Trading For Peace

By Amin Hashwani & Amir Zia
The News
April 27, 2011

It is now time that the economy, rather than politics, takes the center stage and dictates relations between the two countries.

Cricket diplomacy between the Pakistani and Indian prime ministers has indeed broken some ice. The baby steps of secretary-level talks indicate a thaw in frosty relations, which remain marred by protracted mistrust and animosity at the official level. But in recent years, a paradigm shift has silently occurred in the way the peoples, and even establishments, of the two nuclear-armed nations perceive and articulate their future ties.

Now warmongering is no longer in vogue or acceptable even among hardliners. Despite troubled relations and seething tensions, few challenge the principle desire of good and friendly Pak-India relations, articulated at all official and unofficial platforms. The civil society-led peace lobbies, once shunned and seen with suspicion by the “politically-correct patriots” in both the countries, have become vocal, assertive and acceptable in recent years. The 2008 Mumbai tragedy and its bitter fallout did snap the composite dialogue process and sports ties, but not the cultural interaction at the limited-level of film and music. Yes, Indian movies continue to adorn Pakistani theaters and some top Pakistani artists remain regular fixtures in the glamour world of Mumbai. This was unthinkable and unimaginable barely a decade ago.

The symbolism of the changing times and mood does not have to end here. A more tangible outcome could be on the economic front where due to bureaucratic snags and difficult circumstances, official bilateral trade between the two countries remains pegged just under $2 billion against the enormous potential of around $8 to $10 billion seen in the near-term.

The April 27-28 talks between Pakistani and Indian commerce secretaries in Islamabad, being held after a gap of more than two years, offers an opportunity to set a premise on which the foundations of enhanced economic cooperation can be built.

The usual irritants and bottlenecks stifling the growth potential of Pakistan-India trade are unlikely to go away as a result of the two-day talks, but it will be unfortunate if the two sides fail to grasp the changing mood and at least agree upon a roadmap to their boost economic relations.

The current trade between Pakistan and India is less than 3 percent of their total trading volumes, which has failed to become a meaningful positive influence in improving their troubled bilateral relations.

India has granted Pakistan MFN (most favoured nation) status, but a range of non-tariff barriers block access to most of the products that can find a market in India. Similarly, Pakistan maintains a list of 1,946 positive items that can be imported from India, while the rest are not allowed. In addition, restrictive and time-consuming visa procedures, logistic limitations in the movement of goods, the linkage of trade policies with that of progress on the political front and investment prohibitions hamper meaningful progress.

The current trade, though relatively small, is heavily skewed in India's favour as the positive list maintained by Pakistan still presents about 65 percent of the potential importable goods from India, while the non-tariff barriers imposed on Pakistani products block most of those goods that can find a market in India in which home textile remains on top of this list.

Other non-tariff barriers on Pakistani goods include cumbersome certification requirements, lengthy import procedures, delays in clearance, extra testing requirements at the port of entry, minimum import prices and duties.

As a confidence building measure and to liberalize trade further, Pakistan and India should reach an agreement, which ensures a level-playing field to businesses on both sides.

ºThis should include removal of protective non-tariff barriers on Pakistani goods as well as granting MFN status to India. Simplification of laws and procedures for the smooth movement of goods should also be part of the agreement.

The two sides also need to focus on enhancing road and railways facilities, which presently work as a constraint in increasing the volume of bilateral trade. Pakistan and India also need to work on ensuring visa facilities that include the removal of the restriction of police reporting as well as of ending the practice of issuing city-specific visas.

The two countries must also create a bilateral fast-track mechanism to remove any impediments in trade, and the private sector should get a voice in the policy framework and its implementation. The opening-up of trade should then lead to allowing investments in each other’s countries. Setting up a formal dispute resolution body for Indo- Pak on trade would help in addressing problems of traders in both countries.

The two countries share a long border, have similar cultures and in the not-too-distant past, enjoyed well-integrated transport and market links.

The issue of trade and industry is an area that needs more research in order to fully understand its potential size and implications for each country.

But in an optimistic scenario, we could foresee a future for Pakistan-India trade that replicates pre-1947 trade patterns, but in a new setting. Major cities in both countries could become the hub for trade, with the smaller nearby towns gaining out of the enhanced trade. This could boost the trade volumes of low income areas and play a significant role in poverty alleviation that plagues both countries. With greater interaction and increase in confidence levels, an open transit facility could benefit other SAARC nations including Afghanistan in their economic development, give a boost to the laying of the Turkmenistan-Afghanistan-Pakistan and India (TAPI) pipeline, open up Central Asian energy rich countries to India and China, and most importantly bring people from all sides closer together and create long-term relationships of mutual benefit.

Businesses create sustainable and durable vested interests for peace. This also remains in line with the global trend where more and more countries are focusing on regional trade after the failure of the World Trade Organization talks.

