|
|
|
|
|
 |
 |
   |
deal Newswatch budget Advantage
investors world A
click and 750 million glitches firstperson
The agreement to hand over Gwadar port operations to a Singaporean firm has raised many eyebrows. The government claims the deal is as transparent as it should be By Shujauddin Qureshi The government claims that Gwadar will attract $ 550 million foreign investment over the next five years. This is being put down to the fact that the Port of Singapore Authority (PSA) will soon start handling commercial cargo at Pakistan's first deep-sea port in Gwadar. The government expects to generate $ 7 billion to $ 31 billion in revenue from these operations over the next 40 years. The PSA international, owned by Singapore state-linked investment firm Temasek Holdings, succeeded in getting the licence to operate the newly-built multi-million rupee Gwadar port for the next 40 years. The licence offers the company an attractive package of incentives which includes exemptions from all federal, provincial and local taxes. It also involves some other fringe benefits like a 20-year holiday from the corporate tax. The formal signing of the agreement between the government and the PSA was held at Gwadar, about 450 kilometres west of Karachi on February 6, 2007, in the presence of Prime Minister Shaukat Aziz. The PSA is, in fact, a leading a consortium, which also includes Karachi-based AKD Group. This group will set up a Free Trade Zone (FTZ) in Gwadar. The three-berth port -- to be formally inaugurated on March 23, 2007, by President General Pervez Musharraf -- is expected to become a hub of economic activities in and around Gwadar and southern Balochistan. Under the agreement, the PSA will construct 14 more berths on 4.5 square kilometres with a further investment of $ 5 billion to $ 8 billion. The agreement also provides that the PSA will set up three subsidiaries to operate Gwadar Port. These subsidiaries will be allowed to import tax-free equipment: No customs duty will be levied on these imports. The first of these three companies will look after the port area and cargo handling, the second one will handle marine affairs like pilotage etc and the third subsidiary will operate the 'Free Trade Zone' (FTZ) with warehouses and other facilities. The Gwadar Port Authority (GPA) will be responsible for the development and maintenance of common port infrastructure, such as access channels, breakwaters and access roads as well as navigational safety and port security. The government claims that it will start receiving 9 per cent of the revenue earned by the first two companies with the start of the port operations in March 2007 whereas the FTZ company will pay 15 per cent of its revenue when it starts functioning. According to the government estimates, the PSA will invest $ 3 billion every year in the project. Gwadar Port will handle trans-shipment traffic for the Gulf and ports on the Arabian Peninsula. Pakistan intends to use this port as the main trade link with land-locked Afghanistan and the Central Asian countries. Though the business community of the country has appreciated the deal and the traders expect to benefit from the opening of the third port in the country, after Karachi and Bin Qasim, the opposition parties and some economists raise many objections against the deal. The main contention of the opposition parties is that the 40-year tax exemption to the PSA is uncalled for. They also claim that the manner of awarding the contact is also non-transparent. "The government has rewarded a particular company through an underhand deal," says Ahsan Iqbal, a former federal minister and information secretary of Pakistan Muslim League (Nawaz). He is not sure as to who is the "actual beneficiary" of the deal. Talking to The News on Sunday over telephone, Ahsan Iqbal says the contract was awarded in a non-transparent manner. "Extraordinary concessions have been provided to the (Singaporean) company. We are not against private investment, but it should be done through a transparent manner," he said. Ahsan Iqbal, who worked as the deputy chairman of the Planning Commission during Nawaz Sharif's second tenure in power, says the government must have mentioned all these attractive concessions before inviting tenders. This, he speculates, should have made a large number of companies from across the world to take part in the bid for handling the port's operations. "Some of those companies might have offered the government a better share of the revenue. Some of them might have asked for tax concessions for a period less than 40 years," he says. But the fact that the PSA faced no competition means that other companies' offers were not even considered, he seems to suggest. "The manner in which only one company was selected clearly violates the principal of transparency. Other companies were not invited even for negotiations," he adds. Ahsan Iqbal, who was the force behind Nawaz Sharif government's Vision 2010, says the federal government, by making the contract tax-free, has deprived the provincial government of Balochistan from a major source of revenue. "It shows that the Balochi nationalists are right in crying foul (over deals like these)," he says. The government has also not provided any details of the land allotted to the PSA, he claims. "Some other details of the deal are also not revealed." Ahsan says his party has submitted an adjournment motion in the National Assembly to have a detailed debate on the deal. The government says the agreement was made in a transparent manner and was finalised after following all legal procedures. Expecting that the opposition will always cry foul, the government says, it has taken a number of precautionary measures. For instance, a number of people from the private sector were included in the committee that negotiated the agreement. These were Arshad Zuberi of daily Business Recorder (he is also a member of the Gwadar Port Authority), Mohammed A Rajpar who is managing director general of shipping agencies and a businessman Farooq Rahmatullah. Former director general Shipping Captain Anwar Shah represented the government in the negotiating committee. The government had expected that the involvement of the private sector would make the agreement credible. "It is a transparent deal and it has been finalised on merit," says Babar Khan Ghauri, federal minister for ports and shipping. "No one has received any money (in negotiating and signing the agreement). There is no underhand deal," he adds. Talking to newsmen at the Karachi Press Club, Ghauri said he himself had not interfered during the negotiations for the deal. Ghauri says concession given to PSA are justified. "They were necessary to attract foreign operators." Gwadar, he says, will also be competing with the tax-free, duty-free port of Dubai. Mohammed Rajpar, a member of the negotiating committee, says the agreement was negotiated, finalised and signed in a transparent manner. He tells TNS: "We (people from the private sector) were involved to ensure transparency. People in private sector have proper knowledge and expertise in port-related affairs and, therefore, they can negotiate better than the government functionaries." The tenders for handling the port's affairs were invited through advertisements in the world's leading newspapers in the United States and the United Kingdom, he says. "Only one company was short-listed out of many that applied. So, it was invited for further negotiations." A lengthy procedure was followed before the short-listing and negotiations. "The tender proposals were received on December 4, 2006 and the negotiation process started on December 27, 2006. The selection process started on September 27, 2006 and completed on February 5 this year. The selection process followed the normal procedure of invitations for expressions of interests (EoIs), pre-qualification and short-listing of bidders, issuance of tender documents and technical and financial evaluation of tender proposals, followed by negotiations with the winner of the tendering process," he explains. Rajpar says an internationally known management-consultancy firm, Arthur de Little, was involved to oversee the entire process (of negotiation) and act as the technical advisor to GPA. "It was Arthur de Little, with an extensive global experience and expertise in port planning and negotiations with port and terminal concession holders, which short-listed the PSA," he reveals. Rajpar, who is a founder member of Pakistan Ships' Agents Association, also explains why the contract to handle the port was not given to a Chinese company despite the fact that the port is being built with expertise and money coming from China. "We had asked some Chinese companies to bid. Also, there had been no prior agreement with the Chinese companies building the port that it would also run the port operations. It was given a contract to construct the port only." Rajpar says the PSA is one of the world's top port operators and is quite well-known in the field. "It is running 20 port facilities in 11 countries in Asia and Europe." According to the company sources, the PSA handled record container volume of 51.29 million in 2006 which was 18.6 per cent more than the previous year. Rajpar also says: "We have tried to get maximum benefits for Pakistan from the agreement and it will benefit the country in more ways than one." First and foremost, he says, the deal will restore the confidence of international traders and investors in Pakistan. While hoping that Gwadar port will emerge as a hub of trading activities in the region, Rajpar clarifies that it will not compete with Karachi port because "Gwadar