nfc
Too good to believe
A stable solution will be the one which recognises that the issue of the smaller provinces is not of greater revenue, but control over their resources
By Dr Pervez Tahir
The news coming from the inaugural meeting of the National Finance Commission, constitutionally mandated to meet every five years but never quite does, is too good to believe. Most of it is either not related to NFC, or related only perfunctorily. Interestingly, the bearers of the good tidings are the representatives of the smaller provinces, which have been clamouring for a larger share in the pie.

comment
Walking the talk
The permanent state apparatus has a deep love affair with power, as well as the abuse of it, which it will never willingly renounce
By Aasim Sajjad Akhtar
While the media frenzy surrounding the treachery of the intelligence agencies and the immaturity of our politicians rages, attempts to sustain the obsolete structures of the post-colonial state quietly pass us by. The unfolding catastrophe in Balochistan took yet another turn for the worse this week with the abduction, torture and murder of Rasool Bakhsh Mengal. Mengal’s fate was uncovered only a few days after the Pakistan People’s Party (PPP) announced the launch of a new governance scheme in the former "Northern Areas," hereon to be known as "Gilgit-Baltistan."

Caught in the tax net
Federal highhandedness in tax matters has not only negated the true concept of provincial autonomy but also has crippled it financially
By Huzaima Bukhari and Dr. Ikramul Haq
The two-day meeting held on August 27 and 28, 2009 of the recently-reconstituted National Finance Commission, ended up with forming two committees for working out "broad-based mechanism for vertical and horizontal distribution of resources." The first committee, comprising provincial and federal finance secretaries, would determine benchmark expenses, and recommend distribution of vertical resources. The second committee, headed by the finance minister and having all NFC members on board, would take up the matters relating to horizontal distribution of resources among the provinces. The third committee is going to determine expenses on war on terror, vertical and horizontal distributions of resources, general sales tax (GST) on services and the gas development surcharge.

trade
Export secrets
Pakistan’s exports are heavily dominated by low technology products, whose share in total export earnings exceeds 85 percent — in order to increase exports competitiveness, following suggestions are made
By Hussain H. Zaidi
Increasing market access and decreasing protectionism in the wake of globalisation have put competitiveness at premium. Only competitive nations and firms can enjoy the fruits of globalisation. A country or nation is competitive if it can sell its products in international market at low real cost. Since it is businesses, not the government, which are the real players on international trade scene, export competitiveness of a country means the competitiveness of its firms.

Democracy’s basic unit
What has truly halted our democracy’s progress is our inability to nullify each dictator’s flawed legacy
By Basit Riaz Sheikh
To say that democracy evolves over time would be a very clichéd statement. Be it political talk shows, TV interviews, or parliamentary speeches, our politicians use it quite frequently to cover up their failed policies and incompetence. I am guilty of using it, too, especially in passionate debates with friends who have long given up on our democratic system’s viability. The next question that comes to mind is how come democracy never seems to mature in Pakistan in spite of all the constitutional reforms, tried time and again by our politicians and dictators alike.

Conducive environment
Climate change is not only raising concern for dying rivers but also might be a way for two countries to work together
By Shahid Husain
The Indus, one of the great rivers of the world, is in trouble. The river which gave its name to the Indian sub-continent has been used and abused by man and is now facing a slow death. The Indus has always been at the centre of economic life of the western part of the continent, what is now Pakistan. Its waters supply the country’s major cities including Karachi, which at 16 million people is one of the biggest cities of the world.

reform
Build cities in FATA
A roadmap, for dismantling tribal structures, that may look ambitious on paper but is worth a try
By Raza Khan
The persistence of the tribal structure in Pakistan’s tribal areas, despite its dysfunctional nature, incompatible values and their manipulation and highjacking in recent years by national and foreign religious radical and terrorist outfits is largely responsible for unprecedented extremist-terrorist upsurge in the country and even somewhat internationally. Therefore, any counter extremism strategy in Pakistan could be effectively evolved and meaningfully implemented if the said tribal structure is somehow overthrown as it can’t be reformed and any claims in this regard are farfetched. But this could obviously be done through an evolutionary process.

 

 


nfc

Too good to believe

A stable solution will be the one which recognises that the issue of the smaller provinces is not of greater revenue, but control over their resources

By Dr Pervez Tahir

The news coming from the inaugural meeting of the National Finance Commission, constitutionally mandated to meet every five years but never quite does, is too good to believe. Most of it is either not related to NFC, or related only perfunctorily. Interestingly, the bearers of the good tidings are the representatives of the smaller provinces, which have been clamouring for a larger share in the pie.

As a matter of fact, these provinces had scored a victory of sorts even before the meeting. Their earlier objections to the constitution of the NFC had been sustained. In the forefront was the Government of Sindh, insisting that only the finance minister could chair the NFC. It then went ahead to elect the unelected adviser to the prime minister on Finance to the Senate, making it convenient for the Federal Government to appoint him as the finance minister. There were objections also to the harmless Hina Rabbani Khar, despite being duly elected State Minister of Finance. To the satisfaction of the objectors, she is no more there.

The terms of reference of the NFC are determined by the Federal Government, which in the past has been quite possessive about the form and touchy about the contents of the terms of reference. None of that this time. Everything that the provinces said has been included. In addition to its traditional demand about unpaid arrears of net hydel profits, the NWFP Government succeeded in placing on the agenda the financial burden arising from the IDPs and the "war on terror." Of all the things, the NWFP also got the "approval" of Chashma Right Bank Canal, even though the NFC is not the forum for this. The chief minister of the province mentioned an actual sum of Rs110 billion of arrears on hydel profits agreed by WAPDA. If WAPDA had this money, the problem of circular debt would not have arisen in the first place. It would, according to the chief minister, be paid by the Federal Government over the next few years. To be sure, all of these are non-NFC items. On NFC, the NWFP wants poverty and backwardness to be an important criterion for distributing the divisible pool between the provinces and a hefty enlargement of the divisible pool from 45 percent to 80 percent.

