The Fall Of Lyari

By Amir Zia
The News on Sunday
January 30, 2011

With the votebank and demography in its favour, but with no party organisation, is the PPP trapped in this backward neighbourhood?

It is considered the strongest lair of the Pakistan People’s Party (PPP) and Bhutto loyalists in Karachi,but the elected representatives of the ruling party remain among the most unpopular individuals here. Graffiti on the walls ridicule and insult PPP lawmakers elected in the 2008 general elections from Lyari -- one of the earliest and most backward neighbourhoods of Karachi -- where old and new tricolour PPP flags dot the electricity poles, rickety old houses and buildings.

At many places, along with posters and huge pictures of slain family members of the Bhutto dynasty and President Asif Ali Zardari, photographs of a notorious gangster of his time, Sardar Abdul Rehman, alias Dakait also adorn the neighbourhood -- underlining the emergence of a new political phenomenon in this PPP stronghold.

Yes, the name and legend of Rehman Dakait, killed in a controversial police encounter in August 2009, continue to live in Lyari. Dakait’s ambitions to join politics from the PPP platform ended with his death, but his People’s Amn Committee (PAC) emerged as a force to reckon with in Lyari -- a PPP stronghold since 1970s. Disgruntled supporters and workers of the PPP, gangsters and criminals comprise the core of the Amn Committee, which takes pride in doing social and welfare work. For the Muttahida Qaumi Movement (MQM) and even some PPP stalwarts, the Amn Committee symbolises criminalisation of politics, while its supporters say that it represents the voice of ordinary people and party workers ignored and forgotten by the leadership.

But between these two extreme points of view, the hard fact is that the Amn Committee has effectively managed to establish its grip over Lyari at the cost of PPP’s organisational structure. The PPP member National Assembly from the area Nabeel Gabol avoids his constituency because of what he believes a threat to his life. Gabol has been staying away from Lyari for months now -- even before he provoked the recent wrath of President Zardari by what the party insiders say his “ill-timed” and “thoughtless” statement about the two PPP allies the Awami National Party (ANP) and the MQM -- which nearly cost him his ministry.

The two PPP MPAs from the area -- Muhammad Saleem Hingoro and Muhammad Rafiq Engineer -- are taunted and badmouthed by a vast number of people in Lyari and have restricted movements in their respective constituencies, where the Amn Committee now wields power.

“It is not that there is no PPP structure in Lyari,” says a senior PPP leader and lawmaker from Karachi requesting anonymity. “From the ward to the district level, there are office-bearers and the party structure, but it is dormant. After coming to power, the leadership failed to come up to the expectation of people. They have been hiding from the people and their demands. The vacuum has been filled by the People’s Amn Committee. Those PPP workers have joined the committee, who were not allowed to rise within the party. They are third and fourth tier of local PPP leaders.”

Uzair Baloch, a cousin of Rehman Dakait, who now heads the committee, first went to jail while protesting on a call made by PPP and so was his father, he added.

Zafar Baloch, a spokesman for the Amn Committee, said that the elected representatives disappointed the people. All uplift projects in Lyari are being carried under a more than three billion rupees special presidential fund, he said. “These elected representatives have nothing to their credit,” he claimed, adding that Gabol has not been barred from Lyari. “Gabol himself does not come to Lyari despite being elected from here. We are ready to provide him protection in Lyari. But if his voters are angry with him, what can we do. Even an MQM minister and a supporter live in Lyari and none of them have ever been attacked or victimised.”

But matters are not as simple as they appear as the Amn Committee now spearheads not just the drive against crime in the area, but also works on social welfare projects -- from restoring public parks to running clinics and supporting education institutions. Police sources say that street crime, rampant all over Karachi, is nonexistent in Lyari. Drugs, which once used to sell openly, are now being sold under wraps. The appearances can, however, be deceptive.

The committee is trying to expand its influence. And in doing this, it is clashing with established forces -- especially the MQM. The tussle is one big cause of the continued violence in the city where more than 70 people have been killed in the first 25 days of January in political assassinations and crime related incidents. These rival groups also accuse one another of running extortion racket, which police officers admit have direct connections with political parties.

Indeed, politics has transformed into a sordid and bloody business in which there are no rules of the game. And the irony is that the central leadership of the political parties and the state institutions not just tolerate it, but in some ways patronise it.

Another disgruntled PPP lawmaker claimed that even the Station House Officers (SHOs) at the Lyari police stations are being appointed on Amn Committee’s recommendations. It is not the local leadership, but Sindh Home Minister Zulfikar Mirza, who has been supporting it, he claimed. “The PPP as a party has vanished from Lyari. Even there have been instances of kidnapping of PPP local leaders -- which was unthinkable in the past.”

