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analysis comment Our
money, their banks Hard
cash Being
civilised change Historical
follies
The continuing conundrum The complex social and political By Yaqoob Khan Bangash
The last government launched a special initiative in November 2009, the Aghaz-e-Haqooq-e-Balochistan package, aimed at rehabilitating the province politically and economically. Broadly, this package included giving royalties owed to the province since 1951, filling in the 5.4 per cent quota already granted to Balochistan in federal jobs, release of political prisoners, and further constitutional devolution. Subsequently the 18th Constitutional Amendment gave further powers to the provinces in 2010, including Balochistan, meaning that there was no longer a concurrent list of subjects for federal legislation and that the provinces now got the bulk of federally collected taxes. Under the 7th National
Finance Commission Award, also enacted under the previous government,
Balochistan’s percentage share was nearly doubled to 9.09%. The
Balochistan package was very well received and rather quickly implemented,
so much so that by November 2011, the then prime minister, Yousaf Raza
Gillani, was boasting that nearly 80 per cent of the package had already
been implemented — in advance of the deadline. The package also
received a pat in the back by the recent caretaker government under the
retired Justice from Balochistan, Hazar Khan Khoso, who presided over
several meetings which monitored the good progress of the package.
However, even with all these developments, President Zardari noted in a
recent interview that he was ‘disappointed’ that the Baloch had not
seized the moment and done enough for themselves. So why is that despite
so many constitutional, political and economic reforms, Balochistan still
remains a conundrum? Why do so many ‘reform’ packages fail to lure the
Baloch into the main stream of Pakistan? What is there that the government
(be it the establishment,
the political parties, or others) fail to grasp about the region? One thing which is quite
patent is that all policy makers, whether today or in the past, have
consistently failed to understand the complicated nature of the province.
The complex social and political makeup of the province has hardly been
given credence by policy makers, and hence a skewed approach has always
been the hallmark of every Balochistan policy. It is only after the
peculiar social and political setup of Balochistan is understood that a
concrete policy can be developed towards the province. Secondly, there have scarcely been any attempts to address the historical roots of Baloch uneasiness and resistance towards Pakistan. The accession of Kalat to Pakistan in March 1948 is still mired in controversy and many a Baloch resistance narratives begin from that contested accession. Ignoring the history of the Baloch issue, therefore, prevents policy makers from really understanding the root cause of the unrest and insurgency. First, therefore, we
need to understand the social structure of Balochistan. A lot of
development planning is conducted in Balochistan as if a large part of the
province were settled area. In fact only a small proportion of the
province is settled and of that an even smaller percentage is urban. A
significant percentage of the population of Balochistan is nomadic (mainly
Brahuis) and the rest are peasant cultivators. In both cases, the tribe is
the main centre of authority, politically and economically. In the Baloch and Brahui
tribal structure, unlike that of the Pakhtuns, the office of the tribal
chief reigns supreme. According to anthropologist Pehrson, for the Marri
tribe for example, ‘The sardar is the central and unifying leader who,
by his existence, creates the Marri tribe and who for formal purposes is
regarded as the font of all legitimate power in the tribe.’ Therefore,
the Baloch and Brahui society is extremely hierarchical, which gives great
leverage to the tribal chief, who in effect orders the lives of the
tribesmen. Further describing this
kind of authority, theorist Kapferer argues that in hierarchical
societies, individuals and groups are seen to be incorporated within and
determined by holistic principles. In those societies political (not
religious) authority is the encompassing, unifying force which subsumes,
orders, and makes whole, otherwise weak or destructive individuals and
groups (quoted in Titus and Swidler). Policy makers also need
to understand the significance of nomadism in Baloch life and society.
Even though the number of Baloch and Brahui who actually live the nomadic
life might have declined in recent years, the ideal ‘Baloch’ lifestyle
still remains deeply rooted in nomadism. Anthropologist Spooner
noted just a couple of decades ago that nomadism ‘is still thought of as
the genuine Baloch life, which embodies the authentic Baloch virtues of
honesty, loyalty, faith, hospitality, asylum for refugees, and so on’.
Most of Baloch folklore, traditional songs, and cultural heritage is still
centered around the nomadic lifestyle. Interpreting Irons,
anthropologists Titus and Swidler also maintain that nomadism ‘can be a
political-military adaptation by weaker groups that have been marginalized
or sought to avoid domination by more powerful settled groups, or
conversely, nomads can themselves be the dominant political force in
society.’ Surveying the history of the Baloch, with the state of Kalat
always between empires, be it the Mughal, Safavid or Durrani, the nomadic
lifestyle not only served a political purpose but also kept close social
and political cohesion in the tribes. We also need to
understand the circumstances under which Balochistan (mainly the erstwhile
state of Kalat) became a part of Pakistan. Without a clear grasp of the
accession saga, one cannot really comprehend the roots of the current
Baloch insurgency or event general Baloch malaise towards Pakistan. In 1947, the parts of
what is now called Balochistan which became a part of Pakistan were the
Chagai district, Zhob agency and the Marri and Bugti areas. These were
collectively called ‘British Balochistan’ and were under the charge of
a chief commissioner. The rest of the current province was composed of the
state of Kalat together with its feudatories of Kharan and Lasbela. In 1947, Kalat was ruled
by Mir Ahmed Yar Khan, who, since his accession in 1933, had been striving
to achieve greater autonomy and independence for Kalat. However, the
control of Ahmed Yar Khan over the state was not so simple as Kalat State
was administered once like a feudal, federal and confederal state with
tribal sardars wielding different levels of authority in different areas.