Even the finance minister of Balochistan, the province which has suffered a criminal neglect from day one, is giving the impression that all their woes are about to end. They are optimistic that area and reverse population density would show up in the criteria and Petroleum Development Levy is likely to become part of the divisible pool. The most jubilant was the chief minister of Sindh claiming the acceptance of all of their demands, the principal one being the inclusion of tax collection as distributional criteria. He also holds the portfolio of finance, about which he knows as much as Kaiser Bengali, the expert member from Sindh, about tiger hunting.

Any outcome of the NFC meetings other than the existing arrangement of apportioning revenue will have two losers — the Federal Government and the Government of the Punjab. The Federal Government loses to the extent its share in the vertical distribution is decreased from the present 55 percent and collection cost down to the actual level from the present 5 percent. Punjab loses as much as the role of population as a single criterion for horizontal distribution is scaled down. Are the losers simply going to be resigned to the new fate?

The Musharaf-Aziz combine had used the policy of divide and rule to more or less maintain the federal share. It asked the provinces to first decide on the formula for distribution among themselves. All provinces had PML-Q governments but this common denominator failed to facilitate any accord, providing an opportunity to the Federal Government to promulgate an ad hoc distribution order. This time, the Federal Government has gladdened the provinces by putting all of their demands, NFC-related or not, on the agenda. The chair of the NFC, the finance minister, has said there will be an award by the end of September. His finance secretary has added another month. But the way the agenda has been welcomed to bloat and expectations rise enormously; there is no likelihood of an early award. This might pave the way for the president to intervene and announce an ad hoc arrangement, yet again.

Punjab, however, has played a master stroke by declaring its willingness to add other criteria to the present single-factoral, population-based arrangement, as it pushes the pressure towards the Federal Government to reduce its share. A relatively just solution would require that no one is worse off than before in absolute terms. For this, the Federal share has to come down significantly. But the provinces may be locking horns over the weights attached to various criteria. Maximum weight will continue to be given to population, followed by collection and poverty and backwardness. Punjab may not suffer much because its share will continue to be the largest on the basis of population. Some analysts believe that Sindh may be surprised that Punjab, whose economy has grown very fast in recent years, may do as well as Sindh on the basis of tax collection. It is also staking its claim on the basis of poverty incidence. The absolute number of the poor, given a large population, will continue to be the highest in Punjab. Even in terms of area, Punjab is second only to Balochistan.

In view of these factors, and a divisive past history of NFCs, this writer has been proposing that a stable solution will be the one which recognises that the issue of the smaller provinces is no more of greater revenue but control over their resources, including natural resources. This solution would have three constitutionally recognized levels of government — local, provincial and federal, each with a major tax of its own. Local governments manage to provide basic services in nearly all countries of the world by mobilising property and related taxes. Provincial governments should get back the GST and convert it into an all-embracing sales tax. Federal government without a concurrent list and respecting genuine provincial autonomy will have enough to run itself on the basis of revenues from customs and income tax including agricultural incomes. Let us give NFC a decent burial.

The writer teaches at FCC University, Lahore.

 

 

comment

Walking the talk

The permanent state apparatus has a deep love affair with power, as well as the abuse of it, which it will never willingly renounce

By Aasim Sajjad Akhtar

While the media frenzy surrounding the treachery of the intelligence agencies and the immaturity of our politicians rages, attempts to sustain the obsolete structures of the post-colonial state quietly pass us by. The unfolding catastrophe in Balochistan took yet another turn for the worse this week with the abduction, torture and murder of Rasool Bakhsh Mengal. Mengal’s fate was uncovered only a few days after the Pakistan People’s Party (PPP) announced the launch of a new governance scheme in the former "Northern Areas," hereon to be known as "Gilgit-Baltistan."

Since winning the general election last year, the PPP has taken some very conspicuous initiatives that appear to underline its commitment to redressing the imbalance of power between the centre and constituent units in Pakistan. Asif Zardari started off with a public apology to the people of Balochistan for the excesses that have been committed against them in the past (and, he should have noted, continue in the present as well). The PPP was relatively sympathetic — even if its public proclamations were cautious — to the Siraiki province issue when it erupted onto TV screens and newspaper editorials. And now the PPP has apparently taken up the plight of the diverse peoples of Gilgit-Baltistan.

But the fact of the matter is that there is no evidence to suggest that the centralised system of power that is so deeply institutionalized in this country is really being challenged. Balochistan is the obvious example. Over the past 18 months there has been no let-up in kidnappings, target killings and use of indiscriminate firepower against innocent civilian populations. The provincial government is nothing more than a dummy and has no meaningful control over any of the levers of policy. The intelligence agencies call the shots and it is hardly surprising that disaffection amongst ordinary people becomes more acute with each passing day.

Meanwhile the Siraiki province debate has quickly been snuffed out. There is no question that administrative restructuring of Punjab would have tremendous implications for Pakistani politics. It would more than likely be in the interests of the PPP (and much to the detriment of the PML– N). Whatever the long-term possibilities, an issue of such great importance deserved more than superficial sloganeering on the media. No one came forward to initiate serious debate.

And now with the creation of "Gilgit-Baltistan," more questions have been raised than answered. One of the more pressing questions is why a Punjabi — Qamar-uz-Zaman Kaira — is being made Governor of the newly constituted administrative unit? After all one of the basic grievances that oppressed nationalities within Pakistan have against the centre is that Punjabis (and to a lesser extent Urdu-speakers) dominate executive and administrative positions. If the PPP is serious about wanting to reconfigure the power equation in "Gilgit-Baltistan," why would it not take the highly symbolic step of inducting a local as the first governor? Unfortunately this is not the most serious reservation with regard to the new set-up.

It is all good and well for the PPP to continue insisting that it believes in gradual reform, and reconciliation rather than confrontation. But the problem is that the objective conditions that prevail in this country at the present time demand more urgent action. Notwithstanding all of NWFP Information Minister Mian Iftikhar Hussain’s press conferences, ordinary people in that province are more convinced than ever that they are the victims of a deep-seated conspiracy in which the unaccountable military establishment is the dominant actor, with foreign powers playing a crucial supportive role. The Awami National Party (ANP) does not make policy, GHQ does.

