analysis
Mere promises or...

Dr Abid Qaiyum Suleri
The recent demand by the Kashmiris of Srinagar to open a trade route along the Line of Control (LoC) gave a new twist to the decades’ old conflict between Pakistan and India. The situation emerged after fruit growers from Indian Kashmir, instead of demanding right to self-determination, called for a trade corridor across the LoC to sell their perishable fruits to the people of Pakistani Kashmir. The demand was aimed at doing away with the problems they were facing in sending their produce to the rest of India, due to an economic blockage by agitators in Jammu over a land allocation dispute. Their call for a march to the LoC had the support of Kashmir’s Chamber of Commerce, as well as the two main political parties. Despite a curfew, thousands of people gathered and the police had to resort to firing at them to stop the march, which resulted in the death of 22 people.

The world according to Dubya
By Kaleem Omar
Luckily for us (by us, I mean the world), we’ve only got a few more months to go before the United States of America has a new president. It’s just as well that an amendment to the American Constitution adopted in the 1940s limits a president to two terms. Otherwise, we might have had Dubya again as the Republican nominee for president in the November 2008 election instead of John McCain.
Some critics say that McCain is a sort of closet George W Bush and then some, meaning that he’s even more of a hawk than Dubya. As evidence of this contention, these critics cite McCain’s statement of a few months ago that US forces may have to stay in Iraq for “another hundred years”.

independence
Still searching for an identity
By
Aasim Sajjad Akhtar

With yet another August 14 behind us, it is worth pausing briefly to take stock of exactly what was being ‘celebrated’ last Thursday. The need for introspection is even more acute, given the political tumult that continues to grip this nation-state of ours. Here I am referring not only to the ongoing tug-of-war between the elected government and the vestiges of military dictatorship, but also to the multitude of conflicts that suggest the existence of a deep crisis of identity.

Justice for all
The government needs to rise up to challenges and transform them into areas of opportunities
By Dr Noman Ahmed
The common people in the country are grappling with the impact of price-hike. The Sensitive Price Index (SPI), which is a measure of inflation in the prices of essential food items, has posted an increase of 31 percent and the trend analysis done by the Federal Bureau of Statistics (FBS) shows no signs of respite in the situation in the near future. The government treasury is already under tremendous pressure, with burgeoning current account deficit, high import bill, low exports and, above all, an impasse in the decision-making process as some of the major contributing factors. According to the World Bank’s estimates, the number of households who live below the earning benchmark of $2 per day is a whooping 85 percent.

issue
In the eye of the storm
By Aimal Khan
Despite Pakistan’s significant contribution to and sacrifices in the fight against extremism, the debate on its role in the US-led global ‘war on terror’ is still on and is stirring mixed responses. Most of the time of Prime Minister Yousuf Raza Gilani during his recent visit to the United States was spent in explaining and clarifying Pakistan’s role in this war, though he failed to allay completely US apprehensions in this regard. The external pressure on Pakistan for results-based performance in the ‘war on terror’ is only expected to mount in the coming days.

Fading tourism
In recent years, the number of tourists visiting Ziarat has declined rapidly
By Arif Tabassum
The Ziarat valley is perhaps the only holiday resort in the province of Balochistan. Its thousands-year old juniper forest, the second largest in the world, is the biggest attraction for the tourists. Besides natural beauty, the Quaid-e-Azam Residency (a national monument) and the shrine of Kharwari Baba attract a large number of visitors to the Ziarat valley. Apple, cherries and other seasonal fruits are considered imperative for the local economy, but tourism is still the main source of livelihood for a large number of the area’s population.

firstperson
Dialogue with an iconoclast
By Murtaza Shibli
The News on Sunday: What is your assessment of the current political and security situation in Pakistan?
Ayesha Siddiqa: The current situation is highly unstable. There is neither any sign of transformation nor transition. The military remains the strongest institution and the worlds are divided as before. Surely, a political government gives relief and is better than the military ruling. However, it has to offer more in terms of strategising for socioeconomic and political development. The problem in the country right now is that it is ruled by rent-seeking elite, both civil and military, who lack political legitimacy. The leadership, both civil and military, is mediocre and there is no end in sight.

 

 

analysis
Mere promises or...
Dr Abid Qaiyum Suleri

The recent demand by the Kashmiris of Srinagar to open a trade route along the Line of Control (LoC) gave a new twist to the decades’ old conflict between Pakistan and India. The situation emerged after fruit growers from Indian Kashmir, instead of demanding right to self-determination, called for a trade corridor across the LoC to sell their perishable fruits to the people of Pakistani Kashmir. The demand was aimed at doing away with the problems they were facing in sending their produce to the rest of India, due to an economic blockage by agitators in Jammu over a land allocation dispute. Their call for a march to the LoC had the support of Kashmir’s Chamber of Commerce, as well as the two main political parties. Despite a curfew, thousands of people gathered and the police had to resort to firing at them to stop the march, which resulted in the death of 22 people.

All this happened despite the fact that both Pakistan and India, as members of the South Asian Association for Regional Cooperation (SAARC), have reaffirmed repeatedly their commitment to promoting regional cooperation as well as intra-regional trade. During their bilateral meetings, the two countries have already discussed the possibility of allowing trade across the LoC. After all, if they can trade across the Wagha border, then why resist the same across the LoC?

In fact, the last week’s incidents in Indian Kashmir testify to the fact that SAARC has failed yet again. The association might not have been able to eradicate the root cause of the problem that led to the death of 22 people. However, a functional SAARC could have led to enhanced regional cooperation as well as intra-regional trade, thus providing the producers and farmers with an opportunity to sell their products in others markets in the region too.

It seems that member countries of the SAARC are not serious in taking the association’s agenda forward. One can assess the level of their engagement from the fact that during the last 23 years of SAARC’s existence, only 15 annual summits have been held, while eight annual summits could not be held due to the non-serious attitude of the member countries. One of the major achievements of SAARC, at least on paper, has been the South Asia Free Trade Area (SAFTA), which was signed in 2004. Despite this free trade agreement, regional trade in South Asia is still less than five percent of the total trade volume of its member countries.

Why SAFTA is not giving a push to intra-regional trade? There are many reasons for this; however, one of the major ones is that despite this free trade agreement only selected products through selected ports of entry are being traded in South Asia. The trade within SAARC region is based on ‘negative lists’ (lists of ‘sensitive products’ for which tariff would not be reduced). The trade between Pakistan and India is carried out under a special arrangement — on the basis of a ‘positive list’.

Only the products included in the ‘positive list’ of Pakistan can be traded with India. The restrictions and curbs on tradable commodities are part of almost all major free trade agreements, so that the trading countries can protect their ‘sensitive products’ from the negative effects of liberalisation. However, blocking the natural trading routes not only increases the cost of doing business, but also the miseries of both producers and consumers.

