End of the love affair?
Perusing the statements of high officials and legislators in the US and Pakistan simultaneously, there is the inescapable feeling of a love affair gone sour. Not so long ago, US officials were carrying out a self-critique of past attitudes towards Pakistan, vowing to move forward from a purely transactional to a strategic relationship promising long term mutual benefits. How quickly things have changed. Starting with the ‘contributions’ of Raymond Davis and perambulating through the fiasco of the May 2 unilateral US raid that killed Osama bin Laden, taking in along the way the embarrassment and humiliation meted out to the military and intelligence services of Pakistan and their ‘infallible’ image in the Mehran base attack and the accusations regarding picking up CIA facilitators in the Osama raid and tipping off terrorist bomb makers, it is easy to conclude that there has been an irretrievable breakdown in trust and confidence between the two sides, always a somewhat precarious and threatened species.
While there are increasingly loud calls in the US Congress to cut off or curtail aid to Pakistan (the House of Representatives has just adopted a bill to withhold 75 percent of the $1.1 billion in the pipeline for Pakistan), reinforced by the American media and public opinion, the Obama administration and the Pentagon are still bending their backs to persuade the sceptics that the relationship, albeit difficult, is essential for the interests of both sides. Admiral Mullen is of the view that the Pakistani military (smarting from the recently inflicted wounds and humiliation) needs time and space to go through a period of “introspection”. Outgoing defence secretary Robert Gates too underlines the importance of the relationship with Pakistan, not only in the context of Pakistan’s crucial help during the withdrawal from Afghanistan, but also in terms of regional stability and Central Asia. What exactly does that mean?
In terms of the ‘region’, we can surmise that Mr Gates is talking about the Gulf and peripheral regions. In the 1960s and 70s, Iran’s Shah had been anointed the ‘policeman of the Gulf’ on behalf of US and western interests. When his US-built-up army crumbled along with his regime in the 1979 revolution, the only other candidate available to fill the ensuing void was Pakistan with its half a million-man professional and battle-hardened army. If Saudi Arabia in years past needed this army’s help against its own home-grown religious jihadi extremists, many smaller states of the Gulf could make do with recruiting retied armed forces personnel from Pakistan for their security forces (Oman and recently Bahrain come to mind). A friendly and cooperative Pakistani army is therefore crucial to Washington’s aims to keep the Gulf from tipping over into chaos, thereby threatening the smooth flow of oil from what is still one of the world’s premier oil supplying regions.
As far as Central Asia is concerned, it is the rising star of the 21st century’s energy supply scenario. Its vast and relatively untapped reserves of oil and gas could lubricate what will continue to be a fossil fuel based technology economy for the foreseeable future. Here, a contradictory picture emerges. Russia’s traditional hold in the region was weakened after the break up of the Soviet Union in 1991. After a period of turmoil and hardship in the transition from communism to capitalism, Russia is regaining its economic and military muscle and combining with China and other Central Asian countries in the SCO to ensure two things. One, to stop any further spillover of terrorism from the Afghanistan-Pakistan theatre, and two, to pose an alternative to NATO as the security organisation for the Eurasian landmass. To this end, SCO is extending its membership incrementally to include observer countries such as Pakistan, India and Sri Lanka and even contemplating opening its doors to Ukraine and Belarus. Although SCO denies any ambition to evolve into a military alliance a la NATO, its increasing emphasis on economic and security cooperation amongst its members, present and future, could mean the weakening if not elimination in the future of any thoughts of Pax Americana dominating this vast region stretching from countries west of Russia to the Indian Ocean.
Although SCO hopes the expected entry of Pakistan and India will also facilitate their mutual amity, the question of what will remain of the much touted strategic relationship between the US and Pakistan seems moot.
Many in Pakistan would say good riddance. If there are alternative friends like China and the SCO available, why linger in the American or even western basket alone? Every state has the right to exercise options in its own best interests. The fly in the ointment though could be the souring relationship between the erstwhile ‘lovers’ provoking a breakdown in the negotiated political settlement in post-withdrawal Afghanistan, leading possibly to another 20-30 year civil war in that benighted country, with its inevitable fallout for neighbouring countries, the region, and the world at large.
Saturday, June 18, 2011
Daily Times Editorial June 17, 2011
Post-raid pique?
The New York Times (NYT) has published a story that says our ISI has arrested five alleged informers of the CIA who facilitated the raid in Abbottabad that killed Osama bin Laden. Amongst them says the NYT, was an army major who is accused of recording the licence plates of cars visiting the al Qaeda leader’s compound. The army, however, categorically denies any major was amongst those arrested. They say some 30-40 people were arrested in connection with the raid, some of whom have since been released and the others are still under interrogation. A senior security official ducked the question whether those arrested were CIA informers, diplomatically using the umbrella of an ongoing investigation that did not allow any answer at this point.
Outgoing CIA director Leon Panetta is said to have raised the arrests with military and intelligence officials on his recent visit to Pakistan, the NYT reported. Ambassador Hussain Haqqani put his finger on the renegotiated terms of engagement between the CIA and the ISI that are a work in progress. The Obama administration tried to put the best face on what appear to be tough negotiations after the Abbottabad raid by calling relations with Pakistan “complicated” but extremely important. Outgoing defence secretary Robert Gates dismissed the arrests as a “harsh reality”, reflecting the truth of our world that “most governments lie to each other”, sometimes arrest people and sometimes spy on each other. State Department spokesman Mark Toner also adopted a soft tone by pointing to the intense engagement with Pakistan since the May 2 raid, adding, “We have strong relations with our Pakistani counterparts, we work through issues when they arise.”
