comment
The public’s assets
We all want things to turn around, but we need to spend a little bit more time and energy clarifying exactly what needs to happen to rescue the PRs and PIAs from the abyss
By Aasim Sajjad Akhtar
Much has been made of the rapid deterioration of major public sector enterprises such as Pakistan Railways (PR) and Pakistan International Airlines (PIA) during the tenure of the present government. Not only have the ‘commanding heights’ plunged to unimaginable depths in financial terms, the quality of service delivery has also dipped alarmingly. This pathetic state of affairs has been held up as yet more evidence of the ineptness of the Pakistan People’s Party (PPP)-led coalition at the centre. The neo-liberals in our midst have renewed calls for wholesale privatization of public assets.

Parliament versus the rest
Is the sense that the troika of the army chief, the chief justice and the opposition leader is up in arms against the elected government real or are we just hearing noises that are normal to a nascent democracy?
By Amir Mir
After the recent decision of the country’s military and intelligence top brass to make the elected government answerable to the Supreme Court in the infamous Memogate case, filed by Nawaz Sharif and heard by Chief Justice Iftikhar Mohammad Chaudhry, some people say that the infamous judiciary-military alliance seems to have been mended again.

politics
Will he deliver?
Imran Khan has changed the political discourse, where he has put new emphasis on things like corruption, payment of taxes, declaration of assets, merit-based appointments, etc, thus putting pressure on the PPP and the PML-N both
By Ahmad Nazir Warraich
In the last 20 odd years of our national life, politics has been defined by electoral battles being waged between the PPP and various forms and factions of PML. Ever since the end of the Zia Regime, the PML-N has formed the government twice in the Centre and Punjab, and the PPP has formed the government thrice at the Centre. But the state of the economy and governance in the country has continued to deteriorate. The current government is mired in crises, although on the constitutional level, the Federation in spite of the Balochistan crisis, has become stronger as a result of the 18th Amendment, and the 7th NFC Award.

Civil-military-judiciary deadlock
In the current crises facing the country, there are lessons to be learnt and hopes to be drawn
By Salman Abid
The political and constitutional crisis in Pakistan is a blind alley. Hence, the repeated contradictory stance taken by the government — that there is no crisis and that there is a state within state.
The government suffered a setback when the Supreme Court suspended the license of Dr Babar Awan. Before this decision, the Supreme Court also called the prime minister against the contempt of the court in the NRO case.

Past, present and future of debt
A story of the perennial tussle between creditor and debtor
By Jazib Zahir
Those of you who have been devoted students of economics, politics, business and related fields are aware that a wealth of theories abound to explain phenomena like inflation, trade and recessions. Chances are that you have studied dozens of conflicting theories that converge to no universal truth and reinforce the belief that economic hindsight is twenty-twenty and the idea of being able to plan better for the future is ludicrous.

trade
Nuts case Dry fruits

processing, value-addition and exports can earn billions in foreign exchange
By Tahir Ali
Pakistan produces abundant quality dry fruits like almonds, figs, pistachio, walnuts, pine nuts, dates, raisins, dry apricots and peanuts. But its dry fruits exports have been far less for lack of standardised packaging, grading and value-addition and some other policy constraints.
Mechanised grading and packaging has started but, for lack of cool chain system, an estimated 30-50 per cent of the total fruit production is still lost during harvesting, transportation, preservation and storage. Total annual loss of dry fruits in term of rupees is estimated at Rs60 billion.


For the supremacy of constitution
Pakistan can never progress unless parliamentarians work  for the supremacy of the constitution
Huzaima Bukhari & Dr Ikramul Haq
Events since March 9, 2007—Day of Defiance in judicial history—represent struggle for rule of law and constitutionalism. On July 20, 2007, when the judiciary declared unlawful action of sacking Chief Justice of Pakistan by General Musharraf, there was great jubilation—a renewed hope in Pakistan for an independent judiciary not subservient to military hierarchy. The retaliation by General Musharraf through imposing Martial law on November 3, 2007 was declared as unconstitutional by a seven-member bench of the apex court. In the history of Pakistan, it was the first courageous act on the part of judiciary—disapproving repeated subversions of the Constitution by men in uniform.

first person
“I see cautious optimism towards Pakistan”

Rashed Idrees graduated with an LLB (Hons) in 1993 from the London School of Economics, qualified as a Barrister of England and Wales in 1994 and is a Solicitor of the Supreme Court of England and Wales. He has more than 17 years of experience — with over 12 years in Asia and the Middle East — including with international law firms Denton Wilde Sapte and DLA Piper and was a partner with Deacons prior to joining his current firm, DFDL (www.dfdlmekong.com), in 2010. DFDL is a full service international law firm with offices in Bangladesh, Cambodia, Indonesia, Lao, Myanmar, Singapore, Thailand and Vietnam.

Cabinet cost
The road to prosperity will remain a distant dream unless the government reduces its unproductive expenses
By Alauddin Masood
The federal cabinet, comprising 96 ministers and advisers, got Rs61.44 billion in salary and Rs90.7 billion in perks and privileges during the last four years. The figure does not include the cost of 4,000 free air tickets, which were issued to ministers/advisors during this period — 45 free air tickets per minister/adviser every month. They also enjoyed free residential accommodation and utilities (like electricity and telephone) allowed to every minister/advisor. The members of the cabinet were allowed 30.84 million free power units and Rs100,000 each under the head of telephone and mobile phone bills. The expenditure of provincial ministers/advisors is also not included in it.

 

 

 

comment
The public’s assets
We all want things to turn around, but we need to spend a little bit more time and energy clarifying exactly what needs to happen to rescue the PRs and PIAs from the abyss
By Aasim Sajjad Akhtar

Much has been made of the rapid deterioration of major public sector enterprises such as Pakistan Railways (PR) and Pakistan International Airlines (PIA) during the tenure of the present government. Not only have the ‘commanding heights’ plunged to unimaginable depths in financial terms, the quality of service delivery has also dipped alarmingly. This pathetic state of affairs has been held up as yet more evidence of the ineptness of the Pakistan People’s Party (PPP)-led coalition at the centre. The neo-liberals in our midst have renewed calls for wholesale privatization of public assets.

Any objective observer will verify that PR and PIA – not to mention other state-owned enterprises – have virtually reached the point of no return. Even the most vociferous supporter of the PPP (or Awami National Party, whose designated leader is Federal Minister for Railways) can sustain the claim that the ruling party has played no part in bringing things to the present impasse. But the decline of once proud organisations such as PR cannot be put down only to the decisions of those currently in government. As with virtually every other important policy matter in this country, in the cases of PR and PIA too many ‘experts’ seem ready and willing to ignore historical realities, presumably because it is simply easier to heap all the blame on the present incumbents.

First and foremost it is necessary to state a fairly straightforward fact, namely that elected members of parliament are not responsible for the day-to-day operation of PR, PIA and other state-owned enterprises, unless one is to work with the premise that anything and everything that happens within these quite large bureaucracies is the responsibility of the relevant cabinet member. It is civil servants who run these organisations, and while elected officials surely do interfere in various matters, only those with a very shallow understanding of the structure of authority in state institutions would argue that elected officials enjoy the kind of control that is often attributed to them.

