Support Price Mechanism Takes Toll On Poor

By Amir Zia
The News
March 27, 2011

The gain of the landed political class remains a net loss for the ordinary people, who are now paying double the price for wheat compared to three years ago

Finally the World Food Programme (WFP) has raised a red-flag over the abnormally high food prices in Pakistan, which is making life tough and bitter for majority of ordinary Pakistanis. Wolfgang Herbinger, WFP’s director in Pakistan, painted a grim picture about the food security situation in the country, where malnutrition levels are on the rise despite good agricultural crops.

One of the key reasons for the food-inflation remains the government’s decision to increase the wheat support price by more than 120 percent that indeed benefited big landowners, but proved a blow for the majority of people, especially belonging to the poor and fixed income groups.

But even before the WFP director made remarks on Pakistan’s food security in Geneva earlier this week on the sidelines of an international conference, there were rational voices in Pakistan that had been highlighting the issue.

In recent months, The News’ opinion pages carried several articles by leading economist and former advisor of the finance ministry Dr Ashfaque Hasan Khan, who questioned the people’s government “criminal” move of pushing the wheat support price to 950 rupees per 40 kilogram from 425 rupees in the early 2008.

“Empirical evidence suggests that a 10 percent increase in the support price of wheat increases the general price level by three percent. The more than 120 percent increase in the support price of wheat has pushed food prices up by 32 percent,” he told the scribe, explaining his point-of-view. “The support price mechanism has long lost its utility and remains beneficial only for big landowners. Today, the domestic wheat rates have surpassed international prices.”

But for a parliament dominated by mighty feudal lords and ladies and tribal chiefs, the temptation of increasing the wheat support price and giving huge subsidies on agricultural inputs remains too great. It is not just the lawmakers belonging to the ruling Pakistan Peoples’ Party (PPP), who reap the benefit of such decisions, but members sitting on the opposition benches also enjoy the windfall.

However, the gain of the landed political class remains a net loss for the ordinary people, who are now paying double the price for wheat ñ the main staple diet in Pakistan — compared to three years ago. No wonder, more and more people now find it difficult even to get two decent meals a day. Poverty is on the rise and so are incidents of suicides.

But economic experts belonging to the PPP say increasing the farm gate price of wheat and the government’s dominance of its market remains necessary to encourage farmers to grow this crop and prevent the smuggling of this commodity to Afghanistan, which remains impossible to stop because of the porous frontier.

“Yes, it has an inflationary impact, but that we have already factored it in,” says Kaiser Bengali, an advisor on finance to the Sindh Chief Minister. “To ward off the inflationary impact of the wheat price increase, the government is giving targeted subsidy to protect the poor. More than 4.6 million families are being given 1,000 rupees a month under the Benazir Income Support Programme (BISP).”

But in a country of more than 160 million people, this kind of subsidy remains insufficient as it leaves the ‘undeserving’ poor out of its ambit. The undeserving poor comprise all those working men and women — from domestic helps to daily wage earners and school teachers to policemen — who work on extremely low wages and are deemed unfit to receive alms, charity and government subsidies. Unfortunately, they comprise a bulk of the population.

The WFP’s warning should not be brushed aside by the people at the helm of affairs. It calls for a serious review of the support price mechanism, which now mainly serves the vested interests of agricultural landowners rather than providing a fair deal to the majority of Pakistanis and protecting their interest.

The thesis of some top government functionaries that big landowners only go for cash crops and it is the small farmers who benefit from an increase in support price is flawed and misleading.

According to Dr. Ashfaque Hasan Khan, the small farmers do not produce surplus marketable wheat and they remain unable to benefit from the government procurement centres because of their limited reach and delay in payments.

It is an irony for the country that despite a much-touted agricultural base and good wheat production, the basic food staple remains unaffordable for a vast number of Pakistanis. One of the options, which the government may now consider to beat food inflation and help the poor, is to keep the wheat support prices capped over the next couple of years. This will help gradually reduce the inflationary pressure. However, the ideal stance, in line with the free-market mechanism, would be to allow the market forces to determine prices of every commodity.

But will the vested interest allow the government’s financial managers to follow a sensible course? The record is disappointing so far.

White man’s burden, again?

By Amir Zia
Saturday, March 26, 2011
The News

The colonial era is no more, but the false moral justifications to launch new wars have not changed in this age of neo-colonialism.

The flawed and twisted concept of “white man’s burden” was once used by imperial European nations as a justification to vanquish and rule the non-white people in the name of “progress and civilisation” in far-flung regions. This Western-centric viewpoint, which remained in vogue till the late 19th and early 20th centuries, justified colonisation and exploitation of mostly self-contained societies of Asia, Africa and North and South America. The credit of coining this phrase goes to the colonial-era English writer and poet Rudyard Kipling, who first used it in his poem in 1899, justifying imperialism as a noble cause.

Take up the White Man’s burden –
No tawdry rule of kings,
But toil of serf and sweeper –
The tale of common things.
The ports ye shall not enter,
The roads ye shall not tread,
Go mark them with your living,
And mark them with your dead.

Kipling advocated “savage wars of peace,” articulating the self-conceited gloss of morality given by European powers to their military campaigns. The colonial era is no more, but the false moral justifications to launch new wars have not changed in this age of neo-colonialism. The white man’s burden of yesteryears of carrying the cross in the name of progress and civilisation has now been replaced by the mantra of teaching virtues of democracy, freedom and human rights to the peoples of Africa, Asia and Latin America – through direct or indirect cold-blooded military interventions.

The latest victim is the North African nation of Libya, facing the combined might of France, Britain and the United States. The Western powers eye a regime change under the pretext of protecting civilian lives – read armed Libyan insurgents, who were at the verge of defeat. Through their aerial blitz, involving hundreds of aircraft and cruise missile attacks, the Western powers want to bestow upon the people of Libya the gift of democracy, soaked in the blood of their soldiers and civilians.

