Re-thinking the future
Growth and the
By Aasim Sajjad Akhtar
I have worked in the predominantly Christian katchi abadis of the federal capital for well over a decade. In this time, I have developed reasonably close friendships with many residents of the ‘squatters’ who live in these settlements. Those who know the politics of Pakistan’s cities will be familiar with the extremely important role played by katchi abadi residents during election time. Voter turnout is much higher than the urban average and, more often than not, whole communities vote en bloc.
A roller-coaster year
By Raza Rumi
Nearly three years after the restoration of civilian rule, the most pertinent question would be the fate of Pakistan’s democratisation and how far has it progressed. There can be no simple answers to this question given that Pakistan is in the midst of a war next door and battling against homegrown extremists.
The conflict and 2010’s natural disaster in the shape of floods have adversely impacted the economy. Whilst the passage of 18th and 19th Amendment to the much mutilated Constitution have heralded political reforms, sadly, a comprehensive institutional reform agenda is nowhere in sight. At the end of 2010, we find ourselves facing the prospect of political instability due to a weak and opportunistic coalition and unresolved issues of civil-military imbalance.
The year started with increased pressure by the opposition for constitutional amendments, which were agreed in 2008 to restore parliamentary form of government. It was feared that the Pakistan People’s Party was not serious in giving up Presidential powers. However, public pressure dictated that a compromise be effected soon. Thus, the highlight, and perhaps the best development of 2010 was the unanimous passage of the 18th amendment which is a historic agreement inasmuch as it tries to devolve power to the provinces and rectify the long-standing issues of federalism. Its implementation is being managed by a central commission headed by Senator Raza Rabbani who played a central role in forging a consensus on this Amendment.
But the implementation snags and pitfalls define the inherent contradictions of Pakistan’s governance crisis. The postcolonial state remains centralised and is wary of sharing power at the provincial and local levels. At the same time, it has decentralised the monopoly of violence, voluntarily or by default, to armed militias found across the country. Thus the transition will take longer than two years and requires continuity of the current quasi-civilian set-up. Similarly, while the ruling coalition is willing to devolve ministries it is also beefing up vertical programmes and institutions such as the Benazir Income Support Programme (BISP) which is not strictly in line with the principles of federalism.
In the first phase of devolution under 18th Amendment, it was announced on December 1, that the ministries of special initiative, Zakat and Ushr, population welfare, youth affairs and local government, and rural development would be devolved. It was decided that economic affairs division would see international agreements of such ministries and the planning process would be handed over to planning and development division. The head of the Implementation Commission dismissed the fears of retrenching employees or offering them golden handshakes. According to Rabbani, in the first phase a total of 3,769 employees would be affected. The government plans to accommodate most of these employees in the vacancies (currently over 900) in other ministries.
In the second phase, five more ministries will be devolved by February 2011. The process of devolution would be completed till June. In the second phase, it is planned that the ministries of tourism, social welfare and special education, culture, education and health would be devolved affecting 44,001 numbers of employees in total. Immediately after announcing it in the parliamentary commission, the government deferred the devolution of health ministry owing to the threat to sustainability of ‘international aid agreements’. Livestock ministry was then added as the fifth ministry in the phase II.
Concerns have been expressed also over the devolution of education ministry and the National Assembly Standing Committee on Education decided to speak against the proposed devolution. Zubaida Jalal, one committee member, termed the plan as a ‘threat to federation’ when no one would be able to come up with uniform syllabus and history. However, it is intriguing that Jalal, hailing from a smaller province (Balochistan), is opposing more autonomy to the provinces. Politics is a strange game.
The devolution of federal powers and functions comes at a difficult time. Provincial governments are already bankrupt and heavily dependent on the federal revenues, find it difficult to accommodate the staff of the ten ministries to be devolved. At the same time, doubts about the longevity of the democratic order exist as always, thereby making the future path quite uncertain.
However, 18th Amendment cannot be implemented in its entirety without corresponding institutional reforms. Most notably, Pakistan’s civil service is in a dire need of restructuring. There are no signs of this happening at the national level. Federal civil servants will continue to hold key offices in the provincial bureaucracies and the mismatch between the competence and career paths of provincial and federal civil service will continue, thereby making the realignment more and more difficult.
In the past few years, Pakistan’s power equation has changed and there were visible manifestations of this new development. The judiciary is now an independent power broker; and the [electronic and print] media has also entered the power matrix with a stake. Therefore, Pakistan’s civilian governance is no longer an executive driven enterprise. The friction between the different power wielders continues and will take time to settle.
There were several instances when the government-judiciary collision was predicted but it did not happen as both the sides preferred to backtrack when things became heated. The judiciary, for instance, did not agree with the way 18th Amendment set a new procedure for appointment of judges. It gave an interim verdict without answering many questions raised in the court. However, the Parliament was quick to respond and the passage of 19th Amendment last week displayed that a rule-based accommodation of competing interests was possible within the parliamentary framework.
The media, on the other hand, has emerged more powerful and effective in holding the ruling coalitions at the centre and the province to account. With increased public outreach and power, the issue of media responsibility also gained attention in the preceding year. The media is yet to develop a self-regulation regime and its conduct in many respects was questionable. The most pertinent example is when unconfirmed news report on government’s alleged move to identify sitting judges created a furore and twenty four hours of uncertainty. A Supreme Court bench took notice of the news report and directed the Prime Minister to submit a written response that the executive had no such intentions. This was unprecedented even by the Third World standards. Similarly, reports of media-persons engaging with extremists and fanning prejudice against minorities also came under public spotlight. Therefore, issues of media accountability continue to afflict the freedom.
In this process of power-tussle, the Parliament emerged to be an ineffectual player often criticised by the public and media as disengaged. Pakistan’s decision-making process has traditionally kept the parliamentary institutions on the margins. The quality of legislators and lack of experience is a major bottleneck. Perhaps the thorniest issues are centralised leadership style, lack of regular elections within parties and dynastic mode of intra-party governance. These render the parliamentary parties pretty powerless and shift the key powers to unelected and influential party stalwarts. Pakistan’s political elites continue to elude this reality and have, in fact, reinforced these patterns by adding a clause to the 18th Amendment whereby party leaders are supreme.