The whole problem emerges out of the mindset of a coterie within the PPP that Amn Committee and ANP can be used as an effective force to counter MQM’s muscle power. But this hedging of position by individuals is being done at the cost of the party, PPP insiders say.

“Supporting criminal element is not an answer to a problem. In the long run, it will hurt not just the PPP, but the overall politics of this city,” the PPP lawmaker said. “When we go to Lyari, there appears no security. We feel threatened. Criminals will be calling the shots here in the next elections.”

Some old PPP supporters say that their party has been trapped in Lyari. “The Amn Committee is pro-PPP, but not in the party discipline,” said a veteran PPP worker, who in mid-1980s was an active leader of the People’s Student Federation -- the PPP’s student front. “The PPP has a votebank and demography in its favour in Lyari, but has no organisation. The Amn Committee has not just the organisational structure, but it is also backed by the gun-power.”

Old dwellers of Lyari say that their area, having a strong tradition of democratic struggle against every military rule especially that of General Ziaul Haq, has now transformed. “All the leftwing and nationalists groups which along with PPP workers were the conscience of the area have been wiped out from here. Ideological and honest political workers have taken a backseat or left politics. It is the area of toughies and goons who are now in the forefront,” the former student leader said.

Baloch of the Amn Committee says that his group has no political agenda. “We want to merge with the PPP. But those with vested interests do not want us.”

With the PPP government surviving from one crisis to another and Karachi remains on the boil with ethnic, religious and politically motivated violence, there hardly appears a chance of the change of fortunes for the people of Lyari.

One Week - Two Bad Decisions

By Amir Zia
Sunday, January 30, 2011
The News

Govt send jitters through corporate and industrial world by taking two highly controversial decisions -- the reinstatement of employees at KESC, allowing import of used cars

These are uncertain and difficult times for industrialists, investors and businesspeople in Pakistan. It is not just the country’s tough economic challenges, energy shortages, rampant corruption and a grave law and order situation which are bogging them down. The “peoples’ government” appears determined to erase -by design or by default -what remains of the little confidence left on Pakistan’s wobbling economy.

During the past one week alone, the government sent jitters through the country’s corporate and industrial world by two highly controversial decisions. The first one pertained to the reinstatement of more than 4,000 non-core employees at the loss-making Karachi Electric Supply Company (KESC), while the second one was to allow the import of up to five-year-old used cars.

Both these decisions reveal how this crumbling economic system operates by threats, pulls, pressures, shadowy deals and even blackmail. Yes, in today’s Pakistan, interest groups are able to force the government to yield to even those demands, which stand contrary to commonsense and prudent business and management principles. The Pakistan Peoples' Party (PPP)-led government appears happy to bend rules and bring fundamental policy changes to appease pressure and interest groups at the cost of the long-term economic interests of the country.

The labour dispute at loss-making KESC is a case in point in which the government endorsed lawlessness rather than standing for the supremacy of law and justice.

Firstly, it failed to provide protection to the KESC management from the violence unleashed by trade unions, backed by labour-wings of the three ruling coalition partners -the PPP, the Muttahida Qaumi Movement (MQM) and the Awami National Party (ANP). Secondly, the government forced KESC’s private management to accept the reinstatement of workers through an executive order instead of ensuring that the dispute gets resolved legally. According to a KESC official, the government and the political parties “literally held us by the throat" and bulldozed this decision.

Most of the sacked employees were political appointees including drivers, peons, sanitary workers and bill distributors. The KESC says that their work has already been outsourced at a fraction of the cost compared with the amount spent on the internal staff. The retrenchment was part of KESC’s restructuring to make it lean and efficient -acceptable in every business model -to make it viable.

The government’s short-sighted approach in handling the affairs of KESC in which leading Dubai-based private equity firm, Abraaj Capital, has 50 percent shares and management control, is indeed a blow to Pakistan’s already stalled privatization programme and dismal investment climate.

The step taken in the name of “workersí welfare” in essence endorses and encourages mob rule, lawlessness and violence and ensures that this unprofitable organisation remains in the red. Pakistan's Privatization Commission and Board of Investment will find Pakistan even harder to sell and portray it as an attractive investment destination because of how the PPP-led government handled the KESC affair, which left its management defiant and angry. At one stage of negotiations, which ended with workers’ reinstatement, the KESC management even offered the government to re-nationalize this institution. The KESC Chief Executive Officer Tabish Gauhar refused to flank the government officials, who proudly announced the labour victory at KESC which last year posted a loss of around 14.64 billion rupees. A few days later, Gauhar vowed to again push for the retrenchment process.

By interfering in the human resource policy of a private-run company, the government has set a bad precedent, which justifies overstaffing, mismanagement and corruption. KESC is not alone in facing the brunt. The much talked about restructuring and reform process of the major public sector entities, which are bleeding the countryís financial system, will now become harder to implement. In fiscal 2009/10, the government provided a staggering 250 billion rupees worth subsidies to these entities, including the Pakistan International Airlines, Pakistan Railways, Pakistan Steel and PEPCO. The financial drain has no way to stop because the government lacks the commitment and will to carry out reforms. The KESC saga proves this.