The relationship between permanent state employees and the government of the day has indubitably evolved over time, with Zulfikar Ali Bhutto’s civil service reforms of 1973 a crucial juncture in this regard. Politicians – or military officers, as the case may be – have over time come to exercise a great deal more influence over the operation of state enterprises, yet the empirical evidence suggests that they limit themselves to a mediation role rather than one that affects the long-term policy direction of the organisation in question.

Given that mainstream politics in Pakistan revolves around patronage networks, most elected politicians enjoying executive authority over public institutions tend to distribute favours so as to expand their established networks and thereby enhance their possibilities of coming back to power in subsequent electoral contests. Arguably the single biggest demand that politicians face from their constituents is to provide permanent state employment. Before going on to an analysis of what this has meant for public sector enterprises, it is important to establish why exactly this demand is as popular as it is.

In a nutshell, the political economy of colonialism was such that a primarily rural population was expected to remain tied to the land, while a comparatively small segment of society was to be accommodated in professional occupations, as well as the state bureaucracy. With social change has come a rapid increase in population and a shift away from the agrarian economy, yet there has been no requisite expansion of employment opportunities in the non-farm sector. The so-called informal economy has to an extent absorbed the rapidly growing, employment-seeking mass, but by definition there is no job security, guarantee of regular remuneration or basic guarantees of humane working conditions. As it is a large number of workers in the informal economy are self-employed.

Not surprisingly, the subordinate classes covet government jobs, and are always on the lookout for a shortcut to secure them. Elected politicians are typically the designated shortcut, and they are under tremendous pressure to deliver jobs because this is simply how politics is done in Pakistan. One could argue that this is a sure route to insolvency for state-owned enterprises, and one would be right. But the fact is that there is a wider structural logic at work here which cannot simply be put to one side in thinking about potential solutions.

Admittedly, it is the responsibility of elected officials to plan for the long-run, and thereby release some of the pressure on public sector organisations. But lest we forget, elected officials should have foreseen the current energy shortages, as they should have foreseen the potential blowback effects of using religious militants as foreign policy proxies. Do the individuals who are sent to the parliament to represent Pakistan’s 180 million people simply not have the capacity to plan for the future?

Here again it is necessary to put things into historical perspective. Our elected governments have typically been concerned less with long-term policy matters than with matters of basic survival – this government being a prime example in this regard. To the extent that certain regimes have undertaken discernible policy decisions, they have faced the wrath of the permanent state apparatus, and particularly the military. There is a problem of will, yes, but we must also contend with the reality of the balance of power within the state.

This is not to suggest that the incumbents should not be held to account for what has happened to PR and PIA during the last four years. But it is just as foolhardy to blame the current government for everything because such polemic leaves us neither here nor there. Whoever comes into government next will not suddenly be able to turn PR and PIA around. An intransigent permanent state apparatus and a patronage-based political system are not the only constraints that politicians face – the dagger of the international financial institutions (IFIs) hangs over their heads uneasily, and while I have not had the space in this contribution to outline how the IFIs have contributed to the PR fiasco, for example, suffice it to say that the champions of ‘good governance’ are just as culpable for the decline of our state institutions as our own protagonists. We all want things to turn around, but we need to spend a little bit more time and energy clarifying exactly what needs to happen to rescue the PRs and PIAs from the abyss.


 

Parliament versus the rest
Is the sense that the troika of the army chief, the chief justice and the opposition leader is up in arms against the elected government real or are we just hearing noises that are normal to a nascent democracy?
By Amir Mir

After the recent decision of the country’s military and intelligence top brass to make the elected government answerable to the Supreme Court in the infamous Memogate case, filed by Nawaz Sharif and heard by Chief Justice Iftikhar Mohammad Chaudhry, some people say that the infamous judiciary-military alliance seems to have been mended again.

As the Chief Justice ruled that the Memogate case was maintainable and subsequently constituted a judicial commission to probe the matter, Asma Jehangir said the court verdict has restored the supremacy of the security establishment over the civilian leadership. She termed the decision the darkest day of the judiciary in Pakistan.

There is a historical context to this analysis. Pakistan’s judiciary has a long history of facilitating and rubber-stamping successive military dictators since the days of General Ayub Khan. By teaming up with General Ziaul Haq following his July 1977 coup, the judiciary-military nexus committed the “judicial murder” of a popular prime minister, Zulfikar Ali Bhutto. The judiciary again validated General Pervez Musharraf’s October 1999 takeover, with the current chief justice also inking the verdict as a member of the bench that was headed by Chief Justice Irshad Hasan Khan, having already taken oath under the Provisional Constitution Order (PCO).

Confronted by an ever-powerful and aggressive security establishment, the judicially active Supreme Court and the opposition, the PPP government seems to be facing the toughest crisis since assuming power after the 2008 elections. Prime Minister Syed Yousaf Raza Gilani sees the fabric of the democracy under threat with the Supreme Court’s decision to initiate contempt proceedings against him over his refusal to reopen corruption allegations against President Asif Zardari.

Although the danger of a military takeover has faded a bit for the time being, following the January 14 meeting between President Asif Zardari and Army Chief General Ashfaq Kayani after an unusual gap of two months, the establishment keeps asserting its power over the civilian government which too seems adamant this time not to allow other state institutions encroach upon the authority of the parliament.

As the Memogate case was filed in the Supreme Court by Nawaz Sharif, the government circles allege the superior judiciary has an obvious soft corner for the prime minister in waiting. These circles further say that the judges owe their current position to Nawaz Sharif whose 2009 anti-government long march played a key role in their restoration. Sharif had called off his long march towards Islamabad after General Ashfaq Kayani assured him on telephone through Aitzaz Ahsan that the deposed judges would be restored within 24 hours.

In fact, having directly and indirectly managed the country’s affairs and tasted political power for more than half the period of its post-independence 60-year life, the Pakistan army has ceased to be apolitical. But having succeeded Musharraf as the Army Chief, General Ashfaq Kayani had made it known to all and sundry that he would remain apolitical come what may and would never indulge his institution in politics. Asking his men in civvies not to indulge in politics, the COAS had reminded them in an official memo of their oath that each one of them is bound to observe.

Kayani’s predecessor too had taken the same oath: “I, Pervez Musharraf, with a sincere heart and God as my witness do solemnly swear that I will be faithful to the State of Pakistan and protect the Constitution of Pakistan which reflects the wishes of the people of Pakistan. Further, I will not indulge in any political activity and will perform my duties in the armed forces with full faith and honesty. I will go where and howsoever I am ordered to by land, air or sea and that I will obey all lawful orders given to me by my superiors without regard to any dangers and threats to my personal safety. May God be my protector and witness! Amen”.

