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trade The supply slide The businesses are impatient of government regulations but seek the umbrella of protection — in the form of import tariffs and subsidies — to shield them from having to compete with foreign suppliers By Hussain H Zaidi Does Pakistan need foreign aid or trade? The answer is obvious. The prevalent and the usual view, particularly among politicians, is that the country should break the begging bowl and seek enhanced market access for its exports. Braving
the threat assistance Agony of the
informal sector Rate
race politics first person Export
cartels: any solutions?
trade Does Pakistan need
foreign aid or trade? The answer is obvious. The prevalent and the usual
view, particularly among politicians, is that the country should break the
begging bowl and seek enhanced market access for its exports. The argument in support
of this position is two-fold. One, foreign aid is incompatible with
national sovereignty. Two, if the country is to stand on its own feet it
must curtail reliance on external assistance and, instead, strive for
better market access for its exports. Few will debate that
safeguarding national sovereignty and promoting exports are worthy
objectives. However, increased market access, though exceedingly
important, is not sufficient for substantial increase in exports. The
country must also overcome its supply side constraints. These include poor
governance, weak or instable institutions, flawed or inconsistent
policies, low labour productivity, macro-economic instability, etc. In the ensuing
paragraphs, an attempt has been made to explain these constraints. The two
main reference works are the State Bank of Pakistan’s Report on the
State of the Economy for FY11 and the World Economic Forum’s Global
Competitiveness Report 2011-2012. Macro-economy:
Pakistan’s supply-side constraints are well borne out by the
country’s poor economic performance during last few years. In FY08, the
economy grew by 3.7 per cent (pc), which slipped to 1.7 pc in FY09. The
growth rate accelerated to 3.8 pc in FY10 only to fall to 2.4 pc in FY11
giving the country average annual growth rate of only 2.9 pc during last
four years. Manufacturing, which
registered growth of 4.8 pc in FY08, contracted by 3.6 pc in FY09. In
FY10, it bounced back with growth of 5.5 pc but next year (FY11), the
growth decelerated to 3 pc. Large-scale manufacturing (LSM), which
accounts for nearly 75 pc of total manufacturing, grew by 4 pc in FY08 but
contracted by 8.1 pc next year (FY09). In FY10, the LSM registered growth
of 4.9 pc, which slipped to 1 pc in FY11. Capacity utilisation in key LSM
sub-sectors, such as textiles, chemicals, petroleum, cement fertilizers
and metals is on the decline. The textiles sector, the linchpin of the
country’s industrial and export performance, is marred by low
productivity, obsolete machinery, lack of innovation and deficiency of
skilled labour force. Agriculture grew by 1 pc
in FY08, 4 pc in FY09, 0.6 pc in FY10 and 1.2 pc in FY11. The services
sector, which accounts for more than a half of the gross domestic product
(GDP), registered percentage growth of 6, 1.7, 2.9, and 4.1 in FY08, FY09,
FY10 and FY11 respectively. Low growth rate has been
accompanied by high inflation. The CPI inflation was 12 pc in FY08, 20.8
pc in FY09, 11.7 pc in FY10 and 13.9 pc in FY11 (average annual inflation
of 14.6 pc during last four years). There is something seriously wrong
with an economy having a low growth-high inflation combination. High inflation deters
savings and productive investment and thus slows economic growth. Growth
recession, in turn, drives up inflationary pressures. In case of Pakistan,
investment-GDP ratio has been on the decline: 22 pc in FY08, 18.2 pc in
FY09, 15.4 pc in FY10 and 13.4 pc in FY11; while saving-GDP ratio has
remained low: 13.6 pc in FY08, 12.5 pc in FY09, 13.1 pc in FY10 and 13.6
pc in FY11. The low growth-high
inflation predicament is closely connected with fiscal deficit, another
major macro-economic problem of Pakistan. During last four years, the
average annual fiscal deficit has been 6.5 pc of GDP. The high fiscal
deficit has largely been financed by bank borrowing. The borrowing from the
central bank is highly inflationary, while that from commercial banks
crowds out private sector investment. Thus, the private sector credit
demand, which grew by 16.5 pc in FY08, slumped to 0.6 pc in FY09, and
subsequently recovered to 3.9 pc in FY10 and 4 pc in FY10. Institutions:
Pakistan’s institutional framework is characterised by high economic
cost of terrorism, organised crime, lack of transparency in the public
sector, inefficient dispute settlement mechanism and lack of adequate
protection of property, including intellectual property, rights. The government needs to
create an enabling institutional environment, which means improved
economic governance by strengthening regulatory and administrative
frameworks and institutions. These include a completely autonomous State
Bank of Pakistan, an effective competition regime, prudent regulation of
the financial sector, in particular the stock market, and civil service
and judicial reforms to make for good governance. Energy and
infrastructure: Energy shortage is a major supply-side constraint, which
has hampered Pakistan’s economic and export performance. The economy
presents a big mismatch between the demand for and supply of energy. As
the State bank of Pakistan observes in its recently released state of the
economy report, various factors account for energy scarcity. These include failure to
draw up a consistent energy policy, the resurgence of circular debt, lack
of infrastructure for import of natural gas and electricity generation,
paucity of funds to initiate power supply projects, and power transmission
and distribution losses. Strides in information
and communication technology have connected domestic markets to the
international economy. Accordingly, trade related physical and commercial
infrastructure has become a major element of competitiveness of nations. However, in case of
Pakistan, the overall quality of infrastructure leaves much to be desired.