The United Nations Security Council resolution 1973, which called for a no fly-zone over Libya and “all necessary measures to protect civilians,” provided these Western nations a so-called justification to act as world goons and meddle in the affairs of a sovereign state, which should have been left on its own to decide its future. But the massive oil stakes in Libya motivated the Western nations to prop up armed rebels and get directly involved in the conflict, making it bloodier and messier.

The swift manner in which Security Council went into action on Libya stands in contrast to many other bigger conflicts on which the world body has been dragging its feet decade after decade. Israeli atrocities on Palestinians, especially in Gaza, in recent years, the continued Indian subjugation and repression of the people of Kashmir are two of the protracted conflicts on which the Security Council chose to play a limited role, despite all the killings and human rights abuses. However, the swift Security Council verdict on Libya should not come as a surprise. The US-led Western nations have a record of using the United Nations to advance their vested interests. The West-sponsored-armed revolt, which is more tribal in nature rather than a democratic or ideological movement, has provided Washington and its allies a chance to get rid of Libyan strongman Muammar Qaddafi – who has been defying the West for a long time. The plan is now to install a subservient government in the name of protecting civilian lives – even though the same argument can be made about intervening in Bahrain or Yemen. The real goal, however, remains exploiting Libya’s vast oil wealth.

The Arab League and the Organisation of Islamic Conference (OIC) have lived up to their reputation of being spineless blocs by blindly endorsing the Security Council resolution, which paved the way for the third Western military intervention in a Muslim country within a decade. The buzz of protest coming from them against aerial bombing is just eyewash. This third war on a Muslim country remains more blatant as it came without any provocation of the Sept 11-like terror strikes on the United States or fabricated charges of weapons of mass destruction as in the case of Iraq.

The Western media, particularly the electronic media, is playing like an orchestra by resorting to one-sided reporting and propaganda against Libya to justify the military intervention. CNN, Fox, and the BBC, all are following the script in totality. Programmes presented by the smiling anchors with their excited voices giving details of the “humanitarian” blitz on Libya are appalling to watch. One of the analysts was seen predicting Qaddafi’s assassination by someone from his close circle. Was it a prediction or instigation remains a question.

The Libyan conflict may not drag for long, given the small size of the population and the isolation of the Qaddafi regime, but this third Nato front against a Muslim country will have far-reaching consequences.

It will fuel Muslims’ anger against what they perceive as “arrogant” Western nations and further radicalise their societies and strengthens those forces, which get energy and life out of such conflicts. The narrative and the world view of “us versus them” propagated not just by puritan legal Islamic groups, but also by extremists, militant and terrorist organisations will gain more acceptance and fan anti-US and anti-West sentiment. It will provide radical group with new willing recruits, who see violence and terrorism as the only means to avenge what they perceive western injustices and atrocities.

The Libyan conflict also remains a bad news for moderate and pro-democracy forces, which are fighting against the tide of extremism and militancy in countries such as Pakistan. They stand weakened as the west continues to interfere and interrupt in the natural evolution of Muslim societies – most of which remain unprepared for the Western-style democracy because of their particular social, economic, political and religious background.

It is high time for the Western nations to come out of their mindset of “white man’s burden,” which can only intensify conflicts in this day and age of powerful individuals, who have the ability and capacity to take on the world powers and keep the pot on the boil. The rulers and the elite of majority of the Muslim countries may be in the pocket of the Western powers, but not the Muslim street. It will react and strike back.

Issue: Making Peace

By Amir Zia
The News On Sunday
March 20, 2011

The real challenge for the government will be implementing the Interior Minister's promise of a crackdown on criminals regardless of their political affiliations.

President Asif Ali Zardari’s decision to ban the controversial Peoples' Amn Committee (PAC) operating from Lyari — one of the ruling party’s strongholds in Karachi — has again saved his alliance with the Muttahida Qaumi Movement (MQM), but the thorny issue of ties between political parties and criminals remains far from over in the country’s industrial and commercial hub.

With militants mainly belonging to the ruling coalition — the Pakistan Peoples’ Party (PPP), the Awami National Party (ANP) and the MQM — locked in a bloody conflict on Karachi streets, there has been a renewed surge in cases of extortion, kidnappings for ransom, robberies and vehicle snatching, which has made this teeming city of more than 16 million people one of the most dangerous mega cities in the world.

In the second week of March alone, at least 30 people were shot and killed, which the police describe as intra-party rivalry. So far in the first two-and-a-half month of 2011, more than 125 people have died in tit-for-tat killings in the city. While majority of those killed were workers of various political parties, many ordinary citizens also became victims in this bloody conflict that claimed 748 lives in 2010 and 242 in 2009, according to the Human Rights Commission of Pakistan.

But the unabated bloodletting remains only one part of Karachi’s grave law and order challenge. The bigger issue that emerged during the last couple of years is the growing influence of politically-connected criminals, who operate with impunity, affecting each and every stratum of the society.

“Criminals have been holding Karachi hostage,” said Saeed Shafiq, President of Karachi Chamber of Commerce and Industry. “From ordinary shopkeepers to big businessman and industrialists — all remain at the mercy of extortionists, kidnappers and bandits.”

A senior police officer, who requested not to be identified, said criminals operate under the cover of major political, religious and ethnic parties. “The Amn Committee members remain the newest entrant and are aggressively trying to expand influence beyond Lyari. The recent crime surge is the result of its activities.”

A number of victims are reluctant to report crime because they have little confidence in police and believe that criminals have political connections.

In recent months, cases of extortion and general crime soared especially in the old parts of Karachi including Joria Bazaar, Timber Market, Sarafa Bazaar, Boultan Market, Saddar — where not just retail, but wholesale markets and businesses are located, background interviews conducted with businessmen and shopkeepers revealed.

“They (criminals) send a receipt (parchi in Karachi’s lingo) — that could be a demand for a few thousand rupees or millions, according to the perceived size of the business,” said a shopkeeper in Timber Market requesting not to be identified. “If you fail to fulfill the demand, you get threats to your life and family. If you pay them once, the next demand will be bigger.”