The most disappointing aspect of the year was the manner in which the security establishment remained a continuous player in domestic politics as well as policymaking process. The ascendancy of the military over the civilian was also testified by the WikiLeaks cables, which showed who called the shots in Pakistan, particularly with respect to foreign and security policies. Politicians remain divided and squabble with each other while the unelected power centre displays discipline and unity of command and action. The Afghanistan war and the war against extremists is pretty much driven and managed by the Army (though it has the political support of most of the coalition parties).
Furthermore, the credibility, or lack thereof, of the political class complicates the matters. In this context, the flood relief efforts of 2010 were viewed and mostly, thanks to the media spin, as a contest between the efficiency of the Army versus the ineptitude of the civilian leaders. The truth is that Pakistan’s politicians are yet to adjust their style of working to the fast-changing structure of power as well as social movements. Their business-as-usual approach lands them in trouble time and again. This is why the major stories on corruption this year dealt with the way politicians have been rewarding their cronies. The most glaring case was that of the Chairman Oil and Gas Development Corporation where a ‘friend’ of the Prime Minister was appointed only to be removed after a Supreme Court order. With a free media and a pro-active (some say hyper-active) judiciary, old model of patronage distribution is not going to work.
Coming back to the civilian-military imbalance and lack of trust (once again, howsoever flawed, WikiLeaks’ cables on Pakistan can be referred to as the closest of documentary record) between the two power centres, political instability is a challenge and there seems to be no escape from it. The sad part is that the political elites are also not interested in making a concerted effort to undo this imbalance as gaining and exercising a power-sharing formula is what they aspire for in the first place.
Having said that, the year 2010 was promising as the major opposition party, PML-N, refused to be part of any ‘unconstitutional’ move for a regime change. This is why many analysts have held that Nawaz Sharif’s support to the democratic order has been the best of things about the post-Musharraf Pakistan. By default, President Zardari has gained, as no major player of the game wants to upset the current arrangements at the centre and the provinces. However, this does not mean that Pakistan is moving towards a more embedded democracy.
Four challenges at the end of year 2010 are worth-noting. First, the inability and lack of a strategy of the political parties to make the parliamentary system work and bring the all-powerful invisible agencies under civilian control is missing.
Second, the rise of extremism despite the various swings of public opinion continues unabated. Al Qaeda, many analysts have noted, is getting more entrenched in Pakistan’s major cities and towns due to the relentless drone strikes in the northwest. Al Qaeda’s agenda cannot be fulfilled without removing the elements of political class that are ideologically positioned against extremism. This spells doom for the Pakistan People’s Party, the Awami National Party, and the Muttihada Qaumi Movement, which incidentally are pitted against each other in Karachi. Therefore, patronage (including that handed out to the criminal elements) politics remains a major issue in the face of a rising Al Qaeda.
Thirdly, Pakistan’s security establishment, which is outside the civilian ambit, is not willing to think out of the box on the Afghanistan imbroglio. The start of US troops’ pullout in 2011 and the deals with the Taliban are going to impact the way Pakistan is governed and who is the proxy on this side of the Durand line.
Finally, the economic downturn with continued stagflation and lack of jobs for a huge number of youth are going to lead to social unrest in the short to medium term. On the economy, there is no consensus among the political parties as the recent battles over Reformed General Sales Tax Bill shows. Unless there is an agreement to bring about structural changes to the economy, we are going to remain in doldrums running from one life support mechanism to another. Inflation and unemployment are going to affect the credibility of the quasi-democracy whether we like it or not.
The writer is editor and policy adviser based in Lahore. He blogs at www.razarumi.com and also edits www.pakteahouse.net
Down the silk route
By Hussain H. Zaidi
Chinese Premier Wen Jiabao’s recent back-to-back visits to India and Pakistan, significant as they are for the three countries, raise some important questions: One, can Beijing and New Delhi foster stronger economic relations, especially in the face of their turbulent political ties? Would stronger Sino-India relations be at the expense of Pak-China relations?
Strengthening relations with China has remained a key plank of the foreign policy of Pakistan. With the emergence of China as a global economic and commercial power, the need to further build up the momentum in Sino-Pak relations becomes even more important for policy makers in Islamabad. India, another important power in the region, is well on its way to upgrade its relations with China.
The relations between China and India are at once competitive and complementary. The two countries constitute world’s two largest markets and are also among world’s fastest-growing economies. They compete for foreign direct investment (FDI) and export promotion as an instrument of job creation. However, China is far ahead of India in terms of FDI and export receipts and other related economic indicators.
For instance, whereas in 2008 China attracted FDI worth $108 billion, India managed to get FDI worth only $41 billion. Similarly in 2009, China’s merchandise exports were registered at $1.20 trillion, while those of India were only $168 billion. However, India is catching up with China in export of services. In 2009, export of services by China and India stood at $129 billion and $86 billion respectively. Whereas China has GDP of $4.98 trillion, that of India is $1.23 trillion. In case of China, gross capital formation-GDP ratio is 46 percent, while in case of India that ratio is 32.4 percent.
Despite lagging far behind China in key economic indicators, India has the ambition of becoming a regional superpower both economically and politically, including getting permanent membership of the United Nations Security Council. And these ambitions may bring it to a conflict with China, which already has that status.
China and India also have some irritants to overcome. The two countries have a history of mutual mistrust, which goes back to their 1962 war in which India was defeated. India and China are locked in a territorial dispute over the Indian state of Arunachal Pradesh, on which Beijing stakes claim. It is also pertinent to mention that when India went nuclear in 1998, the country described threats from China as the prime reason for that decision. New Delhi also continues to host the Tibetan government in exile, though it officially recognises Tibet as part of China.
India looks upon China’s nuclear cooperation with Pakistan with suspicion. Similarly, China is not happy with India-USA nuclear cooperation, which it interprets as running counter to its interests in the region.
Both India and China accuse each other of hindering market access to their exports as well as unfair trade practices. India claims the Chinese government subsidises its domestic firms, which make them ‘artificially’ competitive. These firms then allegedly dump their products into the Indian market much to the detriment of the domestic industry of India. China denies Indian accusation and both countries have remained locked in several anti-dumping disputes in the WTO. China, on the other hand, accuses India of stringent non-tariff barriers, particularly, delay in issuing visa to its workers and business persons.
India has yet to give China market economy status. Upon its accession to the WTO in 2001, China, like other members, had signed a protocol. One of the provisions in that protocol was that China, whose economy is largely controlled by the state, would be treated as a non-market economy for determination of anti-dumping duty on Chinese imports. Other WTO members can revoke non-market economy status and give China market economy status if they so desire. So far some 21 countries, including Pakistan, have given China market economy status.