Unfortunately it appears that mainstream parties have acquiesced to the fact that the system cannot be definitively changed so it is better to simply work within it. What they are relying on is that a critical mass of ordinary people will accept access to the (repressive and exclusionary) state in lieu of the much more difficult yet compelling option of capturing this state and transforming it. So by this logic it is acceptable that the majority of the Baloch population remains deeply alienated from the state, so long as some educated young people can be cooped into the patronage network through which things get done. Enough people are implicated and make their living in smuggling across the Balochistan-Afghanistan border to keep the system ticking over.

Similarly, a large number of Pakhtuns now survive by participating in the war economy that has existed in the region for the best part of 30 years, but has, since late 2001, become even more pervasive. The people of Malakand have had their lives turned upside down by events that have unfolded since 2006, yet if there is no political leadership with the vision to guide them out of their ongoing nightmare and towards a peace that rejects all protagonists of war, they will be forced to find ways and means to subsist. The refugee camps have taught them this and if and when they return, their cynicism will only increase.

It seems to me that one of the major reasons why mainstream parties have reached the conclusion that it is futile to resist and better to simply get by — the biggest reason of all is the lack of will and/or capacity to take on the military establishment — is the larger-than-life role of world powers, and particularly the US, in this region. There even seems to be an enduring belief in some circles that Washington will help re-establish parity between political forces and the establishment. I am not quite sure how this belief persists in the wake of the mess that the Americans have made out of Afghanistan and the spread of war into NWFP and FATA.

The permanent state apparatus — which includes the military and the civil bureaucracy — has a deep love affair with power, as well as the abuse of it, which it will never willingly renounce. Its natural inclination is to concentrate power and it has no tolerance for those who argue in favour of the often messy art of politics. On the other hand ordinary Pakistanis are extorted and humiliated by state functionaries on a daily basis. Yet in the final analysis they will hold their elected representatives responsible for the deteriorating state of affairs they face, even if it is the permanent state apparatus that is primarily to blame. This is the historical inheritance of our political parties and it is up to them to change their own fate. In most other countries, elected governments are shunted out of power at the ballot box if they have not fulfilled their commitments. One can only hope that this latest elected government does not pay the ultimate price of being forced out of power before 2013.

 

Caught in the tax net

Federal highhandedness in tax matters has not only negated the true concept of provincial autonomy but also has crippled it financially

 

By Huzaima Bukhari and Dr. Ikramul Haq

The two-day meeting held on August 27 and 28, 2009 of the recently-reconstituted National Finance Commission, ended up with forming two committees for working out "broad-based mechanism for vertical and horizontal distribution of resources." The first committee, comprising provincial and federal finance secretaries, would determine benchmark expenses, and recommend distribution of vertical resources. The second committee, headed by the finance minister and having all NFC members on board, would take up the matters relating to horizontal distribution of resources among the provinces. The third committee is going to determine expenses on war on terror, vertical and horizontal distributions of resources, general sales tax (GST) on services and the gas development surcharge.

The Sindh government took a strong stand on the issue of GST making it clear that as per the Constitution it should not be part of the NFC. It was reiterated by the chief minister of Sindh that GST on goods was a district tax and federal government had no right to collect it. The NWFP government expressed satisfaction that the response of the federal government was very positive vis-à-vis their demands for resolving the issue of net hydel profit. The representative of Punjab informed the Commission that poverty level in Punjab was much higher as compared to other provinces and "it was a total misperception that this province was getting more resources on population basis". The point of view of Punjab was that it was getting only 47 percent, against the population share of over 57 percent — and per capita distribution to the Punjab was just Rs3000 against Rs6000 to Balochistan and over Rs 4000 to Sindh.

Though it is heartening to note that the provinces and federation showed satisfaction over NFC’s deliberations, but the fact remains that fundamental issue.

Our article The ‘Central’ question that appeared on these pages on Feb 15, 2009 was written in the wake of unanimous resolution passed by the Sindh Assembly on Feb 3, 2009. The Sindh Assembly demanded the federal government to immediately stop collecting sales tax on services and refund Rs213 billion collected under this head by the Federal Board of Revenue (FBR) on gas, power and telephones services from Sindh province during the fiscal years 2001-02 to 2005-06.

The provinces, during the NFC meetings, failed to highlight that the federal government in utter violation of Constitutional provisions was collecting taxes that fell exclusively in their domain. The provinces did not work out their actual share — 70 percent federal tax collection is on account of indirect taxes that provinces alone can levy in a true federal structure — in total collection of FBR. The provinces are not aware of the fact how the Centre has been cheating them since 1973. In terms of Fourth Schedule [Legislative lists] to the Constitution of Pakistan, the provinces have exclusive right to levy sales tax on services. In recent years, however, the federation imposed a number of taxes on services under the federal statutes — Sales Tax Act, 1990, Federal Excise Act, 2005 and Income Tax Ordinance 2001 — in utter violation of unambiguous constitutional position on the subject.

It is a matter of record that the successive governments in Pakistan — civil and military alike — have never bothered to restore judicious distribution of taxation rights between the federation and the federating units. Lack of judicious distribution of taxes and perpetual abuse of constitutional provisions by Islamabad has created disharmony and animosity between the Centre and the provinces. Our prime minister in his maiden speech after winning the "historic" vote of confidence, made a pledge that Concurrent List in the Constitution would be abolished within one year. He could have done it immediately — there was consensus on it in both the houses — but deferred it unnecessarily for one year and even failed to fulfil that promise.

In all major federations — USA, Canada and India for example — the federating units have the exclusive right to levy indirect taxes on goods and services transacted within their geographical boundaries. In Pakistan, the federal government has denied this right to the provinces, and this issue was not raised by any province during the NFC meetings. The federal government has been collecting huge amount of taxes which constitutionally belonged to the provinces and then "distribute" it to them under NFC Award. This is like adding insult to injury. The nationalist Baloch leaders have rightly rejected it as charity, which they are not ready to accept any more.

