Analysis: Attack and After

By Amir Zia
The News On Sunday
May 29, 2011

The dominant narrative following the terror assault on Mehran airbase in Karachi is that of an audacious denial in accepting the reality of terrorism in the country

Naval Chief Admiral Nauman Bashir denies that there has been a major security breach at the airbase, where a small band of terrorists destroyed two multi-million dollar P-3C Orion surveillance aircrafts and killed 10 security officials in an 18-hour long standoff.
Many of Pakistan’s leading analysts, politicians and opinion-makers remain convinced that “an unholy nexus” of Indian, Israeli and US intelligence agencies masterminded and sponsored this brazen attack to undermine the country’s armed forces and raise questions about the security of its coveted nuclear arsenal. They deny that any Islamic radical group linked to the Taliban, al-Qaeda or its local or foreign allies could have carried out this assault. The closest few of them could get to blame these forces is when they, as a matter of faith, say that some foreign intelligence agency penetrated and used Islamic militants against Pakistan.
As the atmosphere remains thick with weird conspiracy theories, aired primarily through television news channels, Pakistan appears to be living in this state of denial despite losing more than 30,000 civilians and 5,000 security personnel in the decade-long campaign of terrorism and violence unleashed by al-Qaeda and its local allies of all shades and colours.
The Tehreek-e-Taliban Pakistan (TTP) has already claimed responsibility of the Mehran base attack, but a vast number of conspiracy theorists, in their anti-US and anti-West zeal, conveniently ignore this fact -- as they always do in such cases -- and are trying to find a foreign hand in this incident too.
However, closing one’s eyes does not change the ground reality and the fact that the biggest threat to Pakistan security is from within. With the May 2 killing of terror mastermind Osama bin Laden by the US forces in Abbottabad, the terrorists have one more reason to intensify their war on Pakistan.
The Pakistan Peoples' Party (PPP) led government struggles to keep its direction and focus toward the elusive enemy on the ideological plane, but besieged by scandals and political opposition, it has failed to galvanise and effectively lead the public opinion against extremists, who have loads of direct and indirect defenders among the legal religious and political parties. It is ironic that many of these politicians see Islamabad’s cooperation with the international community against the global terror network as a problem rather than terrorism and extremism, which finds a perfect breeding ground on our soil.
The sharp ideological chasm, indeed, affects the country’s resolve and capabilities in taking on terrorists, who appear to be going for hard and strategic military targets now. The assault on Mehran airbase appears as a watershed as it is for the first time that operational assets -- P-3C Orion -- and not the men remained the real target. In a way, this attack holds bigger symbolic value than the October 2009 assault on the army headquarters because Mehran base serves in the frontline of the country’s conventional defense system.
Pakistani armed forces, which scored huge successes against militants, in their operations in parts of tribal areas and Swat, for the first time appears at the receiving end. Yes, never before, Pakistan’s mighty security apparatus appeared so ill-prepared, directionless and lethargic in confronting the internal security challenges as it has appeared in the recent months. It is the terrorists, who have the initiative rather than Pakistani armed forces.
Interior Minister Rehman Malik and other officials have been underlining the point that terrorists, who attacked the naval base, were trained and motivated. But this raises the question how prepared and trained are we in combating them?
The terrorists, indeed, have a huge advantage of not just element of surprise but also of selecting their turf for an action. Like any guerrilla group, they hide when hunted and strike when least expected. They also have the advantage of melting away in the civilian population. This is a nightmare situation for any army, especially if it is operating on the home front and remains unable to take those excessive measures, which stand justified during full-blown conflicts in the enemy territory.
Although Pakistani armed forces have been locked in this war on terror for a decade now, their grooming and training has been largely done for conventional warfare and that too mainly for the eastern front. The problem compounds given the fact that within the armed forces there are elements which once used the Islamic militants as proxies. The mindset that these shadowy groups could again prove an asset has not entirely changed.
One big challenge for the military leaders of today is how to readjust and reorient the training of their men that they get prepared to deal with home-grown ideological foes that includes the Taliban and other banned terrorist organisations. The military needs not just special counter terror units, but also to indoctrinate their ranks on the importance of taking on these extremists, who exploit the sacred name of Islam because of their distorted worldview.
But the military alone cannot deliver in this kind of fight in which the civilian government, political parties and the police should remain most crucial players. It is the civilian authorities which have the prime responsibility of spearheading this war on ideological plane and isolating militants. For this, Pakistan needs a comprehensive counter-insurgency policy, addressing both the symptoms and causes of extremism and terrorism.
The Mehran base attack, while calls for the accountability of officials responsible for lax security, also underlines the risk of operating defense installations amidst the densely populated neighbourhoods -- especially in an urban jungle like Karachi. The military leadership should think of moving cantonment areas and defense assets out of the civilian areas on a fast track basis and ensure that housing schemes and commercial areas do not spring up again around them.
There is also a need to closely scrutinise the internal security mechanism within the armed forces and make them foolproof against the penetration of extremist Islamic groups. There is ample evidence of inside help in many high-profile terror attacks in the past. The Mehran airbase assault also need to be reviewed from this point-of-view because the band of terrorists not just managed to sneak inside the base, but also remain undetected until they themselves fired the first shots.
Authorities face an uphill task in confronting the massive terror network, which remains loosely knit and is without a centralised command. Besides known major terror organisations, which themselves are more than two dozen, the terrorists have multiplied in countless of small shadowy cells. This includes not just the hardcore ones, but also who are in the making. Many of them remain undetected until they commit their first and last act of terror -- the suicide bombing.
While security officials appear convinced that incidents of terrorism and extremism are likely to hit a new peak as the al-Qaeda and its local sympathisers are out to avenge the killing of bin Laden, the Mehran airbase attack should be used to galvanise the street and barracks against this monster. This happened during the Swat operation, which remains a resounding success story in this conflict. The civil and military leadership must grab the initiative from extremists. If our leadership seriously wants to stop the country’s slide into anarchy, guard its sovereignty, prevent unilateral Abbottabad like operations as done by the US Marines, it has to act and succeed against the monster of militancy and extremism itself. We have no other choice.