Both the Pakistan Railways and Pakistan International Airline (PIA) are in
a shambles, while the road infrastructure needs a lot of improvement. According to a World
Bank study, if Pakistan wants to achieve sustained growth rate of 8 pc per
annum, it must increase infrastructure investment to 7.6 pc of the GDP. Human resource
development: Access to basic health and education shores up the
productivity of labour and makes it easier for workers to adapt themselves
to advanced production processes. In case of Pakistan, the relevant
problem areas are low literacy level (58 pc), low level of net primary
education enrolment (66.4 pc), high infant mortality rate (63.3 pc), low
life expectancy and poor quality of primary education. Budgetary allocation for
heath (0.6 pc of GDP) and education (1.8 pc of GDP) is meager. In addition
to basic heath and education, investment in higher education and training,
including on-job training, is important if the economy is to move up the
value chain. In case of Pakistan,
higher education and training has been a neglected area. The biggest
impediment is low level of secondary (33.1 pc) and tertiary education (6.4
pc) enrollment followed by inadequate staff training, availability of
research and training services, internet access in schools, quality of
science education and low level of research and development. The country
is at 118th number among 140 nations on the knowledge economy, and only 3
percent of the people undergo vocational training. Technology and
innovation: Technology is the mainspring of growth and development. Lack
of technological readiness, the agility with which existing technologies
are adopted to raise productivity, is another supply side constraint. The
major problems are lack of technology transfer through FDI, the internet
usage, availability of latest technologies, government’s procurement of
advanced technological products, grant of utility patents and availability
of scientists and engineers. Corporate culture: The
business culture of Pakistan is by and large characterised by inefficiency
and lack of delegation of authority. The businesses are impatient of
government regulations but seek the umbrella of protection — in the form
of import tariffs and subsidies — to shield them from having to compete
with foreign suppliers. hussainhzaidi@gmail.com
Braving
the threat Unidentified gunmen
kidnapped Dr Khalil Ahmed Dale, a 60-year-old British Muslim national and
head of the International Committee of the Red Cross (ICRC) medical
operations in Balochistan province on January 5, near the Chaman Housing
Scheme in Quetta. Interestingly, the area
where he was picked up is one of the high security zones in the housing
offices of all international organisations. It was second high profile
kidnapping of foreign aid workers from the area in the last two years. In February 2009,
UNHCR’s John Solecki was also abducted from the same area and later BLA
claimed responsibility. So far, no organisation has claimed responsibility
for Dr Khalil’s kidnapping. “He was serving most deprived people of
Pakistan from the last one and a half years,” says a Pakistani colleague
of Dr Dale. “He was a great human being and a dedicated health
professional”, he adds. ICRC has been
permanently present in Quetta since 1983 continuously. It initially
started operations here to provide health assistance to the victims of the
armed conflict in Afghanistan while its current operation focuses on
Balochistan, assisting victims of armed violence and natural disaster. It provides medical care
for the wounded and disabled people, visits detainees in some areas and
restore family links. It is also supporting the livestock and dairy
development department in the province. “We are focusing more
and more on health facilities there. We have been helping thousands of
people here every year through our weapon-wounded assistance and physical
rehabilitation programmes. From January to November 5,681 patients have
been treated at ICRC. It supported three clinics in Quetta while 3,333
patients were treated at rehabilitation centre from January to December
2011. Along with costs of entire treatment of registered patients we also
cover most of the travel and food expenses of patients,” informs
Najum-ul-Saqib Iqbal, Operational Communication Manager, ICRC. Restoring Family Links (RFL)
is one of the most important activities of the ICRC in Balochistan through
which it, along with its partners, make an effort to re-establish and
maintain broken family links because of violence or disasters. Between October and
December 2011, the ICRC team in Quetta facilitated the exchange of 40 Red
Cross Message and 7 Salaamats (verbal message) between families and their
relatives detained abroad. In total, 10 RFL related phone calls were
performed, including teleconference calls with people and their families
detained at Bagram and Guantanamo Bay. “We helped thousands of people
during 2008 earthquake and 2010 floods in the province as well”, says
Najum-ul-Saqib Iqbal, adding, “We do not know why somebody would kidnap
an official of such an organisation. We have not been contacted by anybody
so far regarding Dr Dale”. Police in Quetta say it
has reached very close to the people responsible for the incident. “We
do not want to reveal their identity as it can put Dr Khalil Dale in
danger”, says Nazir Kurd, Police Operations Deputy Inspector General
(DIG). According to him, Dr Dale was on his way to the office when a group
of armed men intercepted his vehicle and detained him at gunpoint. “The
abductors left behind the vehicle and spared the driver”, he says,
adding “ICRC has been offered security in the past but it declined
terming it was against its mandate,” Kurd tells TNS. The organisation also
received threats in May 2010 from some Baloch insurgents and closed down
its offices for a few days in Quetta. The officials of the organisation do
not link those threats with the latest incident. The ICRC head office at
Islamabad has called for an unconditional release of its kidnapped staff
member. The organisation has also re-affirmed that despite the incident,
it will be continuing its humanitarian work in Pakistan. But the incident has
placed deprived and helpless people at risk in the most backward province
of the country. At the day of the incident, the ICRC announced closure of
its six offices in Pakistan, including three based in the remote areas of
Khyber-Pakhtunkhwa while one each in Punjab (Lahore), Sindh (Jacababad)
and AJK (Muzaffarabad). Operational
Communication Manager, ICRC says that organisation was facing increasing
difficulties for the last few years regarding access to those areas and
population where it wants to work. “In addition, questions were being
raised repeatedly on issues related to the ICRC’s scope of activities
and operational procedures, so we decided to limit the physical presence
of the organisation by almost 70 percent. We will maintain presence in
Islamabad, Peshawar, and Quetta and continue operations in other areas
through these offices. ICRC’s office in Karachi remains operational for
the time being,” he says. The organisation has
been striving its level best to serve the most backward and tough-to-reach
areas of the country. “Unfortunately, the most vulnerable
groups-children and women of these deprived and violence-hit areas will be
most affected in future by the closure of ICRC offices”, says a leading
local aid worker from Quetta. “The people who have been creating
problems for aid organisations to work in areas like Balochistan and KPK
are playing into the hands of a mindset that thinks aid-work is
spy-work”, he says.
assistance Chairman of the National
Disaster Management Authority (NDMA) has said that only 40 percent of the
funds have so far been received against the appeal launched by the UN. The
UN launched an appeal for $ 356 million for support of the flood affectees
in Sindh and Balochistan. So far, hardly $150 million could be mobilized.