On the one hand, the provinces have not been allowed to levy indirect taxes on goods and services within their geographical boundaries, and on the other the federal government has utterly failed to tap the real revenue potential of taxes, which is not less than Rs4 trillion. The failure of FBR adversely affects the provinces as they are wholly dependent on what the Centre collects and transfers to them from divisible pool. As FBR collected only Rs1170 billion during fiscal year 2008-09, the provinces get Rs655 billion as their share. Pakistan is, thus, caught in a dilemma: The Centre is unwilling to grant the provinces their legitimate taxation rights and in turn the provinces are unable to generate their own resources to reduce the ever-increasing burden of inflation on the poor population, who are the real sufferers in this tug of war.

Federal highhandedness in tax matters (by using both federal and concurrent lists) has not only negated the true concept of provincial autonomy but also has crippled it financially — this way the Centre wants to perpetuate its hegemony over provinces. The Federal government has been blatantly encroaching upon the undisputed right of provinces of levying taxes on goods and services within their geographical perimeters. Such taxes levied under the garb of presumptive taxes are not "taxes on income (which the federal government is empowered to levy under item 47 of the Federal List). This core issue was not touched by any province nor was it taken into account by the Sindh Assembly in its resolution of Feb 3, 2009. The NFC Action Committee Sindh, which is very active on the matter, it seems, is also not aware of this vital issue.

The debate about Article 160 of the Constitution that deals with the formation of NFC misses the point that this provision does not prescribe any particular formula for distribution of net tax proceeds among provinces. It, in fact, requires equitable sharing and/or distributing of resources among federation and provinces. The issue is not that of vertical or horizontal distributions of taxes and resources but giving the provinces full autonomy that includes exclusive right of levying taxes on goods and services emanating in their respective areas. The Centre, at present, is transgressing on this constitutional right of provinces and then out of so-called divisible pool — comprising unlawfully collected taxes belonging to provinces—gives them peanuts. This is lamentable act. It should be stopped immediately. The ownership of natural resources of provinces and its exploitation for the benefit of their own people is the real issue that NFC must address unless it is too late.

The writers, tax lawyers, are visiting Professors at LUMS.


trade

Export secrets

Pakistan’s exports are heavily dominated by low technology products, whose share in total export earnings exceeds 85 percent — in order to increase exports competitiveness, following suggestions are made

By Hussain H. Zaidi

Increasing market access and decreasing protectionism in the wake of globalisation have put competitiveness at premium. Only competitive nations and firms can enjoy the fruits of globalisation. A country or nation is competitive if it can sell its products in international market at low real cost. Since it is businesses, not the government, which are the real players on international trade scene, export competitiveness of a country means the competitiveness of its firms.

Pakistan’s exports are heavily dominated by low technology products, whose share in total export earnings exceeds 85 percent. The share of medium technology products in exports is about 10 percent, while that of high technology products is negligible. This is in contrast with the global scenario. Developing countries by and large are making strides in making high and medium technology products and their share in global exports is fast increasing in these sectors.

The share of high and medium technology products in Chinese exports, for instance, is 30 and 25 percent respectively. High technology products make up 60 percent of Malaysian exports, while the share of medium technology products is 20 percent. In case of India, high and medium technology goods account for 25-30 percent of the country’s exports. The greater the value addition, the higher the prices exports bring in. Since high technology products embody the maximum value addition, countries relying on such products have high export earnings and rising market share.

To increase Pakistan’s export competitiveness, the following suggestions are made:

The fundamental condition for competitiveness is creating the highest possible customer value, which is a fairly difficult task. It entails studying the various factors-education, income, social class, age, gender and social organisation-which underlie the target consumers’ behaviour, followed by improving the production, distribution and market communication processes. Even then, the job is only half done. Since customer value is not static but dynamic, firms have to constantly take feedback from customers. It is in the light of this feedback that product design, performance, image, supply and promotion have to be adjusted.

Coming to Pakistan, one of the major causes of lack of competitiveness and consequently slow export growth is that most of the exporters do selling rather than marketing. Instead of first identifying customers and their needs and than offering goods that satisfy them, our exporters by and large try to sell whatever they have produced usually in excess of domestic capacity. As their products are not fully tuned to customer needs, they are deficient in customer value. Some exporters even cheat customers by selling substandard goods. This may help them earn profits in one deal but makes it impossible for them to strike another deal with the same importer or even in the same market.

Owing to resource constraint, it is difficult for small exporters to conduct market research about the buying behaviour of foreign consumers. Such exporters need the assistance of Trade Development Authority of Pakistan and Pakistan’s commercial officers in foreign missions to get the required commercial intelligence.

Understanding and complying with the regulatory environment of importing countries is also very important. Globally, while tariffs are being reduced, other trade barriers are supplanting them. These include, but are not confined to, environment standards and those dealing with protection of human, animal and plant lives. Collectively these standards are called sanitary and phyto-sanitary (SPS) measures and technical barriers to trade (TBT). It is pertinent to mention that nearly 60 percent of Pakistan’s exports are purchased by the USA and the European Union (EU), which have strict product and packaging standards. In case of Pakistan, however, exporters either lack awareness of the need to comply with the target market’s SPS and TBT standards or are deficient in the means to comply with the same. They believe, and wrongly so, that merely by offering low price products, they can penetrate a foreign market or that if they can sell sub-standard products in the domestic market, they can also export them. Hence, not surprisingly a large number of export consignments from Pakistan, particularly those of food products, are rejected at the boarder in developed countries for failure to meet consumer safety standards. For instance, on several occasions, export of rice and other products from Pakistan have been rejected for containing aflatoxins beyond the permissible level, which it is suspected, may cause cancer.