will mainly facilitate trans-shipments". He, however, says that Gwadar has competition with Dubai and other deep sea ports of the region. Businesspeople cannot agree more with him. They have welcomed the agreement. So far no objection has been raised by any trading association on how the agreement was made. "I think it is a good move in the right direction," says Majyd Aziz, president of the Karachi Chamber of Commerce and Industry. "The idea of setting up industrial estates and a duty free zone near Gwadar port will bring a lot of foreign investment and generate economic activities in the backward province of Balochistan," he tells TNS. Majyd says the business community of the country will have now three different ports to operate from. "They can now pick and choose between them according to their requirements." This will ease pressure on the country's ports. But he demands that the government should treat local and foreign investors equally. He asks the government to extend same concessions and tax breaks to local investors as are provided to foreign investors. The KCCI president suggests that a 100 square mile area around Gwadar port should be declared a free trade zone. He also wants a resort built in Gwadar which, he expects, will not only attract foreign tourists but foreign investors as well. Newswatch By Kaleem Omar Costa Rica is the only country in the world that has no army. Yet, if tomorrow, the Bush administration were to declare that it had decided to attack the tiny Latin American nation because it posed an imminent threat to the security of the United States, the chances are that most sections of the mainstream American media would jump on to the war bandwagon and produce elaborate stories detailing the nature of that so-called threat -- complete with maps, charts and interviews with right-wing US security analysts. To the mainstream American media, it would not really matter that there was not a shred of evidence to support the administration's assertions -- just as it did not matter to the mainstream American media, back in the months leading up to the invasion of Iraq, that there was not a shred of evidence to support the administration's contention that Iraq -- in Bush's words -- "posed an imminent threat to the national security of the United States". Myth-making of this sort has long been staple fare in the US media. Every country's media indulges in myth-making from time to time, but the American media is in a class of its own. There are several reasons for this. For one thing, the US media is a giant enterprise with global reach. So wherever it goes with a story, the rest of the world tends to follow. For another, the US media is the product of a society that seems to need myths more than most other societies. It could also be argued that Americans are a people obsessed with what they call 'American values'. Any story that tends to promote those values is quickly pounced upon by the US media and broadcast around the world as if it were gospel, irrespective of whether the story has any credibility or not. Take the Jessica Lynch story, for example. The 19-year-old Lynch, a US army private, was injured and captured in Iraq after her 507th Maintenance Company convoy was ambushed on March 23, 2003 in Nasiriyah after missing a turn. She was later 'rescued' by US troops from an Iraqi hospital where she was under treatment. After her 'rescue,' the American media hailed her as a 'hero' who had kept firing her M-16 rifle at her Iraqi attackers until she ran out of ammunition. A video shot by the American troops who 'rescued' her nine days later from the Iraqi hospital suggested they encountered fierce resistance in a daring raid. The video was broadcast by US television channels around the world. American newspapers, too, ran a spate of stories about Lynch's 'heroism' and her daring rescue. As a result of the media blitz, Lynch became America's best-known soldier from the Iraq war. But critics of the Iraq conflict described Lynch as a pawn in the US government's cynical attempt to create a 'hero' who could 'sell' the war to the American people. As far back as April 2003, however, reports appearing in non-US sections of the international press suggested that there was more hype to the Lynch rescue saga than truth. Those reports said that, in fact, the American troops had encountered no resistance in their rescue mission and that there weren't even any Iraqi troops at the hospital. The reports added that there was no truth to stories circulated by the US military in the early days of the war that Lynch had gone down fighting in an Iraqi ambush. Lynch's authorised biography "I Am a Soldier, Too: The Jessica Lynch Story", published in November 2003, debunked those early myths that US troops had waged a daring rescue to save her, and described a team of Iraqi doctors as gentle caretakers who worked at their own risk to keep her alive. The biography, by former New York Times writer Rick Bragg, discredited stories from the war's first days that Lynch shot at her Iraqi captors and that the Iraqi hospital where she was being treated was hostile territory that posed grave danger to Lynch's rescuers. In fact, those early stories in the US media were discredited six months earlier, in May 2003. All the same, it goes to Lynch's credit that she subsequently decided to set the record straight. That is more than can be said for the Bush administration whose Iraqi spin machine has continued to function in overdrive for the last four years -- even as US-occupied Iraq descended deeper and deeper into chaos. On one occasion, according to the book, Iraqi medical workers even loaded Lynch into an ambulance and drove the vehicle to an American checkpoint in the hope of returning her -- but came under fire from US troops and had to turn around. Referring to her 'rescue,' Lynch's biography says the hospital staff did not resist, and even offered US troops a key. Still, the ex-prisoner of war from rural West Virginia took pains to say that she does not care why the US military may have exaggerated her story, and that she considers the soldiers who rescued her on April 1 to be 'heroes.' In an interview with the Associated Press news agency in New York on November 11, 2003, Lynch said that all the slain Americans are 'heroes' to her. But can the soldiers of any country who invade and occupy another country, in an unprovoked and totally illegal war of aggression, be called heroes? Can soldiers who kill thousands of innocent civilians including women and children be called heroes? The answer, of course, is, 'No.' Yet 'heroes' is what the Bush administration insists on calling US soldiers in Iraq. Lynch told AP that the almost-daily reports of US troop deaths deeply sadden her. But what about all the tens of thousands of innocent Iraqi civilians that have died as a result of US bombing? Don't their deaths sadden her? Eleven US soldiers lost their lives when Lynch's convoy was ambushed. But Lynch dismisses reports that she had engaged in a firefight with the Iraqis who ambushed the convoy. Like many soldiers in her company, the M-16 rifle she carried had jammed with grime and airborne sand. She fired no shots, she said. "From the heartbreaking mess of the convoy ambush, gold was spun -- first from an event that looked more dangerous on television than it perhaps truly had been, and next from a story of heroics in the fight at Nasiriyah that a Hollywood scriptwriter would have been hard put to invent," Bragg writes in the book. And the suggestion by critics that Lynch may have contributed to the myth, deceiving others to enhance her heroism, enrages her family and makes Lynch, herself, "cry," according to the book. "Don't they know I'd give anything in the world if it had never happened at all," she says. The Iraqi people would agree with Lynch. They, too, would say that the US invasion and occupation of their country should never have happened at all. As if to underscore that point, a Gallup poll published on November 11, 2003 -- the same day that Lynch's biography went on sale in the US -- showed that only 5 per cent of Iraqis polled said they believed the US had invaded Iraq "to assist the Iraqi people," and only 1 per cent believed it was to establish democracy there. The poll's findings did not say very much for George W Bush's contention, in a speech at the neo-con Heritage Foundation in Washington on November 11, 2003, that the US was "helping the Iraqi people to rebuild their country" and that Iraq was "moving towards democracy." budget Matter over mind Skewed priorities of the NWFP government have led to budget allocations which prefer mega construction projects over human development By Behroz Khan Political interference, lack of vision, preference for personal priorities over collective ones and absence of money for development expenditure may be common problems facing all provincial governments. But in the North West Frontier Province (NWFP) these factors are creating development trends which hardly cater to the province's needs. They are particularly harmful for human development in a region where monthly per capita income is as low as Rs 746. The province has a population of 18.67 million which counts for 14 per cent of the total population of Pakistan. A survey conducted by the International Union for the Conservation of Nature (IUCN) in 2003 suggests that 46 per cent of the NWFP population of lives on or below the poverty line. This is much higher than 37 per cent, the proportion of people living on or below the poverty line in the country as a whole. In the urban areas of the province 31.2 per cent and in the rural areas 44.3 per cent