Whereas the scale of flood disaster this year surpassed the damages of
previous year’s flood, donors’ response has been starkly lukewarm this
time. So far, European
Commission, US, Japan, UK and Norway have been the major donors. According
to the latest figures of the NDMA, 520 people died during the flood.
Approximately 34,000 villages were affected and 1.6 million houses were
damaged which affected more than 9.6 million people. Rural economy in Sindh
is ruined as cropped area over 2.2 million acres was damaged and more than
116,000 cattle heads were perished. According to the UN, the floods have
wiped out 73 percent of standing crops, 36 percent of livestock, and 67
percent of food stocks in the 13 worst-affected districts of Sindh. Loss
of crop and livelihood is a serious concern as these two are the key
sources of livelihood in the flood affected areas. Sluggish response by
humanitarian aid community is causing severe stress on relief activities.
Major shortfall is in critical areas of food security (86 pc) drinking
water (83 pc) and shelter (49 pc). As a result of that three quarters of
the total affected households in Sindh and Balochistan have not received
any shelter assistance. In winter, the need for
shelter and blankets has increased. In Sindh and Balochistan, 3 million
flood-affected people remain highly vulnerable and in need of immediate
food assistance. According to aid agencies, over five million people
urgently require agricultural support to resume food production and income
generation activities. Clearly, this situation
is leading towards a lurking human crisis in the coming days. World Food
Program has also raised concern on the shortfall of $107 million to cover
food needs of critically affected communities till Feb 2012. The agency has warned
that if resources are not mobilised their stock will be exhausted by the
end of November and they will be constrained to cut down the size of
ration and number of people being assisted after December. The latest update of
NDMA on 2nd Dec shows approximately 232,000 people still living in 755
camps, requiring all kinds of assistance. According to UNOCHA, around 25
percent of the 9 million flood affected population is in danger of
contracting various kinds diseases as cases of malaria, cholera, upper and
lower respiratory tract infections, and skin diseases have been reported.
This situation certainly calls for urgent action on the part of government
and humanitarian aid community. Donor’s response shows
a downward trend in recent disasters. During 2010 floods UN appealed for
$1.9 billion but only $1.3 billion were provided by donors. 11 most
generous donors contributed $1.6 billion and the least generous 15
countries contributed only $33 million. Denmark contributed $23
million but Portugal with bigger GDP contributed nothing. France donated $
4.2 million, nine times less than Sweden’s donation while having six
times larger GDP. According to a report by an aid agency, Islamic Relief,
there is a marked difference in donor response compared to Haiti’s
earthquake. In Haiti 3.7 million
people were affected and it received $948 per affectee in aid whereas in
2010 floods more than 20 million people were affected in Pakistan but only
$122 per affectee was received. According to an analysis
by an international aid agency, Oxfam GB, only $1.30 has been committed
per person by international donors in the first 10 days of the UN appeal
as compared to $3.20 committed in the same period during last year’s
floods. The corresponding figures for 2005 earthquake was $70 and for
Haiti’s earthquake was 495$. This trend clearly indicates that donor
response does not commensurate with the scale of disaster. Except number
of deaths all other accounts of damages in recent floods have been far
greater than Haiti’s earthquake. Delayed appeal by the
government, economic slowdown in Euro zone and US, lack of efficiency and
transparency on part of government, lukewarm coverage by international
media are considered as key reasons for the poor response by humanitarian
aid community. The government
underestimated the scale of disaster and the appeal for international aid
came too late when millions were already shelterless. Also, major aid
contributors, e.g. Europe and US, are reeling under economic meltdown. The
US, after losing $US 550 billion in Afghanistan war, is facing worst
unemployment in recent decades. Fourteen million unemployed Americans are
a major cause of concern. After losing credit
rating one step down, US law makers are bent upon axing international aid.
Deep cuts in food and medicine for Africa and disaster relief aid are
being seriously contemplated. US foreign assistance has declined from two
percent of its federal budget in 70s and 80s to less than one percent in
2011. The House Appropriation
Committee has proposed cutting assistance to Iraq, Afghanistan and
Pakistan. Similarly, major countries in European Union are facing a worst
debt crisis. Gross domestic debt in Euro zone is now 85pc of its GDP.