Diplomatic and strategic considerations may be imposing restraint on the statements both sides make about each other, but it is an inescapable fact that the terms of military and intelligence engagement between Pakistan and the US have yet to get to the stage of pressing the reset button. The military, and ISI in particular, have been stung by the embarrassment and humiliation of the May 2 debacle. In their pique, they may have decided to go after the CIA informers/facilitators of the raid. The new and aggressive tone our military establishment has adopted since that fiasco so close to the Kakul Military Academy reflects an aggressive stand against US unilateralism and the unauthorised expansion of the CIA’s footprint in Pakistan. At the same time, it must be conceded that the military and ISI opted for the lesser charge of incompetence to save further embarrassment surrounding the more serious allegation of complicity in harbouring bin Laden. The raid not only angered the military establishment because of the blatant lack of trust it reflected, but also because of the strategic vulnerability it exposed.
The military has taken some retaliatory steps in the aftermath of the embarrassment. It has pared, if not totally sent back, the American trainers working with the Frontier Corps on anti-terrorism techniques. On the question of distrust, another recent event has only deepened suspicions about the Pakistani military and intelligence establishment. Apparently the CIA tipped off Pakistan about the existence of two bomb-making factories in FATA. Within 24 hours of the tip-off, the militants were detected by US surveillance satellites fleeing the sites. Panetta raised this too on his recent visit, but it is not known what, if any, purchase he got.
By striking a fiercely nationalist pose, the military and intelligence establishment may be trying to reverse the pressure of adverse opinion about their readiness and competence that has overtaken public perception of late, reflected in the barrage of criticism unleashed against these institutions in the media. That barrage of criticism invited the attention of the recent Corps Commanders conference, whose subsequent statement issued what could only be read between the lines as a blunt warning to the critics to cease and desist. Even were the critics to comply, that would not change the reality that the divergence in the goals of the US and Pakistan in Afghanistan and elsewhere is now fully on display, with uncertainty clouding the future of this often fraught relationship.
The New York Times (NYT) has published a story that says our ISI has arrested five alleged informers of the CIA who facilitated the raid in Abbottabad that killed Osama bin Laden. Amongst them says the NYT, was an army major who is accused of recording the licence plates of cars visiting the al Qaeda leader’s compound. The army, however, categorically denies any major was amongst those arrested. They say some 30-40 people were arrested in connection with the raid, some of whom have since been released and the others are still under interrogation. A senior security official ducked the question whether those arrested were CIA informers, diplomatically using the umbrella of an ongoing investigation that did not allow any answer at this point.
Outgoing CIA director Leon Panetta is said to have raised the arrests with military and intelligence officials on his recent visit to Pakistan, the NYT reported. Ambassador Hussain Haqqani put his finger on the renegotiated terms of engagement between the CIA and the ISI that are a work in progress. The Obama administration tried to put the best face on what appear to be tough negotiations after the Abbottabad raid by calling relations with Pakistan “complicated” but extremely important. Outgoing defence secretary Robert Gates dismissed the arrests as a “harsh reality”, reflecting the truth of our world that “most governments lie to each other”, sometimes arrest people and sometimes spy on each other. State Department spokesman Mark Toner also adopted a soft tone by pointing to the intense engagement with Pakistan since the May 2 raid, adding, “We have strong relations with our Pakistani counterparts, we work through issues when they arise.”
Diplomatic and strategic considerations may be imposing restraint on the statements both sides make about each other, but it is an inescapable fact that the terms of military and intelligence engagement between Pakistan and the US have yet to get to the stage of pressing the reset button. The military, and ISI in particular, have been stung by the embarrassment and humiliation of the May 2 debacle. In their pique, they may have decided to go after the CIA informers/facilitators of the raid. The new and aggressive tone our military establishment has adopted since that fiasco so close to the Kakul Military Academy reflects an aggressive stand against US unilateralism and the unauthorised expansion of the CIA’s footprint in Pakistan. At the same time, it must be conceded that the military and ISI opted for the lesser charge of incompetence to save further embarrassment surrounding the more serious allegation of complicity in harbouring bin Laden. The raid not only angered the military establishment because of the blatant lack of trust it reflected, but also because of the strategic vulnerability it exposed.
The military has taken some retaliatory steps in the aftermath of the embarrassment. It has pared, if not totally sent back, the American trainers working with the Frontier Corps on anti-terrorism techniques. On the question of distrust, another recent event has only deepened suspicions about the Pakistani military and intelligence establishment. Apparently the CIA tipped off Pakistan about the existence of two bomb-making factories in FATA. Within 24 hours of the tip-off, the militants were detected by US surveillance satellites fleeing the sites. Panetta raised this too on his recent visit, but it is not known what, if any, purchase he got.
By striking a fiercely nationalist pose, the military and intelligence establishment may be trying to reverse the pressure of adverse opinion about their readiness and competence that has overtaken public perception of late, reflected in the barrage of criticism unleashed against these institutions in the media. That barrage of criticism invited the attention of the recent Corps Commanders conference, whose subsequent statement issued what could only be read between the lines as a blunt warning to the critics to cease and desist. Even were the critics to comply, that would not change the reality that the divergence in the goals of the US and Pakistan in Afghanistan and elsewhere is now fully on display, with uncertainty clouding the future of this often fraught relationship.
Saturday, June 11, 2011
Daily Times Editorial June 12, 2011
Punjab’s ‘election’ Budget
The ruling PML-N in Punjab led by Chief Minister Shahbaz Sharif clearly had an eye on the next elections when framing its Budget for 2011-12. That explains the attempt to include ‘populist’ measures intended to consolidate and hopefully expand its electoral outreach. In this political endeavour that may or may not make economic and financial sense, the PML-N has been immeasurably helped by the increased allocations to the provinces after the 18th Amendment and the National Finance Award. But flush coffers should not blind anyone to the need for prudent financial and economic management, particularly in the current recessionary situation. As it is, there is a lot of criticism concerning some populist measures of the Punjab government that have badly backfired and disappeared without a trace.
