in the making
Growth of poverty
By Raza Rumi
Honour politics: More often than not, we as Pakistanis feel that we are not given the respect we deserve as a sovereign nation, and that we are not taken seriously by the international community. We feel unfairly lumped together, with a few bad apples marring our national character through their involvement in terrorism, illegal immigration, and other grave misdemeanours, whereas the vast majority of Pakistanis are peaceful, law-abiding citizens. Now, we have before us an opportunity to prove those who would judge us by our green passport dead wrong, and do the right thing, despite popular protests being whipped up for political gain.
Did US Diplomat Raymond Davis commit cold-blooded murder of two innocent, cellphone-and-gun-loving boys, or was it self-defense against blatant dacoity? The answer is worth investigating but not all that relevant. Davis ostensibly carries a Diplomatic Passport (as stated by our Interior Minister), and he was allowed to travel to Pakistan by our own Foreign Ministry. As galling as it might be to some quarters, we will have to let him go, not because we want to aid and abet murder, but rather, by respecting the long-established principle of diplomatic immunity, we show our strength and stability to the world, and show the international community that we are not a “rogue” or “terrorist” state, but rather one which respects international standards, conventions and agreements.
There is a principle here:
The tradition of diplomatic immunity goes back a long time. In 1814, the Congress of Vienna met to straighten out national borders after the Napoleonic wars. Ambassadors from all major powers redrew Europe’s map and in doing so, specifically noted the strong protection that ambassadors were owed while in host countries. This vision was later codified in the Vienna Convention on Diplomatic Relations, a UN-based conference and treaty to which Pakistan and the United States and are both signatories.
But why agree to a system in which we’re dependent on a foreign country’s whim before we can prosecute a criminal inside our own borders, under our laws? The practical answer is because we depend on other countries to honor our own diplomats’ immunity just as scrupulously as we honour theirs. The concept of diplomatic immunity -- safe passage for diplomats in potentially hostile territory -- has existed in some form for many centuries. Envoys between armies, traveling under a white flag, have long been accepted as safe from attack. The principle involved isn’t law or treaty so much as Pakistan’s blatant self-interest: if we go after their emissaries, they’ll go after ours.
International law matters:
Today, boldly showing that Pakistan respects the concept of diplomatic immunity is extremely important. We need to make sure that foreign diplomats -- especially our own diplomats abroad -- do not get jailed for arbitrary or political reasons. By subjecting Raymond Davis to these local court proceedings, we are basically declaring open season on our own representatives overseas to be intimidated and harassed. Furthermore, by ignoring the principle of diplomatic immunity, we are further extricating ourselves from the society of civilized nations. Do we, as a nation, aspire to be taken seriously in international fora, or would we rather join the ranks of tin-pot dictatorships like Belarus, Burma, Zimbabwe and Turkmenistan. It is already hard enough to travel on a green passport. Let us also not make it difficult for Pakistan’s own representatives on international assignments and project the true character of Pakistan as a nation of law and peace.
Why the world honours diplomatic immunity, despite its costs
Rapists, pedophiles, torturers, drug dealers, thieves, arms-smugglers and yes, murderers -- these are the kinds of criminals the foreign authorities let slip past their justice system on a regular basis, to the overwhelming chagrin of their public and legislatures. Why? Because the overarching and long-established principle of diplomatic immunity is far too important for any other nation for that matter, to sacrifice for short-term political gains.
Much has been made in the press here of the rare exception of Georgian diplomat, Georgi Makharadze, who killed a 16-year old girl while driving drunk, and that his immunity was waived. However, this was truly remarkable, and in almost every other case, once invoked, diplomatic immunity gets any and all miscreants who have diplomatic immunity off scot-free, and they are quickly whisked home, where they may or may not face trial in their home country.
Examples abound of criminal activity perpetrated by diplomats serving in the US going unpunished due to their immunity. Take the case of the Bangladeshi woman, who was enslaved by a senior Bahraini envoy to the UN and his wife. In 1999, she charged that the couple took her passport, beat her and paid her just $800 for ten months of work, and only allowed out of their New York apartment twice. When she sued her employers, the US Justice Department dismissed the case because the Bahraini envoy and his wife had diplomatic immunity. Salem Al-Mazrooei, apprehended by Virginia police after driving four hours to have sex with who he thought was a 13-year-old girl. He was immediately released once it was clear he was a UAE diplomat, and quickly left the country without prosecution.
In 1984, two Libyan diplomats shot and killed British policewoman, Yvonne Fletcher, from inside the Libyan Embassy in London, and were returned home and never prosecuted. In January 2001, a Russian diplomat in Ottawa, Canada hit two pedestrians with his car, killing one and seriously injuring the other. Andrei Knyazev was previously stopped by police on two different occasions on suspicion of alcohol-impaired driving. Although a request by the Canadian government to waive his immunity was refused, Knyazev was prosecuted in Russia for involuntary manslaughter, and sentenced to four years in prison, serving time in a penal colony.