Most of these markets are located in the close proximity of Lyari, from where most of the crimes emanate allegedly under the umbrella of PAC, founded by notorious gangster Rehman Dakait who was killed in a police encounter in 2009. But Dakait’s death did not deter his followers from expanding their network, which they claim remain focused on welfare work in line with its founder’s wish.

Zafar Baloch, a spokesman for the group, rejected allegations that the PAC was involved in crime. “We concentrate just on welfare work,” he claimed. “The Committee has Bhutto loyalists and party activists in its ranks. We remain loyal to PPP and its leadership.”

However, on the ground, “the PAC has effectively sidelined the local PPP Lyari leadership, encroached upon its offices and curtailed activities of PPP elected representatives in the area,” PPP sources alleged. PPP’s Member National Assembly from Lyari, Nabeel Gabol, was even threatened and stopped from visiting his constituency.

However, some of the PPP leaders, including Sindh Home Minister Zulfikar Mirza, viewed the group as an extension of the party.

“Amn Committee remains a strange mix of populism and crime,” admits a PPP local leader in Lyari, who also asked not to be named. “Sindh home minister even attended its rallies and called the committee members his boys. Probably, he saw them as a counterbalance to the MQM muscle power, which in itself was a wrong policy. The PPP never had a record of patronising criminals.”

The Amn Committee expanded its network rapidly in other parts of the city, pitting itself directly in confrontation with the MQM.

Haider Rizvi, an MQM MNA, said that it remains a flawed line of reasoning that the PAC, comprising “ruthless criminals, kidnappers and extortionists” posed a challenge to his party. “The MQM has an elected mandate and is a law-abiding party,” he said. “Amn Committee was no threat to us. This group, in fact, undermined the PPP mandate in Lyari and hijacked its structure over there.”

The MQM stiffened its stance against the PAC, threatening to quit the ruling coalition after Zulfikar Mirza made a public speech supporting the controversial group.

A PPP insider said that action against criminals regardless of their political affiliation was the key demand of the MQM in its recent negotiations with President Zardari. “In one of the meetings, the president expressed his shock that the Amn Committee had become such a big problem,” he said. “Some of the key PAC members, including Baba Ladla and Uzair Baloch, are wanted by police in criminal cases, but they roamed freely because of their political connections.”

However, PPP Sindh leaders remain divided about PAC’s status and its relations with their party — even barely a few hours before Interior Minister Rehman Malik announced a ban on this group in a joint press conference with MQM leaders in the wee hours of March 16.

While the PPP’s elected representatives from Lyari wanted action against the group, some other key members called it a “sister organization”.

“Amn Committee is a sister organisation, but is not formally affiliated with the party,” said PPP Sindh General Secretary Taj Haider, a few hours before Malik announced the ban. “All those affiliated with the committee are not criminals. Many of them are old PPP supporters.”

PPP sources say that many PAC members will be back to the PPP fold as it will formally cease to exist.

The real challenge for the government and the state institutions, however, will be implementing the Interior Minister Malik’s promise of a crackdown on criminals regardless of their political affiliations. This has never happened in Karachi, where even state institutions played one group against the other. Will they be able to turn a new leaf and work for the supremacy of the law? The experience offers little hope, but Malik’s high-sounding assurance, on behalf of Zardari, has certainly averted a political storm — at least for the time being — and probably provides a short relief to this troubled city.

Baby Steps Won’t End Pakistan’s Economic Woes

By Amir Zia
The News
Sunday, March 20, 2011

Getting back in the good books of IMF by implementing RGST and other promised reforms remains crucial for the country's economic revival

After a prolonged period of inaction on the economic front, the government finally came out of its lethargic mood to slap 53 billion rupees worth of additional taxes and slash development and administrative expenses by 67 billion rupees. These long-anticipated measures, enforced through presidential ordinances, came following the government’s failure to impose the reformed general sales tax (RGST) because of stiff opposition from its key allies in the ruling coalition, opposition parties and other interest groups, which ignored the urgency to expand the country’s tax base in the wake of last year’s devastating floods that hit the economy hard. The political pressure also forced the Pakistan Peoples’ Party (PPP) government first to keep fuel prices capped in early January by withdrawing a 9.0 percent hike despite a surge in the international crude oil rates and then again in March to slash the increase it made on petroleum products by 50 percent within days of the decision.

The wavering and indecision on key issues triggered fears that the budget deficit, targeted at 4.7 percent for the current fiscal 2010/11 (July-June), may balloon to 7.5 to 8.0 percent and further fuel inflation that already hovers at 16 percent. With global lending agencies and the country’s key allies, including the United States, refusing to extend a helping hand to end Islamabad’s economic woes until it implements the promised reforms, the government appears short of choices. It needed to take at least some baby steps to arrest the rot, which came in the shape of 120 billion rupees mini-budget, comprising new taxes and cuts in expenses on March 15.

But the mini-budget remains a fire-fighting and short-term measure. It does not address the main flaws of the economy, which stems largely from a narrow tax base, heavy government subsidies mainly in the energy sector and loss-making public sector enterprises.

A look at the taxation measures reveals it all. The 15 percent flood surcharge on income tax targets only the salaried class already in the tax net. Yes, in the wake of the national calamity of floods, they need to pitch in their share, but why not include others in this act of virtue through similar direct taxes rather than going for the oppressive indirect taxation? There are affluent professionals, from lawyers to doctors and wealthy traders, businessmen and shopkeepers, who need to pay their share.

The much-talked about tax on agricultural income remains off the government’s radar because it now falls under the domain of provincial governments, where the interests of the landed-class effectively block any such move. The government should try to evolve a consensus with major political parties for the imposition of taxing this sector, which has made a windfall income because of the massive rise in prices of key commodities, including cotton and wheat this financial year.

According to estimates, there has been an additional income of more than 500 billion rupees just because of the rise in cotton prices to more than 12,000 rupees per maund from 4,000 rupees and an increase in wheat’s support price to 950 from 625 rupees per 40kg this year. Not long ago, the support price of wheat was 415 rupees.