Labour Trouble

By Amir Zia
The News
May 24, 2011

The prevailing lawlessness, the government’s mixed signals and the state’s incapacity to provide protection to legitimate and lawful businesses are sending negative signals to both foreign and local investors, who were already wary of Pakistan.

Are the commercial organisations free to reform, restructure and reinvent themselves in Pakistan? Are they allowed go for cost-saving measures and improve efficiency? Do they have a right to hire the best possible human resource, get rid of non-performers, cut losses and make profits?

These are some basic policy questions on which the ruling coalition needs clarity of thought, which appears to be missing at present. Even a cursory look reveals how this policy confusion is damaging the country. Overstaffing, nepotism, corruption and mismanagement — long being the hallmark of most public sector entities — remain the biggest source of financial hemorrhaging for the national exchequer. The top eight public sector organisations alone incur annual losses of more than 250 billion rupees, an amount higher than Pakistan’s development budget.

The government has failed to reform and restructure these institutions, simply because it remains hostage to various interest groups and flawed perceptions about popular politics. Some senior Pakistan Peoples’ Party (PPP) leaders, caught in the time-bubble of the ’60s and ’70s, see privatisation as a betrayal to their party’s founding ideology. But they fail to recognise the fact that this ideology died long ago when Benazir Bhutto, in line with the changing times, abandoned the mantra of nationalisation and dropped her father Zulfikar Ali Bhutto’s socialist rhetoric in favour of pragmatic economic policies, incorporating privatisation and market-oriented reforms. However, even during her times, there remained a contradiction between the actual policy and the party’s public rhetoric that was often followed by controversial actions such as providing jobs to loyalists in already overstaffed public sector institutions.

This contradiction of policy and action seeps through even while managing affairs of the private-run companies. The labour trouble at the Karachi Electric Supply Company (KESC) is a case in point, where the government has been barring its management from going for the planned restructuring for months now.

On paper, the government wants to attract foreign investment, which has taken a blow because of terrorism and the country’s political instability. It runs a full-fledged privatisation ministry. There is a government-run Board of Investment, which seeks to bring and facilitate foreign and local investors. Finance Minister Dr Abdul Hafeez Shaikh was the moving spirit behind the country’s most successful privatisation programme under the former military-led government of Pervez Musharraf.

Yet, this government fails to protect those investors, such as KESC, which had already invested more than 600 million dollars over the last two years and brought some improvement in the city’s rickety old power generation and distribution systems.

Back in January, the ruling coalition forced the KESC management to withdraw its decision to sack more than 4,000 non-core employees, who were being given a voluntary separation scheme. The scheme ensured that each employee receives more than 1.4 million rupees on an average on leaving the organisation. A decent package, but political party-backed trade unions blocked the scheme.

The KESC, even then, made it clear that it was being forced to accommodate these employees under duress as it had already outsourced the non-core functions, including bill distribution, security and transport. The government, however, slept over the issue. In fact, some politicians openly supported their respective trade unions, encouraging workers to go for an all-out confrontation with the management.

The result: the trade union decided to jack up stakes when the management decided to bar non-core employees from overtime and withdrew their job specific allowances. The decision made sense because jobs of the non-core employees had already been outsourced at a fraction of the cost incurred on these regular employees, many of whom claimed up to eight hours overtime a day, but barely worked for more than two to three hours.

According to a senior KESC official, the cost of outsource functions remains 250,000 rupees less than the total amount spent just on non-core employees’ overtime and job specific allowances. Once the KESC implements its restructuring plan and reduces the number of employees to around 13,000 from the current 17,000, it will make net savings on account of their salaries and allowances. From a financial point of view, the decision makes perfect sense.

