The National Finance Commission (NFC) Award has always been a bone of contention between the provinces and federal government. But it is a pity that despite repeated demands by smaller provinces, the federal government has failed to announce an award based on consensus by all the federating units.

Given the overwhelming control of President Pervez Musharraf at the helm of affairs during the last six years, many had anticipated that his decision on NFC, announced late last year, would be acceptable to all, at least to those who are part of his regime. But this has not turned out to be so.

The new award announced by President Pervez Musharraf, according to economic experts, has once again created more confusion than it purported to resolve. The new award is applicable on the basis of old formula which takes population as the only criteria. This obviously benefits one province, Punjab, with the largest population, leaving smaller provinces with meager share from the divisible pool of federal revenues.

Under the formula, Punjab gets 57 per cent and Sindh gets only 23 per cent of the money from the federal divisible pool. This difference is thrown into sharp relief by increasing Punjab's share in general sales tax while reducing that of Sindh. Punjab will now get 50 per cent from the general sales tax it generates against its last year's share of 42 per cent while Sindh, which has been getting 46 per cent of sales tax collected in its jurisdiction, will now receive only 34 per cent of it.

Given these gross inequalities, provincial governments kept quiet for some time after the announcement of the award by the president. Now that -- through the announcement of the federal budget for 2006-07 -- they have come to know what they will get in actual terms under the award, they are quite vocally raising a number of objections. Governments in Sindh and Balochistan have expressed concerns on the resource allocations under the award, demanding a fair division of the divisible pool. The Sindh government has, in fact, gone to the extent of making its concerns known to the federal government through a recent communique´.

"Though we have prepared our provincial budget under the new NFC, we are going to take up the issue with the federal government because justice is not done to Sindh in announcement of the award," says M A Jalil, a key leader of Muttahida Qaumi Movement (MQM) who advises the provincial government on finance. "The award announced by the president was interim in nature. We are going to take up this issue with the federal government to seek more funds for Sindh."

Jalil says the revision in the formula for distribution of general sales tax has resulted in Rs 5 billion loss to Sindh. "Distribution of resources on the basis of population is an injustice to Sindh. We are seeking revision in this criterion."

The provincial government's views have been echoed by politicians, experts and other actors in Sindh. It's one issue, along with some others, on which the official view is similar to that of the hardline Sindhi nationalists.

"The NFC award on the basis of population is a robbery of Sindh's resources," says Khaliq Junejo, a high court lawyer and the chairman of Jeay Sindh Mahaz, one of the many Sindhi nationalist groups, espousing a tough stance on issues like NFC and the construction of Kalabagh Dam. "It's an illegal and immoral practice." Khaliq says nowhere in the world one finds an arrangement which guarantees less money for those who generate more of it. Most of the money generated in Sindh, he says, gets spent in "other parts of the country without any justification".

According to him when Bangladesh was East Pakistan, Punjab opposed the demand for the NFC award to be announced on the basis of population alone. "But after the separation of East Pakistan, Punjab has now changed its position. Why?" He suggests that it's about time that historical injustices done to Sindh are undone.

To be fair, all provincial governments in Sindh in the recent past -- no matter whether they were dominated by Pakistan Peoples' Party or urban-based MQM -- have been demanding drastic changes in the composition of the NFC and the criterion for the announcement of its award. All of them, without exception, have been of the view that the criterion for the distribution of money in the divisible pool should be how much revenue a province generates, not how many people it has. Obviously, this suits Sindh. A major portion of the federal revenue is generated from Sindh's capital -- Karachi -- which besides being the only port city in Pakistan is the hub of financial and economic activities in the country.

"The province generates 70 per cent of revenue and gets back only 23 per cent of it. This is unjust and unacceptable," says Sikandar Brohi, a Sindhi technocrat and the chief executive of Participatory Development Initiative (PDI).

Politicians in Sindh believe that even when the federal government applies different formula for NFC award, its major consideration is to fulfil the demands of Punjab -- the province whose residents dominate the military, the civil services and other key posts at the federal level.

While Sindh wants resources allocated on the basis of their generation, governments in Balochistan and the Frontier want them designated on the basis of how backward a province is. Given the low level of development in the two provinces, their demand is not difficult to make sense of.

"The NFC is a very serious issue and the federal government needs to take bold steps to provide justice to smaller provinces, especially Sindh," observes Sikandar Brohi.

Under this scenario in which every province is seeking more funds on the basis of a different formula, even the distribution of resources, let alone their fair allocation, among the federating units has become a serious challenge for the financial managers of the Musharraf regime.

In Sikandar's views a just formula to announce the NFC award should first take revenue generation into account, then it should consider backwardness. Population, according to him, should be least important basis for the award to do justice with all the four provinces' requirements. "We have no grudge against Punjab but we want a fair share for Sindh."

People like Brohi argue that the skewed distribution of resources is hampering Sindh's development. The rural areas in the province suffer from acute under-development. Villages in Sindh have the lowest literacy rate in the whole of country and most of them lack even the most basic amenities of life like potable water. People in the province's rural areas have a much lower per capita income when compared to the income of those living in Punjab's villages, according to a World Bank report released in 2005.