The agriculture sector, which remains untaxed since the country’s independence, should not remain a holy cow. It should be taxed. However, there remains a need for proper homework on the mechanism and implementation of tax on farm income that protects poor farmers and targets only the wealthy landlords.

In an important step, the PPP’s finance team targeted the agriculturists in this mini-budget by withdrawing the 17 percent general sales tax (GST) exemption on tractors, fertilisers and pesticides. This may be a good step to generate additional money, but this indirect taxation is no substitute for the direct tax on agricultural income.

For the next budget, the government needs to start doing its homework from now along with the provincial governments to bring the agriculture sector under the tax net.

The cuts in administrative expenses, a ban on new appointments and other austerity measures are, in fact, more symbolic than of any real value, but they should certainly be welcomed.

For a serious push in this direction, there remains a need to reduce the size of the government, its departments and all the public sector enterprises to make them lean and efficient. For this, massive restructuring and revamping of these institutions remains the need of the hour.

In today’s world, it is not the government’s business to provide employment. Its responsibility is to create an environment where the private sector can grow and expand and help rejuvenate the economy, which in turn creates employment opportunities.

While after a long delay, the government has finally come up with its mini-budget, there remains room and a need for those promised giant steps that remove the structural flaws of the economy with an aim to put it back on the high-growth trajectory as it was until 2007. For this, getting back in the good books of the International Monetary Fund (IMF) by implementing RGST and other promised reforms remain crucial. Whether the baby steps of this mini-budget eventually lead to bigger and more meaningful reforms and steps remains a key question.

Broken Wings

By Amir Zia
Newsline
March 2011

PIA’s glory days are unlikely to return until nepotism, mismanagement and gross inefficiency are eliminated.


With an ageing aircraft fleet, over-sized staff strength, poor on-flight services, alleged corruption and huge financial losses, the Pakistan International Airlines (PIA) now appears a shadow of its impressive past. From its lofty slogan “Great People to Fly With” to the present request “Come, Fly With Us,” the national flag-carrier’s operations and management nosedived in recent years and it now struggles to remain afloat on the back of heavy government subsidies.
However, one of the severest blows to PIA’s operations and reputation came in the wake of a four-day workers’ protest and strike that began on February 8, over the planned handing over of some key international routes to Turkish Airlines under a code-sharing formula. The protest not only affected the airlines’ operation, with more than 400 international and domestic flights being cancelled, inflicting more than 250 million rupees of direct losses, but also resulted in the unceremonious ouster of its managing director Aijaz Haroon, who had long been the target of workers’ wrath for pushing “unpopular” reforms and disciplinary measures.
The government, bowing down to the workers’ pressure, announced that it would scrap the planned code sharing deal with Turkish Airlines and removed President Asif Ali Zardari’s hand-picked managing director, Haroon. In addition, PIA’s new management also moved fast to appease labour unions by accepting some of their controversial demands that included exempting union leaders from routine duties.
In an attempt to win staff support, the new managing director, Nadeem Khan Yousufzai, who like his predecessor is a pilot and a hand-picked man of President Zardari, promised concessions and facilities for workers, which the airline, in its present fragile position, appears unable to afford. The promises include easy house and car loans, allowances for employees’ weddings, children’s education and daily essentials from the state-run utility stores.
Indeed, the victory of PIA employees proved the second big success of workers’ power in a short span in the country’s teetering corporate sector that remains bogged down by Pakistan’s continued political instability, inconsistent policies, crumbling economy and terrorism. The first big labour victory came when the Pakistan Peoples Party (PPP)-led coalition government forced the privately run Karachi Electric Supply Company to reinstate more than 4,000 non-core sacked employees on January 23, to defuse a violent protest.
However, the labour’s seal of power at PIA is being seen as more ominous for the country’s economy as it has effectively sealed the fate of reforms at PIA, which suffered a staggering 67.31 billion losses during the last five years. The airline registered a loss of 11.69 billion rupees in the first nine months (to September 2010) compared with 10.77 billion during the same period a year ago.
A combination of factors, including unprofessional management, unrestrained trade union activism, political interference and corruption, have effectively blocked any hopes of a turnaround in the national airline’s fortunes where every effort at reform hits a dead end.
According to a former senior PIA official, the Turkish Airlines deal was a recipe to pull the airline out of the red. “PIA has been losing passengers to other airlines, especially the ones from the Middle East, because of its small network and lack of frequency to major world destinations,” said the former top official, (who asked not to be named). “The deal with Turkish Airlines would have given PIA that reach.”
For PIA, with its fleet of 40 aircraft – having an average age of 20 years each – and inability to induct new planes because of financial constraints, the deal with Turkish Airlines was an easy way to increase its reach to more than 100 destinations where it does not fly, he said.
PIA planned to surrender some of its prestigious, but less profitable, loss-making or less frequented routes including New York, Chicago, Barcelona, Amsterdam and Milan to Turkish Airlines, which had daily flights to these destinations against the national carrier’s once or twice a week flights. It would have helped PIA to cut operational costs and earn 20% commission on each of its tickets sold beyond Turkey, including destinations in Africa, South and North America and Europe where it does not operate flights. Under the proposed deal, PIA would have flown passengers to Istanbul and Turkish Airlines would have taken them to other cities from there.
It appeared an easy and a sure-shot way to increase PIA’s revenues and profits, but trade unions were only concerned with possible downsizing.
Suhail Baloch, president of Pakistan Airline Pilots’ Association (PALPA), says that PIA should not surrender its routes as getting them back in the future would be expensive and difficult. “We are not against code-sharing, but against giving routes to other airlines.”
“There are other ways to cut PIA losses and make it profitable,” he adds. “To start with, stop the leakages, which are worth two billion rupees every month; stop serving hot meals on domestic flights; stop giving newspapers, except during morning flights. But the former managing director never listened to us. He wanted a pocket union.”
But senior officials of the management say that the employees’ proposals hardly offer proper solution to PIA’s current predicament. Instead, they blamed trade unions for many of the ills gripping the airlines, where the ratio of employees per aircraft hovers at around 430 against the international standard of 200 to 225.
Yes, PIA remains hugely overstaffed with its strength of 22,000 employees – out of whom around 4,000 were regularised only recently by President Zardari. Earlier, in 2008, the government reinstated hundreds of sacked employees with full back benefits, burdening the airlines with unplanned expenses.
PIA insiders say that the number of employees remains three to four times higher than international standards. “For instance, internationally giving a clearance certificate to an aircraft is the responsibility of one engineer. In PIA, five engineers do this job, each clearing one particular operation of an aircraft. Haroon’s management wanted to end this and get more work done from under-performing employees,” says another senior official.
However, union leaders argue that PIA’s salary bill was around 16-18% of its expenses – really low compared to other international airlines which have a salary bill of 30-35%.
Baloch said that the salary bill was not a burden and PIA can afford to keep 22,000 employees in a country where joblessness remains rampant. But management officials argue that good professionals leave the organisation for good airlines and PIA remains stuck with a bulk of average and below average employees – most of whom are political appointees.
The former managing director’s efforts to use technology to run its systems including that of the crew management were also bitterly opposed by trade unions. “Despite the availability of a computerised system, crew management in PIA was done manually, which resulted in abuse of the system and out-of-turn assignments,” says the official. “There was a time when key flights to the US and Europe were being sold. There was a lot of corruption and only union-connected employees managed to get good flights. The implementation of the computerised programme stopped this, disturbing many of the crew and especially those affiliated with unions.”
PIA officials admit that irregularities and corruption increased in the national airlines following the lifting of the ban on trade unions in 2008. Unions tried to dictate and interfere in management work, officials allege. There was resistance to every move aimed at reform – from selecting hotels at foreign destinations to the ban on the use of business class seats – even on domestic routes – for PIA pilots and ground engineers, which came at the cost of losing revenue passengers, they add. Baloch challenges these allegations, saying that cases should be brought against those charged with corruption.
Scandals including the one in which employees were found selling staff emergency tickets to ordinary passengers and pocketing the money, and loopholes from procurement to the maintenance departments, and vested interests prevent any initiative which aims to stop the rot, PIA sources say. “There was even resistance when the management tried to get old employees to vacate women’s hostel rooms,” said the official.
Since the lifting of the ban on unions, PALPA has gone on a go-slow twice and carried out a full-fledged strike.
PIA appears to have become unmanageable because there are irregularities, corruption and nepotism at every level. Experts say that management has become a specialised and professional job and political appointees are not capable of doing that job. From the top management to the board of governors, there has been nepotism in appointments.
PIA’s existing board of governors includes a ginner from Multan, an artist, an owner of a foam manufacturing factory and a Lahore-based businessman. They have no experience in running an airline. Their only qualification is that they are friends of people in power.
No wonder the PIA lacks a proper marketing strategy. All thanks to their rickety old airplanes and many overweight and old cabin crew members who have been allowed to fly due to a controversial Supreme Court order. The future of the national carrier appears in the doldrums as the management and the government both remain reluctant to take tough and bitter decisions which are needed to change the fortunes of PIA.