Under the Vienna Convention, the most a host country can ever do is expel a diplomat, declaring the person persona non grata (PNG), or a person who is officially no longer welcome. If he remains in the country after being PNG-ed, the diplomatic status may be revoked and the diplomat may be arrested like a regular citizen, if remaining there on his or her own free will. In some circumstances, the person committing the crime faces trial in their home country, like the US Marine assigned to the US Embassy there who was involved in a fatal car accident in Bucharest, Romania. He was later court-martialed and convicted of several charges, but not manslaughter.
The crimes by diplomats are also financial, costing the United States a fortune in unpaid fines, taxes and other fees. From 1997 to 2002, foreign diplomats in New York City racked up over 150,000 illegal parking tickets totaling $18 million in fines, and City officials had no means of collecting these. Outrage over the abuse of diplomatic immunity was so widespread that the nationally-televised comedy show “Saturday Night Live” satirically portrayed UN diplomats proposing going to lunch with as many illegally-parked vehicles as possible and in light of their diplomatic immunity, spending the afternoon stealing from a high-end boutique, to the horror of then-Secretary of State Colin Powell. Almost none of tickets were ever paid by foreign missions, nor by their representatives.
Furthermore, everyone knows that the three regimes that the US has its most-antagonistic relationships with: Iran, North Korea and Cuba. Bitter enmity has existed for decades on both sides, and yet each year, US authorities permit their UN Ambassadors, ministry functionaries and even heads of state to romp around New York, making inflammatory, anti-American speeches at the UN and elsewhere. Why would America let these diplomats roam free in its largest city, while at the same time actively opposing their regimes at every turn? Again, the overriding principle is that of respecting diplomatic immunity, and ensuring that international norms are observed in law.
The fact is diplomatic immunity is too vital for the effective execution of statecraft in the modern day. Governments need to ensure that they treat diplomats -- even those who commit crimes -- as inviolable, so as to ensure that their own envoys and representatives can freely go about their business without fear or risk of persecution and harassment, by an otherwise hostile host nation.
Hysteria in Pakistan
The case of Raymond Davis, unfortunate as it is, has provided the Pakistan’s right wing in the ascendant to whip up anti-Americanism, which has become the greatest emotional banners of our nationalism. The religious parties, soon after their alliance on blasphemy law now, want Davis to be tried and punished or even worse ‘traded’ for Afia Siddiqui. The two cases are different: one involves the murky world of terror networks and the other at best a reckless security ‘advisor’of the US Embassy. Talk show after talk show has condemned the US and its high-handedness and has invoked national pride and the abstract notion of ‘justice’ here. As if by hanging Davis Pakistan will avenge America for its support to Israel to the drone attacks in the northwest. The reality could not be more complex and nuanced. We may hate the US but in these times we have to build and reformulate our bilateral relationship based on mutual respect.
Empty rhetoric will not do. We have to act as a mature, rational nation and discard the policy of blind hatred towards others. More importantly, we need to recognise that until we take care of our internal issues and challenges of poverty, inequality and skewed political participation of the people we cannot be truly sovereign.
The writer is a
policy advisor and a writer based in Lahore. He blogs at www.razarumi.com
and edits a webzine at www.pakteahouse.net.
Cooperation in the education sector
would ultimately strengthen
By Raza Khan
Professor Hamidullah Amin is Chancellor of Kabul University since 2008. Born in 1938, Amin completed his MA in geography at Durham University, United Kingdom, in 1968. During his stay in the UK he also produced a noted document, “The role of communication in the development of Afghanistan”. After braving the Soviet occupation of Afghanistan, Amin left the country in 1988 and went to Australia teaching for 14 years at Macquarie University. Amin returned to Afghanistan to work for Kabul University, a leading educational institution of Afghanistan. Simultaneously, he taught as a visiting professor at the United States University of Nebraska in Omaha. During this time he published his book, A Geography of Afghanistan. He was appointed Chancellor of Kabul University by President Hamid Karzai in view of his vast experience in the field of education. During his stint as Chancellor of Kabul University Amin has worked not only to improve the quality of education in Afghanistan but has taken steps to increase the number of female students in higher education in Afghanistan. Recently, Amin visited Pakistan as part of an official Afghan delegation of university chancellors and vice-chancellors to promote linkages between Afghanistan and Pakistan in the field of higher education. TNS had a chance to interview him. Excerpts follow:
The News on Sunday (TNS): What is the status of Kabul University at the moment?