An increase in economic cooperation and trade will go a long way in the resolution of long-standing political and geographical disputes as well. This remains the only sensible and rational way to go forward and to ensure prosperity and progress in the region. It is now time that the economy, rather than politics, takes the center stage and dictates relations between the two countries.

Amin Hashwani is a leading businessman; amin@hashgroup.com

Amir Zia is business editor, The News; amir.zia@thenews.com.pk

Talking Tax Reforms: Fault Lies With Parliament

By Amir Zia
Sunday, April 24, 2011
The News

The government needs to boost growth, increase revenues and stop wasteful expenditure if it wants to end the low growth and high inflation cycle in which the country has been caught for the last three years.

Finance Minister Dr. Abdul Hafeez Shaikh hit the bull’s eye when he held parliament responsible for blocking the much-needed tax reforms, while meeting with officials of the global lending agencies in Washington. Ironically, he had to retract those remarks, which created an uproar in parliament and made many honourable lawmakers fume with rage. But even if the Pakistani media misreported the finance minister’s statement by design or default, it reflected a fact about the country’s depressing tax culture, which one cannot hide or deny.

Yes, tax collection has long been a thorny issue in Pakistan, where only the salaried class and the organised corporate and industrial sectors form the backbone of direct taxpayers. The liquidity-flushed agriculture sector, the money minting retail outlets, the middleman, the vast services sector and the informal economy remain, by and large, out of the tax net. The real estate sector infamously thrives by under-reporting transactions and a majority of private businesses finds ways to evade taxes and duties by under-invoicing in this Islamic republic.

No wonder, the tax-to-GDP ratio in Pakistan hovers at a slim 10 percent against more than 15 percent in Sri Lanka and 18 percent in India. Pakistan’s small tax base is reflected by the fact that there are less than three million registered taxpayers in a country, having an estimated population of more than 170 million. The active taxpayers, out of these three million, are not more than 2.7 million.

Who is responsible for this state of affairs?

Of course, the powerful vested interests, who resist and oppose every reform. Parliament and the political parties — which ideally should be vehicles of change, improvement and the rule of the law — remain their main strongholds. The ruling elite effectively blocks any moves aimed at creating a fair and equitable tax system.

Agricultural tax remains a taboo though apparently provincial governments are empowered to collect it. The reason is understandable - our parliament and provincial assemblies are dominated by tribal chiefs and landlords, who jealously guard their self-interest. The government’s effort to impose tax on retailers, represented by political parties with an urban base, has been confronted by shutter power. Value-added tax was shot down. The proposal for reformed general sales tax (RGST) is being bitterly opposed. Do we have any fresh ideas to raise revenues other than to milk the ones who already pay taxes?

The politics of expediency — mastered by our mainstream parties — are not letting the country and its people achieve their potential. It is the narrow vested interests and not the national interest, which dictates policies.

A leading Pakistani economist, who once used to work for an international lending agency, summed up the guiding principle of the country’s ruling elite and successive elected governments aptly in these words; “they steal for themselves and beg to run the government”.

But the problem in today’s world is that money is hard to get without conditions. The global lending agencies, foreign donors and the world powers refuse to provide a free lunch. They want Pakistani rulers and the rich to share the burden by paying taxes and removing untargeted subsidies. They want the government to put its house in order by stopping the financial hemorrhage caused by the public sector companies, which wipe out a staggering 300 billion rupees annually in subsidies aimed just to keep them afloat. Subsidies on fuel and electricity also remain a massive drain on the country’s meager economic resources.

The problem for Finance Minister Shaikh and his team stems from the fact that their political bosses are not prepared to take those measures, which are the critical need of today. The minority government of the Pakistan Peoples’ Party (PPP) is being kept on a tight leash by its allies and the opposition. They all have one thing in common — hostility to reform, change and an unwillingness to sacrifice their interests.

The half-measures, which came in the form of ordinances in March to mobilise more than 50 billion additional resources in the wake of last year’s devastating floods came as too little and too late. They provide short-term relief and a recipe to marginally slash the yawning budget deficit. This trick will not rescue the economy from its present morass.

The message, which came loud and clear during the spring meetings of Finance Minister Shaikh and his team with officials of the IMF, is that they have to go for the promised reforms if Pakistan wants support of the global lending agencies and the world powers.

A new programme from the IMF will remain out of the question and the resumption of the existing stalled standby arrangement linked to practical steps, which include the key condition of enforcement of RGST to broaden the tax base and the removal of untargeted subsidies.

The government needs to boost growth, increase revenues and stop wasteful expenditure if it wants to end the low growth and high inflation cycle in which the country has been caught for the last three years. The problems of a low tax base, the power sector’s massive losses and controversy about passing on any increase in international fuel prices to the consumers are certainly not new ones. Who is stopping the ruling elite from resolving them? Of course, the IMF, the World Bank, the United States, the West, India or Israel cannot be blamed for the government’s inaction and the ruling elite’s failure.

The fault is with those state institutions, including parliament, which are unable to rise up to the challenge and lead the country from the front.

