to prevent them from depending on and using timber for the construction of houses.

The ongoing military operation in the Malakand division has one potential advantage for the local biodiversity and ecosystems too: in terms of reduced pressure on aquatic fauna, especially fish, which were earlier caught through mechanical means such as use of dynamite and electrification. So, the military operation has possibly benefited the fish population of the area. Moreover, because of the tense situation in the recent past, the local people stopped carrying weapons openly that discouraged illegal hunting and poaching. However, shelling and firing may have a bad impact on the wildlife population of the area; some of the species may have already migrated from the area and many others may have died due to habitat fragmentation and restricted territory and range.

Livestock rearing is one of the most important activities in the area, because the vast majority of the local people depend on cattle as one of the subsistence sources. A large number of people rear goats, sheep and cows to obtain dairy and other products of daily use. These people usually feed the cattle on pastures or collect fodder for them from forests. With displacement of the local people to other parts of the province and country, a large number of cattle were left stranded during the evacuation process to safer places. It is likely that these cattle would have died of starvation. However, this may have a positive impact on local pastures: because no livestock will be grazing in the area's pastures, this may be beneficial for their natural replenishment.

It is well established fact that the fruits of the Malakand division are among the best in the country. At present, the fruit orchards of Swat are laden with apricots, plums and peaches of the finest quality. Since almost all of the owners and growers have fled the area, there is no one behind to reap the harvest. Similarly, apple orchards will also be adversely affected because of the lack of proper care.

This may result in increased prices of these products in the plain areas, because this season Swat will not be able to contribute its produce to their markets. This will also be a huge blow to the local economy as well as the national gross domestic product (GDP). However, in terms of benefits to the local biodiversity, a plenty of food will be available to the area's wildlife species.

Many local people also rely on agriculture for earning their livelihood. They supply many agricultural products to different parts of the country. However, things will change this season. The production of off-season vegetables -- such as potatoes, turnips, peas, cabbages and tomatoes -- will also be adversely affected. In lower areas of Swat, Lower Dir and Malakand Agency, there will be reduced rice production in all likelihood. In Swat, Buner, Lower Dir and Malakand Agency, onion crops are ready to be harvested and they will be of no use after a few weeks. Since most of the local people have already fled the area, it is expected that wheat will be harvested on a limited area this season.

Given the socioeconomic and ecological importance of the Malakand division, there is an immediate need to bring stability and peace to the area, outline efficient resource management strategies and approaches, coordinate rehabilitation of the displaced people, and fulfil needs of the local people during the rehabilitation phase. This will surely help in mitigating an inevitably huge impact on natural resources in the best interest of the area and the country. The situation also calls for the need to conduct comprehensive multi-sectoral research and assess the existing resources of the area.

Through the Federal Budget 2009-10, our rulers have once again made it clear that they are not sincere in making the tax system equitable, or in levying taxes on the rich and the mighty, especially absentee landlords. As a result, the poor will continue to pay for their luxuries. Shamelessness is the most apt word to describe the attitude of our ruling elite in taxing the poor for the benefit of the rich. In all civilised societies, it is the other way around: the rich are taxed for the benefit of the less privileged.

All the rulers in Pakistan -- civil and military alike -- have been wasting the taxpayers' money on their unprecedented perquisites, foreign tours, unnecessary security and garish lifestyle. They keep on telling their foreign masters (donors) that the people of Pakistan do not pay taxes, but the reality is exactly the opposite. Pakistanis are the most heavily taxed nation in Asia. In fact, the ruling classes are the actual culprits; they do not pay due taxes on their collossal wealth and incomes, and are also beneficiaries of huge loan write-offs. Moreover, the ruling classes are also guilty of plundering and wasting public money.

The state has become so callous that the people living below the poverty line (BPL) are also subjected to tax on the purchase of salt being sold under different brand names. On the one hand, people are dying of hunger, living miserably in camps and abandoning their children at hospitals and welfare centres; while, on the other, our leaders and their lackeys are wasting millions on their security, comfort and foreign visits.

To meet the needs of the internally displaced persons (IDPs) and introduce welfare schemes, no tax has been imposed on the rich classes in the next budget. On the contrary, corporate employees earning Rs1 million or more during July 2008-June 2009 have been asked to pay 30 percent tax on bonus income. Why has this IDP-tax not been imposed on the rich agriculturists who do not pay a single penny as income tax? This is downright discrimination of the worst kind, clearly in violation of Article 25 of the Constitution of Pakistan.