These differences notwithstanding, both Beijing and New Delhi deem economic cooperation to their mutual advantage. China and India being the world’s two largest markets, no business which sees for itself an international scope can afford to disregard the immense advantages that either market offers.
Already, the two countries have an agreement for reciprocal protection of investment. India can supply raw materials to Chinese industry, while China can provide technical know-how to India. Many Indian IT firms have already established offices in China.
Over the past few years, economic relations between the two countries have considerably improved. China is now India’s largest trading partner. In 2009, Indo-China bilateral trade reached $43.38 billion, including $29.66 billion exports from China and $13.72 billion exports from India. In 1990s, the total bilateral trade was only $250 million.
In 2008, Indo-China bilateral trade was $51.83 billion including $31.58 billion exports from China and $20.25 billion exports from India with trade balance of $11.33 billion in favour of China. Between 2005 and 2008, the bilateral trade has grown by 177 percent.
China’s exports to India have increased by 253.64 percent, while imports from India have increased by 107.47 percent. In 2005, China had trade deficit of $830 million with India. However, subsequently trade balance turned in favour of China reaching nearly $16 billion in 2009. The growing trade deficit was a major point of discussion during the Chinese premier’s visit.
The increased economic relations between China and India may also bear upon their bilateral political ties. Experience shows that one of the most effective ways to ease political tensions is to enhance economic and commercial cooperation, which creates common stakes on either side. This is what happened in case of the countries of the European Union, which have avoided war for the last sixty-five years mainly because the economic cost of such a conflict would have been disastrous.
By contrast, political tensions may escalate in case greater economic interaction does not create a win-win situation for both parties. For example, the US’s growing trade deficit with China, which Washington attributes to Beijing’s alleged unfair trade practices, particularly its ‘grossly undervalued’ exchange rate, has strained their bilateral relations.
Trade, it hardly needs to be emphasized, is an instrument of job creation; however, most of the jobs go to the country — at the expense of its trading partner — which exports more. The government of the country losing jobs is susceptible to jingoism.
Thus, in the age of commercial diplomacy where economic interests take precedence over political interests in shaping inter-state relations, notwithstanding their political differences, India and China will continue to consolidate their economic and commercial relations.
Since Islamabad attaches highest value to its relations with Beijing, the growing Sino-India relations are bound to arouse suspicions in Pakistan. It was mainly to allay those suspicions that the Chinese premier’s visit to India was immediately followed by that to Pakistan. Like the visit to India, the visit to Pakistan was marked by signing of several bilateral trade and investment agreements. The two countries already have a free trade agreement (FTA). In addition, the Chinese leader was given the rare honour to address the parliament. On his part, Mr Wen exhibited greater warmth during his meetings with Pakistani leadership than those with Indian leadership. However, there are certain indisputable facts.
One, China no longer supports Pakistan’s Kashmir stance. At least it does not press for a solution to the Kashmir problem under UN resolutions. Two, India is a more attractive market for China than Pakistan, and trade and investment relations between China and India have a much higher potential than those between Pakistan and China.
Though, politically, Pakistan may be a more dependable ally than India, the potential of Sino-India economic relations is so enormous that it will be a fatal flaw in our foreign policy to continue to treat our relationship with China as unshakable. While Beijing will find it in its own interest to continue to engage both Pakistan and India, the relative importance of the two South Asian countries in the triangle will principally be determined by their economic positions.
The diplomat truly served the interests of his country
By Aziz Omar
Richard C. A. Holbrooke, who passed away on the 13th of December this month, was hailed in the global media as a man who US President Barack Obama called "a true giant of American foreign policy…who will be remembered for his tireless diplomacy, love of country, and pursuit of peace." Even our local Pakistani media termed his death as a tragedy for Pakistan, for whose prosperity he had been so bravely battling for in Washington’s corridors of power.
However, an examination of his career’s shenanigans reveals that his apparent brilliant accomplishments of brokering peace deals, settling conflicts, and framing US foreign policy, pickled with stints in the Wall Street’s oligarchy, seems to have adversely affected not just the economic and social fabric at home in the US but also in other regions all over the globe.
His last assignment of serving as US Special Envoy for Afghanistan and Pakistan, a post created for him by Mr. Obama just two days after he assumed office, came right after his seven years as member of the Board of American Insurance Group (AIG), the world’s biggest insurance company. During this time, AIG had perpetrated a fraud to the tune of tens of billions of dollars based on the reinsurance of mortgaged assets of American home owners.
AIG’s actions of trading debt guarantees internally amongst its affiliates, largely contributed to the collapse of American housing market, leading to a US economic recession that later snowballed into a global one. AIG had its cake, ate it, and then when it received at least $ 180 billion of US taxpayers’ money in a federal bailout, which it then funneled as bonuses towards its executives.
Holbrooke’s services were so highly appreciated by President Zardari that he has been posthumously awarded the Hilal-e-Pakistan, nation’s highest civilian award. Perhaps this had nothing to do with the fact that Mr. Holbrooke had also battled in the congress to keep Asif Zardari’s presidency alive amidst rising concerns of its incompetency, especially from the Pakistani military quarters.
Perhaps, in conferring the award, it was also overlooked that he had lied in July this year about the presence and operations of US troops in Pakistan, when an October 2009 WikiLeaks’ cable confirmed the active involvement of US soldiers from the elite Joint Special Operations Command (JSOC) in offensive combat alongside the Frontier Corps.
It seems that the award was conferred despite the fact that his flood relief rhetoric regarding millions of dollars of additional aid to be given to Pakistan, an eventual amount of $300 million, was proven false. It was made clear in Washington in October that all such aid was in actuality just a reworking of the amounts allocated to the Kerry-Lugar Bill and no extra funds would be released to Pakistan. This was despite Holbrooke’s ridicule leveled on several occasions towards the official friendship of China and Saudi Arabia with Pakistan and the former two of not having stepped up with flood-aid commitments. Interestingly enough, the Saudi State came out on top as the biggest donor for Pakistan’s 2010 flood relief campaign.
Holbrooke’s time as official in the State Department, being in charge of East Asian and Pacific affairs, during the late seventies is best mirrored in gross human rights violations and genocide that was unleashed upon the people of East Timor by the Suharto regime of Indonesia. Even though at that time there was an official ban on arms trade with Suharto’s government, the US under the watch of Richard Holbrooke, authorised shipment of military equipment.