The Political Department’s Col. Keyes’ description came close but even
that explanation baffled officials. Col. Keyes had noted: ‘…Kalat is a
multiple federal state and not a simple confederacy. In the niabats, both
in Sarawan and Jhalawan and in Kachhi, the Khan was an autocratic
ruler…while in the tribal territory he is head of a confederacy but even
so holds a position higher than that of primus inter pares…’ This
complication meant that any decision of the Khan could be easily
challenged by other sardars and that sovereignty did not completely lay
with the Khan, but was multilayered. My forthcoming book
deals with this topic in greater detail, but in brief, Kalat state wanted
to remain independent (just like Kashmir, Travancore and Hyderabad), but
ended up becoming a part of Pakistan after eight-month long negotiations,
a threat of attack from Pakistan, and after a rumour that it had applied
for accession to India. However, considering the
complex nature of the polity in the region, the accession document signed
by the ruler, Ahmed Yar Khan, was almost immediately repudiated by large
sections of the population. The Khan’s own younger brother, Prince Karim,
raised the banner of revolt and led a band of about 500 men to the
mountains of Afghanistan from where they waged small incursions into
Balochistan till they were finally apprehended in July 1948. Both Prince Karim, and
Ghous Bakhsh Bizinjo, the leader of the Kalat State National Party and the
leader of the House of Commons in Kalat State, decried the accession and
claimed that the Khan had out stepped his authority as the leader of a
confederacy and signed away the state without agreement of the various
stakeholders. Bizinjo, while
addressing the lower house of the Kalat parliament in December 1947 on the
question of accession, poignantly raised a critical question. He noted:
‘We have a distinct civilization. We have a separate culture like that
of Iran and Afghanistan. We are Muslims but it is not necessary that by
virtue of our being Muslims we should lose our freedom and merge with
others. If the mere fact that we are Muslims requires us to join Pakistan
then Afghanistan and Iran, both Muslim countries, should also amalgamate
with Pakistan…We are ready to have friendship with that country on the
basis of sovereign equality but by no means [are we] ready to merge with
Pakistan…We can survive without Pakistan.’ Since then the banner of
revolt has been raised in almost every decade, in 1958, 1963-7, 1973-7,
and now since late 2005. So how does the above
help us, and especially the policy maker? The above précis on the
social structure of the Baloch and Brahui and the historical context of
the insurgency primarily show that this is not an easy problem which can
be dealt with by throwing money at it, as has happened several times in
the past. The problems Balochistan faces are deep and complicated and will
take more than a ‘package’ to address. First, Pakistani policy
needs to be formulated keeping in mind the social structure of the Baloch
and Brahui society. So either the tribal leader needs to be completely
onboard, or needs to be completely removed from his strong tribal role.
Any midway role, hallmark of Pakistani government policy to date, will
simply not work and will, in effect, exacerbate the problem as seen in the
case of Nawab Akbar Bugti who was variously a Baloch nationalist and a
government servant several times. So the long term choice for the
government of Pakistan is to either perpetuate the current social
framework in Balochistan or intervene decisively to alter it. The results
of either policy are self-evident. Secondly, the legacy of
the challenged accession needs to be addressed honestly and openly.
Historically, Pakistan has refused to revisit the question of accession
and Baloch insurgents have repeatedly started their narrative from it.
Therefore, unless this historical cause of Baloch unrest is addressed the
issue will remain unresolved. Quite obviously, open
ended talks and an end to aggression on both sides is the simplest way
forward. The talks might result in Balochistan settling for a more
autonomous federal arrangement with Pakistan, but if this is the price of
keeping Balochistan in the federation and the people there in peace, then
it is not a high price to pay. After all the linguistic groups in Belgium
keep getting more and more autonomy and still remain in one country, and
the same is the case in Canada. Prime Minister Nawaz
Sharif has made a very wise move in not forming a PML-N led government in
Balochistan. Allowing a non-tribal head as chief minister and a Pashtun as
governor will give them a chance to run their own affairs. However, what
he must be careful about is whether the choice of the first non-tribal
elder as chief minister is going to be simply window dressing or is it
going to lead to some positive changes in the centuries old social
organisation of the province. Also, important to note
will be how the new provincial and federal governments are going to deal
with the young band of insurgents who have given up on the state of
Pakistan. Bringing them to the negotiating table will involve clearly
accepting the wrongs of the past (including the contested accession) and a
complete and real end to military operations against them. Balochistan is a very
complicated region which is now increasingly an area of international
interest. Several countries have strategic interest in the area,
especially the United States, the United Kingdom, Afghanistan, Iran,
India, China and the UAE, and especially now since the Chinese are
developing the Gwadar deep sea port, which could potentially host the
Chinese navy thereby threatening both the commercial hegemony of the Gulf
states and the military presence of the United States and its allies in
the Arabian sea. More so than the rest of
Pakistan, Balochistan is at a crossroads, and therefore informed yet
courageous decisions need to be taken by all sides if we are to see a
peaceful solution of the problem for the betterment of all. The writer is the
Chairperson of the Department of History, Forman Christian College, and
tweets at @BangashYK Corrupt to the core Corruption has become widespread and a major barrier to Pakistan’s growth and progress By Alauddin Masood Taking
cognizance of widespread corruption, Prime Minister Nawaz Sharif has
directed the federal hierarchy to cancel contracts of corrupt officials
and take concrete measure to eliminate corruption in government offices.
In a letter, the PM told the federal m There cannot be two
opinions about the fact that the scourge of corruption has become endemic.
On June 28, 2013, while hearing a case pertaining to the utilisation of
Rs42 billion in excess of the Prime Minister’s budgeted discretionary
funds by Raja Pervaiz Ashraf, Chief Justice Iftikhar Muhammad Chaudhry had
remarked: “Where ever we touch, springs of corruption sprout.” Money
was provided to those who were to contest election and they even devoured
the pension funds of the poor people, he added. Attorney General Munir A.
Malik informed the court that Raja Ashraf had violated the Planning
Commission’s rules and regulations by releasing unbudgeted development
funds. A sampling of some more
mega cases of corruption recently carried by The News has been reproduced
below to enable the readers to assess its dimension and various forms.
Reportedly, more trouble awaits Raja Ashraf who lifted the ban on cutting
of trees in Gilgit-Baltistan, on his last day in office, causing a loss of
eight billion rupees to the national exchequer and irreparable damage to
the environment. CJP Iftikhar Chaudhry
has taken notice of corruption cases of more than Rs40 billion in the
Employees Old Age Benefit Institute during the last three years.
