Thursday, June 27, 2013
TTP’s extended reach The remote control bomb secreted inside a motorcycle that targeted Sindh High Court senior puisne Justice Maqbool Baqar, failed to kill its intended target who was miraculously saved with only injuries but wiped out 10 of his security detail while 15 were injured. The motorcycle was innocuously parked before a mosque on the judge’s route to the Sindh High Court. It is said the blast site had no CCTV cameras. Later reports said most of the CCTV cameras installed in the city were out of order. So much for surveillance and monitoring. Justice Maqbool Baqar, who has a reputation for honesty and integrity, was probably targeted for his earlier services as a judge in the anti-terrorism courts. This was confirmed by a Tehreek-e-Taliban Pakistan (TTP) statement by spokesman Ehsanullah Ehsan claiming responsibility for the attack and attempting to justify it by characterising the judge’s decisions as ‘against Sharia and the mujahideen’. The other angle DIG South Dr Ameer Shaikh was about 70 percent convinced of was that Justice Baqar was targeted because he is a Shia. Condemnations of the attack came thick and fast, from the top political leadership to the Sindh judiciary, Bar Councils and others. The lawyers community of Sindh went on strike in protest. Security of superior court judges, the chief minister, governor, etc, is being reviewed by the Sindh government, especially those amongst them who are Shia. The Sindh Assembly passed a condemnatory resolution and MPAs warned the attack was a wakeup call indicating the terrorists were ‘close’. Dr Farooq Sattar of the MQM saw the attack having taken place purely because Justice Baqar was striving for truth and justice. He underlined that the prime minister needs to sit with the chief ministers of all the provinces and the security agencies, presumably to forge an efficacious response to terrorism, whose demonstrated deadly efficiency now reaches from north to south and east to west through the length and breadth of the country. However, Dr Sattar’s suggestion to summon an all parties conference, which Punjab Chief Minister Shahbaz Sharif also ‘announced’ in Lahore, does not inspire confidence, based on past experience of such conferences. They may provide much sound and fury, but in the end all that amounts to nothing. If at all any such conference can have a beneficial outcome, it would be if all the political forces agree a common position on terrorism and how to combat it. There too, however, opinion is divided, with the range of views extending from talking to the terrorists to wiping them out. The military has been trying for at least the last five years to nudge the politicians to a consensus on anti-terrorism strategy in order to strengthen the military’s hand vis-à-vis anti-terrorist operations. Alas, we are no nearer that goal today and the new dispensation has still to come out with a clear cut strategy on the issue, Interior Minister Chaudhry Nisar’s wish list notwithstanding. While the country as a whole is terrorism-afflicted, perhaps the one city most affected has been Karachi. The metropolis of at least 18 million people, contributing 42 percent of GDP, has been beset for years with murders, kidnappings, ethnic, sectarian and political violence. To this combustible mix has been added terrorism for some years. The result is that the industrial and commercial hub of the country ha s been virtually brought to its knees. One estimate says 2,000 people were killed in the city last year due to ethnic and political violence, the deadliest toll in two decades. As we have emphasised repeatedly in this space, it is the lack of coordination between civilian and military authorities, and the federal and provincial governments that leaves gaps and holes for the terrorists to wriggle through and breach even the most elaborate security regime. Talk is in the air finally of the need for a coordinated and cooperative coming together of all these state actors if the hydra of terrorism is to have all its heads cut off. The sooner that comes to pass, the better. Already, too much water (and blood) has flown down the river. Time, gentlemen, for action, not just words.
Monday, June 24, 2013
Einstein’s wisdom About 20 gunmen dressed in Gilgit Scouts uniforms tortured, then riddled the bodies of 10 foreign tourists with bullets at the Fairy Meadows, Diamer base camp near Nanga Parbat on Sunday. A Pakistani woman mountaineer and local guide were also reportedly amongst those killed in an unprecedented attack in an area hitherto free of violence and militancy. Interior Minister Chaudhry Nisar conceded in the National Assembly (NA) that the area had no security escort arrangements for foreign tourists. The attackers abducted two local guides and with their help reached the base camp. One of those guides is dead, the other under interrogation. Two claims of responsibility competed for the dastardly deed. The Jundullah sectarian group was first off the mark with a claim of responsibility, followed some time later by the Tehreek-e-Taliban Pakistan (TTP), whose spokesman Ehsanullah Ehsan said a new unit called Jundul Hafsa had carried out the attack in revenge for the killing of the TTP second-in-command Waliur Rehman in a drone strike recently. The count of the dead includes six Ukrainians, three Chinese, two Slovaks, one each Lithuainian and Nepalese, and a Chinese-American. As though the terrorists had not already virtually brought the country to its knees by their unremitting actions, the past week having seen a flurry of such attacks, this latest incident must pose a serious question mark over the future of foreign mountaineering and trekking expeditions in the country, one of the last vestiges of tourism left in terrorism-afflicted Pakistan. The government has responded with anger and condemnation, Prime Minister Nawaz Sharif describing the incident as “inhuman and cruel”, while Interior Minister Chaudhry Nisar moved swiftly to suspend the Chief Secretary and IG Police of Gilgit-Baltistan and order the setting up of an inquiry committee whose findings would be shared with parliament. The bodies of the killed were in the meantime transported to Islamabad where, after post mortems, they were being handed over to their respective embassies for shipping home. Also, any remaining foreign tourists in the area are being evacuated (never to return?). The responses from the government, which has promised the usual ‘thorough investigation’, and the NA, which passed a unanimous resolution of condemnation moved by the PTI’s Shah Mehmood Qureshi, smack of the traditional ritualistic reactions. These attempt to camouflage the precarious state of the country because of terrorism and the failure of the security forces to quell it behind brave words about the ‘image’ of Pakistan and accusations (from some quarters) of the ubiquitous ‘foreign hand’, are all too disconcertingly familiar. Admittedly, the government is new and has hardly had time to settle in. In fact the traditional 100-day ‘honeymoon’ normally available to new governments has been conspicuously absent this time, a sign of the dire straits the country is in. From the energy crisis to the economy, a grip on eroded governance to terrorism, the new government has its work cut out for it. It is an unenviable bed of thorns they have inherited. Chaudhry Nisar has since taking over the interior ministry been on record several times regarding the security architecture’s failings. He reiterated the problem in the NA while discussing this latest grisly incident. The point is that unless the new national security policy under discussion manages to bring all the security and intelligence forces under one umbrella (possibly the National Counter Terrorism Authority?), we will be hard put to it to “deal with the uphill task of combating terrorism” (Chaudhry Nisar). Complacency and ‘business as usual’ in this respect is our biggest enemy, not to mention the normal inertia that creeps in eventually after a few hours or days of being on alert. A radical overhaul therefore, of the security and intelligence apparatus is critical if the terrorists are to be defeated. This involves the civilian and military, federal and provincial authorities being on the same page (and under the same umbrella sharing their data base), which according to Chaudhry Nisar is now a given. Certainly going on in the old manner and traditional ways is a prophecy of doom foretold. Einstein once said, “Insanity is going on doing the same things and expecting different results.” Heed the words of wisdom of one of the greatest scientists humanity has produced.