These shipments especially consisted of parts for OV-10 Broncos, Vietnam War era planes that were specifically designed for counter-insurgency operations on the ground. There is no doubt that these airborne weapons played a key role in the onslaught upon the East Timorese resisting Suharto’s oppressive regime, resulting in tens of thousands of killings.
As later revealed by memoirs of the former US ambassador to the UN, Patrick Moynihan, the US was actually blocking two UN Security Council resolutions that called for Indonesia to withdraw its troops without delay. Coinciding with these events, a visit by Richard Holbrooke to meet with Suharto was publicised as an opportunity to press for human rights and self determination for East Timor. However, after meeting with Suharto, Holbrooke praised his regime for an improvement in human rights and allowing a delegation of US congressman to enter the territory of East Timor under military guard.
Holbrooke’s "piece de resistance" is widely touted as having been the chief architect of Dayton Peace Accords that are deemed to have ended the massacre-riddled Bosnian War in December, 1995. However, what transpired afterwards in the territories of Bosnia and Herzegovina portrays what the carefully crafted peace treaty was actually meant to achieve. Two pseudo independent states, though officially having separate presidencies and legislatures, were centrally controlled in the old capital Sarajevo under the shadow of a perpetual command force of NATO, the multinational military Implementation Force IFOR that has complete authority over Bosnia’s airspace and freedom of movement with the right to use force as it so chooses.
Purported to be the harbinger of peace and economic prosperity all wrapped up in the wonders of capitalistic, free-market neo-liberalism, and providing succor from the failures of socialism, the Dayton Accords have achieved very little of what it promised 15 years ago. As an article appearing in Newsweek at the time astutely pointed out, it was "less a peace agreement than a declaration of surrender".
The sovereignty of the former Yugoslav republic was completely railroaded by appointing a US backed so-called high-representative who has exercised his "Bonn Powers" to annul laws constituted by local democratic institutions and expel any politician not bowing down to the stipulations of the Dayton Accords.
"You’ve got to end this war in Afghanistan", Richard Holbrooke’s reported last remark to his doctor right before his fateful surgery has been relegated to the dying wish of a champion of peace and human rights who remained true to his cause right till the very end. Yet the portentousness of his last words can perhaps be construed from those that he uttered during his inaugural address as Special Envoy for Afghanistan and Pakistan in the US State Department on 22nd January, 2009. After acknowledging that the American forces were fighting a ruthless enemy that had committed odious acts such as beheading females daring to teach in schools, he indicated that "across the border lurks a greater enemy still: the people who committed the atrocities of September 11th, 2001". If one could have read his mind after he asked of ending the war in Afghanistan before his demise, one might have found that he minced the words: so that one can finally be started in Pakistan.
Shortage of hides due to loss of livestock in floods and its smuggling adds to woes of leather industry
By Tariq Iqbal
Pakistan’s leather industry, which was already facing tremendous problems, is one of the biggest affectees of floods that played havoc with the country. The loss of millions of animals, mainly cattle, sheep and goats, has deprived it of the basic raw material on which it is based. Finding it hard to meet the need of fresh animal hides, the industry has prepared its case and wants to present it to the government to avoid further damage to the industry.
As per details available with Pakistan Tanners Association (PTA), leather industry is the second largest export-earning sector after cotton and textiles and provides a large number of jobs to the people. There are 800 tanneries in the country producing 150 million square feet of exportable quality of leather. The industry consists of six sub-sectors namely, tanning, leather footwear, leather garments, leather gloves, leather shoe uppers, and leather goods.
In the last three years, the export of leather and leather products from Pakistan has registered a decline of 30 percent i.e., it has come down from US$ 1.220 billion to US$ 863 million during this period.
Khurshid Alam, Chairman PTA, believes one of the major issues the leather industry is facing is the export and smuggling of live animals to Iran and Afghanistan. Talking to The News on Sunday, he says about 100 trucks full of cattle cross borders into Iran and Afghanistan daily. Scarcity of livestock means less slaughtering in the country and hence less hides and skins available for processing the leather tanning industry of Pakistan," he says.
PTA Chairman says despite repeated assurances the government has not done anything tangible to check this practice. He blames the government staff for promoting smuggling and charging the rates of Rs2000 for cow and Rs500 for goat/sheep as bribe. He says PTA demands immediate ban on issuance of licenses/quotas for the export of live animals from Pakistan.
His point is that unlike the cotton-based textile industry, leather is based on a by-product (animal hides) of meat industry. Free movement of raw material of an industry, which itself is based on by-product of another is not wise and should be restricted. "Our competitor countries Like China, India, and Bangladesh have imposed ban on export of raw hides and skins. Why cannot we?" he questions. He also recommends it to the government to provide incentives for cattle farming which will improve the supply of hides as well as meat and milk. Khurshid says the government should stop export and smuggling of live animals.
According to the chairman, the export of wet blue, which is a form of semi-treated leather, also leads to shortage of raw material for the industry. "The government has imposed 20 percent duty on its export but some unscrupulous elements, not related to the industry, are exporting huge lots of wet blue through under-invoicing, causing loss to the industry and to the exchequer as well. PTA demands enhancement of export duty up to 50 percent along with minimum export prices (in square feet) to be notified for the product."
Power breakdown in the leather industry destroys hides and gives birth to quality issues. PTA demands uninterrupted supply of electricity to the exporting industries so as to enable the exporting industry to fulfill its orders and to save its precious raw material from going waste. Recently the problem of gas shortage has increased and 2-day suspension of industrial supply of gas is announced which is disastrous for the industry.
The industry has to meet certain environmental standards in order to win export orders. Setting up of water treatment plants is one of these. The government of Pakistan has announced matching grant for installation and construction of wastewater treatment plants in individual tanneries. However, government departments concerned have not yet released any money in this respect.
Jawad Hassan, Advocate Supreme Court and a prominent environmental law practitioner,-says a lot of chemicals are used in leather industry which finally form part of its wastage. "The solid chemical waste is more harmful as compared to water discharge. The chemical which is thrown into drain after treatment falls into canal and from there into river. So the polluted drain water damages the water life besides harming the cultivated land parallel to the river."