Budget deficit in Britain has reached 10.4 percent and in US is 8.9
percent. Unemployment in 16 to 24 years age group in UK has reached 14
percent during the last three years. A 10 percent cut in government
spending is already on cards. In this scenario,
international aid is likely to be more sluggish in the event of any future
disasters. Countries like Pakistan need to re-appropriate its own
resources more prudently to meet contingency needs. With alarming rise in
the frequency of disasters, Pakistan needs to contemplate a long-term
master plan for disaster risk reduction. A fraction of the huge sums of
money required for relief and rehabilitation operations can help making
better pre-disaster arrangements. The
writer is Chief Executive of Strengthening Participatory Organization-SPO,
nmemon@spopk.org
Agony
of the informal sector The informal sector
comprises small units that produce goods or services with the primary
objective of generating employment and incomes for the families engaged in
these activities. Informal activities have often been characterised by low
levels of capital, skills, diminished access to organised markets and
technologies; low and unstable incomes and poor and unpredictable working
conditions. Such activities are
often outside the scope and purview of the official statistical
enumeration and government regulations, while also eluding the formal
system of social protection. The units operating in the informal sector are highly labour-intensive
but employment is mostly casual, and based on kinship or personal
relations rather than contractual arrangements ensuring protection. In Pakistan the
situation is extremely instable not only because of the global depression,
but also on account of Pakistan’s involvement in the so-called ‘war on
terror’. The prolonged war has increased uncertainty, lowered investment
and created an environment of fear due to the frequent suicide bombings
and target killings in marketplaces. In Lahore, majority of
the home-based workers work mostly at their own homes where they receive
raw material through sub-contractor. In some cases, group of women also
opt to work together at one place. They are spread out in all localities A number of businesses,
social and political groups have petitioned for laws and ordinances
banning kite flying which does damage to property and people. All of this
culminated in the Supreme Court issuing the ruling this week that imposed
the ban on kites during the month long Basant (spring festival)
celebrations. Kite flying is another
sector where HBWs working in the informal sector are involved. Kite making
has always been a business restricted to the informal sector. It was work
that kept both women and men earning, and work was shared by entire
families, who could earn up to Rs 2,000 a day. Today they are broke with
no work to do. While the general
populace has qualms about missing Basant festivals something that they
could celebrate, the more afflicted party is that who has lost out
financially, and is now living in intense poverty. Where once they make
enough money to live contentedly, today they have bowed down to the
heavyweight of financial pressures and have ended up losing the only work
that they knew since decades. Kite making has always
been a business restricted to the informal sector. It was work that kept
both women and men earning, and work was shared by entire families, who
could earn up to Rs 2,000 a day. The kite flying has been banned by Punjab
government due to the hazardous wire used. Kite flying is totally a
homebased work done by families living in walled city of Lahore and
Shalimar town of Lahore.. At this crucial juncture
where unemployment is increasing, inflation increasing on weekly basis and
population ratio also on the rise; it becomes essential to encourage the
cottage industry to flourish and empower informal sector employment. In
Faisalabad, filling reels (or ‘cones’ as they were commonly called)
with thread was found in many neighborhoods. In general, piece rate
payment was Rs200 for filling 40 cones; the process was being carried out
using an electrical industrial unit. In urban Faisalabad,
women were also found to be making very fine quality leather shoes; the
entire stitching was being carried out by hand. Faisalabad was a huge hub
for HBWWs; they were engaged in many different types of work, including
gluing mukaish-like tinsels on kameez and dupatta. Carpet making was being
carried out in Faisalabad city as well as rural areas of DG Khan, and
Kasur. Women of all ages, including girl children were found to be making
carpets of various sizes; the loom sizes varied, from very large to small
carpets. The earning for making one carpet in 26-30 days varied from Rs.
800 to Rs. 3,800 based on the carpet size. The shift to informal
sector jobs during the financial and economic crisis will likely be long
lasting for many workers. This adds considerable pressure on earnings for
those in vulnerable employment. Such trends will keep the level of working
poverty high, especially since social protection is relatively limited. There is a wide variety
of declarations, conventions and goals, both at the international and
national levels, which reflect the aspiration to eradicate extreme poverty
and ensure decent work and living conditions for workers and citizens: 1)
The Millennium Development Goal (MDG) 1 refers to the eradication of
extreme poverty and hunger and aims to halve the proportion of people
whose income is less than one dollar a day; goal 2 refers to primary
education for both boys and girls by 2015; goal 3 refers to gender
equality and empowerment of women and aims to increase the share of women
in waged employment in the non-agricultural sector. Additionally, Universal
Declaration of Human Rights (Articles 22-26), Convention for the
Elimination of All Forms of Discrimination Against Women (CEDAW: Article
11), the Beijing Platform for Action 2005, Convention on the Rights of the
Child (CRC), International Covenant on Social and Economic and Cultural
Rights (ICSECR), International Covenant on Civil and Political Rights (ICCPR),
and International Labour Organization (ILO) Conventions are all a part of
the global aspirations to create a just world for workers in general and
women workers in particular. The Labour Policy 2010
acknowledges the difficulties of extending labour protections to the
country’s large informal sector. The proposed policy for home-based
Workers constitutes the following objectives: 1) to increase women’s
incomes and economic viability; 2) Secure Social Protection; 3) lay the
Foundation for a Political Framework through which women can articulate
their concerns and demands. The salient features of the policy include a
focus on minimum protection, minimum remuneration, regulation of working
conditions, skill development and literacy programmes, and occupational
health and safety standards. Since women in
home-based sector are among the most vulnerable and deprived strata of
society social protection is absolutely necessary for them. Effective and
affirmative actions for the registration of home based workers are a must
to bring them under the labour workforce. The
writer is a development manager and can be reached laila.azhar@gmail.com Rate
race In Pakistan, problems of
one institution are spreading in others while media, being the fourth
estate, is not an exception too. Electronic media, instead of standing
bigger than the crowed, unfortunately, due to lack of basic ethics of
journalism and broadcasting, are joining the crowed. The present episode has
been yet another example in which media could not live up to even basic
journalism principles. It once again became visible that rather than using
common sense and cross checking the information and help the public get
closer to the truth, media hastened to deliver all those questions as
“Breaking News” and had talk shows based on these rumours and
speculations. They went on jumping their guns without any proof and their
‘credible sources’ once again proved to be incredible sources. On the other end of the
spectrum: problem lies with the authorities as well for not giving enough
information to the media, if the president was unwell, for instance, the
government could have at least lessened the severity of the crisis by
avoiding giving contradictory and misleading statements to the media. However, this case is no
exception: be it terrorist attack on GHQ, Raymond Davis case, US operation
against Osama Bin Laden in Abottabad, PNS Mehran attack, memogate scandal,
Nato attack in Pakistan or a social issue, in such times of instability,
there have repeatedly been similar concerns that media coverage might have
exacerbated the crisis by exaggerating a news item or letting incredible
information leak out among wider audiences. With due respect, media
owners of some news channels, media managers and anchors should be held
equally responsible for not showing a sense of social responsibility and
steering this unfortunate country towards its doom, by beating panic with
panic in their news broadcast and talk shows, eventually, spreading chaos
in society. Journalists need to
understand their rights and responsibilities and know when to step back or
move forward as questions arise during work. Decision-making becomes
easier and less risky when one is aware of the laws governing the media.