Meanwhile, a new enquiry report has revealed that the amount of national
money looted through stock manipulation, illegal issuance of CNG licences
and massive gas theft has crossed the threshold of Rs100 billion. In an apparent move to
hide corruption involving billions of rupees and to protect thousands of
ghost schools throughout the country, head of Basic Education Community
Schools has forewarned his staff about raids by third party validation
teams, hired by the federal government to detect ghost schools, which
number in thousands. There was corruption
from the office of the Patwari up to the top offices but no system could
be established to bring an end to the menace, stated Peshawar High Court
Chief Justice Dost Muhammad Khan on June 29, 2013. “There must be a
constitutional body that could keep a check on corruption by everyone,
including the president and premier,” he stressed. Corruption is a bane,
which afflicts all societies. It is neither so benign in underdeveloped
world nor it is so rare in advanced countries. However, it is perceived to
be more widespread in third world countries, particularly in states where
official business is conducted under the cover of secrecy and officials
enjoy wide discretionary powers. The history of
corruption is, however, as old as the history of human civilization. It
was a serious problem even in the Biblical and classical times, and was
found in most periods of history. In his will, Alexander the Great advised
that his hands be kept out of his coffin so that the people could see that
he was going empty-handed from the world. This has many lessons for the
wise, but an overwhelming majority, it seems, in their pursuit of wealth
forget that they have also to leave their earthly abode empty handed. However, history is
replete with benign rulers who could control corrupt practices. For
example, vices like hoarding, adulteration, manipulating prices etcetera
did not exist during Alauddin Khilji’s rule. Deterrent punishment,
coupled with an efficient system of monitoring and creating awareness
about severe punishment, refrained people from indulging in these vices
not only during the Khilji rule but for about 150 years thereafter
although the punishment was actually awarded to only three persons during
Khilji’s rule. As regards Pakistan, the
country inherited corruption from the colonial rule, impelling
Quaid-e-Azam to describe it as “one of the biggest curses from which
India is suffering,” and exhorting legislators, in his maiden address to
Pakistan’s constituent assembly on August 11, 1947, to put it down with
an iron hand. But, like a cancerous wound, the vice of corruption has been
constantly rising in this country over the last decades, in particular
following the 1958 events. It has now become widespread and a major
barrier to Pakistan’s growth and progress. In addition to financial
corruption, other major forms of corruption practiced here include: misuse
of authority, grant of liberal perks to the elite and top bureaucracy,
nepotism, favouritism, bending rules to favour cronies, deviation from
standard norms and procedures, attempts at thwarting the process of law
and justice in cases affecting the oligarchs, extending patronage to crony
businessmen indulging in malpractices and, above all, misuse of
discretionary powers. In the past also, the
authorities have been taking steps to curb corruption. The transformation
of Special Police Establishment into Federal Investigation Agency (FIA) in
the mid-1970s, and the establishment of National Accountability Bureau
(NAB) in the 1990s bear testimony to the existence of the problem and the
government’s half-hearted endeavours to root it out. But, the vice of
corruption continued to spread and it has now reached a stage where one
could not get even his legitimate jobs done without paying “facilitation
charges” — a refined name for bribe money. The growth of government
activity and regulations in the modern state increases the opportunities
and the temptations for corruption. Improvements in education need not
lead to the elimination of corruption but to its perpetuation in new and
sophisticated forms. One of the perceived pre-requisites of good
governance is transparency in administration and, in fact, in public life
as a whole. If the governance is
conducted openly, the government can afford transparency in most of its
activities. It is now universally agreed that the more the transparency
the less the corruption. On the other hand,
corruption inhibits good governance. It undermines economic development,
stunts growth, fuels poverty and creates political instability. No nation
can develop to its full capacity or realise its full potential in any
field if its social system is plagued by corruption and inefficiency.
Corruption not only causes a severe drain on the national economy, it also
acts as a major disincentive to foreign investment. Generous allocation of
vehicles to state minions, starting from 1970s, introduced another element
of corruption. In most of the developed countries, prime ministers and
cabinet ministers are allocated only one limousine each for official use
strictly. Though this has been the norm in Pakistan prior to 1970, now sky
seems to be the limit for some holders of public offices who retain
several dozen of official vehicles in their fleet. When Ch Muhammad Ali was
prime minister his wife used to cook food herself. The number of domestic
employees available to his successors in office is more than two hundred.
President Ayub Khan felt quite comfortable travelling by PIA’s
commercial flights. Now, there are more than 14 planes for the exclusive
use of the President, Prime Minister, Governors and Chief Ministers, who
enjoy rides in these aircrafts without any distinction of official or
private use. Furthermore, there is no mechanism to combat corruption at
top levels. Muhammad Khan Junejo (1985-88) stands tall amongst the PMs for
having sacked four cabinet ministers on charges of corruption. Cognizant of the
ill-effects of corruption, a majority of top leaders, on assumption of
public offices, vowed to eradicate the scourge. Even despot General Pervez
Musharraf had expressed his determination to eradicate corruption by
addressing its causes and not just the symptoms. But, NAB’s founding
Chairman Lt. General Syed Muhammad Amjad was given a new assignment when
he decided to investigate six major defence deals. Amjad’s close circles
reportedly claimed that he had enough documentary evidence to launch probe
against at least 20 retired senior officials, including three former
chiefs of army staff, two naval chiefs and an air force chief in purchase
of tanks, submarines, naval mine hunters, mirage fighters and jeeps. The
message was loud and clear that the army ruler was there to conduct
accountability of civilians and that the forces should never be held
accountable for anything. Following terrorist
attack on Frenchmen, in 2002, in Karachi, foreign media carried reports
suggesting that the contract for construction of Agosta submarines in
Pakistan involved payment of $60 million in commission to Pakistan’s
four top naval officers. French newspaper Le Monde (May 11, 2002), an
unofficial mouthpiece for the French Socialist Party, claimed that part of
the “bribe payment” went to the brother and spouse of the then prime
minister. Contrary to the former prime minister’s relatives, the daily
noted, Admiral Mansurul Haq decided, in February, 2001, to reimburse $6.2
million to Pakistan. But, Admiral Haq was not the top man in the Navy at
the time the transaction took place. The names of other three top naval
officers, who allegedly received commission in the award of contract for
Agosta submarines, have not been made public so far. The masses have
“herds” instinct — they follow leaders. Darvaish scholar Shaqiq
Bulkhi tried to convey this to Abbaside Caliph Haroon-ur Rashid, saying
that a ruler was like a spring of water and state officials like water
channels flowing out from that spring. If water in the spring (main
source) was not sweet how could it be sweet in the canals? If the water in
the spring was sweet then it could not be brackish in canals. In other words, if top
leaders observe merit, honesty, austerity, etcetera, and refrain from
corruption and corrupt practices these virtues would automatically trickle
down and the masses would adopt them willingly, believing these to be the
traits of great people. The writer is a
freelance columnist based at Islamabad. alauddinmasood@gmail.com
Senate’s
Standing Committee on Finance, in its non-binding recommendations sent to
the National Assembly on June 21, 2013, specifically suggested exchange of
information with Swiss government to unearth untaxed accounts of