Yet, being someone who had first-hand experience of serving with an army chief-cum-president of Pakistan and having seen his valour and glory as an unchallenged ruler, it was quite hard for the current army chief resist the temptation to taste political power. Hardly a year after his appointment as army chief, leaked diplomatic cables (by WikiLeaks) reported Kayani’s musings about forcing out President Asif Zardari. According to the leaked cables which were made public on December 1, 2010, General Ashfaq Kayani told the then US ambassador Anne Patterson during the March 2009 meeting in Islamabad that he might pressure President Zardari to resign.

WikiLeaks further disclosed a conversation between former US Ambassador to Pakistan, Anne Patterson, and army chief Kayani, in which the latter expressed unhappiness over a clause in the Kerry-Lugar-Berman Bill which was about to curtail the autonomy of the Pakistan Army. Kayani told the then US ambassador that he could have overthrown the Zardari government during the long march — staged by the Nawaz Sharif-led opposition for the restoration of the judges who were deposed by Musharraf in March 2009.

It was subsequent to these meetings and the pressure exerted by the establishment as well as the anti-government movement launched by the Nawaz Sharif-led opposition that the Zardari regime had to reinstate the 100-plus deposed judges of the superior courts, including the incumbent Chief Justice of Pakistan, Justice Iftikhar Chaudhry. All the sacked judges were finally restored on March 16, 2009, almost two years after their sacking by Musharraf. The keen interest shown by the establishment in the restoration of the deposed judges was attributed to the military’s desire not to give a freehand to President Zardari and his government and to keep them under check through judicial activism. It was a year after the restoration of the deposed judges that General Kayani managed in July 2010 a second three-year term as the army chief — something no elected government in Pakistan had done before.

And it is the same troika of the army chief, the chief justice and the opposition leader which is giving a tough time to the besieged PPP government that is apparently not going to back down without a fight this time.

 

 

politics
Will he deliver?
Imran Khan has changed the political discourse, where he has put new emphasis on things like corruption, payment of taxes, declaration of assets, merit-based appointments, etc, thus putting pressure on the PPP and the PML-N both
By Ahmad Nazir Warraich

In the last 20 odd years of our national life, politics has been defined by electoral battles being waged between the PPP and various forms and factions of PML. Ever since the end of the Zia Regime, the PML-N has formed the government twice in the Centre and Punjab, and the PPP has formed the government thrice at the Centre. But the state of the economy and governance in the country has continued to deteriorate. The current government is mired in crises, although on the constitutional level, the Federation in spite of the Balochistan crisis, has become stronger as a result of the 18th Amendment, and the 7th NFC Award. Both of these are considerable achievements in themselves, however, the worsening of law and order, the overall weak governance and failure of public bodies to perform efficiently and non-availability of basic service delivery has resulted in hardships for the public and the economy. People seem unhappy with the performance of the provincial governments as well.

There is a perception that both the main political parties, like many others in the country, don't have a democratic ethos within their parties. Many commentators view the parties to be like family holdings, with only family members expected to inherit leadership.

In this background, the electorate and the youth in particular want to try something new. Resultantly, people have been long looking for a third alternative. Imran Khan has been positioning himself and his party just for that, since 1996. However, now his time seems to have eventually arrived. The Lahore jalsa catapulted him into mainstream national political scene, while the December Karachi jalsa, cemented his position in the national political arena. Concurrently, politically winnable candidates have started joining his party, in large numbers. This has changed his party from a party on the fringes to a possible contender for power. Although there is still debate about how much of his new found support can be converted into seats in the assemblies, at the Centre and the provinces. In addition, there remains the question, that if voted into power, would he be able to deliver on the promises made?

So the question with regard to Imran and his PTI, is whether his Party can be an electoral success and whether it can deliver.

The PTI has traditionally never been able to make a mark in the national politics. It is because of this that a lot of people felt that Imran's aspirations may never become a reality. However, things seemed to have changed dramatically in the last few months. The general misgovernance and climate of political bickering and mutual name calling, between the two leading players has disillusioned a sizeable section of the society. In this background Imran is promising a clean and efficient government.

Corruption and good governance are two related but separate areas. Imran Khan may be able to deliver something on corruption, although corruption is perceived to be too deep rooted to be eradicated during the life span of one government. However, even if the top echelons are honest, that itself is believed to have the potential to save the country billions of rupees. However would he be able to deliver on governance, that is the million dollar question. The issue of SKMCH and winning World Cup is peripheral to this. Running a government in a large and complicated federation is a different ball game altogether.

PTI is seen as a personality-based party, which revolves around Imran Khan. His strength is his own person and track record, not so much his ideology. His young voters are going for a leap of faith. Thus the party is seemingly based on personality cult; ideology seems to be secondary. The youth seem to believe and trust that he will deliver; the how part is immaterial to them. The other older electorate, which is a bit more skeptical about his ability and experience is nevertheless willing to do so more on the basis of the other parties' unwillingness or inability to deliver.

Electorally, his main strength is believed to be the Urban and peri-Urban educated youth, but in addition, also many middle and upper middle class urbanite 40 somethings are likely to vote for him. He is expected to get some votes on ethnic basis as well; such as those of Pathans and people from the Seraiki belt.

Many political commentators are of the view that PTI as yet does not have a concrete roadmap, beyond a promise of corruption-free government and good governance. But how will the things be put in place. At the end of the day, Imran Khan has to remember that he should not promise the moon; only what he can deliver. Otherwise it may be a huge disappointment for his voters. Some people feel that some of the agenda items Imran Khan has highlighted show that they are not based on a realistic assessment of the situation. For example, how can we elect thanedars; in the US this happened in the Wild West of 19th Century. These days, the US has regular police departments, such as LAPD, NYPD, etc. And if we do elect thanedars, how would that depoliticize the police, wouldn't it politicize it. Then what of the DSP, SP, DIG, and IG, would they also be elected? The point, however, that the police does need to be reformed in a way that makes it service delivery-oriented is valid. Then, with regard to making education the same across board would require provincial legislation, as after the 18th Amendment it is no longer a part of the Federal Legislative List, which means he has to form government in all the federating units, etc.

Imran Khan is a welcome addition to the political scene, considering that the electorate needs a broader range of choices. He has changed the political discourse, where he has put new emphasis on things like corruption, payment of taxes, declaration of assets, merit-based appointments, etc, thus putting pressure on the PPP and PML-N both. This has forced the opposition to change its tactics and rhetoric, to move beyond Zardari bashing, and beyond building roads and bridges and underpasses. They have realised that they are not the only alternative to PPP, neither the sole one claiming the mantle of reform. This seems to be having a positive effect on the political discourse.

Imran Khan has given hope to many people, and they have high expectations from him. He must be very careful in the roadmap and the people he chooses, from now onwards. It is more than his own destiny which is at stake here.

The writer is a Lahore based lawyer and political analyst.

 

Civil-military-judiciary deadlock
In the current crises facing the country, there are lessons to be learnt and hopes to be drawn
By Salman Abid

The political and constitutional crisis in Pakistan is a blind alley. Hence, the repeated contradictory stance taken by the government — that there is no crisis and that there is a state within state.