One should perhaps sympathise with Hafeez Shaikh and his team, who may know the panacea for the present ills, but are incapable of taking the right step at the right time because they carry no weight within the ruling party and share a bed with those allies and opponents who serve narrow vested interests. It appears a fail-fail situation for everyone!

Fighting Crime Vital To Save Karachi’s Businesses

By Amir Zia
Sunday, April 17, 2011
The News

One does not have to be an economist or a financial guru to know that the foremost requirement for any business to flourish and grow is security and rule of the law

Big promises, tall claims and a barrage of allegations and counter allegations -- that's what appears to be the outcome of the April 5 shutter down by traders and shopkeepers against the politically-connected crime mafias operating in the countryís financial hub of Karachi.

Interior Minister Rehman Malik, who at least has mastered the art of domestic diplomacy if not the ability to maintain law and order in the country, again dashed to Karachi this week with a bag full of promises to calm the nerves of the weary business community that remains the prime target of extortionists, kidnappers and all types of thugs.

In his meeting with leaders of the Karachi Chamber of Commerce and Industry (KCCI) at Governor House on April 14, he again made a string of bombastic promises that range from the controversial statement of shooting extortionists and bandits at sight to that of providing cellular telephone monitoring equipment to the police for tracing criminals. More security pickets, patrolling and snap checking in the volatile areas have also been ordered.

Keeping scepticism aside, have we not heard such empty announcements many times before and yet seen the city plunging deeper into the cycle of lawlessness, violence and crime? For instance, on March 17, Malik vowed a crackdown on criminals, including the Peoples’ Amn Committee of Lyari — blamed for the recent surge in crime and extortion in the main business and trade centres of Karachi. However, no action followed this announcement as criminals continue to strike at will. This forced small traders and shopkeepers to go for a shutter down on April 5, defying the KCCI leaders, who wanted to postpone this protest to give time to the government for a crackdown on the crime mafias.

Although the shutter down led to bitter divisions within the business community over the protest strategy, it remains a fact that extortion has become the number one problem for small and big traders, shop keepers, businesspeople and industrialists alike.

“If the government wants to prevent an economic collapse, it has to restore law and order in Karachi which is Pakistan’s industrial and commercial hub,” said Siraj Kassim Teli, chairman of KCCI’s Businessmen group. “The situation is grave. Operating even a small shop has now become a risky business because of the rampant crime.”

Atiq Mir, leader of the All Karachi Traders’ Alliance, which led the April 5 shutter down, said that the business of extortion blooms as usual. “Everyone is afraid of these invisible bandits, who demand money on the phone and threaten dire consequences if one refuses to meet their demand.”

It has been months now since the KCCI has been urging both the federal and provincial governments to tackle the crime mafias, but thanks to political expediency, they have got nothing but hollow promises and false assurances. Background interviews with business leaders show that people remain reluctant to put money and open new businesses in Karachi. The problem is not restricted to one or two neighbourhoods. The entire city of more than 17 million people appears hostage to criminals and an uncaring government.

For all practical purposes, the police and paramilitary Rangers are powerless, while the all-knowing Intelligence Bureau and the much-dreaded Federal Investigation Agency clueless when it comes to dealing with the vast empire of extortionists, kidnappers and bandits. One has to live in Karachi to feel the dread of criminals and politically-connected mafias. The irony is that most criminals operate under the banner of this or that political party. While all the political forces, even the partners in the ruling coalition, discreetly point fingers at one another, there remains a callous apathy toward the plight of the people.

Indeed, Karachi has a history of violence and crime, but there has been an explosion in cases of extortion, kidnappings for ransom, robberies and murders since Pakistan Peoples’ Party (PPP)-led government assumed power in March 2008. The breakdown in law and order has hit hard all sections of the society, but small shopkeepers, traders and businesses are among the worst affected.

The fear of receipt or “parchi” as called in the local lingo, or a threatening text message on one’s mobile telephone demanding money, brings a shudder in the spines of those who receive them. The demand could start from a few thousand rupees to that of tens of millions.

One does not have to be an economist or a financial guru to know that the foremost requirement for any business to flourish and grow is security and rule of the law. Insecurity and lawlessness force capital to fly to safer destinations as has been happening in Pakistan from where many business concerns have shifted abroad for expansion including places like Bangladesh, Malaysia, Dubai and South Africa. When even locals are afraid to make investments because of insecurity, crime and terrorism, one can't expect foreign investors to enter the land of the pure. KCCI President Muhammad Saeed Shafiq appears right when he says that tackling crime in Karachi is no longer just an administrative issue.

It requires immense political will and commitment to beat the crime mafias, starting from reforms not just in the state institutions — from the police to judiciary — but also a process of cleansing within the political parties, which have armed goons in their ranks.

The blame game will not end Karachi’s law and order woes, which are having a crippling affect on the business climate. The need of the hour is establishing the rule of the law. Karachi needs actions not words. Are the political parties ready to rise to the challenge to ensure that the economic pulse of Pakistan keeps beating?