Hamidullah Amin (HA): After the disasters that the wars brought to Afghanistan, the education sector in Afghanistan was completely destroyed. Kabul University is the oldest institution in Afghanistan and was established in the year 1929. Due to war on our soil our institution has lost a tremendous collection of books and research work we had done and nothing has been left. Much of the research was lost or looted. Before war started in Afghanistan we had full-fledged 15 faculties and 74 Departments working to their full capacity. Presently, they are not working upto their potential and one of the main reasons for this is lack of skilled and qualified faculty members. It is estimated that the university will need US $64 million to function again on a basic level. However, with whatever resources we receive we have tried to rehabilitate the university. For instance, in January 2004, the campus of Kabul University had only 24 computers and one stethoscope but at the moment the number of computers at the university is in hundreds which is indeed an encouraging sign. In 2007, the government of Iran donated $800,000 to Kabul University’s dentistry faculty. It also donated 25,000 books to the university. At present, the main library of Kabul University is the best-equipped library in Afghanistan. The library has many computers, books and magazines. In July 2010, a newly constructed Faculty of Arts building was inaugurated. The $10 million project was funded by Pakistan.
TNS: How can Pakistan be a partner, a helping hand, with Afghanistan in the field of higher education?
HA: As you know, most of the faculty members of universities in Afghanistan have fallen prey to the war in Afghanistan. They were either killed or ran away to other countries. Now, we are face shortage of teachers. The gap can only be filled if the neighbouring Pakistan shares knowledge with our scholars and faculty members in Masters, M. Phil, and PhD programmes because at the moment most of our faculty members have a bachelor’s degree, which is certainly not enough for teaching at the Higher Education level.
TNS: In what ways Pakistan can help Afghanistan in the reconstruction and rehabilitation process?
HA: Afghanistan is in the rebuilding phase and Pakistan can be of great help for us to retain our lost stability. Pakistan by far is the friendliest country for us and we have no difficulty coming here. Afghanistan during the last thirty years has faced severe hardships and it is high time for neighbours to help us in their own respective domains so that our children live a better life than we did. In fact, Pakistan’s role in Afghanistan’s reconstruction is critical and we in Afghanistan realise this.
TNS: What is the state of higher education in Afghanistan and is it playing its role in rehabilitating Afghanistan?
HA: We have 25 Universities working in the public sector and 33 working in private sector with a total enrollment of around 100,000 students in the country. Kabul University has a total enrollment of 15,000 students. I think education is the way forward for us. In fact, we have no other option but to educate Afghans. Now it is upto us and our friends how to come up with best strategies to rehabilitate and develop the education sector in Afghanistan. I can assure you if the education is put on the right track, which we are trying to, it can play an instrumental role in helping rebuild institutions of state and society in Afghanistan.
TNS: How could educational exchange help regional countries?
HA: Cooperation in the education sector would ultimately boost and strengthen relations between countries that are facing the menace of terrorism for the last one decade or so. I see education as the ultimate remedy for long-term peace in the region. Educational linkages can bring the countries closer and dilute a lot of mistrust between and among them.
TNS: How do you look at the war on terror at the moment?
HA: The war against terrorism is our own war and not that we are fighting someone else`s war. The impression that it is not a war of Afghans is wrong because it is us who have suffered the most from the menace of terrorism.
The struggle to achieve meaningful social change cannot be equated with the demise of individual dictators
By Aasim Sajjad Akhtar
By the time this column is read, Hosni Mubarak may already have been ushered out of office by a combination of Egypt’s powerful military and the White House. Mubarak sealed his own fate on Tuesday during a public address in which he insisted on staying on until the next presidential election later in 2011, offering his version of a fig leaf by announcing that he himself would not seek yet another term in office. The tyrant’s ‘gracious’ gesture further angered Egyptians -- and popular forces all over the world -- who have been subject to Mubarak’s hubris (and sham democracy to boot) for almost three decades and have now taken to the streets to proclaim that they have had enough.
What has transpired in Egypt, Tunisia and to a lesser extent in Yemen and Jordan in recent weeks is nothing short of historic. The speed with which events have unfolded has been breathtaking. It would not be incorrect to suggest that distant observers -- not to mention those actually in the thick of the battle -- have been overcome by a distinct sense of euphoria. In fact, many Pakistanis may well be reminded of public sentiment some three and a half years ago when the anti-Musharraf agitation started in earnest.
Of course, it took us a lot longer to unseat our dictator than ordinary Egyptians have managed with Mubarak. But I believe there are numerous common factors that can -- and must -- be identified which may provide an insight into how things will evolve in the Arab world’s most pivotal state in coming days and weeks.
First, both Pakistan and Egypt are extremely important to the United States. As was the case with Musharraf’s stage-managed exit, in Egypt too Washington has been keen to avoid things getting beyond control. It is thus that the Obama administration finally came around to spewing out some rhetoric about democracy and the need for a ‘smooth transition’. In the final analysis, the US will ensure in Egypt that the post-Mubarak dispensation is not inimical to its interests. Shrewd analysts in this country knew even before Musharraf’s last stand that the incoming elected government would remain firmly within Washington’s orbit.