But first things first. The Budget 2011-12 envisages an outlay of Rs 655 billion, of which Rs 220 billion is for development. This is even more ambitious than the allocation for last year of Rs 193 billion, of which not more than Rs 123 bullion could actually be spent in the outgoing financial year. Apart from the inherent bottleneck in all the provinces, and Punjab is no exception, of lacking the capacity to absorb larger and larger development budgets and actually implement them by spending the allocations, Shahbaz Sharif’s province has an additional quirk. That is the hands-on, one-man show style of governance of the younger Sharif. This involves ignoring his own party ministers, MPAs and workers and relying only on serving and retired favourite bureaucrats. Such a non-political, highly centralised decision-making and implementation regime cannot but add to the implementation bottleneck. The current budget is miserly in allocations for the social sector, partly perhaps because of the Punjab’s ‘declaration’ of foregoing US aid.
Punjab hopes to receive Rs 531 billion from the federal divisible pool, Rs 86 billion from the provincial tax revenues and Rs 22 billion from non-tax revenues. While this means no additional taxes have had to be imposed, marginal increases in certain taxes/levies have been proposed that may have more to do with wanting to cash in on popular sentiment rather than making any significant difference to the province’s coffers. For example, taxes are to be imposed on large farmhouses (a fashion that has become one of the favourite retreats of the elite), private swimming pools, elite club members’ fees, increased token tax on cars of 1300 cc and above, and there is a proposal to tax luxury vehicles that requires the consensus of the other provinces. None of these promises huge returns.
On the other hand, the ‘populist’ measures include 15 percent increase in provincial government employees’ salaries, and a 15-20 percent increase in pensions. Also, a 20 percent increase in conveyance allowance for grades 1-15. Entertainment tax is being brought down from 65 percent to 20 percent for theatres and circuses, and a three year exemption from the tax for cinemas is proposed. The Punjab Rozgar (Employment) Scheme envisages a revival of Nawaz Sharif’s Yellow Cabs plus interest-free loans of Rs 20,000-100,000 for skilled educated persons. Rs 30 billion is marked for various subsidies like cheap roti (bread), etc. There is an attempt to tilt such employment-generating measures in favour of the deprived southern Punjab, lately restive with calls for the carving out of a Seraiki and/or Bahawalpur province.
Electoral considerations aside, the Punjab government needs seriously to revisit the failed populist measures of the recent and not so recent past. The Yellow Cabs scheme came a cropper on recoveries. The Sasti Roti (Cheap Bread) scheme swallowed billions without trace. The Food Stamps handouts are heard of no more. Unless the design of the revived or new measures is seriously examined in the light of the flaws and failures of the past, they are likely to end up like their predecessors or even worse, given the changed negative economic climate. In its own interest, the Punjab government must not shut its eyes to the pitfalls of seemingly popular measures that end up causing more harm than good in the long run.
The ruling PML-N in Punjab led by Chief Minister Shahbaz Sharif clearly had an eye on the next elections when framing its Budget for 2011-12. That explains the attempt to include ‘populist’ measures intended to consolidate and hopefully expand its electoral outreach. In this political endeavour that may or may not make economic and financial sense, the PML-N has been immeasurably helped by the increased allocations to the provinces after the 18th Amendment and the National Finance Award. But flush coffers should not blind anyone to the need for prudent financial and economic management, particularly in the current recessionary situation. As it is, there is a lot of criticism concerning some populist measures of the Punjab government that have badly backfired and disappeared without a trace.
But first things first. The Budget 2011-12 envisages an outlay of Rs 655 billion, of which Rs 220 billion is for development. This is even more ambitious than the allocation for last year of Rs 193 billion, of which not more than Rs 123 bullion could actually be spent in the outgoing financial year. Apart from the inherent bottleneck in all the provinces, and Punjab is no exception, of lacking the capacity to absorb larger and larger development budgets and actually implement them by spending the allocations, Shahbaz Sharif’s province has an additional quirk. That is the hands-on, one-man show style of governance of the younger Sharif. This involves ignoring his own party ministers, MPAs and workers and relying only on serving and retired favourite bureaucrats. Such a non-political, highly centralised decision-making and implementation regime cannot but add to the implementation bottleneck. The current budget is miserly in allocations for the social sector, partly perhaps because of the Punjab’s ‘declaration’ of foregoing US aid.
Punjab hopes to receive Rs 531 billion from the federal divisible pool, Rs 86 billion from the provincial tax revenues and Rs 22 billion from non-tax revenues. While this means no additional taxes have had to be imposed, marginal increases in certain taxes/levies have been proposed that may have more to do with wanting to cash in on popular sentiment rather than making any significant difference to the province’s coffers. For example, taxes are to be imposed on large farmhouses (a fashion that has become one of the favourite retreats of the elite), private swimming pools, elite club members’ fees, increased token tax on cars of 1300 cc and above, and there is a proposal to tax luxury vehicles that requires the consensus of the other provinces. None of these promises huge returns.
On the other hand, the ‘populist’ measures include 15 percent increase in provincial government employees’ salaries, and a 15-20 percent increase in pensions. Also, a 20 percent increase in conveyance allowance for grades 1-15. Entertainment tax is being brought down from 65 percent to 20 percent for theatres and circuses, and a three year exemption from the tax for cinemas is proposed. The Punjab Rozgar (Employment) Scheme envisages a revival of Nawaz Sharif’s Yellow Cabs plus interest-free loans of Rs 20,000-100,000 for skilled educated persons. Rs 30 billion is marked for various subsidies like cheap roti (bread), etc. There is an attempt to tilt such employment-generating measures in favour of the deprived southern Punjab, lately restive with calls for the carving out of a Seraiki and/or Bahawalpur province.
Electoral considerations aside, the Punjab government needs seriously to revisit the failed populist measures of the recent and not so recent past. The Yellow Cabs scheme came a cropper on recoveries. The Sasti Roti (Cheap Bread) scheme swallowed billions without trace. The Food Stamps handouts are heard of no more. Unless the design of the revived or new measures is seriously examined in the light of the flaws and failures of the past, they are likely to end up like their predecessors or even worse, given the changed negative economic climate. In its own interest, the Punjab government must not shut its eyes to the pitfalls of seemingly popular measures that end up causing more harm than good in the long run.