No wonder, the NFC is the second most covered issue -- the first being Kalabagh Dam -- by over a dozen Sindhi newspapers, published from Karachi and Hyderabad. It's also not surprising that almost all of these papers adopt a similar line, seeking the distribution of resources on the basis of revenue generation.

A recent editorial in a Sindhi newspaper argues that even if population is considered a criterion, Sindh should also be given money for millions of people who have migrated to the province from other parts of the country. The editorial writer says that these people are counted as residents of Punjab and the Frontier in the census report, though they are living on Sindh's resources.

Like on the Kalabagh Dam, people in Sindh are so charged on the NFC issue that even Sindh Chief Minister Dr Arbab Ghulam Rahim -- who runs his administration solely on the basis of blessings by the federal government -- cannot afford to keep quiet about it. In a number of recent statements, he has categorically stated that his government would take up the issue with federal government and would keep fighting for a fair share of the federal divisible pool.

All these developments mean that the two issues are no longer just political or technical disputes among the federating units, not at least in Sindh. People in the province take very serious interest in both of them and have started questioning the current federal scheme of things which, they belive, denies them their share of water and financial resources.

This is, certainly, a dangerous trend. It's the responsibility of those at the helm of power as well as politicians in the opposition to tackle these issues seriously with an aim to settle them justly and fairly. Instead of trying to get political mileage, all stakeholders should sit together to find an amicable solution before it's too late.

The sugar crisis, persisting for the last many months, seems to have taken a new turn with recent announcements by the importers and producers of the commodity. In an extraordinary move, they have offered to bring their stocks into the market and dispose them off at much lower price than what they were demanding earlier.

The importers have offered the government that they are ready to sell 200,000 tons of their stocks on discounted price. They believe that sugar prices are sliding fast in the domestic market due to increase in supply. In this situation holding back their existing stocks will only mean incurring losses. Pakistan Sugar Mills Association (PSMA) has also offered to sell its stocks to the government at the price at which sugar is being imported into the country.

Though this change in the stance of importers and producers has been brought about by an expected downward trend in sugar prices to a great extent, some strict announcements made by the State Bank of Pakistan (SBP) have also come in handy. Last week, the SBP imposed a 50 per cent cash margin condition on sugar loans and told sugar importers to clear all their outstanding loans by July 31, 2006. The SBP directives came at a time when millers were making statements that they had run out of their stocks.

The millers were also perturbed by the announcement made by Prime Minister Shaukat Aziz that income tax returns of all sugar mills will be reviewed. This, he said, will be in contrast to the previous policy of reviewing the income tax returns of only a couple of sugar mills on a random basis. To make matters worse for the millers, the Monopoly Control Authority (MCA) started collecting information from them about their production and stock positions. The sugar mills had stopped announcing their stock positions since January this year.

Irrespective of what the millers and importers say about the government moves to bring down the prices of sugar, the market is abuzz with rumours that they want to off-load their existing stocks, anticipating a sharp decline in the commodity's prices. This decline is becoming all the more imminent as domestic stocks are expected to go up to 2.3 million tons in the next six months vis-a-vis local demand of 1.9 million tons. In coming weeks alone, the Trading Corporation of Pakistan (TCP) is set to place orders for about 600,000 tons to 700,000 tons.

Sheikh Mushtaq Ahmed, a Lahore-based sugar dealer tells The News on Sunday that the monthly sugar import figures are swelling fast, much to the dismay of hoarders. He says sugar imports in January this year stood at 1,185 tons, in February they were 21,128 tons, in March they stood at 83,379 tons and in April at 174,263 tons. "The figure for May, at 185,000, is the highest registered so far." This increase in sugar import, along with the sale of subsidised sugar at the utility stories, is bound to give sleepless nights to hoarders," says Mushtaq.

Commenting on PSMA's offer to sell its sugar at the current import price, Mushtaq says sugar millers are even now looking for a price much higher than what their production cost warrants. "Demanding current import price is unfair because it also includes loading and off-loading charges, shipment costs, insurance cover etc. On the other hand, locally produced sugar does not have to incur these costs."

Mushtaq also points out recent rise in sugar's import prices. "During the last two months, sugar prices in the international market have risen sharply due to higher demand from countries like Pakistan. Asking this increased price for sugar produced locally cannot be justified at all."

Chaudhry Zaka Ashraf, Chairman PSMA tells TNS that sugar mills have not announced to sell their stocks at import price out of any fear of the market forces or the official directive. "In fact, it is being done to dispel the impression that sugar mills are guilty of hoarding." Zaka says sugar is produced in three months but sold all through the year. "Sugar mills, therefore, have managed their stocks prudently so that they last through out the year."

Pakistan's total monthly sugar consumption is around 325,000 tons that has to be met collectively by the government, millers and importers. Due to the careful management of stocks by the millers, "I can claim that not even once in the last two years, the supply of sugar has fallen short of its demand," says Zaka.