Commercial and business organisations are not run as charities or provide employment by booking losses. It is the government’s role to create the right environment for private sector businesses where they can flourish. Once this is done, jobs get created automatically as businesses expand and new ones are established, increasing the demand for a workforce. To do this, the government needs to attract both foreign and local investors by transparent governance, establishing the supremacy of law and consistent policies.

Allowing the import of five-year-old used cars is the other bad decision, which is a blow to the manufacturing sector in general and auto-sector in particular. It shows how cartels and importers manage to orchestrate major policy-shifts, damaging the interest and future prospects of the local industry.

The government has relaxed car imports at a time when their sales are down. The auto-industry, having a capacity to produce around 275,000 units annually, is likely to produce 160,000 units in fiscal 2010/11 as high interest rates have made the availability of cheap auto-loans a thing of the past.

The government needed to protect this industry because it directly and indirectly provides around 1.4 million jobs and gives 34 billion rupees in customs duties and taxes annually. Allowing car imports is likely to badly hit this sector, which spent more than 20 billion rupees in expansion over the last four years, and may result in unemployment.

The government’s stand that the import of used cars will benefit the common man remains flawed. Media reports show that most of the 471 vehicles that arrived in Pakistan are of 1300cc and above.

The government’s argument that car prices remain high compared to the other regional countries is weak given the fact that the Pakistani rupee has eroded more than 35 per cent against the dollar since this government took power in 2008. According to the Pakistan Automobile Manufacturers Association, prices of car manufacturing materials surged sharply in 2009 and 2010 including that of steel, which rose by almost 26 percent, polypropylene by 51 percent, aluminum by 49 percent and copper by 82 percent.

“The government inability to understand the industry dynamics that requires stable policies and long planning cycles is striking,” the association said in a recent statement, which underlines the main flaw of this government and its financial managers. They have failed to give confidence to foreign and local investors and businesspeople because of their lack of vision, inconsistent policies, politics of expediency and lack of transparency which transforms their every move into a shadowy deal. One wonders whether Finance Minister Abdul Hafeez Sheikh and his team have any say in these policy decisions - and if the answer is yes, then it is a really poor performance.

Perspective: KESC Labour Row - A Test Case

By Amir Zia
The News
Sunday, January 23, 2011

The government seems to listen and bargain only with those who shout the loudest, resort to lawlessness and violence

The Karachi Electric Supply Company (KESC) management appears on its own to face the violent backlash and political pressure following the retrenchment of more than 4,000of its “non-core” employees.

When the sacked employees went on rampage on January 20 at the KESC head office, smashing furniture and damaging vehicles, police and paramilitary rangers’ personnel simply stood by, many with smiles on their faces. They made no effort to stop the lawlessness, exposing the vulnerability of businesses and law-abiding citizens in the countryís commercial hub. The ruling coalition partners — the Muttahida Qaumi Movement (MQM) and the Pakistan Peoples’ Party (PPP) - were quick to offer support to protesters. Governor Sindh Ishratul Ebad asked the loss-making Company to defer its retrenchment decision until a government committee gives verdict regarding the issue.

Welcome to the unique business and investment-friendly environment of Pakistan, which offers little protection to the life and property of foreign and local investors or ensures rules of the game - at least under this democratic dispensation.

The government seems to listen and bargain only with those who shout the loudest, resort to lawlessness and violence. In such a scenario, even local investors remain reluctant to invest, but we hope to attract foreign investment to help revive our battered economy. No wonder, Pakistan’s privatization programme stands stalled since 2008 and the foreign investment dipped to a mere $2.08 billion at the end of fiscal 2009/10 from the highs of $8.42 in fiscal 2006/07.

Those investors, who have already taken the plunge here, are getting a taste of Pakistanís choppy political and business environment in which corruption, inconsistent policies, lawlessness and insecurity reign supreme. The KESC, privatized in 2005, emerges as a glaring example that why investors should stay away from Pakistan. The baggage is too big and political interference too much.

Indeed, retrenchment of workers from any organisation remains a painful and unpopular process. But tough economic conditions demand difficult decisions. Institutions - both private and public - have to remodel, reinvent and adjust according to the changing times. The process can be agonizing, but necessary to make institutions lean, efficient and financially viable. This goes a long way in determining the fate of not just businesses, but the country’s economy.

It is the company, which has to determine the size and skill criteria of its work force and not the government. Any deviation from this principle proves lethal. We have seen Pakistan’s state-run institutions paying the price of over-staffing and mismanagement.