Daily Times Editorial June 11, 2011
The army’s response
Since May 2, the armed forces have come in for an unprecedented amount of stick. Abbottabad, Mehran, Kharotabad and most recently Karachi have become bywords for what the critics are saying has gone wrong with the military and intelligence services. Lest we are swayed by the language of the ISPR release after the meeting of the high command of the army, these critics are not confined to the ‘usual cast of suspects’. Even hitherto reliable, if not wired mouthpieces of the establishment have of late acquired new wings and taken flight along paths never before associated with them even in the wildest imagination. Is this, as the Corps Commanders’ ISPR release suggests, a move to slander and weaken the armed forces by those with unshakeable biases or, God forbid, hidden agendas at the behest of our ‘enemies’? Even more alarming, does the press release’s statement that all this criticism should be put an end to constitute a thinly veiled threat? After all, Saleem Shahzad is not yet cold in his grave, and the investigations into his brutal murder seem to have lost their way in the labyrinthine maze such efforts seem always destined to end up in. The media in Pakistan may be imbued in large part with pro-establishment views, but even those holding such views are finding it hard not to reflect on the obvious failures of recent days, fearing a loss of their own credibility. Defending the indefensible has never been harder, and seems all but a lost cause. Some political leaders too have taken up verbal arms against these alarming manifestations of weaknesses, lapses, failures. No doubt some of them may already have had the honour of being in the list of usual suspects, but new entrants, as in the media, must be cause for concern for GHQ. The trickle down effect in today’s information-savvy Pakistan also is cause for worry for those whose self-image of the ultimate saviours of the country has taken a pounding of late.
Perhaps it is a reflection of the sensitivity this barrage of criticism has aroused that COAS General Ashfaq Pervez Kayani, in a rare show for the military of self-abnegation, has proposed that US aid intended for the military should be redirected towards the civilian side. Appreciable as the sentiment is, and it may be informed also by the questions of ‘guns versus butter’ that have been reignited by the recent budget, in the first place it is necessary to ask whether this is practicable? US aid is intended to be spent for the purposes for which it is given. In the past, the US has raised suspicions over the diversion of aid meant ostensibly for non-military or specifically for counter-terrorism purposes, to other uses. That is one of the issues holding up the reimbursement of Coalition Support Fund payments. Can a ‘reverse osmosis’ of military aid being diverted to civilian use be done without an explicit nod from Washington, and particularly the US Congress? In that case, the aid would be re-designated and therefore no longer be considered ‘military’. The implication is that it is not as simple as ‘switching’ money from accounts received under the head of military aid to civilian use, no matter how desirable that may be in the present circumstances. In fact, this would require a re-negotiation and restructuring of that aid with the US’s consent. Such a restructuring would be immensely popular here and help, if that is the purpose, to refurbish the recently battered image of the army, which the present COAS has been at pains to achieve after Musharraf’s departure took the stain of association with the dictator off the uniform.
The corps commanders also warned against stoking divisions between institutions and between the military and the people. It needs reiteration that there is no ‘plot’ at work here, only the natural consequences of recent negative developments that need addressing rather than a retreat into a bunker mentality and knee-jerk reactions against real or imagined enemies. Shooting the messenger, a la Saleem Shahzad, will only mean the message has not been heard, remains therefore unaddressed, and can only be to the detriment of the armed forces themselves and the country. Cooler and wiser reflection at the level of the top brass is the need of the hour. The country is beset with grave problems, primary being terrorism and the economy. As the military itself has stated, this is a time for pulling together to confront the huge tasks ahead. The best beginning for that would be to shun any thoughts of ‘ending’ criticism and instead responding in a serious manner to the issues and questions the critics keep throwing up.
Since May 2, the armed forces have come in for an unprecedented amount of stick. Abbottabad, Mehran, Kharotabad and most recently Karachi have become bywords for what the critics are saying has gone wrong with the military and intelligence services. Lest we are swayed by the language of the ISPR release after the meeting of the high command of the army, these critics are not confined to the ‘usual cast of suspects’. Even hitherto reliable, if not wired mouthpieces of the establishment have of late acquired new wings and taken flight along paths never before associated with them even in the wildest imagination. Is this, as the Corps Commanders’ ISPR release suggests, a move to slander and weaken the armed forces by those with unshakeable biases or, God forbid, hidden agendas at the behest of our ‘enemies’? Even more alarming, does the press release’s statement that all this criticism should be put an end to constitute a thinly veiled threat? After all, Saleem Shahzad is not yet cold in his grave, and the investigations into his brutal murder seem to have lost their way in the labyrinthine maze such efforts seem always destined to end up in. The media in Pakistan may be imbued in large part with pro-establishment views, but even those holding such views are finding it hard not to reflect on the obvious failures of recent days, fearing a loss of their own credibility. Defending the indefensible has never been harder, and seems all but a lost cause. Some political leaders too have taken up verbal arms against these alarming manifestations of weaknesses, lapses, failures. No doubt some of them may already have had the honour of being in the list of usual suspects, but new entrants, as in the media, must be cause for concern for GHQ. The trickle down effect in today’s information-savvy Pakistan also is cause for worry for those whose self-image of the ultimate saviours of the country has taken a pounding of late.
Perhaps it is a reflection of the sensitivity this barrage of criticism has aroused that COAS General Ashfaq Pervez Kayani, in a rare show for the military of self-abnegation, has proposed that US aid intended for the military should be redirected towards the civilian side. Appreciable as the sentiment is, and it may be informed also by the questions of ‘guns versus butter’ that have been reignited by the recent budget, in the first place it is necessary to ask whether this is practicable? US aid is intended to be spent for the purposes for which it is given. In the past, the US has raised suspicions over the diversion of aid meant ostensibly for non-military or specifically for counter-terrorism purposes, to other uses. That is one of the issues holding up the reimbursement of Coalition Support Fund payments. Can a ‘reverse osmosis’ of military aid being diverted to civilian use be done without an explicit nod from Washington, and particularly the US Congress? In that case, the aid would be re-designated and therefore no longer be considered ‘military’. The implication is that it is not as simple as ‘switching’ money from accounts received under the head of military aid to civilian use, no matter how desirable that may be in the present circumstances. In fact, this would require a re-negotiation and restructuring of that aid with the US’s consent. Such a restructuring would be immensely popular here and help, if that is the purpose, to refurbish the recently battered image of the army, which the present COAS has been at pains to achieve after Musharraf’s departure took the stain of association with the dictator off the uniform.