people are poor. Indicators in other fields are equally poor. In fact, in many areas things have gone from bad to worse. The population growth rate of the province is 2.8 per cent, higher than the national percentage. Labour force employed in the agriculture sector constitutes 48 per cent of the total while only six per cent of the workers in the province are working in the industrial sector. The total unemployment rate in the province stands at 26.83 per cent. Official documents and survey reports prepared by private sector organisations indicate that literacy rate in the province is 37 per cent, (Literacy rate among the male population of the province is 53 per cent while among the female population it stands a meagre 21 per cent. Life expectancy in NWFP is 61.3 years and infant mortality rate is 62 per 1000 live births. All these figures paint a dismal picture of the state of human resources in the province. The only indicator where the province seems to be better off than some other parts of the country is the availability of safe drinking water. In NWFP, 58 per cent households have access to safe drinking water. Due to locational disadvantages, the province is plagued by sick industrial sector. Agriculture growth has also remained sluggish of late because NWFP does not have proper irrigation channels to utilise its share of water under the 1991 Water Apportionment Accord. An evaluation of the practices the provincial government has adopted for the designing and implementation of projects shows that a number of flaws mar the process, rendering even well thought out plans and strategies ineffective and thereby obstructing the poverty reduction efforts of the government. There is little disagreement among the planners that political motives behind designing development programmes are the main obstacle in the way of sustainable development because most of the projects are being carried out to secure the interests of those in power. The situation becomes all the more troubling when the fact is taken into account that NWFP depends on the central government for 90 per cent of its budget. The provincial government keeps complaining that the central government does not give any special packages or any extra grants to the province for development. Because the province is not receiving the money it needs from the centre, the provincial authorities are not releasing funds to the district governments, thereby hampering development activities at the local level. "It is like an abuse syndrome. We treat our district governments in the same manner as the federal government treats us," remarks a senior former bureaucrat Khalid Aziz. Khalid Aziz believes that development in real terms can only take place if Pakistan follows the models introduced in countries like Australia, New Zealand, South Africa and India. It involves budgeting of the expenditure in a transparent manner. "There is hardly any move on the part of the government to conduct an accountability of the statements and allocations made for development since 1947. Only such an accountability can assure that all the money allocated for development is also spent for the purpose." Another factor that is negatively impacting the development of human resources is the politics of like and dislike both at the federal and the provincial level. The data collected from different districts of the province reveals that political interference and influence peddling can result in the initiation and implementation of big development projects -- like the construction of roads -- in some areas after other areas and sectors are deprived of even the meagre resources allocated to them. According to Khalid Aziz, every district should pray that no chief minister, speaker or any other big government official is elected from there in future. "This drastically effects human development there." He suggests that politics must not interfere in human development. He claims that investment in female childcare has improved human development in Abbottabad and Haripur only because political interference in development activities in these districts was minimal because no bigwig has been elected from there in 2002 general elections. On the contrary, due to high political interference in the process of development districts like Bannu, Buner and Dir have lost the previous high status on health and education, sanitation, environment and many other aspects of human development, though more funds have been allocated to them, says a World Bank report. Resources have been pumped in to these areas by the chief minister, the speaker of NWFP Assembly and a former senior minister who belong to these districts. Combined with slow economic growth and a highly politicised religious education, these development policies are turning out to be the proverbial recipe for disaster in an area which is one of the most backward regions in the country. The fact that the province is in the grip of religious extremism and under a steadily increasing scare of suicide bombings can only be explained in terms of frustration arising out due to lack of economic activity and the absence of political will to do something about it. Still funds are allocated for development, more so for some areas and sectors than others. Every government, it seems, has a predilection for building roads and constructing buildings. They may be necessary but why they are given preference over other projects is their visibility. They are projected by the governments and conspicuous signs of the activity. Following this model ditto, the NWFP government too is spending a major share of its Annual Development Program (ADP) on roads. For instance, this year the government has allocated Rs 2662 million for the construction of roads. This is only slightly less than Rs 2754 million, allocated for schooling and literacy. Health, with an allocation of Rs 2172 million, stands third on the priority list of the government as far as allocation of funds is concerned. But allocation is one thing and utilisation quite another. During the first quarter of the 2006-7 budgetary year, only 15.9 per cent of the money allocated was spent on schooling and literacy. In health sector the situation was even worse: Only 11.5 per cent of the funds allocated to it could be used in the first quarter. But, not so surprisingly, in the same period the expenditure on roads was as high as 24.5 per cent of the total money allocated for the purpose. NWFP has a total road network of 14,804 kilometres but only 32 per cent of the people in the villages have access to roads. Under the devolution of power plan, 7000 kilometre long roads have been transferred to the district governments though their maintenance and repair remains the responsibility of the Works and Services Department. The Frontier Highway Authority is responsible for upkeeping 2100 kilometres of core provincial roads while the National Highway Authority looks after the remaining roads in the network. Perhaps this bias for building roads owes to the fact that a number of current and former legislators from the province are/have been government contractors as well. A survey conducted for the World Bank on the request of the NWFP government suggest that a sizeable number of the sitting members of the (provincial and national) assemblies and the Senate are either ex-government contractors or run their businesses through frontmen or family members. Does the construction of roads contribute to the elimination of poverty? Figures from the NWFP show it does not. In 2001 the provincial government decided to confront the rising levels of poverty by undertaking the Provincial Reforms Programme (PRP) by placing emphasis on improving fiscal management, social services delivery, governance and devolution. With the help of the World Bank, the provincial government identified five areas of reform including fiscal reforms to create financial space, public sector financial management to improve governance in budgeting and expenditure, reforms to improve quality of services and their delivery in key areas, especially in the basic social sectors, reforms to make the civil services more efficient, accountable and service-oriented and development and growth of the private sector. But the World Bank reports that the province suffers from indiscipline in many areas because there is an absence of coherent plan in the development sectors for implementing the requirements of the PRP. The bank also suggests that financial reporting and ADP controls are weak, future sustainability of projects is questionable, calculation of future cost implication of projects need attention and fiscal pressure is building up, endangering the PRP. The report further says that about 60 per cent of the project proposals are based on other than technical criteria and the projects selected for inclusion in the ADP are not based on the needs and priorities laid by the PRP or the National Economic Commission (NEC). This is a very high percentage and is bound to have a negative impact upon PRP outcomes, it adds. "Except for some of the foreign funded projects, even the line departments forward recommendations, which have a non-technical bias." Apart from this, the report says, there is a need for transparent expenditure budgeting mechanism and strict accountability. For example, the provincial works and services department shows that Rs 112.9 million were released for drinking water and sanitation but the expenditure for the period for which the money released stands at Rs 46.7 million only. In an efficiently managed system, the fund inflow should equal outflow. The same is the case with other sectors.