Already, there have been such precedents in Pakistan, including at the privatised banks, and the state-run natural gas supply companies, which outsourced security and bill distribution functions. The KESC management says that by getting rid of non-core functions, it would be able to concentrate on core operations and hire new technical staff where required.

The reform agenda, however, remains unacceptable to the political party-backed trade unions, which have huge vested interest in keeping things as they are. This means keeping an army of ghost workers, paying them overtime for work, which they never do and allowing corruption. In the case of KESC, this implies meter tampering and stealing electricity through illegal connections. While the technical staff supported the management’s move, the non-core employees resorted to disrupting the power supply in an organised manner. They forcefully closed down offices, set a number of sub-stations on fire and cutoff power supply cables. The troublemakers also attacked co-workers trying to restore supplies and even threatened their families.

This has been happening for more than two weeks now. Even on Monday morning, the trade union workers and their political supporters attacked KESC offices, vehicles and staff. No wonder, the city’s power supply situation now stands in a mess and the megapolis bubbles with spontaneous protests against the prolonged power outages that have hit every segment of the society, especially people belonging to the middle and lower income groups, many of whom do not have the luxury to light their homes and run businesses on generators. The power supply remains suspended in many commercial, industrial and residential areas not just for a few hours, but even for five to six days at a stretch. No wonder, patience is running thin in many localities and violent mobs are out on the streets.

Many PPP stalwarts, rather than helping institutions to establish the rule of law, are seen inciting workers for cheap publicity. The prevailing lawlessness, the government’s mixed signals and the state’s incapacity to provide protection to legitimate and lawful businesses are sending negative signals to both foreign and local investors, who were already wary of Pakistan. The PPP and the unions are not doing a service to the nation by indulging in this mindless politics and protests, which ensure only a “lose-lose” situation for all.

A Favoured Option

By Amir Zia
The News On Sunday
May 15, 2011

The overwhelming response of business leaders remains in favour of boosting trade ties which they see as beneficial for both nations, dispelling the impression that Pakistan, being smaller in size, won’t be able to compete with its giant neighbour

Given the bitter history of hostility and distrust, Pakistan-India talks are mostly a tense affair. But this time around when the commerce secretaries of the two countries met in Islamabad on April 27-28 after a gap of more than two years, they managed to break the inertia that had marred the trade relations of the two South Asian nations for decades.

The two-day talks managed to generate optimism regarding an early resolution of some of the key matters, including granting the most-favoured nation (MFN) status to India by Islamabad and addressing the issue of non-tariff barriers (NTBs), which choke Pakistani exports to India.

“It was a huge 20-point agenda,” said Zafar Mahmood, Pakistani commerce secretary. Compared with the last four rounds of trade talks -- held prior to the 2008 Mumbai attack -- the two sides now managed to go beyond a mere articulation of good intentions and actually put in place a mechanism to implement decisions, he said.
The enthusiasm of the Pakistani business community regarding enhancement of trade ties with India encouraged the government to move confidently into these talks. Mahmood had held detailed interactive sessions with business and corporate leaders ahead of talks with his Indian counterpart Rahul Khullar.

The overwhelming response of business leaders remains in favour of boosting trade ties which they see as beneficial for both nations, dispelling the impression that Pakistan, being smaller in size, won’t be able to compete with its giant neighbour.

Wajid Jawad, a leading businessman and former chairman Export Promotion Bureau, says China enjoys a special status in trade with Pakistan, but the local businesses have managed not just to stay competitive but also to benefit from this relationship.

“Because of proximity, Indian imports will be cheaper and benefit Pakistani consumers,” he adds. “Pakistani goods will also get an access to a billion-plus market, which will result in capacity utilisation and trigger growth.”

However, the two sides need to cover a lot of ground and will have to walk through a political and bureaucratic minefield to realise the dream of enhanced trade and reap its benefits.

According to Mahmood, Islamabad’s decision to move from the positive list of around 2,000 items -- allowed to be imported from India -- to the negative list, which blocks certain items, is a huge step forward. It should lead to granting the MFN status to India by October.

Islamabad has already extended the MFN status to more than 150 countries. Pakistani officials say it is a misperception that the local markets will be flooded with Indian goods if India is given the same status.

“MFN only provides equal and non-discriminatory treatment. It does not offer any sort of tariff concessions to a specific country,” says Naeem Anwar, a leading international trade economist. “Pakistan’s refusal to extend MFN to India is based on the fact that our products are denied market access through the NTBs, which means the benefits of MFN granted by India are being circumvented. We seek removal of these NTBs for granting MFN.”

Pakistani businessmen are of the view that any Indian product, having a demand in the Pakistani market, reaches here anyway by a formal channel or a third country. By granting MFN, Pakistan will not expose any new industry to competition but only divert the third-country trade to the formal channel, they say.

Anwar says that Pakistan has always been saying New Delhi denied market access to Pakistani goods by installing the NTBs, which nullifies the benefits of MFN granted by India.