The second and related point has to do with the paucity of existing political alternatives. The inability of a people’s uprising to precipitate fundamental structural shifts in the polity in both Pakistan and Egypt can be explained in large part by the absence of the required subjective factor. We all know that Pakistan’s repeated experiments with military rule, and the fact that the military establishment retains so much power even when elected regimes are in place, have seriously undermined the political process, and emaciated political parties. Thus, when objective conditions to challenge state establishments and imperialism become favourable, there are no political forces actually willing and able to do so. One could argue that in the post-Cold War era anti-imperialist or anti-capitalist political parties have fallen by the wayside even in strong democratic polities, but the contemporary wave of radicalism in Latin America is a robust rejoinder to such a hypothesis.
Finally, and yet another related point: the right-wing ultimately benefits from such spontaneous agitations, even though it has little meaningful role in actually mobilising people in the first place. This is true because of the manner in which right-wing forces have been patronised by the state in varying measures throughout most of the Muslim world over the past few decades. Admittedly, the Muslim Brotherhood has enjoyed far less of a consensual relationship with Egypt’s military establishment than our political mullahs have with our kingmakers. Yet in Egypt, as in Pakistan (as in so many other Muslim countries), the combination of state and imperialism has systematically weakened secular democratic forces and, thereby, provided the right-wing with the space to establish social and political roots for itself within society.
The last point brings into focus a common criticism that has been leveled by certain progressives on other progressives in Pakistan vis-a-vis the ‘restoration of judiciary’ movement. Following his restoration, apex court chief clearly pandererd to right-wing political causes and even threatened to derail the political process. Those who were at the forefront of what I still believe was primarily an anti-dictatorship movement are said to have adopted a very short-sighted approach which failed to account for the fact that the chief was actually an unwitting tool in the hands of right-wing forces from the very beginning.
To the extent that this is true, it is a reflection only of broader social and political trends over the past three or four decades in the sense that the gradual decline of the left and the concomitant (state-supported) rise of the right has doomed all major social and political movements to be instrumentalised by retrogressive forces to forward their own ends. This does not mean that a majority of movements which emerge are inherently ‘right-wing’ or ‘left-wing’ (although some movement can most definitely be characterised in this way, particularly the prototypical agitations around ‘Islamic’ causes in this country). Real material issues inform political struggles and the fact that leftists are weak does not mean that they should cease to engage with such issues at all for fear of the right-wing taking advantage. This would be tantamount to suggesting that one should abandon politics entirely until there is a guarantee that outcomes can be molded to one’s own preferences.
All this having been said: If our experience is any indicator, Egypt’s people are likely to be gripped by euphoria for only a short while. Then the reality of a post-Mubarak government will set in: there will be no fundamental break from the imperialist grip (both American and Israeli), the neo-liberal economic paradigm will remain firmly in place, and the patronage-based political order will become even more cynical. Does this mean that the Egyptian people will have achieved nothing? In fact, they will have achieved a great deal. But the struggle to achieve meaningful social change cannot be equated with the demise of individual dictators, however symbolic such struggles may be. We Pakistanis have evicted Musharraf, Ayub Khan and Yahya Khan from power yet continue to be subjected to the whims of the military establishment and hopelessly compromised mainstream parties. History is hardly as romantic as we would like it to be. Yet in the long-run, progressive forces do win. We just have to have the stomach to wait out our turn.
A proactive monetary policy is
necessary but not
By Hussain H. Zaidi
The State Bank of Pakistan (SBP) has maintained the policy discount rate (interest rate) at 14 percent for February-March 2011. The decision has been taken, according to the new Monetary Policy Statement, in an attempt to strike a balance between risks to inflation and economic growth.
With a view to containing strong inflationary pressures, the SBP has adopted a rather restrictive monetary policy for last couple of years. In November 2008, the policy discount rate was increased by two percentage points to 15 percent. In April and August 2009, the rate was cut by one percentage point each bringing it to 13 percent.
In November 2009, the interest rate was reduced to 12.5 percent. In August 2010, the interest rate was hiked to 13 percent. On September 30, the interest rate was increased to 13.5 percent and, subsequently, to 14 percent on November 30, 2010. Despite changes in the interest rate, strong inflationary pressures have persisted.
The monetary policy in general and interest rate in particular is determined by various factors, including the balance of payment position (BoP), fiscal balance, inflation and the real sector growth. Both the present position and future forecast need to be considered. We begin with the real sector or GDP growth.
A modest economic recovery was made in FY10 as the growth rate increased to 4.1 percent surpassing the 3 percent target and 1.2 percent revised growth rate for the previous fiscal year. Economic growth of 4.5 percent was targeted for the current year. However, the heavy floods, coupled with the persisting energy shortage, upset most of the calculations. According to conservative estimates, floods have washed away more than one percentage point of the potential GDP growth; therefore, the actual growth rate is likely to remain below 3 percent.