Sunday, June 23, 2013
Dar’s winding up on budget Finance Minister Ishaq Dar faced his moment of truth while winding up the budget debate in the National Assembly on Saturday. Having been under heavy fire for many of the budget proposals, Dar had to appear simultaneously conciliatory and firm. He proposed amendments to placate the agitated salaried class and lend legitimacy to the hasty implementation steps of the government, notably the General Sales Tax (GST) increase of one percent that has been struck down by the Supreme Court. Dar argued that rescheduling or a moratorium on the IMF loan was not available and failure to meet repayments would be a default. He revealed the IMF’s regret at having advanced such a large loan whose repayment was proving difficult. He said foreign inflows were required to repay the huge loans obtained by the previous government but these inflows had to be on suitable terms. This year, $ 3 billion of the IMF’s $ 7.6 billion Standby Facility had to be paid. Whereas engagement was required with the IMF and other key financial institutions, Dar insisted that the one percent increase in GST from 16 to 17 percent would have to be retained to meet the essential tax collection target of Rs 2.475 trillion. The GST rate, he assured, could be reduced in the future if the revenue target was met in fiscal 2013-14. Further, he argued that the previous government had incurred Rs 600 billion additional expenditure, which had to be regularised through supplementary grants. Not only that, the finance minister reminded the house, the circular debt in the energy sector of Rs 503 billion too had to be cleared as the first step towards resolving the energy crisis and load shedding. In addition, a reduction in the budget deficit of Rs 2 trillion and tax shortfall of Rs 374 billion last year had to be met. The concessions Dar has made are: the tax liability for those with an annual income of Rs 2.5 million or less will remain unchanged; zero GST rating on stationery items, milk, dairy products and bicycles has been restored; exemption from income tax for non-profit educational institutions stands; the rate of additional GST on supply to unregistered persons has been reduced from two percent to one percent; rental income will be taxed as withholding tax adjustable against final tax liability in two slabs of 10 and 15 percent, reduced from the proposed six slabs going up to 17,5 percent, and teachers and researchers’ rebate on tax has been reduced to 40 percent from 75 percent rather than doing away with it altogether. On the other hand, withholding tax on mobile phones has been increased from 10 to 15 percent. Despite Dar’s clarificatory arguments and justifications for the increase in GST, which may or may not be retrospectively validated from June 13 by parliament, Leader of the Opposition from the PPP Khursheed Shah was dismayed at the retention of the increased GST rate. As has already been in evidence despite the Supreme Court striking down the increase before parliament has passed the Finance Bill, there has been a sympathetic price rise across the board since the budget. Khursheed Shah anticipates a flood of price hikes if the GST increase is passed. These views reflect not only the criticism from the opposition on the provisions of the budget, they strike a popular chord with citizens subjected to the fresh round of price rises and inflation being heaped upon their already straitened financial circumstances. This in essence is the dilemma not only for Mr Dar but any government in today’s Pakistan: how to reconcile the contradictory pulls of financial and budgetary government solvency, including huge debt repayments and defence expenditure, against the need to provide relief to the people whose back has been broken by inflation, unemployment and the energy deficit over the last five years.