He says there is no way left for the tanneries than to set up water treatment plants as importers are deeply concerned about environmental issues in the exporting countries. Whenever a factory applies for ISO 14000 certification, which is related to upholding of environmental standards, foreigners visit the place and companies with required expertise inspect the whole factory, and observe the conditions of workers, power supply, machinery, waste water disposal, etc," he says adding, "Compliance of conditions under ISO 14000 are strictly binding on the tanneries who want to export their products."
Fawad Shafi, Executive Director of Shafi Tanneries and Punjab Zone Chairman of PTA urges the government not to let zero rated tax on export-oriented leather industry go. "Any tax on the export of leather would bring down the exports figures further," he says. He suggests the tanneries should be funded from Export Development Fund (EDF) for installation of waste treatment plants.
Fawad says the price of hides were high as there was huge loss of livestock due to the devastating floods. "For this reason, the quantity of hides remained much lower than demand, resulting in escalation in their price. This was another bad news for the reeling industry, he adds".
Leather: A commodity in demand.
A gold and copper story
Exploration of untapped minerals can go a long way in addressing our energy and monetary issues
By Alauddin Masood
Pakistan has the world’s second biggest reserves of gold and copper at Reko Diq in Chagai, Balochistan. Evaluated around US$ 500 billion, Reko Diq reserves have the potential to showcase Pakistan as a world-class mining destination, where it is safe for companies to invest in mining projects to explore precious natural resources.
Located close to Saindak gold and silver project in Chagai district, the mineral resource at Reko Diq is estimated at 5.9 billion tons. From this resource, an estimated 2.2 billion tons of economically mine-able ore, with an average copper grade of 0.5 percent and an average gold grade of 0.3 grams per ton, can be processed to produce 2.2 billion pounds of copper (ten million tons) and 13 million ounces of gold. In other words, around 200,000 tons of copper and 250,000 ounces of gold, per year can be processed for about 56 years.
According to eminent scientist, Dr. Samar Mubarakmand, the same kind of reserves have also been discovered in North Waziristan. Dr. Samar said that despite the fact that Thar coal reserves are found in powder form under water, Pakistan could produce 50,000 MW electricity and 100 million barrel diesel through their gasification. In addition to these metallic minerals, Pakistan has a good supply of non-metallic minerals, like rock salt, limestone, soapstone, sulphur, and marble.
In terms of agricultural production, Pakistan ranks amongst the top 10 countries of the world. But despite being the world’s 10th top country in agricultural production, Pakistan often faces shortages of various commodities due to primitive agricultural practices, poor marketing, and managerial skills. Consequently, country’s gross domestic product and, in particular, its exports, are neither commensurate to its agro-industrial potential nor its size and the population. Reason: Bad governance, self-serving policies of top hierarchy, poor law and order situation, corruption, chronic energy shortages, and poor marketing techniques, etc. The value addition depends upon the quality of human resource. The more the literacy and skill levels, the better the prospects of adding value to raw materials.
The gas and electricity shortage, which have persisted for the last over a decade now, have hit the industrial sector. The Karachi Chamber of Commerce and Industry (KCCI) has termed the present trade and industrial conditions the worst in the country’s history, warning if timely measures are not taken the situation would go out of control. According to a KCCI report, 316 industrial units have been closing doors every year for the last several years.
The government revised gas load-shedding plan in November, announcing that the industrial sector would observe 2-3 gas holidays per week till March 15, 2011. Not content with the decision, it abruptly suspended gas supply to the industrial units in Punjab on December 13 till further orders. According to textile mills, the step would jeopardise US$ 80 million monthly textile exports generated from Punjab and put at risk jobs of 1.5 million workers, according to a report.
Bad governance seems to have touched new heights. In its latest audit report on Alternate Energy Development Board (AEDB), the audit has noticed that AEDB performs similar functions as are being performed by Pakistan Council of Renewable Energy (PCRET), Hydrocarbon Development Institute of Pakistan (HDIP) and National Energy Conservation Centre. Understandably, Pakistan recently paid US$ 30 million as commitment charges to ADB for not using efficiently, timely and in transparent manner the credit lines amounting to US$ 4 billion.
At the beginning, while the leadership and bureaucracy exercised restraint in spending money from state coffers, the country had sufficient funds for catering to the needs of defence, development, industrialisation, etc. With interruption in the democratic dispensations and rise to power of greedy and self-serving elements, a new culture started to take root. The new leadership indulged in extravaganza and luxurious lifestyles, trying to impress others with pomp and show instead of actual performance.
We have now reached a situation where the country resembles an overweight ship, struck deep in turbulent waters. In such circumstances, the captains would normally throw away the extra load and think about remedies and plans to steer the ship and the passengers, with as much safety as was possible, to their destinations. But, strangely, in our case, the captains of state have been adopting a course entirely different from the captains of ships. The result is that within the last two years loans of the country have increased by 50 percent and these now exceed 61 percent of Pakistan’s GDP.
By observing austerity, China has now become one of the leading economic powers.
Austerity has transformed China from an under-developed to a developed country within a span of six decades. Will Pakistan ever get a leader who can curtail waste and unnecessary expenses, motivate the nation to live within the means and steer it to progress and prosperity? Unless we learn to do so, debts will continue to mount, adding further to the poverty of an already impoverished nation.
The writer is a freelance columnist based at Islamabad.
Gwadar: A gateway to minerals.
The themes this year included social insecurity in South Asia, especially in the post-flood Pakistan
By Ammara Ahmad
Sustainable Development Policy Institute (SDPI), a non profit organisation founded in 1992, held its annual conference (their thirteenth attempt) in Islamabad the other day.
This year the conference was a three -ay event titled, "Peace and Sustainable Development in South Asia: The Way Forward", held from the 21 to the 23 of December. It was designed as a platform for exchanging a discourse on sustainable development with civil society, academics, legislators and policy-makers.
The conference included 24 panels, where research papers were read and discussions held. These sessions ran simultaneously in different halls of the hotel. Along with scholars and researchers, even students presented their thesis. Since there was no registration or membership fee required, the attendance was highest this year.
The themes this year included social insecurity in South Asia, especially in the post-flood Pakistan. Some panels dealt with issues related to flood risk management, climate change, and peace and security. There was one main plenary session each day in which prominent keynote speakers addressed significant areas of sustainable development, such as natural resource management, environment, and gender.