The IDP-tax should have been equally distributed among all segments of the society, rather than just targeting corporate employees. Why not impose the IDP-tax on all those who have earned Rs1 million or more in 2008-09, instead of targeting the most vulnerable taxpayer category? For this, a special surcharge of 5 percent could have been imposed across the board rather than just taxing corporate employees at the rate of 30 percent on their bonus income. This surcharge could have fetched at least Rs20 billion, while the additional tax on corporate employee would not fetch more than Rs1.4 billion. This illustrates the lack of imagination on part of Ministry of Finance and Federal Board of Revenue (FBR) officials.

Pakistan is facing an acute shortage of revenues. Despite this, only half-hearted measures have been announced in the next budget to generate additional resources. Adding insult to injury, no personal tax has been levied on the rich agriculturists. Sadly, the tax to GDP ratio has declined to 9 percent, exposing the extreme inefficiency of the tax system. Since the FBR has miserably failed to tap the real tax potential of the country -- which is not less than Rs3 trillion -- the fiscal deficit for the next year has been estimated at Rs722.5 billion or 4.9 percent of gross domestic product (GDP), as against 4.3 percent for 2008-09.

This deficit is to be bridged through external financing of Rs265.0 billion and domestic financing of Rs457.6 billion. The assertion in the budget speech that the real fiscal deficit would be 3.4 percent of GDP -- a figure arrived at by discounting Rs178 billion to be received from the Friends of Democratic Pakistan (FoDP) group and Rs48 billion to be received for the IDPs -- is a classic case of self deception. Unfortunately, no serious attempt has been made in the next budget to bridge this gap through domestic resources only.

The oft-repeated claim in the budget speech to revive the industry and broaden the tax base instead of overburdening the existing taxpayers does not conform to fiscal proposals suggested to achieve this goal. A mere 16.8 percent growth in FBR revenue is, in fact, no growth if viewed in the backdrop of projected inflation rate of 9.5 percent and GDP growth rate of 3.3 percent for the next fiscal year starting July 1.

The government has shown no political will to broaden the tax base or improve the tax to GDP ratio. The government's claim that "the tax measures proposed are fair and equitable, guided by the principle of 'ability to pay' and set in the context of an economy fighting a war" is simply incomprehensible, simply because there are no new tax measures in the budget. Measures like carbon surcharge and increase in capital value tax (CVT) on real estate have largely to do with change in the nature of collection modes rather than anything else. Therefore, these will not have any substantial impact on broadening of the tax base.

Contrary to general perception, the introduction of carbon surcharge to replace the existing petroleum development levy (PDL) is a step in the right direction. Unlike the PDL, carbon surcharge will go to the federal consolidated pool for distribution among the Centre (51 percent) and the provinces (49 percent). This tax also merits praise because it is aimed at curbing consumption, saving foreign exchange, reducing carbon emissions and ensuring transparency in the pricing of petroleum products.

The widening of the scope of federal excise duty may help in broadening of the tax net, provided the companies that are currently not registered are brought into the system. Since the rich landed classes are not ready to pay income tax or capital gain tax (CGT), the brunt of indirect taxes will be bore by the poor. Such taxes take a larger portion of the income of the poor in comparison with that of the rich. This is the most painful aspect of our tax system: it is highly inequitable and unjust.

A visit to the offices of the troubled House Building Finance Corporation (HBFC) these days paints a gloomy picture. Banners, posters and bulletin boards are filled with slogans against privatisation. A worker, who was addressing his comrades in the office corridors, was levelling serious allegations against the successive heads of the HBFC. In an almost melodramatic tone, the speaker was warning of dire consequences if the powers-that-be decided to "sell" the HBFC as a remedy to its malignant financial and managerial ailments.

All this was not plain hot air! Sections of the media have reported that Muttahida Qaumi Movement (MQM) Parliamentary Leader in the National Assembly Farooq Sattar met with Advisor to the Prime Minister on Finance Shaukat Tarin on June 15 to demand that the HBFC may remain a public sector enterprise. Assurance has also been received to that effect, but the situation will not change until drastic policy and implementation measures are put in place.

The poor, lower middle and middle income groups in the country have an extremely constrained access to housing credit, which is the key prerequisite to home ownership. The cities, which account for nearly 40 percent of the country's population, do not have subsidy of any kind in the domain of housing. Even when subsidies were available, mechanisms of distribution were not compatible for the needy to benefit from them in the real sense of the word.