Saturday, June 22, 2013
Governments beware The newly elected government of the PML-N has encountered its first taste of judicial activism and embarrassment at having one of the central pillars of the budget 2013-14 knocked out from under its feet. In a five page short order, a three member bench of the Supreme Court (SC) headed by Chief Justice Iftikhar Mohammad Chaudhry has held that the implementation of the one percent increase in General Sales Tax (GST) from 16 percent to 17 percent before the passage of the Finance Bill of which it was a part was null and void and unconstitutional. Similarly, the increase in POL prices as a result of the GST increase was invalid (they have now been withdrawn). The government’s defence before the court that its declaration under Section 3 of the Provisional Collection of Taxes Act 1931 validated the measure imposed since June 13 was struck down by the court for not having the status of either legislation or sub-legislation, therefore without force in law and contrary to Articles 3 (elimination of exploitation), 9 (security of person), 24 (protection of property rights), and 77 (taxes to be levied only by parliament). Also, the additional 9 percent GST being collected on CNG, over and above the prescribed 16 percent rate under the proviso to Rule 20(2)(c) of the Sales Tax Special Procedures Rules 2007 and Section 3 of the Sales Tax Act 1990 was unconstitutional and in violation of the constitutional Articles quoted above as well as Section 3 of the Sales Tax Act. OGRA was directed to issue a revised notification to recover GST at 16 percent on taxable supplies until the Finance Bill was passed by parliament. Regarding the increase in essential commodities’ prices in the wake of the GST increase, the court directed the federal and provincial governments to take action under Sections 6 and 7 of the Price Control and Profiteering and Hoarding Act 1990 (Essential Commodities) to keep prices consistent as per the Sixth Schedule under Section 13(1) of the 1990 Act (Essential Commodities). Further, the court ordered the government to deposit the excess GST collected on POL/CNG or any other taxable supplies since June 13 with the Registrar of the SC, pending the final passage of the Finance Bill by parliament. In the light of the final Bill, the amount would be either returned to the government or appropriate orders passed. The short order has effectively put the budget on hold, at least temporarily. It can only be rescued from the impasse created by the court’s verdict by parliament. In the National Assembly on Friday, on the one hand the combined opposition seemed to be enjoying the government’s discomfiture, albeit in restrained fashion, and on the other hearing voices questioning the parameters of the budget now in the light of the SC verdict (Shah Mehmood Qureshi of the PTI) as well as statesmanlike speeches for parliament to rise to the occasion and settle the matter itself rather than it being settled by other forums (former Speaker Dr Fehmida Mirza of the PPP). After he was free of the Senate session discussing the budget (the Senate made various recommendations), beleaguered Finance Minister Ishaq Dar reiterated on the floor of the lower house that the government would abide by the court’s verdict, at the same time postponing his winding up speech on the budget until Saturday (today). It remains to be seen how the Finance Minister achieves either consensus or at the very least uses the PML-N’s majority in the house to get the GST increase passed or, if it is not, recasts his budget. The gnomes of the finance ministry have advised Dar to ask his detractors on the GST increase to suggest alternatives to generate the Rs 60 billion that would be lost of the measure is not passed. The problem stems from the long-standing practice by successive governments to implement taxation measures even before the Finance Bill passes muster over many years. But what the finance ministry gnomes and their boss forgot was the changed landscape of Pakistan in which they now have to operate. It can no longer be assumed with confidence that just because something has been done for long, it will continue to enjoy immunity from judicial review. The superior judiciary, immeasurably strengthened since its restoration in 2009, has sent a clear message to all governments, incumbent as well as future: Gentlemen, the days of executive privilege over and above the law and constitution are now a thing of the past. You had better therefore pull up your socks and shed complacency derived from such past practices.
Wednesday, June 19, 2013
So much for talks The suicide blast at a funeral in Shergarh, Mardan on Tuesday killed an independent MPA and 34 others, injuring dozens more. It seems the MPA was the target. The incident once again indicates that for the militants, nothing is sacred, not even the last rites of a person. This attack was the deadliest in three months. The MPA, Imran Mohmand, had apparently been receiving threats and had been provided police security, but this proved unable to prevent the bomber from exploding himself next to the MPA soon after the funeral prayers ended. While the ritual condemnations from high officials and the announcement of cash compensation for the dead and injured was once more on display, this is by now an insufficient response to the persistent terrorism that has brought the country to its knees. This bombing was the deadliest since the blast in Karachi on March 3 that killed 50 people, and occurred just three days after the horrendous attack on a women’s university bus in Quetta that killed 25 people, including 14 girl students. Shergarh borders Malakand, formerly a stronghold of the militants that was cleared through an army operation in 2009. Though there has been no claim of responsibility so far, the cast of usual suspects is headed by the Taliban, who hold sway in Mardan after being ejected from the Swat valley by a military campaign. To put things in perspective, it is important to recall that 150 people were killed by militant actions during the election campaign. After the campaign dust settled and governments were formed at the Centre and in the provinces, the terrorist ‘offensive’ has not ceased, if anything it has intensified. Interior Minister Chaudhry Nisar Ali has put his finger on some of the anomalies attending the country’s anti-terrorism efforts. In a television interview, Chaudhry Nisar said the military needed to be purged of “Pasha-like” officers, a reference to former ISI chief General Pasha. The meaning of this pointed reference became clearer later in the interview when Chaudhry Nisar talked about the intelligence agencies. General Pasha may or may not deserve the ‘accolade’ paid to him by the interior minister, but his tenure was perhaps the high point of the duality of policy adopted by the military establishment vis-à-vis militant groups. The arbitrary division of these groups into ‘good’ and ‘bad’ Taliban ignored the nexus between those operating in Afghanistan and those targeting Pakistan. That ‘fiction’ has since been exposed in the media. On the intelligence agencies, of which there is a considerable panoply, Chaudhry Nisar decried the tendency to act as rivals to each other, at the cost of a coordinated and concentrated anti-terrorist struggle. As these lines are being written, there are reports that a national security policy is under consideration amongst Prime Minister Nawaz Sharif, the interior minister and COAS General Kayani. This has not come a moment too soon. In this space we consistently advised the previous government that an overarching, centralised structure for the anti-terrorist struggle with a shared database was a sine qua non for an effective anti-terrorist strategy. Chaudhry Nisar appears to have endorsed the idea in principle in his remarks. It remains to be seen if the civilian and military authorities, and the Centre and provinces can bring all their intelligence assets on the same page against an elusive and deadly enemy. Without that, the authorities will continue to chase their tail, reduced as they are to reactive rather than proactive steps. Amazingly, in the face of the latest attack that has killed the second MPA in Khyber Pakhtunkhwa (KP) since the elections, the Pakistan Tehreek-e-Insaaf (PTI) leaders continue to harp on the tired formula of peace talks with the murderers of innocent men, women and children. Their blinkered view continues to lay the blame for such incidents on the war on terror and drone attacks. What drone attack, even had it occurred, would justify killing people at a funeral indiscriminately and cruelly? The PTI and others of its ilk need to wake up and smell the coffee. What the country (and KP) needs to understand is that we are confronted by a fanatical enemy impervious to logic or reason. Talking to such elements is like talking to a brick wall. They need to be answered in the same language they have long employed, the language of force.