He says hoarding of sugar is not possible. Millers have the least incentive to hold back stocks for long periods because it ends up increasing their debt burden. "The millers want to sell their stocks as early as possible and clear their debts."

Zaka says what millers do is a proper management of stocks, just to ensure a demand-supply balance all through the year. "We try to ensure that the supply of sugar is neither less than its demand nor does it exceeds what the market needs."

The PSMA chairman says it is sad that the government of Pakistan is finding fault with the sugar mills alone and neglecting all other factors responsible for hike in sugar prices. "For example, the last sugarcane crop was not enough to produce sufficient sugar to meet domestic demand of 3.9 million tons. The crop in Punjab had suffered a lot from frost attack."

In addition to these factors, he says, there was massive export of gur to Afghanistan and Central Asian Republics (CARs) for manufacturing of alcohol. "All these factors combined led to a fall of 400,000 tons in sugar production this year." He asks as to why the government does not check the massive export of gur.

Zaka says that gur also has a ready domestic market where it is sold for something between Rs 45 to Rs 50 per kg. "But all that catches government's attention is the price of sugar," he protests. "There was a proposal to impose export regulatory duty on the export of gur but the Economic Coordination Council (ECC) rejected it," he claims. "I fear if the government does not address these problem in time, the sugar industry will not be in a position to produce any sugar or lift sugarcane from the farmers in the next harvesting season.

In Zaka's view, the buying of sugarcane is already costing sugar millers quite a lot. He, in fact, attributes increased sugar price to rise in the prices of sugarcane. "During the harvest of last crop, sugarcane price given to farmers was increased from Rs 100 to Rs 120 per maund. This figure is highly significant because sugarcane price constitutes 80 per cent of sugar's total cost of production."

Dr Ashfaq Hassan Khan, advisor to federal finance ministry, tells TNS that his ministry is in no way victimising sugar industry through the issuance of loan-related directives by the State Bank of Pakistan. "There is a common perception that the finance ministry calls the shots. Instead, all the decisions are taken by different ministries and departments and discussed in the meetings of ECC before they are finally approved. The reason for the misperception is that I announce all the ECC decisions being its official spokesman." He says all the decisions made to stabilise sugar prices have been taken with the intention to discourage hoarding.

Dr Ashfaq asks as to how sugar mills can call their exposure to income tax evaluation as blackmailing, "The payment of income tax is a national obligation and no one including sugar mills should have any reservations in this regard."

Commenting on the demand that sugar import be exempted from the general sales tax, he says it is a totally unjustified demand. "How is it possible that you levy taxes at the domestic level but exempt them when it comes to imports. It is against the principle of 'equal treatment' as promised by Pakistan under the agreements mandated by the World Trade Organization (WTO)."

He also calls it an impractable suggestion to exempt sugar altogether from general sales tax as a way to bring down its prices. "Taxes are not the reason for current hike in sugar prices."

There is a lot of hype in the international press these days about the emergence of India as an economic powerhouse that is likely to rival China in the next few years. The rapid growth of India's IT export earnings is often cited as an example of the economic and technological progress that India has made in recent years. But there is a darker side to this rosy picture. According to the World Bank, about 500 million Indians still lack access to electricity. That's nearly 50 per cent of India's population of 1.1 billion, and more than the total population of the European Union.

The Indian government, for its part, says it aims to bring electricity to all rural areas by 2012 and has committed $ 3.1 billion for rural electrification. By contrast, rural electrification in Pakistan has now been extended to more than 90,000 villages (13,000 in the current fiscal year alone), and the Pakistan government says it plans to electrify all the remaining villages by the end of 2007.

On other fronts, too, India is in serious trouble. It has the world's highest number of HIV infections: over four million infected people and 350,000 AIDS-related deaths in 2004. One in 50 pregnant women in urban areas tests positive and epidemic levels are reported among northern drug users. Some 350 million people in India live below the poverty line with a per capita income of less than a dollar a day. Another 500 million are not much better off, with a per capita income of less than two dollars a day.

India's infrastructure is in shambles. Its roads are in an atrocious state. The antiquated railway network (which is one of the biggest in the world and carries over 13 million people to some 7,000 stations every day) is falling apart and horrific train accidents have become increasingly common.

Adequate housing is in chronic short supply and tens of millions of people in the cities sleep on the streets. Calcutta's slums are the worst in the world for any major city, and even Bombay (India's wealthiest city) increasingly resembles a huge slum.

India's life expectancy, at 62 years, is lower than Pakistan's, at 63, and India has one doctor per 2,165 people, as against one per 2,000 people in Pakistan.

For years, a severe fiscal crisis has plagued Indian governments bedeviled by chronic and huge budget deficits. These deficits partly came from the bankruptcy of state-owned enterprises, ill-considered increases in social spending, and over-growth of the public sector. To sustain the deficits, successive Indian governments incurred heavy debt burdens. This forced them to cut back sharply on investment in both physical and social infrastructure. This, in turn, led to low wages and low employment rates, resulting in low consumption and poor motivation. The last two have resulted in low productivity.