Because commercial financial institutions do not have credit line touching base compatible with socioeconomics of the downtrodden, the HBFC is the only ray of hope for them. However, the HBFC, which is the largest public sector enterprise, is struggling to deliver according to its mandate. Owned by the Government of Pakistan through the Ministry of Finance, it draws its credit line from the State Bank of Pakistan (SBP). The Pakistan Credit Rating Agency (Pacra) has accorded 'A' rating for long term and 'A1' for short term operations, but the maladies are rooted in the complacent decision-making apparatus.

A Pacra report informs that no board meeting of the HBFC could be held between Aug 2007 and Feb 2009. Despite the appointment of a new head in February, the rot could not be stemmed. There are many dimensions to the poor performance and status of the HBFC. A sizable portfolio of non-performing loans, over staffing, poor branch management, credit line issues with the SBP and absence of clear policy direction from the government have virtually paralysed the organisation.

The various residential projects launched by formal sector developers have been able to attract prospective buyers in the past due to the HBFC's loan facility. With a technical embargo on new loans towards such undertakings, the developers are also directly affected. A builder, who spoke on condition of anonymity, reveals that unavailability of loans has paralysed the bookings of his new projects. The majority of his clientele emanated from the working classes. They resorted to HBFC loans as the only option to acquire a shelter worth the name.

Under normal circumstances, three years was the standard time of construction of housing projects after which occupancy was granted to buyers. The payment of installments was usually done by the clientele accessed by him. However, the visitors to his site offices return without commitment after they find out about the precariousness of loan availability. The developers are subjected to financial pressure because they are not able to finance the various stages of construction in the absence of the HBFC's credit line.

Whereas the core ailments shall require management foresight at the top policy level, many operational aspects need deep analysis and review. It appears that HBFC management has not studied the clientele profile in its true diversified form. Whereas formal builders and developers may appear to be an important segment of business outreach, other categories also need attention. Small house owners, informal builders and developers account for a sizable number of housing stocks that is constructed in the large and medium sized cities. The HBFC can venture to work with those NGOs that have a working record of loan disbursements and recoveries.

Recently, the London-based International Institute for Environment and Development (IIED) has published a working paper based on the documentation and analysis of urban poor funds in developing countries in Asia and Africa. These funds extend financial and technical assistance to the urban poor in accessing housing stock in the respective contexts according to available options. Despite much contextual diversity, these funds have some common denominators. They build upon the community initiatives, such as local savings groups, and evolve into larger entities at the city level. The poor funds directly respond to the housing issues of the respective areas keeping in view the local cultural and sociological sensitivities.

From the institutional perspective, these poor funds have a strong mechanism of checks and balances as well as accountability since they function along participatory approaches. The leadership of urban poor funds normally evolves from activists and professionals having long careers in community work of varied kinds. Examples covered in the document have been derived from Cambodia, Kenya, Malawi, Namibia, Philippines, South Africa, Zambia, Zimbabwe, India, Sri Lanka, Uganda, Tanzania and Ghana.

The challenge to the working of these funds is the risk of funding informal processes that are far from being recognised by the state mechanisms. It is an interesting fact that the poor of 16 countries have built tangible assets and equities worth $142.515 million for these funds, which in turn would help them in approaching housing options. There are many lessons from this case study for Karachi. The experience can be channelised to launch housing credit packages through pilot projects. Similarly, the HBFC may proceed to devise loan products with the assistance of real estate professionals on the basis of their local field experience.

A thorough analysis of default profile, clientele and trends is needed. Baseline information reveals that there are many potential reasons that are responsible for ineffective loan recovery status. Faulty and dubious documentation, long procedures of litigation, high cost of punitive actions, political and extra administrative interference, and poor follow up by recovery staff and ineffectiveness of mortgage financing are a few major reasons.

Each of these sub-heads is in need of a comprehensive review and consequent revamping. For instance, the property ownership records across the country, especially in urban areas, need to be published under gazette notification. Once the database of properties, especially land, shall become free of encumbrances, the credit worthiness shall improve substantially. Similarly, the procedures and time / monetary input in facing litigation require to be streamlined. Some cases take years for proper decision. In this regard, legal experts may be invited to study the scenario and suggest the solution.

Communication linkages play a vital role in enhancing regional trade cooperation as well as regional integration. Like communication network of road and rail links in other regional blocks, Pakistan, Iran and Turkey can also set off a new era of socioeconomic development and prosperity in the region with the Economic Cooperation Organisation (ECO) container train service.