Monday, June 17, 2013
Balochistan conundrum Federal Interior Minister Chaudhry Nisar Ali visited Ziarat on Sunday to see for himself the destruction wrought on the Residency that still resonates in people’s hearts as the last residence of Mr Mohammad Ali Jinnah. Talking to media afterwards, Chaudhry Nisar vowed to rebuild the historic building within 3-4 months. Describing the destroyed building as a national asset, the interior minister also announced that a plan would be chalked out to provide maximum security to historic places in the future. The sentiment may be praiseworthy, but the minister may soon be brought back to earth by the implications of such a plan. There is no figure of the number of sites that answer to the description ‘historic’. Imagine calling upon the existing already overstretched human and material resources of the security agencies to safeguard the probably thousands of such sites. Given the ongoing battle against terrorism that has the country by the throat, the plan may not be practicable. Hiring fresh security personnel for the task may also run foul of the straitened financial circumstances the state finds itself in. So, for all these reasons, our advice to the worthy interior minister would be, nice idea, but impractical. Instead of passively trying to guard everything in sight (an impossibility in any case), the security agencies need to be re-oriented in the direction of strengthening intelligence-based proactive and pre-emptive steps against the terrorists. In this space we have long argued that what Pakistan needs in its fight against terrorism is an overarching body with a centralised data base that helps coordinate the efforts of the Centre and the provinces, civilians and the military against the jihadi extremists, including those of a sectarian hue such as the Lashkar-e-Jhangvi (LeJ) that has taken responsibility for the horrible events in Quetta the other day. The LeJ has now also revealed that it used a female suicide bomber to attack the bus of the university students in Quetta. She is said to have exploded herself after boarding the bus. The fanatical mindset of the LeJ has by now managed to persuade even females to join its malign purposes and agenda. Chaudhry Nisar’s hint at certain decisions having been taken by the federal government vis-à-vis the situation in Balochistan, but which awaited approval by Prime Minister Nawaz Sharif, has sparked off contradictory speculations about whether the Centre will intervene in the security and law and order situation or simply support the Balochistan provincial government. Given that the government in Quetta is the PML-N’s choice and newly installed, pending any announcement of the ‘decisions’, the likelihood is that Islamabad will stand in support rather than replace or displace the Quetta government in handling the situation. The issue however, of the Baloch nationalist insurgency remains unaddressed. The whole idea behind inducting a Baloch middle class moderate nationalist like Dr Abdul Malik Baloch as chief minister was that he would be better placed to approach and persuade the insurgents to come to the table. The insurgents earlier made their opposition to the new arrangement clear even before Dr Malik took office. Now they have underlined their hostility to what they see as the ‘Trojan Horse’ role of the new chief minister vis-à-vis defusing the nationalist insurgency. Based on the Baloch nationalist struggle’s past experiences, every time they have eschewed armed resistance for political engagement, the results have not necessarily gone in their favour. Scepticism regarding the role of Dr Malik therefore on the nationalist insurgents’ side is understandable. This should not, however, be reason for abandoning serious efforts to approach the insurgent leadership in the mountains and abroad. Without a meaningful and serious dialogue, there is no possibility of a solution and the risk of the conflict escalating. The governments in Quetta and Islamabad will have to make up their minds to stay the course of political dialogue and reconciliation in Balochistan, but its success or failure critically depends on the military establishment changing its mindset and policies of repression in the province. If the right hand is bloody and the left offers sweet nothings, it does not take much imagination to see which would prevail and what the outcome would be. Balochistan is at a crossroads. So is the government’s and military establishment’s policy on the province. On their decisions in the near future will depend whether Balochistan descends into further conflict and chaos or finds its way into the light of better, peaceful days ahead.
Sunday, June 16, 2013
Balochistan attacks Two violent incidents in Balochistan on Saturday have left people numb with shock. First, Baloch insurgents attacked and destroyed the Ziarat Residency during the night, a building with much history and sentiment attached to it as the place where Quaid-e-Azam Mohammad Ali Jinnah spent the last days of his life. One security person was killed. Second, the morning bombing of a bus of the Sardar Bahadur Khan Women’s University in Quetta killed 12 students, followed by an armed attack on the Bolan Medical College’s teaching hospital, where 22 injured students had been taken for treatment. This attack and exchange of firing between the attackers and the security forces lasted five hours before the terrorists were finally overcome. In the process, four attackers were killed and one captured alive. Four nurses, the Quetta DCO and four security personnel were killed in this battle. The Balochistan Liberation Army (BLA) has claimed responsibility for the Ziarat attack, while the Quetta carnage has been claimed by the Lashkar-e-Jhangvi (LeJ). Condemnation of both attacks has flown thick and fast from the top leadership of the country and the ruling PML-N, as well as leaders of other political parties. The Senate passed a unanimous resolution condemning the attacks, particularly the one on the Ziarat Residency. Prime Minister Nawaz Sharif spoke to Balochistan Chief Minister Dr Malik Baloch, urging patience, while Interior Minister Chaudhry Nisar Ali said there would be no dialogue unless the militants accepted the writ of the government. There has been a tendency in the media coverage of the incidents to lump them in the same basket. This is a mistake. The LeJ is a sectarian outfit, not so long ago responsible for the bombings in Quetta that killed hundreds of Hazara Shias. Its terrorist inclinations are once again on display in its targeting innocent girl students. Its almost simultaneous attack on the hospital shows its merciless and ugly visage. The Ziarat attack on the other hand, grief over a symbol of