The corps commanders also warned against stoking divisions between institutions and between the military and the people. It needs reiteration that there is no ‘plot’ at work here, only the natural consequences of recent negative developments that need addressing rather than a retreat into a bunker mentality and knee-jerk reactions against real or imagined enemies. Shooting the messenger, a la Saleem Shahzad, will only mean the message has not been heard, remains therefore unaddressed, and can only be to the detriment of the armed forces themselves and the country. Cooler and wiser reflection at the level of the top brass is the need of the hour. The country is beset with grave problems, primary being terrorism and the economy. As the military itself has stated, this is a time for pulling together to confront the huge tasks ahead. The best beginning for that would be to shun any thoughts of ‘ending’ criticism and instead responding in a serious manner to the issues and questions the critics keep throwing up.
Thursday, June 9, 2011
Daily Times Editorial June 10, 2011
Struggle against terrorism
Since the May 2 raid that killed Osama bin Laden, a new pattern in the struggle against terrorism has emerged. Drone attacks in FATA have accelerated. The latest attacks the other day on North Waziristan killed 24 terrorists, amongst whom it is believed foreigners and Punjabi Taliban were included. The Zawai Narai area of Shawal tehsil (sub-district), on the border between North and South Waziristan was where these terrorists were targeted. It is an area run by Hafiz Gul Bahadur, a prominent terrorist leader. Wednesday’s strike came two days after US missiles fired by drones killed 18 terrorists in South Waziristan, which till now was the deadliest strike for months. The US not only seems oblivious to Pakistan’s protests against drone strikes, which some say are ritual denunciations for public consumption while the Pakistani civil and military authorities are actually complicit in the whole enterprise, Washington is unlikely to pay heed either to Russian Consul General in Karachi Andrey Demidov’s criticism of the drone strikes inside Pakistan.
While both Waziristans receive more than their share of attention by the drones, attacks from across the border with Afghanistan in the Dir area have not completely abated. And in a clash with terrorists in Parachinar, Kurram Agency, five terrorists and two security personnel were killed. Clearly the escalation by the US of drone strikes since May 2, reflecting growing impatience with Pakistan’s military establishment’s games, has evoked a number of responses. Maulvi Nazir, another of Pakistan’s most influential extremist leaders, has vowed to retaliate against the pounding by drones in recent days of an area of South Waziristan along the border with Afghanistan that he controls, by sending more fighters to attack US and allied troops in Afghanistan. His logic is that they have sufficient fighters, more will be recruited because the drones are also killing innocents, and since they cannot shoot down the drones, their riposte will be on the ground in Afghanistan. Ayman al-Zwahiri, bin Laden’s number two, has in the meantime, in a video eulogy to his dead leader, promised to continue bin Laden’s jihad, prophesying that the slain terrorist leader will continue to terrorise the US and its allies in death as he did in life.
While Leon Panetta, outgoing CIA chief and appointee-designate as the next defence secretary has again urged Pakistan to do more against the militants within its borders, 90 US military trainers out of 135 attached to the Frontier Corps in Khyber Pakhtunkhwa have been asked to pack their bags and return home. This may well be the beginning of more ‘expulsions’ to come of US personnel operating on Pakistani soil since 9/11. Despite these negative signals, and the chorus of voices in Congress to cut aid to Pakistan, State Department spokesman Mark Toner continued to argue in his daily briefing that the anti-terror cooperation with Pakistan was in the US’s interest. And in US designate-ambassador to Afghanistan Ryan Crocker’s confirmation hearings in Washington, there was a lot of discussion about the fact that the US spends $ 120 billion on Afghanistan and only $ 2.8 billion on Pakistan, yet the terrorist safe havens are on Pakistani soil. This implies, was the sense of the discussion, that unless that situation is tackled, success in Afghanistan will remain a chimera.
In other words, voices questioning the US’s approach and methods are getting louder at home and elsewhere. The implied paradigm that there is a link between poverty and terrorism is refuted by a new study, “Poverty and Support for Militant Politics: Evidence from Pakistan”, whose four academic authors argue on the basis of a 6,000 respondent survey that the poor and those in areas of the worst terrorist conflict do not support militant organisations as their activities, and the authorities’ response to those, cause them the greatest hardship. Instead, the argument goes, it is the middle class that provides most of the cannon fodder for the terrorists. This may require more focus on this section of society as well as promoting secular education to combat extremist mindsets.
All the above indicates just how complicated, confusing, contradictory the struggle against terrorism has become. Without all anti-terrorist forces, domestic and foreign, being on the same page, the terrorists are probably smirking all the way to the bank.
Since the May 2 raid that killed Osama bin Laden, a new pattern in the struggle against terrorism has emerged. Drone attacks in FATA have accelerated. The latest attacks the other day on North Waziristan killed 24 terrorists, amongst whom it is believed foreigners and Punjabi Taliban were included. The Zawai Narai area of Shawal tehsil (sub-district), on the border between North and South Waziristan was where these terrorists were targeted. It is an area run by Hafiz Gul Bahadur, a prominent terrorist leader. Wednesday’s strike came two days after US missiles fired by drones killed 18 terrorists in South Waziristan, which till now was the deadliest strike for months. The US not only seems oblivious to Pakistan’s protests against drone strikes, which some say are ritual denunciations for public consumption while the Pakistani civil and military authorities are actually complicit in the whole enterprise, Washington is unlikely to pay heed either to Russian Consul General in Karachi Andrey Demidov’s criticism of the drone strikes inside Pakistan.