Poor productivity, in turn, means poor profits, which, on the one hand, will discourage potential investors from investing more, and on the other hand, will affect the revenues received by the government. Diminished government revenues mean that only a slim budget can be assigned to build up India's infrastructure.

It has been argued that, under global interdependence, the worst choice a country can make is autarchy (self-sufficiency). India lags behind in many key technologies because it opted for many years to do it itself.

Successive Indian governments have been proclaiming the promise of a strong Indian economy for years. 'Strong and steady growth' has been the official mantra.

The trouble is that this growth has not made much of a dent in poverty. The often-cited figure of the emergence of an Indian middle class of 250 million people has been static for years. The question is, what about the other 850 million Indians? How long will it take them to emerge out of the swamp of poverty? Another 50 years? Another 100 years? Or what?

And India still lags far behind China in attracting foreign direct investment. FDI flows into India totaled $ 6 billion in 2005, versus $ 50 billion for China.

True, the Indian economy has been growing at the rate of over six per cent per annum in recent years. Even at this rate of growth, however, it will take decades to lift hundreds of millions of Indians out of poverty.

In 1991, the then-Congress Party government (in which India's current prime minister, Manmohan Singh, was finance minister), threatened with a balance-of-payments crunch, started the painful task of deregulating industry and stripping special interests of their privileges. The result was brisker growth and the flowering of the software industry.

But the reforms have proceeded in a halting manner, and never produced the 8 per cent-plus annual growth rates that India really needs to relieve grinding poverty. Enough reforms have gone through to inflict enormous pain on ordinary Indians. But not enough reform has occurred to give businesses and workers the flexibility and speed they need.

India has lowered tariffs sufficiently to let cheap imports come in and compete for consumers' hard-earned rupees against locally made goods. The result has been a host of bargains for shoppers, but devastation for local factories. To cite only one example, in Navi Mumbai, an industrial suburb of Bombay, more than 1,000 factories have shut down.

In theory, the flood of cheap imports will force local businesses to restructure and get more efficient (that's the same argument one hears in Pakistan). But these businesses are hobbled by high costs -- and no reform laws have been passed to lower them. Indian businesses are hampered by tough labour laws and high water and power bills.

The big, bitter pill is labour reform. Laying-off workers is all but impossible. That puts off foreign investment and leaves Indian industry hamstrung when it comes to serious restructuring.

India's industry is also manacled by other archaic laws. The excise tax is so complex and arcane that you need a PhD to understand it. The process adds 5 per cent to industry costs and wastes time.

The Indian government has now awakened to the immediate dangers and is trying to stem the flood of cheap imports. But fundamental labour reform or a simplified tax code? No such breakthroughs are on the horizon.

Pakistan is a classic model to show how not to make a budget. The country has a long 59-year economic history, dominated directly and indirectly either by non-civilian managers or by those working under the directions, dictations and conditionalities of international financial institutions. The liberal agenda of the corporate globalised world has of late become another dominant feature in Pakistan's economic governance.

Since signing of structural adjustment programme by Pakistan in 1988, the supply side economic has been prescribed as a way to liberalize the economy, privatise the state-owned enterprises and regulate market forces. This liberal model of economy coupled with tighter monetary and restrictive fiscal policies has resulted in the failure of the economy to pick up for 15 consecutive years.

There exists a vast body of literature on the adverse impacts of adjustment policies on employment, growth, output, poverty, inequality and external balance of payments. This was exactly the case in Pakistan, at least until the post-September 11, 2001 turnaround occurred. Since then, Pakistan has experienced a positive external influence through higher remittances, more donor aid and rescheduling and cancellation of debt, with increasing access to international markets. These relatively favourable macroeconomic conditions and 'accommodative monetary policy' facilitated the emergence of a new elite class -- though thriving on high state subsidies -- comprising stock market investors, beneficiaries of privatisation and real estate owners/dealers. But the policies of deregulation of public services and a growth pattern marred by long periods of stagnation have widen the gap between the rich and the poor. As a result, economic activity by and large has worked well for a certain section of the populace -- industrialists, some agriculturists and corporations with a strong links with civil and military bureaucracy.

It is in this context that one needs to look at Pakistan's budget documents which are highly complex, lengthy and difficult to read and make sense of. Even for most of the Parliamentarians, it is hard to derive meaningful information from them so as to create a meaningful parliamentary or public debate about them. For common people, it is very difficult to understand even how the budgets are made, let alone comprehend their complex texts.

If we look at our legislatures' knowledge of rules, their ability to participate in an organised, informed debate on the budget making process and their capacity to propose amendments (an important tool for legislation), we are faced with a situation where most of the legislators are found wanting on most of these counts. As a result, budget making process has always remained the domain of military-civil bureaucracy working under the directions and dictations of the International Monetary Fund and the World Bank. There is very little room available for anyone wanting to influence the policy in the favour of the poor.