the Quaid and Pakistani heritage notwithstanding, was a message being delivered by the BLA that it not only did not recognize Pakistani national monuments, it was also a rejection of the hopes residing in nationalists from the province being handed power in the shape of the Dr Malik-led coalition government in Quetta. Soon after taking office, Dr Malik had stated he would try for a dialogue with the insurgents. There were even reports in the media that he had contacted self-exiled Baloch insurgent leaders abroad for the purpose. The hope that Dr Malik's induction would somehow lead to a softening of the insurgents’ hardline rejection of the Pakistani state on the basis of their historical and ongoing resentments must now be treated as wishful thinking. Unfortunately, the chances of Dr Malik being able to persuade the insurgents to join talks were negated by a continuation of the ‘kill and dump’ policy before, during, and after the elections. The two sets of policies, political reconciliation through a moderate Baloch nationalist-led government in Quetta, and the continuing repression at the hands of the security services, particularly the hated Frontier Corps (FC) and its mercenary death squads, clearly are so contradictory as to lend credence to the insurgents’ argument that the new government in Quetta is only the soft face of the same repressive order. As far as the LeJ is concerned, its evil will not yield to reason. Such fanatics and enemies of humanity need to be dealt with with an iron hand. There is just no other alternative. As to the Baloch nationalist insurgents, the contradictions in the state’s policies, ranging from continuing repression to raising hopes of political reconciliation in the teeth of the former, seems a project inevitably doomed to failure. Balochistan’s nationalist insurgency remains a political issue, lending weight to the argument that a dialogue to resolve the long standing problems of the province is at least a theoretical possibility. However, for that to have a snowball’s chance in hell, the other side of the policy coin, repressive and murderous measures, will have to be abandoned first. Since there is no sign of that happening anytime soon, it seems the largest, least populated and least developed province of the country is likely to face even more violence and bloodshed. This can only add to the mountain of problems the government of Prime Minister Nawaz Sharif already faces.
Saturday, June 15, 2013
Energy plan The government is already grappling with the energy crisis. Reports say a three-pronged plan to tackle the energy deficit has been worked out. Essentially the plan envisages the retirement of the Rs 503 billion circular debt of the energy sector within two months and bringing 1,500 MW generation into the system through the IPPs. Rs 326 billion has been earmarked as partial retirement of the circular debt by June 30, of which Rs 200 billion in cash will come from the federal budget to pay the IPPs and PSO, which have borrowed from the banks to finance their operations but are struggling to repay their bank borrowings. Another Rs 126 billion will be generated through bonds issued by the Oil and Gas Development Corporation (OGDC) and Pakistan Petroleum Limited. These bonds will carry market-based interest rates. The remaining Rs 177 billion of circular debt is owed to public sector corporations that have countervailing liabilities with the government. This amount will be retired through a book adjustment in July. What will follow this is a cascaded elimination of untargeted subsidies in order to free up fiscal space in the medium term for the government to carry out affirmative action in favour of the poorest sections of society. Finance Minister Ishaq Dar has followed through on his pledge in his post-budget press conference that he will talk to the IPPs to reduce their interest rates on their outstandings from its present KIBOR plus four percent to KIBOR plus two percent to ease the government’s burden and in the light of their own borrowing rate from banks of around KIBOR plus 2-3 percent, given that such outstandings come with sovereign guarantees and the government is now engaged in paying them over the next two months. This is exactly what Mr Dar has done in a meeting with the IPPs. The finance minister also requested the IPPs to extend their credit period from 45 to 60 days to further ease cash flow constraints. We await an announcement that the IPPs have reciprocated the government’s active intervention on their behalf with such an eminently reasonable concession. While the government wrestles with circular debt, Prime Minister Nawaz Sharif has approved a power tariff hike of Rs 2.50 per unit to be implemented from July 1. He was chairing a meeting to discuss the energy plan, the agenda of which discussed power generation, theft, a uniform tariff and line losses, in short all the afflictions of the energy sector. According to the Water and Power Ministry, the subsidy on electricity comes to Rs 350 billion, based on the fact that electricity is bought at Rs 14 per unit and supplied to consumers at Rs 9 per unit. The tariff hike of Rs 2.50 per unit is expected to save Rs 100-150 billion. A comprehensive energy policy is expected by month’s end. Difficult as the economic situation is generally, and critical in the energy sector, the government’s energy plan does have inflationary implications. The example of raising GST by one percent in the budget, setting off an escalating series of price rises in petroleum, CNG, transport and everyday use items is an indication of what will follow the power tariff rise. Already, in a suo motu action, the Supreme Court has grilled the government about the rise in petroleum and CNG prices in the wake of the increase in GST. The objection by the court revolves around the fact that the Finance Bill, of which the hike in GST is a part, has yet to be passed by parliament. The court wanted to know how this measure could be implemented in the shape of the increase in POL and CNG prices even before parliament ha s passed the Finance Bill. After listening to arguments by the Attorney General and the counsel for OGDC regarding the measure being covered under the Provisional Collection of Taxes Act 1931 and the declaration by the finance ministry, the court did not go so far as to issue a stay order against the price rises, but warned before postponing the hearing that it could suspend the FBR’s notification issued without parliament’s approval unless satisfied on this count. This is the first indication that no one should be under any illusions that the independent judiciary will go ‘soft’ on the new government where adherence to the spirit and letter of the law is concerned.