Interview: KCCI President

By Amir Zia
Newsline
April 2011

“Leading businessmen and small shopkeepers alike are the criminals’ targets”
– Muhammed Saeed Shafiq

Q: What is the need for establishing a National Crisis Management Cell at KCCI?
A: In recent months there has been a sharp rise in incidents of extortion, kidnapping for ransom and robberies in Karachi. But a vast number of people belonging to the business community remain reluctant to lodge reports with the police because they are either afraid of the criminals or lack faith in the police.
The KCCI took up the issue of the rampant crime with Interior Minister Rehman Malik, who promised the business community the assistance of the Federal Investigation Agency and the Intelligence Bureau. But we have not been able to achieve the desired results because people are afraid to come to the fore to report crimes and also because of the fact that even the federal agencies assigned to assist the KCCI have to bank on the police under the country’s legal system when it comes to the issue of taking action.

Q: How many cases have been reported to the Crisis Cell so far and what is the nature of the complaints?
A: In the past one month, more than 50 cases have been reported to the police through this cell, but the number of complaints is much higher. At least 60-65 other people came and reported cases of extortion, robberies and kidnappings for ransom, but they refused to go to the police despite all our efforts. They were too afraid to risk their lives.

Q: Which areas remain the most affected on account of the rising crime?
A: In Karachi, no area is safe now. But the worst affected parts of the city as far as traders, shopkeepers and businessmen are concerned remain the wholesale and retail markets in the old parts of Karachi and the industrial areas. The menace of extortion meanwhile, is rampant in a majority of the city’s areas – from one end of Karachi to the other.

Q: What are the criminals’ usual demands? How do they target victims?A: Whether you are small shop-owner or a leading businessman or industrialist, you remain the target. In many cases, there are organised gangs which monitor the movement of their prey and his family members for days. They assess the worth of their victim and then call, making demands according to the target’s estimated financial wealth. They use mobile telephones to communicate and keep changing sims, which are registered under fake identity cards. Even private security guards are no guarantee of your safety. The criminals will tell you to which educational institutions you send your children, when they leave, and when they return. They will give you the registration number of your car. People are forced to negotiate and pay – at least part of their demand. But once you make a payment, they will soon be back with bigger demands.
Then you have simple cases of extortion in which people come to your shop or workplace and demand donations for one cause or the other, or bluntly ask for protection money (bhatta in local lingo). Many leave receipts in advance – those can be for anywhere between a few hundred to thousands of rupees. There have also been cases of short-term kidnappings. Kidnappers abduct a person at gun-point, make a call using his phone and demand ransom money within a few hours.

Q: How has this hurt business?
A: Terrorism, crime, and the ongoing security problems have really hit our businesses hard. If I am an exporter, my foreign clients no longer visit Karachi because of security fears. Our businessmen have to go to Dubai to make deals. Many are shifting business abroad or are closing them. Even local investors are reluctant to put in money and make investments to start any new businesses or expand because of all the uncertainty and insecurity. The situation is taking its toll on the country’s economy as new job opportunities are not being created because of a lack of investment. There are no new or emerging business ventures, and even the existing ones struggle for survival.

Q: What proposals have you made to improve the situation?
A: We have to bring in sweeping changes in the system as superficial steps of transfers and postings won’t work. There is a need for reforms in the police as well as the judiciary and a requirement for setting up speedy courts. We also need the issuance of harsh punishments to criminals, including the death sentence. The present system is flawed. It is not working. We see hardened criminals getting bail and being released from the courts because of poor prosecution, lack of evidence and corruption. The political parties have to work together to help bring about change.

Q: Has the banning of the Peoples’ Amn Committee of Lyari on March 17 made any difference?

A: It has made no difference so far. The step has been taken [by the government] to appease its coalition partner, but action has to been seen on the ground. There has been no crackdown on criminals. Banning the name of an organisation means nothing. The real challenge is to stop their activities and protect citizens.

La Cosa Nostra

By Amir Zia
Newsline
April 2011

Officially banned, the Amn Committee still remains active in criminal enterprises across the city.