For the KESC, which booked losses of 14.64 billion rupees in financial year 2009/10 compared with 15.48 billion a year ago, reduction in operating cost is definitely a make-or-break decision. In 2010/11, the company hopes to cut losses further if it is allowed to restructure, recover money from defaulters and curb power theft. The signs of a slow recovery can be seen. In the first-quarter of the current financial year (July-September), KESC’s losses were around 1.78 billion rupees down from 5.61 billion rupees a year ago in the corresponding period.

But a sustainable turnaround in KESC’s fortunes will be hard to achieve without reducing the size of workforce, which hovers around 17,000 employees. According to senior KESC officials many of the appointments were made in the past on political basis in the category of non-core employees including drivers, office attendants, sanitary workers and security guards. Many of these employees were ghost workers and their functions already have been out-sourced in what the management claims “at a fraction” of the cost that the company incurs on internal resources.

For any business model, reduction in operating cost makes sense. Companies cannot provide jobs if they are in the red. They create employment only when they make profits. The successive Pakistani governments tried to be the biggest job provider, but the formula did not work. It transformed functioning, profit-making institutions into sinking ships, which proved a drain on the economy for decades now.

KESC says that retrenchment of workers came as a last resort. It initially launched a voluntary separation scheme (VSS) with what it called “generous payoutsî ranging from a minimum of 700,000 rupees to five million rupees. But only 400 employees accepted the scheme out of the targeted 4,500 as the Collective Bargaining Agent of the employees assured members that it would either be able to prevent retrenchment or get them better terms. In these pressing economic times, the dark specter of unemployment certainly remains a concern for employees, but that could have been addressed through peaceful and lawful means.

As the government, political parties and labour unions press the KESC management to change its decision, the company maintains that the step remain in compliance with local labour laws. “The company has the right to declare certain functions redundant and to retrench staff in these positions - this is all that has been doneÖ We intend to maintain our position and vigorously defend this decision through the courts,” a senior official of the company said. “The legal precedent remains on the side of the company since the higher courts have repeatedly upheld the right of companies to manage their staffing and to retrench redundant staff as necessary.”

How authorities resolve the management-labour dispute at KESC remains a test-case, particularly for the Finance Minister Abdul Hafeez Sheikh, who led the most successful privatisation programme of the country during Pervez Musharraf era as his Privatisation Minister. The tackling of the labour row at KESC by the government will determine not only the direction of the country’s privatization programme, but also the signal it wants to give to foreign investors. Will the government be able to make the right decision for the economy - remains today’s thorny question.

What Karachi Really Needs

By Amir Zia
The News
January 22, 2011

The pressure of living in Karachi can only be understood by ordinary residents

The government has again started to talk tough in the wake of unabated politically motivated killings and the surging crime rate in the country’s commercial hub, Karachi. But despite all the half-baked plans and a stream of statements issued by senior government officials for tackling Karachi’s law and order challenge, there appears more confusion than clarity about the direction of these efforts.

The paramilitary Rangers, backed by helicopters, have already been seen in action in parts of Orangi Town, in which more than 300 people were rounded-up. How many of them were criminals and assassins is a question that remains to be answered. And it is not just the effectiveness of this much-publicised operation that is being questioned. It has become controversial because of the very fact that both Interior Minister Rehman Malik and Sindh home minister Zulfiqar Mirza claimed in separate statements that they were unaware of this crackdown. This shows that various arms of government and state institutions have not yet built a consensus and worked out a viable strategy on Karachi’s security problem.

The barrage of tough official statements appear more a knee-jerk reaction and crude devices aimed at playing to the gallery in the wake of continuing political violence and street crimes, which according to media reports claimed more than 60 lives in the first 20 days of January.

Out of these 60 victims, around 20 were workers and supporters of different political parties, and one was a policeman. The rest were ordinary citizens, including a journalist, who were not part of any conflict or organised rivalry. Some of them were killed by bandits in robberies. The motives behind the majority of these murders have yet to be known. They were just killed. Snipers, gunmen on motorcycles, bandits, extortionists and cold-blooded assassins – who first torture their victims before shooting them dead – all have been let loose in this city. They kill and flee. Hardly any of them is ever arrested and, even if nabbed, manages to wriggle out of the so-called long-arm of the law – thanks to a weak prosecution and inefficient and corrupt legal system.

Yes, it is normal for killers to roam freely in this city.

The pressure of living in Karachi can only be understood by ordinary residents. From petty street criminals, extortionists and of goons belonging to the drug, land and transport mafias to that of workers belonging to key political parties and the personnel of law enforcement agencies – all seek their pound of flesh in this city. As government functionaries try to stay safe surrounded by armed guards, pickets, high walls and impressive cavalcades, a constant fear lurks in the minds of a vast number of dwellers of this city all the time. One has to live it to feel the insecurities of life in Karachi. Getting suddenly caught in a cross-fire between rival groups, being kidnapped for ransom, held and looted at gun point or simply falling to a stray bullet – all remain probable scenarios of Karachi life.