On the first day, Dr. Abid Qayum Suleri, Executive Director of SDPI, in his introductory speech said, "One of the prerequisites for a stable and prosperous Pakistan is a sustainable Afghanistan and one of the prerequisites for India to top the league of emerging economies is a sustainable Pakistan." Dr. Suleri added that NATO is unlikely to leave Afghanistan without peace and development in Afghanistan’s neighbouring countries. Suleri approves of TAPI gas pipeline and the Pak-Afghan Transit Trade Agreement as collaborative initiatives on the part of the international community.
Indian Feminist and publisher, Urvashi Butalia, was the keynote speaker at the opening ceremony. She focused on the plight of Hindus in Pakistan who had migrated to India. After each war, may it be the war of "1965, 71 or Kargil, the numbers of the migrants increase. These migrants don’t have a nationality because their Pakistani passports have expired and India won’t register them. They are also not refugees because they were not forced to escape."
In concurrent sessions on water and sanitation problems, experts declared that Pakistan needs comprehensive poverty alleviation efforts. They established that the absence of water and sanitation facilities in Pakistan worsen poverty, health, education, gender, and income.
Another concurrent session discussed disaster management with a focus on the recent floods. Experts emphasised that Pakistan needs to shift from disaster management paradigm to a disaster risk reduction. They stressed on a community-led reconstruction model to endorse a democratic culture, improve accountability, and tackle widespread perception of government corruption.
Rashed Titumir, professor of economics at the Dhaka University told TNS that, "The conference attempts to address challenges facing South Asia in terms of its states, citizens, and issues. The challenge is to grow with rights and wealth for all, plus to translate some of the papers in impact factored international journals."
One of the highlights was the attendance. The audience included policymakers, teachers, students, journalists, researchers, scholars and writers. Foreign participants from countries like Kazakhstan, Nepal, Bangladesh, India, Sri Lanka, U.K, Canada, U.S and Germany also participated. Ministers and politicians like Marvi Memon, academics like Imtiaz Gul, Moeed Yusuf, Ejaz Haider, and Dr. Adil Najam were also present on the occasion.
Participants from India seemed to have also enjoyed the experience. Dr. Prakash C. Tiwari, a Geography Professor at Kumaun University Nainital, India, believes, "We can very peacefully solve all issues with enhanced understanding. Because now various sectors of society, and not just politicians and military, exist and these civilian sectors don’t want war. Since, both nations are a democracy; it will be difficult to go against the people’s will." Dr. Bishnu, also from India, praised the SDPI food security report a lot and graded it as the best research efforts in the area. The study was read out on the second day of the conference and is part of a regional project on "Food Security in SAARC" carried out to determine major factors affecting food security in South Asia.
On the third and last day of the conference, Syed Naveed Qamar, Federal Minister for Petroleum and Natural Resources addressed the conference, "Energy crisis is the fundamental challenge and we have to ensure peace for improving quality of life, security and development in Pakistan and South Asian region", he said.
In a panel on water resource management, the significance of community-based water management was highlighted. The issue of water quality and availability was declared to require urgent policy initiative. Another panel sought to reduce deforestation and degradation (REDD) emphasizing on a developing a national strategy for REDD as well as for pilot projects.
A panel on energy governance of industrial productivity, exports and economic growth as a result of electricity shortages in Pakistan were highlighted. Policy makers were urged to utilise wind and solar energy in Pakistan.
Shirala Mallick, Chairperson Standing Committee of the Senate for Women Development emphasised that structural changes were required to improve Pakistani women’s plight. In a panel to promote decent work in post-flood circumstances and implications of the floods on labour, it was noted that all stakeholders should work together to find innovative approach to ensure decent employment to weak groups in the post-flood times. During the panel discussion on regional trade, experts agreed that increasing trade with India and the region is inevitable for Pakistan’s economic prosperity.
Britta Petersen, Country Director Heinrich Böll Stiftung, a non-profit organisation headquartered in Germany and a partner of SDPI, said floods brought an opportunity for improvement. "I think in the ministry of environment, people know that climate change is an important issue but lack of expertise makes it difficult."
The conference, a platform of people from various walks of life and South Asian countries, provided an opportunity to put their heads together and think about a peaceful and sustainable future.
All ears: Audience at a session.
Rotation of audit firms may also facilitate the FBR in
By Dr. Syed Nazre Hyder
The major accounting scandals such as of Enron, WorldCom, and Xerox at the international level and also in many incorporated companies on a relatively smaller scale unearthed in Pakistan and throughout the world necessitated stringent rules to regulate the corporate sector for its sustained growth.
A number of countries the world over have, therefore, reviewed their prospective legislation concerned with auditing and accounting practices of their corporate and audit firms to prevent recurrences of corporate failures, including accounting scandals. Among these measures, the mandatory rotation of audit firms after a specific period of time has also been proposed by some countries as one of the important policy instruments to ensure the accuracy in auditing.
However, there are a number of key themes and arguments, both for and against, mandatory rotation. The following points are argued as most important factors that affect audit quality:
i) Long involvement of an auditor with any particular client can lead to formation of a close relationship between them. This is likely to adversely affect the objectivity and independence of auditors. It has been revealed that major accounting scandals (some of them referred to above) and also many on small scale in Pakistani scenario exposed the relationship that existed between companies and their auditors.
ii) It could actually help increase the efficiency levels of audit firms, given the fact that a fellow succeeding auditor is more likely to discover the inefficiencies and major failings of fellow outgoing auditor.
iii) Moreover, the so called monopoly of large audit firms existing in many countries may be broken by healthy competition, inducing firms to improve their operational skills. It would help the small and medium-sized audit firms to grow to the benefit of all concerned.
On the other hand, it is generally recognised that there are (i) additional start-up costs affecting both the auditors and client, (ii) adverse effects on the quality of the audit due to a lack of familiarity in the first and early years of the audit, (iii) lack of incentives if the audit is about to change hands and (iv) the signals that may be given out currently when there is change in auditor.
To safeguard the corporate sector and investors against any such corporate failures and scandals, some countries such as Australia, Greece, India and Italy have mandatory rotation of audit firms. However, despite a number of advantages of mandatory rotation of audit firms pleaded by certain quarters, most of the countries still have the system of periodic rotation of audit partner. The main factors for non-implementation of the desired system were a strong opposition by a strong group of auditors’ community and indifference of the companies themselves towards its adoption.