Although President Asif Ali Zardari ordered a ban on the Peoples’ Amn Committee last month in a bid to pacify the Muttahida Qaumi Movement (MQM) and ensure it remains part of the ruling coalition, many leaders and supporters of his Pakistan Peoples’ Party (PPP) remain divided about whether to condemn or condone this shadowy group. Contrary to its name, since its formation, the Amn Committee has engendered anything but peace in the city. In fact, it is widely deemed largely responsible for the soaring crime rate in the commercial and financial hub of Karachi.
It is also recognised that the committee has sidelined the organisational structure of the ruling party in Lyari – long considered the main stronghold of Bhutto loyalists in Karachi – and even occupied its offices.
All that aside, some PPP Sindh stalwarts see the committee as a bulwark against, and a counter-balance to the muscle-power of the MQM. Others question whether supporting and patronising criminals and gun-toting militants makes any sense for the largest political party in the country. “When you bring criminals and guns into the fray, it hurts political forces in the long run,” said a senior PPP Karachi leader, requesting anonymity. “But some of our friends within the party who lack political vision and experience, fail to understand this.”
Until recently, the pro and anti-Amn Committee groups in the party were fairly equally balanced. But when Sindh Home Minister Zulfikar Mirza openly announced his support for the committee and unabashedly participated in its programmes, and several other key PPP leaders also displayed their proclivity for this controversial group, the pro votes tipped the scales.
Senior PPP leaders, including Senator Faisal Raza Abidi, MNA Abdul Qadir Petal and several others, along with Zulfikar Mirza kept politically supporting the committee, despite the reservations of many of their colleagues – especially the PPP’s three elected representatives from Lyari, who faced a tough time because of the committee in their respective constituencies.
While the Amn Committee aggressively articulated the grievances and problems of the people of Lyari, the target of their wrath remained mostly the elected PPP representatives from the area. For months at a stretch, PPP MNA Nabeel Gabol, for example, was not even allowed to visit his constituency. The two PPP Sindh Assembly members – Muhammad Saleem Hingoro and Muhammad Rafiq Engineer – also remained targets of criticism for their alleged “failure to carry out development work and resolve the problems of the people.”
The Amn Committee was formed by one of Lyari’s most notorious criminals, Rehman Dakait in June 2008, purportedly to carry out social and welfare work. Sardar Abdul Rehman Baloch as his admirers like to call him, aspired for a political career. This ambition was, however, cut short when he was killed in a police encounter in August 2009. Following his demise, the stewardship of the committee fell to young Uzair Baloch, Dakait’s relative who is wanted by the police in several cases. Meanwhile, the Peoples’ Amn Committee grew from strength to strength, making a solid base for itself first in Lyari – one of the most backward areas of the city – and then expanding its range of “lawful” and unlawful activities in other parts of the city. By opening small schools, running medical centres, and restoring parks and playgrounds, it earned itself the support of the locals. It also helped lower the crime rate in this locality – at least on the surface. But gradually, as gangsters, disgruntled workers and supporters of the PPP and unemployed youngsters from Lyari all started to assemble under its banner, it began to be seen in many circles as more a criminal enterprise than a welfare body.
Sensing the effectiveness of this group – which kept expressing its loyalty to the PPP even while virtually disallowing the party’s local leadership from operating in the area – some key ruling party leaders encouraged the Amn Committee to expand its network in other neighbourhoods. That brought the committee into direct conflict with the MQM and triggered an extensive bouts of killings, starting from early 2010.
Apart from its turf war with the MQM, Amn Committee members also went all out to expand their economic interests in the city – especially in the main commercial areas and bazaars in the close vicinity of Lyari.
On account of its activities, senior police officials, business leaders and the MQM started accusing them of being the main perpetrators of crime in the city – a charge strongly denied by committee spokesman Zafar Baloch. “The MQM accuses us because they see us as a direct challenge to their monopoly in Karachi,” said Baloch, while claiming that the group remains loyal to the PPP and Bhutto’s political legacy.
That some PPP members subscribe to this contention can be gauged by the fact that even a few hours before Interior Minister Rehman Malik announced President Zardari’s decision of banning the Amn Committee at a joint press conference with MQM leaders in the wee hours of March 17, PPP Sindh leaders were calling the group a “sister organisation.”
On March 16, Taj Haider, a senior PPP leader, explained the difference between an affiliate and a sister organisation, saying that while the Amn Commitee was not formally recognised by the party as an official wing, “all those affiliated with the committee are not criminals. Many of them are PPP supporters and so it is our sister organisation.”
Sister organisation or not, and opposition from within the PPP aside, it was the MQM that compelled Zardari to ban the party, failing which it threatened to quit the ruling coalition. The President concurred and went a step further: when Rehman Malik announced the ban, he also expressed the government’s intention to crack down on criminals without any discrimination, in conjunction with the MQM.
Within hours of the announcement of the ban, the Amn Committee ostensibly decided to voluntarily disband its structure and hand over its offices to the PPP. Following this, most members of the committee were assimilated in the party, but PPP leaders were quick to assert that criminals would be kept at a distance.
The question is, will this promise really materialise? And has the committee really disbanded at all? So far, there isn’t a great deal of room for optimism.
The Amn Committee may have been banned on paper, but its key figures and followers, many wanted in dozens of cases, continue to roam freely. But it is not just the Amn Committee which remains the mother of all troubles in Karachi. There are also a number of other ethnic, political, religious and purely criminal mafias that operate in the city and have their fair share in whipping up trouble. Thus, the racket of extortion, kidnappings, robberies, land grabbing and killings continue unabated in the city.
While the fact that the PPP and the MQM – Sindh’s two main forces – have announced their resolve to fight crime and restore supremacy of the law is very welcome, the real test will be seeing this translated into action on the ground. Both these parties – in fact all political parties – must end the politics of expediency and get rid of criminals in their ranks. For this, they will need the will to make a conscious policy decision, because it is bound to be resisted by vested political and economic interests.lisation of politics and politicisation of crime have become Karachi’s biggest challenges. Political parties have to empower institutions – from the police to the judiciary – to help eradicate these trends, and they need to get the ball rolling now. Time could prove to be the city’s worst enemy.