In a joint statement issued after the talks, India for the first time agreed to look into the NTBs which, according to Anwar, implies that the Pakistani concern was genuine. “These NTBs are not traceable to one source or document,” he insists. “They include administrative procedures, policy restrictions, personal conduct of customs officers, quality and standard regulations, security formalities and hidden subsidies.”

He also underlines the importance of a comprehensive study in order to list these NTBs as well as to point out those which are Pakistan-specific.

The Commerce Ministry sources say the two countries agreed to set up a Working Group to investigate, examine and analyse the NTBs and recommend measures to remove or minimise them at the earliest.

“The Commerce Secretaries will review the progress of this Group and take appropriate decisions in their October 2011 meeting,” says one official, requesting anonymity.

Pakistani business leaders say the biggest hurdle to the market access in India is their visa regime.

Amin Hashwani, a leading businessman, says the delays in visas remains the biggest discouragement for Pakistani exporters. “After the Mumbai terrorist attack, applicants have to wait sometimes up to two months to get their visas.”

Pakistani officials estimate more than 80 percent visa applications of Pakistani businesspeople were rejected without assigning any reason, in 2010, compared with 8 percent rejection by Pakistan during the same year.

“The remaining 20 percent Pakistanis are discouraged by city restrictions, police reporting requirement and less-than-necessary days of stay in their visas,” says an official of Pakistan High Commission, New Delhi.

“Next, the businessmen have to seek hotel accommodation in India which means going through an entire documentation requirements and facing the inconsiderate authorities all of which makes sure they don’t come back again,” he says.

Under such circumstances, says Anwar, it is not just difficult but almost impossible to strike business deals. “It’s ironical that on the one hand you grant the MFN status to Pakistan and on the other you deny us entry what with your visa policy!”

Pakistani officials also claim visa processing at Pakistan High Commission in New Delhi is criteria-based, non-discriminatory and evenly applicable.

As Hashwani puts it, Pakistani exports to India suffer because of a lengthy clearance procedure by the Indian authorities. “A pre-inspection certificate should be enough, but the Indian authorities have a lengthy process for clearing goods, which involves inspection and laboratory tests on arrival.”

Then there are specific duties on certain goods which usually hurt Pakistan, he adds. On paper, these duties range between 20 to 25 percent, but practically they are between 50 to 60 percent due to specific or minimum import duties.

No wonder, the trade balance between the two countries remains hugely in India’s favour. Indian exports to Pakistan are 300 to 400 percent higher than Pakistani exports to India.

However, Pakistani products have a great potential in the Indian market. “We remain competitive in terms of price, quality and other commercial parametres,” says Anwar. “Our home textiles, woven fabric, ladies’ garments, footwear, surgical instruments, sports goods, inorganic chemicals, fruits, marble and onyx, and gypsum have a huge market if the NTBs are removed.”

Given the peculiar dynamics of Pakistan-India relations, trade and economic interests can go a long way in easing tensions and creating powerful lobbies, having stakes in peace between the two countries. If economy takes the centrestage, it will work as a catalyst in the resolution of long-standing disputes and issues.

The Stalling Game

By Amir Zia
May 2011
Newsline

Faced with increasing pressure from the IMF and the World Bank, will this government swallow the bitter pill of reforms or resort to stalling tactics yet again?