One expected that SAARC would take care of most of the intra-regional issues. However, the Colombo Declaration issued at the conclusion of the recently held XV SAARC Summit was as disappointing for many South Asians as were the previous 14 declarations. “Partnership for growth for our people” was the central theme of the Colombo Declaration and it emphasises a lot on “robust partnership for people-centric development”. However, many feel, that much of what was agreed in Colombo had nothing to do either with “partnership” or with “people-centric development”.

Like previous summits, the heads of state / government once again reaffirmed their commitment to the principles and objectives enshrined in the SAARC Charter. They renewed their resolve for collective regional efforts to accelerate economic growth, social progress and cultural development, which would promote the welfare of the peoples of South Asia and improve their quality of life, thereby contributing to peace, stability, amity and progress in the region. They also talked of “effective implementation of all SAARC programmes and mechanisms by rationalisation and performance evaluation on a regular basis”.

The XV SAARC declaration does talk about the need for developing the regional hydro potential, grid connectivity and gas pipelines to meet the growing energy requirements; improving communication among member countries by lowering telecommunication tariffs; improving intra-regional connectivity; promoting tourism; increasing regional trade; cooperating to combat challenges of climate change; conserving water resources; working together for poverty alleviation; initiating joint ventures to combat terrorism; and mutual cooperation for education as well as trade in services.

All these are excellent commitments. In fact, this is the minimum that the people of SAARC region deserve. After all, most of the challenges facing the region are common and can be effectively tackled only through collective regional responses. However, in the absence of any timeframe or clear direction, declarations issued at the conclusion of annual SAARC summits cannot help in devising meaningful regional strategies for sustainable development.

There are certain fundamental issues that need to be addressed for turning SAARC into an effective body for regional cooperation. Non-proliferation and demilitarisation are a must for people-centric development in South Asia. How can South Asian countries contribute to peace, stability and development when they are busy in a maddening arms race? How can they afford to spend on people’s welfare when more than one third of their financial resources are allocated to defence? How can they talk of joint efforts to combat terrorism when their intelligence agencies are making plans to destabilise the neighbouring countries? How can they talk of conserving water resources when Pakistan and India, the two biggest countries in the region, are directly responsible for the melting and receding of Himalayan glaciers? In fact, many of the problems facing the region can be solved simply by demilitarisation.

The second core issue hampering any progress towards realising the objectives of SAARC is the draconian visa regime. SAARC heads of state / government are talking of promoting trade in services, tourism, cultural cooperation, education, etc. Who can disagree with the wisdom of SAARC leaders on this issue? However, a soft visa regime is a must to achieve these objectives. How can one think of promoting trade in services, tourism, cultural cooperation and education with the existing visa problems, especially between Pakistan and India, Pakistan and Bangladesh, and Bangladesh and India?

While Sri Lanka and Nepal follow a policy of issuing visas on arrival to South Asian visitors, the visa regime between two Pakistan and India is a nightmare. General visas are issued (if at all) for a maximum of three cities. There are restrictions on mode of travel, and ports of entry and departure. Moreover, the visitors are bound to report to the local police station at their destination about their whereabouts. Furthermore, there are requirements of filling residential permit forms and carrying immigration forms in the host country. None of these practices would help in promoting intra-region tourism.

Cooperation in promoting education is another area that requires immediate attention of policymakers. Policy measures — such as mutual recognition of educational qualifications, issuance of student visas, provision of more scholarships for intra-regional students and, most importantly, revising the curricula to ensure that textbooks do not promote enemy image of the next door neighbours — are a must to devise a common strategy for cooperation in promoting education across the South Asian region.

The XV SAARC Summit has rightly recognised that improving intra-regional connectivity is another prerequisite for regional integration. However, it seems a wishful thinking considering that direct flights do not operate even among all SAARC capitals. For example, there is no direct flight from Islamabad to any other SAARC capital, except Kabul. Therefore, it is cheaper to fly from Islamabad to a European destination than to Kathmandu or Colombo. There is no provision of international roaming service between Pakistan and India, and Pakistan and Nepal. It is five to 10 times cheaper to make a call to the United States, the United Kingdom or Canada from South Asia than to make an intra-regional call. The first and foremost issue, however, is improved connectivity of the region’s decision-makers, so that they may in turn improve intra-regional connectivity.

SAARC heads of state / government have quite rightly identified that there must be enhanced intra-regional cooperation to tackle the challenges of climate change, energy shortage and food security. However, these challenges require concrete responses from the member countries. A clear roadmap, sharing of resources and responsibilities, and working with a ‘win-win’ paradigm is required to collectively deliver on these challenges. The ideas of SAARC food bank, development fund and commission on climate change are still in the air, and waiting ratification from the member countries.

SAARC heads of state / government rightly condemned all forms of terrorist violence, and expressed serious concern over the serious threats posed by terrorism to the peace, stability and security of the region. They reiterated their commitment to strengthening the legal regime against terrorism, including by undertaking to implement all international conventions relating to combatting terrorism to which the member countries are parties, as well as the SAARC Regional Convention on Suppression of Terrorism and the Additional Protocol to the SAARC Regional Convention on the Suppression of Terrorism.

However, it must be understood that a joint approach to combat terrorism requires common understanding of possible root causes of this phenomenon. One needs to understand the crucial linkages between terrorism and poverty, terrorism and lack of democracy, terrorism and social injustice, terrorism and growing militarisation in society and, finally, terrorism and intolerance. If global North can enter in intercultural and interfaith dialogues to understand the possible causes of growing extremism and intolerance leading to violence, then what stops the stakeholders in this region from making an attempt to understand the point of view of their neighbours vis-a-vis terrorism through constructive debate and dialogue. An understanding of how conflicts happen would provide the clues needed for avoiding and managing terrorism.

SAARC is gaining international recognition. Currently, Australia, China, the European Union, Iran, Japan, Korea, Mauritius, Myanmar and the US are observers to the association. However, it is quite disappointing to note that broader civil society (not merely NGOs) do not find any voice in this process at all. Concerned citizens of South Asia, including academicians, advocacy groups, development practitioners, lawyers, journalists peace activists, the private sector, rights activist, women’s groups, youth groups, and many other non-governmental actors have been very actively playing their role in turning the dream of regional cooperation into a reality.

People’s initiatives seek to sensitise member countries of SAARC on the urgency of regional cooperation in all potential forms and in all possible ways, and urge them to act quickly so that South Asians do not continue to suffer. They are mindful of the fact that awareness raising among the people of the region, to generate pressure on the policymaking processes and structures, is the ultimate trump card to bring about the desired changes, if the governments and SAARC do not act.

(The writer is executive director of Sustainable Development Policy Institute.

Email: [email protected])

 

The world according to Dubya

Luckily for us (by us, I mean the world), we’ve only got a few more months to go before the United States of America has a new president. It’s just as well that an amendment to the American Constitution adopted in the 1940s limits a president to two terms. Otherwise, we might have had Dubya again as the Republican nominee for president in the November 2008 election instead of John McCain.