Friday, June 14, 2013
Budget’s aftermath In his post-budget press conference a day after the presentation of the Budget 2013-14, Finance Minister Ishaq Dar asserted that no tax on essential food items has been imposed, and only the rich had been taxed. Even if it is conceded that Mr Dar may be technically right, this is only half the truth. The price rises that have followed on the heels of the budget tell the other half of the story. The one percent increase in sales tax (GST) announced by the worthy finance minister in his budget speech was implemented just one day after that presentation. Objections have been raised that this step does not have legal cover since the Finance Bill has yet to be passed by parliament. After its passage, the increased tax should only kick in on July 1, the start of the new financial year. The PPP amongst others has objected to this ‘haste’. The measure has also been challenged in the Supreme Court. The fact of the matter is that this kind of increase in GST has been implemented in just this manner over many years, irrespective of the Finance Bill’s passage into law. Practiced it may have been for long years, but this is perhaps the first time that a political and legal challenge has been mounted against such premature imposition of an enhanced GST. In response to the increase in GST, POL products and CNG prices have been immediately raised. Sympathetic price rises in edibles and daily use items have followed as surely as night follows day. Inter-city fares too have been jacked up. All this ‘negates’ Mr Dar’s argument that no tax on essential food and other daily use items has been imposed. The free market economy that everyone from the finance minister downwards now accepts as a given, has worked its ‘magic’. The market is not amenable to the fine tuned arguments of finance ministers or economists. Any across the board increase in an indirect tax such as GST is bound to give rise to sympathetic price rises in essentials and even non-essential items. Being indirect, GST inevitably is regressive, hitting the poor harder than the well off as a proportion of their income. Since the budget failed for the first time in living memory to raise the salaries of government employees (the increase of 10 percent in pensions and raising the minimum pension to Rs 5,000 from Rs 3,000 notwithstanding), it has sparked off unrest amongst the denied. Government clerks have announced a strike on Friday, other government servants from June 21. Mr Dar’s argument that government employees’ salaries were raised by 20 percent just two months ago was refuted in his press conference by the fact being pointed out by media men that that increase was confined to a relatively small section of government employees and was not extended to all categories of government servants. Mr Dar has asked government employees in his press conference to swallow the bitter pill this year in the hope of relief next year. The alternative, he argued, was to print more money, which would inevitably be even more inflationary. It seems that the government servants were not impressed by the finance minister’s case, pointing out that concessions in import of hybrid cars for the relatively well off when the poor were finding it hard to make ends meet was unacceptable. The new government may have miscalculated the political mood at the mass level. The heightened public expectations from the incoming government tended in certain cases to soar beyond the possible. For example, the impatience with load shedding resulted in riots in Faisalabad, and the situation was made worse by the tender attentions of the police towards the protestors. Similarly, having been tormented by inflation, unemployment and other afflictions through the five-year rule of the PPP-led government, the people are impatient for change, relief, succour. Admittedly Mr Dar’s hands were not totally free to satisfy the public’s expectations. But particular measures in the budget such as the example of hybrid cars pointed out above left the government inadvertently looking uncaring and insensitive to the plight of the masses. Such a perception so early in the new government’s tenure cannot be good for it. It is therefore just as well that Mr Dar has decided to set up a committee to review the question of salary increases of government employees. In today’s Pakistan, this is a measure of how all governments from hereon will have to be aware of, and responsive to, the demands of the people.
Saturday, June 8, 2013
Federal cabinet Prime Minister Nawaz Sharif has inducted a 25-member federal cabinet with 16 full ministers and nine ministers of state. The cabinet members took oath from President Asif Ali Zardari on Friday. There were few surprises in the cabinet lineup, with most being men, old loyalists of Nawaz Sharif from his previous stints in power, and overwhelmingly (19 out of 25) from Punjab, the PML-N’s stronghold. While this appears natural given the makeup and mandate of the PML-N, it does raise questions about the new government’s ability to take the other provinces along in a situation where federal and provincial authorities nee d to work together on very many crucial issues. No women made it to full minister, two having to be satisfied with minister of state. Nawaz Sharif has decided to retain the defence and foreign affairs ministries to himself, the former significant in the light of the events of 1999, the latter for the centrality of relations with the world powers that be, especially the US, at the best of times, let alone at the present fraught juncture. Sartaj Aziz has been appointed adviser to the prime minister on national security and foreign affairs to bring his experience to the deliberations of the government on these two critical areas. Sanaullah Zehri, perhaps to compensate him for the loss of his much wanted chief ministership of his native Balochistan province, has been appointed a special assistant to the prime minister. Ex-ambassador Tariq Fatemi strengthens the foreign policy team as another special assistant to the prime minister. Some appointments more or less were expected, if the candidates did not ‘appoint themselves’ on merit. Ishaq Dar was the obvious and widely respected choice as Finance Minister. Despite a few holdovers from the Musharraf era, the appointment of Chaudhry Nisar as Interior Minister and Pervez Rasheed as Information Minister raised no eyebrows. The former is known for his pugnaciousness, and he will need it and much more to tackle the disturbed law and order situation. The new Interior Minister vowed to extend across the board assistance to the provinces in intelligence sharing and deployment of federal security forces, including the Rangers, wherever and whenever required. He admitted it was a challenging task to safeguard the life and property of citizens, especially given the terrorist threat. Chaudhry Nisar promised the appointments of all heads of departments under his domain strictly on merit. Pervez Rasheed had served the PML-N as its point man vis-à-vis the media for a considerable period, so his choice too seemed preordained. The incoming Information Minister started his innings by promising the ministry’s secret funds, which have been the subject of a case in recent days before the Supreme Court, would not be used for personal or political gains. What they might be used for instead was left to the imagination. Meanwhile PPP’s Khursheed Shah has been notified as Leader of the Opposition, on the basis that his party has the largest number of seats (41) in the National Assembly out of all the opposition parties. He was also the only applicant, the PTI and MQM being at daggers drawn during and after the elections and therefore unable to mount a common challenge for the post, the only way they could have blocked the PPP nominee. President Asif Ali Zardari has called a joint session of parliament tomorrow, Monday, June 10, which he is expected to address. This is a constitutional requirement but the irony is that the president is expected to read out a speech given to him by the incumbent government. Since in this case the government is of the rival PML-N, the hope is that President Zardari’s sang froid will not fail him when mouthing the PML-N’s words. It is a sign of the maturing of democratic institutions that a president belonging to and even being the leader of a rival party, the PPP, accepts the constitutional obligation of faithfully reflecting the philosophy of a rival party in power, whatever his subjective feelings on the subject. These elections have proved the incremental maturing of the polity and the electorate. If state institutions now follow suit, the prospects of consolidating the democratic system will be hugely improved.