Fiscal deficit was to be reduced to 4.9 percent of the GDP during the last financial year. However, that revised target could not be attained as fiscal deficit rose to 6.3 percent of GDP compared with 5.2 percent in FY09. For the current financial year fiscal deficit target of 4 percent of GDP (Rs685bn) was announced initially, which was revised upward to 4.7 percent with the consent of the IMF on account of expenditure on the rehabilitation of the flood-hit people and reconstruction of infrastructure.
The fiscal deficit reached about Rs500 billion (2.8 percent of GDP) by the close of the first half of the current fiscal year (H-1FY11) and it is apprehended that the fiscal deficit may surpass 6 percent of GDP for the full year.
Tax collection by the Federal Board of Revenue during H1FY11 grew by 13 percent to reach Rs661 billion against the target growth of 26 percent to bring the full year tax collection to Rs1.66 trillion. The revenue target is difficult to achieve, especially as tax reforms have been shelved. On the other hand, expenditure will continue to rise because of subsidies and security related expenditure.
The decision not to pass the impact of the rising world oil prices to consumers has caused Rs7 billion loss to the government during the last two months. The SBP is of the view that in case the government continues to subsidise oil prices it may bear Rs25-35 billion in additional cost by the close of the fiscal year.
Not only the fiscal deficit but also the way it is being financed is a cause of concern. In the absence of considerable external assistance, the government is heavily relying on the banking system, particularly SBP credit for deficit financing. Between July 1, 2010 and January 15, 2011, the government borrowed Rs352.2 billion from the banking system, including Rs133 billion from the SBP and Rs222.2 billion from scheduled banks. The central bank borrowing has resulted in monetary expansion of Rs453.9 billion during this period. For the full FY11, monetary expansion of Rs877 billion is projected (15.2 per cent growth).
The external account presents a better picture. During H1-FY11, the current account surplus of $26 million was recorded as exports increased by 19.4 percent to $11.12 billion (compared with $9.31 billion in H1-FY10) and remittances increased by 16.7 percent to $5.29 billion (compared with $4.53 billion in H1-FY10). In addition, $743 million were disbursed from the Coalition Support Fund (CSF). The SBP projects 15 percent export growth for full FY11, while import growth is projected to be 12 percent. Current account deficit is projected to be 1.5 percent of GDP down from 2 percent of GDP in FY10.
Finally, we come to persisting inflation -- the main case for continuing with a restrictive monetary policy. During FY08, average inflation was 12 percent, which rose to 20.8 percent during FY09 and was brought down to 13 percent during FY10. The fall in inflation in FY10 was due partly to price deflation caused by global recession and partly to weaker domestic demand. In the first half of the current fiscal year, average inflation was 14.6 percent and is projected by the central bank to be in the range of 15-16 percent for the full FY11.
The SBP attributes the strong inflationary pressures, notwithstanding a rather restrictive monetary policy, in the main to fiscal deficit and the way it is being financed (bank borrowing). Another cause is the energy crisis driven aggregate demand-supply gap as there is both under-utilisation of the existing production capacity and lack of new investment.
As the Monetary Policy Statement notes, “a proactive monetary policy is necessary but not sufficient to tackle high and persistent inflation.” If inflation is to be contained, monetary policy has to be supported by fiscal policy together with increase in output. Much of the inflation that the economy is facing is either supply-side or induced by deficit financing, which monetary policy alone can be of little use in dealing with.
The government may have to take some unpopular economic decisions in the days to come
By Mehtab Haider
The government seems to be in a fix over the issue of pursuing economic reform plan. The economic managers have apprised the government that in case of failure to deliver on this front could push us towards brink of economic collapse where economic activities would be further choked and inflation could rise to unimaginative levels, ultimately brining down the government. The government considers that the imposition of RGST, other taxation measures, withdrawal of subsidy on the power sector, and raising prices of POL products could land them in trouble.
Economic managers say there is no other option but to take additional measures to raise revenue in February as well as reducing the ballooning expenditures to cut down deficit in the range of 5.5 percent to 6 percent of the GDP, which is equivalent to Rs1000 billion. If the step is not taken, the budget deficit could increase to over 8 percent of the GDP and that will translate into Rs1300 billion gap between revenues and expenditures.
In case appropriate measures are not taken, inflationary pressure would further aggravate as the latest State Bank of Pakistan (SBP) projection shows it would be hovering around an average rate of 16 percent for the ongoing fiscal year against the initial target of 9.5 percent. It means that with scarce resources the government will be forced to ask SBP to printing money on a daily basis in order to meet day-to-day expenditure that would fuel inflationary pressure.