Some critics say that McCain is a sort of closet George W Bush and then some, meaning that he’s even more of a hawk than Dubya. As evidence of this contention, these critics cite McCain’s statement of a few months ago that US forces may have to stay in Iraq for “another hundred years”.

Only time will tell whether this contention is true or not. But even if (horror of horrors) it does turn out to be true, McCain is different from Dubya in at least one respect, namely, that he does not even begin to compare with Dubya when it comes to mangling the English language.

Indeed, Dubya may well be the most illiterate president in US history. If his father, former President George Bush Senior (who was in Beijing last week along with his son for the opening ceremony of the Olympic Games), had a problem with “the vision thing”, Dubya has a problem with pretty nearly everything — the past, the present, the future, history, geography, you name it.

In particular, he has a problem with English. He’s okay when he’s memorised a speech written for him by others, or is reading a speech from cue cards or a teleprompter. The trouble arises when he is called upon to make off-the-cuff remarks. It’s then that just about anything can happen and usually does.

Speaking at a political rally in Washington, Bush said: “People say, how can I help on this war against terror? How can I fight evil? You can do so by mentoring a child; by going into a shut-in’s house and say I love you.” So now you know.

I, for one, however, find it difficult to believe that people in America actually go around asking: “How can I fight evil?” It sounds like something out of the world of comic books. But then, that may be well be the world that Bush inhabits, judging from some of his utterances. Maybe he should have switched jobs long ago and become president of Marvel Comic Books, Inc. And what’s a “shut-in’s house”, for Pete’s sake?

Speaking at a Republican rally in Davenport, Iowa, Bush said: “I’m plowed of the leadership of Chuck Grassley and Greg Ganske and Jim Leach.” Messrs Grassley, Ganske and Leach would probably say that they’re “plowed” of Bush’s leadership too.

Bush being “plowed” of their leadership opened up a whole new line of thought, suggesting that a big bunch of familiar quotes might have to be modified — as in, for example, “Plide goeth before the fall” and “Death be not plowed”. Could Bush be Chinese, by any chance?

But Dubya really hit his stride during a speech in Nashville, Tennessee, when he said: “There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.” Oh, yeah!

He gave the game away, though, when he said in South Bend, Indiana: “There’s no doubt in my mind that we should allow the world’s worst leaders to hold America hostage, to threaten our peace, to threaten our friends and allies with the world’s worst weapons.” Not “shouldn’t allow”, mind you, but “should allow”. And then people want to know why Bush’s case for a war against Iraq didn’t make much headway at the United Nations Security Council back in March 2003.

In a speech to students in Little Rock, Arkansas, Bush said: “If you don’t have any ambitions, the minimum-wage job isn’t going to get you to where you want to get, for example. In other words, what is your ambitions? And oh, by the way, if that is your ambition, here’s what it’s going to take to achieve it.” I defy anybody to make sense of this, though Bush would probably have said that it was all as clear as mud.

Over, now, to Oklahoma City — the site of the worst terrorist attack in the United States before the 9/11 attacks on New York and Washington. Speaking at a rally there once, Bush said: “See, we love — we love freedom. That’s what they didn’t understand. They hate things; we love things. They act out of hatred; we don’t seek revenge, we seek justice out of love.”

Are we to take it from this that the US has been bombing Afghanistan and Iraq for years out of “love” for the Afghani and Iraqi people? The mind boggles at the thought.

Crawford, Texas, where Dubya owns a ranch where he chops wood, clears brush (not to be confused with Bush) and does other tough-guy things, was the scene of what he told reporters once back in 2002. With a grinning then-US Secretary of Defense Donald ‘Weapons of Mass Destruction’ Rumsfeld at his side, Bush said: “Nothing Saddam has done has convinced me — I’m confident the secretary of defense — that he is the kind of fellow that is willing to forgo weapons of mass destruction, is willing to be a peaceful neighbour, that is — will honour the people — the Iraqi people of all stripes, will — values human life.” That wasn’t just gobbledygook, it was state-of-the-art gobbledygook.

But what many people would still like to know is: what was the Bush administration doing before the 9/11 attacks? Here’s what Bush had to say on the subject on August 21, 2001: “One of the interesting initiatives we’ve taken in Washington, DC, is we’ve got these vampire-busting devices. A vampire is a — a cell deal you can plug in the wall to charge your cell phone.” The question is why didn’t the Bush administration want cell phones charged?


independence
Still searching for an identity

With yet another August 14 behind us, it is worth pausing briefly to take stock of exactly what was being ‘celebrated’ last Thursday. The need for introspection is even more acute, given the political tumult that continues to grip this nation-state of ours. Here I am referring not only to the ongoing tug-of-war between the elected government and the vestiges of military dictatorship, but also to the multitude of conflicts that suggest the existence of a deep crisis of identity.

It is important to recall that, in the modern era, Pakistan occupies a truly unique place in the comity of nations. It is, alongside Israel, the only nation-state in the world to have constituted its national identity along religious lines. Despite what our official history says, and the profound commitment that many of us maintain to a monolithic ‘Islamic culture’ in the subcontinent, it is time to accept that the state that was carved out of the two wings of British India was a product of numerous conjunctural factors, rather than a divinely ordained inevitability.

It would be beyond the scope of this article to discuss the circumstances of the country’s creation; what matters is that when the state did come into being there was no blueprint — ideological or otherwise — to chart the meaning or the shape of Pakistan. There were contending perspectives, all informed by established political interests, and those that won did so not because they represented the people but because they had the means to impose their preferred ideology on the rest of us.

In short, ‘Pakistaniat’ came to be associated with Islam and the Urdu language, as well as militant anti-India sentiment. More importantly, from an early stage, the state exhibited almost no tolerance for competing or dissenting perspectives. In fact, even before the inception of the state, centrifugal tendencies were very pronounced on account of the lack of consensus (on politics, culture, economics and just about everything else) between the different ethnic communities that would come to constitute Pakistan. The only thing that bound disparate histories and aspirations together was a shared religious identity. And 61 years later, it is imperative to acknowledge that this one similarity has not been able to gloss over all our differences.

Take, for example, the ongoing low-intensity war in Balochistan! While the state has a bad habit of attributing each and every internal conflict to the ‘external hand’, and is doing the same vis-a-vis the conflict in Balochistan, a closer look at the history of how Islamabad has dealt with the Baloch people will make it clear that the ‘external hand’ perspective is simply naive. Instead, there is a need to acknowledge the severe disaffection that now grips Balochistan on account of the refusal of the state to redress 61 years of exclusion and oppression.

While we seem to have completely eliminated it from our collective psyche, the most glaring illustration of the inability of religion to create a shared national identity was the secession of the eastern wing in 1971. True to form, the establishment continues to claim that the ‘break up’ of the country was an Indian conspiracy, but serious students of Pakistan’s history know that the rot started as early as 1948, when Jinnah refused to accede to the demands of Bengali students to accord Bangla the status of national language alongside Urdu. Tragically, the attitude of the rulers in post-1971 Pakistan was little different from that before the secession; and rather than accepting the shortcomings of a monolithic and unitary religious nationalism, the state proceeded to assert it ever more vigorously.