Monday, June 3, 2013
President Zardari’s interview In a wide-ranging interview to a panel of journalists on television, President Asif Ali Zardari explicated his views on a whole host of issues that confront him, the PPP, and the country. First and foremost the president revealed that he had no intention of standing again for the office once his term expires in September this year. His argument was that unlike 2008, the PPP did not have the mandate, and therefore the right, to have its candidate elected president. He went on to say in answer to a question that after leaving the presidency, he would be bound by the party’s decision whether it wanted him to lead the PPP, otherwise he would be content to work as a common member. The president credited all the political forces, not just the main opposition PML-N, with the strengthening of democracy over the last five years and a smooth transition. The PPP, the president underlined, would play the role of a constructive opposition rather than opposition for opposition’s sake, in contrast to what is commonly being pitched that it is the Pakistan Tehreek-e-Insaaf that will be the real PML-N government’s opposition. Further, President Zardari said if Nawaz Sharif wanted to be elected prime minister unanimously as the PPP’s Yousaf Raza Gilani was in 2008, he would have to approach all the political parties (implying the president would have no role in facilitating this outcome). About Nawaz Sharif’s offer of dialogue to the Tehreek-e-Taliban Pakistan (TTP), the president said it would have to be seen whether the TTP had a political mindset, with which negotiations may be possible, rather than just an extremist outlook that precluded a political dialogue. The National Reconciliation Ordinance (NRO) and Swiss cases were dismissed by Mr Zardari as controversial and without substance. It may be recalled that the NRO was struck down by the Supreme Court as discriminatory and the Swiss legal authorities responded to the request (finally) of the PPP government for assistance in the Swiss cases by saying they could not be reopened. On Balochistan, the president tried to justify the PPP government’s track record by arguing that they had done a lot for the Baloch, but the Baloch had not come forward or done enough for themselves. The legitimate question to be asked in this context would have been whether, in the face of the military’s ‘kill and dump’ policy in the province, the Baloch were in a position to do anything for themselves except resist oppression. On drone strikes Mr Zardari said he did not know if Musharraf had any agreement with the US on allowing the strikes on Pakistani territory. However, the previous PPP government never had any such agreement with Washington. In answer to a query that reflected Imran Khan’s adventurist suggestion that if the incoming government could not persuade the US to stop the drone strikes, the drones should be shot down, President Zardari said drones are not just birds you can shoot out of the sky, and even if you did, then what? The repercussions have to be thought through soberly. On Musharraf’s fate, the president left it up to Prime Minister-in-waiting Nawaz Sharif to decide whether to pursue his cases or not. If Musharraf’s family asked him to pardon the ex-army chief, the president emphasised, he would consider it. Reports in the press speak of Musharraf travelling to Dubai to visit his sick mother, perhaps the first sign that the powers that be have decided to let Musharraf go and close this potentially incendiary chapter. In cryptic terms, President Zardari ascribed the troubles in Karachi to non-state actors, without detailing who these were, what their political affiliations if any were, and what could be done about restoring peace to the city by the sea. The PPP-led coalition government in Sindh under the same Chief Minister Qaim Ali Shah badly failed to control the violence and bloodletting, terrorism and crime in the city. It remains to be seen if the second time round the chief minister can do better, scepticism rising since the MQM so far has decided to sit in the opposition. President Zardari has tried to put a brave face on the adverse circumstances facing him and his party after its debacle in the elections. However, the interview in question failed to convince even non-partisan watchers of the president’s wisdom or insights into national affairs. It was a sorry comedown from the claim throughout the last five years that the president’s ‘street smart’ tactics had nullified all opposition and allowed the PPP government to survive. Clearly, as the elections showed, you can only achieve so much with ‘street smart’ tactics and no more. For the rest, you have to deliver.