The foregoing calls for two things: One, creating awareness among growers or manufacturers and exporters about the need for complying with the food safety and environment standards. Two, strict quality check at both manufacturing and export stages. Needs to be enforced. The government must ensure that products meant for both domestic consumption and export are free of hazardous substances. Generally, the same producers or distributors that supply in the domestic market also export. If they are made to comply with food safety standards in the domestic market, they will also do so while exporting. However, if they get away with selling substandard products in the domestic market, they will, and actually do, try and export such products in foreign markets.

Low labour productivity makes it difficult for exports to become competitive. Labour productivity is low, because, human resource development has traditionally been a neglected area in Pakistan. Workers are potentially an organisation’s greatest asset and no organisation can compete successfully if its most valuable asset remains under-utilised. This calls for making greater investments in the capacity building of the workforce.

Like HRD, industrial research has been a low priority area in Pakistan. Because education is not market-based, whatever scientific research is done in academic institutions has little relevance to the industry. The result is that there is little innovation or even product up-gradation coming through. Because of a low technological base, there is lack of value addition and the country is condemned to rely on low technology products for export receipts. Unless technological base is broadened, it will be difficult for the country to make a transition from a manufacturer of low technology goods to that of medium and high technology products.

A competitive export regime exists only in a competitive economy. Business culture in Pakistan has traditionally been characterised by protectionism and subsidisation, which hindered the growth of competitive firms. However, during last one decade, the government has liberalised the economy. One important step in this respect is tariff reduction. At present, maximum tariffs in Pakistan are only 25 percent (with the exception of tariff peaks), while average tariff rate is about 14 per cent.

The cost of doing business in Pakistan has remained high due to such factors as poor infrastructure, high interest rates, macroeconomic instability and political uncertainty. At present, the country is involved in war against terror, which has taken a toll on the business environment. To cut the cost of doing business, there is the need for improving infrastructure and attaining macroeconomic stability and political certainty.

Finally, in international markets, both products and the exporting country’s image are sold. An otherwise competitive product may not find a large number of buyers simply because of a poor image of the exporting country. This holds true in case of Pakistan, whose international image is one of extremism, intolerance and lack of transparency in business dealings. Image building is a matter of both perception and reality; therefore, the need is to improve upon both these aspects. On the one hand, we must curb extremism, show greater respect for human rights and become more transparent in business dealings, so that the ground reality gets better. On the other hand, the mere negative perception about Pakistan should also be corrected. This requires aggressive marketing and image building by Pakistan’s missions abroad.

Email: [email protected]

 

Democracy’s basic unit

What has truly halted our democracy’s progress is our inability to nullify each dictator’s flawed legacy

By Basit Riaz Sheikh

To say that democracy evolves over time would be a very clichéd statement. Be it political talk shows, TV interviews, or parliamentary speeches, our politicians use it quite frequently to cover up their failed policies and incompetence. I am guilty of using it, too, especially in passionate debates with friends who have long given up on our democratic system’s viability. The next question that comes to mind is how come democracy never seems to mature in Pakistan in spite of all the constitutional reforms, tried time and again by our politicians and dictators alike.

Each military takeover has slowed down the progress of our democratic system. Every now and then, we have had a power-lustful dictator who wrecks havoc with our democratic institutions to elongate his illegitimate rule. But what has truly halted our democracy’s progress has been our inability to nullify each dictator’s flawed legacy. The dictator phobia handicaps us so terribly that our post-dictator reforms just centre on reversing his each and every policy and not on restructuring our institutions to make them more productive and sustainable. Our democracy will continue to stumble until we put an end to this viscous cycle of mindless rollbacks.

As our provincial governments gear up to decide the fate of the local bodies system introduced by the then dictator-in-chief, the question once again is: rollback or restructure. The jury is still out, but the battle lines have been clearly drawn. It is very disturbing to hear members of some leading political parties advocate the complete scrapping of local bodies system and replacing it with centuries old magistracy system. This is exactly the mindset we need to cautiously guard against if we want our democracy to evolve progressively.

The advocates of the magistracy system narrate long tales of alleged rampant corruption by some Nazims. There are countless stories of gross mismanagement and nepotism too. Under the local bodies system, the District Coordination Officer (DCO) was the designated chief financial officer of the district. If any public funds were misappropriated, it could not have been without the connivance of the DCOs. Strangely enough, the supporters of magistracy system want the same DCOs to replace the Nazims.

The easiest but the worst thing the provincial governments could do is to revert back to the system of bureaucratic bigwigs that takes all the power away from the people and puts it into the hands of a few unelected and appointed officials. The bureaucratic system of governance, like any dictatorship, is always bound to collapse in the long run since the decision-makers are never accountable to their people. We must resist the temptation of the easier route.

I agree that the local government system in its present form is far from perfect; but it needs reforms not reversal. In a system, where the Nazim of the cultural capital of Pakistan and a populous city like Lahore is reduced to a mere figurehead with the arrival of an influential Chief Minister, one doesn’t have to be a constitutional expert to figure out that something is terribly wrong with the system. In a system, where the MNA/MPA of an area are more interested in local governance issues and Thaana Siasat than legislating future energy and trade policies, what you get is a political hotchpotch that we have today where everyone is pulling everyone else’s legs. There are countless aspects of local government system that need to be reformed, but with a little prudence and patience we can fix the system to make it far more workable and sustainable than any magistracy system, because unlike the magistracy system, if implemented correctly it truly takes democracy to the grass-roots level.

Even in its flawed form, the local government system somewhat empowered common people. In my own ancestral district Bahawalnagar, I have seen ordinary people with no prior political affiliations get elected as councillors. These people have taken upon themselves to solve their small everyday problems ranging from sanitation issues to water storage. Unlike their bureaucratic counterparts, not only are these people more accessible they are also far more accustomed to their problems.

One of the main political parties is crucifying the present Nazims on charges of bad governance and deteriorating law and order; which is unfair since the system never granted Nazims enough authority to establish their writ in the first place. I know a district Nazim whose DPO (district police officer) wouldn’t even bother to answer his phone call let alone follow his policy guidelines. The Nazim’s written portion of the DPO’s annual confidential report is deemed superfluous, hence making the cops totally non-answerable to the people. This system seems to be neither democratic nor bureaucratic.