Existing models of free trade agreements and investment treaties offer little to the developing countries. Pak-US moves to sign these treaties are unlikely to create any different outcomes By Barrister Taimur Malik There has been much talk in the recent past about a Pakistan-US Bilateral Investment Treaty (BIT) and many US officials including Frank Lavin, the US under secretary for international trade, have assured Prime Minister Shaukat Aziz of progress in this regard. While some are enthusiastic about the benefits that may flow from the inking of the agreement, others are a little sceptical about its advantages. It is interesting to note that the first ever BIT was signed between West Germany and Pakistan in 1959. Germany in the post world war scenario having lost most of its international investments sought to protect its future investments abroad and therefore actively undertook investment agreements and to date remains the country with the highest number of the BIT agreements. The need for such agreements also arose from the desire of the investors to be afforded protection by governments. The lobbying of the Anglo-Iranian oil companies to seek assurances and protection under a BIT from their countries in 1960s led to an increasing number of such agreements, mostly between Western European and developing countries. The stimulating factor was obviously the desire for more protection by the 'big western companies' in the developing countries. The developing countries look at these BITs as the solution to their problem and believe that if they sign these agreements foreign investment shall flow in. However, there is little empirical evidence to suggest that there is a link between BITs and new investments, although they do suggest a policy approach geared towards ensuring protection for foreign investment and thus convey a positive signal to the investors. According to Jennifer Tobin and Susan Rose-Ackerman of Yale University, the number of BITs signed appears to have little impact on a country's ability to attract Foreign Direct Investment (FDI). Their study also shows that in the case of US BITs, the reduction of political risk in the host country may lead to an increased FDI from the US. It's in this perspective that we need to see the US promises to sign a BIT with Pakistan. The ultimate objective of the Pakistani government is to enter into a Free Trade Agreement (FTA) with the US. But the provision of preferred treatment under an FTA to investors from a particular country, as a BIT guarantees, is in fact contrary to the non-discrimination principle of the World Trade Organization (WTO). This principal is enshrined in the Most Favoured Nation (MFN) rule of the WTO which provides that a member state should extend the same favourable treatment to all other member states of the WTO which it grants to any one member state. There is a growing jurisprudential debate on this issue, but owing to the benefits offered by the increasing number of FTAs, and partly due to a very slow progress in negotiations towards a multilateral international trade agreement at WTO, the organization has chosen to encourage such agreements. The developing countries face a serious problem when it comes to negotiating BITs and FTAs in an informed manner due to a lack of specialist investment legal expertise. What mostly happens is that they are presented with older European/North American models to base their agreements upon and while these offer the desired investor protection, they do little in terms of protecting the developing state's rights and national interests. The model US BIT provides for the right of the investor to transfer all earnings to the investing country. This provision is for the benefit of the US investors who are used to the free movement of cash but may have implications for a developing economy such as Pakistan as the US investors may be tempted to withdraw their investments at the first signs of any risk in the country. In Pakistan's case, however, the Board of Investment's Foreign Direct Investment (FDI) policy already provides the foreign investors this incentive to encourage them to invest in the country. Most BITs also contain clauses that allow the investors to lodge legal claims against the host government for damages resulting from environmental and health regulations enacted after the investment took place, which have an impact on the cost of the investors' business operations in the host country. Developing countries need to retain the right to enact new laws in these areas from time to time to achieve gradual progression towards the standards existing in developed countries. It's not a surprises that the majority of international investment disputes are against developing or under-developed countries. The average cost of defending a claim runs into millions of dollars. Most BITs provide for dispute resolution methods preferred by the investors. The developing countries thus face the prospect of very expensive international dispute settlements in the face of any claims. The World Bank's International Centre for the Settlement of Investment Disputes (ICSID) is the favourite forum in most BITs for investor-state dispute settlement. Pakistan recently ratified the New York convention on the Recognition and Enforcement of Foreign Arbitral Awards, which came into force in October 2005. There has been some discussion about setting up a National Arbitration Centre as well. These steps enhance investor confidence in the country and are viewed by foreign investors as positive steps towards creating a stable and more investor friendly trade regime. Since Pakistan is a party to the New York Convention now, the local courts are obliged to enforce arbitration awards rendered abroad against Pakistani entities and no appeal against the award may be admitted except only in very limited circumstances. This diminishes the need for foreign investors to get entangled in protracted legal battles in domestic courts and makes the option of investing in countries like Pakistan more attractive. The proposed US-Pakistan FTA/BIT posses the same model for Pakistan and it can be said that Pakistan has little latitude in negotiating the agreements, which may mean, among other things, agreeing to expensive dispute settlement methods on international forums. Since there is a lack of home grown legal knowledge in this field, the costs for hiring international lawyers in such circumstances raises the costs for countries like Pakistan. Moreover, the concept of 'pre-establishment' rights given in most US BITs is likely to afford greater protection to US nationals and companies investing in Pakistan. Any policy changes affecting these investments by Pakistan even in the wake of national public policy interest may lead to compensation claims against Pakistan. Similarly, the Most-Favoured Nation (MFN) status clause in BITs has been referred to as 'multilateralism through the backdoor' partly due to the ability of international lawyers to allow their clients from third countries to benefit from protection and dispute resolution clauses in a BIT. This means that companies registered in the US but owned by nationals of other countries may be able to obtain the benefit of international dispute settlement clauses under the Pakistan-US BIT for resolution of their investment disputes and to demand increased investment protection rights provided for under the BIT. Even Pakistani citizens may be able to avoid the lengthy local judicial process and seek protection under the BIT by establishing companies in a country with which Pakistan has signed a BIT. This could entail expensive legal battles for the government at international forums. Additionally, the FTA clauses on government procurement cover the market access aspects, that is, enabling foreign companies to bid on equal terms with local companies for government contracts. This would drastically limit or eliminate policy space for the developing-country government to give preferential treatment to local companies and persons, and thereby lose a crucial instrument for boosting domestic economy. Also, the requirement to treat foreign goods, services and firms at par with domestic goods, services and firms can also result in loss of market share for the local firms as well as loss of foreign exchange for the local economy. The intellectual property clauses of the proposed agreement with the US are also a reason for the delay in its finalisation. According to news reports, United States has decided to remove Pakistan from its 2006 intellectual property rights (IPR) priority watch list due to improvement undertaken by Islamabad during the last 12 months. According to US Trade Representative Rob Portman, United States has closed its review of a petition from the US private sector questioning Pakistan's eligibility for preferential tariffs under the Generalized System of Preferences (GSP) programme because Pakistan has made significant progress in the protection of intellectual property rights. It is pertinent to mention here that in 2004, Pakistan exported products worth more than $94 million duty-free to the United States through the GSP programme. Pakistan may perhaps stand to benefit from an FTA with the US. But the negotiators need to be aware and protective of Pakistan's interests as well as legislative, social and economic needs, especially when there is hardly any empirical evidence to suggest that FTAs result in an increase in the FDI. Perhaps this is one reason that the officials of the two governments have not reached a consensus on these agreements as yet. Pakistan, in the meanwhile, has been actively negotiating and signing free trade agreements and bilateral investment treaties for the last few years with countries as diverse as Sri Lanka and China. It remains to be seen if these have made any positive impact on the country's economy. The
writer is executive director of the Research Society of International Law (RSIL)
Pakistan. He can be reached at rsil@wol.net.pk