Sunday, June 2, 2013
A historic transition With 301 of the 323 newly elected members of the National Assembly (NA) taking oath on Saturday, 345 members doing the same in the Punjab Assembly and 56 in the Balochistan Assembly, the process of inducting the new members of parliament is complete (the Khyber Pakhtunkhwa and Sindh Assemblies have already done this). This completion of the first phase of the process of completing parliament sets the seal on the historic transition for the first time in the country’s history from one elected government that completed its term to a new elected government. The elections of May 11, some vacant seats needing to be filled notwithstanding, have by and large been accepted as credible if not always wholly transparent or even fair. Considering the speculations and rumours doing the rounds in the run up to the polls that the elections may not happen at all because of various conspiracy theories, the people and the parliamentarians deserve applause, particularly since the threats of the terrorists failed to dampen the enthusiasm of the electorate. While many new voters entered the fray, especially those who have only just achieved maturity (a considerable number from all accounts), about 100 new faces or first timers were visible in the 14th NA in its inaugural session. After administering the oath to the MNAs, outgoing Speaker Dr Fehmida Mirza prorogued the house till 11:00 a. m. today, when the elections for Speaker and Deputy Speaker are to be held. In the provinces, three already have decided their chief ministers. Balochistan is the exception, although the meeting of the PML-N and its allies in the Balochistan Assembly being held in Islamabad on Sunday evening was expected to take the final decision. Prime Minister-in-waiting Nawaz Sharif returned to the NA as a member after a full 14 years, many of them spent cooling his heels in forced exile. His entry and presence were loudly cheered by his supporters in what appeared a festive mood for the PML-N. Earlier, speaking to the Central Parliamentary meeting of the PML-N, Nawaz Sharif sombrely enunciated the priorities for his incoming government. He declared zero tolerance for corruption, raising Rs 550 billion to retire the circular debt in the energy sector and thereby tackle load shedding, dealing with multiple problems but first and foremost the flailing economy that was at the root of terrorism, poverty, unemployment and even the energy crisis. He was thankful for not having had to compromise with any party to form his government, but promised to adhere to the Charter of Democracy he had signed in London in 2006 with slain PPP leader Benazir Bhutto. The meeting nominated Nawaz Sharif unanimously as prime minister through a resolution moved by Chaudhry Nisar. The phenomenon of multiple seat holders in the National and provincial Assemblies having to surrender their extra seats by June 10 raises the question why our electoral system allows candidates to stand from more than one constituency. Nowhere else is this practice in vogue. Multiple seat victories that have then to be trimmed down to one indicate that the winning candidates were never serious about representing the voters of the surrendered seats, often not even being acquainted with them or their problems. The incoming government should seriously consider doing away with this anomaly, which will now require new elections on the 28 National and provincial Assembly seats surrendered, in favour of single constituency elections for all candidates. That way, the elected representatives will be better in touch with their constituents and serve them better. And if they perform well, are likely to be re-elected from the same seat as a mark of the confidence of their constituents. Much of the reportage on the new dispensation reminds us that this is a right-wing government for the next five years (all other things being equal). While Nawaz Sharif’s government is expected to be pro-business (witness the business community’s delight at the PML-N victory), the weight of expectations from the new government can only be met if it focuses on the serious problems of the underprivileged, marginalised and poverty-stricken. Nawaz Sharif should not lose sight of the fact that this is the majority of our people.
Saturday, June 1, 2013
Droning on PML-N chief and incoming prime minister Nawaz Sharif has finally found his voice to condemn the US drone strike that killed Tehreek-e-Taliban Pakistan (TTP) number two Waliur Rehman along with some TTP commanders, albeit through a ‘close aide’ who spoke to US Charge d’ Affaires Richard Hoagland. The message delivered was: Nawaz expressed his serious concern and deep disappointment at the strike within days of US President Barack Obama’s ‘crossroads’ speech in which he had outlined a new policy of care, caution and restraint in the use of drones. Nawaz categorised the drone strike as a violation of Pakistan’s sovereignty and territorial integrity, and of international law and the UN Charter. The desired course, the prime minister-elect said, was meaningful consultations and close cooperation between the two countries rather than unilateral actions. Nawaz Sharif stressed the US must exercise restraint and “give peace a chance”. The latter phrase may be reminiscent of the anti-Vietnam War movement of the 1960s, but that is where the resemblance ends. The situation of the struggle against terrorism in Pakistan is an entirely different kettle of fish. ‘Unilateralism’ has crept into the equation over the years since the US began to suspect the Pakistani intelligence community of being involved in tipping off targets mutually agreed. The Osama bin Laden raid was the acme of such unilateralism, in which the Pakistani defence forces were caught by surprise. Changing tack, the CIA has relied more (including in the bin Laden affair) o local sources of information rather than the Pakistani intelligence community. In the case of Waliur Rehman too, there are reports he was identified by a local tip-off, although Washington continues to refuse to confirm Waliur Rehman’s death officially, while being non-committal on whether the local informant would be in line for a Rewards for Justice programme payoff. Newly inducted Chief Minister Pervez Khattak of the Pakistan Tehreek-e-Insaaf (PTI) in his maiden speech from the floor of the Khyber Pakhtunkhwa (KP) Assembly echoed Nawaz Sharif’s sentiments. He said the federal government should formulate a clear policy on drones and the war on terror, and the PTI-led government in KP would support it. The sub-text in Khattak’s message was, stop the drone attacks, leave the war on terror, which the PTI characterises as a foreign-imposed war, forgetting conveniently the history of terrorism in Pakistan that predates by decades the US invasion and occupation of Afghanistan in 2001, an event the PTI singles out as being responsible for all our troubles with terrorism to the exclusion of all other historical facts. While admitting that the KP government could not end the drone strikes since this was within the purview of the federal government alone, Pervez Khattak repeated his leader Imran Khan’s partisan formulation that ‘innocent’ Pakhtuns were being killed by drones. He then went on to indulge in some bluster, claiming that if the PTI had been in power at the Centre, the US would not have ‘dared’ conduct drone strikes. With respect, methinks the chief minister exaggerates his own and his party’s room for manouevre vis-à-vis the US. As to the ‘innocence’ of Waliur Rehman and those killed with him, the redoubtable commander’s track record speaks of a series of attacks on genuinely innocent people, such as his masterminding the Marriott Hotel Islamabad attack on September 2008, in which 50 totally innocent and uninvolved people were killed. He is also accused of running a gang in Karachi that carries out bank robberies and kidnappings for ransom to swell the TTP’s coffers. If such a person is the ‘innocent’ Pakhtun Pervez Khattak has in mind, he needs to think again. Meanwhile US Secretary of State John Kerry has defended drone strikes as legal, since the US is at war with al Qaeda and the Taliban. He cited the right of self-defence as a last resort to justify Washington’s continuing with the increasingly controversial use of unmanned aerial vehicles delivering their lethal loads silently and with devastating effect. Since Mr Kerry is about to embark on a visit to Pakistan once the new government is in place, this will no doubt be at the top of the agenda for discussion. Only if Nawaz Sharif can convince Washington that either Pakistan has better alternatives to drone attacks or is able to promise the Pakistan army will deal with the conglomeration of terrorists in FATA will his pleas for a cessation of drone attacks and ‘close cooperation’ be likely to be heeded. However, scepticism on his ability to deliver on either of these assurances is shared by many in Pakistan too, not only in Washington.