The government suffered a setback when the Supreme Court suspended the license of Dr Babar Awan. Before this decision, the Supreme Court also called the prime minister against the contempt of the court in the NRO case.

It appears that the ruling party has girded up its loins for a political fight. Its first option is to go for a game of give and take; the other one is to smash its rival with full force so that political martyrdom is attained and public sympathy earned before the general elections.

On the face of it, the army chief and the chief justice have both made clear their stance they are not working on any anti government agenda. As for PML-N leader Mian Nawaz Sharif becoming a petitioner in the ‘memogate’, it has been apparently done to restore his relation with the military establishment. Historically, it is an outcome of policies that have been followed since day one — allowing army leadership great freedom of operation and autonomy not only in its own sphere but also beyond it. Another reason the political forces are forced to negotiate with the army and play a subordinate role to the non-political forces is that there is no democracy within the parties. This crisis may come in handy to start a process of re-evaluation; the political parties should take full responsibility of their actions instead of living in a state of denial.

At the same time we cannot underestimate the impression of judiciary being pitched against the elected government. The statements and remarks issued by the judges confirm the impression that members of judiciary perceive that the civilian government has not accepted their judgments and is not serious in implementing them.

Factually speaking, the judiciary has got its intensions recorded in the six options it has offered in the NRO implementation case. The prime minister has been declared insincere to his oath. There is a clear sense that the judiciary must operate in the constitutional domain without getting involved with judicial activism. Option number six makes most sense. It is the discretion of the government to hold election without taking pressure from the judiciary. It is an established principle that political matters should be handled by the political forces. It has now become even more necessary.

What has really helped the cause of parliamentary democracy in the current crisis is the role of the parliamentarians. We must appreciate the positive role played by Asfandyar Wali Khan and Ch Shujaat Hussain in bringing a resolution acceptable to all. It is equally heartening to see Maulana Fazal-ur-Rehaman bridging the gap between president Zardari and Nawaz Sharif. The president is determined to have the Senate election by all means; that is his political and legal right. But Maulana has his own agenda of getting some new political guarantees from President Zardari with the help of Nawaz Sharif; he has hidden talent for arriving at a compromise between President Zardari and Nawaz Sharif.

The recent meeting between the president and the COAS sends hopeful signals about ending the crisis. Credit goes to the allied parties and Ch Atizaz Ahsan. The prime minister Gillani should stop issuing fiery statements and be cool as cucumber. The present government’s future is depending on the Supreme Court proceedings in the coming weeks. Will it reflect the consequences of reconciliation affirmed and promised by the government?

Coalition partners of the government are not ready to support the government in further confrontation with judiciary and army. In these circumstances, the government is left with only one choice — to accept the verdict of the Supreme Court in letter and spirit. A very positive gesture made by the government is its announcement to go for fresh polls after the Senate election.

The next big question before us is: who will supervise the general election because the political forces are not ready to contest election under the president of Zardari. Unless and until they arrive at a workable formula, our fragile democracy will suffer more and every single actor will be held responsible for the consequences.

(The writer is a political analyst and can be reached at [email protected])

 

Past, present and future of debt
A story of the perennial tussle between creditor and debtor
By Jazib Zahir

Those of you who have been devoted students of economics, politics, business and related fields are aware that a wealth of theories abound to explain phenomena like inflation, trade and recessions. Chances are that you have studied dozens of conflicting theories that converge to no universal truth and reinforce the belief that economic hindsight is twenty-twenty and the idea of being able to plan better for the future is ludicrous.

On the surface “Paper Promises” is a book about the past, present and future of debt. In fact it describes itself as the story of the perennial tussle between creditor and debtor. Through this prism, it attempts to explain the history of money right up to the contemporary challenges our world is facing. It’s an ambitious task to stitch together such a rich tapestry on to a simple framework, but the author does a commendable job.

The core idea of the book is that debt is a necessary evil. Without debt, there is no way to generate growth on a pervasive scale. But too much debt is unsustainable so every society attempts to tread the precarious line between the two extremes. Creditors need debtors to provide them with a return on their excess cash. Debtors need creditors to finance their activities. Sometimes creditors need to compromise on how they get their money back. It is this very dynamic that has proven to underlie the nuances of the modern economy.

The early parts of the book trace the history of money and make interesting reading for those with a taste for anthropology and sociology. Money has existed in some form through the ages and its control has allowed empires to rise and fall. The emphasis in this stage of the book is on the emergence of a gold standard and how it empowered some nations at the expense of others. We learn about the limitations of this model and how it was gradually displaced by paper money, then finally electronic money that was much more convenient but also accelerated the growth of the money supply and made debt fashionable. There are some intricate concepts being discussed here, but chances are you will come away with a fairly good grasp of major milestones in economic history.

The middle portion of the book zooms in on the present and allows the United States and Europe to occupy centre stage. Much literature has already been inked on the reasons behind the recession in the United States. The unique contribution of this book is to provide a more insightful analysis of how the financial system in the United States works with a special focus on banks, hedge funds and private equity. It also provides a lucid description of the conflicting economic ideology between Democrats and Republicans. There is an explanation of why legislation in the United States has been designed to cushion the pains of bankruptcy and how this too has been a contributing factor to its present difficulties.

The analysis of the European Union deals with the most contemporary of issues. It considers the trade-offs accepted by nations that entered the fold of the union and compares and contrasts the situations in Germany, Spain, Italy, Greece and Ireland. The conclusion of the book is rather pessimistic. It is accepted that the quantity of debt in the developed world is beyond that which can ever be serviced. Possible future scenarios are assessed. Though no prediction is made on what is most likely to transpire, all are equally unpalatable. It is clear that the major creditor nations of today especially China are poised to have enhanced influence on economic policy of the future and the dollar may lose ground in its dominance. But the author refrains from making too bold a prediction in acceptance of the fact that the United States has demonstrated a remarkable resilience in the past and the rest of the world maintains a sense of faith in its government and stability.

If the book has a central weakness, it is that it has summarized the economic history of the world from a western perspective. We learn much about the United States and Europe and see glimpses of China in action. But other important swathes of the world are largely ignored. So it would be more accurate to characterize the book as an explanation of economic policy in the western, developed world.

There are certainly some sections of the book that delve into deep economic theory and take some effort to understand. But overall you will find it is academic enough to make you feel like you learned something while being accessible enough to keep it readable. I would have to rate it as one of the most comprehensive books in its genre and highly recommend it to anyone with even a tangential interest in the field.

 

   

trade
Nuts case Dry fruits
processing, value-addition and exports can earn billions in foreign exchange
By Tahir Ali

Pakistan produces abundant quality dry fruits like almonds, figs, pistachio, walnuts, pine nuts, dates, raisins, dry apricots and peanuts. But its dry fruits exports have been far less for lack of standardised packaging, grading and value-addition and some other policy constraints.