The number of violent deaths tell Karachi’s grim story. In 2010, according to the Human Rights Commission of Pakistan, 748 people lost their lives, which in journalistic jargon is called “targeted killings.” Out of them 447, got killed in politically or religiously motivated violence, while the remaining 301 were ordinary citizens. In 2009, the figure of targeted killings was 242 – which itself is no small number.

As authorities again plan for house-to-house search operations, aerial surveillance, snap checking of vehicles and imposition of mini-curfew in volatile neighbourhoods, one wonders what new and different approach is being applied to establish the writ of law in this teeming city. While the print and electronic media are building a hype of the operation, political parties remain at loggerheads, blaming one another for the crisis and making demands that can at best be called self-serving and aimed at damaging the rival rather than finding a solution to Karachi’s law and order problem. From the demand for a military operation in Karachi to that of getting the city rid of weapons – all these have been tried and tested in the past, but failed to bring peace. Apart from dramatic public posturing and lip-service to the cause of peace, the authorities have offered nothing but ad hoc and fire-fighting measures. And that too aimed more at appeasing this or that political or interest group than tackling terrorists and criminals.

The main conceptual flaw of the Pakistan People’s Party-led coalition government and its predecessors has been the approach that peace in the city is a mere question of an operation or a crackdown.

The operation-based approach remains flawed because it fails to tackle the law and order problem of Karachi in a holistic manner. An operation or crackdown in its essence is for a brief period – a few hours, a day, a week, a month, a year, two-years or even more. It has to end after achieving limited objectives, but ensuring rule of law and writ of the state remains a 365-day job, every year, not just in Karachi, but each and every part of Pakistan. It is akin to the irritating hafta-e-safai or week-long cleanness drive, after which in the remaining 51 weeks, it is the business of filth as usual.

If the government is sincere about peace in Karachi, it has to get out of the operation mindset and focus on basics that start with reforming and depoliticising the police. The culture of political pressure, political appointments, selective justice and corruption needs to be eradicated from the police force. The city needs a professional and independent police, whose top officers get appointed on fixed terms and remain accountable to institutions rather than be at the mercy of unscrupulous politicians.

Today, the police in Karachi remain unable even to implement traffic rules, let alone confronting the political and criminals mafias. Indeed, the foremost challenge for the government, if it wants to match words with action, is to empower the police so that it can do its job.

However, arresting criminals and terrorists is only one part of the challenge. The important question remains, what happens after they are caught. A vast number of accused, involved in heinous crimes, manage to get free through courts on lack of evidence and weak prosecution. Therefore, strengthening the investigation and prosecution system should also be among top priorities.

There also remains a need for reforming the judicial system and, if necessary the relevant laws, because of which cases remain pending for years. The cases of hardened criminals and terrorists need to be decided on a fast track – not months, but weeks.

For major political parties, it is a time for some serious self-criticism and rethinking. If they want peace and rule of law, they have to stop patronising criminals, extortionists, and terrorists. The politics of expediency must be replaced by the politics for rule of law, fair play and justice. These could be the first few small steps for peace in Karachi, but do the people at the helm of affairs knows what is required of them.

Efficient Team -- A Must To Steer Economy

By Amir Zia
The News
January 16, 2011

It remains an irony that the PPP has no person to offer from its ranks for the key slot of finance minister.

What are the foremost requirements to run an economy or to pull it out of a crisis? The answer, perhaps, is simple — a vision and a dedicated team. Sadly, the Pakistan Peoples’ Party (PPP) government lacks both.

Barely three years in the office and this government has already given us four finance ministers, five finance secretaries and three central bank governors. A continued state of flux in the key members of economic team means uncertainty and instability. For both foreign and local investors and businessmen, stability and consistency in policies remain a prerequisite for committing money in any country. Pakistan under the PPP has failed to meet this basic requirement, let alone tackling bigger issues that include providing clean governance, implementing the International Monetary Fund (IMF)-backed reforms and combating terrorism and crime.

It remains an irony that the PPP has no person to offer from its ranks for the key slot of finance minister. It banks on outsiders or stop gap measures to run the economy that speaks volumes about the lack of this government’s economic vision.

While PPP old guards stay committed to the jargon of Zulfikar Ali Bhutto-era, those who lead the ministry today are for privatisation, deregulation and economic liberalisation. No wonder this internal contradiction is hurting the policy-making and its implementation.