As in any developed democracy, the Nazim, being the executive head of the district must be given full administrative authority including law and order and the DPO must directly report to him. This would cease any political bickering between different branches of the local government and ensue a better chain of command with a public representative at the helm of affairs. Some may argue that resting all authority in the Nazims may lead to increased nepotism and further bad governance. In case it does, the beauty of democracy is that it empowers people to vote out all those who fail to deliver.

With more authority, the issue of regular and frequent accountability of Nazims and other office-bearers becomes even more important. By leaving the question of accountability to the electorate every four years, the current local government system runs the risk of massive unchecked corruption. This weakness has been exploited by many office-holders in the past. However, as we witnessed in the case of the special task force formed to vilify the anti-government Nazims in Punjab, the accountability setup must not end up being another tool in the hands of provincial Chief Minister to meddle in district governance matters. To ensure transparency, the accountability commission should either be under the auspices of retired judges of the High Court or a provincial parliamentary committee comprising of elected members from all political parties.

The governance issues like law and order are served more effectively at the local level. The local government is the most basic unit of our democracy. Until and unless we restructure it efficaciously, our democracy will never mature up.

The writer is a PhD student at Cornell University. Email: [email protected]

 

 

Conducive environment

Climate change is not only raising concern for dying rivers but also might be a way for two countries to work together

By Shahid Husain

The Indus, one of the great rivers of the world, is in trouble. The river which gave its name to the Indian sub-continent has been used and abused by man and is now facing a slow death. The Indus has always been at the centre of economic life of the western part of the continent, what is now Pakistan. Its waters supply the country’s major cities including Karachi, which at 16 million people is one of the biggest cities of the world.

In its long journey from the Himalayas, it has scoured out the fabled Khyber Pass, and once in Pakistan, it has been harnessed through giant dam building and irrigation projects to provide electricity and food for an ever growing, ever poor population.

The trouble caused to the Indus due to building of barrages and large dams would be accentuated due to the thinning of Himalayan glaciers that happens to be a major source of water for the Indus besides major rivers of India and China.

The cause of the Himalayan glaciers melting down is climate change and that was thoroughly discussed at the South Asian Media Briefing Workshop on Climate Change in New Delhi on August 27-28 ahead of the Copenhagen Conference on the burning issue in December this year.

The workshop was organised by Centre for Science and Environment (CSE), an independent Indian think tank that works on environmental issues. Glaciers serve as regulators of regional ecosystems, storing up snow and ice in the winter months when precipitation is at its peak, and then releasing it during the drier summer as melting occurs. Any decrease in glacial volume will have a direct negative impact, with more serious droughts in summer as a result of reduced melt-water, and more floods in winter as less water is retained as ice.

According to the Chinese Academy of Meteorological Sciences, the Plateau’s glaciers have been melting at a rate of 7 percent annually since 2000, as warming trends have accelerated. If, as expected, the rate of melting continues at this high figure, glacial coverage of the Plateau will be reduced by 50 percent over the next ten years.

Dr. Anil V Kulkarni, coordinator, Snow and Glacier Project, Space Application Centre (SAC), Ahmedabad, said Himalayas have approximately 33,000 sq. km under glaciers but fragmentation of glaciers is taking place leading to shifting of mean. He said fragmentation of glaciers would have profound impact on glacial retreat since it effectively reduces depth and response time. He said many glaciers have now no "accumulation area." He added that the retreat of 1317 glaciers suggests 16 percent loss in area since 1962.

India has vowed to undertake joint glacier studies with Pakistan and evolved consensus on climate change with Pakistan. It seems to be a good omen. In fact, similar worries about climate change could lead to narrowing of conflicts in other areas between the two countries. Farrukh Iqbal Khan, Director, Pakistan’s Ministry of Foreign Affairs and a top negotiator on climate change talks, was at the CSE workshop and confirmed that there was indeed an issue of "water stress" in Pakistan, since its resources were shared and this could lead to conflict. He hastened to add that there was also a "silver lining" because stress could also lead to cooperation. Indian ministers and scientists were all praise for Khan for his negotiating skills and showed optimism that developing countries might succeed in forcing developed countries that happens to be the major polluters for striking a positive deal in climate change talks.

"0.5 percent of GDP of developed countries should be for climate finance," said Shyam Saran, special envoy of Indian Prime Minister on Climate Change. "The contributions should be made on the basis of per capita income of developed countries," he said.

It should be pointed out that rich countries account for about seven out of every ten tonnes of carbon dioxide that have been emitted since the start of the industrial era. Historical emissions amount to about 1,100 tonnes of carbon dioxide per capita for the United Kingdom and the United States, compared with 66 tonnes per capita for China and 23 tonnes per capita for India. "This is the natural debt of the rich countries as against the financial debt of industrialised countries and it has to be paid," according to a document compiled by CSE.

Saran pointed out that developed countries’ vision on climate change was poor and they had ignored their commitments. There was also an attempt to split developing countries and least developing countries, he said. "Climate change only exacerbates the stresses which we already have. Therefore, our response is a response that is inbuilt in our development plans and growth," Saran added. Technology about climate change, he said, should be made available as public goods.

"Climate-friendly technologies should be made available free from intellectual property rights," said Farrukh Iqbal Khan. "It should avoid any coercive measures such as trade sanctions," he added. "Effective financing and resource delivery is the key," said Dr. Anand Patwardhan, executive director, Indian Institute of Technology, Mumbai. "Resources should be predictable; they should not be donor-driven," he said.

"Climate change is real, it’s already dangerous," said Sunita Narain, director, CSE. "It’s also urgent and it needs us to act quickly and it is directly linked to economic growth," she added.

 

 

reform

Build cities in FATA

A roadmap, for dismantling tribal structures, that may look ambitious on paper but is worth a try

By Raza Khan

The persistence of the tribal structure in Pakistan’s tribal areas, despite its dysfunctional nature, incompatible values and their manipulation and highjacking in recent years by national and foreign religious radical and terrorist outfits is largely responsible for unprecedented extremist-terrorist upsurge in the country and even somewhat internationally. Therefore, any counter extremism strategy in Pakistan could be effectively evolved and meaningfully implemented if the said tribal structure is somehow overthrown as it can’t be reformed and any claims in this regard are farfetched. But this could obviously be done through an evolutionary process.