If one makes ethical decisions for a reason that one can explain, people
will respect work. True, incompetent
political and military leadership and foreign interference has brought the
country to this pass, no matter the situation, elements responsible for
this crisis should all be subject to observation and scrutiny by media.
Under such circumstances, media can play a positive role in bringing
things back to normal which no army, political party or other unseen power
groups can do. But, how can media question them unless they put their own
house in order? Television channels and
the anchors are trying their best to convey information to the public,
ideally to serve public interest. However, the manner in which this
information is being disseminated through TV channels, has not only a
negative impact on the mental health of the public but the country at
large. Every news is not
breaking news, but the “Breaking News” fashion has out-caste the
research and investigation attitude from journalism in Pakistan. The race
to be the first to break the news is promoting sensationalism and painting
the country’s image more gloomier. Media, instead of being agenda
setter, has become agenda follower of the power elite. The statement that “we
show what people want to watch” is no more justifiable as media ought to
play its actual role of trend setter not of trend follower. Media should
shape community values objectively. People won’t mind if media covers
difficulties of their everyday life more than activities of politicians
and others. The dilemma that media
is facing today might be because it’s a novice and most of broadcast
journalists come from print to broadcast journalism without proper
education and training. On the other hand, there is no gate-keeping
institution in almost all news channels to cross check or balance the news
items coming from different sources; media owners seem to be least
bothered about ethics in journalism because their prime concern is the
rating of the channel which is gained through disseminating
sensationalism. This attitude may help in generating high revenues but it
creates panic in society and results in loss of credibility. However, it’s still
not too late to avoid imminent loss. According to Centre for International
Media Ethics, “J-ethinomics” a combination of journalism, ethics and
economy can produce remarkable results. Ethics is a great opportunity to
make news organisations economically sustainable. Trust in the news
influences news sales. The audience’s perception of news as
“ethical” and responsible cannot only ensure media’s economic
viability, but will also help in gaining long-run public trust as well. politics A couple of weeks ago I
wrote about the ‘politics of the court’ on these pages. While at the
time I suspected that political fireworks were on the horizon, I could not
have predicted that the Supreme Court and the Pakistan People’s Party
(PPP) government would come to (figurative) blows as quickly as they have.
The extent of the contradictions within ruling circles has now become
clear to the world, and it is unlikely that the PPP-led dispensation will
survive in its present form for too much longer. Cue applause. It is sad
but true that so many Pakistanis, and particularly political forces, are
licking their lips at the prospect of yet another elected government being
shown the door before the end of its stipulated term. Of course, the PPP
and the much reviled Zardari may yet live to fight another day — and one
would not put it past them given their penchant for survival — but even
if they do, it will not change the fact that such a large section of our
political class seems intent on getting rid of them by hook or crook. It is true, as some
commentators have noted in recent times, that the PPP and democracy are
not synonymous, and that the principle of protecting the democratic
process should not be conflated with the imperative of saving the PPP
government. I also believe it is necessary to hold the PPP to account for
what it has achieved — or not, as the case may be — in terms of policy
and legislation since the 2008 general election. I understand the
frustration of those who point to the PPP’s miniscule progress on the
everyday issues that affect the Pakistani people. The present regime has
spent most of its time engaged with questions of its own survival —
moving on from one ‘crisis’ to the next, the ‘people’s
government’ has evinced little concern for a plethora of issues that
should have been at the top of its agenda. This is precisely why I
find the hardly contained excitement of political workers on the anti-PPP
side of the current divide appalling. They either could care less about
the very issues they are criticizing the PPP for neglecting, or they
genuinely believe that they will magically fix all of the long-term
structural problems of this country as soon as the PPP is evicted from the
presidency and PM house and ‘clean’ and ‘committed’ leaders take
their place. These ‘clean’ and ‘committed’ politicians, who appear
to be jialas of the Chief Justice of Pakistan whilst remaining devoted
defenders of the men in khaki, obviously feel they are legitimately
entitled to openly lobby for the current occupants of the presidency and
PM house to vacate their premises. But are they entitled to
do so? How much have Pakistani politicians really moved on from the
fractious bickering and intrigue that characterised the ‘lost’
democratic decade of 1988-99? For all of the talk of maturity and a
‘new’ politics doing the rounds, does the present confrontation bode
well for Pakistani democracy or does it confirm just how difficult it will
be to institutionalise some semblance of a representative political
process in this country? Despite the constant
assurances being issued about the impossibility of martial law on the part
of populists such as Imran Khan and Nawaz Sharif, as well as the Chief
Justice himself, any reasonably seasoned observer of the Pakistani
political scene can testify to the fact that the Pakistani military will
not cease pulling the strings even if the days of direct military
takeovers appear — and I must stress appear — to be over. Lest any
evidence be required one need only to consider the statement issued by the
Inter-Services Public Relations (ISPR) machinery this past week which was
a thinly-veiled threat to the government to back down or face the exit
door. More generally, the
military still exclusively formulates major policies, both to do with
Pakistan’s relations with the outside world (Kashmir, Afghanistan) and
the state’s priorities and actions within the country (budgetary
allocations, Balochistan, patronage of religious militancy). Large
sections of the media and intelligentsia steer clear of any overt
criticism of the institution, and even the emergent activist judiciary
makes no bones about the fact that elected representatives of the people
can be subjected to unrestrained judicial scrutiny but the men in khaki
enjoy virtual immunity. Yet those who proclaim
the impossibility of ‘undemocratic’ or ‘extra-constitutional’
excess want the people of Pakistan to believe that the latter have
suddenly become the wellspring of power? They want those of us who have
fought tooth and nail against the military dominance to ignore the fact
that state policy continues to be formulated at the behest of General
Headquarters (GHQ) at the cost of the welfare of the ordinary Pakistani?