Let’s begin the story from the beginning. The first finance minister of this government, Ishaq Dar, was borrowed from the Pakistan Muslim League (Nawaz), who in his zeal to criticise Pervez Musharraf, declared that Pakistan’s economic numbers were fudged. This was the first self-inflicted blow to the economy, creating a crisis of confidence. Dar’s early exit from the scene, as a result of PML (N) differences with President Asif Ali Zardari, brought PPP stalwart Naveed Qamar as a stopgap-measure. Qamar kept finance minister’s chair warm as PPP hoped against all hopes that the PML (N) would return back to the federal cabinet. More than six crucial months were lost in indecision at a time when the country needed aggressive management to counter the impact of rising food and oil prices.

Shaukat Tareen, a veteran of banking sector, but not a PPP ranker, entered the scene as finance minister when the country was facing a gnawing balance of payments crisis. Tareen went to the IMF for $11.3 billion standby arrangement, which many analysts say was a far bigger programme than Pakistan’s actual requirement.

Dr. Ashfaque Hasan Khan, director general NUST Business School, Islamabad, and a former Finance Ministry adviser, said that the country needed not more than $2.5-3.0 billion IMF programme.

“A smaller IMF programme would have worked. It was enough to show to the world that the IMF remains engaged with Pakistan,” he said. “The big loan package from the IMF has pushed Pakistan deeper into debt.”

Tareen, however, left the cabinet on a sore note because of his inability to implement reforms, which he thought were crucial for the economy. From privatisation to cutting government expenses to that of expanding the country’s tax-base, the PPP veterans and old-guards remained firmly opposed to his proposed policies.

Tareen also overestimated the flow of funds coming from Friends of Democratic Pakistan and failed to foresee the impact of the National Finance Commission Award under which resources and powers have been transferred to the provinces. That resulted in the widening of budget deficit to 6.3 from the targeted 4.7 percent.

Abdul Hafeez Sheikh, the fourth finance minister, was part of the Musharraf government and remains a PPP outsider. He faces more or less the same challenges confronted by his predecessor -- the top one remains politics overriding the economy.

The way government has withdrawn the recent rise in fuel prices over the pressure of opposition and disgruntled allies and backed away from implementing the reformed general sales tax (RGST) underlines that Sheikh has been alienated in the cabinet.
But it is not just the opposition within the PPP ranks that is holding back the current economic team from delivering and implementing the process of reforms.

The current team has failed to come up with any mid- to long-term plans to arrest the present slippage on the economic front and convince the government not to go for an increase in its expenses that includes the recent hefty raise in the salaries of government employees.

A senior Finance Ministry official, who spoke requesting anonymity, said there appears a complete disconnect within the team. “Finance Secretary does not know what Finance Minister is doing. The State Bank of Pakistan governor instead of just focusing on its core responsibility is involving himself with the restructuring of state-run institutions, while the Planning Commission has yet to focus on planning.”

Many in the Finance Ministry complaint about what they call ‘lethargic’ and ‘laidback’ attitude of the finance minister. “He hardly interacts with the private sector or media. On crucial economic issues when the government was being attacked from the right, the left and the center, there was no one to present the government’s point-of-view,” the official said.

The long foreign trips of key officials -- sometimes stretching up to three weeks -- also hurt the effective management of the economy. Some key officials of this team, including Deputy Chief of the Planning Commission, Dr. Nadeemul Haq and Chief Economist Dr. Jaffer Qamar, have lived most of their professional careers abroad. This leaves them out of touch of Pakistan’s ground realities.

“Some members of this team do not have their families and homes in Pakistan. Till recently they have been living in clubs and hotels in Islamabad. They hardly have any stake in this country. They have to just pack their bags and go,” said the Finance Ministry official.

As the PPP government drifts from one crisis to another, economic management continues to remain low on its priority list. Its actions and words hardly boost the sagging confidence or offer any ray of hope for the beleaguered economy.

Our Litmus Test

By Amir Zia
The News
January 14, 2011

When law-breakers and murderers are hailed as heroes and the state institutions keep mum about it, then something has gone terribly wrong with society

The polarisation between rationalist and Islamic literalist forces in Pakistan had never been as sharp and visible in recent years, as it stands following the assassination of Governor Punjab Salmaan Taseer by a policeman assigned to protect him. With some leading Islamic parties and scores of religious-minded individuals branding the assassin, Malik Mumtaz Hussain Qadri, a hero for what they perceive as “a justified act” of killing a person opposing the blasphemy law, the very trial of the accused has all ingredients to become an explosive issue that could prove a test case for the state itself.

Top leaders of religious parties, including Maulana Fazlur Rahman, have already upped the ante by announcing at a Karachi rally on January 9 that they plan to defend the killer of Taseer come what may. The country’s civil society, led mainly by non-governmental organisations, remains in the forefront in condemning the murder and the killer. Ironically, one side’s villain remains a hero for other. An active section of lawyers, supporters of religious parties are showering Qadri with rose petals, underlining the complexity and sensitivity of the issue.