Mechanised grading and packaging has started but, for lack of cool chain system, an estimated 30-50 per cent of the total fruit production is still lost during harvesting, transportation, preservation and storage. Total annual loss of dry fruits in term of rupees is estimated at Rs60 billion.

Dry fruits exports in the last five years, according to Federal Commerce Minister Makhdoom Amin Fahim, were 505,124 metric tonnes. Total dry fruits exported were 81,387 MT in 2005-06 which rose to 99,936MT next year but then dropped to 92,082MT in 2007-08. These, however, rose to 110,885MT in 2008-09 and then to 120,834 the next year.

“The government has taken numerous steps to increase dry fruit exports by encouraging the private sector to develop dry fruits processing units in northern areas of Pakistan, developing of solar processing units, initiating projects for processing and drying of dates in Turbat, Khairpur and DI Khan and sending delegations of exporters to international food fares and exhibitions and potential markets of food items,” he had told the Senate in May last year.

Under the medium term development framework, Pakistan targeted fruit exports of $238 million in 2010 and it reached up to $290 million. These can be increased even further.

But absence of farm-to-market roads, outdated post-harvest techniques for unskilled labour, poverty and ignorance of producers, non-market oriented production, and lack of quality certifications are making it difficult to improve the quality and quantity of exports.

An integrated ‘Cool Chain System’ project worth over Rs13 billion, being envisioned under the national trade corridor improvement programme that aims at 10 per cent reduction in post-harvest losses, is likely to save Rs6 billion annually. But any export development initiative will not bear any fruit unless linkages of stakeholders with international markets are established and close collaboration between the public and private sectors are ensured.

Negligence of the government to tap the real potential of this treasure of Pakistan can be gauged from the fact that out of dozens of projects of the Pakistan Horticulture Development and Export Company (PHDEC), which are either in operation, near execution or being considered for launching, not a single one is meant for the dry fruit development in the country.

Pakistan’s fruit production is mostly organic and, therefore, acceptable to the world. But non-compliance to the international standards and inability of Pakistan’s 58 trade missions in 43 countries worldwide that are supposed to work for promoting Pakistani exports in close collaboration with trade development authority (TDAP) and PHDEC appear to have restricted its exports and appeal for international consumers.

Dry fruit development also could not find any place in the 12 projects the TDAP intends to launch for improvement of different fruits in the country. Dry fruits such as fig, raisin, pistachio, dry apricot and pine nuts etc face insect infestation at some stage of their storage and transportation. Food Irradiation Technology (FIT) not only saves them from insect infestation but also increases their shelf life. FIT also helps dry fruit exporters meet international quarantine requirements.

Though the federal government had granted approval for the technology in 1996, FIT could not deliver optimum benefits for lack of irradiation facilities in the country.

Pakistan’s fruit exports will get a fillip once its products are produced and prepared in compliance with certain export-related certifications such as the Hazard Analysis and Critical Control Point (HACCP), Global Good Agriculture Practices  (GGAP), British Retailer’s Consortium (BRC), Monitoring of Maximum Residues Limits (MRL) and Fair-trade Labelling Organisations (FLO).

With the world becoming increasingly sensitive to food quality issues, Pakistan’s fresh fruit export industry will have to ensure compliance with international standards and certification mainly focused on food safety, traceability, residues of different agrochemicals, lack of good agricultural practices, reduction of post-harvest diseases and pests and issues pertaining to safety of food packaging materials.

The TDAP and PHDEC should open its regional liaison offices in the dry fruit specific KP, federally/provincial administered tribal and northern areas. The government also needs to open common facility centres, dry fruit collection points, processing plants, product testing laboratories and guidance and counselling centres in the production areas.

There is, regrettably, not a single mention of dry fruit in the current KP’s horticulture policy 2009 as if dry fruits are not part of the sector and as if not produced in the province. Coordination between the TDAP and PHDEC and the Chambers of Agriculture and Chambers of Commerce and Industry should also be improved. The facilitation division in the TDAP needs to have closer cooperation with exporters. A few training institutes for dry fruit productivity/quality enhancement with funding from the export development fund also need to be established.

Cold weather and black marketing by dealers leads to increase in prices of dry fruits as winter comes. Per kilogramme prices of different qualities of walnuts at present are between Rs120-350 for whole and Rs400-1000 for its kernel, of pistachio between Rs600-1500, of almond Rs150-500 and its kernel at Rs400-900, of fig Rs300-600, dry dates Rs100-250, peanut Rs 160-180 and of chilghoza Rs1500-2400 in the open market in different parts of the country.

Despite extensive search and contacts, the exact figure of countrywide production of dry fruits could not be ascertained. Based on an average consumption of dry fruits at nominal one kilogramme per person per month, total annual consumption comes to 2040 million kgs or 2 million metric tonnes.

However, Siraj Muhammad, Deputy Director Information of the Agriculture Ministry Khyber-Pakhtunkhwa, says the province produced 13000 tonnes of walnuts, 11500 tonnes of dates, 19000 tonnes of apricot and 25000 tonnes of other dry fruits. Pine nut is Pakistan’s characteristic dry fruit. Several parts of KP, Balochistan, federally-administered tribal and northern areas have plenty of pine trees which could be further increased.

According to an estimate, the total production of pine nut in the country is estimated at 21,000 tonnes. With the current price of Rs70,000 per 50kg (Rs1.75mn per tonne) in the wholesale market, the production is worth over Rs36 billion per year. It could earn plenty of foreign exchange for the country provided the commodity is produced on mass commercial scale.

Walnut production is around 20,000 tonnes per year — mostly produced in KP and Azad Kashmir. With a price of Rs12000 per 50kg (Rs0.3mn per tonne), walnut’s total income is Rs6 billion. That could increase to hundreds of billions of rupees as, according to locals from Malakand division, over 90 per cent potential of the area for walnut and other dry fruits still remains to be utilised.

The horticulture export, according to the national trade policy, was to be made into an industry to enable it to qualify for institutional credit and relief in taxation. The government should announce a rebate in duties and a dry fruit specific export finance scheme for dry fruit exporters. It should provide support to fruit exporters to open their retail outlets in foreign countries. Pakistan International Airline also needs to bring down it freight charges for exporters.

For the supremacy of constitution
Pakistan can never progress unless parliamentarians work  for the supremacy of the constitution
Huzaima Bukhari & Dr Ikramul Haq

Events since March 9, 2007—Day of Defiance in judicial history—represent struggle for rule of law and constitutionalism. On July 20, 2007, when the judiciary declared unlawful action of sacking Chief Justice of Pakistan by General Musharraf, there was great jubilation—a renewed hope in Pakistan for an independent judiciary not subservient to military hierarchy. The retaliation by General Musharraf through imposing Martial law on November 3, 2007 was declared as unconstitutional by a seven-member bench of the apex court. In the history of Pakistan, it was the first courageous act on the part of judiciary—disapproving repeated subversions of the Constitution by men in uniform.                  