Of IMF’s Gloss & Govt’s Promises

By Amir Zia
The News
Sunday, March 13, 2011

Pakistan has to show more seriousness and commitment toward the stalled economic reform process

Eleven days of talks between an International Monetary Fund (IMF) mission and Pakistan’s top economic managers leave more questions than answers about the direction of the country’s ailing economy. The biggest one remains the government’s willingness and commitment to introduce reforms on which it has been dragging its feet for months and months now.

The statement issued by IMF’s mission leader Adnan Mazarei at the end of talks on Friday, indeed, provides the much-needed gloss over Pakistan’s shaky relations with the global lending agency, but the carefully chosen polite words such as “constructive discussions” do not conceal the fact that all depends ‘if’ the government manages to “promptly and consistently” implement measures needed to reduce the yawning budget deficit and put a cap on bank borrowing during the remaining months of the current fiscal year and the next 2011/12 (July-June) period. All the other key economic performance benchmarks, including reviving growth and curbing inflation, remain linked to whether the government is able to address the fundamental structural flaws of the economy or not. For this, expanding the tax base and abolishing untargeted subsidies, ranging from fuel and electricity to the loss-making state-run institutions, are seen as the most vital.

But going by the Pakistan Peoples’ Party (PPP) government’s performance, this ‘if’ syndrome has so far proved its main disaster. Yes, if the ruling party had an economic vision, an economic team of its own, if it managed to provide clean and honest governance, if it was able to increase revenue collection, widen the tax-net and implement reforms, and if... the wish list can go on and on. Certainly, Pakistan would not have been in the present mess, if the government had taken timely and tough decisions.

But that was not in Pakistan’s destiny under President Asif Ali Zardari-led PPP government, which wavered, compromised, and remained paralysed on key economic issues, from the imposition of the value-added tax (now the reformed general sales tax) to taxing the urban rich and rural landlords.

The government’s inability and incapacity to fulfill promises made to global lending agencies led to the technical suspension of the IMF’s $11.3 billion standby arrangement in May 2010 after the disbursement of $7.6 billion. Despite these 11 days of talks with the IMF, tidings from Islamabad are that the situation is unlikely to change as the PPP bosses, bogged down by a wide range of political challenges emanating from the judiciary, extremists, political opposition and from within the ruling coalition, do not want to shake the present economic status-quo and go for hard choices.

If looked at from the PPP leadership’s narrow self-serving prism, the government’s inaction makes sense. The PPP has started the fourth year of its term and going for difficult and path-breaking decisions does not make sense now. Such decisions are made at the start of the term, which the ruling party did not go for. Now going by President Zardari’s agenda, the target is to complete the term or at least hang on to the power as long as possible.