Can the government take unpopular decisions? Former Special Secretary Finance and Dean NUST Business School, Dr Ashfaque Hassan Khan, says the government has not performed well on the economic front. He says instead of discussing the 10-point agenda at this point in time, “only one point agenda should be the mainstay of ongoing negotiation between PPP and PML (N) and that is reviving the economy”.
Khan says it is a good opportunity for the government to impose agriculture tax as it would help broaden tax base as well as equally burdening other segments of society. “It is first time in Pakistan’s history that the IMF team is directly interacting with political parties to convince them on Reformed General Sales Tax (RGST) and other taxation measures because the government remained unable to muster the required support in this regard.”
The IMF officials understand that political parties are not ready to accept RGST until a comprehensive plan is put in place by imposing tax on agriculture income exceeding Rs3, 00,000 per annum by making legislation to this effect as well as bringing real estate under the tax net.
The IMF team is of the view that Pakistan needs short term and medium term measures to come out from the economic crisis as it would not be viable not to pass on the POL prices, which touched $100 per barrel in the international market. The government can lose 40 billion if it keeps prices at constant level. It will not be able to generate petroleum levy of around Rs8 billion with the existing price level.
With the help of the US and G-7 countries, the government is striving hard to convince the IMF for gaining more time for implementing RGST. The RGST amendments could be made part of the Finance Bill 2011-12 by withdrawing exemptions. The IMF has given conditional consent to delay the imposition of RGST if Pakistan takes additional revenue measures in the remaining five months (February-June) of the current fiscal year. The IMF officials say medium and long term measures both on revenue mobilization and expenditure curtailment could pave the way for achieving macro-economic stability.
In case there is a consensus among political parties and the government on taking additional revenue measures as well as reducing expenditures by 10 to 15 percent, including downsizing the federal cabinet, the IMF will send its team by the end of this month to revise macro-economic framework of the current fiscal year.
Deputy Chairman Planning Commission, Dr Nadeem Ul Haq, talking to TNS, says negotiations are on with the IMF and consensus would be achieved if all political parties show maturity on this count for achieving higher growth rate with an average of over 8 percent for the next 20 years.
Conceding the slow pace of power sector reforms, Haq says “Pakistan’s economy requires minimising the role of government which is involved in activities such as construction and import of sugar and other commodities. It should be the role of the private sector, instead of public sector-owned entities.
Vice Chancellor Pakistan Institute of Development Economics (PIDE), a subsidiary of Planning Commission, Dr Rashid Amjad is of the view that it would not be a viable option to not increase POL prices as the fiscal position does not allow unbridled subsidies. He says the “government is feeling pressure for taking certain economic decisions after witnessing mass protests in Egypt and other parts of the Arab world.
We should find out solutions for our economic issues through political wisdom and not through politicising them
By Dr Abid Qaiyum Suleri
The year 2010 was extremely challenging both for the people as well as for the government of Pakistan. Despite all optimism, I don’t see any let up in these challenges in year 2011 either.
One does not require rocket science to predict state of Pakistan’s economy in 2011. Besides foreign exchange reserves, all other macro-economic indictors present a bleak picture. The negative effects of fiscal and fuel crises on common people are getting worse due to lack of effective social protection strategy, which in turn makes people first casualty of any macro-economic disciplinary measure.
Lack of political will to bring any meaningful power sector reform (despite the pressure from IMF) would remain the major cause of growing circular debt in power and fuel sectors. Revenue generation target seems unachievable and generated revenue would be barely sufficient to meet the costs of debt-servicing and defense expenditures, leaving very little for day-to-day administration, and public sector development programme (PSDP). It is estimated that total budgetary deficit for the financial year 2010-11 may touch 1.4 trillion rupees. International Financial Institutes (IFIs) are demanding a letter of comfort from the IMF before lending any money to Pakistan, which means either the government would have to take non popular decisions and please IMF or keep on borrowing loans from domestic resources thus crowding out private sector.
One third of Pakistan was hit by floods where reconstruction and rehabilitation is still a far cry. The rest of the country would be negatively affected by reduction in the PSDP, which is a direct result of increasingly increasing fiscal deficit. The cut in PSDP will not only decelerate the pace of growth and development but also adversely affect the delivery of basic services by the government to its citizens (of which more than 50 percent are food insecure). Unbridled spending on non developmental expenditures and lack of funds for essential day-to-day administrative measures coupled with non-functional democracy in the country would worsen the problem of governance and further weaken the rule of law.
The ongoing war on terrorism, drone attacks, series of ethnic conflicts in Karachi, and brutal blood-letting in the name of religion -- be it the assassination of Salman Taseer or attack on Chehlum processions in Lahore and Karachi -- is impacting the socio-political and socio-economic conditions negatively affecting not only the social fabric, livelihood opportunities, and business environment but potential foreign investment too. All of which will lead to increased unemployment, poverty and, in turn, increased militancy.