The military complex was both bewildered and baffled. Such defiance was least expected from judges approving Musharraf’s rule, going to the extent of giving him the right to amend the Constitution. As usual, General Musharraf and his team (which included many who are now posing to be champions of democracy) employed the notorious policy of ‘Divide and Rule’—he secured endorsement of his unconstitutional actions from his puppet parliament (sic) and judiciary through the auspices of pro-establishment judges.         

Mohtarma Benazir Bhutto led all the political forces to exert pressure—using the lawyers’ movement—on the establishment to abdicate power and transfer it to civilians. She paid the price with her life but her heroic struggle forced Musharraf and his lackeys to hold elections. February 18, 2008, shattered all hopes of the King and his party to retain control over power (what a tragedy in history that leading men of King’s party are now sitting with Asif Zardari).           

The Neo-Colonialists, as confirmed by Condoleezza Rice in her book   No Higher Honor, forced General Musharraf to promulgate the infamous National Reconciliation Ordinance (NRO) in the late hours of October 5, 2007, just a few hours before the presidential elections. The Prime Minister Yousaf Raza Gilani in his speech before the Parliament on January 16, 2011, the day he received contempt of court notice from the apex court, legitimately rightly raised the issue why the framers of NRO were looming free and elected representatives were being punished for something they did not enact. The NRO was ploy of Neo-Colonialists who decided to dump Musharraf and control Pakistan by installing their puppets in PPP as “rulers” (sic). What happened thereafter is obvious. The government violated rule of law, gave the men in khaki extensions, created confrontations with judiciary and above all set new records of bad governance and corruption. But their gravest crime is not prosecuting General Musharraf who destroyed all the institutions.                      

Failure of government and more importantly that of the parliament, to punish the imposer of emergency on November 3, 2007 for his acts of subversion of Constitution, removing judges and detaining them along with their families, weakened the civilian rule from its inception. After nearly four years since March 9, 2007, we are still struggling for revival of constitutionalism – now the government is openly defying orders of the Supreme Court to defend a law that it earlier conceded was indefencible. It is also for the government to punish those who framed NRO and subverted Constitution on many occasions rather than blaming the apex court for selective justice.        

November 3, 2007, was certainly a disgraceful day, but what is happening now is equally condemnable. Where is the respect of people’s will? Have they elected the PPP and its allies to behave in the manner they have demonstrated of late? Judiciary acted boldly for the first time on July, 20 2007 and November 3, 2007 (may be in its own interest as alleged by the PPP stalwarts), but the parliament did not even pass a resolution for punishing the worst offender of the supreme law of the land.            

What was behind the bizarre episodes of March 9, 2007, November 3, 2007 and February 18, 2009, obviously, a tussle between the proponents of cronyism and advocates of rule of law? The cronies, ruling for the last four years, have done everything to destroy State institutions and deny the masses their fundamental rights. In the face of this grim reality, judicial activism threatens rule of the corrupt. They cannot afford independence of judiciary for obvious vested interests. The advocates of rule of law rightly argue that dispensation of justice through an independent and efficient judiciary alone can establish democracy, a responsible government and an equitable social order.            

It is now the sole responsibility of democratic forces to galvanize and mobilize people to counter any extra-constitutional move by any. Courts are meant to interpret the law, whereas enforcing the will of people and countering any despotic and undemocratic rule is always a political question that cannot be resolved in the courts. Since our leadership has failed in the past on this account, the entire society is facing devastating effects of perpetual despotic rules – military and civilian alike. The main cause of our present day socio-political and economic chaos is ineffectual leadership, existence of inefficient, corrupt and repressive institutions, which are anti-people, thus least concerned with the welfare of the common man.          

The constitution of a country is a living and vibrant document that determines the future direction of a nation, provided there is respect for the document and for rule of law. In a country where the corrupt and incompetents rule, there can neither be democracy nor constitution. It is high time that people in next elections elect such persons that are capable of working for the supremacy of constitution and rule of law.

In a democratic set-up, the electoral process ensures dominance of the people over those who hold political offices. In Pakistan, forces of          status quo     want to determine it through a president lacking support of the masses. This brand of ‘democracy’ is unknown to the students of constitutional law anywhere in the world. One wonders what useful purpose this unjust and unlawful process can yield! It is only bound to frustrate the verdict of people, forcing them to believe that the entire electoral process was just a farce. Earlier, Musharraf and his associates challenged elected leaders on their promise of reinstatement of judges. Presently, Zardari and company have assumed the same role—this confirms dominance of undemocratic mind set and disrespect for people’s mandate.

Pervez Musharraf has portrayed himself In the Line of Fire          as a great saviour of the nation, whereas the reality is that under his rule, the people of this country lost their lives in suicide bombings, deprived of basic needs and sufficient food what to talk of fundamental rights of access to free health and educational facilities, and dispensation of justice, things which are only possible under a true democratic structure. Attitude of Zardari and his cronies is not much different from any other dictator. Every dictator desires to perpetuate his unlawful rule proclaiming himself as the saviour of the nation and in this process destroys the very fabric of national cohesion. This is what is exactly happening now in the present government-supreme court-army impasse.

It is now for the masses to resist the undemocratic mindset and struggle for real democracy. Pakistan can never progress unless parliamentarians work for the supremacy of the constitution in the country and all the state organs discharge their functions within strict parameters and powers laid down in the supreme law of the land. The only way to sustain democracy is by establishing responsible government and protecting the rights of masses guaranteed under the Constitution.

Legislature is sovereign but the supremacy of constitution is above everything— legislators in fact exercise delegated powers given by the people within the framework of the Constitution. We need a new Pakistan where parliament is sovereign where the people of Pakistan are truly represented. To attain this goal, masses will have to demonstrate determination and unity. Pro-democratic forces, with the people’s strong support behind them, must wage an all-out war for establishing a representative and responsible rule, completely independent judiciary, responsible media playing positive role for vigorous accountability, socio-economic growth and justice for all.

The writers, authors of many books, are Visiting Professors at Lahore University of Management Sciences (LUMS).

first person
“I see cautious optimism towards Pakistan”

Rashed Idrees graduated with an LLB (Hons) in 1993 from the London School of Economics, qualified as a Barrister of England and Wales in 1994 and is a Solicitor of the Supreme Court of England and Wales. He has more than 17 years of experience — with over 12 years in Asia and the Middle East — including with international law firms Denton Wilde Sapte and DLA Piper and was a partner with Deacons prior to joining his current firm, DFDL (www.dfdlmekong.com), in 2010. DFDL is a full service international law firm with offices in Bangladesh, Cambodia, Indonesia, Lao, Myanmar, Singapore, Thailand and Vietnam.

Rashed is a partner and the managing director of DFDL’s offices in Singapore, Bangladesh and Cambodia and also heads the firm’s South Asia and Middle East practice groups advising project sponsors, borrowers, trading companies and lenders on projects and project finance transactions, international trade and commodity finance, privatizations, bond issues, loan notes, corporate finance and securities, integrated gas to power project development and finance, IPP developments, water and waste water projects,securitizations, receivables financings and other structured financing transactions.