The Business Of Crime

By Amir Zia
Newsline
April 2011

Welcome to one of the world’s most dangerous megacities, where the roaring business of organised crime has cast a pall of gloom over commercial, business and industrial life.

Against a backdrop of mounting crime, the Karachi Chamber of Commerce and Industry (KCCI) established a crisis management cell this February to help its members secure themselves against organised gangs of extortionists and kidnappers, who have made life miserable for shopkeepers, traders, business people and industrialists in the teeming port city in recent months.
The statistics are telling. Citizens-Police Liaison Committee (CPLC) data indicates a record surge in the daily crime reports at its centres – ranging from broad daylight mobile and vehicle snatching to extortion and kidnapping for ransom. Cases now average 4,500 a day, compared with 2,500 in March 2010. Additionally, the less-publicised Sindh Home Minister’s telephone complaint centre has been receiving 50-60 complaints daily on an average – the maximum number of these reporting extortion, kidnapping and police excesses.
Welcome to one of the world’s most dangerous megacities, where the roaring business of organised crime has cast a pall of gloom over commercial, business and industrial life. Groups of politically connected criminals and mafias now hold the city hostage and strike at will. In most parts of Karachi, you cannot do business or keep a shop open without paying “protection money.” Youngsters brandishing automatic weapons can descend on you in any part of Karachi – demanding your mobile phone, cash or vehicle. Kidnappers can abduct you or a family member for a few hours, weeks or even months – and payment, ranging from a few hundred thousand rupees to millions in cold, hard cash, is the only way to win freedom in most cases. And armed robberies at the workplace or at home are commonplace.
These gangs encroach upon government and private land, sell drugs and weapons and kill rivals. Often the assassinations of political activists – or even notorious gangsters – bring armed youngsters on the roads, who force shops and commercial centres to close shutters as a mark of protest.
There are some standard modus operandi: political activists-criminals knock at your door demanding donations on the pretext of buying party flags to organise celebrations for a sacred event such as Eid Milad-un-Nabi. If you refuse, there are threats, public beatings, or even a bullet. One of the worst of such cases occurred in the Sher Shah Kabari Market last October, when around a dozen shopkeepers lost their lives because they refused to pay extortion money. In recent months, a number of shopkeepers have also been murdered in hit-and-run attacks in busy commercial areas. Not surprising then that as the Pakistan People’s Party (PPP)-led government continues to allow matters to spiral downwards, a climate of fear and insecurity and a general sense of hopelessness prevails among the citizens of Karachi.
“The business environment has never been as bad as it is today,” Muhammad Saeed Shafiq, president of KCCI, told Newsline. “It is not just the country’s economic situation which is challenging. It is the poor law and order and the 24/7 insecurity that has shaken the confidence of the business community. Almost every second or third day shops and businesses are being forced to close in many parts of the city under one pretext or the other. Ongoing incidents of extortion, kidnappings and other crimes have made Karachi one of the most unsafe places for doing business.” (See interview on page 19)
Ikram Sehgal, chairman of private security firm G4S, and a leading security analyst, disclosed that leading private security companies have been innundated by requests from nervous businessmen, industrialists and professionals, who want security guards for themselves and their families.
“We simply cannot meet their demand because of the lack of trained manpower,” he said. “The criminals’ numbers have burgeoned. And now they are not just targeting the small affluent elite, but the upper-middle class as well. Only a day ago, two of my friends each got threatening calls that their son or daughter would be kidnapped if a hefty ransom amount was not paid.”
It is true that in Karachi today virtually every second or third person has a harrowing story to tell about a direct encounter with criminals, or their friends, relatives or acquaintances running out of luck. The numbers speak for themselves.
A majority of Karachi’s 110 police stations report a massive increase in the crime rate. In 2010, there was a formidable 20% jump from the previous year in reported-crime cases: 59,000 compared with around 49,500 in 2009, according to official Sindh police statistics. The rising crime tide has shown no signs of reversal in the first three months of 2011. The total number of killings in Karachi since January to the present has crossed the 200 mark. In the first 25 days of March alone, more than 150 people fell victim to targeted assassinations in the city. According to the police, around 50% of these fall into the category of political and religions or sectarian murders, while the rest were killed because of personal feuds or were routine crimes.
According to the Human Rights Commission of Pakistan, 242 people were killed in political strife in 2009 and 748 in 2010. The police put the total number of murders in 2009 at 801 and 1,339 in 2010. These include crimes of every nature, not just politically or religiously motivated killings.
The statistics of reported crime, though mindboggling, do not, however, reflect in entirety the state of a city where the majority of citizens live on the knife’s edge. Experts say that reported crime remains only the tip of the iceberg, as even according to conservative estimates, more than triple the number of crimes that occur remain unreported. Fear of reprisal from criminals, or the peoples’ lack of confidence in the police are not the only factors that stop people from lodging first investigation reports (FIRs). Policemen themselves discourage many victims from registering complaints in an attempt to keep the number of reported crimes low in their respective jurisdictions.