Clearly, the media’s spin doctoring has got the best of the populists
spearheading the ‘regime change’ campaign — they themselves do not
realise just how much has changed in today’s Pakistan. This is now a society
wracked by competing visions of the future and endless spouting of the
myth of the indivisible Pakistani people cannot change this. It is almost
irrelevant whether or not the PPP is planning to manoeuver some kind of
electoral mileage out of the current imbroglio — what matters is that
there are a non-negligible number of social constituencies that are on the
PPP side of the divide and the merest hint that a ‘Punjabi’ conspiracy
is afoot to undermine the elected government will simply underline the
divide. Public discourse is, without doubt, heavily manipulated in this
country, and the information revolution has to an extent reinforced the
ability of the powers-that-be to forge an environment that suits them. But
the means of manipulation have become only slightly more sophisticated
relative to the confidence with which dissenters now make themselves heard
and seen. In other words, the same old tricks can no longer guarantee the
same results. The judges and generals
will do what they will. What is of greater significance is the positions
taken by those who purport to represent the Pakistani people. In their
heart of hearts all of our mainstream politicians know that not one of
them represents the diverse and increasingly assertive constituencies that
together constitute the polity. When General Musharraf departed the scene
some three and a half years ago, many observers were cautiously optimistic
about the sounds being made by the political class vis a vis the sanctity
of the political process and the need to move forward through consensus.
The consensus, to whatever extent it existed, now appears close to
collapse. Those who are clamouring to be given entry into the corridors of
power should rest assured that the methods that they are currently
favouring to gain access to power will come back to haunt them, very
likely sooner rather than later.
Looking
back in despair Let us recap 2011 and
some of the changes taking place at various levels. Pakistan witnessed
another year of energy deficiency, fiscal deficit, policy led poverty, man
made floods, and socio-political instability. These problems were so
sever in nature that they masked some of the good things that actually
happened in Pakistan during 2011 (yes there are quite a few, such as
decrease in suicide attacks at least in major cities of Pakistan). In order to meet social
sector development challenges, Pakistan has been heavily relying on
external actors and factors. The revenue collected by Government of
Pakistan is barely enough to meet debt repayment and defense expenditures.
Day to day domestic expenditures are met through domestic borrowing, while
social sector development is linked to external help, aid and loans. This
is precisely the reason that Public Sector Development Program gets axed
when an external commitment be it is “Kerry Lugar Money” or “Friends
of Pakistan Forum” pledges does not come through. Economic and security
crises coupled with changing priorities in the developed world necessitate
nations such as ours to redefine paradigms of sustainable development amid
‘curtailed aid’ or ‘no aid’ scenarios as the dependence of our
development on developed world would no more be sustainable in the near
future, meaning we would have to think beyond foreign aid and looking
beyond the West. This year global
community would be gathering for Rio+20 conference to carry out a stock
taking exercise on what did it achieve on sustainable development front.
It would assess the sustainability of some of the solutions that were
proposed for sustainable development. While preparing for Rio+20, it is
about time for us to make reality check whether the prescriptions
prescribed to us so far were relevant, whether those solutions were
financially viable, whether we had the political will at the top, demand
at grassroots level and expertise at implementers level to deliver,
whether all of the abovementioned factors or none of these factors were
responsible for our current state of affairs. At the same time we do
need to come up with new normative for our existing problems. To me part
of the revised normative of our problem is existing mistrust on our
regional resources and capabilities. Pakistan is almost at
the verge of global isolation. It needs to redefine its development
policies following a philosophy of “looking East” for survival and
doing businesses to enable its people to get benefit out of the growing
regionalism. Many are opposing trade normalization efforts between
Pakistan and India on both sides of the border. To me these efforts are
very timely. They can be an appropriate response to changing priorities of
our traditional allies which necessitate diversity of trading partners and
exploration of new markets. Year 2012 would be a year of realignment and
it is about time we as a nation should also learn to realign our
priorities, policies, and practices taking a pro-people approach. On economic front at the
global level, financial crisis in Eurozone, resulting in resignations by
Italian and Greek premiers and a virtual surrender of individual EU
member’s financial policy sovereignty to EU financial regulators
threatened the whole EU philosophy. This uncertainty also
affected the strength of Euro which hit the 16 years lowest against US
dollar. However, a strong US dollar did not mean a strong US economy. US
economy did receive quite a few shocks during 2011, especially downgrading
of sovereign credit rating of United States. The Obama administration
received warnings not only from Federal treasury, but also from China that
happens to be the biggest investor in US Federal Securities for
irresponsible spending and over borrowing. China, on the other hand, too
faced a slowed economic growth for the first time in last 11 years. Chinese real estate
market continues to face slump. Increased unemployment and reduced
predictions for growth in the global north are indications of further
chaos. London riots, attacks on immigrants in Greece Italy and Spain;
demonstrations against international financial institutes and movements
like “Occupy Wall Street” are yet other signs that “development”
in the global north that many in the global south were following as role
model is not sustainable enough. In fact, that model is
unable to take care of the needs of the current generations and it would
definitely not be able to fulfill the needs of the future generations. On political front, one
witnessed Arab spring where a combination of internal and external actors
and factors proved lethal to the powerful rulers like Hussni Mubarak and
Gaddafi whereas few more seem to be on their way out. One of the lessons
learnt from Arab Spring is that state security devoid of human security
would never result in stable governments. On energy front, rise in
fuel prices to a record high after 2008 and Fukushima nuclear plant
tragedy yet again reminded us of the importance of energy efficiency and
finding some new solutions to current energy crisis. On regional front,
US’s decision to enter in dialogue with Taliban and NATO’s back
channel diplomacy for an honorable exit from Afghanistan may change the
geo-political scene of this region. Changed attitude of US
and NATO towards post Osama Pakistan and Pakistan’s recent attempt to
assert its existence as sovereign nation to NATO and US governments may
reshape West’s priorities, policies, and practices towards this region. In social sector
development, missed commitments for development assistance by most of the
developed countries and missed millennium development goals by most of
developing countries are points of concern for the poor, marginalized and
socially excluded people. Yet another inconclusive
round of talks in Durbin on climate change merits a thorough analysis of
existing priorities, policies, and practices of major stakeholders. The
writer is heading Sustainable Development Policy Institute and may be
contacted at suleri@sdpi.org
first
person Eak Rana is a Nepalese
expert on sustainable development. He joined International Centre for
Integrated Mountain Development (ICIMOD) in Kathmandu in November 2009 as
Project Coordinator for Reducing Emissions from Deforestation and forest
Degradation. The project is being run in developing countries to protect
forests. Rana coordinates with partners and liaise with local ministries
and stakeholders to institutionalise forest carbon accounting, monitoring,
and registration and help develop a national forest carbon fund. Rana gained extensive
experience in forest resources management and livelihood improvement
during many years of work. His recent experience included working for an
initiative in Nepal where he was involved in various activities
implemented by the Forest Ministry’s REDD Forestry Cell under the World
Bank’s Forest Carbon Partnership Facility scheme. He has rich experience
working with government, civil society, and NGOs. Rana has a Master of
Science degree in sustainable resource management from Technical
University of Munich, Germany, specialising in forest ecosystem
management. He is project coordinator; REDD (Reducing Emissions from
Deforestation and Forest Degradation in Developing Countries) Ecosystem
Services at the International Centre for Integrated Mountain Development (ICIMOD)
in Kathmandu. The News on Sunday had the opportunity to interview Rana.