The Security and Exchanges Commission of Pakistan (SECP) decided to adopt the principle of rotation of audit firm in its Code of Corporate Governance, notified as far back as in March 2002. However, the Institute of Chartered Accountants of Pakistan (ICAP) opposed its introduction on some grounds, which are summed up as under:
i) The objective of ensuring independence in audit has been addressed by limiting the auditors of listed companies to undertake only defined services in the list of companies drawn up by ICAP in consultation with SECP.
ii) The quality of audit of the listed companies was subject to Quality Control Regulations by ICAP, which was duly acknowledged by SECP.
iii) The ICAP has and the members adopted and strictly implemented the International Audit Standards and had adopted Code of Ethics of International Federation of Accountants, which specifically addressed the independence and familiarity issues.
iv) Section 252 of Companies Ordinance, 1984 clearly gives privilege to the shareholders to appoint auditors and does not envisage anywhere that these rights could be impeded in any manner. The rotation of auditors, therefore, lacks locus standi when viewed in the context of the provisions of law.
The SECP, however, offered ICAP that application of the requirement may be rationalised in any of the following manners:
Phased application to auditors of listed companies according to the size of companies.
Phased application to auditors of listed companies according to the length of their audit.
Deferred its application for one year.
The ICAP disagreed with the first two propositions. The available record showed that it was, accordingly, decided that the mandatory rotation of auditor should be enforced in respect of appointment of auditors after December 31, 2003. The decision was ratified by the ICAP in its council meeting held on April 26, 2002 but in December 2003, the ICAP again wrote to the Commission that the decision of rotation of auditors was neither in the interest of accountancy profession nor in the interest of corporate sector.
On the request of ICAP, a task force was constituted in consultation with ICAP, said to represent the members from all stakeholders to study the issue in the local as well as international scenario.
The composition of the task force, however, seemed to be highly lopsided as those having interest against the rotation of the audit firms predominantly represented it. The representatives of some of the most important stakeholders such as Ministry of Finance, Federal Bureau of Revenue, State Bank of Pakistan, Ministry of Investment and SECP were missing on the task force.
Five rounds of day-long sessions of the task force were held which dealt with the issue in depth but the ICAP, including those interested in status quo, opposed it except a member of auditors’ community and a few others kept themselves away either from the whole proceedings or with the ending sessions.
Keeping in view all these facts, the Chairman of the Task Force who was so strongly convinced with the advantages of rotation of audit firms on the basis of arguments advanced during the proceedings of the meetings, recommended the following against the views of the majority of the members attending the session:
Instead of rotation of lead partners in the firm, mandatory rotation of audit firm, every five years, for all listed companies should be allowed.
On rotation, the audit firm, which is replaced, shall not be permitted to compete for the same audit service for four years.
Appropriate provisions be incorporated to ensure that in the event of any attempt by the auditors to circumvent the spirit of law by indulging in malpractices, such as audit swap, reciprocal arrangement, shifting of audit to a dominant firm or to a firm of cross ownership or controlling interest or otherwise, shall in suspension or cancellation of practicing license.
SECP for adequate reasons and exceptional circumstances shall have power to exempt any company or class of companies from mandatory rotation of audit firm for which specific provisions should be clearly specified and added.
Report of the Task Force — a thorough work of five months was submitted in September 2004 but since then, the issue has been swept under the carpet. There is a need that the matter of great national interest, having implications for the economy, be reconsidered by a properly constituted working group having equal representation of audit community and corporate firms besides concerned government departments and former members of judiciary, to finalize the decision which was once a decided one.
Rotation of audit firms may also facilitate the FBR in scientific evaluation of tax obligations at least of the corporate sector. The work, which was carried out by the formerly constituted task force, is available with the SECP, which may serve as the Working Paper for the proposed group.
The writer is Senior Economic Advisor, Sustainable Development Policy Institute, Islamabad
By Saadia Salahuddin
Dr. Syed Imtiaz Hussain Gilani, Vice Chancellor, University of Engineering and Technology, Peshawar is a noted educationist. As vice chancellor, he modified the old system in the university to a modern, more dynamic and practical one. A PhD in Structural Engineering, and an MBA in Finance, he also has 10 years of experience of working in the US. Among other things, Gilani served as minister for education, information, and youth affairs in the Government of Khyber-Pukhtunkhwa and introduced many reforms.
The News on Sunday (TNS): Recently, there has been much demand for raise in funds for education. What do you say?
Syed Imtiaz Hussain Gilani (IHG): We need to focus on education. What is the last thing to be left out in a home budget? Kitchen, of course! The family has to be fed above all to survive. Education is to a nation what kitchen is to a home. It is the last thing to be left out. Give four percent of the country’s GDP to education for a period of 10 years and the nation will rise. Meet all the other needs in the rest of the 96 percent. Come what may, there should be no question of cuts in the education budget. We, the university administrators, want a paradigm shift. If you google where Pakistan stands in the world in the allocation of funds to education, you will see that there are only three countries whose budget is less than that of Pakistan. They are Ghana, Equador and Haiti. In the absence of allocation of proper funds to education it will be a collective suicide of the nation. We will not be a marketable commodity. What will you do then?
TNS: Is there any plan to increase funds for the education sector?
IHG: There are plans to increase the education budget to 7 percent of the GDP by 2015 but that seems to be a dream. We are demanding only 4 percent of the GDP for education for the next 10 years and I assure you that will put Pakistan on the road to progress. The 4.9 percent of the GDP is the global average budget for education.
TNS: How can we improve the education system?
IHG: Why are we giving perpetual class-based education? Why do we want one thing for our children and another thing for others? We need to do something about it. It’s important to create equal opportunities. There is no dearth of talent in this country, I tell you. When the government wanted us to make an atomic bomb, we did it. All the defence technology is there. We can make everything in this country but we lack political will. After the 2005 earthquake, UNICEF predicted that one million people would die in the first winter. Nobody died as the nation stood up. Then when the number of internally-displaced people (IDPs) reached 25 lakh in the Khyber Paktunkhwa, the nation again stood up. People have the resilience, they have faith in God. They have been blind-folded by the policy-makers.
TNS: In which specific areas you see the political will missing?
IHG: Education first. It is important to make the public aware that the solution to all their problems lies in credible education. In my view, adequate investment in credible education is that which gets revenues in return — in the form of better-trained Pakistanis who will participate in the development of the country.
TNS: What do you see in the absence of political will?
IHG: If we are not going to invest in education adequately, this country is going to get from bad to worse. This is not a critique of the government. We need to refocus and re-engineer our priorities. Only 5 percent of the raw material (people) is being processed. The 95 percent (people) that is not being processed is producing chaos.