While both Waziristans receive more than their share of attention by the drones, attacks from across the border with Afghanistan in the Dir area have not completely abated. And in a clash with terrorists in Parachinar, Kurram Agency, five terrorists and two security personnel were killed. Clearly the escalation by the US of drone strikes since May 2, reflecting growing impatience with Pakistan’s military establishment’s games, has evoked a number of responses. Maulvi Nazir, another of Pakistan’s most influential extremist leaders, has vowed to retaliate against the pounding by drones in recent days of an area of South Waziristan along the border with Afghanistan that he controls, by sending more fighters to attack US and allied troops in Afghanistan. His logic is that they have sufficient fighters, more will be recruited because the drones are also killing innocents, and since they cannot shoot down the drones, their riposte will be on the ground in Afghanistan. Ayman al-Zwahiri, bin Laden’s number two, has in the meantime, in a video eulogy to his dead leader, promised to continue bin Laden’s jihad, prophesying that the slain terrorist leader will continue to terrorise the US and its allies in death as he did in life.
While Leon Panetta, outgoing CIA chief and appointee-designate as the next defence secretary has again urged Pakistan to do more against the militants within its borders, 90 US military trainers out of 135 attached to the Frontier Corps in Khyber Pakhtunkhwa have been asked to pack their bags and return home. This may well be the beginning of more ‘expulsions’ to come of US personnel operating on Pakistani soil since 9/11. Despite these negative signals, and the chorus of voices in Congress to cut aid to Pakistan, State Department spokesman Mark Toner continued to argue in his daily briefing that the anti-terror cooperation with Pakistan was in the US’s interest. And in US designate-ambassador to Afghanistan Ryan Crocker’s confirmation hearings in Washington, there was a lot of discussion about the fact that the US spends $ 120 billion on Afghanistan and only $ 2.8 billion on Pakistan, yet the terrorist safe havens are on Pakistani soil. This implies, was the sense of the discussion, that unless that situation is tackled, success in Afghanistan will remain a chimera.
In other words, voices questioning the US’s approach and methods are getting louder at home and elsewhere. The implied paradigm that there is a link between poverty and terrorism is refuted by a new study, “Poverty and Support for Militant Politics: Evidence from Pakistan”, whose four academic authors argue on the basis of a 6,000 respondent survey that the poor and those in areas of the worst terrorist conflict do not support militant organisations as their activities, and the authorities’ response to those, cause them the greatest hardship. Instead, the argument goes, it is the middle class that provides most of the cannon fodder for the terrorists. This may require more focus on this section of society as well as promoting secular education to combat extremist mindsets.
All the above indicates just how complicated, confusing, contradictory the struggle against terrorism has become. Without all anti-terrorist forces, domestic and foreign, being on the same page, the terrorists are probably smirking all the way to the bank.
Saturday, June 4, 2011
Daily Times Editorial June 5, 2011
Predictable Budget
It comes as no surprise that the Budget 2011-12 reflects the straitened economic and financial circumstances of the country. That leaves little fiscal space for ay relief for the beleaguered citizenry. The total proposed outlay is Rs 2,767 billion, up 14.2 percent on last year, but inflation means the increase may not turn out to be real. To meet this outlay, estimated gross revenue is Rs 2,463 billion (up 9 percent on last year’s budget estimates), leaving an apparent deficit of Rs 304 billion (up a whopping 82 percent on last year’s budget estimates and 33 percent less than the revised budget figure), to be met through bank borrowing. On closer examination, however, the gross revenue includes an amount of an expected provincial surplus of Rs 125 billion and external resources of Rs 414 billion. If these do not come through, the potential deficit could balloon to Rs 843 billion. That implies the optimistic estimate of the budget deficit is 4 percent of GDP, a target agreed with the IMF, while the pessimistic outcome could be much higher. In either case, the government seems wedded to plug its budget gap by borrowing from the banking system, an inflationary measure that also has implications for credit availability for private sector borrowing. If the government continues to muscle the private sector out of the borrowing loop (including through maintaining the present high interest rates regime), we can kiss domestic investment goodbye. Foreign investment too is likely to remain shy in the present state of insecurity because of terrorism and a breakdown in law and order. The revival of the economy therefore appears precariously poised.
Gross revenue receipts of Rs 2,732 billion include tax revenue of Rs 2,074 billion, of which FBR’s collection target has been settled at Rs 1,952 billion (up 17 percent on last year’s estimate and 23 percent on the revised figure, a highly optimistic scenario). Rs 500-600 billion additional tax revenue to be collected seems wishful thinking, particularly since the desire for the incremental documentation of the economy made shipwreck in the debacle of the RGST. Given our trade practices, there is every likelihood of these additional taxes being passed on to consumers, heightening inflationary apprehensions.
Of the total outlay of Rs 2,767 billion, current expenditure of Rs 2,315 billion includes debt servicing of Rs 1,034 billion (interest on domestic and foreign loans Rs 791 billion, repayment of foreign loans Rs 243 billion). This debt burden takes the lion’s share of resources, while defence gets Rs 495 billion (less than the over Rs 550 billion or so the military reportedly wanted) and development Rs 452 billion. There was perhaps no alternative to continue to follow the pattern of many years now, whereby debt servicing, defence and administration soak up virtually all the resources, leaving little for development. The social sector is always the one to suffer most in such straitened circumstances. Hardly any funds are available for development in health or education. It could be argued that it is now for the provinces, after the 18th amendment, to take up this slack. The jury is still out whether the provinces have the financial and organisational means to make this wish come true. As always therefore, the lenders and guns trump butter and human beings.
IMF nostrums have produced the slashing of subsidies by Rs 229 billion to Rs 166 billion. While much can be said about subsidies being abused and not benefiting the target audience, the wholesale withdrawal is bound to cause further hardship for the already overburdened poor. On the other hand, relief of sorts is offered to government servants, serving and retired. Salaries will increase by 15 percent and pensions by 15-20 percent, costing an additional Rs 25 billion. Salaried taxpayers’ exemption limit is to be raised to Rs 350,000 from 300,000 and senior citizens will receive a 50 percent tax exemption over and above the enhanced limit above.