As frenzy and rigidity reigns supreme, there appears no middle ground on which the two ideologically opposing sides could see eye-to-eye. The Islamic forces of all shades and colour appear more aggressive and emboldened following this high-profile murder. As they try to build a campaign on incontestability of the blasphemy law, there are chances that the radicals among them may like to broaden the agenda and set bigger goals. Currently, the active street power appears on their side.

The liberal, secular and rationalist Pakistanis are without an organised political force. The political parties, which should have represented their aspirations on the issue of blasphemy law and Taseer’s murder, have been found wanting. Even the ruling Pakistan Peoples’ Party appears on the back foot despite the fact that two of its leaders – chairperson Benazir Bhutto and Salmaan Taseer – were murdered by the extremists. Its federal ministers - as they have done on so many other issues – have been issuing contradictory, self-defeating statements aimed at appeasing the religious forces rather than taking a clear and firm position on this sensitive issue.

But political expediency of one side does not mean that the religious groups are in a benign mood. They have become more assertive. No wonder there is pessimism and fear among many liberal and educated Pakistanis about the country’s future as they see the space of democratic discourse, moderate views and tolerance shrinking in the society. For many affluent and liberal Pakistanis, today’s black humour - which also serves as a grim warning - is when they ask one another whether they checked loyalties and religious leanings of their security guards.

Yes, today’s Pakistan stands not only divided but at war with itself. The tidings are ominous. When law-breakers and murderers are hailed as heroes and the state institutions keep mum about it, then something has gone terribly wrong with society. No so-called lofty ideal goal justifies taking the law in one’s own hands. If collective conscious of any society allows this, it is a one-way road to anarchy, chaos and lawlessness. It results in the weakening and collapse of the state.

The government’s weak reaction on the killing of Governor Taseer has exposed the fragility of this democratic dispensation, surviving on a day-to-day basis. The religious parties can now smell blood and radicals among their ranks can try to expand their boundaries. There is a growing realisation among the religious-minded hardliners that their movement has a potential to gain momentum because of a frail government, state and civil society. The situation can encourage them to go for an adventurous course.

While Pakistan struggles to adjust and get to terms with itself post-Taseer, the international community appears more sceptical about a nuclear-armed Muslim state. The notion of a failing and crumbling state is likely to gain more currency about Pakistan – whether we like it or not. News from here does nothing to change this perception.

Indeed, Pakistan is at the brink of becoming a pariah state because of the unabated rise of extremism and terrorism. It has already become a no-go area for international sports and tourism. Foreign investors and businessmen like to stay away from this country, while even leading local businesses are making fresh investments abroad because of security fears. The government’s incapacity to carry-out the much-needed reforms, provide clean governance, fight extremism and militancy from inside Pakistan are fuelling fears of Pakistan’s slide into anarchy and strife.

The need of the hour is that the leadership on both sides of the ideological divide makes sustained efforts to bring down the rising temperatures. The government needs to play an active role to make this happen and open channels for dialogue and exchange of ideas on proper platforms. Taking such sensitive matters on the street or trying to decide them in emotional debates on television screens won’t help, but add fuel to the fire.

But this does not mean that there should be a compromise on the supremacy of the law or the writ of the state. This needs to be ensured in an emphatic manner by dispensing justice to the killer of Governor Taseer. There are religious scholars and clerics belonging to all the Islamic schools of thought, who stand for the constitution and rule of law.

There is also an urgent need to address concerns of the religious minorities of Pakistan with the participation of Pakistani clerics. Whether regarding procedural issues of the blasphemy law, which is not meant to target innocent people or implicate anyone on false charges. Yes, it is time to assert for supremacy of the law – nothing less than that.

Divided They Stand

By Amir Zia
Newsline, January 2011
Why did the PPP choose to rock the coalition boat at a time when the country faces grave challenges?