TNS: Recently, the World Bank has announced $200m for education in Pakistan?
IHG: The fact that the World Bank is extending money for education in Pakistan should be appreciated. The bank has been criticised for propagating its own agenda in the Third World but we must acknowledge its support in the education sector in Pakistan because that is where investment gives the highest dividend. Higher Education Commission (HEC) considers WB money ad-on which will hopefully meet the shortfall.
TNS: Being Vice Chancellor of a university, do you have any proposal for universities?
IHG: We should promote collaboration amongst universities in the country and abroad. Internet has opened a new world of communication. We are living in an age where individuals are sharing assets, why can’t institutions. The University of Engineering, Peshawar has an earthquake centre established after the 2005 earthquake in Kashmir. We have done great research which is going to benefit the country and the world.
TNS: Are universities helping industry?
IHG: No. There is a big gap between university and industry in our country. Industry says, ‘Your curriculum is not ok. We don’t know who to talk to, how to talk to you". Academics also need to come down to the ground from their ivory towers. They mind when I ask a professor to go to an industry and see what problem they have. Academics are very strong people but they have to learn the language of the streets — industries. The university-industry nexus is important. Academics need to talk to politicians who hold the key to treasures, who are the ones to release money. Instead of criticising we have to cultivate channels of communication. Universities also need to be branded like a product people would like to buy. We cannot be in the society and not be answerable to it.
Progressive forces need to be out there in the political
fray, offering Christians a
By Aasim Sajjad Akhtar
I have worked in the predominantly Christian katchi abadis of the federal capital for well over a decade. In this time, I have developed reasonably close friendships with many residents of the ‘squatters’ who live in these settlements. Those who know the politics of Pakistan’s cities will be familiar with the extremely important role played by katchi abadi residents during election time. Voter turnout is much higher than the urban average and, more often than not, whole communities vote en bloc.
Recently, I was discussing with a resident of France Colony in the posh F-7 sector of Islamabad the prospects of the usual suspects in the next election — whenever that may be — and was told that the former Member of National Assembly (MNA) from the urban Islamabad seat, and leader of the Jama’at-e-Islami (JI), Mian Aslam, is by far and away best positioned to win the vote in the abadi.
Mian Aslam has been Islamabad’s MNA only once — between 2002 and 2008. On the first time of asking he polled very few votes from the capital’s Christian abadis. This seems intuitive enough — after all, the JI is the closest thing in this country to an Islamic supremacist party, and is typically at the forefront of political campaigns that make religious minorities feel extremely insecure.
So why would Mian Aslam, despite his Islamist credentials, be considered the frontrunner for the next election by non-Muslims in France Colony (who acknowledge the JI’s otherwise anti-minority posture)? The answer is quite obvious: Mian Aslam has been diligently maintaining social commitments with residents of the abadi, and, perhaps more importantly, has been a reliable source of assistance when called upon to intervene in thana/katcheri matters.
While one could argue that this particular example reflects the reality of politics as we know it throughout Pakistan, I think that the compulsions of Christian katchi abadi residents (of Islamabad, or anywhere else for that matter) deserve to be considered in their own right. As a general rule, religious minorities in this country occupy a very different world than the Muslim-majority. As significant as the physical discrimination they put up with is the psychology of being a minority in a country where Islam is very deeply embedded in public discourse and practice.
I believe firmly — and I say this on the basis of my personal ties with working-class Christians — that ordinary Christians feel terrified of the JI, and other such organisations. More generally, they go through pains to make sure that they are not accused of harming religious sensibilities of Muslims (which is why it is so ridiculous when Christians like Aasia Bibi are accused of going out of their way to bash Islam). That this basic fact can be true and yet Christian katchi abadi residents still feel like a prominent leader of the JI is their best bet for political representation should be cause for reflection for anyone who wants Pakistan to be a state in which all citizens are treated equally.
There is undoubtedly a crisis of politics in Pakistan, which has many causes. This crisis is distinct yet also similar to the legitimacy crisis facing established democracies such as India and the United States — Arundhati Roy has written extensively, and very eloquently, on the former. However, where we all feel that mainstream politics as it has come to be practised since 1978 is at a basic level very hollow, then, surely, we should be willing to acknowledge that politics for the Christian minority — and others like it — is at some level completely divorced from the essential political questions that define their lives.
To reiterate: something is amiss when disenfranchised Christians accept that voting for Mian Aslam is their lot in life. Why is it that they are not able to vest their hopes in a candidate that demands equal citizenship rights regardless of religious affiliation, or a life for the children outside the traditional occupations associated with that most derogatory of naming words?
Lest readers mistake my argument: I am not advocating separate electorates or any other such thing. In fact, I am suggesting that our political institutions, laws, and the like must be blind to religious difference. Progressive forces throughout Pakistan’s history have struggled incessantly for secularisation of the state. I am not simply repeating the obvious. I am, in fact, asserting that secularising the state is not simply a function of a restructuring of its juridical framework. Progressive forces need to be out there in the political fray, offering Christians — and all other oppressed and vulnerable segments of society — a genuine alternative to the thana/katcheri-toting standard fare.
Of course, there is no immediate chance of this happening. And, therefore, it would be disingenuous to decry those with limited choices for making the choices that they do. If it is the case that the Christian residents of Islamabad katchi abadis end up casting their votes for the JI candidate, we as progressives can do the usual and say that Ziaul Haq and his lackeys have made our lives miserable, but we should instead be trying to build political alternatives that allow us to move beyond Zia’s legacy.
This Christmas was spent in the shadow of the furore that has been generated by the religious right in the wake of the Aasia Bibi affair and the calls from progressive circles for the repeal of – or at the very least amendments to – the blasphemy law. All across the country rallies have been organized, paraphernalia distributed and right-wingers in the media mobilized to rehash the same tired narrative of ‘Islam in Danger’ that has blighted this country since its very inception. Christians are not the only ones cowed into passive consent by this well-organised brigade and its patrons in the higher echelons of the state. Most of us too mutter under our breath and continue to go about our daily business while the very humanity that we supposedly cherish and claim to defend is trampled upon ruthlessly. Thankfully brave individuals and the isolated movement here and there continue to inspire. Here’s hoping that next Christmas our tenuous grip on our humanity is a little less tenuous.
A typical street in a katchi abadi.