There seems to be no solution to break the poverty-militancy nexus in 2011 too. The situation is further deteriorating by one off incidences such as killing of Pakistani citizens by an American. US Embassy is undermining the extent to which its pressure for diplomatic immunity to Raymond Davis may backfire and result in increased public sympathies for extremist forces that are responsible for physical insecurity in Pakistan in the name of “revenge” from allied troops.
On top of everything, global food price hike is on the cards once again. According to the recently released World Food Price Index, prices of food commodities have reached at historic level since 2008. Although global food crisis should not have a direct bearing on food prices in Pakistan (as we are a food grain surplus country), yet lack of effective measures to stop food hoarding and poor governance may lead to food price inflation (and reduced supplies too) in Pakistan in near future. According to WFP-SDPI report, almost 70 percent population had poor to extremely poor “economic access” to food in 2009. This segment of society, majority of which happens to be in Balochistan, FATA, KP and South Punjab would turn further vulnerable in case of any governance led food crisis hit Pakistan in 2011.
There cannot be a magic wand to solve the above-mentioned problems. All of those problems require immediate attention, both short as well as long term strategies, and prompt implementation on those strategies by state with the support of contesting political forces at the domestic level and ever demanding allies at the international level.
One way of building trust is being more transparent and adopting a participatory decision making process. The current consultation between PPP and other political parties on economic issues and decisions like reduction in cabinet members are steps forward to bridge the trust gap and should be welcomed. However, this is not enough. We are passing through unusual times of our history and business as usual would not work anymore. Opposition of today is the government in waiting and should help the current government in bringing macro-economic stability so that when they come into power they don’t end up landing in an economic crisis that welcomed the PPP government in 2008.
This is the time when all political forces should agree on taking tough decisions for macro-economic stability. There is no “either” “or” approach and all sane suggestions that can recover economy should be given a serious consideration for their effective implementation. In order to achieve macro-economic stability we would have to document our economy, be it through RGST or through any other means.
We would have to undertake power sector reforms to resolve the issue of circular debt. In the absence of fiscal cushion, government cannot provide blanket subsidy on fuel any more and would have to pass on this price shock to consumers according to their buying capacity. However, all of the above mentioned measures would be extremely anti-poor and anti-people if adopted without a social protection strategy to minimise the side effects of these measures at the micro level. In order to be effective, such strategy should be collectively owned by diverse political forces in the country.
Finally, the governments (both federal and provincial) would have to adopt austerity measures through substantial reduction in their non-developmental expenditures. The current adhoc-ism would not provide any sustainable solution to problems facing the people as well as the government of Pakistan. This is about time we should find out solutions for our economic issues through political wisdom and not through politicising them. Year 2011 is going to be a tough year, but we can certainly turn 2012 a year of relief by setting our priorities right during the current year.
writer heads Sustainable Development Policy Institute and is a senior
researcher of NCCR- North South. He can be contacted at firstname.lastname@example.org
There is a need to focus on the agenda of growth with equity and poverty-reduction programmes
By Zubair Faisal Abbasi
The latest variant of the manifesto of Pakistan People’s Party was issued in 2008. The party, after winning the election, is leading the ruling coalition. So, the items on the menu should provide central framework for what is being cooked in policy and planning kitchen of Pakistan. The manifesto promises growth with equity, meeting basic needs, targeted poverty programmes, and good governance.
Interestingly, the theme of growth with equity is something which should be very important component of the new growth strategy being developed in the Planning Commission of Pakistan. While growth is a necessary condition for equitable development, economic growth in itself does not guarantee social and economic well-being or human development. Experiences of some countries show that a few countries showed good performance in growth but lagged behind on the scale of human development.
Such a skewed growth could not adequately fuel the next rounds of expansion in economic opportunities, let alone sharing in an equitable manner with society. Human development in terms of increase in sustainability, empowerment, equity, and productivity remained a distant dream despite economic growth spurts.
Some countries even lost economic growth momentum without entering into the stage of sustainable human development. Pakistan is an example of such countries which had respectable growth till the late 1960s but later experienced low levels of economic growth (with equity) because of faltering on human development. Much like some countries of Sub-Saharan Africa and Latin America, a sizable proportion of the citizens of Pakistan has not been able to live a full-life pursuing cultural, economic, political, and social well-being.
It can be said that despite having economic growth, the group of countries which share Pakistan-like fortunes, languished in low levels of human functioning and capabilities to enjoy freedoms which modern economy could generate.
An often forgotten lesson, which emerges from these experiences, is that increasing the size of economic pie and making rich people richer does not make everyone better off later. In fact, it requires a vigilant developmental state which can administer ‘growth with equity’ as this sort of mention is found in Taiwan’s constitution -- the country showing a good example in this direction of growth outcome.