He is currently leading DFDL’s teams acting for sponsors on numerous greenfield IPPs in Bangladesh, lenders on M&A transactions in Sri Lanka, Indian investors on outbound investments from India into South East Asia, concession holders on copper mining projects in the Sultanate of Oman and international off-takers of long term petroleum product supply from refineries and GTL plants in Qatar.

Recently, Rashed was on a visit to Pakistan where he explored Pakistan’s current economic and investment climate, interacted with    banks and business community leaders and held parleys with public sector bodies like the Private Power and Infrastructure Board (PPIB) and the Oil and Gas Development Company Limited (OGDCL). TNS talked to him on his findings and the prospects of an economic recovery and increasing foreign investment in the country. Excerpts of the talk follow:

The News on Sunday: What investment opportunities do you see in Pakistan?

Rashed Idrees: I think Pakistan is a very fertile market for foreign investors as it has a huge consumer base of 180 million people. Whatever the conditions may be or are perceived to be, people here need food, energy and other amenities to live and, in some cases, thrive. For example, I see great potential in the power and infrastructure sector and natural resources. There seems to be huge scope for investment in hydel and coal-based power projects, alternative energy like wind power and natural gas transmission from foreign lands. The country also needs infrastructure, world-class education systems, exploration of its natural resources and mechanization of industries. Foreign investors can exploit all such opportunities and the country can also gain in the meanwhile.

TNS: Is the regulatory environment conducive for foreign investment?

RI: Yes, I think the regulatory environment here is very conducive for foreign investment. I have worked here in the past and have tried to better understand the existing climate and opportunities during this visit.. I think of Pakistan as a very good market for investment for foreigner investors, certainly from a regulatory perspective. I do not think I am painting an unduly rosy picture. With a population well-versed in English, there are no major language barriers and from my previous experience working with local Pakistani counsels on numerous cross-border transactions, I understand           that the legal system is largely based on English law which suits most international lenders and sponsors and facilitates funding issues faced by prospective investors and that there are good laws, statutes and court decisions and jurisprudence is far more developed — and certain — than that in many countries we have experience working with.

When we speak with our Pakistan contacts, they seem to be very clear on the direction the economy needs to take with certainty on procedures, timelines and rules of business and processes, for example company registration usually doesn’t take too long although I understand from some of our local lawyer contacts that this is more of an issue as a result of recent initiatives.

In 1997, I worked on a cross-border securitization of a Pakistani originator which was one of the most ‘cutting edge” deals of its kind at that time anywhere in the world. Our firm is working with many foreign investors who are making significant investments into far more, in our experience, challenging and emerging markets. For example, Pakistan’s judicial system seems to be functioning well and we understand that corruption in the higher courts is now unheard of. I have worked in countries where this is very far from the case and yet we see foreign investors literally flocking there.

TNS: What is the biggest factor that deters foreign investors from coming to Pakistan?

RI: For me, the most important issue seems to be the negative perception about Pakistan in the international media. It seems that every time there is news about Pakistan in the international media it is not positive with Pakistan often being portrayed as a dangerous country where terrorists roam around freely causing havoc and mayhem. There are dozens of conflict zones in the world where human rights violations, crime and violence are a norm but none seem to have been marginalised quite like Pakistan. I believe it’s the collective responsibility of the citizens, the local media and the government of Pakistan to help change this tide. I’ll cite the example of Sri Lanka, which only very recently was the subject of a long and economically — and other — damaging civil war and yet I recently attended an investment conference for Sri Lanka organised in Singapore. It was a very well attended event and some major investors from the region were there and showed a keen interest in investing in Sri Lanka. I would give a lot of credit to the diplomats and senior businessmen from Sri Lanka for taking the initiative for such an event, presenting the opportunities Sri Lanka has to offer foreign investors and inviting them to their country. I think the Pakistani business community and officials may wish to take a page out of their book.

TNS: What plans does your law firm have for Pakistan and the region?

RI: Our firm offers customised legal and tax solutions to our clients. We are the first international law firm with a dedicated Bangladesh practice and we are already advising on several high profile infrastructure and power projects in that country. DFDL is the first international law firm specialized in emerging markets with a pan-regional legal and tax expertise throughout the Mekong region (Cambodia, Lao PDR, Thailand, Myanmar, Vietnam), Bangladesh, Indonesia and Singapore, and with a dedicated focus on other South-East Asian jurisdictions, South Asia and the Middle East. With a team of over 250 foreign and local lawyers, advisers and support staff working closely together within a fast growing network of 11 offices in Asia, we provide personalised, tailored and effective legal, tax and consulting services and solutions.

We usually advise investors as both international and local counsels in major transactions and thanks to our in-depth understanding and knowledge of local laws and cultures in the region combined with international industry and sector expertise, we are able to provide practical and commercially viable solutions to our clients.

The interface between offshore and local laws and structures are often fundamental to the success of projects in our core countries and areas of expertise so our being able to bridge that gap through both offshore international expertise with local on the ground expertise is intended to provide a seamless service to our clients looking at investing in often very challenging jurisdictions.

We have brought and hope to continue with the same model in South Asia and I will certainly look to carry a positive message back to our regional and international clientele to the effect that although things for 2012 (being I understand an election year) may be relatively slower, opportunities are there and will need to be leveraged moving forward.

TNS: Do you see international companies entering Pakistan in the near future?

RI: I do not think I say anything new by acknowledging that there is tremendous investment potential in the country. Based on my interactions here in Pakistan, it seems that many of the players are following a wait and see policy in the short term. And yet despite the apparent “watching brief”, many of the contacts I have met here on this trip remain cautiously optimistic and have even suggested we might look to have an on the ground presence or association even by this year so that we position ourselves for what they see as an inevitable upsurge. This seems to be the prevailing conventional wisdom from the meetings I have had in Pakistan on this trip.

I also strongly believe that in adversity there is also opportunity. The need for power, infrastructure, natural resources and others is I think obvious to all in the country and may need to be understood a little better by foreign players combined with initiatives in better highlighting Pakistan’s undoubted potential.

I would also like to add that Afghanistan is another country where we see huge potential for growth, probably with Pakistan as a good platform from which to leverage this. It seems quite clear that a lot of investment has and is going to flow in to facilitate much needed development and investment. We think that the business community and the service-providers of Pakistan will have an important role to play in that development as well.

 

Cabinet cost
The road to prosperity will remain a distant dream unless the government reduces its unproductive expenses
By Alauddin Masood

The federal cabinet, comprising 96 ministers and advisers, got Rs61.44 billion in salary and Rs90.7 billion in perks and privileges during the last four years. The figure does not include the cost of 4,000 free air tickets, which were issued to ministers/advisors during this period — 45 free air tickets per minister/adviser every month. They also enjoyed free residential accommodation and utilities (like electricity and telephone) allowed to every minister/advisor. The members of the cabinet were allowed 30.84 million free power units and Rs100,000 each under the head of telephone and mobile phone bills. The expenditure of provincial ministers/advisors is also not included in it.