The Sindhis, Seraikis and Pakhtuns too have been railing against the exclusionary practices of the military-bureaucratic oligarchy that continues to run this country. But very little has changed, the result of which is a growing divide between Punjab and the rest of the country. This divide has been bridged somewhat during the Musharraf dictatorship as Punjab’s working people have become more sensitive to the oppressive practices of the oligarchy, but much more needs to be done.

For their part, ethno-nationalists that depict Punjab as a monolith and hold every single Punjabi responsible for the failure of the federation make matters worse. It is true that working class Punjabis have been co-opted into not only accepting but celebrating the exclusionary notion of ‘Pakistaniat’, but it is foolish to overlook the substantive class and other differences that are pervasive throughout Punjab. Besides, can the social contract in Pakistan be meaningfully reconstituted without the collaboration of oppressed nationalities and the working people of Punjab?

Arguably, the first step in this direction must be taken by those committed to independent and critical thought, by dispassionately analysing the crisis of identity that Pakistan faces. In the first instance, it is necessary to recover history, because without a firm grasp on the past, there can be no understanding of the present or a fashioning of the future. If on the one hand there is an urgent need to overhaul what children are ‘taught’ in schools, just as urgent is the need for substance in our political and intellectual discourses, both popular and academic.

Arguably, what is needed the most in the current conjuncture is an open and self-critical debate on Pakistan’s relations with its neighbours. After revelations about the ISI’s continuing links with jihadi groups, many a political analyst has adopted a defensive tone and insisted that neighbouring states take responsibility for fixing the situation, rather than acknowledging the state’s own follies.

In the first instance, it is important to bear in mind that principled observers have been warning about the ISI’s shady activities since long and the rot should have been addressed by those serious about the Pakistani people’s welfare long before Washington raised the issue (which is why many are reacting defensively). Second, the knee-jerk response of the majority of scholars reflects their continued commitment to an obsolete strategic vision, which is guided not by what Pakistan is (or should be) but what Pakistan is not (anti-India).

In any case, things have unravelled so quickly that Islamabad’s age-old obsession with India has had to give way to the fallouts of the so-called ‘war on terror’. However, even if there was no imperialist war to contend with on our western border and anti-India ‘realism’ reigned freely, those still committed to the myopic project of ‘Pakistaniat’ would need to recognise that those on the periphery of this state (the working poor and oppressed nationalities) have never been participants in this project, and that identities that are forged on such an exclusive basis hardly constitute a recipe for national integration.

There are many good things that go on in this country called Pakistan, but most of these good things are submerged in the contradictions that continue to plague it. On August 14, it would have been nice to see a bit more introspection in the Punjabi heartland, at least among those who consider themselves makers of public opinion. If we want the ‘Independence Day’ to be celebrated in the peripheries like it is in the centre, we must sit down together and establish a new identity shared by all.

caption

Photo by Rahat Dar.

 

Justice for all

The common people in the country are grappling with the impact of price-hike. The Sensitive Price Index (SPI), which is a measure of inflation in the prices of essential food items, has posted an increase of 31 percent and the trend analysis done by the Federal Bureau of Statistics (FBS) shows no signs of respite in the situation in the near future. The government treasury is already under tremendous pressure, with burgeoning current account deficit, high import bill, low exports and, above all, an impasse in the decision-making process as some of the major contributing factors. According to the World Bank’s estimates, the number of households who live below the earning benchmark of $2 per day is a whooping 85 percent.

On the other hand, the number of income tax payers is less than two percent of the total population. Weak governments, thus, resort to indirect taxation that affects the economically deprived the most. The economy is trying to wriggle free from oil price fluctuation, food insecurity, water distribution conflicts and high non-development expenditure on security. The government, however, has taken some steps to deal with the situation. For example, the finance minister announced Rs34 billion for the Benazir Income Support Programme in the budget speech. Under the programme, Rs1,000 per month will be given to most needy households throughout the country and the assistance of the National Database and Registration Authority (NADRA) has been sought to identify the poorest of the poor.

Similarly, utility stores are being facilitated to sell essential food items to the needy at concessional rates. The government has also raised the minimum pension to Rs2,000 per month to help the apparently disadvantaged sections of the society. There, however, is little hope that these measures will succeed in achieving the desired objectives. In the past, many similar efforts were made without much success, mainly because they missed the target groups and most of the funds were lost in corruption by the concerned staff. A crucial task before the government, therefore, is to rise up to these challenges and transform them into areas of opportunities, through effective implementation strategies to effect lasting distributive justice.

There can be many reasons for poverty, and calamities and subsequent dislocations are also one of them. For instance, violence in the Federally Administered Tribal Areas (FATA) has forced thousands of people to migrate to safer locations in other parts of Pakistan, mainly Karachi. It is common knowledge that the means of livelihood of the displaced people are severed, putting them at a high poverty risk. Similarly, the flood and rain affectees in Sindh and Balochistan are still dislocated in different parts of the country.

On the other hand, energy shortage has affected the industrial employment, as many small and medium enterprises have not been able to sustain production under erratic and expensive energy supply. The situation, however, also offers certain opportunities. It is invariably a situation of high labour force availability, especially in the low-skill category. According to Keynesian principles, this labour force can be used for development projects of national importance.

For instance, the subcontinent used to have cleaning and maintenance of the canal and irrigation infrastructure on a periodic basis in the intermittent period between the crops. This initiative used to be steered by the irrigation department with the help of local landlords. On a ‘food-for-work’ arrangement, this much-needed service was provided by the rural work force. The same practice can be re-initiated in the present circumstances with suitable modifications. The labour force can also be given mass training in trades related to agriculture, which has become a promising occupation again.

The ongoing food crisis has hit hard many vulnerable sections of the society, especially the landless farm labourers and the urban poor. Rising food prices and low purchasing power are leading to increased food insecurity in Pakistan’s growing cities and towns, where some 40 percent of the country’s more than 160 million inhabitants now live. A recent study conducted by the World Food Programme (WFP) informs that about 21 million urban inhabitants are now tagged food insecure. Ninety-five of the country’s 121 districts face food insecurity problems, including malnutrition, under-nutrition, hunger, disease and poverty, the study reveals.

As the situation stands today, the already high food prices are likely to increase further. This crisis can be averted only by swift action. It is high time to build on the increasing value of agriculture by investing in the sector in a targeted manner. Agro-planners must be invited to come up with innovative packages for increasing the yield, seeking efficiency in inputs and conserving water. If the livelihood of marginal communities is effectively sustained in their respective habitats, this may also lead to a reversal in the growing trend of urbanisation.