The idea of container train was first discussed during the 18th ECO Regional Planning Council meeting in March 2008, and it was finalised exactly a year later. This goods train service -- to be plied on Islamabad-Tehran-Istanbul route -- is slated to start on August 14 on trial basis and continue until December in the first phase, while passengers train service would be launched in the second phase. Turkey and Iran already have railway link-ups at their borders for both goods and passenger train services, and connecting Pakistan to the Iranian network will link the three countries.

Currently, commercial goods are sent from Turkey to Pakistan by ship, which is an expensive option. Thus, building rail link between the two countries will surely provide a more viable proposition. Both Iran and Turkey have already shown resolve to provide Pakistan with technical and financial cooperation to develop its rail infrastructure. The proposed rail track is 6,500-km long, of which 1,900-km is in Pakistan, 2,570-km in Iran and 2,030-km in Turkey.

However, some technical issues need to be addressed to make this venture successful. For instance, Turkey and Iran use the 1,435 mm gauge, which is known as standard gauge, while Pakistan uses 1,676 mm gauge. The country requires $500 million to upgrade only the Quetta-Taftan track of 700-km to meet the international standards.

Another important issue is the ECO container train service project's feasibility study report that was to be completed by December, but is still being awaited. The financial support from the donors is likely to rely on the outcome of this report. It is important to remember here that financial constraints are among the major hurdles in the initiation of the project. Moreover, the speed of trains on the Quetta-Taftan route is only 15-km per hour due to the poor quality of the track. For the success of the project, upgrading tracks, particularly the Quetta-Taftan one, is vital.

Iran is also constructing a 540-km rail track between Kerman and Zahidan, which would link Pakistan to Europe via Iran and Turkey. In this regard, the 100-km rail track between Taftan and Marjawa (Iran) also needed upgrading to the standard gauge and work on the project is already underway. According to the project's plan, Zahidan would be used as an interchange, and goods trains will take 15 days to complete their journey from Pakistan to Turkey. As a principle, each member country will provide warehouse for goods at the interchanges.

The Turkey-Iran-Pakistan rail link project has a vast potential, not only in terms of economic cooperation but also in terms of further cementing the ties between the people of the three countries. We have seen that efficient means of communication enhance regional economic cooperation and the success story of the European Union is the most pertinent example in this regard. In short, the three Muslim countries can also alter the course of history by developing efficient means of communication.

There is no doubt that the proposed rail project could face a number of challenges, such as the US presence in the region, the so-called 'war on terror', unrest in Balochistan and activities of Jundullah in Iran. These challenges have the potential to eclipse the rail link project and the benefits it can accrue for the people of the three countries. The US openly opposes any project that involves Iran, and the Iran-Pakistan-India gas pipeline is a major case in point. Since the US is already present in the region on the pretext of the so-called 'war on terror', its opposition to the project is very much likely.

The law and order situation, particularly in Pakistan, is another major area of concern. The country is currently facing several challenges and cannot guarantee the safety of the rail network. The unrest in Balochistan is also likely to affect the success of this or any other project involving Iran. Though development work in Gwadar is underway with the Chinese support, the overall situation in Balochistan remains volatile. On the other side of the border in Iran, law and order problems created by Jundullah are another major threat to the proposed rail project.

The Pakistani government has recently taken some steps to encourage the investors and to boost economic activity in the country. It has offered free of cost plots to the neighbouring countries of Iran, Afghanistan and Turkey for establishing their trade consulates, which would promote Gwadar as a hub of regional trade and economic activity. Steps have also been taken to enhance the country's warehouse capacity for facilitating container trains of Iran and Turkey.

Most experts are optimistic about the project's success. Economist Naseem Shahzad views that the rail link has the potential to provide an opportunity to Pakistani businessmen to get access to European markets for their products. Political analyst AW Shamsi says with active communication grid of road and rail links, Muslim countries can overcome their economic backwardness. He believes that the proposed project will not only integrate the region but will also bring prosperity to it.

Nonetheless, some analysts have kept their fingers crossed about the success of the project, because of some tangible variables that have the potential to turn this opportunity into a constraint. Professor MK Rana argues that conflicting strategic interests of big powers in the region are sufficient to derail this rail link project. Similarly, economist Pervaiz Rashid points out that this project will not give the desired results, because Pakistan's trading hubs are located far away from this rail track.

It can be concluded that despite many problems, particularly the US presence in the region, the three governments have shown resolve to go ahead with the project. If this commitment is maintained and the project becomes a reality, it will not only contribute to economic uplift of the three countries but will also boost regional economic cooperation.

(Email: sibtainrazakhan@yahoo.com)