Budget making process and the context of economic policies

It is the national budget through which resources for national development are allocated. Unfortunately, all national budgets formulated since Pakistan's independence in 1947 have been deficient in terms of providing comprehensive guidelines and mechanisms for achieving the objectives of national welfare, poverty reduction, economic justice, regional balance and decent living conditions. The process of making budgets is rarely or never has been transparent and genuinely participatory. Drumbeating of growth has always been its central slogan.

National budget announcement is, in fact, dominated by the same 59-year old habit of claiming that the budget will automatically lead to poverty reduction. But whatever growth has been achieved during the last six decades has never 'trickled down'. The recent pronouncements of significant reduction in poverty is at best disputed because a very large number of Pakistanis are queuing outside utility stores for cheaper pulses and sugar. Government's announcement to offer subsidies for the provision of these commodities is a de facto acceptance of widespread poverty and price hike.

Allocation of money for public sector development programmes has always suffered from one fundamental flaw: There is accountability and transparency in the allocation and utilisation of these funds and their details are not subject to public disclosure.

The existing tax structure is highly exploitative of the poor as the major portion of the tax revenue is raised through indirect taxes, which are regressive in nature making the incidence of taxes to fall largely on the poor. Because the present tax structure cannot ensure redistribution of income, it can hardly contribute to poverty eradication.

Some general observations on the budget making process are as follows. The segregation of the national budget into revenue and development budgets makes it very difficult to distinguish the budget components pertinent to the objective of poverty eradication. This is a serious impediment to an accurate appraisal of the budgetary process as far as poverty eradication is concerned.

For the last many years, development expenditure has shown a continuous declining trend because funds allocated for development either remain under-utilised or are targeted at wrong projects. At the same time, defense expenditure has been constantly increasing.

Allocation for social service sector has not exceeded a fraction of the total expenditure. Within development expenditures, allocation for social service sector has not increased much. To further confound the situation, original budget estimates under this head are routinely revised and reduced.

Programmes like Zakat fund, Baitul Mal, subsidies on wheat and fertilizer etc have a number of inefficiencies which render them ineffective for the poorest of the poor. Microcredit programmes' coverage and target is very low and they charge unreasonable rates of interest. The impact of these programmes, in terms of generating employment and reducing poverty, is still inconclusive.

Now some observations on the budget for 2006-07, food subsidies have been converted into subsidies for public sector organisations like Water and Power Development Authority (Wapda) rather than using them for food security or cash transfers for the poorest of the poor. Though the budget has increased total expenditure for women development, the coverage of women development programmes is still insufficient and funds allocated for the purpose highly under-utilised.

Resources allocated for the education sector, at present, are extremely inadequate. There are serious inequalities in the expenditure pattern in various sub-sectors of education. Of all the sub-sectors, primary education is the most neglected one. But even if it's not so, expenditure in primary education will continue to be wasted if the quality of education imparted at this level is not improved.

In fact, educational sector is pitched against itself. A special problem in Pakistan is that the country has multiple parallel systems of education. First, there is the well known division between the so-called English medium and Urdu medium schools that exacerbates existing social and economic divisions and leads to a virtual system of educational apartheid in the country. Second and equally important is the divide between the 'formal' educational institutions (formal in the sense of being under some nominal supervision of national educational authorities) and the 'informal' institutions, especially the madrassas.

Education remains inequitably distributed among various income groups and regions in the country. Educational institutions lack physical facilities. Educational institutions face shortage of qualified and motivated teachers, especially female teachers. Due to financial constraints and lack of managerial capacity, education targets remained un-achieved. Classification of schools as elite and non-elite, government and non-government, military and madrassa, rural and urban and disparities between southern and northern regions of the country are widely recognised. One classic example is of the population of 600,000 people in Islamabad having access to unlimited number of universities both open and close and operating in different media, with some of them housed together in the same building.

Healthcare system in Pakistan, both public and private, is also found to be iniquitous. Private health service providers serve exclusively the well-off, bypassing the poor and the poorest. Major government hospitals, specialised hospitals and qualified/trained doctors are also found to be in the service of the rich and the middle class.

The poorest of the poor in both urban and rural areas are also deprived of institutional credit facilities. Although non-government organisations have been trying to bridge the gap, the coverage of their programmes so far has not been significant.

Lessons learnt

Making a budget is a highly complex, secretive, technical and bureaucratic affair in Pakistan. It is also highly biased in the favour of elite, donor agencies and pro-liberal agenda of the global corporate world. The process is non-participatory, non-transparent, and not accountable to the people.

The budget hardly address/expose the rich, those who have accumulated power and wealth at the expense of the poor. Recent sugar and wheat crises are glaring examples of this economic injustice.

Information about the budget, though it exists, is not released. In fact, it is hardly allowed to enter the domain of public debate. As most of the fiscal and financial measures are now being taken as matters of routine all through the year, budgets have become formal exercises. The budget gets so changed due to these measures that original allocations no longer matter at the end of the year.

Nobody knows what is actually disbursed or spent (or deliberately mis-recorded). This is particularly true for defence expenditure. Every year the data is juggled by frequently changing baselines of national accounts. It then makes easy to claim that debt burden and poverty have decreased.