One possible outcome of growth with equity is reduction in poverty and inequality in society. Conversely, inequality and poverty as persistent phenomena in economy means that a ‘differential diagnosis’ as Jeffery Sachs calls it, has to be made lest the patient dies an avoidable death. The diagnosis should not only be to identify the fever but also deep-rooted problems which irk infrastructure, institutional arrangements, culture and behaviours, power relations, and environment.
Pakistan needs a serious effort to undergo differential diagnosis exercise; otherwise it will keep languishing in low-human development perching on poverty and inequality. At best, it will be able to achieve boom and bust type of economic growth without really sharing the story of boom with the 40 percent of population while subjecting them to shoulder 99.9 percent burden of economic downturns.
Such a trend of poverty and inequality, if it persists, will perpetuate the loss of well-being for a sizable majority of people who will not be playing a role in expanding the market. In fact, poverty and inequality feeds onto itself with depriving a large segment of population from accessing opportunities of wealth creation and income generation.
The disparities so entrenched are further cemented with a gap between the rich and poor classes, thereby making the rich powerful political elites able to become rent-seekers. The policies developed by rent-seeking society do not create space for spending on public education and health.
As a result, the growth which is shown on macro-economic curves is the growth of a small but powerful class of people and not of the whole country. The figures become deceptive to the extent that 7-9 percent growth rate (2004-05) fades away in the next two years (2006-07) and tapers off to 3 percent later, such as the case in Pakistan. Without having coherence towards improving the distribution of wealth scenario, the quality of life will not improve for a large segment of society.
The case being made for New Development Approach (NDA) at the Planning Commission will become a bundle of profound promises showing rosy pictures of creative cities. To makes things well-meaning for the poor segments of society there is a need to focus on the agenda of growth with equity and targeted poverty programmes so that inequality does not feed disgruntled portions of society.
The writer is a
development consultant working with Institute for Development Initiatives
We as a nation should look at our attitudes and acts in order to promote tolerance for a safer Pakistan
By Adeel Pathan
Intolerance seems to have seeped into the whole society, be it our personal lives or professional. Our mindset is becoming prone to extremism and this is not restricted to physical intolerance (such as violence) but can certainly be looked at as violence in our attitudes where we hardly accept diverse opinions.
Reasons could be many but the foremost is the intolerance in our approach. That is why we are being labeled as an intolerant society within the state of Pakistan. We show this through our gestures and ways in responding to certain things or actions. We are carrying multiple identities, we tend to be a good Muslim and a patriotic Pakistani but never think the obligations of being a good and sensible citizen who accepts diversified opinions.
What is evident is the reflection of our collective attitudes towards looking at things without getting information about issues and forming conclusion without thorough research, which we as a nation suffer a lot.
Mushroom growth of anything has side effects and the same is the fate of an enormous growth of Pakistani electronic media which has a much bigger outreach than that of the print media. Television channels, especially news and current affairs, hold series of talk shows an opinion can be rejected without any logical grounding.
Vulnerable sections of society become immediate victim of this attitude. Why do we always happen to see the poor or powerless peoples falling victims to our intolerant approach on roads, homes, offices, etc? It is just because of the fact that it only aims at overpowering the others.
The gruesome killing of Salman Taseer was an eye-opener of this outburst of intolerance which exists in our attitudes. All sections of society are equally responsible for this decay in society. Intolerance has different modes but it usually affects the weak the most and the same happens when a minority (read a religious minority) comes under attack in our part of the world as they seldom hear massive voices that directly sympathise with them.
The reaction to the murder of Punjab Governor was also a show of intolerance because intolerance is gradually being instilled into our minds through some sections of the media. Some television channels and hosts have certain ideologies. They think others are always wrong and they are always right so the end product they give us on television screens is reflective of their mindsets. When they discuss issues such as blasphemy, they keep on pushing in the wrong direction instead of just focusing on the real issue.
This is the situation we are living in. We don’t want to get out of the ‘boxes’ and feel comfortable and happy with ourselves. Anybody who has a different opinion becomes controversial. This wave of intolerance is not something new in Pakistani society but this needs to be addressed after looking deep into the roots which lie in the upbringing of our youth in an atmosphere where they consider things ‘right’ only when they hear or see from the eye of those whom they follow.
We as a nation should collectively look at our attitudes and acts in order to promote tolerance for a safer Pakistan, especially for those who have yet to open eyes in this society of ours. The level of intolerance seems to have also increased in the themes of drama serials because the soaps show that being intolerant is being prominent. All the elements of civil society -- lawyers, engineers, journalists, intellectuals, development workers, doctors, students, religious scholars, teachers, etc, should join hands to challenge intolerance. This is not an easy task. But it is never too late to begin something and ask the young generations to start looking at things differently.
The writer is a
freelance journalist working in an Islamabad-based organisation. He can be
reached at email@example.com
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