The current level of foreign exchange reserves, hovering at above $17 billion on the back of high remittances from expatriate Pakistanis and a surge in exports, means that the government can safely pull itself through for another few months, or even a year or so without needing the IMF’s held up tranches of $3.7 billion. By that time, the country would have gone into the election mode and it would be the new government’s job to face the harsh economic realities.

Therefore, one now does not see the urgency and the will even within the government’s economic team to fight their case within the ruling party or with political opponents and plead their case in the media. Finance Minister Dr Abdul Hafeez Sheikh and his coterie of economists appear content just holding important portfolios and passing time. No wonder, apart from occasional lip-service provided to the cause of reforms, Sheikh and his team appear in no mood to stick their necks out and become the public face of this government. The aloofness of this team from the stakeholders and the media is also taking its toll on the economy.

Remaining engaged with the IMF without producing results, however, remains a necessity for this economic team not just to give a flimsy mirage to the world that the reform process is still on, but also helping individuals to cultivate contacts and provide an opportunity to remain within the circle of global donors and lending agencies. After all, for some, these institutions could offer the next lucrative job.

But for ordinary Pakistanis, the sobering thought is that for the first time in recent years the United States and its key western allies have not asked the IMF to show Pakistan any leniency. The world powers, through the IMF, want Pakistan to develop a consensus on reforms and their implementation and to contribute its bit before seeking aid, loans and dollars from the taxpayers of other nations.

Yes, Pakistanis have to show more seriousness and commitment towards the stalled reform process than their international partners.

Sadly, it appears that the IMF remains more serious about putting the country’s battered economy back on track rather than our government and its economic team.

Subsidising Oil — Poor Govt’s Poor Choice

By Amir Zia
The News
Sunday, March 6, 2011

Untargeted subsidies remain a bane for the economy as in the case of petroleum products. Instead, the government should plan targeted subsidies for low-income groups.

The Pakistan Peoples’ Party (PPP) government has again been forced to beat a hasty retreat on the thorny issue of adjusting domestic fuel prices in line with the international oil rates. However, unlike early January, when the government was compelled to withdraw the entire nine percent hike, this time around it is not an all-out surrender, but a partial one. The revised decision to slash by 50 percent a 9.9 percent increase in fuel prices within three days of its March 1 announcement has been made to appease a key coalition partner, the Muttahida Qaumi Movement (MQM), and to deflect the political pressure.

This concession definitely has made the life of the embattled PPP government slightly easy for a month or so, but the issue remains far from over and its repercussions are all set to bite the economy hard in the coming days in terms of a widening budget deficit and mounting inflationary pressure.

The tidings are indeed ominous.

There has been an almost 26 percent raise in the world oil prices since November 1 to date, a period during which Pakistan kept its domestic fuel rates capped. The international oil market remains highly volatile and nervous because of the Libyan crisis, which has squeezed supplies from this North African nation. As the crisis drags on, the crude prices appear set to remain on the higher side despite assurances by some key oil producing countries to increase their output. For countries such as Pakistan, this means bleaker and more uncertain times.

A fleeting glance at the damage done due to the game of politicking on this crucial economic issue explains it all. The government had already taken a hit of around 14 to 15 billion rupees from November 1 to end-February for keeping the oil prices unchanged. This loss is likely to mount to 20 billion rupees now because the government is being forced to sell fuel at a discount of more than 20 percent.

Whether we call it subsidy or slashing the government levy on the petroleum products, the end result is the ballooning of the budget deficit, which is all set to cross eight percent against the original target of 4.7 percent for the current fiscal 2010/11 (July-June) as all efforts to expand the tax base through the imposition of reformed general sales tax (RGST) and meaningfully cut expenses appear to be making no headway.

The government, which had set a target to collect 110 billion rupees through the petroleum levy during the current fiscal year, faces an accumulative shortfall of at least 20 billion rupees in achieving this target by the end of March because of selling oil cheaper than international prices. If the government continues to subsidise oil, this shortfall is all set to increase. According to a senior Finance Ministry official, the government has no arrangement to recoup this amount.

There are serious repercussions if the government continues to waiver on such key policy issues, starting not just from a galloping budget deficit — termed the mother of all troubles for an economy -ñ but further undermining Pakistan’s credibility in the eyes of the global donor agencies, including the International Monetary Fund (IMF) and the international community. The cash-strapped government, which had already increased the country’s public debt to a record 10 trillion rupees from 4.8 trillion rupees in 2006/07, will have to depend on ever-increased bank borrowing and print more and more new notes, triggering an unprecedented inflationary pressure, which is already hovering at more than 16 percent.

A further increase in inflation because of the fundamental policy flaws will hit the poorest of the poor and prove more damaging for the economy than the price hike triggered by an increase in petroleum prices, which may appear bitter, but at least remains a step in the right direction.

However, the way the government has been yielding to the pressure of allies, opposition and interest groups, mainly led by public transporters who staged a two-day strike in Karachi against petroleum price increase earlier this week, underlines the fact that it has no vision or any commitment to tough economic reforms, which remain vital for the country.

The government’s economic team despite identifying the ills gripping the economy and prescribing solutions, has proved powerless to implement them. Our soft spoken Finance Minister Dr Abdul Hafeez Sheikh has been unable to make his voice heard or put reason in the minds of his political bosses. He and his economic team have also been unable to effectively fight the government’s economic case and point-of-view on crucial issues effectively in the media. The result is that the government seems to be rudderless when it comes to economic management. The politics of appeasement and surrender are only deepening the crisis rather than offering a way forward.

The role of key government allies and the opposition also remains negative and destructive. They appear to be more focused on playing to the gallery by design or default and have become a key obstruction in the process of reforms. Most of their suggestions remain either devoid of reality or offer long-term solutions — from eradicating corruption in government ministries and departments, including the Federal Board of Revenue to the restructuring of loss-making state-run institutions, which need around 300 billion rupees annual subsidies.