world It's hard to find conclusive evidence for a positive link between trade liberalisation and poverty reduction By Mazhar Farid Chishti Globalisation is not a shortcut to development. Economic development has always required a prudent blend of domestic innovations with imported practices. But political leaders and policymakers look in a hurry to catch the momentum generated by globalisation. Openness mantra which is always backed by the senior officials of the International Financial Institutions like the World Trade Organization (WTO) and International Monetary Fund (IMF) has been repeated in so many times that it is now viewed as an essential component of a country's development strategy. Poor nations are diverting resources from key domestic issues to global economic integration. This is bad news for them. The global integration agenda is based on shaky empirical ground and seriously diverts policymakers' priorities. Openness does not deliver on its promises: the developing countries that have embraced the integration orthodoxy are now discovering this fact. Simply opening borders is insufficient: It needs to be complemented by a thorough institutional reform. Developed countries took generations to achieve the level of openness their economies have but now they want poor countries to do the same thing in minimum time. The examples normally are given of the fastest growing countries like China, India, East and Southeast Asia, but policymakers in these counties implemented trade and investment liberalisation in an unorthodox manner. These countries worked gradually and sequentially. China worked on two-track strategy which is a highly unorthodox way and practically violates every rule in the guide book. Secondly India, which achieved significant growth rate in the 1980s, remains one of the most highly protected economies. These countries have combined their outward orientation with unorthodox policies. The only clear pattern is that countries dismantle their trade barriers as they grow richer. They liberalise trade gradually over a period of decades not years. And when the World Bank holds such countries up as proof that liberalisation works, this is hypocritical, to say the least. Another worry about this sort of attitude is that it fails to distinguish clearly between trade policy and quantity. Ask any World Bank economist what is required for trade liberalisation and he is likely to provide a laundry list of measures beyond the simple reduction of tariff and non-tariff barriers. As the promise of trade liberalisation fails to materialise, the prerequisites keep expanding. 'Political Uncertainty' has always been a favorite of international financial agencies to blame the developing countries for their failure. Do lower trade barriers spur greater economic progress? The available studies find no systematic relationship between a country's average level of tariff and non-tariff barriers and its subsequent economic growth rate. Neither economic theory nor empirical evidence guarantees that deep trade liberalisation will deliver high economic growth. Mattias Lundberg and Lyn Squire find similar trends. They report that greater "openness is correlated negatively with growth among the poorest 40 percent, but strongly and positively with growth among the middle 60 percent and wealthiest 40 percent" of households. The IMF cites estimates that developing countries could gain between $ 83 billion to $ 226 billion dollars per year if all barriers to trade in merchandise were eliminated (IMF, 2001). Even reducing a single subsidy could greatly help some countries. For example the, cotton subsidy under the 2002 US farm bill costs Central and West African countries about $ 250 million annually in lost revenue (Ingco & Nash, 2004, 9). Oxfam estimated that US dumping alone has caused poor cotton-producing countries in Africa losses of almost $ 400 million (Oxfam, 2005c). The situation is far worse for developing countries in bilateral and regional agreements with developed countries. The African Growth and Opportunity Act provides access to the US market if the African apparel manufactures use US produced fabric and yarns, so limiting the potential economic spillovers in African countries. Examples of East Asian tigers, China and now India are given and the advocates say where would they be without international trade and foreign capital flows? Yes, this is undeniable that these countries reaped enormous benefits from their progressive integration in the world economy. But we need to look closely to know what prudent policies produced these results. South Korea and Taiwan abided by few international constraints and pay few of the costs of integration during their formative growth experience in the 1960s and 1970s. It is also worth noting that some studies of stabilisation and adjustment programmes (SAPs), which include many of the liberalising policies that we are interested in, show that the performance of countries that have undergone SAPs has been worse than those that have not undergone adjustment. On the whole, the view that the market liberalising reforms advocated by the IFIs are increasing growth rates, decreasing inequality, and ameliorating poverty is unsubstantiated. Liberalisation may even be contributing to increasing inequality and decreasing growth rates amongst the poorest segments of the world's population. Economists argue that differences in growth rates between countries depend on may factors (though the effects of these factors on growth rates can be quite complicated): Education levels, initial incomes, climate, disease, proximity to markets, trade policy, and the quality of national and international economic institutions are just some of the factors. But high levels of education, land redistribution, and investment in agriculture may increase growth rates. Policies to improve bureaucratic quality, reduce the risk of expropriation, prevent government repudiation of contracts, reduce corruption, and liberalise trade are correlated with higher income levels on average. Additional factors which can effect growth include the availability of land and natural resources as well as government policies regarding public consumption, property rights and distortions in domestic and international markets. In the financial arena, too, various studies have found that financial market liberalisation does not increase growth and decrease inequality. They found that financial market liberalisation creates instability and is not correlated with growth. There is plenty of evidence to suggest that financial liberalisation is often followed by financial crash. Look at Asian tigers -- Indonesia, Malaysia, Thailand -- and then Mexico and Turkey. All these countries have shown that there is little evidence to suggest that high rate of economic growth follow capital account liberalisation. But there is plenty of evidence that financial liberalisation is followed by financial crisis. Controlled depreciation of the domestic currency by the developing countries has caused every growth boom during the last four decades. But financial openness is making impossible to manage exchange rate. When some successful countries gave in to Western pressure to liberalise capital flows rapidly they were awarded with the Asian financial crisis. Developing countries are pushed to import legal codes and standards by international agencies rather than improving their existing legal institutions. According to Branko Milanovic, a leading economist in World Bank Research Department, a unit of the bank dealing with poverty, income distribution and household surveys, the growth of World GDP between 1961 and 1978 was an average of 2.7 per cent per year. It declined to an average of 1.5 per cent per year between 1979 and 2000. It is not entirely clear what kind of growth the IFIs are advocating if growth has been decreasing in the decades when liberalisation has been increasing. Branko Milanovic nicely illustrates these trends. He divides the world into four income groups and then sees how countries move between the groups. The 'rich' group includes the traditionally rich Western European and North American countries. The 'contenders' in a given year are those whose incomes are no more than 1/3 below the poorest 'rich' country. The 'third world' countries have incomes between 1/3 and 2/3 the income of the 'rich' and the rest are classified as 'fourth world'. Milanovic then tracks the movement of countries between groups over time. Most developing countries are doing worse now than they were in 1978. In percentage terms, 82 per cent of those that were rich in 1978 were still rich in 2000; 12 per cent of those that were rich in 1978 became contenders by 2000; 6 per cent of the erstwhile rich joined the third world; 13 per cent of the contenders became rich, 6 per cent of them were still contenders, while 69 per cent of them joined the third world and 13 per cent joined the fourth world. Every year 9 million people are diagnosed with tuberculosis. Every day more than 13,400 people are infected with AIDs. Every 30 seconds malaria kills a child. n the area of public health developing countries are bound to obey WTO rules even if this causes thousands of deaths. In 1997 when South Africa passed legislation allowing imports of patented AIDS drugs from cheaper sources the country came under severe pressure from Westerns governments. More than 2.7 billion people of the approximately 6 billion people on earth live below the two dollars a day international poverty line. Over a billion people have less than one dollar a day. "Roughly one third of all human deaths, 18 million annually or 50,000 each day, are due to poverty-related causes" (Pogge, 2005, 2). Normally there are two methods to measure poverty. First, we might use an assortment of indicators such as education and caloric intake levels to measure poverty. The second is use of a unitary measure of poverty. A unitary measure allows us to get a sense of how well people are doing overall. According to the World Bank's $ 1 a day is poverty line. The Bank relies on purchasing power parity (PPP) measures to convert country estimates of income poverty into a common currency. This is problematic. In fact the bank itself admits this much. "Poverty is multi-dimensional, and not all its aspects are determined by economic performance." (World Bank, 2001, 27-28). The main sources of PPP measures are the Penn World Tables (PWT) and the International Comparison Project (ICP). These measures are based on surveys with inadequate coverage. Only 63 countries participated in the 1985 ICP (Reddy & Pogge, 2006, 25). China has not participated at all in the ICP surveys and India has not participated since 1985 (Wade, 2004, 572). This makes poverty calculations quite unreliable. there are a great number of poor people living in these countries (Reddy & Pogge, 2006). After all, the world's 358 richest people have more money than the combined annual incomes of countries with 45 per cent of the world's population. Calculation of income inequality within a country and among countries is normally measured in three ways. The first is by altering the distribution of goods within nations. One might call it intra-national inequality. For example, the decreasing size of the middle class in the US is a manifestation of this sort of inequality. The second is by altering the distribution of goods between nations. For instance, if developed countries are getting richer while the developing countries are getting poorer international inequality is increasing. The third is by altering the distribution of goods between individuals. World inequality is inequality between individuals independent of their country of origin. If the global rich are getting richer and the global poor are getting poorer then world inequality is increasing. Those who are concerned only about how individuals are faring independent of country of origin should be most interested in trends in world inequality. Communitarians might care about inequality between nations. It is not at all clear what kind of inequality is at issue for those who argue that globalisation is increasing growth while reducing poverty. There are many ways that world inequality can