Excerpts follow: The News on Sunday (TNS):
Tell us about your work at REDD? Eak Rana (ER) Globally,
REDD is considered a new approach for climate change mitigation and
adaptation. We think that forest policies will have to align with the
incentives of and the public interest. However, a challenge is made more
difficult by the complex causes of deforestation, many of which are
external to forestry sector. Nepal still does not have a concrete
framework in terms of a policy under REDD, but is part of two programmes:
the Forest Carbon Partnership Facility, and the United Nations REDD
Programme. The country has gotten $200,000 for a readiness preparation
proposal and an additional $3.5 million from the World Bank to work on six
different components related to REDD. TNS: What is the purpose
of the International Centre for Integrated Mountain Development? ER: The International
Centre for Integrated Mountain Development, ICIMOD, is a regional
knowledge development and learning centre serving the eight regional
member countries of the Hindu Kush-Himalayas — Afghanistan, Bangladesh,
Bhutan, China, India, Myanmar, Nepal and is based in Kathmandu, Nepal.
Globalisation and climate change have an increasing influence on the
stability of fragile mountain ecosystems and the livelihoods of mountain
people. ICIMOD aims to assist mountain people to understand these changes,
adapt to them, and make the most of new opportunities, while addressing
upstream-downstream issues. The center supports regional trans-boundary
programmes through partnership with regional partner institutions,
facilitates the exchange of experience, and serves as a regional knowledge
hub. It strengthens networking among regional and global centres of
excellence. Overall, it is working to develop an economically and
environmentally sound mountain ecosystem to improve the living standards
of mountain populations and to sustain vital ecosystem services for the
billions of people living downstream now, and for the future. To adapt to
the changing scenario, ICIMOD has set up a demonstration centre in the
Jhikhu Khola watershed at Lamdihi village, farmers are taught the
techniques of roof-water harvesting, making farm ponds, drip irrigation,
composting and terracing. From growing one maize crop a year, some farmers
now harvest rice, potato and vegetables thrice a year. Under this project we
are working hard to stop forest degradation and deforestation. Community
foresting is one of the ways to save forests. Such foresting was adopted
three decades ago under which forested areas were handed over to local
communities. In 1988, community-based forest management groups were
formally approved, with the Kavre and Sindhupalchowk districts being the
pioneers. There are now 16,000-20,000 community-managed forests in Nepal,
covering 25 per cent or 1.2 million hectares of the country’s forest
land. This policy really yielded positive results and many degraded
landscapes rejuvenated after the communities imposed management regime
allowing natural regeneration. Communities also earn revenue by selling
non-timber forest produce (NTFP), rejuvenating the land. Forests are very
important for the Nepalese people especially those living on high lands.
One of the studies conducted by the project indicated 70 per cent of
forest users depend on forest biomass based household energy as a source
in project sites. We are of the opinion that they should use this source
of energy in a sustainable way. Recognising this, the project has
introduced alternative energy technologies such as bio Biogas and improved
cooking stoves so that pressure on the forest could be reduced. Similarly,
there has been enrichment plantation of native and culturally valuable
tree seedlings in community and private forest land within three
watersheds. Trees planted on farms will eventually reduce pressure on
local forests. In one year, the community forests in three watersheds
increase carbon offset of carbon dioxide of 2.67 tonnes per hectare. The
entire project covers about 10,266 hectares of community forest area. In
voluntary market, the price per tones of carbon dioxide is between US$ 3
and 5. However, the market price can go above US$ 20 for per tones of
carbon dioxide internationally. TNS: How Nepal was
affected by climate change? ER: Like other states of
developing world, the countries of South Asia have been hit by climate
change and Nepal is no exception. The country known for its high mountains
and rich forests is facing droughts on the one hand and floods on the
other hand. This drought leads to forest fires that is not only destroying
livelihood of the people living on highlands but also causing damage to
environment. Eighty per cent people in Nepal depend on agriculture but
because of drought and floods agriculture yield has greatly been affected.
Our country is facing two types of floods — glaciar lake outburst and
overflow in regular rivers. Glaciers lake outburst flood the local lakes.