Pakistanis. It is common knowledge that no tax is paid by Pakistani
residents on such accounts — though, under the law, they are bound to
declare both Pakistan and foreign source income (total world income) and
then claim exemption or credit on the doubly taxed income, if available. The Federal Board of
Revenue (FBR) has been seeking permission of the finance minister to
negotiate new agreement with Switzerland for this purpose, but has failed
to obtain it till today — a summary sent to Dr Abdul Hafeez Sheikh never
got a response and now a fresh one is moved to Ishaq Dar. A news published in The
Times of India of June 21, 2013, says that “when it comes to money in
Swiss banks, Pakistan has a slight edge over India with total funds
amounting to 1,441 million Swiss francs [Rs1.52 trillion] held there by
Pakistani individuals and entities. However, this was the lowest level for
such funds ever since Switzerland’s Central Bank began compiling this
data in 2002 and was less than half of the record high amount of over 3
billion Swiss francs [Rs4.18 trillion] recorded in 2005. The previous
record low of 1.95 billion Swiss francs [Rs2.06 trillion] was seen in the
year 2010. In their local currency, the total funds held by individuals
and entities from Pakistan in Swiss banks stood at over Rs1.5 trillion as
on December 31, 2012”. It was further revealed
in the report that this marked a decline of nearly 32 per cent from 2,119
million Swiss francs (Rs2.32 trillion) at the end of 2011. The issue of
alleged stashing of black money in Swiss banks has been a matter of
intense debate in Pakistan, as there have been reports of some top former
government leaders having kept their money in banks in the European
country due to their hugely popular ‘safe-haven’ status. However, a
higher amount than Indian entities, assumes significance because Pakistan
is a much smaller country in terms of population and area. Still, the
quantum of money held by Swiss banks for their Pakistani clients was about
1.5 per cent higher than the equivalent figure for Indians at 1,421
million Swiss francs at the end of 2012, the latest data compiled by Swiss
National Bank (SNB) shows. The report is shocking
— confirming that our tax evaders have larger funds than Indians in
Switzerland alone. If we add Dubai and other such centres where the rich
and mighty have been shifting billions, the figure would be horrendously
large — many times what is lying in Switzerland. It is not a matter of a
few billions — the amount is at least ten times the collection of FBR.
On the one hand, the government is begging before the IMF for further loan
and imposing regressive taxes on the poor and on the other, there is no
political will to tax the accounts held in Switzerland and elsewhere by
our tax cheats [Of assets disclosures and transparency, The News, December
12, 2011]. While the government has
rejected the recommendation of Senate to seek assistance of foreign
governments in taxing accounts of Pakistanis with them as done by India
and other countries, the Finance Act 2013 passed by the National Assembly
on June 27, 2013 has given powers to the FBR to access all bank accounts
within Pakistan. Such powers have been held by the Senate Finance
Committee as “too intrusive, against privacy of individuals and is prone
to abuse and misuse.” The Senate committee is
of the view that “since the FBR is itself susceptible to corruption, as
stated by Chief Justice of Pakistan, it will likely lead to loss of
confidence of Pakistani people in their own banks, almost similar loss of
confidence is suffered due to seizure of foreign currency accounts after
the 1998 nuclear tests.” Finance Minister Ishaq
Dar did not accept the recommendation of Senate to withdraw changes in the
Income Tax Law giving powers to the FBR to access information of account
holders held with local banks. He says the information will be confined to
Chairman and members of the FBR and not to be shared with staff. If it
will not be shared with the field staff, then what could be the purpose of
having such powers? Apparently, the only purpose then would be to
blackmail political opponents or big fish. It will certainly lead to more
flight of capital. It is strange that the
government wants complete access over local account holders but is not
ready to get similar information for accounts lying outside which are
depriving the national exchequer of billions of rupees in taxes. All
responsible governments in the world have, in recent years, shown
commitment to retrieve looted money or funds kept by their citizens in tax
havens. But in Pakistan, the PPP-led government, during its five-year
tenure (2008-2013), acted as the main stumbling block to any such move.
Now the PML-N government has also shown unwillingness to tax trillions
kept by Pakistanis abroad — these were not offered for tax and their
sources are obviously dubious. The issue of tax
avoidance by keeping accounts in tax havens has become a highly charged
political issue in the world. Across much of Europe, rich northern
countries are increasingly fed up with demands for bailout money from
heavily indebted countries like Greece. A key demand of a recent bailout
deal announced for Cyprus was that the nation drastically shrinks its role
as a financial center and, many in Germany suspect, a haven for money
laundering. In Pakistan’s case, we are begging for bailout from the IMF
while billions of untaxed dollars are lying abroad. We should bring them
back by taking tough measures after giving option of whitening them at the
rate of 15-25 per cent voluntarily. If it works we would need no further
loans from the IMF or local banks. People in Pakistan ask
why they should file tax returns when their president, prime minister,
ministers, governors and elected representatives pay no or meagre taxes.
President Zardari, before his election on September 6, 2008, got $60
million unfrozen in Switzerland, and now his case is barred by time. He
did not bother to tell the nation how much tax was paid on this collossal
money and why it was lying abroad. Before taking the oath of president’s
office, he did not declare his assets and liabilities with evidence of
payment of taxes where due. The same stands true for all the leading
politicians, including Mian Nawaz Sharif and Shahbaz Sharif. We have written time and
again in these columns that tax culture in Pakistan will never take roots
unless tax and asset declarations of all the mighty segments of society
— politicians, high-ranking military and civilian officials, judges and
all public office holders — are made public. There should be a public
campaign that absentee landlords, most of whom are members of the
parliament, should reveal their tax declarations. All the judges,
high-ranking public servants, including serving and retired generals,
should also be required, under the law, to make public their assets and
tax declarations on annual basis. Any person who is a tax delinquent
should be debarred from contesting elections. All kinds of exemptions and
concessions provided under various tax codes should be withdrawn. The writers, tax
lawyers, are members Adjunct Faculty at Lahore University of Management
Sciences (LUMS) Vicious circle Paying huge circular debt to end energy By Shahzada Irfan Ahmed Nothing was more
unexpected than the announcement made by Finance Minister Ishaq Dar to do
away with circular debt worth Rs503 billion in 60 days. He made this
statement during the budget speech leaving many to wonder about the source
of funding required to settle this huge amount. Another concern was why
the government was bearing this burden when it could do with partial
clearance of this debt in phases. Weeks down the road, an
amount of Rs322 has been cleared and the federal government is working on
clearance of the remaining amount within a month or so. The payment was
made after getting an approval from the Economic Coordination Committee
and making the recipient Independent Power Producers (IPPs) agree to
certain terms. The payment formula is
that the IPPs and others like PSO will be paid 60 per cent cash and the
remaining 40 per cent through issuance of bonds. To ensure the circular
debt does not build up at same pace, some preconditions were introduced
and the recipients asked to agree to these terms. These terms included
optimal utilisation of available capacity by IPPs, commitment from four
IPPs for conversion to coal within a stipulated time, reduction in IPPs’
interest rate on receivables by two per cent and increase in IPPs’
credit period from 30-45 days to 60 days. The question that arises
here is that if the solution was so simple and the funding readily
available, why did not the outgoing government go for these options?