High oil prices began affecting the world economy in June 2007. Pakistan, which experienced a high growth rate over the first few years of the current millennium, has also experienced a high consumption rate. Thus, the soaring prices have affected economic growth in more than one ways. Pakistan’s petroleum imports accounted for 24 percent of the country’s total imports in 2006-07 and consumed 44 percent of its export earnings. Improving terms of trade would mean that a smaller volume of exports would be needed to pay for a given quantity of imports. For Pakistan this ratio, however, is decreasing: more exports are needed to offset the burden of rising import bill.

Given the high cost of doing business and low industrial output, this appears to be the foremost challenge. The available opportunities comprise an alternative energy plan to lower the dependence on oil, an oil and gas development strategy through rigorous drilling / exploration missions, and conservation approaches. The Iran-Pakistan-India (IPI) Gas Pipeline Project is another initiative that needs to be followed up. Without economic growth of an appropriate proportion, distributive justice shall remain an elusive dream.

Pakistan currently has a promising demography. 40.2 percent of the country’s population comprises children below the age of 14, while 55 percent of the population is in the age bracket of 15-64 years. This places the country at the crossroads of an enormous opportunity and an equally serious threat. If the bulk of this population is properly educated, and absorbed in gainful employment in the country as well as abroad, it can become a useful reserve of human capital capable of sustaining high growth in future. Conversely, if left uneducated and subjected to obscurantism, this population can become threat to the very survival of the country due to potential anti-social activities.

Detailed review of the population reveals several important aspects. The household structure in the country is changing. Joint families are now breaking down into smaller units called ‘nuclear families’. This change creates a need for more housing, infrastructure, communication and transportation facilities. As per the estimates of 2005, 37 percent of the households comprise five people or less. Thus, a demand factor is generated in the economy that causes it to grow almost naturally. The crucial challenges to population, however, remain intact.

(Email: [email protected])

 

issue
In the eye of the storm

Despite Pakistan’s significant contribution to and sacrifices in the fight against extremism, the debate on its role in the US-led global ‘war on terror’ is still on and is stirring mixed responses. Most of the time of Prime Minister Yousuf Raza Gilani during his recent visit to the United States was spent in explaining and clarifying Pakistan’s role in this war, though he failed to allay completely US apprehensions in this regard. The external pressure on Pakistan for results-based performance in the ‘war on terror’ is only expected to mount in the coming days.

The tribal areas will again be the main arena of international focus in this regard. Similarly, America’s future course of action will depend on the results of Pakistan’s ‘war on terror’ policies, particularly in the Federally Administered Tribal Areas (FATA). It remains to be seen whether Islamabad, or more specifically Rawalpindi where the GHQ is located, will be able to adopt corrective policies to check the ever-increasing militancy and avert the much-publicised impending US direct action against militants in Pakistan’s tribal areas or not.

Is there a need for revising our policy in the tribal areas and Afghanistan? Is any balanced policy option available to us? Is our policy formulated after assessing all the pros and cons, and after taking into account the genuine strategic interests of all the stakeholders, both internal and external? These are some of the main questions analysts have been trying to answer after the prime minister’s recent visit to the US.

America’s frustration at Pakistan’s failure to counter the terrorist threats to its strategic interests and to close militants’ safe havens in the tribal areas is becoming more and more visible with each passing day. Earlier, America was pressing hard for the resumption of the joint US-Pakistani operations that ended in 2003, but Pakistan rejected this demand and asked for more US military assistance and intelligence cooperation to deal with the militants by itself.

Now the US has asked Pakistan “to do more” or it will take the things into its hands. To put pressure on Pakistan, the US is threatening direct action against the militants and their bases in Pakistan’s tribal areas, where they get training to plan and conduct cross-border attacks on US and NATO troops. The growing activities of the militants on the Pakistani soil and some of the recent statements by them are lending credence to the allegation that the country is being used by them to plan attacks against other countries.

Using its bases in Afghanistan, the coalition forces are already chasing the local and non-Afghan militants into Pakistan’s border areas, besides targeting the suspected militants’ hideouts and high-value targets by air. Reconnaissance flights by US spy planes and drones over Pakistan’s tribal areas have become a routine occurrence. Amid a record surge in the Taliban’s attacks, mounting causalities of the US and NATO forces, and an increase in the number of non-Afghan volunteers who are fighting along with the Taliban in Afghanistan, Washington’s concerns do not appear to be baseless.

Pointing finger at the Taliban and citing al-Qaeda’s latest activities, US officials are also foreseeing the possibility of another 9/11-like incident, which could originate from Pakistan’s tribal areas. Sharing US apprehensions, Gilani recently maintained that incidents like 9/11 could happen again if foreign militants were not dealt with sternly. He admitted that foreign militants — including the Chechens, Uzbeks and Tajiks — were present in the tribal areas and their activities were increasing with each passing day.

The ties between Pakistan’s Inter-Services Intelligence (ISI) agency and America’s Central Intelligence Agency (CIA) currently are at the lowest ebb, though the two have remained close allies for decades. Since the 1980s, the CIA — in close collaboration with its Pakistani counterpart — has first instigated and supported jihad against the Soviet invasion, and then conducted counter-insurgency operations against the Taliban and al-Qaeda after 9/11. The latter operations, however, have caused a major dent in their ties.

American military and intelligence officials suspect that some of the pro-Taliban elements in the ISI have links with and support the militants who are undermining US strategic interests in the region. Due to strategic imperatives, they believe, Pakistan joined the so-called ‘war on terror’, but its spy agency continued its policy of engagement with the Taliban. Some powerful circles in Pakistan consider the militants as one of the main policy tools for achieving strategic depth in Afghanistan. They want to install a government of their choice in the country, to keep the current unfriendly Afghan government under constant pressure, as well as to counter India’s growing political and diplomatic moves there.

Instead of removing the mistrust between the CIA and the ISI, the recent high-level talks between American and Pakistani military and intelligence officials ended in a fiasco, with allegations and counter-allegations being traded against each other. For example, Pakistan was critical of the US for disregarding foreign support to the Baloch resistance movement. It claimed that the CIA dossier on the ISI was based on “India-influenced intelligence inputs”. Privately, some of Pakistan’s security officials did not hide their concerns about the alleged US-India-Afghanistan nexus aimed at destabilising Pakistan.

Pakistan is also disturbed by the emerging links between the US and India. To the country’s utter disappointment, the recently-released National Defense Strategy document of the Pentagon envisions a greater role for India in the international system, corresponding to its “growing economic, military and soft power”. Islamabad is also complaining that, despite repeated requests, the US did not provide it the required equipment to effectively control and secure the border for checking the illegal cross-border movement.

On the other hand, American and Afghan officials are complaining about the ISI’s deliberate attempts to undermine their strategic interests by supporting the Taliban. US think-tanks, as well as its strategic and intelligence communities, have started blaming directly some elements in the ISI for supporting the militants and having links with them. It has also charged some elements in the ISI for providing the militants with details about the American campaign against them.