Key expenditures are kept off the budget documents or are concealed in the fine print, making it hard to derive information about who gets what and who spends how much money allocated to them. For instance, under privatisation law, the government is bound to spend 10 per cent of the money made from privatisation on poverty reduction and the remaining 90 per cent on debt reduction. No accounts have ever been presented in terms of where the privatisation money has been diverted to. Instead, painful and often corrupt practices of selling public assets are being used to 'bribe' the cronies of the regime.

Of late the Supreme Court of Pakistan has stayed the handing over of Pakistan Steal Mill to its private sector buyers. The opposition parties accuse the government of incurring loss of Rs 274 billion rupees to the exchequer as a result of the privatisation of the mill.

In these circumstances, making a pro-people budget might be a utopia. To make the budget a more effective instrument for reducing the level of poverty and inequality, solution lies in increasing employment opportunities, in providing better social services -- which so far remain criminally neglected -- in ensuring decent working conditions, in attaining gender balance, in guaranteeing better social justice and ultimately a welfare state that will automatically take care of the poor people.

The task is decidedly beyond the capacity of present rulers. It needs overhauling of not just all the fiscal and monetary policies but also those government macroeconomic, development and trade sectors. All of them need to be given a human face.

This would require making the budget formulation process fully transparent and getting inputs from various social groups including the organisations of the poor.

The writers are the faculty members of department of economics of the Quaid-e-Azam University, Islamabad.

Agricultural development implies a shift from traditional farming methods to science-based methods of production and post-harvest handling of farm produce which comprise new technological components, new crop varieties, new farming systems and marketing practices. Research plays a vital role in this process as it generates tested and useful scientific knowledge for improving farm productivity. However, the adoption of this knowledge requires an efficient delivery system in which all the important actors should participate actively.

Agricultural extension is a key ingredient of any research and development (R&D) system aimed at improving farm productivity and promoting profitable agri-business. It is a fundamental tool for bringing desired change in knowledge, skill, human attitude and in prevalent cropping patterns and farming systems through effective training and communication techniques in a given environment It also works as a facilitator for establishing purposeful linkages among all the actors involved in promoting agricultural production, processing and marketing for better returns

Historical perspective

The concept and practice of agriculture extension is very old. Explorations carried out in Iraq have revealed that it was practiced in 1800 B.C. Advices for proper watering and rat control were found written on lime tablets.

In the absence of an institute or agency for learning and practical education, exchange of indigenous knowledge and experience in the past was through personal contacts and observations. With the advancement of sciences useful knowledge was gained through empirical experimentation and trail, which could be utilized by the farmers for boosting their farm production. This created the need for organising institutes and deportments for the delivery of useful research results to the actual end-users.

It was in the late 19th century that the land grant system of colleges was legalised in the USA. In the UK and France extension approaches and organisations were established primarily for food security in the face of reoccurring of highly devastating diseases and the need for solving problems confronted by the farmers. Models developed in these countries were adopted in colonial countries initially for the improvement of raw material for export purpose and to ensure enough food supplies for the armies.

The subcontinent

During the early years of British Raj there was a sharp focus on high-value exportable commodities like tea, tobacco and cotton. The frequent dry spells and famines necessitated the creation of an irrigation system and setting up a well integrated agricultural education, research and extension system for improving crop yields and livestock production and solving the problems faced by the farmers. At partition in 1947, Pakistan inherited a unified system of agricultural research and development which also dealt with the provision of essential inputs and field services to the farmers. After the imposition of the martial law in 1958 and merger of the provinces into one unit this unified system was restructured into a series of independent institutions and organisations. Education was divorced from research and had its own independent network. Extension after complete separation was reorganised on the pattern of civil administration starting from the union council or grass roots level. Supply of inputs and services was gradually transferred to corporations and private agencies. Agriculture extension was converted into a missionary type of preaching organisation with no support of research. With this change the essential linkages between researchers, extension agents and the farmers became very weak. This serious lack of cohesion and integration adversely affected the process of problem-oriented research, delivery of useful research results to the end-users for rapid adoption and sustainable development in agriculture sector.

Major approaches

In order to strengthen linkages and create harmony in the development endeavors a number of approaches were applied at various levels. It would be worth going over them briefly.

The Village Cooperative Movement: It was started immediately after the independence with the concept that the entire farmers in a village should unite under the aegis of Cooperative Department and organise their own committees to work on cooperative basis for which the credit was made available by the department. In short it was a credit-based extension approach. It failed because it only benefited the influential farmers.

Village AID Programmes: In the early 1950s a Village Agricultural and Industrial Development programme (Village AID Programme) was launched as a holistic approach for the socio-economic uplift of the rural masses with the assistance of USA. It was a top-to-bottom approach having a well-defined hierarchy of staff and activities. Teams of female workers were also employed to work at union council level for improving the income and living conditions of the farm families. Most of the field and administrative staff was acquired on deputation from various development departments. Nevertheless, it had no linkages with the research institutes and the universities. The programme was closed in the early 1960s due to departmental rivalries, overlapping of functions, and lack of coordination and the attitude of the rural masses toward female workers.