This has also led to an overflow in rivers. The country is also witnessing
irregular rainfall, which is also contributing to floods. These irregular
rainfalls have been caused by temperature rise, which is a global
phenomenon now and
Nepal
is no exception. This temperature rise has created many
difficulties for the Nepalese people; the lowland people face drought and
floods while the specter of forest fires and drought keep haunting the
people of highlands. In Panchakhal area of the country, it now rains in
May though traditionally rainfall occurred during June-September. With
help from an NGO, the village has dug a 250-foot borewell and pumps water
to a tank. Villagers get 80 litres a day for their use, but the 11-hour
load shedding does not help. Most families use biogas to reduce dependence
on forests. TNS: How people are
dealing with this changed situation? ER: This phenomenon has
forced people the way they used to live. Earlier people in highland would
live in houses made of wood but now there has been a trend to make metal
houses to escape the devastating consequences of forest fires. Peasants
also find it hard to decide as to which crop they should grow. Since they
are not sure about rainfall, they have diversified the means of their
livelihood. Earlier all people would be dependent on agriculture and would
grow crops to meet both ends but now one or two members of a family choose
to go to urban centers in search of livelihood. Farmers are employing
pre-sowing methods of agriculture. Because of irregular rainfalls farmers
sow seeds before time, for instance potatoes grow in five months but now
it may take seven months and the peasants sow its seeds before time.
Earlier they would cut potatoes into four and sowed it but now they sow a
whole potato to combat moister. TNS: What has Nepalese
government done to deal with this situation? ER: We have launched
National Plan of Adaptation Actions in 2011 under the United Nations
Framework Covenants on Climate Change (UNFCCC). We will get fund from the
UN agency for the five areas that we have identified as being hit by
climate change and we will work to improve situation in these five areas. Export
cartels: any solutions? Interactions between
trade and competition could not be more intimate as they are today when
countries the world over are getting severely affected by the volatility
of trade in primary commodities. The major commodity
spike of 2007-08 sent alarm bells ringing when the prices of many primary
goods doubled from what they had been not so long ago. Much of this
fluctuation may be explained by way of simple economics of demand and
supply, while managing supply side failures is critical to restore some
sense in the market. One such management
issue is that of the inability of trading nations to deal with rampant
anticompetitive practices, especially when the importing countries pay
heavily for anticompetitive practices exempted by exporting countries’
competition laws. Case in point here is the global potash fertiliser
export cartel. A recent study has
highlighted the overcharge paid by India due to anticompetitive practices
in the global potash market. Under a competitive scenario, the price of
potash would decline from $574 per tonne in 2011 to $217 by 2015, and
subsequently, increase to $488 by 2020. However, in the continuing
presence of fertiliser cartels, the price of potash would steadily
increase from $574 per tonne in 2011 to $734 in 2020. The resulting
overcharge for India and China, two of the largest buyers of potash
amounts to more than a billion US$ per year per country. Such export cartels are
in some cases government sponsored. For example, in February 2010, China,
which controls more than 95 percent of the global production of rare
earths, a collective name for 17 minerals used in high technology from
mobile phones to military equipment, announced that it intended to impose
restrictions on rare-earth mining in the next five years while maintaining
international cooperation on trade in the metals, including
“reasonable” export quotas. But export cartels also
exist in the manufacturing sector and can originate in developing
countries. For example, last year the Chinese government filed an amicus
brief in a US court in support of a motion to dismiss a private suit
against four Chinese vitamin manufacturers accused of having cartelised
their exports to the US since 2001. The Chinese government argued in its
brief that it had supervised the price-fixing as part of its effort to
“play a central role in China’s shift from a command economy to a
market economy” and in order to mitigate the exposure Chinese companies
faced in potential antidumping investigations. Export cartels have a
significant influence on prices in general and on the swing of prices of
primary products in particular. Competition authorities in the countries
of origin of the export cartels do not act against them because export
cartels do not affect the domestic markets of the cartelists. Competition authorities
in the victimised countries either do not have powers to act against the
export cartels which they suffer from for a variety of reasons. They may
lack extra-territorial jurisdiction (as the litigation in India against
the US-based soda ash cartel under the now repealed Monopolies and
Restrictive Trade Practices Act, 1969 showed); the sovereign compulsion
doctrine may prevent them from prosecuting state sponsored export cartels;
they may not have the means to gather the evidence they would need to
convict the perpetrators even if they have jurisdiction or they can be
under pressure from their government not to act against them so as not to
expose the country to retaliations endangering its own economy and state
supported export cartels. In January, 1997 the WTO
established a working group on the interaction between trade and
competition policy to explore the linkages and see whether a multilateral
agreement on competition can be incorporated in the WTO. The idea was
carried forward in the Doha Development Agenda. Alas, the same was taken
off the negotiating agenda in 2004 due to opposition by developing
countries to negotiations on several issues, which included competition
policy. Given the reforms in
competition regimes brought about across the world since the collapse of
the agenda in WTO (130 countries have adopted a competition law today as
opposed to 35 in 1995) and now that it seems as though the Doha
negotiations do not have an immediate future and that the WTO has to
redirect its focus from trade negotiations to analyses, the time has come
for this multilateral organisation to undertake a serious and
dispassionate study of the effects and the appropriate legal regime to
regulate export cartels. Such a study would need
to distinguish between the export cartels which may actually enhance the
export opportunities of small countries which would not otherwise be able
to access export markets from the export cartels which have no such
redeeming values and are limited to rent seeking and reduce competition
rather than enhance it. It would also need to distinguish between the
purely private export cartels and the state sponsored cartels, like oil,
which may deserve a different treatment. Finally, it should take into
account the fact that export cartels may originate in countries which have
vastly different levels of economic development and therefore have quite
different domestic impacts.
Sweeping the issue under
the carpet as has been the case of late foster beggar-thy-neighbour
activities hampering competition in international markets and preventing
trading countries from getting the benefits of trade liberalisation. The writers are
Chairman, OECD Committee on Competition Policy and Secretary General of
CUTS International respectively. |
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