This is the prime reason that the US is now urging Pakistan to do something about the alleged involvement of ISI officials with the militants. Unlike the past, when the Americans used to keep mum over Afghan and Indian allegations against Pakistan, the CIA has blamed the ISI for the July 7 bombing of the Indian Embassy in Kabul, while referring to communication intercepts between Pakistani intelligence officers and the militants who allegedly carried out this attack.

The leakage of highly confidential documents to the media and the validation of Indian allegations by the CIA are a cause of displeasure for the Pakistani policymakers. Pakistan strongly rejects these allegations and terms the reports of its intelligence officers’ links with the militants and their role in bombing of the Indian Embassy in Kabul baseless. If the US pressure prevails upon the Pakistani rulers, a purge in the ISI is expected soon. According to some analysts, this would be the fourth purge since the late 1980s to clear the ISI of pro-militants elements.

The US government is facing problems in coping with the new political realities that emerged after the February 18 general elections in Pakistan. The events that took place prior to and around Gilani’s visit to the US, especially the ISI fiasco, overshadowed it. This has further exposed the government’s lack of direction and political will, as well as its indecisiveness and ineptness. The policy of political engagement with the militants has failed to find any subscribers in the West, mainly due to its dubious nature. These deals have failed to contain militancy, establish the government’s writ and rule of law, and put an end to cross-border infiltration. The western countries want a results-based policy, not just a deal for the sake of a deal.

Amid unprecedented pressure to do more in the ‘war on terror’, Islamabad is left with very few options. Even if the Bush-Gilani meeting was “between a remote-control prime minister and a lame-duck president”, its outcomes will have far reaching impact on the ties between Pakistan and the US on the one hand, and on Pakistan’s domestic politics on the other hand. Considering this, will the Washington again prefer the military leadership over civilians for doing serious business? In this scenario, what will be the emerging equation of civil-military relations? Is the Bangladeshi model applicable to Pakistan, where several clean-up experiments and accountability drives have repeatedly failed due to partiality, lack of transparency and selectiveness? Will only Musharraf’s ouster really bring about the desired changes? It will not take long to find answers to these questions.

(Email: [email protected])




Fading tourism

The Ziarat valley is perhaps the only holiday resort in the province of Balochistan. Its thousands-year old juniper forest, the second largest in the world, is the biggest attraction for the tourists. Besides natural beauty, the Quaid-e-Azam Residency (a national monument) and the shrine of Kharwari Baba attract a large number of visitors to the Ziarat valley. Apple, cherries and other seasonal fruits are considered imperative for the local economy, but tourism is still the main source of livelihood for a large number of the area’s population.

Hotels, guest / rest houses, restaurants and shops generate substantial employment opportunities for those who do not have land. The tourists’ arrival starts in May and lasts till the mid of August. During this period, thousands of tourists visit the Ziarat valley and spend enough time here. The valley receives a lot of snowfall in winter, thus only a limited number of tourists visit the area in this season.

The tourists who come to Ziarat hail mostly from Sindh and Punjab, while the people from within Balochistan mostly visit the valley on out-back basis — they usually bring their own food items and make their own living arrangements, and thus contribute very little to the local economy. In short, the economy of Ziarat is dependent on tourists from outside the province.

In recent years, the number of tourists visiting Ziarat has declined rapidly. “In the last two to three years, the number of tourists from other provinces has decreased by 80-90 percent, while the number of local tourists by 50 percent,” informs the manager of a local hotel. He adds that the declining tourism has severely affected the hotel industry, and many hotel-owners are now seriously thinking about quitting the business and doing something else.

The caretaker of a local guest house tells The News on Sunday that he spends the whole day on the road to seek tourists and attract them towards the luxurious accommodation, but he does not receive more than a guest or two in a week. “If the situation does not change, I may not be able to continue my job in the next season,” he shared with grief. “We have to wait for hours to get flour, but its consumption is decreasing with each passing day because tourists now refrain from visiting Ziarat,” comments a local baker.

According to local businessmen, the reasons for the declining number of tourists to Ziarat include the insufficient infrastructure in the valley, the overall security situation in the province and high inflation. The tourists from Sindh and Punjab are now afraid of visiting Ziarat, because they fear for their life due to the poor security situation in the province. Because of the high inflation, visiting Ziarat has now become almost unaffordable for the local tourists, so their number too has declined. Similarly, because of the lack of adequate infrastructure, especially roads, many tourists do not want to revisit Ziarat. All these factors have played havoc with the valley’s economy that was and is still dependent on tourism.

The National Tourism Policy was announced in 2001 and its salient features include: 1) tourism will continue to be treated as an industry; 2) round-the-year tourism will be promoted; 3) steps will be taken to improve the environment, as well as to develop human resources and tourist services and products; 4) the federal and provincial governments will be asked to make laws in line with the demands of the tourism industry; and 5) Attempts will be made to stimulate the private sector’s involvement in the tourism industry.

In Balochistan, however, nothing was done on the ground to implement the National Tourism Policy. The legislative powers of the province lack the understanding of the significance of tourism and its link with economic development. The provincial government, therefore, has failed to attract any private investment to promote tourism as an industry in the province. Similarly, public efforts to promote tourism and tourist attractions have been marred by lack of planning and coordination.

The Ziarat Valley Development Authority (ZVDA) was established a few years ago to promote the tourism industry in the valley, by improving the infrastructure and services, but soon the initiative was rolled back due to unknown reasons. After the inception of the local government system, many people hoped that the district government of Ziarat would improve the infrastructure and ensure quality services to attract tourists to the valley, but it never showed any interest in this regard. The wrecked inter-city roads and the poor quality of environment testify to the district government’s poor performance. The unclear roles and responsibilities of the federal, provincial and district governments have also contributed to the decline of tourism in Ziarat.

The poor security situation in Balochistan has not only affected the tourism industry of Ziarat, but has also played havoc with the province’s economy. The people from outside Balochistan used to live in Quetta and Ziarat for months, and their visits to different tourist attractions were seen as imperative for the province’s economic development. The markets are still there, but there are no customers. Similarly, tourist attractions are still there, but there are no tourists.

Moreover, the ever-increasing inflation has deprived the people of all opportunities of recreation. As a result, intolerance and frustration are growing among them. Ziarat used to be the most peaceful district of Balochistan till recently, but now incidents of robbery and theft are a common occurrence. Though there are other reasons for this also, it shows that the declining tourism industry is paving the way for anti-social activities. Moreover, high inflation has affected the local transport industry, particularly of the areas such as Ziarat, where except tourism no other means of livelihood are available to most of the population. To revive tourism in the Ziarat valley, the federal and provincial governments should:

• Revive the ZVDA and provide it with sufficient funds, so that it can concentrate on the development of infrastructure in the valley. The ZVDA should develop inter-city roads, improve picnic spots and places of accommodation, and promote tourism through websites, brochures and flyers within and outside the country.