When it comes to Pakistan’s relations with the International Monetary Fund (IMF), one thing is now clear – there is no money for the country under any new or old programme until the government implements its promised reforms in which expanding the tax base and stopping wasteful expenditures remain the top items on the agenda.
This was perhaps the crux of the matter that emerged from Finance Minister Dr Abdul Hafeez Shaikh and his team’s recent trip to Washington where they met with top IMF and the World Bank officials in an attempt to salvage the government’s reputation, tarnished by its inability to keep its promises to the global lending agencies. The toughening of IMF’s stance toward Pakistan was clear even in its programme note issued on April 7, a few days prior to Dr Shaikh and his entourage’s departure for Washington for a series of much-hyped spring meetings.
The IMF, in an unprecedented strongly-worded language, said that the structural reforms “have been retarded or reversed in 2010 and 2011.”
IMF, which approved a standby arrangement for Pakistan in November 2008 and augmented it in August 2009, imposed a technical suspension of its $11.3 billion programme in May 2010 after the disbursement of $7.6 billion due to the government’s inability to implement the reform agenda. Islamabad did manage to get a nine-month extension in the programme as a face-saving measure. However, its efforts to get the IMF programme back on the track have so far proved futile because the global lending agency is not prepared to settle on anything less than practical steps.
IMF’s April 7 programme note says that under its standby arrangement, Pakistan’s economy initially made progress toward stabilisation. “Macroeconomic imbalances shrank and inflation fell below 10% in mid-2009. More recently, however, the budget deficit has increased, reaching 6.3% of the GDP in 2009/10 (July-June), and inflation has been on the rise, recording 13% in March 2011.”
The note further states that since June 2009, the authorities exceeded the budget deficit targets under the programme, among others, due to large additional subsidies for the electricity sector. “The overrun on the fiscal deficit target at end-June 2010 reached 1.7% of GDP.”
According to Finance Ministry sources there appears to be an increasing frustration among top IMF officials towards the government’s lack of willingness and commitment to the reform process.
The value-added tax (VAT) had effectively been torpedoed by political parties and various interest groups. The reformed general sales tax (RGST), which was supposed to be enforced at the start of the current fiscal year, has been delayed by one year.
The untargeted subsidies on energy remain a constant drain on the national exchequer. The subsidy on electricity alone stands at more than 200 billion rupees during the current fiscal, while the haemorrhage from the public sector companies stands around 300 billion rupees. The fuel subsidy during a three-month period of November 1 to end-February also stands at around 15 billion rupees.
This has resulted in the widening of the budget deficit, slashing of annual development programmes, and an increased bank borrowing, which not only had an inflationary impact, but also crowded out the private sector from the credit chain.
The government’s measures to mobilise more than 50 billion rupees in March through three ordinances came as too little and too late. Even on this front, the government scrapped some vital measures under the pressure of vested groups.
Finance Minister Shaikh and his team have been unable to get rid of their lethargic and laid-back attitude, which has become a hallmark of their management style. They not only failed to convince their political bosses of the necessity of reforms, but have made little effort to build a consensus and advocate their case by proactively engaging various trade and business organisations, the media, and the opposition parties.
Sources say that the IMF officials in their Washington meetings have made it clear to Shaikh and his delegation members that the resumption of the stalled programme remains linked to the implementation of reforms – for which the coming budget would provide a litmus test. An IMF team will be here in Pakistan in May to engage Pakistani officials in the budget preparations. It will revisit Pakistan in July to review whether the government has been able to get the promised budgetary measures passed through the parliament – which has so far proved to be the main stumbling block in the reform process.
Tax on agricultural income, enforcement of RGST and stopping wasteful expenditure remain top items on the agenda and the government will have to move on them and convince its allies and the opposition that they remain vital for the economy.
“Getting a new IMF programme was not on the table for discussion,” says a source close to Finance Minister. “We aim to get the stalled programme resumed because it is the matter of the country’s credibility.”
Government officials say that remaining on track with the IMF is extremely important for Pakistan because engagement with, and support from, the global lending agency sends a positive signal to the foreign investors and the international community.
However, Pakistan’s finance team has not been able to win the confidence of IMF officials, who view their promises with increasing scepticism. Some officials in the Pakistan team are known for their anti-IMF stance because of their political beliefs and their participation in the discussions did not prove to be of much help in ironing out the differences with the fund, say government sources.
While IMF-bashing remains the best pastime of most leading Pakistani politicians and political parties, the fund should not be blamed for the country’s economic woes, which stem from the government’s myopic policies and its inability to take the right decision at the right time. This has hit the common man the hardest.
The government should focus on measures to boost growth, increase revenues including taking measures to tax the rich and the affluent and stop wasteful expenditures. That’s what the world, including the IMF, is asking Pakistan to do – and it makes sense.
Shockingly, in a country of more than 170 million people, less than 3.0 million are registered tax payers and out of them only 2.7 million are active tax payers. The country’s tax-to-GDP ratio remains one of the lowest in the world at a slim 10%, only ahead of countries like Afghanistan and lagging behind even regional countries including Sri Lanka and India, which stand at a respectable 15% and 18% respectively.
As Pakistan remains in the vicious cycle of low growth, high-inflation and widening budget deficit for the last three years, the government appears clueless on how to put the country back on the high growth trajectory for which low and stable inflation and low interest rates remain a must.
But for a government, which wasted the first three years of its term and hesitated to take tough decisions on the economic front, would it be prudent to expect that it would be able to bite the bullet and go for the bitter pill of reforms at the fag-end of its term when political pundits are already setting eyes on the next elections.
Few believe that the government will be able to go for any meaningful reforms. But under pressure from the global lending agencies and the world powers, it can’t just sit and wait either. The era of free money and free lunches is now over. How the government balances the demands of popular politics with the demands of the economy remains a moot point. The budget for 2011-2012 will reveal how the government sets its priorities and manages the political dissent of its allies and the opposition. The government’s record in this regard is not exactly encouraging, but it would make sense even for the opposition parties to help push the reforms through now when the Pakistan Peoples’ Party (PPP) is in power so that they can reap the benefit of the tough decisions two to three years down the road. Will sanity prevail and will the opposition stop opposing the reforms for their own narrow vested interests?