Besides, what is the exact source of the funds required to clear this
circular debt and what will be the financial cost the government is going
to bear on this account? Are there any long term measures as well to check
future build-up of circular debt. The finance minister was
asked such questions a couple of times but he did not come out with an
exact answer, especially on the source of funds generation. He, however,
vehemently denied any plans to print currency notes without matching
reserves to pay off circular debt. He has also said the
Rs40 billion they are planning to save by cuts in government expenses may
be used for this purpose. The frozen secret funds of different departments
and the discretionary funds of the prime minister were also hinted at as
the financial resources which the government could exploit to settle
circular debt. Leading economist,
former finance minister and deputy chairman Planning Commission, Dr Hafeez
Pasha, has an answer to this riddle. He tells TNS the government has
borrowed from the State Bank of Pakistan (SBP) by selling treasury bills
to it at the rate of 10 per cent per annum. The federal government always
has the option to sell treasury bonds to SBP and commercial banks to raise
money whereas provinces can take overdrafts up to a certain limit to meet
financial needs, he adds. Pasha says unfortunately
the SBP has started hiding information lately, a proof of which is that it
has updated loan figures up to June 21, 2013. The said amount was borrowed
after this date and the details of this amount should have been there, he
adds. Pasha refers to budget
2013-14 and shares it with TNS that the federal government has mentioned
its plans in the “Current Investments” section of this document. It
states the government would settle circular debt worth Rs326 billion in
revised 2012-13 budget and Rs168.8 billion in 2013-14 budget. On the burden under
repayment of the borrowed amount, he says the government can either pay
back the amount or get it rolled over for another year on the payment of
10 per cent. Putting it simply, the financial cost of using Rs 500billion
for a year would be Rs 50billion. The SBP would have no issue with
extension of loan period on receiving the interest amount, he adds. Apart from payment in
cash, the government is going to issue bonds to Oil and Gas Development
Company (OGDC), Pakistan Petroleum Ltd (PPL) and Pakistan State Oil (PSO)
etc. In the second phase, the federal government may go for adjustment of
a major part of the remaining circular debt against receivables pending
with the organisations seeking clearance of their dues. Energy expert and
advisor at Sustainable Policy Development Institute (SDPI) Islamabad,
Arshad Abbasi, has serious reservations against payment of circular debt
without technical audit of IPPs. He says these IPPs are themselves
responsible for the building of circular debt caused due to huge
difference between cost and sale price. Explaining his point, he says
ideally the efficiency rate of an IPP should be around 50 to 60 per cent
but in Pakistan IPPs are working at an efficiency rate as low as 20 per
cent. This, he says, means the
same amount of fuel is required to produce 50 to 60 units at an efficient
plant and 20 units at an inefficient one. “It’s a strange thing that
different IPPs quote different per unit rates in their invoices and the
government pays them off without questioning them.” His point is that the
differential in production and selling price has increased more due to
this efficiency than anything else including power theft and government
subsidies. The cost of generation will have to be brought down by
switching to cheaper fuel as well as making IPPs bear the cost of their
inefficiency. Abbasi doubts it was on
the pressure of some IPP owners close to the Nawaz government that this
huge amount was cleared without delay. The cash-strapped government has got another IMF bailout package to avoid a potential financial default By Mazhar Khan Jadoon Pakistan has
once again approached the International Monetary Fund with a refurbished
begging bowl to wriggle out of the economic mess at home. Breaking the
begging bowl, economic sovereignty and self-reliance are pleasing slogans
before every election, but once into the business of running a government
with empty coffers, the bitter reality of loans and bailout packages take
charge. “The government of
Pakistan and International Monetary Fund have reached an agreement for a
three-year programme of at least 5.3 billion dollars under an extended
fund facility,” said Finance Minister Ishaq Dar after concluding the
deal on July 4, 2013. “This is a
Pakistan-designed programme. It includes bringing the fiscal deficit to a
more sustainable level,” Jeffrey Franks, the regional adviser to the
Fund on Pakistan, told reporters speaking alongside the Pakistani finance
minister. The IMF expects Pakistan to reach a budget deficit target of six
per cent of gross domestic product as part of its bailout loan programme,
said Franks. Dar said there was no
option but request the loan to save Pakistan from defaulting. “We have
not carried the begging bowl in our hands nor are we getting a grant,
Pakistan is a member of the IMF,” Dar said. Despite Dar’s rhetoric
that the government has negotiated on its own term, Pakistan has conceded
to all the IMF’s conditions to stave off a potential financial default.
International donors like IMF always link bailout packages with certain
reforms that they think can overhaul the broken economy. Generally, all
the governments in Pakistan — dictators and civilians alike —
conveniently push the proposed reforms under the carpet once they get the
money. Besides, the lenders also make it sure that they will get back
their money and keep the recipients from committing any default. The country’s economic
team, led by the finance minister, had held weeks-long tough deliberation
with the IMF delegation to sort out details of the programme. The
Pakistani financial managers were desperate to win over the IMF team at
all costs because agreement with the Fund means more easy money coming
their way. In addition to the $5.3billion IMF package, Pakistan will
likely get a $5.6bn loan from the Asian Development Bank and the World
Bank as well as countries like Japan, the United States and the United
Kingdom. The total volume of the loan that Pakistan hopes to bag will be
around $11bn — an amount that can resuscitate the dying economy if
utilised properly. The IMF wants the
government to reduce the fiscal deficit over three years. The target has
been left for Islamabad to decide if it wants to do it through widening
the tax net, reduction in expenditures or withdrawal of subsidies and tax
exemptions. Retiring huge circular
debt to contain energy crisis was a gigantic task and the urgency to
strike a deal with the IMF also highlights the crunch at Pakistan’s
foreign reserves — central bank has only about $6.25 billion left in
reserves, enough to cover less than six weeks of imports. The IMF loan at
this moment seems to be a life-saving dose for Pakistan’s economy. Why does every
government go to the IMF for bailout packages in the first place?