CPLC chief Ahmed Chinoy reveals that extortion has emerged as the top crime in Karachi. “But the problem is that barely 30% of the victims of extortion or even street crime come forward to report. The rest remain silent,” he said. “Until people report crimes, the police or we will be unable to help them.” That notwithstanding, CPLC information call centres remain flooded with distress calls spiking of late to 4,500 a day on the average in recent months.
While all the major political parties in the country have a history of patronising criminals, the recent unprecedented surge in crime has been blamed largely on the newest entrant on Karachi’s political horizon – the Peoples’ Amn Committee of Lyari. Although the Amn Committee, comprising mostly known gangsters and disgruntled PPP workers, announced a closure of its offices and claimed it was disbanding following Interior Minister Rehman Malik’s March 17 announcement that the government plans to ban it, business leaders say that its activities continue. (See box: La Cosa Nostra)
A police officer acknowledged, “More than two weeks down the road since the government announced the ban on the Amn Committee, there has been no operation against gangsters. The ban remains only on paper.”
Echoing this, said a leading businessman, requesting anonymity: “Nothing has changed on the ground. All the major retail and wholesale markets located in Lyari’s vicinity remain at the mercy of gangsters, who continue to extort money and rob people. All the notorious criminals continue to roam freely.”
Some of Karachi’s oldest and busiest markets, including Jodia Bazaar, Sarafa Bazaar, the Timber Market, Bolton Market, Jamaa Cloth, Denso Hall, Shoe Market, Burns Road, and even Saddar suffer the brunt of the spiralling crime, because of their proximity with Lyari.
A senior police officer, who also asked not to be identified, said criminals from Lyari fan out in the city’s main commercial areas to carry out their activities. “But ironically, this area, one of Karachi’s oldest neighbourhoods, is not itself among the top 10 most crime-infested areas of the city.” The reason, he said, is a lack of reporting of crime, as well as the fact that Lyari’s gangsters usually strike in neighbourhoods outside their own.
However, the closure of many of Lyari’s storage houses and cottage industry is contributing to unemployment in the area. Lyari residents contend that many young men are thus forced to resort to criminal activities.
While Lyari residents feel the authorities are missing in action when it comes to readressing their grievances, Sharfuddin Memon, a former CPLC chief, who now works as a consultant on planning, policies and public relations at the Sindh Home Ministry, said that the perception of inaction against criminals is wrong. According to him, the police have arrested 89 people involved in targeted killings in recent months. “There have been raids in Lyari as well, along with other pockets of the city,” he said. But, he conceded there should be a continuity in operations and all three coalition partners – the PPP, the Muttahida Qaumi Movement (MQM) and the Awami National Party (ANP) – should work together to establish the rule of law. He added, “The law and order agenda should never be mixed with other issues.”
While the politics of expediency have prevented an even-handed crackdown on law-breakers, criminals and terrorists since the early 1980s, the Karachi of 2011 has never been more unmanageable and ungovernable than it is today. Now state institutions themselves play one political group against the other and nurture the trend of criminalisation of politics, ignoring the killings and criminal activities conducted by their stooges – if not overtly or covertly supporting them.
Memon said that a key impediment in fighting crime remains the poor prosecution of criminals. “The conviction rate is less than 5%. When the conviction rate is so low and there is no fear of accountability, then of course, criminals will take advantage.”
In fact, criminals get away not just because of corruption in lower courts and poor prosecution – they escape justice because they also threaten judges, witnesses and policemen.
Memon disclosed that a landmark witness protection plan has been approved by the Sindh cabinet, which will be tabled soon in the provincial assembly. “It will help us protect witnesses, who are afraid to testify.”
Farooq Sattar, MQM’s parliamentary leader in the National Assembly told Newsline that his party had held two rounds of talks with President Asif Ali Zardari who assured them that criminals would be taken to task regardless of their political association. However, since then – in just the month of March alone – crime and violence has intensified in the city – and the MQM has lost nearly 35 of its members in targeted killings. Said a disgruntled Sattar, “Criminals and terrorists are striking with impunity. We have recommended that a special PPP-MQM committee on crime, headed by the chief minister, should meet daily to address Karachi’s law and order challenge.”
Sattar added, “We have to regain the confidence of traders, businessmen and investors, who have stopped putting their money in Karachi. If this situation continues, there will be a flight of capital, which to an extent has already started. This trend needs to be arrested as it will impact not just Karachi, but the overall economy of the country. We have to revive Karachi’s role as the country’s main commercial hub.”
Taj Haider, a senior PPP leader, concurred that there should be a crackdown on criminals without any discrimination, fear or favour. “The city needs to be liberated from criminals and militants – there can be no dispute on this. For this we have to work together. Our resolve is firm,” he maintained.
That may well be, but it has not translated into any concrete action. So far the government has not managed to walk the talk. As the key political players in the ruling coalition remain sceptical about one another, their ability to rise above petty party politics remains moot. And till that happens, chances of peace and prosperity in Karachi remain elusive.