Integrated Rural Development Markaz: On the dismemberment of the Village AID Programme the deputationists were sent back to their parent departments and the remaining staff was absorbed in the local bodies' organisations. The concept of establishing a model of integrated rural development centre or markaz where all the essential inputs and services were provided under one umbrella was again implemented with the staff drawn on deputation from various departments. It was placed under the control of the district administration. The programme showed no significant results and was closed due to complex management problems and lack of motivated staff.

Training and Visit System (T&V System): In 1980s the World Bank introduced T and V system approach. It was basically a management approach focused on improving the efficiency of the staff through training of field staff and visits to farms according to a scheduled plan of activities to be carried out through progressive farmers. It also aimed at improving mobility of the field staff. This programme improved the mobility and professional capabilities of the field staff but it was considered an expansive approach. Furthermore it had no in- built arrangements for practical linkages with research institutes for updating massages and communication of the problems of the farmers for appropriate solutions.

Farming System Research and Extension Approach (FSR/E): The main objective of this programme was to introduce most appropriate and profitable interventions in the existing farming system of the area instead of focusing on a small plot of land or commodity. This model also proved expensive and received low priority in resource allocation.

Outreach Programme: In order to improve the quality of education and research in the NWFP an outreach programme was launched there in the mid-1980s under TIPAN Project (Transmission and Integration of Agricultural Network) of the NWFP University with the assistance of Illinois University in USA. The main purpose of this programme was to broaden out-reach of the faculty members and the research scientists and take the NWFP Agricultural University to the people as an active partner in socio-economic development. However, like other approaches this programme had also week linkages with Agricultural Extension. As it was a forced marriage between research and education. It gradually resulted in separation with no significant achievements.

Impact of devolution on agricultural extension

With the introduction of devolution of power system the provincial agricultural extension setup has now been transferred and placed at the disposal of the district nazim. Keeping in view the availability of resources, limitations and competence of the available technical manpower and expressed demand of the people district nazim has to prepare his own plan of development priorities. Apparently there will be more pressure for road-building, drinking water, health and education It is obvious that agriculture may receive low priority. Furthermore, under this system as well, research is kept separate with no functional linkages for upgrading skill and conducting problem oriented research.

The weaknesses

No doubt the agricultural extension has played a crucial role in creating awareness about the new crop varieties and their production technologies enhancing per acre yields 3-4 times but the rate of adoption has been very slow. So far only 30-40 per cent yield potential of the improved varieties has been exploited. There are a number of reasons for this slow adoption but on the basis of an objective analysis of the above-mentioned situation, following weaknesses and gaps are quite evident.

• There has been no consistent and balanced policy for agricultural education, research and extension.

• Research, extension and farmers linkages are still very weak.

• No efficient system of inputs supplies and field services has been established in the country. This has adversely affected the rate of adoption of the recommended technologies and inputs.

• Agricultural production system has not been linked with the markets. There are serious gluts and production errors. There is a strong need to commercialise production system through promoting agribusiness and value addition of farm produce.

• There are no demand-based and client-oriented research and extension approaches.

• Effective regulatory and quality control measures are lacking

• At rhetoric level agriculture is considered the main driving force for the economic growth but at the time of resource allocation it receives low priority.

• There is no recognition and appreciation of the services rendered by the researchers and the extension agents. Expectations from agricultural extension agents are very high. They are made in most of the cases escape goat for policy failures and production errors.

Suggestions

It should be clearly understood that each technology has its own essential components and input requirements. If these essential ingredients are not made available as recommended the technology will not generate the expected results or benefits. In case of an imbalance in inputs there may be even negative effects. It is also important to know that awareness alone will not be helpful in adopting new technologies unless the production is linked with the market and the producers have easy and profitable outlets for the farm produce. For a progressively sustainable growth and exploring competitive markets research support is a must. Another critical point is that the system and approaches should be designed and executed keeping in view the prevalent social and cultural values of the area. These approaches should be flexible, innovative and attractive for various clientele groups. In the light of the foregoing discussion following measures are suggested for an efficient agricultural extension system in Pakistan.

• A sound national agricultural policy is the basis for sustainable development and growth. National goals and objectives should be derived from the national policy.

• Each mother research institute or centre covering special crops and livestock should have a technology transfer division (TTD). This division should have the responsibilities and capabilities to tailor useful research findings and recommendations of the researchers into understandable languages for further dissemination through electronic and print media and ocular demonstrations. Another important responsibility should be to train the subject matter specialists. It should also be an important function of TTD to strengthen research, extension and farmers linkages through on-farm adaptive trails and demonstrations of the newly evolved techniques and crop varieties. In each district or ecological zone there should be an agricultural demonstration farm for showing the performance of improved crop varieties and animal breeds and improved agro-techniques and also for updating the skill and experience of the farmers, extension staff and the stakeholders.