Now bin Laden’s ghost to haunt Pakistan economy

By Amir Zia
May 08, 2011
The News

An angry, bitter Pakistan appears more on the path of confrontation than keeping pace with the international community on the issue of terrorism. This, in itself, is a major contradiction as Pakistan has suffered the most -- both financially and in terms of human lives — at the hands of al Qaeda, the Taliban and their local allies

Pakistan is now considered amongst some of the most dangerous countries in the world, placed in the wretched company of conflict-ridden Iraq, Afghanistan, Palestine, Congo, Somalia, Sudan and Haiti. Whatever grand, self-deluding image we might have of ourselves as defenders, torch-bearers and promoters of Islam and the world's lone Muslim nuclear power, others see us as an abnormal society and a weak state that appears all set to implode. This negative perception strengthens itself due to the state’s inability and incapacity to establish writ on its territory and resolve the simmering internal contradictions that have transformed Pakistan into the hotbed and breeding ground of violence and terrorism.

No wonder, many of the mid-level and small foreign investors and businessmen have long stopped visiting the country. Instead, Pakistani businesspeople and exporters have to go all the way to the UAE, Malaysia and other peaceful and safe places just to hold meetings with them. The giant multinationals and foreign companies also remain reluctant to send their top officials to this land of the pure because of security concerns. They mostly operate businesses from abroad or through their local representatives.

Many leading foreign apparel brands have asked their Pakistani partners to shift their production units abroad, to ensure that their supply-line remain intact in times of crisis. As a result, some top Pakistani textile manufacturers have already and some are in the process of establishing their units abroad, including countries like Bangladesh.

Under these circumstances, it should be no surprise to see the net flow of foreign investments plunging to a meager 2.08 billion dollars in financial year 2009/10 (July-June) from the highs of 8.42 in 2006/07, according to the State Bank of Pakistan figures. In the first nine months of the current fiscal, the total foreign investment stands at around 1.31 billion dollars compared with 1.32 billion dollars during the same period a year ago.

The domestic investment climate also remains bleak with many local investors and businesspeople putting plans on hold due to the country's continuing political uncertainty and the dark specter of terrorism and violence, which has been affecting every section of our society.

The signs of times, indeed, are ominous and have got only worse with the killing of the world's most wanted terrorist mastermind Osama bin Laden in the garrison town of Abbottabad on May 2. Media reports that bin Laden had been living in Abbottabad for more than five years — despite all the denials by top civilian and military leaders all these years — has come as another huge blow to Pakistan’s already battered world image.

Although the focus of popular debate in Pakistan remains violation of its sovereignty by the American assault on bin Laden’s den rather than about his presence in the country, the international community is rightly asking how the al Qaeda chief managed to find a safe-haven here. Was it the sheer incompetence of our security apparatus or was there connivance at some level? Whatever the answer to this tricky question, Pakistan remains in the dock and will be under close international scrutiny for all of its sins of commission and omission in the years to come.

The distrust of Pakistan’s establishment and its institutions will grow, which is bad news for the country’s struggling economy dependent on foreign aid, trade and support. Although the world’s leading rating agency -- Moody’s Investors -- has said that Pakistan does not face an immediate risk of a withdrawal of foreign aid in the aftermath of bin Laden’s killing, analysts say that the country will remain under intense pressure in the mid- to long-run.

Yes, bin Laden, has even in his death, given a major jolt to the Pakistani economy, already caught in the cycle of low growth and double-digit inflation for the last three years. And Pakistan is not going to get rid of bin Laden’s ghost easily.

Nervous Pakistani representatives of multi-national and foreign companies have been frantically revising the risk and threat perception to their operations. “Forget now about expansion and fresh investment in Pakistan. There is a lot of talk of the curtailment or downsizing of our operations,” said an official of a western company requesting anonymity.

Understandably, even the International Monetary Fund (IMF) officials, who were supposed to hold the crucial pre-budget meetings in Islamabad from May 8, shifted this venue to Dubai. Let alone foreigners, even President Asif Ali Zardari now finds it unsafe to travel within the country. Therefore, the Karachi Stock Exchange’s top companies’ award ceremony is being held outside Karachi for the first time ever on May 23 in the President House Islamabad so that President Zardari can grace the event as the chief guest.

As the anti-US and anti-west rhetoric intensifies among the rightwing political parties, on television screens and in the vernacular media, backed by some tough talk by the armed forces of downing US drones if ordered and defending the country’s sovereignty, an angry, bitter Pakistan appears more on the path of confrontation than keeping pace with the international community on the issue of terrorism. This in itself, is a major contradiction, as Pakistan has suffered the most -- both financially and in terms of human lives — at the hands of al Qaeda, the Taliban and their local allies.

Pakistan’s civil and military leadership will have to perform a high-wire act to minimize the damage in the aftermath of bin Laden’s killing on our soil. Until Pakistan manages to beat the monster of extremism and terrorism in all its shades and manifestations, the dream of a prosperous and economically stable Pakistan will remain elusive. It is high time for the country’s ruling elite to work sincerely and honestly, to clear the mist of doubt and distrust, which the world has towards Pakistan on the issue of terrorism.

The right actions, not words, are needed to restore Pakistan’s image and pull it out of its present morass. This will serve as a first step towards the goal of economic revival and prosperity.