These niggardly crumbs from the table of a state and society in which the rich and powerful enjoy the perks and privileges in good times and bad while the ordinary people suffer in both periods, are hardly likely to make a dent in the misery of the masses. Arguably, a deficit budget, whatever level it finally comes out at, will increase backbreaking inflation because of government borrowing. In short, there is little or no good news for the ordinary citizen, only perhaps more difficult days ahead.
It comes as no surprise that the Budget 2011-12 reflects the straitened economic and financial circumstances of the country. That leaves little fiscal space for ay relief for the beleaguered citizenry. The total proposed outlay is Rs 2,767 billion, up 14.2 percent on last year, but inflation means the increase may not turn out to be real. To meet this outlay, estimated gross revenue is Rs 2,463 billion (up 9 percent on last year’s budget estimates), leaving an apparent deficit of Rs 304 billion (up a whopping 82 percent on last year’s budget estimates and 33 percent less than the revised budget figure), to be met through bank borrowing. On closer examination, however, the gross revenue includes an amount of an expected provincial surplus of Rs 125 billion and external resources of Rs 414 billion. If these do not come through, the potential deficit could balloon to Rs 843 billion. That implies the optimistic estimate of the budget deficit is 4 percent of GDP, a target agreed with the IMF, while the pessimistic outcome could be much higher. In either case, the government seems wedded to plug its budget gap by borrowing from the banking system, an inflationary measure that also has implications for credit availability for private sector borrowing. If the government continues to muscle the private sector out of the borrowing loop (including through maintaining the present high interest rates regime), we can kiss domestic investment goodbye. Foreign investment too is likely to remain shy in the present state of insecurity because of terrorism and a breakdown in law and order. The revival of the economy therefore appears precariously poised.
Gross revenue receipts of Rs 2,732 billion include tax revenue of Rs 2,074 billion, of which FBR’s collection target has been settled at Rs 1,952 billion (up 17 percent on last year’s estimate and 23 percent on the revised figure, a highly optimistic scenario). Rs 500-600 billion additional tax revenue to be collected seems wishful thinking, particularly since the desire for the incremental documentation of the economy made shipwreck in the debacle of the RGST. Given our trade practices, there is every likelihood of these additional taxes being passed on to consumers, heightening inflationary apprehensions.
Of the total outlay of Rs 2,767 billion, current expenditure of Rs 2,315 billion includes debt servicing of Rs 1,034 billion (interest on domestic and foreign loans Rs 791 billion, repayment of foreign loans Rs 243 billion). This debt burden takes the lion’s share of resources, while defence gets Rs 495 billion (less than the over Rs 550 billion or so the military reportedly wanted) and development Rs 452 billion. There was perhaps no alternative to continue to follow the pattern of many years now, whereby debt servicing, defence and administration soak up virtually all the resources, leaving little for development. The social sector is always the one to suffer most in such straitened circumstances. Hardly any funds are available for development in health or education. It could be argued that it is now for the provinces, after the 18th amendment, to take up this slack. The jury is still out whether the provinces have the financial and organisational means to make this wish come true. As always therefore, the lenders and guns trump butter and human beings.
IMF nostrums have produced the slashing of subsidies by Rs 229 billion to Rs 166 billion. While much can be said about subsidies being abused and not benefiting the target audience, the wholesale withdrawal is bound to cause further hardship for the already overburdened poor. On the other hand, relief of sorts is offered to government servants, serving and retired. Salaries will increase by 15 percent and pensions by 15-20 percent, costing an additional Rs 25 billion. Salaried taxpayers’ exemption limit is to be raised to Rs 350,000 from 300,000 and senior citizens will receive a 50 percent tax exemption over and above the enhanced limit above.
These niggardly crumbs from the table of a state and society in which the rich and powerful enjoy the perks and privileges in good times and bad while the ordinary people suffer in both periods, are hardly likely to make a dent in the misery of the masses. Arguably, a deficit budget, whatever level it finally comes out at, will increase backbreaking inflation because of government borrowing. In short, there is little or no good news for the ordinary citizen, only perhaps more difficult days ahead.
Friday, June 3, 2011
Daily Times Editorial June 4, 2011
State of the economy
Not surprisingly, the Economic Survey 2010-11 unveiled by Finance Minister Abdul Hafeez Sheikh in a news conference on Thursday lists a litany of reasons why all targets were missed and the economy’s growth slowed down. Amongst the negative factors impacting the economy, pride of place belongs to last year’s devastating floods, the energy crisis, the hike in international oil prices and the internal and regional security challenges. The economy grew only 2.4 percent against a target of 4.5 percent. The average growth for the last three years of the PPP-led government pans out at 2.6 percent, the lowest in three decades. During the same period, Asian countries grew by 8.4 percent, with India, Sri Lanka and Bangladesh recording growth of 7.7, 6.6 and 6 percent respectively.
The finance minister revealed that the floods in 2010 affected 1.6 million families and caused damage of $ 10.5 billion to infrastructure, agriculture and other assets. It must be said that despite the earlier sympathetic noises by the international community, the actual help to flood affectees and the rehabilitation of infrastructure, etc, has fallen far short of expectations or commitments. Even well meaning local philanthropists seem to have run out of steam, leaving millions still living under open skies and without opportunities to rehabilitate their incomes and lives.
The energy crisis includes not only a shortfall of supply versus demand, but a chronic circular debt of some Rs 120 billion, which is exacerbating the shortage of electricity generation. The government’s strategy for meeting the energy crisis, comprising short- medium- and long-term measures, appears to have run aground at the first hurdle, the Rental Power Projects’ scandal-hit effort. Independent Power Projects, representing the medium-term component of the strategy, appear to be crawling along in implementation. The long-term component of dams, prime being the Bhasha Dam, are stuttering because of financial constraints and the difficulties of generating the finance at affordable cost from the international donors. Renewable energy is still an infant that has to grow teeth before it can make any kind of impact.