The teetering PPP-led coalition government now stands at the mercy of political opponents, and past and present allies. To survive in the corridors of power, it has either to win back former allies by accepting tougher conditions or bank on the life-line thrown to it by arch rivals demanding their pound of flesh from the now minority government of Prime Minister Yousuf Raza Gillani. For any political force, it is the worst possible scenario.
This means that the government’s ability to provide effective governance will further be eroded because of the politics of populism. The government will not be allowed to go ahead with the tough reforms which are vital for the economy. This includes expanding the tax base, doing away with subsidies especially in the energy sector and slashing non-productive expenditure. The government has already failed to fulfill promises made to the International Monetary Fund (IMF), forcing it to seek a nine-month extension in the $11.3 billion Standby arrangement from this global lending agency.
The harsh conditions set by the opposition in exchange for providing a life-line to the government only means that the country’s economy is all set to take the biggest hit because of the political turmoil and uncertainty. Even if the government manages to survive in the coming weeks and months, it will be a lame duck, unable to do what is required of it in these hard times.
And the assassination of Governor Punjab Salmaan Taseer has only added to the gravity of the situation not just for the struggling government, but for the state which faces a far greater threat on account of its failure to resolve internal contradictions and enforce certain rules of the game.
As Pakistan’s religious forces of all shades push hard to change the complexion of the state by hook or by crook, mainstream political parties do not appear to have the ability and capacity to rise to the challenge. They are too involved in politicking and repeating the mistakes of the past for which they have paid dearly.
The ghastly murder of the Punjab governor notwithstanding, the harsh fact remains that the government’s latest predicament is yet another sorry tale of drifting from one self-inflicted crisis to another. In addition to mishandling crucial issues during its 34-month rule, the government has gone and done the same even with its allies. The irony is that where the government should have taken a firm stand on crucial issues such as the controversial Blasphemy Law, extremism and the economic reform agenda, it caved in. And where there was a need to play the astute game of compromise and show graciousness to allies, its stalwarts, including the prime minister, chose to indulge in brinkmanship.
The Jamiat Ulema-e-Islam (JUI) and the Muttahida Qaumi Movement (MQM) are not among those forces that refuse to play ball – if the ball is pitched right. They are not willing to sacrifice an arm and a limb for the sake of principles alone. Yet, the PPP government managed to annoy them and rock the coalition boat at a time when the country faces not just the continued challenge of extremism and militancy, but a grave economic crisis too.
Take the strange case of JUI Maulana Fazlur Rehman who, at a fair price, has proved to be a bankable PPP ally since the days of the late Benazir Bhutto. But even the politically flexible maulana was pushed against the wall by the surprise dismissal of his party’s Federal Minister for Science & Technology Azam Khan Swati. This sacking by Prime Minister Gillani was done apparently to balance the ouster of PPP’s controversial Religious Minister Hamid Saeed Kazmi, accused of corruption during Haj operations. Kazmi, considered close to the prime minister, was at loggerheads with Swati, who openly accused him of graft even in cabinet meetings. The rivalry between Swati and Kazmi also stems from the fact that they belonged to different schools of thought. The JUI – representing the Deobandi school of thought – wanted the ministry of religious affairs for its nominee, but it was given to a Barelvi maulvi belonging to the PPP.
Some of the PPP cabinet members admit that Gillani had misread JUI’s reaction over the ouster of its federal minister, which they say was uncalled for. “This confrontation was unnecessary and could have been avoided,” said a federal minister requesting anonymity.
Presently, the maulana is in no mood to change his decision. Prime Minister Gillani has become the main target of JUI’s wrath, underlining the fact that the religious party has tactfully kept the option of returning to the PPP’s fold open. Maulana Fazl’s demand that Prime Minister Gillani be sacked is being interpreted as a hint for an in-house change despite President Zardari’s announcement that the PPP stands firmly behind him.
The scenario of in-house change appears easier said than done because of the divided and fractured opposition. There are many ifs and buts in the process – the biggest hurdle being the unleashing of a complex numbers game, which might not suit the key political players. There is the gnawing fear that a vigorous political tug-of-war may upset the carefully laid applecart and prove the beginning of the end for the entire system.
PPP’s estrangement with the second ally, the MQM, is a more complex issue. It is not just one incident that forced the MQM to part ways at the federal level, while continuing to remain a coalition partner in Sindh. The two parties have big political and financial stakes in Sindh, especially in Karachi, which often clash. The MQM no longer enjoys a free hand in running the affairs of Karachi, where some PPP stalwarts are promoting the militant Peoples’ Amn Commiittee of Lyari and the Pakhtoon Awami National Party (ANP) to counter the MQM’s muscle power. The PPP hardliners including Sindh Home Minister Zulfikar Mirza are more inclined to use heavy-handed policies to keep the MQM on a tight leash.
However, the real problem bedevilling their relations remains the local bodies system. The MQM insists that the Pervez Musharraf-era local bodies system be kept intact, while the rest of the major parties want to revert back to the old system in which more powers are vested in the commissioners and bureaucrats. “We can’t have two local bodies systems in the country,” said a PPP leader close to President Zardari. “But before they announced a parting of ways with us, there was a consensus at the meeting with the president that the local bodies bill would not be presented in the assembly. We accepted their other demands, including posting bureaucrats of their choice to run Karachi. But, in a surprise move, they announced their decision to quit the government.”
While in the longer run an alliance between the PPP and the MQM makes sense, particularly for ensuring peace in Sindh and countering religious extremism, the short-term clash of interests seems to override these goals. The MQM’s firm anti-PPP stance on crucial issues starting from the National Reconciliation Ordinance to the reformed General Sales Tax has shaken the alliance between the two to the core.
As Pakistan’s political weather gets chillier, the days ahead will be tough not just for the government, but for the country itself. A weak minority government will find it extremely difficult to confront the challenges on the economic and security fronts, which need to be tackled boldly and decisively by an effective, efficient and performing government.