After Bin Laden

By Amir Zia
The News
Tuesday, May 03, 2011

In the country’s own enlightened self-interest, there is need to ensure that the state’s writ is established across the country and all terror havens are abolished. Our failure to do so will prompt others to go for terrorists as happened in the case of Bin Laden.

The killing of Al-Qaeda chief Osama bin Laden is indeed a triumph in the global war against terrorism, but for Pakistan its implications should be more a cause for concern than relief. The mere fact that Bin Laden was holed inside a luxury compound in Abbottabad not very far from the Pakistan Military Academy should be seen as a massive security lapse.

For how long had Bin Laden and his aides been using this plush compound, surrounded by 18-feet high walls and barbed wire, as a hiding place? Why did such a big compound, which was without a telephone or internet connection, not raise suspicion within the ranks of our intelligence agencies? Who were the Pakistani collaborators of Bin Laden and his gang and how did they manage to secure this property? Why was it the US and not the Pakistani security forces which conducted the raid? And, most importantly, why did the world’s most dreaded terrorist gravitate to Pakistan and manage to find a foothold here?

Although details about Bin Laden’s last hideout, his final moments, his life in Abbottabad and the raid remain sketchy so far, in the era of Wikileaks and an aggressive media, these facts and the gloss over them are likely to hit us sooner than later.

US president Barrack Obama has certainly talked about Pakistani cooperation in efforts to fight terrorism while announcing the death of America’s number one enemy, but Al-Qaeda leader’s killing on our soil has given Islamabad’s opponents and critics a brush to paint Pakistan black.

Afghan President Hamid Karzai has already said that the war against terrorism should not be fought in Afghanistan but in Pakistan. New Delhi has expressed concern over the presence in Pakistan of safe havens for terrorists. There are strong lobbies in the West, especially the United States, which have been carrying out a sustained propaganda campaign against the Pakistani armed forces, and the Inter-Services Intelligence, accusing them of doublespeak and double games.

It is indeed ironic that Pakistan, which suffered and sacrificed the most because of terrorism, including the deaths of more 30,000 civilians and 5,000 security officials in recent years, is seen as providing sanctuaries to terrorists.

Bin Laden’s killing will intensify pressure on the country both on the international and domestic fronts. On the international front, there will be now increased demands on the civil and military leadership to pursue and strike the local and the Taliban terror network, especially in the country’s northern rugged mountainous region, more decisively. The focus of the war on terror will be on Pakistan than Afghanistan, which is being portrayed by the Afghan leadership as a victim of militants coming from across the porous frontier.

This will lead to tremendous covert and overt pressure of Washington and its allies on Pakistan, which will be asked to do more against militants.

There also remains a possibility of an escalation in US drone attacks and operations against Al-Qaeda and Taliban militants following Bin Laden’s death, which is all set to create problems for the civil and military leadership and compound their image problem.

On the domestic front, there is a huge possibility that Al-Qaeda, the Taliban and their shadowy Pakistani sympathisers will try to hit back – just to prove that they still matter and remain a force to reckon with, even without Bin Laden.

Members of the local terror network, which remains intertwined with Al-Qaeda and the Afghan Taliban militants, have the potential to carry out assaults with more vengeance. To create mayhem and terror, they are likely to go for soft targets more aggressively now, along with selective attacks on the security forces and government officials whom they see as collaborators of the West. In an era of ideological confusion in which sacred Islamic teachings have been misinterpreted and the concept of jihad, or holy war, distorted by religious fanatics and extremists, there isn’t a dearth of willing recruits.

Legal religious parties, including the Jamaat-e-Islami and the major factions of the Jamiatul Ulema-e-Islam, which have a history of keeping mum over the spate of terror attacks within the country, need to show maturity and come out openly to condemn and disown terrorism. This is not the time to ignite emotions but to help the security agencies in getting rid of extremism and terrorism in the country.

The killing of Bin Laden in Pakistan is a big blow to those religious parties and their likeminded politicians who opposed Pakistan’s cooperation with the international community in its bid to defeat terrorism. Living in a state of self-denial is not going to help Pakistan’s cause. The world is justified in its demand that Pakistani soil should not be used for terrorism against any country or to provide shelter to the extremists. This has also remained the stated policy of successive Pakistani governments. In the country’s own enlightened self-interest, there is need to ensure that the state’s writ is established across the country and all terror havens are abolished. Our failure to do so will prompt others to go for terrorists as happened in the case of Bin Laden. This is necessary if Pakistan wants to keep pace with the international community in the 21st century.

Bin Laden’s killing on Pakistani soil is indeed a test case for both our civilian and military leadership as to how they handle the pressure and turn this incident into an opportunity to get rid of the twin monsters of terrorism and extremism that have bled Pakistan more than the United States. It is time not just for a more decisive, resolute and determined action against these monster groups on our own but to increase our collaboration with the international community to defeat these groups. It is time to seize the moment.