change. Intra-national inequality might be increasing, but this might be compensated for by decreasing international inequality. International inequality might be increasing, but this might be compensated for by decreasing intra-national inequality. In either of these cases, the situation of the extremely poor might not be improving. World inequality could decrease if the only change is that the elite (either in the developed or in the developing world) are not getting richer. It is important to look at the components of world inequality to get the larger picture. International inequality is the largest contributor to world inequality (intra-national inequality contributes less). However, it is worth mentioning that the worsening exchange rate inequality does bode poorly for poor countries. Because many debts are denominated in dollars, imports are paid for in dollars, and participation in international affairs must be paid for in foreign currency, the costs of worsening inequality in exchange rates can be high. Though the bias of market exchange rates is to make inequality look worse than it actually is, Dowrick and Akmal argue that population weighted international and world inequality are getting worse using exchange rate conversion methods even when biases in exchange rates are corrected (Dowrick & Akmal,2001). A keen reader can find further detail in Milanovic's book, Worlds Apart: International and Global Inequality 1950-2000. It provides a comprehensive and detailed overview of recent results and discussion of methodological issues. Market liberalising policies are not the only ones that may sometimes require trade-offs between increasing growth, and reducing inequality and poverty. However, it should also be clear that some kinds of public expenditure can reduce poverty and inequality, while increasing growth rates. One policy, not mentioned above, that may be particularly useful for reducing poverty without negatively impacting world growth rates is liberalising movement of people. Dani Rodrik argues that "this would produce the largest possible gains for the world economy and for poor countries in particular" (Rodrik, 208, 2005). The possible gains from liberalising labour markets are much greater than from liberalising markets in goods and capital. He speculates that 25 times as much growth could come from liberalising movement of people as from liberalising goods and capital. L A Winters estimates that developing countries could gain $ 300 billion per year or $ 60 per person in the developing countries by the liberalisation of people's movement (Winters, 2000). Poor countries will benefit from greater remittances, technology, skill transfer, and investment. Even better, if the poor were allowed to work in developed countries, they will benefit directly from liberalization. We would not have to wait to see whether the benefits of liberalization will eventually trickle down (Rodrik, 2005, 209). In conclusion, the empirical evidence that market liberalising reforms improve the lot of the worst off is not as clear as the International Monetary Fund and the World Bank contend. Growth rates have been declining in the 30-year period since market liberalisation became fashionable (Milanovic, 2005; Wade, 2004). The poverty statistics are too poor to be of much use. Inequality under almost all (including the most relevant) measures has been increasing (Reddy & Pogge, 2003). Some studies have even found that liberalisation itself is correlated with increasing inequality and decreasing growth rates (Cornia, 2004). We cannot just have faith in the ability of markets to increase growth, decrease inequality, and ameliorate world poverty. Thus, we need to examine particular policies the global economic institutions might implement to see how they impact growth, inequality, and poverty. For instance, we need to consider the effects of different policies on different people. How do those suffering from diseases like AIDs fare under the World Trade Organization's agreement on trade related intellectual property rights? Is there a more equitable system of intellectual property rights we can implement? We also need to consider the effects of different combinations of policies. What background conditions must be met before we can conclude that education will both increase growth and help the poor? When is land reform going to reduce inequality and increase growth rates? Finally, we need to consider policies' different effects on the many things we care about. Will opening borders increase inequality even as it decreases poverty and increases growth rates? Do structural adjustment programmes increase growth rates but also hurt the poorest of the poor? We need to carefully consider the best means to increasing growth, and reducing inequality and poverty, if we are going to be successful in achieving these goals. I have not argued for a particular means of increasing growth, decreasing inequality, and ameliorating poverty here. However, we also need to get clearer about what matters. Does it matter if opening borders increases inequality even when it reduces poverty? What kinds of inequality matter? We should seriously consider promoting land reform, agriculture, micro-credit, education, and health care services. Finally, we might liberalise trade and investment in some respects, but we should consider liberalising migration as well. E-mail:
al-farid@hotmail.com
A click and 750 million glitches All the various experiments being done to introduce telecommunication and information technologies in rural India will fail unless they take local social context into account By Aziz Omar Information communication networks are being unfolded all across India and the rural masses are awakening to global interconnectedness. As international technology firms such as Microsoft are investing in regional Research & Development centers to tap into the potential workforce of programmers in India, wireless internet and phone booths are springing up in villages where people use them for things such as applying for a driver's licence, reserving railway tickets and even finding a mate. For the estimated 750 million Indians living in over 600,000 villages, life is a far cry from their upscale urban counterparts. The modern Indian urbanite, residing in metropolitan centers such as Mumbai and Delhi, is enthralled by the glitzy infotainment offered by digital TV and is immersed in a web of social networking activities while zooming along on cars and bikes. Average Indian villager, on the other hand, is extremely lucky if he/she has access to basic health facilities and public utilities. In the state of Bihar, the poorest region in India, annual income per person is around $ 82 and the women there have to walk for several kilometers to fetch passably drinking water. All this notwithstanding, the Indian government, under the dictate of President Abdul Kalam, has made the establishment of communication channels across the country as vital as 'laying the roads'. Interestingly, even this goal is being highlighted with a poor analogy as it is the very network of roads that is still in dire need of implementation. The connectivity frenzy is indeed in high gear, attracting international players to vie for a stake in one of the most unexpected markets opening up in Asia. Microsoft already has pledged to install 50,000 broadband internet kiosks under the 'Saksham' project over the next three years. These kiosks will be run by a private entrepreneur, typically from the local area, and will offer connection speeds of up to 2 megabites per second (mbps) by using a VSAT satellite linkup. However, much higher speeds are in the offing with the WiMAX trails that are being deployed under a joint venture between chipmaker-giant Intel and network firm Nortel. WiMAX relies on microwave-based data transfer protocols and can offer speeds of up to 40 mbps in a 10 kilometer radius from the transmitting station. President Kalam is convinced that such technological advances will promote e-governance, telemedicine and distance learning. However visionary such aims might be, they seem quite bewildering when assessed in the light of India's deplorable human development indicators. When even simple dispensaries and clinics, police stations and access to government funds is not available, information technology will be a fancy gimmick at best. Technically speaking, telephony going wireless in India, especially with regards to rural areas, is making a lot of sense these days. The portable phones that makes voice and text communication possible have become extremely affordable and reliable. India has now over 150 million cellular subscribers, which is more than three time the number of fixed line connections in that country and call rates there are the lowest compared to anywhere in the world. Apart from the government owned BSNL/MTNL, private companies such as Reliance Communications have made a roaring business in providing cheap cell phone connection packages. Models such as that of Nokia's 1100 and Motorola cost just under 2,000 Indian rupees, though their huge success in this region coincides with market saturation in Europe and the Americas. Nonetheless, rates are on the verge of further declining in an attempt by the manufacturers to partake of more emerging markets. Such mobile modes of social communication and information exchange are far more popular and affordable when compared with a computer-based setup and internet connection. Currently, the cheapest locally produced models made by HCL, though produced at a very low cost of about 10,000 Indian rupees, are still way out of the common citizens reach. And even then, such cost effective makes don't quite cut it when it comes to operating in humid, dusty and hot environments of rural India. Rugged materials are being considered in the production models targeted at such areas but they will come at a higher price tag. When considering the publicly shared internet kiosks such as those being marketed by Dhrishtee -- an NGO that is now working in collaboration with Microsoft -- still the total setup fee is a steep 70,000 Indian rupees. In this arrangement, after the initial 20,000 rupees are paid upfront, the rest is to be paid in monthly installments of about 1,600 with the person-in-charge being guaranteed a minimum income of nearly twice that amount. The business for the kiosk owner has to be drummed up after cycles of activity associated to applying for official documents. Alternate services being offered in this regard are matchmaking, current market rates of farm produce and availability of farming essentials. These advantages and benefits should not allow some equally important facts to be ignored. viability of ICT (Information Communication Technology) systems cannot be exaggerated in the absence of a primary infrastructure comprising of localised education, employment, health and sustenance. The importance of say effective transport and power networks in non-urban areas if India cannot be masked over by overtly pushing for the development of consumer driven and corporate beneficial technological