Yes, progress need to be made on these fronts, as well, but it is a harsh reality that these forces not only remain unable to come up with doable suggestions for increasing the country’s revenue base, but block reforms despite all their lip-service paid to this cause. A case to point is the way the political parties contributed in obstructing reforms in the privately-run Karachi Electric Supply Company and the state-run Pakistan International Airlines. There is a need for a national consensus on key economic issues, including increasing the revenue base, curtailing expenses, fighting corruption and re-launching the country’s stalled privatisation programme. Along with this, those issues, which had been settled long ago, such as linking domestic oil rates with the international market ñ should not be reopened.

Untargeted subsidies remain a bane for the economy as in the case of petroleum products. Instead, the government and the main political players should plan targeted subsidies for low-income groups. The politics around oil prices is one thing, which Pakistan’s economy cannot afford now.

A Regional Solution

By Amir Zia
The News
Sunday, March 6, 2011

Media of Pakistan and Afghanistan, by working together, can play an important role for better understanding of complex issues

Pakistani media has only a token presence in Afghanistan, while its mainstream print and electronic media organisations none. The Afghan media, which to-date remains commercially unviable, too has no eyes and ears in a country, which undoubtedly is its most important neighbour. The two countries see each other largely through the narrow prism of Western media that remains focused on conflict and the war on terror.

The selective coverage of Western media organisations stems from the fact that they identify, report, analyse and interpret news in line with their yardstick and clients’ need. They do not find it necessary to go for intricate details and cover those areas which are important for Pakistanis and Afghans because of their geographical proximity and huge political and economic stakes.

No wonder, the news that Pakistanis and Afghans get about one another is not only narrow in scope but often reflects biases and prejudices of a small coterie of political players. Therefore, stereotype images and negative perceptions are common, which weigh heavily on relations of the two countries. The depth of relations between the people of these two countries spanning over centuries, their common interests, problems and issues in the conflict-ridden world of today and the potential economic and political gains, which close cooperation and peace will bring them, remain ignored in the mainstream media of the two countries.

Can this situation change? If Pakistani and Afghan journalists are allowed more exposure to each other’s countries, will it help transform some of the negative perceptions that plague Pakistan-Afghanistan relations today? Will in-depth and independent media coverage assist in conflict resolution, help in deciding common goals and bring the people of the two countries closer? There is only a one word answer to these questions -- a big yes.

The task may appear daunting but remains doable. A small, but important step to bring journalists of the two countries closer and establish direct communication bridges has been initiated through a two-day Afghanistan and Pakistan media dialogue held in Kabul last month. The February 21-22 launch conference was organised jointly by Pakistan Institute of Peace Studies (PIPS), the International Media Support Group Denmark and the Killid Group Afghanistan. The programme has been supported by the Norwegian Ministry of Foreign Affairs and Danish Ministry of Foreign Affairs.

The conference was the start of a three-year programme that aims to improve Pakistan-Afghan media ties, help train journalists and improve reporting quality on regional issues to promote relations and better understanding between the two countries.

A handful of key Pakistani journalists had extensive deliberations with Afghan media personnel and intellectuals focusing on a wide-range of issues -- from the need for cooperation between the media persons to impediments that could mar this initiative and safety of journalists to the issue of professionalism and capacity-building.

The consensus was that strengthening relations between journalists and media organisations will help curb erroneous and unbalanced coverage as well as promote a better understanding towards mutual problems and disputes and act as a catalyst for their resolution between the two countries.

This first initiative of its kind plans to provide training opportunities and facilitate bilateral cooperation to cover complex cross-border issues. At the end of the conference, a 12-member advisory board -- comprising six journalists each from the two countries -- was formed to assist in taking this programme forward. One of the interesting aspects of the initiative includes the plan of 21 joint investigations and exchanges of journalists over the next 18 months, which will produce a number of stories, aired programmes and what the organisers described as a “visibly enhanced coverage” of the complex regional issues.

Both during the official discussions and on the sidelines of the conference, many Afghan journalists and intellectual appear skeptical and bitter about Pakistan’s role in the simmering Afghan conflict – especially Islamabad will to take on the Taliban militants. Islamabad’s past strategy of supporting one group against the other or picking favourites also came under the spotlight. From the Pakistan side, participants underlined the fact that their country suffers no less from the twin trouble of extremism and terrorism, which have claimed thousands of lives from one end of the country to the other. The often aggressive tone of President Hamid Karzai and his top aides against Pakistan does not help the cause of a united front against the Taliban and al-Qaeda linked militants. The participants initially delicately avoided taking up key issues bedeviling relations between the two countries, but some also took the bull by its horn – underlining the overall spirit of understanding one another and the desire to work together.

The small step starting with less than two dozen Pakistani journalists and peace activists and handful of their Afghan counterparts could go a long way in improving ties between the two countries, which have no rational choice available to them other than to cooperate for a better future of their people. Expanding this prorgamme and including more and more journalists and institutions would remain pivotal for its success.

Pakistan’s mainstream media organisations, which have both financial and human resources available, should take a lead from this initiative by joining hands or going for a solo-flight with an Afghan counterpart to report the Afghan independently and comprehensively, which remains vital for the country’s interest. The more such bridges the better.

There already has been such a landmark Aman Ki Asha initiative jointly launched by Pakistan’s Jang Group and the Times of India Group for the promotion of better ties between the two South Asian nuclear armed rivals. This civil society movement has completed a year and has many successful conferences and programmes to its credit, generating an alternate discourse for peace and stability in the region.

Luckily Pakistan and Afghanistan, despite all the mistrust and finger-pointing at each other, do not share a history of hostilities and bitterness, which exist between Pakistan and India. But the main challenges and problems faced by Islamabad and Kabul stem from the same roots of extremism and terrorism. The media of the two countries through independent and in-depth coverage can indeed play an important role for the better understanding of issues and painting a factual picture that will help in improving the relations between the two countries. A united front of the media has so far remained the missing link in efforts to bring the two nations closer. Now there appears hope that this link is being established amidst high hopes.