“Generally, when the incompetent government fails to formulate
appropriate monetary and fiscal policies to run its economic activities
and cannot control its balance of payments and balance of trade, then such
financial crises emerge,” says economist Dr Asmatullah Khan. “Such
countries are always facing shortages of finances. Consequently, they
approach the IMF to cope with their deficit financing.” People generally are not
comfortable with their elected representatives doing the IMF bidding at
their cost. Are the IMF conditions to end subsidies and impose more taxes
justified? “Yes, these conditions are very legitimate. The government
should have done all these reforms on its own,” says Dr Ishrat Hussain,
former governor of State Bank of Pakistan, while talking to TNS. Dr Ishrat Hussain thinks
the government has no other option at the moment, but to get the IMF
bailout. “The government needs to put its house in order if the rulers
want to avoid the donors’ dictations and pressures. Economic
self-reliance is only possible if the government widens its tax base, tax
the rich and mighty landlords and introduce tax reforms.” However, Dr Khan’s
viewpoint sounds more popular, but unrealistic at the same time as far as
more taxes are concerned. According to him the 2013 budget has already
made living worse by further increasing the miseries of the poor people
and salaried class. “Therefore, elimination of subsidies and imposing
more taxes is never justified and will definitely initiate political
turmoil and, perhaps, it is the utmost agenda of the IMF to destabilise
Pakistan further.” Dr Khan substantiates his arguments, saying, “Taxes
are imposed but at reciprocal basis. People are facilitated in terms of
better and cheap health services, free education, peace and security and
provision of basic needs. Do we have all these facilities available to the
common people? If not, then how the government will justify its action of
imposing more taxes in such grim circumstances.” What alternatives the
governments have, if there is no loan? Dr Hussain says the government
should narrow down its fiscal deficit by scaling down different subsidies
that cost the kitty billions of rupees. “Tax reforms and prudent fiscal
policies can help the government achieve economic stability without
foreign help.” Dr Khan seconds Dr
Hussain, saying, “We do not need bailout packages if only the looted
money is recovered and landlords, industrialists and business class are
justifiably taxed.” He says there are countries which are surviving
without loans. “Iran is developing its economy despite economic
sanctions. Devotion, sincerity, honesty and fair planning are the only
remedy to bail this country out of all such difficulties.” “Programme or no
programme, we shall not impose further taxes. We have rejected the IMF’s
proposal for imposition of more taxes,” Ishaq Dar told the
parliamentarians recently, and went on to confirm that if the lender did
not accept the PML-N’s economic roadmap, a contingency plan-B was ready
to shore up foreign exchange reserves and improve revenue collection by
reducing tax theft and widening the tax base. Financial experts
believe tax exemptions are one of the problems hitting the economy hard,
suggesting that such exemptions through Statutory Regulatory Orders (SROs)
should be done away with. Unconvinced by the fiscal and economic
projections and the expected outcomes, the IMF mission also wants a
reduction in development spending (which was increased 50 per cent under
the PML-N’s first federal budget) and more taxes to limit the fiscal
deficit, according to media reports. “Pakistan is an
agricultural country and is quite rich in natural resources and cheap
labour. Almost the whole country is replete with every kind of deposits of
minerals and valuable resources. But poor governance, weak planning, open
corruption, lack of research and outflow of capital from the country have
made the country financially paralysed,” says Dr Asmatullah Khan.
“Smuggling and lack of economic emancipation are other obstacles in the
way of self-reliance. Return of the looted money and recovery of the
national wealth from the corrupt mafia could be another step towards
economic sovereignty.”
Proper investment in healthcare and education will help us create a ‘critical mass’ which will usher Pakistan into a new era, commensurate with the demands of the 21st century By Tahir Kamran “For any
nation the measure of being civilized is the investment and care that it
extends to its dispossessed and vulnerable, thus the United Kingdom is
ranked among the top civilized nations in the world,” claimed Dr Rizwan
Hassan, Anesthetist Consultant from Cambridge, while referring to the care
and compassion given to autistic children by the state through the
National Health Service. Dr Hassan is a big
advocate of ‘integrated care’ and vehemently argues in favour of the
age-old adage “prevention is better than cure”. He is very good at
drawing comparison between the healthcare system in Pakistan and the UK,
to which he emigrated a quarter of a century ago. Any improvement in the
dismal state of healthcare in Pakistan, he lamented, does not figure
anywhere among the priorities of the ruling elite. Thus, fundamental human
rights like education and healthcare are denied to the citizens by either
privatising healthcare and education or neglecting them altogether. Ironically, the
Pakistani ruling elite exhibits a nonchalance that reeks of an utter
ruthlessness towards education and healthcare because it does not have any
stake in institutions intended to cater to the needs of the general
citizenry. It now sounds more like a cliché to state that their kids go
abroad for education and if anyone of them falls sick, he/she is whisked
off to the developed world for medical treatment. Insouciance in
redressing medical ‘vulnerability’ is reflected in the absence of any
concrete plan or policy of the government. All said and done, the state,
being represented solely by the elite, has absolved itself of the
responsibility of providing these essential amenities to the people. The vulnerable, to whom
Dr Hassan referred, are children with some deformity. However,
‘vulnerability’ ostensibly has myriad forms, multiple manifestations
but more often than not, its context is social. In the welfare-state
system, an elaborate system of social welfare is devised, whereby
education and healthcare assume the top slot in the list of priorities of
the government. Dr. Hassan emphasized the primacy of ‘hygiene’ that
holds importance in any practicable health policy. The availability of
clean water, exercising quality control over edible items, eradicating the
causes spawning toxic gases which are injurious to health and inculcating
social awareness among the populace about cleanliness, serve as anchoring
features for the movement to create a hygienic environment. Along with these social
factors, scientific techniques of childcare and immunisation programmes,
such as administering preventive shots to kids, are equally important.