Yes, We Can Compete In Trade

By Amir Zia
May 1,2011
The News


Never before in the traumatic history of these two nations, one finds so little opposition to building ties of trust through economic and trade relations and so much support for giving peace a genuine chance

“Yes, we can compete in trade with India. Its huge size, booming economy and technological edge should not be a cause of concern for us, but rather seen as an opportunity.”

That was the crux of the message, which a select group of business leaders gave to Commerce Secretary Zafar Mahmood in Karachi — a few days before he was scheduled to meet his Indian counterpart Rahul Khullar to resume the stalled talks on trade after a gap of more than two years.

The confidence of Pakistani business leaders in the informal meeting came as a pleasant surprise for me. Being a journalist, perhaps we are more accustomed to only hearing stories of doom and gloom, especially in the Pakistani media world where negativity reigns supreme. But more on the issue of rampant cynicism in Pakistani media and how it affects the country in general and the economy in particular some other time.

Getting back to Pakistan-India trade, it was indeed an eye-opener to find representatives of various sectors — from textile to information technology and cement to automobile — underlining the fact that despite the non-tariff barriers imposed on Pakistani exports by our giant neighbour, estranged relations, and host of other practical problems that impede bilateral trade, they not only see themselves as competitive in the Indian market, but expect their businesses to grow with the normalisation of trade and economic relations.

One of the leading textile entities of Pakistan, which could not export its goods to India through the relatively cheaper rail, road or sea routes because of this or that constraint, decided to send products via the costly air route. Surprisingly, it still managed to remain not just competitive, but also expand exports.

A representative of the automobile sector appeared optimistic about selling engineering goods to India. The spare-parts of Pakistani tractors already have a niche in the Indian market, and select other products can also find buyers because made-in-Pakistan automobile parts are of superior quality as well as offer competitive prices.

The Indian information technology sector — one of the mainstays of its booming economy — generating staggering revenues of 70 billion dollars a year and employing more than two million people — offers Pakistan a huge potential to expand and grow.

Pakistan’s information technology sector, though small, with a around 150,000 professionals and one billion dollars worth exports, eyes winning business process outsourcing from India, establishing collaborative development centers, cross-selling of products as well as tacking other markets in joint ventures. According to Jehan Ara, president of Pakistan Software Houses Association for IT & ITES (P@SHA), Pakistani professionals remain second to none and have proved themselves by developing some of the most sought after software in the world.

Similarly, spokesmen for the cement sector, which has been exporting more than 600,000 metric-tonnes on an average to India for the last four years, claim that with its 10 million tones of surplus production capacity, it has a tremendous potential to expand sales in the Indian Punjab and Haryana states if trading is relaxed through road and rail links.

The brainstorming session with the commerce secretary ahead of his April 27-28 talks was organised by leading businessman Amin Hashwani, an active peace campaigner and advocate of Pakistan-India trade relations through the platform of Aman Ki Asha — a civil society-led peace movement launched jointly by the country's media giant, the Jang Group and The Times of India group.

The optimism and the enthusiasm seen at the interactive session with Mahmood did not prove misplaced. The two-day Pakistan-India talks on trade manage to achieve more than what one expected keeping in view the history of rocky and estranged relations between the two nuclear armed neighbours.

What makes the recently-held talks different from the four other such rounds of discussions was summed-up aptly by Mahmood. “In the past, it was just the articulation of good intentions. This time round, we have put in place, a mechanism to implement those intentions,” he told this scribe.

And indeed, it was a huge 20-point agenda which was put on the table, which according to the commerce secretary requires time — at least six months — to get absorbed and digested for implementation. The two sides have set up working groups and tasks forces, which will submit their reports and pave the way for another interaction between the commerce secretaries of the two countries in six months time.

“We have managed to break the inertia of decades,” said Mahmood. The two sides have put in place a roadmap that encompasses all vital issues from the question of granting most-favoured nation (MFN) status to India to the non-tariff barriers on Pakistani goods, he added. “By October, we hope to grant MFN to India.”

The good thing is that the Pakistani business community does not appear worried about the local market being flooded by Indian goods as a result of relaxed trade regime. They see it as an opportunity to make a niche for themselves in the billion plus Indian market. Stiff competition improves the competent and annihilates those who lag behind. This remains the spirit of free trade.

When Pakistan can compete with China, which has a preferential trade agreement with Islamabad, it indeed stands a chance in the face of the Indian challenge. Currently, the trade balance is heavily tilted in India's favour. Its exports are four to five times higher than Pakistani exports to India.

However, in the mid- to long-run, trading with India makes more sense. It will not just bring cheaper imports and give an access to a bigger market, but greater economic linkages and dependency will also help in the resolution of longstanding political conflicts and ensuring peace in this volatile region. Building bridges of peace through economic ties should be the mantra in this day and age. And the good tiding is that not only the interest groups, but the governments of the two sides appear to have finally realised this. Never before in the traumatic history of these two nations, one finds so little opposition to building ties of trust through economic and trade relations and so much support for giving peace a genuine chance. There are reasons to be optimistic.