Why Peace Eludes Afghanistan

By Amir Zia
The News
March 1, 2011

Almost 10 years after the ousting of the Taliban from Kabul by the US-led forces, the present political setup continues to bank solely on foreign money, muscle and compassion for its survival

There is a semblance of normalcy in the Afghan capital of Kabul. The battered roads now remain choked with traffic most parts of the day, with glitzy four-wheel drives and cars, while new multi-storey buildings, bill-boards and shopping centres are among the new facets of this conflict-prone city. The head-to-toe veils and long beards of the Taliban era are hardly noticeable in Kabul’s downtown. Many men dress in Western clothes and women can venture out of their homes barefaced without the fear of being flogged. Music and musicians, banished by the former Taliban rulers, are also back with a bang and FM radio stations rule the waves. More than 20 television channels fiercely compete for viewers’ attention. And, yes, glimpses of NATO troops, foreign aid workers and diplomats also remain common in the city, where the local Afghan security personnel appear in charge and huge portraits and billboards of the slain Tajik guerrilla commander Ahmed Shah Masood stare at passers-by at important junctions and roads.

My three-day visit to Kabul this cold, wet and snowy February for a media conference came after 10 long years and contrasts of then and now proved striking. Despite occasional terrorist attacks, which rock the Afghan capital at least twice or thrice every month, life and businesses mostly appear as usual these days. But this visibly carefree attitude should not come as a surprise. The resilient residents of Kabul have seen worse days during their country’s protracted conflict spanning over more than three decades. They can smile and play perfect hosts even during a barrage of artillery fire and these are peaceful times according to their standards. However, to achieve this semblance of normalcy, they have paid a heavy price through their blood and tears. And yet their worries remain far from over.

You scratch the surface a little and the fragility of Kabul’s glasshouse stands exposed, where not just peace but even the infrastructure largely is in a shambles despite the engagement of world powers in its affairs since late 2001. The tenacious Taliban insurgents and their Al-Qaeda allies, hovering within and around this city, remain the key, but not the only problem. President Hamid Karzai’s house of cards stands discredited even in Afghanistan’s seat of power, let alone the Pakhtun-dominated regions serving as the hotbed of the armed resistance.

The Karzai administration remains tainted with allegations of massive corruption and nepotism. Even some of the senior non-Pakhtun Afghan journalists admit that the situation remains grim. “The whole government system is rotten with corruption,” said a veteran Afghan journalist. “Now one cannot travel out of the city safely because of lawlessness and crime. No road going out of Kabul stands safe.”

While the sense of insecurity has increased in post-Taliban Afghanistan, with the rampant kidnappings and broad-daylight lootings on highways, the top Afghan officials are often being accused of multimillion-dollar corruption scams. The Karzai government seems unable to rub away this impression.

Almost 10 years after the ousting of the Taliban from Kabul by the US-led forces, the present political setup continues to bank solely on foreign money, muscle and compassion for its survival. Its chances of standing without foreign crutches appear bleak even in the long run. With little organised economic and business activity in the country, the Afghan government could raise only one billion dollars in 2010 from its own resources. The remaining amount of more than 5.5 billion dollars had to come from the United States and its allies, both for civilian and security needs of the Afghan budget. Given the weariness of the NATO countries locked in this decade-long conflict and Washington’s plans to end combat missions here by 2014, the current setup is in a race against time to prove wrong those prophets of doom and gloom who want to write in advance its obituary.

But the trouble is that there are no easy, readymade solutions to the complex Afghan crisis. It is not a simple “them vs us” divide. Afghanistan stands deeply polarised and divided—horizontally and vertically. The Taliban insurgency underlines not just the ideological divide between the modern and fundamentalist forces. It basically remains ethnic in nature with the majority of Pakhtuns having a perception that despite being more than 60 per cent of the total population, they remain denied of their fair share in Afghanistan’s power structure, which they say remain lopsided in favour of ethnic minorities including Tajiks and Uzbeks. Karzai’s Pakhtun credentials and loyalty remain controversial.

For Mohammed Daud Miraki, a US-based and US-educated politician, those Pakhtuns who are working for this government had “sold themselves to the devil.”

“A genocide of Pakhtuns is going on both sides of the border (Afghanistan and Pakistan),” said the clean-shaved Pakhtun politician sitting in Kabul’s Intercontinental Hotel, where foreigners and locals brush shoulders discussing all sorts of theories on why peace continues to elude Afghanistan. “The Americans equate the Pakhtuns to the Taliban and the Taliban to Al-Qaeda. There can be no peace until Pakhtun representatives get their share in power, which includes the Taliban and their leader Mullah Omar.”

But the very thought of bringing top Taliban leaders into any reconciliation process remains a big a “no” for many other Pakhtun and non-Pakhtun politicians and intellectuals, who question the worldview and way of life of the religious militia. For them any share of power to the Taliban would mean losing whatever little freedom and modernity they managed to restore in the capital Kabul, the country’s north and small pockets in the Pakhtun belt.

But many of the Pakhtuns living in Kabul, including journalists, appear to be seething with anger against the Karzai regime and the US-backed war which they see as directed against Pakhtuns in the name of the Taliban. The government and its Western allies have so far failed to remove this impression that this war was not directed against Pakhtuns.

Indeed, the war has its own economy and vested interests. The way regional and world powers contributed in making the situation worse in Afghanistan—also is a hard fact. But pointing fingers at this neighbour or that—in which Pakistan remains a favourite target of many educated Afghans—is not going to heal Afghanistan’s festering wound.

As all the Afghan sides engaged in the conflict tend to take extreme ideological and political positions, it is the collective failure of the Afghan leadership that they have been unable to find a middle ground which paves the way for sharing of power and ownership of the peace process among all the stakeholders.

There appears no end to the Afghan tragedy as the main players, including the present Afghan setup and its Western allies, have failed to alienate the Al-Qaeda-linked hardliners from the mainstream Pakhtun resistance. Until this is done and Pakhtuns are brought into the fold of Afghanistan’s power structure, peace will continue to elude this unfortunate nation, let down both by its leaders and foreign friends.