The foremost measure in diluting the tribal structure is to have such physical and social structures in place in FATA that could effectively lead the process of social change there. These physical and social structures could take root and thrive only in a conducive environment. Since no such environment exists there, it has to be introduced from without. This could most effectively be done by establishing some cities in the tribal belt of Pakistan.

To begin with, four sizable cities could suffice. These cities should have well-laid infrastructure and well-protected and delimited boundaries in order to effect change in tribal areas rather than getting tribalised reversely, as has happened to many areas of NWFP. The foundations of these proposed cities in tribal areas obviously could not be laid immediately on industries due to location problems and total inexistence of industries there. But these cities could be made fully functional and economically viable through the services sector like education, transport, construction, telecommunication and media. The growth of services sector instead of industries could save the crucial time available for developing FATA.

The gradual development of these sectors would make the cities self-sustaining. This is indeed important. The newly established mega towns would definitely draw educated, skillful people from not only FATA but also from outside. Thus they would evolve a work and need-based professional environment. As such, social milieu is always impersonal and individualistic in orientation; it directly clashes with the highly personalised and collective tribal social structure.

This may sound strange that people from outside or from other parts of FATA would come to a particular tribal area for purely professional engagements. But we have the example of Darra Adam Khel, the town well-known for its crude arms industry. When production of arms was in full swing, most of the workmen and craftsmen working there were from outside the tribal areas including Karachi and Punjab. Moreover, by virtue of being a big arms market, Darra used to be frequented by visitors from all over Pakistan. Even the master craftsmen of Darra on occasions got contracts from Hollywood companies for providing old type of guns to be used in shooting of films. However, official Pakistani planners could not foresee to capitalise on this potential of the town to make it as a symbol of development in the whole tribal region.

By bringing together the educated and skillful professionals, the proposed new cities could initiate the much-needed social change in FATA that has to culminate in transforming the social complexion of the tribesmen and women. This change could be maintained and rather snowballed by the evolving social institutions of modern family, liberal education, non-subsistence mass producing economy, secular political affiliations and above all by the non-tribal religious institutions.

Obviously, in the would-be cities in FATA with professional and non-agrarian and somewhat urban environment the incoming hitherto tribal families have to sever their links and bonds to survive in the new social settings. Overthrowing the tribal identities and bonds indeed would be indispensable for the families to be functional in the new setting of city. This foundation of a new family that is nuclear in structure having parent and their children or at the most grandparents could be laid. If the new cities in FATA and their planners and governors are able to manage the situation a large number of such tribal families could be implanted in these proposed cities.

This would be a Great Leap Forward, using China’s Mao Zedong term for his ‘Cultural Revolution’ (1966-76) in dismantling the tribal structure. On one hand the hitherto tribal families would be no longer under the collective decision-making of their clans and tribes and on the other children of these new families would have completely new environment to socialise in. This socialisation in a generation’s time would significantly dismantle the tribal structure in FATA provided all other things move in the desired direction.

Obviously children undergoing their socialisation in a non-tribal and hence non-violent and tolerant milieu would be broadminded in approach and modern in outlook besides having tolerant social behaviour. This would significantly curtail the level of extremism in the tribal society, which by that time expectedly would no longer be a tribal one.

Although education institutions have been present in different tribal areas of Pakistan, they have played insignificant role in transforming the tribal society. Naturally schools operating within tribal structure and run by teachers, themselves socialised in tribal mores, could not be expected to effect a social change and development. In fact, the funds for establishment of schools in various tribal areas have always been used by the government to bribe tribal chieftains to have his relatives appointed as ghost teachers in schools that never got constructed. Thus education was not at all given a chance to reform the tribal society; rather the funds allocated in the name of education have always been used by the tribal maliks to reinforce the tribal structure.

On the other hand, some enlightened tribesmen, educated elsewhere, dedicated their lives to promoting education in FATA. Perhaps the most educated among them — Syed Razi Hussain Shah Kazmi, principal Government Elementary College, Jamrud, Khyber Agency — had to pay with his life (beheaded by Taliban) in December 2008 for his efforts to reform tribal society. Educated people have generally been at risk. One of this writer’s close friends from South Waziristan, who opened a school to contribute to change there, was intimidated by extremist elements to the extent that he had to give up his mission.

Therefore, only within the proposed new cities in FATA could one expect to have educational institutions which have the capacity to educate the tribesmen. But for these educated institutions to function desirously, majority of the teachers have to be brought from elsewhere. Once such educational institutions are operational, the children of the newly implanted tribal families in cities could have their first experience of an environment where real education, that has no linkage with tribal values, could be imparted.

Moreover, it could be these institutions which can enrol tribeswomen for educational and training purposes. Thus galvanising half of the tribal population to contribute to the demolishing of the old tribal structure in which it now has no say, let alone control.

As far as tribeswomen are concerned, the relative urban social setting of the proposed cities could help them redeem their personalities, social roles and rights in a number of ways. The existing tribal structure does given women unrivalled respect but it is basically due to the Pakhtun social code and traditions rather than tribal edifice. The decadent tribal structure and the radical control-taking attitude, on the other hand, has almost ostracised women in recent decades.

Interestingly, this is happening at a time when women elsewhere to a certain extent have been able to attain their rights and gained success in redeeming their genders and identities. It is ironic to note that if Um-ul-Momineen Hazrat Khadija could engage in trade and business 1400 years ago in a profoundly tribal society of Arabic peninsula, why can’t Muslim women of FATA take up jobs permissible in religion today?