schemes. Whereas communication exchange services based around dial-up internet access, GPRS and cell phone networks will open up the world to the Indian countryside, innovative and self-reliant technology is far more crucial for developing enlightened minds. A case in point is that of RIN (Rural Innovation Network), a Chennai-based non-profit organisation funded in part by the US-based companies. The American funding only materialised when the founder of the organisation Paul Basil was able to garner success in developing inventions like rain gun, a low-cost drip irrigation system. The prototype, if you may, was conjured by a 70-year old farmer belonging to a village in Karnataka. Paul claims that his organisation serves the role of an enabler and offers its services for a token cost rather than for free. When it is offered for free, as a social service, very few seem to take the initiative seriously. Therefore, a purely commercial arrangement is made with the inventor and the royalty per unit sold is awarded after the finished assembly is marketed. Another such workable innovation is a manual, vacuum-driven milking device that has become hugely successful and is fast spreading in use. True progress and sustainable development will only happen in the rural parts of Indian when innovative enterprise and Information Communication Technologies work in tandem. It is crucial that indigenously oriented models of education and scientific advancement be developed rather than imposing a 'magic box' form of technology that may only engage the user superficially. firstperson Naseerullah Babar Straight talk (To counter extremism and Talibanisation) all you need to have is the writ of the government which for all intents and purposes and in every instance is not there. Major General (retired) Naseerullah Babar has served on many important positions. He has been federal interior minister as well as the governor of North West Frontier Province (NWFP) during the era of Zulfikar Ali Bhutto. He has been at the centrestage of many important events of Pakistan's history. Naseerullah Babar is also considered to be the architect of Taliban movement in Afghanistan during the mid 1990s, a charge he tacitly rejects. He is also also credited with the formulating of a strategy of intervention in Afghanistan from Pakistan in the early 1970s. Babar is even said to be the person who made Inter-Services Intelligence (ISI) interfere in political affairs for the first time ever. A close confidante of both Zulfikar Ali Bhutto and her daughter Benazir Bhutto, Babar is a clean man who has never been charged of corruption. He also has to his credit as the federal interior minister the restoration of peace in Karachi, thus becoming bete noir for the Muttahida Qaumi Movement (MQM). His personal valour is acknowledged by his arch rivals. He belongs to Pirpai village in Nowshera district of NWFP. The News on Sunday recently got hold of him and talked to him at length on various issues of national, regional and international interest. Excerpts of the interview follow: By Raza Khan The News on Sunday: What are your personal future political goals? Naseerullah Babar: The goals in the age in which I am are very very limited. If I do contest elections, it will be for a provincial assembly seat so that I can serve the people of my area. TNS: Does it mean that you are limiting to provincial politics? NB: No, not provincial politics, per se. It is the size of the constituency which matters for me. In my ancestral area in Nowshera both the constituencies for the National Assembly are very big but population there is sparse. It is not possible for a candidate to go to every households, even every village. That's why I have limited myself. I am not becoming the chief minister, though. But I will also like to add that I will contest elections only if I am (physically) fit enough to run as a candidate. TNS: What do you think of President Pervez Musharraf? Is he under pressure from the West to held elections and cut deals with secular parties like your Pakistan People's Party (PPP) to counter religious extremism? NB: You see, this has a background in the sense that Musharraf brought these people (the religious parties) to power to convey a message to the Americans that you have Taliban in Afghanistan and mullahs in Pakistan. That is why the two bordering provinces were given to the MMA (Muttahida Majlis-e-Amal). This was done on purpose. But it is possible for him to get rid of them. You can see that the Supreme Court has come up with this case on the educational qualifications of a number of MMA legislators. This is done three, four years after the case was first filed. Why were the mullahs allowed to sit in parliament for so long? All this may be happening with a design. (The came has come up) so that in future these people cannot contest elections. Historically in Pakistan there has been an alliance between the mullahs and the military in political affairs. Even when Afghanistan question came up, Ziaul Haq needed religious extremists and the religious extremists needed him. But because both the army and the mullahs have no manifesto, no programmes, they, therefore, are dependent on unnatural forms of government. TNS: Does it means that the West in general and the United States in particular may be asking Musharraf to bring genuine secular parties like the PPP to power through elections? NB: There has all along being a controversy in a sense that for half of the life of Pakistan the government has been run by the mullah-military alliance for other half by political parties. The military has never allowed political parties to grow and have long tenures of governance. Only the 1971 debacle compelled the military to give power to a genuine civilian government but soon this government became an eyesore. The then political government still developed a lot of institutions that were to the benefit of the army like the National Defence College to provide militarymen with higher education. The office of the chairman joint chiefs of staff committee was developed so that the administrative control of the army could be taken over and looked after by that institution instead of the army itself. When the coup by Sardar Daud in Afghanistan occurred, Bhutto extended his rule by one year and then in January (next year) Pakistan National Alliance (PNA) was formed within a week. How could such disparate parties (as formed the alliance) come together on a common programme so quickly? It was because the homework had already been done by the military to use them against the political government and that was the beginning. When Russia invaded Afghanistan, Zia should have formed an exile government of seven component parties of Afghanistan in Pakistan but he did not do so because it did not suit him. Then favourites were found like Hekmatyar and others. That led to the subsequent chaos in Afghanistan that remains till today. When a political government came to power in Pakistan again in 1988, the ISI had ganged together a shura of Afghan parties and asked our government to recognise it. When we looked at the proposal it did not meet our requirements because it did not include an international personality. The PPP government, therefore, said sorry because we had certain limitations under international law. When the PPP government was sacked and Nawaz Sharif came to power, situation in Afghanistan started unfolding like a stageplay. First Professor Mujeddadi was sent there for six months as president then Burhanuddin Rabbani was made president for a year. On the completion of his tenure, he refused to resign. A chaos was created out of which Dr Najeeb emerged as the Afghan president. With Najeeb I arranged talks in 1992 and Asad Durrani set the tone for the work of intelligence agencies. Dr Najeeb said he was ready to quit at any time provided a governing mechanism was set up in Afghanistan. Due to the unpreparedness of ISI or its insincerity the talk fell through. I must add that I went as a guarantor of Pakistan in talks with Najeeb. In fact, Dr Najeeb came to my house in 1979 to tell me me that he also wanted to join the anti-Soviet resistance. But he was not acceptable to the intelligence agencies of Pakistan. So, he went back. TNS: Though you claim to have played a positive role role in Afghanistan, why are you also accused as the creator of Taliban there? NB: In fact, the Taliban phenomenon cropped up during PPP's second stint in power (1993-96) but we did nor recognise them and instead stopped them when they were about to take over Kabul. Pakistani agencies' philosophy was that whoever occupied Kabul should have the right to be recognised as the government of Afghanistan. But we said unless Taliban formed a broad-based government we would not recognise them. We were able to bring together Taliban and Dostum and a draft agreement was formed. Under it a political commission was to be set up having members from all provinces in Afghanistan based on population to give a federal structure to Afghanistan. After the Afghan parties had agreed to the draft, Dostum kept sending me messages to go to Afghanistan for the signing of the agreement. On November 3, 1996, at midnight we had a meeting in the presidential palace in Islamabad with President Farooq Leghari presiding. The prime minister, ISI's director general and the chief of army staff were all present. I was instructed to go and get the document signed by all the parties. I was to go on November 5 but on the night between November 4 and November 5 Leghari dismissed our government for the reasons best known to him. When the new government came in it did not know anything about Afghanistan or Taliban. It immediately give recognition to Taliban. After that whatever leverage or stick we had with Taliban had been lost. I or PPP is not responsible for that. Even earlier, in 1970s we were in negotiations with Sardar Daud (creator of Pakhtoonistan movement) and also with Zahir Shah. We sent two men from Hizb-e-Islami with Pakistani colonel Ibrahim to Rome with the offer that the Hizb would be supportive of Zahir Shah if he returned as a constitutional monarch. The constitution had been prepared by one Mr Shafiq, who had been to the Al-Azhar University in Cairo. This constitution was acceptable to the Hizb-e-Islami Afghanistan. In 1994, the PPP government was to launch a programme for opening of routes through Afghanistan to Central Asia for the benefit of the whole region. Our thinking was that the market lay in Central Asia while India had industry. So, if oil and gas was brought to Multan from Central Asia, it could be supplied to India and onwards. We could have also used this as a lever to push India to solve the Kashmir problem. But this was not liked by the powers that be. Regarding Taliban, when in our second government I sent a convoy of goods and some gifts to Afghanistan, it was stopped at Kandahar by the Indo-Iran lobby. Then the Taliban came in and cleared the road for the convoy as well as the area where it was difficulties of travel. TNS: How come Taliban emerged so instantaneously out of nowhere? NB: Because they