Pakistan has 96 ministers and advisors for 180 million people; while there are 32 ministers in the Indian cabinet for 1.27 billion people. Both China and the USA have 14 ministers each in their cabinets for 1.35 billion people and 270 million respectively. Till 1970, the size of Pakistan’s cabinet seldom exceeded 12 ministers to serve the people of both East and West Pakistan. The larger the size of cabinets, the greater the number of ministries and the supporting staff.

In a bid to get establishment’s cooperation, the leaders have been granting liberal perks including cars, plots and allowances, to the state minions. Resultantly, the government’s expenditure exceeded its revenues by almost 123 per cent last year...In FY 2011, the federal government’s total revenue income was 11.7 per cent of GDP. After transfer of 47 per cent to the provinces under the NFC Award, the federal government was left with 6.2 per cent while its expenditure was 13.8 per cent of GDP. The revenue gap of 7.6 per cent was financed from borrowings.

Due to constant and continuing deficit financing in FY 2011, debt-servicing consumed 41 per cent of the total tax revenue and it was 48 per cent higher than the country’s total defence expenditure. Furthermore, tax-GDP ratio declined to 8.9 per cent during FY 2011, with indirect taxes accounting for 64 per cent of the total revenue. Indirect taxes and excessive government borrowing led to a sharp increase in prices. Being cruellest form of taxation, inflation adversely impacted the economic growth and added to income inequality and poverty. On the other hand, the consolidated development expenditure declined to 15 per cent of the total expenditure in FY 2011.

If one tries to find out reasons for constant increase in the expenditure, some major factors that would surface include: establishment’s craze for perks/privileges and for leading a life of luxury at the state expense, liberal import of fancy products, bad governance and corruption. Extravaganza and opulent life styles are against the legacy of Pakistan’s founding fathers and builders, some specimens of which are reproduced below:

Before the start of a cabinet meeting, when the ADC enquired from Pakistan’s founding father and the first Governor General (GG), Quaid-e-Azam Mohammed Ali Jinnah, if they were serving tea or coffee. The Quaid-e-Azam replied sternly: “Whichever of the ministers wish to have tea or coffee should drink it before leaving his home or when he returns home. The nation’s money is for the nation and not for the ministers!”...As long as the Quaid-e-Azam was head of the nation, nothing except water was served in cabinet meetings.

This was Pakistan of 64 years ago when Jinnah was head of the state. Though with time the impact of the Quaid’s legacy has been weakening, it prevailed till 1970, when simple living and working with devotion and commitment was the norm. When Ch Muhammad Ali was prime minister, his wife used to cook food herself. The number of domestic employees available to his present-day counterpart is a little short of two hundred.

Till 1965, Pakistan ranked high amongst the countries that set up industries with state funds, and disinvested those ventures when they became profitable. The government had set up PTDC for that purpose. However, with the introduction of foreign aid in mid-1950s, a new culture had started to take roots. The leaders started using tax-payers’ money and foreign loans for their worldly pleasures, excelling even the Mughal emperors in elegance. Soon, the bureaucracy also started to tread on the foot-steps of their leaders.

While early era leaders exercised restraint in spending state funds, Pakistan had resources for catering to the needs of defence, development, industrialisation, etc. During those days, the developing countries considered Pakistan to be a role model and haven for education, employment and bilateral trade.

Interestingly, till 1971, state officials were not allowed perks like official transport. Even top bureaucrats had to make own arrangements for going to offices and also for meeting their social obligations. They did not feel shy using bicycles for this purpose. However, in early 1971, secretaries and additional secretaries were provided with a state vehicle for use by them and their families while Musharraf extended this facility to BS-20 officers also.

Before 1958, even prime ministers felt at ease travelling in old models of cars. The ministers drew clear lines of distinction between official and private journeys and used state vehicles strictly for official duties. The wives of cabinet ministers, who wanted to attend social/cultural functions, had to use private cars till early 1970s. However, post-1970, extravaganza replaced simple living; and the ruling elite started spending public money lavishly.

Consequently, the state expenditure started to soar, exceeding revenue receipts by a few per cent points every year. However, this did not prick the conscience of leaders. They continued with their extravaganza, borrowing money, both from external and internal sources, to meet growing deficits. Finally, the borrowings have reached a critical point, but this does not deter the leaders to abandon their grotesque manner of spending state funds. Resultantly, development activity has almost come to a standstill, while non-development expenditure has continued to soar.

Presently, Pakistan is facing an extreme energy crunch. But, still for a project that can make Pakistan self-sufficient in gas and greatly reduce its dependence on imported energy, the concerned quarters considerably delayed sanctioning $100 million for purchasing gasifiers for the Thar coal project. Thar coal can provide 50-60 million cubic feet of gas, while it can also annually generate 10,000 MWs of electricity and produce 100 million barrels of diesel for 30 years. But, much would depend on the availability of funds and the project’s execution by appropriate experts.

The current situation in Pakistan reminds one of the conditions in Turkey about a decade ago, when the country was known as the “Sick man of Europe”. During those times, Turkey’s economy was regressing while the prices witnessed sky-rocketing increase and made the life of citizens miserable. Adulteration and corruption added to the woes of the people.

Taking stock of the situation, firstly, Prime Minister Erdogan and his cabinet ministers curtailed their expenses and then proceeded to curb corruption. Their dedicated efforts borne fruit: turned deficit budget into a surplus budget, made corruption a thing of the past, gave a boom to the economy, doubled the income of citizens and arrested the price-hike. With increase in revenues, the Turkish government launched a massive programme of infrastructure development, catapulting Turkey to an era of prosperity.

The economic turn-around created tremendous goodwill for the ruling party amongst the masses, enabling it to take decisions on issues that the “powerful establishment” had declared lay in its exclusive jurisdiction. It not only halted military operations against the Kurds, but also restored basic rights of the Kurd minority. It also freed many prisoners and admitted, for the first time, that its forces had killed unarmed citizens. These steps succeeded in curtailing violence and bringing Kurds to the mainstream. Resultantly, the expenditure on security reduced considerably.

Meanwhile, the exports of Turkey have registered a record increase of 18.2 per cent this year and swelled to $134.8 billion. With a population of 750 million, Turkey is now the 17th top economy of the world. It ranks amongst the countries having the largest growth rate. Last year, Turkey’s GDP witnessed an increase of 8.9 per cent. Though Turkey is not a nuclear state, Nato has stockpiled 90 atom bombs on one of its airports. In case of a major threat to its security, after seeking Nato’s permission, Turkey can use 40 of those bombs for its defence.

Pakistan needs to take a leaf from Turkey and reduce its unproductive expenses as well as perks/privileges of the state minions. If we could curtail annual expenditure by three per cent, the country could save equal to the amount that was proposed to be annually doled out to it through Kerry-Lugar Bill.

Alauddin Masood is a freelance columnist based in Islamabad. E-mail: [email protected]

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House in disorder.

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