One is convinced of the strength of the well-known theory of ‘Base and Superstructure’ by Karl Marx in which he argues that at the foundation of ever society is its economy and all other institutions whether politics or family derive their strength, shape and nature from the base i.e. the economy. This contention of Marx seems much convincing when one looks at the society of the tribal areas. The nature of FATA’s economy can be described by the terms subsistence, agrarian, amorphous, undocumented and unregulated economy. Every tribal family and clan produces its own on the very small landholdings and raises domestic animals for meat and milk. The state does not have any role in the tribal economy; thus tribesmen justifiably pay no taxes and hence have no sense of belonging or responsibility to the state.

This leaves the tribal economy highly susceptible to criminalisation and radicalisation and so it is no coincidence that criminal and smuggling mafias have always manipulated the conditions in FATA for their own ends. Being infamous for bringing the proverbial kegs of ill-gotten wealth, of late tribal areas have been one of the main source of finances and sustenance of the clerical extremist and terrorist outfits and their activities.

With the establishment of cities in FATA, the services sector like education, telecom and health would have the opportunity and space to thrive. This space has hitherto been absent or linked to the vicissitudes of tribal life. On the other hand the newly established cities may provide some support to the industries to have foothold in tribal areas. If the new cities in FATA, even in the long run, are able to support industries like providing professionals, transportation and partial marketing facilities, it would be a great contribution to the efforts in dismantling the tribal culture.

With the US intent to establish Reconstruction Opportunity Zones (ROZs) on the Pakistan-Afghan border encompassing FATA — where the latter have immense mineral and natural resources potential like Waziristan’s copper — new cities could really supplement this project and make it a success. Once a significant number of industries are set up on ground in FATA, this would in itself trigger a huge change in the tribal social structure. Because, historically speaking, it was the Industrial Revolution (1780-1850) in England which changed for good the feudal-aristocratic society prevalent there and subsequently in the whole of Western Europe.

The institution of modern politics could only develop within the ambit of conducive, tolerant social and physical structures. Modern politics is a great vehicle of change and is instrumental in democratisation of society. Tribal structures are totally incompatible with modern politics. Therefore, the proposed cities in FATA could provide the platform for political players and political parties to organise their activities. Only through politicisation, the power-political vacuum in tribal areas could be efficiently filled by genuine players.

Otherwise, the present power political edifice in FATA dominated by corrupt state officials, clerical parties and Taliban would strengthen further and the problems would keep multiplying. Without urban settings, all attempts of extending Political Parties Acts to tribal areas, as announced by President Zardari recently, would be a futile exercise. Moreover, cities with their peculiar culture always serve as sanctuaries for intellectuals, liberals and dissenting voices. This is indeed important in the context of prevailing conditions in the tribal areas.

Apart from it, if FATA has some cities it would give rise to civil society and civil rights movements and without these movements politics, human rights and democracy in tribal areas are unthinkable.

Significantly, it is the relative environment of cities where technology could best be employed to regulate and facilitate the lives of the inhabitants. Tribal structure in FATA being quite primitive due to least use of technology has minimum or no reliance on the latter, which provided little opportunity to contribute to change the tribal society. With FATA having cities, technology will for the first time come and play its role in the process of change and development.

Today, the most negative social trend in Pakistani tribal areas is the rise of extremist and clerical version of Islam. This trend took full advantage of the tribal structure to have sway. This stranglehold of clerical extremist tendencies could only be reversed if it comes to grips with some rival politico-religious movement. But in the extremist dominated tribal areas it has now become impossible for rival politico-religious ideology to challenge radicals. For instance, a well-known religious figure of FATA, Pir Noor Ul Haq Qadri, whose religious ideology has been profoundly against Taliban, has lost a number of his family members in attacks by Taliban and now he seldom visits his native Khyber Agency despite being a federal minister. He has been able to evade physical harm so far to his person by taking up residence in Islamabad. Therefore, it could only be the safe and sound environment of new cities in FATA that will provide anti-radical politico-religious movements and forces to organise people against the extremists, convince them of the ill-effects of tribalism and thus initiate an indigenous challenge to both.

Here it is important to note that both Pakistani government and international community would have to play their full role in establishment of the proposed cities in FATA and above all provide them fool-proof security. This could best be done by employing layers of security mechanism and this in turn could be easily attained if all the would-be cities have clear limits which are not violated by any one particularly by extremists and terrorists. The cities must have clear exit and entry points, always manned by security officials. This is not difficult if big boundary walls and barbed wire borders are constructed around these cities. The purpose is to give through these cities and their environment a totally new non-tribal structure a chance to evolve.

The strength of the argument of having cities in FATA can be gauged from the fact that it is through the Governor House and FATA Secretariat in Peshawar, a city, though which affairs of FATA have been managed, howsoever, poorly. Had these offices not been located in the relative security of Peshawar, they would not have been able to provide any governance structure in FATA.

But the problem with this arrangement is that the officials can’t have the real feel or a judgment of the situation in FATA. If such offices are located somewhere in FATA, which is not possible without having some cities there, the power-political vacuum in FATA could be filled and a worthwhile and efficient administration could be provided to tribesmen. The indispensability of cities in tribal areas could also be judged from the fact that the government for the last many years has been planning to construct a university and medical college in FATA and has time and again made announcements in this regard but could not do so because of unavailability of suitable place to build them. Resultantly, there have been suggestions to build these educational institutions in Peshawar and Kohat, both cities of NWFP.

Then for the last many years there have been very strong voices from influential tribesmen representatives to make FATA a province, which is a very practicable demand-cum-suggestion. If the government concedes to such a demand, the question arises: whether it is practical without having some viable cities in FATA?

In recent years there has been much national and international focus on Pakistani tribal areas. Many people in the World have come to realise that the profoundly underdeveloped, remote, unsophisticated and ignorance-stricken conditions are responsible for the sordid situation in FATA. Some public and private organisations have also come up with development strategies to develop the tribal areas.

All these efforts have failed to make any difference. The reason is that they did not identify the root cause of the problem in FATA which is the tribal structure. Thus these strategies and concept papers could not arrive at workable solutions.

(The writer is a political analyst and researcher presently writing a PhD thesis on Countering extremism-terrorism in Pakistan-Afghanistan Region.

[email protected])

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