were the same people who had been waging jehad against the Soviets. The only thing that changed was that some groups had become fed up with infighting and warlordism. From then onwards, we kept advising the Americans and the United Nations that Afghanistan needed a major socio-economic uplift programme. We had a long term and multifaceted programme for Afghanistan. But unfortunately at the instance of the US or whoever our government was dismissed. Then I advised (Taliban leader) Mullah Zaeef to hold a Lockerbie-like trial of Osama bin Laden but the Americans asked me how I could guarantee that a court comprising of a Saudi and Afghan judge (to which the Taliban had agreed) could punish Osama. I said no court could say in advance as to whether the accused would be punished. Then the 9/11 happened. All this could have been averted. TNS: You are also accused of being the architect of Pakistan's intervention in Afghanistan? NB: It was in 1972 when I was in Peshawar, then Bhutto came to Peshawar and I advised him to open the border of tribal areas with Afghanistan. So, in 1973 we opened Kakar-Khursan in Balochistan. Then other areas followed. In 1973 when Sardar Daud staged a coup against King Zahir Shah in Afghanistan and we thought we had an interest there. So I wrote a paper analysing what would happen, for instance, to Shah of Iran etc. Then Bhutto decided that we had to protect our interests. At the same time, the Hizb man Habibur Rahman came to us. The Hizb was against the socialist and communist parties in Afghanistan. In 1950s when Daud became premier he had opened Afghanistan to Russians. If you can recollect all the routes from Torghundi to Kandahar and the other from Bandar Sher Khan to Kabul were opened up while the main airbases of Bagram and Sheen Dandh were built by the Russians. We thought this was a plan by the Russians to move on to the hot waters. You know that Peter the Great (Russian emperor) had left a will to his nation to keep pressing until it got to the hot waters. Last of the communist ideologues like Brizhnev etc liked to complete the agenda of Peter the Great. TNS: The border between Pakistan and Afghanistan has always been the topic of heated discussions. What's your views? NB: Sardar Daud by 1970s was well aware of the designs of the Russians. He said to us that if (the invasion) was from the North today it might come from us tomorrow. Daud therefore came to Pakistan and was about to sign on an agreement with us on the Durand Line. It was not that we needed it. The treaties of Gandamak and Rawalpindi had already sanctified the Durand Line as a permanent border. Now to look at it differently, the northern border of Afghanistan on the Amu Darya was also demarcated by Sir Mortimet Durand. If the Durand Line agreement loses meaning then all the other agreements including the China-India border (will also become irrelevant) because all of them were drawn by the British. It is a very erroneous argument that the agreement on the Durand Line was valid for hundred years. It is the firm and final border between the states. TNS: What do you think about Pakistan's proposals to mine and fence the border? NB: If today the government thinks of putting a barbed wire on the border or mine it, then it is against tradition and even against the Durand Line agreement because the agreement says the tribes will be allowed to travel across the borders. So these limitations will be unnatural. TNS: How do you think extremism and Talibanisation can be countered? NB: For this all you have to have is the writ of the government which for all intents and purposes and in every instance is not there. Moreover, if you have the support of the people then there is nothing these elements can do. During PNA agitation, when I was the NWFP governor, was there any incident of violence? It was because I followed every procession and they knew that I was behind them. TNS: Who are the supporters of Talibanisation in the Frontier and the tribal areas? NB: There is no one. It is just the lack of governance. Benazir, during our second government, told me to take Maulana Fazl to Afghanistan for negotiations because he had a lot of influence and contacts in Afghanistan. I took him to Kandahar to Mulla Omar. Fazl did not know Mullah Omar nor did Mulla Omar know him. When the stage for talks came Fazl was refused permission. I sent him back straight to Quetta. Then Maulana Hassan Jan, who was the governor of Kandahar, requested me not to bring Fazl to Afghanistan. They told me they have studied along with Fazl and knew he would divide them. TNS: MMA has emerged as a key power player in NWFP. How do you see the future of the alliance? NB: You have seen their performance as the NWFP government. Because of a lack of education and administrative experience, they have failed completely. Secondly, these people cannot see beyond their nose. Maulana Fazlur Rahman is promoting his brothers while Qazi Hussain Ahmed has brought in his son, daughter and nephew into politics. They say they would resign and then they backtrack. In fact, Fazlur Rahman has been so corrupt then when the federal government sent National Accountability Bureau officials to Dera Ismail Khan, Maulana immediately budged. This was when on resignations issue Qazi was saying one thing and Fazl another. Now he has prevailed upon Qazi to give up. Why Fazl was named Maulana Diesel earlier? He himself admitted it in front of the press that the charge had been correct. In fact, during our government, Fazl made so much demands that in front of him I asked Benazir Bhutto as to why he is not given the keys of the State Bank to get rid of him. TNS: So, he is a very worldly mullah? NB: Yes, all mullahs are worldly because all of them came through the madrasas and they haven't seen the better side of the life. When Fazl was the head of the Parliamentary Committee in our government he went to Frankfurt and stayed at a hotel and left a huge bill of shopping outstanding which our ambassador had to pay. TNS: But Maulana has on occasions said that the key to peace in tribal areas and Afghanistan lies with him... NB: Tell me who does he know among the Northern Alliance. Secondly, Fazl has benefited a lot because he has been sending rations there. TNS: So you think secular, liberal parties will prevail if the establishment stops supporting religious elements... NB: But Army has no interest in that. Their economic condition has never been so good. Look at the defence housing schemes and lands allotments. If you are a lieutenant general you must have several plots. That will not happen under a political government. Secondly, it is the supine judiciary that is not letting things happen that way. Every time a case comes up, it is decided under the doctrine of necessity. Then there are characters like Sharifuddin Pirzada and A K Barohi who work against the political governments. If one of them was out, the second would be in. The governments have been sacked on the charges of corruption. The point is if the army is less corrupt. Corruption occurs in every democratic society and elections are the answer to that. TNS: What's your views on provincial autonomy? NB: Had political government been given enough time, the concurrent list of the constitution would have been devolved to the provinces as a matter of course. I agree there should be more autonomy and decentralisation. When the present government could not do so they bypassed the provincial government and came up with the idea of decentralisation at the district level. But army can only change the state into a unitary form of government. Ayub Khan made One-Unit and lost half of the country. Now the other half may break up. What business the army has to distribute money among parties. Today Hameed Gul (former ISI boss) proudly says he made Islami Jamhoori Ittehad. In 1990, the the ISI chief Asad Durrani also distributed money among political parties. We went to the Supreme Court with all the evidence but the case could not be taken up due to various reasons. I also provided a report to the then chief justice on how intelligence agencies could be brought under the law and constitution so that they play their formal role. Even then the court did not deemed it fit to take up the case. TNS: But you were the one to have assigned a political role to ISI... NB: In fact, those who accuse me of doing that use one incident of Hyderabad Tribunal. I had framed the case against the Awami National Party and ISI had brought all the evidence against it. The ISI had to be given a fictional cover in the case because it had no locus standi to produce evidence in the court. So an administrative order was issued creating a political cell within the ISI. It was for a limited purpose. Now they are using that precedent to create an ISI empire. I told them that an administrative order could be cancelled any time. It has no legal sanctity. But why allow the ISI and other intelligence agencies to become even bigger than the state. TNS: Pakhtoon nationalist forces say that they never launched any movement for Pakhtoonistan but the bugbear was created by Bhutto and you to strengthen almost a totalitarian rule by PPP? NB: The record is available. For instance, the speeches Ajmal Khattak made from Kabul (clearly point out who was behind the bugbear). Then see who supported the Pakhtoonistan movement. It was (former Afghan President) Sardar Daud early in 1950s who did so. He opposed Pakistan's entry to the United Nations. After that the problems in Pak-Afghan relations continued, though during the wars of 1965 and 1971 the Afghan government told us that we can remove all the army from the Western front. In fact, the Pakhtoonistan movement was launched for a limited purpose to gain certain advantages. TNS: You worked on high posts both in the army and the political governments. What distinguishes a military rule from a civilian government? NB: The military has limited education. They have no experience of political life and governance so they can only use force or at best they can link up with the mullah. TNS: Some American think tanks have been talking of geographical and political changes in our region... NB: Changing maps will be difficult in our region but easier in the Middle East. If the US attacks Iran then all the artificial boundaries drawn by the foreign ministers of British and France will go. TNS: Recently MQM chief Altaf Hussain has said that the man who unleashed a reign of terror on Karachi and MQM is living in a house in Peshawar... NB: See, firstly, I have a clear conscience. Secondly, (the operation in Karachi) happened in 1995. Till today, has any one has gone to the court to complain that excesses were committed. If there was anything against me, it should have come up by now. Yes, I acted against the MQM men for being involved in militancy because they did not have any right to kill Pakhtoons or Punjabis or someone else. It is a misfortune that every night we have to hear on our TV screens the diatribe of a criminal hiding in London and the criminal in the Governor's House in Sindh. Why is Altaf sitting in London? Is he a British citizen?
|
|