Mercifully, Pakistan has made some headway in that direction but still a
lot more is needed. In order to ensure prevention, the field of community
medicine, Dr Hassan asserted, is very vital in the present day discourse
on health. Community medicine is concerned with the health of the members
of a community, municipality, or region. The emphasis in that
branch of medicine is on the early diagnosis of disease and, more
importantly, the recognition of environmental and occupational hazards to
good health, and the prevention of disease in the community. Thus, the
issue of health is embedded in the social ethos of any community. The
realisation of its importance is vital for the prevention of physical
vulnerability in Pakistan. In light of Dr
Hassan’s prognosis, one feels the need of a radical shift in the health
policy in Pakistan. In order to catch up with the systems of healthcare
available in the developed world, the policy of focusing entirely on
hospitals and the provision and manufacture of drugs needs to be subjected
to a drastic review, adopting the approach of ‘integrated care’. Some
equilibrium must be struck between the prevention and the cure through
medical treatment at hospitals. ‘Health inequality’ is another hazard,
which requires the attention of those sitting at the helm. An undertaking
is required to provide equitable health facilities to all citizens. The sharp divide between
rural and urban, rich and poor, needs to be bridged. Better incentives for
young doctors that induce them to go to distant villages and serve for a
stipulated period of time should be introduced. It should be made
obligatory not only for doctors, but also for teachers to serve in ‘hard
areas’. The focus should be
shifted from populist measures, which may secure an election victory but
don’t ameliorate the lot of the general citizenry, to people’s
welfare. Initiatives such as the raising of awareness among the populace
about ‘hygiene’ and instructing them about social factors causing
ailments may not yield immediate results, but they will bring enduring
benefits to the general masses of Pakistan. We must be mindful of
the fact that only healthcare and education will help us create a
‘critical mass’ which will usher us into a new era, commensurate with
the demands of the 21st century. Research in social history reveals that
modern nations are forged through education and healthcare. Thus optimum
energy and resources must be invested in these areas.
change The world has
become an insecure place due to threats, instability and revolution-series
emerging from the Middle East. Outside powers, in An episode of this is
what happened recently in Egypt. A “revolution” to overthrow a
democratically elected government, elected a year ago, by the national
army is as far from simple as it is possible to get. Mohamed Morsi,
Egypt’s first democratically elected president, has been ousted from
office just over a year into his presidency. Morsi was elected Egypt’s
president in June 2012 after a campaign focused on appealing to the
broadest possible audience. But he became increasingly authoritarian and
forced through a conservative agenda during his year in power. Egypt today
is ruled by an interim government backed by the military. Ex-president Morsi
appears to have been responsible for his shortsightedness and apolitical
schemes. Elected by 52 per cent majority in general elections, Morsi
failed to keep the nation united. He also failed to tackle national
economy which was already in a shambles. As we know that a
substantial and strong secular minority resides in Egypt, there was no
improvement in the security environment and his government was perceived
to have been pursuing an Islamist agenda to the exclusion of all others.
Among the causes for people’s displeasure over his rule are lack of
security, rising food prices, long fuel lines, and frequent electricity
cuts during the scorching Egyptian summer. Over and above, Morsi lacked
charisma and oratorical skills, and at the same time he hadn’t been able
to back his orders with a stick in the same way that Mubarak and his
predecessor, Anwar Sadat, did in the past. Although the country’s
deficit had fallen and tourism revenue had slightly improved over the past
year, the effects were not being felt by the people on the street. This
all lashed back. Keeping Morsi’s list
of failures, one feels that Egypt is still passing through revolutions.
First it was against Hosni Mubarak, which successfully culminated in its
achievements and can be termed “revolutionary moment”. Then it was
against the military establishment which resulted in the rise of the voice
of the people and Muhammad Morsi rose to the occasion. This can be termed
as “change moment”. Later, it was the constitution. With
demonstrations and huge protests, the constitution had been approved with
controversies. The yes votes outpaced the no votes by a larger margin. According to official
results, votes for constitution were 10,693,911 (63.8 per cent) and
against were 6,061,101 (36.2 per cent) whereas the total turnout stood at
32.2 per cent. However, it resulted in division of the nation. The
“constitutional moment” was missed. A joint constitution could have
built a consensus among political forces, liberal-secular and Islamist. On
the contrary, it divided the entire movement and sowed seeds for the
future political compartmentalisation. It was such political division that
resulted in President Morsi’s ouster from power. Had this happened
before? Take the case of South Africa. South Africa’s post-Apartheid
constitution was developed through a lengthy process of negotiation,
public consultation, and consensual decision-making. It was nicknamed as
the “birth certificate” of a new nation. Former President Mohamed
Morsi was justified in completing the transition phase in the shortest
possible time. However, deliberations on constitution-making process,
educating citizens about the text of the document on which they were asked
to vote was more important than completing the transition phase. Iraq in 2005 also had a
divisive constitution-making process. But even in Iraq there was both a
greater pretense of openness and consultation and a greater reality of
negotiation than in Egypt. Hence, an opportunity to form a
consensus-constitution was missed. No lessons were learnt from South
Africa or for that matter Iraq. Thus, democracy was robbed in shape of
removing a popularly-elected government with a majority of 53 per cent
people’s support. However, this is a fact
that for the first time in the history of Egypt, a government came into
existence by fulfilling all the prerequisites of a democratic process —
a free and fair election. But the irony of fate is that it succumbed to
minority pressure resulting in dictatorship. Further to that, forcing the
Muslim Brotherhood to the sidelines is not the way forward rather this
will further lash back. Muslim Brotherhood is a very strong party in Egypt
with a strong street power. If they are not in the future government,
Egypt will remain in turmoil for the next years till Brotherhood is
accommodated. Middle East is passing
through a testing time. Only a regional political architecture can calm
the Middle East and that cannot be achieved without active participation
by democratically elected governments and the Western support to such
democracies. Sitting like silent spectators and watching military takeover
like in Egypt would keep Middle East in abysmal depth. Bringing countries
like Egypt out of isolation and back into global mainstream — which
means encouraging them to moderate policies, cheering democracy, and