• Clear the roles and responsibilities according to the devolved government structures. The district government needs to be empowered to promote tourism in the valley with clear funding and authority lines.

• Attract private investment in the valley. Quality motels and hotels, as well as food and beverages, and improved transport services could be the main areas to invest in. This will also play an instrumental role in generating employment opportunities for the local population.

• Improve the security situation in the province and establish the writ of the government. For this purpose, the reconciliation process in the province needs to be expedited. In particular, the provincial government should play a proactive role in initiating dialogue with the people fighting for their rights.

• Revive the levies system, which was very efficient in maintaining peace in the area due to its indigenous roots. Since the police have taken the control of security in Ziarat, anti-social activities have increased manifold in the valley. This is one of the major reasons for the declining tourism in Ziarat.

• Announce a policy to promote the tourism industry in the province.

(The writer is a
freelance socio-political analyst.

Email: [email protected])



firstperson
Dialogue with an iconoclast

The News on Sunday: What is your assessment of the current political and security situation in Pakistan?

Ayesha Siddiqa: The current situation is highly unstable. There is neither any sign of transformation nor transition. The military remains the strongest institution and the worlds are divided as before. Surely, a political government gives relief and is better than the military ruling. However, it has to offer more in terms of strategising for socioeconomic and political development. The problem in the country right now is that it is ruled by rent-seeking elite, both civil and military, who lack political legitimacy. The leadership, both civil and military, is mediocre and there is no end in sight.

TNS: When you talk about both political and military leadership being mediocre, are you drawing comparisons between Musharraf and Kayani, on the one hand; and Benazir Bhutto, Nawaz Sharif and Asif Zardari, on the other hand?

AS: Benazir Bhutto was the only Pakistani leader worth her salt and she is gone. When I say lack of vision it means that while Kayani and Musharraf do not have the vision to see that they must not try to hold the political governments permanently hostage to machinations, the civil leadership does not have the strength or the vision to think of ideas to escape the constant blackmail.

TNS: What is Pakistan’s current Kashmir policy? The country’s political leadership seems to be following a reconciliatory path, in line with that of the Musharraf regime, but the incidents of militancy are on the rise. Can you please explain this phenomenon?

AS: The civil and military leadership are pursuing two different paths. The civil leadership certainly wants peace and harmony. It wants to build trade ties. In this respect the civilian government is like the previous civilian governments, which have wanted peace with India. I find it amusing when Indian analysts say Pakistan’s military will guarantee peace and the civilians are the troublemakers. A couple of years ago, Musharraf said Kashmir flowed “in our blood”. From the military’s perspective, the India-Pakistan divide is deeply ideological. Unless the civilian government seriously works on correcting the civil-military relations, peace will India will remain an elusive dream.

TNS: Can we place the blame solely on the Pakistan Army’s obsession with Kashmir? India had a chance when Musharraf offered solutions that reflected a massive shift from the official stand, but its non-response marred the spirit. Are you absolving India from its responsibilities?

AS: This obsession is shared by armies of both Pakistan and India. The political governments were close to resolving the Siachen dispute, but the Indian army backed out. The lack of imagination to solve the crisis is on both sides.

TNS: There are some suggestions that Pakistan’s stance on Kashmir has changed. Is this true?

AS: I don’t see that Pakistan’s military has changed its stance on Kashmir. The only change, however, is that it is seen as an existential issue for both, which means that you have to plan more carefully as not to have a bigger conflict. As for the people of Pakistan, they are like the people of India — more interested in bread and butter. The only time they get interested in the issue is when the government chooses to lift their moods by some geopolitical excitement.

TNS: Can you please elaborate?

AS: It means that whenever there is pressure, the governments start their nationalistic rhetoric to divert attention.

TNS: Some people even equate jihad in Kashmir with terrorism. They think that it is an extension of suicide bombers and the Pakistani Taliban who are against the societal norms. What do you have to say?

AS: Opinion on jihad and terrorism is divided. Even if you equate jihad with terrorism, we have some people who believe in doing that. It is an academic debate whether targeting civilians is terrorism or not.

TNS: Pakistan chose to ignore the recent Amarnath Shrine Board controversy when the whole of Indian Kashmir was on the boil, prompting Syed Ali Geelani to blame the country for abandoning the Kashmiris? How do you see this non-reaction of Pakistan to a very public issue?

AS: What do you expect Pakistan to do? It is not a territory like Kashmir. It is a country and has to manage relations. Just like India kept quite in the recent past on a number of tricky issues that Pakistan had, including the Dr Abdul Qadeer Khan case, the latter has to reciprocate as well as appear not to interfere in the former’s internal matters.

TNS: Is Kashmir India’s internal matter? Does this reflect a change in Pakistan’s attitude?

AS: The Pakistani leadership, certainly the politicians, want to move on.

TNS: Where would you place Kashmir in the military business calculus?

AS: Kashmir is very much part of the military business in Pakistan, mainly because it justifies the military’s hegemonic control. Since the insecurity syndrome is linked with Kashmir, the issue is played up constantly to build the logic for the military’s presence. Moreover, there is money to be made and pocketed by people in the case of war.

TNS: Has 9/11 reconfigured the relations between the Pakistan Army and the religious extremists? If yes, how?

AS: 9/11 brought fundamental configuration between the army and the jihadis. Instead of hundreds of smaller groups, these had to be narrowed down to a few the army could trust. Groups were merged with each other, eliminated or new ones were formed. This was organisational restructuring, but nothing beyond this.

TNS: Does this mean that Musharraf’s claims and assurances that Pakistan won’t let its territory to be used by terrorists against India were a farce?

AS: No one in Pakistan can completely back off from the non-state actors, as long as there is a real threat and fear that India will use extra-legal and extra-diplomatic methods to pressurise Pakistan. The existence of terrorists is part of the existential crisis of Pakistan.

TNS: Where would you place Pakistan’s intelligence infrastructure in the massive military business complex?

AS: The intelligence agencies are part of the military, not independent of it.

TNS: How do you view the recent decision of the government to bring the ISI under civilian control, but then backing out in less than a day?

AS: It depends on who was behind bringing it under the Ministry of Interior and then who forced the reversal of the decision. This was a necessary move to renegotiate civil-military relations. I am sure that the military forced the government to reverse it. Technically, the ISI is under the Prime Minister’s Secretariat. They should have just transferred operations and finances of the ISI to the PM’s Secretariat, rather than the Ministry of Interior. It is possible that the United States influenced the first decision.

TNS: According to some recent reports, the Pakistan Army is cutting troop levels by 50,000. Similarly, there has been no increase in the country’s defence budget in the ongoing fiscal year. Is this some kind of security sector reform? If yes, what do you think is its cause and what would be the outcome?

AS: The reduction of number is to solve the image problem and other internal problems, which were occurring due to the continuation of batmen for the families of officers. This is all that has been reduced but the short-term liability has increased, because every officer is now given money to get a servant from the market.