While Pakistan, dependent as it is on oil imports, can do little about the spike in international prices of POL, what is conspicuous by its absence is any semblance of a strategy or campaign to conserve energy, which logically would seem to suggest itself as a demand dampener. The energy crunch has impacted industry and commerce seriously, with factories closing down or functioning at low capacity, and trade too suffering customers turning away because of inconvenience and the inflationary spiral biting deep into their purchasing power.
The struggle against terrorism and the open declaration of war against Pakistan by the Tehreek-i-Taliban Pakistan and al Qaeda have led to the worst security climate within memory. Let alone foreign investors, even domestic investors are shy and some have despaired of the interminable security and energy crises to shunt their capital to more salubrious climes abroad. Terrorism is the illegitimate, but inevitable child of the misplaced jihadi enterprise beloved of our military establishment for the last four decades, whose chickens have by now come home to roost with a vengeance. There are growing calls for revisiting this policy, but so far it appears, despite the setbacks in Abbottabad and Karachi, that the military’s point of view is set in stone, despite its own, and the people’s grave losses. Inevitably, Pakistan does not have a hope in hell of attracting any kind of investment, domestic or foreign, unless peace is restored by taking out the terrorists without discrimination or being waylaid by spurious notions of ‘good’ and ‘bad’ Taliban.
Last but not least, the State Bank of Pakistan’s (SBP’s) tight monetary policy and maintaining high interest rates, ostensibly to keep inflation in check, is clearly not working to keep a lid on prices. Inflation officially rose to 12 percent, although this figure is disputed by independent analysts as well as empirical evidence. Since core inflation is related to food prices, the impact of the high interest rates has been to dampen private sector borrowing, crowded out as it is further by government’s dipping into the SBP and commercial banks’ coffers.
On the eve of the budget, the government needs to prioritise the elimination of the bottlenecks listed above to the revival of the economy through visionary, creative, out-of-the-box thinking, not the clichéd and failed nostrums of the international lending agencies and the western governments that swear by them.
Not surprisingly, the Economic Survey 2010-11 unveiled by Finance Minister Abdul Hafeez Sheikh in a news conference on Thursday lists a litany of reasons why all targets were missed and the economy’s growth slowed down. Amongst the negative factors impacting the economy, pride of place belongs to last year’s devastating floods, the energy crisis, the hike in international oil prices and the internal and regional security challenges. The economy grew only 2.4 percent against a target of 4.5 percent. The average growth for the last three years of the PPP-led government pans out at 2.6 percent, the lowest in three decades. During the same period, Asian countries grew by 8.4 percent, with India, Sri Lanka and Bangladesh recording growth of 7.7, 6.6 and 6 percent respectively.
The finance minister revealed that the floods in 2010 affected 1.6 million families and caused damage of $ 10.5 billion to infrastructure, agriculture and other assets. It must be said that despite the earlier sympathetic noises by the international community, the actual help to flood affectees and the rehabilitation of infrastructure, etc, has fallen far short of expectations or commitments. Even well meaning local philanthropists seem to have run out of steam, leaving millions still living under open skies and without opportunities to rehabilitate their incomes and lives.
The energy crisis includes not only a shortfall of supply versus demand, but a chronic circular debt of some Rs 120 billion, which is exacerbating the shortage of electricity generation. The government’s strategy for meeting the energy crisis, comprising short- medium- and long-term measures, appears to have run aground at the first hurdle, the Rental Power Projects’ scandal-hit effort. Independent Power Projects, representing the medium-term component of the strategy, appear to be crawling along in implementation. The long-term component of dams, prime being the Bhasha Dam, are stuttering because of financial constraints and the difficulties of generating the finance at affordable cost from the international donors. Renewable energy is still an infant that has to grow teeth before it can make any kind of impact.
While Pakistan, dependent as it is on oil imports, can do little about the spike in international prices of POL, what is conspicuous by its absence is any semblance of a strategy or campaign to conserve energy, which logically would seem to suggest itself as a demand dampener. The energy crunch has impacted industry and commerce seriously, with factories closing down or functioning at low capacity, and trade too suffering customers turning away because of inconvenience and the inflationary spiral biting deep into their purchasing power.
The struggle against terrorism and the open declaration of war against Pakistan by the Tehreek-i-Taliban Pakistan and al Qaeda have led to the worst security climate within memory. Let alone foreign investors, even domestic investors are shy and some have despaired of the interminable security and energy crises to shunt their capital to more salubrious climes abroad. Terrorism is the illegitimate, but inevitable child of the misplaced jihadi enterprise beloved of our military establishment for the last four decades, whose chickens have by now come home to roost with a vengeance. There are growing calls for revisiting this policy, but so far it appears, despite the setbacks in Abbottabad and Karachi, that the military’s point of view is set in stone, despite its own, and the people’s grave losses. Inevitably, Pakistan does not have a hope in hell of attracting any kind of investment, domestic or foreign, unless peace is restored by taking out the terrorists without discrimination or being waylaid by spurious notions of ‘good’ and ‘bad’ Taliban.
Last but not least, the State Bank of Pakistan’s (SBP’s) tight monetary policy and maintaining high interest rates, ostensibly to keep inflation in check, is clearly not working to keep a lid on prices. Inflation officially rose to 12 percent, although this figure is disputed by independent analysts as well as empirical evidence. Since core inflation is related to food prices, the impact of the high interest rates has been to dampen private sector borrowing, crowded out as it is further by government’s dipping into the SBP and commercial banks’ coffers.
On the eve of the budget, the government needs to prioritise the elimination of the bottlenecks listed above to the revival of the economy through visionary, creative, out-of-the-box thinking, not the clichéd and failed nostrums of the international lending agencies and the western governments that swear by them.
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