denouncing military takeover — are the absolute prerequisites of peace
in the region. Unconditional support for them is no more productive than
unconditional opposition to dictatorship or rise of dictatorship or even
path to dictatorship. We, as global partners,
are accustomed to seeing the Middle East as a ticking time bomb. Images
and words scare us: Hamas, Muslim Brotherhood, Hizbullah, al Qaeda,
oppressed women, revolutionary guards, religious fundamentalists,
Sheikhdoms, Islamic conservatism, anti-Americanism, patriarchal society
and oil-fueled corruption. Despite turmoil and bad
omens associated with the greater Middle East, there are positive options
as well. One of the positive options is to support the growing and nascent
democracies like Egypt and discourage military takeovers. The author teaches at
the Department of International Relations, University of Peshawar
syedshaheed@hotmail.co.uk
Whether Pakistan is ready or not, a new historical perspective is likely to emerge soon after Nato forces withdraw from Afghanistan By Helal Pasha William
Dalrymple, in his recent essay “A Deadly Triangle” published at the
Brookings Institute, claimed, “The hostility between India and Pakistan
lies at the heart of the current conflict in Afghanistan.” In his essay,
he further claimed that the hostilities around the partition are the true
source of the problems between Pakistan and Afghanistan. A review of the
history brings out a different context
to the assertion, as he is way off the mark in sourcing it to 1947. The current Pak-Afghan
relations are just a perpetuation of historical clashes that surfaced from
the battles that Raja Ranjit Singh’s armies fought in the famous Battle
of Jamrud in 1837. Afghanistan, at the same time, was under attack from
the Persian forces supported by Russian advisors on its western borders
around Herat. Then the great game started. In December 1838, the East
India Company managed to take Quetta from Bolan Pass and attacked
Afghanistan to forestall the alleged Russian advance into Afghanistan. The
roots of the dispute emerged in 1837, rather than 1947. While Afghanistan lost its second capital Peshawar and the most productive farmlands to the Sikh armies, the British destroyed Afghanistan’s sovereignty in many ways and left Afghanistan as a weak state for the rest of the British rule in India. The military doctrine
that guided the British invasion stated, “in order to ensure the welfare
of India, the British must have a trustworthy ally on India’s western
frontier.” Dalrymple has conveniently assigned exactly the same words to
the famous “Strategic Depth” doctrine of the Pakistan Army developed
after the Afghanistan civil war in 1980s. Dalrymple’s thesis is
not an exercise in futility; there is some merit to it, just stretched out
too far to fit the storyline. The state of Pakistan is essentially the
inheritor of the three domains — East India Company, the British Raj,
and the Punjab of Raja Ranjit Singh — and their problems in this area
played a major role in Pak-Afghan relations since 1947. In Washington, DC, where
the attention span is usually short, the article presents another
historical revision of 1947 partition in a precise order, excelling in
tidiness. Still, the US admin or intellectuals that supported the US
invasion in 2001 hardly cared about the history of Afghanistan after the
tragic events in September 2001. The US might be
interested in some contextual answers to resolve a historical anomaly; the
departure of the Nato forces will fundamentally alter the relations in the
region. Whether Pakistan is ready or not, a new historical perspective
will emerge soon. Pakistan and Afghanistan
do not see eye to eye on different issues. There is major bitterness in
Afghanistan over the role Pakistan played, especially under the army rule,
in the 80s, 90s, and later in 2000s. Pakistan wants a permanent solution
to territorial disputes over the Durand Line. Over the years, Pakistan has
been insensitive in its handling of the situation or its responses have
often been construed as maleficently, diminishing the Afghan sovereignty. Pakistan has not learned
from many setbacks including the menace of domestic terrorism of various
sectarian or political groups. Over the last several years, Pakistan,
humiliated by events like the one in Abbotabad, has not changed its
course. The falling perception of Pakistan around the world has not
deterred Pakistan from following a problematic approach since 1980s. Fata has been in a state
of semi-war for the last 30 years. Especially, the last 10 years of
intense war and drones in the region have contributed to the collapse of
the traditional cultural, tribal, and familial relations. The tribal areas
lack any infrastructure for remedies. Residents have abandoned their
fields. The increasing numbers of jobless youth provide perfect
environments for the Taliban recruitment. The Taliban make a
religious pitch; provide opportunities to youth to assert power and
strength on the streets, and promise financial rewards to strapped
parents, brothers, and sisters to recruit suicide bombers. In a collapsing
social structure, militants’ numbers swell up fast. The continued insurgency
in Fata, now extended to parts of KPK, creates conditions that would allow
some groups to strengthen their positions for future unification of the
Pushtoon-speaking areas. With KPK and Fata joining in, the chances of
economic viability of any such area would increase manifold. Many
interested parties can easily manipulate the Taliban like groups in Fata.
The most likely manipulators could be the Afghan Taliban and some foreign
groups. They encourage insurgency in Pakistan to loosen the state
structure by spreading lawlessness. With the anarchy spreading to the
settled areas, the state would lose the apparatus to maintain the physical
integrity of the country. The way Pakistan
operated during the last decade or so has diminished people’s confidence
in the state. People see Pakistan state behaving erratically under one
influence or another. Rationalising and leveling with people is key to
garner support. Similarly, the prolonged dispute over an already accepted
international border with Afghanistan is not in Pakistan’s interest.
Better relations with India and Afghanistan are prerequisite for economic
success of Pakistan. People of Pakistan,
exhausted by unnecessary disputes on the borders and constant domestic
violence in the cities, look for better handling from the new government.
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In
1934, the Foreign Secretary of India decided to understand the
constitution of Kalat State, which formed two-thirds of what is now the Balochistan province of Pakistan. After studying the topic for months,
Weightman came to the conclusion that he was ‘confused’ and that the
makeup of Kalat ‘seemed to defy any definition and was fated to arise
controversy among those who attempted one...’ Almost eighty years to
that minute, the successor to the British in that part of the world is as
confused and as troubled by the province as the British were. Successive
governments in Pakistan have tried to solve the Balochistan ‘problem’
but have been unable to do so. 
inisters
and secretaries that since the menace of corruption is a hurdle in the way
of serving the masses, so removal of this hurdle is the government’s top
priority. He said: “The governance cannot be improved unless corruption,
nepotism, inefficiency and conflict of interest are tackled upfront.”
All upright and enlightened citizens would lend support to Nawaz Sharif in
his endeavours to wipe out corruption from the country.