'Of a weak state & a strong society’

By Amir Zia
The News
Sunday, April 03, 2011

“Its economic problems are rooted in poor state management, not Pakistan’s economic fundamentals, which remain robust."

Are Pakistan’s objective conditions really frightening or it is just the negative perceptions, which hold the country hostage? The answer cannot be simply in black or white. Yes, perceptions are usually the result of objective realities, but not always. There are instances when perceptions can be overblown or understated by design or by default. Ground realities do shape perceptions, but there are times when a negative or positive view works as a catalyst to influence situations — for better or for worse — rather than just painting a factual picture.

In today’s world, what are the perceptions about Pakistan?

According to Dr. Maleeha Lodhi, the distinguished journalist and former ambassador, “the prism of terror and extremism has deflected attention away from the strength and stability of underlying social structures, which have enabled the country to weather national and regional storms and rebound from disasters — natural and manmade.”

The extract is from a new book - Pakistan: Beyond The ‘Crisis State’ - which Dr. Lodhi has edited.

At a time when many predict only doom and gloom for the country both here and abroad, this book not just explores Pakistan’s multifaceted challenges, but tries to underline the important fact that these problems are soluble by identifying the policy responses.

Along with Dr. Lodhi, 16 other eminent Pakistani experts and practitioners have assessed in detail in the book the key challenges Pakistan faces on political, economic, social, foreign policy and governance fronts and spelled out ways to overcome them. Among the array of leading experts are Dr. Ishrat Husain, one of Pakistan’s most effective former central bank governors, and Dr Meekal Ahmed, an economist who held senior positions in Pakistan’s Planning Commission and the International Monetary Fund. The two in their separate articles have given their take on the issues of how to improve economic governance and key regime-changes in the economic policymaking, respectively.

Mudassir Mazhar Malik, an economist who is the executive vice chairman of BMA Capital, offers the private sector’s perspective on economic competitiveness, while Ziad Alahdad, an energy specialist, investigates what it will take to turn this sector around, which remains the single greatest impediment to economic recovery. Other experts include leading historian Ayesha Jalal, award winning journalists Zahid Hussain and Ahmed Rashid.

Together they debate their country’s strengths and weaknesses and offer ways out of its current predicament.

Despite its diversity of opinion, the underlying argument of the book remains that Pakistanis have the capacity to transform their country into a stable modern Muslim state, but bold reforms will be needed to bring about this outcome.

The articles in the book see a silver lining even in the biggest challenges and the worst of tragedies.

The devastating floods of 2010 was one such disaster both in terms of humanitarian and economic fallout, which forced the world to fear the worst for a state already shaken by the scourge of extremist and terrorist violence and an economic meltdown.

“The floods exposed the paradox that lies at the heart of Pakistan’s predicament today; that of a weak state and a strong civil society,” writes Dr. Maleeha in the opening lines of the book as she mentions the poor government response to the tragedy compared with the resilience of the people and civil society, which came forward to help the victims.

It is heartening to hear the message that the Pakistan of today is not all about extremism, intolerance, violence and terrorism or political instability and rampant corruption. Yes, these are real challenges and the country has to navigate through this minefield.

But the crux of the matter remains that along with these problems, Pakistan also has a promising potential. And that’s what contributors in the book —barring one or two — have tried to focus on while analysing the state of affairs in the country.

Not succumbing to the mood of self-denial or closing their eyes to the problems, but acknowledging them and suggesting a way forward.

“It (Pakistan) has a significant industrial base, an elaborate infrastructure of roads and communication links, a modern banking system, a large domestic market and a thriving informal economy — factors that have averted a national breakdown even when in the throes of severe financial crisis,” writes Dr. Lodhi.

“Its economic problems are rooted in poor state management, not Pakistan’s economic fundamentals, which remain robust. It has managed — in spurts — to achieve high rates of economic growth, not nearly enough to keep pace with an exploding population, but sufficient to invest the country with several features of a modern nation.”

In these tough and uncertain times, Pakistan - Beyond the ‘Crisis State’, appears as a significant addition to the contemporary literature on the country. It challenges the conventional wisdom and goes beyond the hysteria created by the western media about Pakistan that depicts it as a failed or a failing state.

The book gives not just an alternate paradigm, but helps develop a better and a deeper understanding of this nuclear-armed nation, which has again and again defied all the odds and survived to write its destiny.