TNS: The performance of the Pakistan Army in the tribal areas has not been impressive. What’s going on?

AS: It is the Frontier Constabulary (FC) where they have problems, which is not really the army. The FC has army management, but the manpower is local. There have been some problems, but then armies do get into such problems when they are involved in counter-insurgency operations on which the views are divided. The people do not believe that the so-called ‘war in terror’ is their war. Moreover, this is a dicey war and becomes more so when there are no clear lines between friends and foes.

TNS: With the US seemingly trying to bridge gaps with Iran, is Pakistan being set as the new American target?

AS: I don’t think that the US will jump so soon to attack Pakistan. It may befriend Iran, but this does not make Tehran a dependable option for Washington.

TNS: There are already some suggestions that the army may return soon. Is the army inseparable from politics in Pakistan?

AS: The army will not return as long as the situation is bad. The financial conditions are bad due to a mix of international and domestic factors, so why should the army risk its neck and reputation by taking over? The pot will be allowed to boil until it is time to have the soup at a good time.

(The author is the editor of www.kashmiraffairs.org)

 

According to media reports, the federal government is considering to transfer collection of general sales tax (GST) on services to the provinces. Currently, the federal government collects GST on behalf of the provinces and, after charging five percent collection fee, transfers the balance amount to them. On the other hand, the provinces also collect taxes worth billions of rupees on behalf of the federal government as withholding tax agents, but they do not get any collection charges. This is only one aspect of the federal government’s fiscal high-handedness.

Historically, the Centre has always usurped the taxation rights of the provinces, who should have exclusive authority to levy taxes on goods and services within their respective territorial jurisdiction. Imposition of presumptive taxes under the Income Tax Law is the worst example of the Centre’s fiscal high-handedness, because in substance these are taxes on goods and services, which in a true federal structure fall within the domain of the federating units. The power to collect GST, which was a provincial subject at the time of the country’s independence, was shifted to the Centre in 1948 by the Constituent Assembly. Unfortunately, this power has since been with the federal government, against the established principles of federalism and norms of justice.

The federal government, therefore, must approach the issue of fiscal decentralisation in a holistic manner. All the due fiscal rights must be restored to the federating units, rather than merely transferring the collection of GST on services to them. In short, the current resource starvation of the provinces, as well as of the local governments, owes to the fact that all buoyant and broad-based sources of revenue are federal subjects. On the top of this, the federal government has assumed whatever residual taxation authority the provinces enjoy under the 1973 Constitution, either directly or by imposing federal taxes on provincial tax bases.

Some of the major examples of the federal government directly assuming tax authority the provinces enjoy under the Constitution are of ushr on agricultural produce, excise duty on hotels and restaurants, capital value tax on imported motor vehicles, etc. Similarly, the major example of the federal government imposing taxes on provincial tax bases is of GST on services, such as electricity, telephone, fax, insurance, courier, shipping and stevedore, travel by air and railways, inland cargo, etc. The outcome of this concentration of fiscal authority with the federal government is that the contribution of the provinces to the country’s total tax revenue is less than five percent. Similarly, their contribution to the country’s total revenue (both tax and non-tax) is only about eight percent.

The three less-populated provinces (Balochistan, the NWFP and Sindh) are strongly opposed to the distribution of taxes from the federal divisible pool on the basis of population, because this deprives them of their due share despite the fact that they contribute almost 70 percent to the country’s total tax revenue. Assignment of taxes is an important constitutional and political issue, and it is high time that proper attention is paid to it for solving the state’s taxing predicaments, which are a perpetual source of disharmony between the Centre and the provinces.

Even after grabbing all the taxation rights and transgressing on residual matters of the provinces, the Centre’s total revenue collection stood at only Rs1,040 billion in fiscal year 2007-2008, of which the provinces received less than Rs700 billion. Interestingly, the federal expenditure under two heads alone — debt serving and defence — was more than Rs900 billion in the same period. Thus, the fiscal deficit has crossed all imaginable limits. It is indeed a sorry state of economic affairs. The country is caught in a dilemma where the federal government is unwilling to grant the provinces their legitimate fiscal rights, due to which the latter are unable to reduce the ever-increasing burden of loans from the former. The real victims in this Centre-province conflict, however, are the voiceless masses.

The Centre might have transferred some of the federal taxes to the provinces — most likely GST, as is the case in Canada, India and the United States — had the federal revenue collection increased substantially over the years. However, despite employing all kinds of negative tactics, it took the Federal Board of Revenue (FBR) four years (from 1998-99 to 2001-02) to jump from Rs307 billion to Rs401 billion — an average annual increase of Rs24 billion only.

From 2002-03 to 2004-05, the FBR managed to increase the revenue collection from Rs460 billion to Rs590 billion — a poor performance considering that the average annual increase did not even cover the impact of inflation. In 2005-06, the revenue collection increased to Rs710 billion; in 2006-07, it increased further to Rs840 billion; and in 2007-08, it reached Rs1,040 billion. Even according to conservative estimates, Pakistan’s total national revenue potential in fiscal year 2007-08 — federal and provincial combined — was not less than Rs2,500-3,000 billon. This potential cannot be realised unless the provinces are granted their fiscal rights.

Assignment of a tax means transfer of taxation power from a higher-level government to lower-level governments. Taxation power includes the following: right to levy tax, collect tax and appropriate the proceeds from such tax. Thus, there can be three interpretations of assignment of a tax: first, a higher-level government may levy and collect a tax, but transfer the entire proceeds to lower-level governments; second, a higher-level government may levy a tax, but allow lower-level governments to collect it and retain the proceeds; and third, a higher-level government may fully transfer a tax to lower-level governments.

Only the third interpretation defines assignment of a tax in its strictest sense. In Pakistan, however, the opposite has happened. Federal high-handedness in tax matters — by using both federal and concurrent lists — has played havoc with the economic rights of the provinces, who should have the exclusive right to levy taxes on goods and services within their territorial jurisdiction. The federal government, however, has encroached upon the undisputed right of the provinces by levying taxes on goods and services under the garb of presumptive taxes on income. Such taxes, however, cannot be termed taxes on income, which the federal government is empowered to levy under item 47 of the Federal List.

The purpose of tax assignment generally is to augment the resources of lower-level governments. It is obligatory for them to levy a tax assigned to them. Not only this, the lower-level governments may not have the power to alter the basic structure of an assigned tax. They, however, may enjoy flexibility in fixing tax rates within a minimum and maximum range prescribed by the higher-level government. Pakistan’s problem is that, on the one hand, we have too many taxes in the country (federal, provincial and local, though the last two generate only a negligible revenue); and, on the other hand, the benefits of revenue collection are not reaching the masses. Only equitable distribution of fiscal powers between the Centre and the provinces can help change this situation.

(Email: The writers are tax counsels who also teach at LUMS.

Email: [email protected])

 

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