• Timely availability of essential inputs and services at reasonable price should be ensured to the growers. Establishment of agriculture inputs stores and farm service centers on the pattern of utility stores in urban areas can be very helpful in achieving this objective.

• Private sector should be fully involved in demand based and client oriented research and extension activities. It should be made compulsory for the agro-based industrial units to invest a portion of their earnings in R&D activities for improving their profitability and competitiveness. Working patterns of Halla Milk Plant, Engro ltd and Sugar Industries are available wherein the expenditure on extension services and inputs is conveniently absorbed in the cost of processing and marketing of the product.

• Regulatory measures and the enforcement of quality standard is the responsibility of the government. However, for performing these functions there should be a separate well-qualified and competent staff and requisite lab facilities. The field staff engaged in extension work in the district should not be burdened with these duties.

• NGOs and corporate bodies should be involved in community development programmes and field-to-market agribusiness.

• There should be diversification of economic activity for cultivators and the landless farmers to reduce poverty levels. Specialised extension service should be available for promoting income generating activities.

It is reiterated that an extension system cannot be successful without ensuring the availability of essential inputs and services and provision of efficient profitable outlets for the farm produce. Extension agent is one of the actors working for bringing change in skills and human behaviour. Other factors have also to contribute in a synergic manner.

The author is a former Director-General, Agriculture, NWFP

Fatehullah Gandapur: I am opposing Kalabagh Dam purely on technological grounds. Being a professional, I will only give professional reasons for my opposition.

The life of its reservoir will be very short, 20 years to be precise, and it will not add any acres to Pakistan's irrigated lands. Claims in this regard are wrong. It will only make up for the storage losses caused by the silting up Tarbela and Mangla dams. In this sense, it is a replacement dam. It will not generate 3,600 megawatts of electricity, as is wrongly claimed by the government. It will only produce 1,460 megawatts, which will be its dependable power-generation capacity. To generate the additional 2,000 megawatts of power, the government has a plan to install a thermal power plant near the dam site.

Moreover, the area earmarked for Kalabagh Dam falls in a high risk seismic zone. The dam's consultant agrees that its foundation will be unsafe for any structure 160 feet high. The height of Kalabagh Dam is 260 feet. So, I suggest to the government that if it still wants to utilise the site, it should instead construct a raised barrage there. This barrage will have a capacity to store 3.5 million acre feet of water. But unlike Kalabagh Dam it will last forever. Its power generation capacity will also be same -- 1,460 megawatts -- as that of Kalabagh Dam. Above all, the construction cost (of the barrage) will be relatively very low and it can be completed quickly.

On the other hand I emphasise on the construction of Katzara Dam because it costs nearly as much as Kalabagh Dam does but it can store 35 million acre feet of water and generate 15,000 megawatts of power. The life-span of Katzara Dam will be more than 1000 years because it is out of the monsoon range and, therefore, will not be flooded with silt. (The water flowing into it) is snow-fed. Katzara Dam can control floods and can be helpful in coping with calamities expected in future as a result of environmental degradation. Above all, if this dam is built, it will stop soil erosion in Skardu valley, the most susceptible place for soil erosion. This will, in turn, stop silt from flowing downstream the Indus river -- something which silts up Tarbela Dam. Had Katzara Dam been constructed before Tarbela Dam, the latter's life-span would have been 1000 years instead of the present 50 years.

The life-span of Bhasha Dam, according to its consultant, is 80 years. But if Bhasha Dam is built after Katzara Dam, then this period will stretch to almost 1000 years.

I may add that in Kalabagh Dam, silt will not come from the Indus river alone. It will also flow into the dam from the Kabul river. Priority should be given to building dams in the upper riparian areas of the Indus river in order to control silt.

TNS: When you say that Katzara Dam should have been built before the Tarbela Dam, are you suggesting that the danger of silting was not properly calculated?

FG: No, they were not. I did a pre-feasibility study on Katzara Dam in 1962 but nobody was interested.

TNS: Are dams good or bad?

FG: The argument put forward by Sindh against the construction of dams is completely illogical. Dams are good; they must be built. They do not consume water. They are like banks. You can withdraw whatever amount of water (after it is stored by a dam) whenever you need it. They also generate power at a low cost.

Pakistan should have constructed at least 20 dams by now. No (big) dam has been built after the commissioning of Tarbela Dam in 1974. The government should have put Kalabagh Dam aside as soon dispute arose over it. Another dam should have been built instead to overcome the scarcity of water.

Now, Pakistan is facing critical times ahead. If (big) dams are not built within a decade, famine will sway the country. Planning (for big dams) should immediately start because water projects are time consuming and costly.

TNS: So you are not concerned with the social impact of mega dams...

FG: In China, the construction of one mega dam displaced 1.5 million people. But they were given alternative places to live even before they were dislocated. People do everything they can for their countries. If some populated area comes under water as the result of a dam's construction, no one should raise hue and cry because (people living in these areas) can be shifted to other places.

TNS: You have worked as Irsa's chairman. What do you say about the authority's working? Is it sloppy? Does the authority lack mechanism to enforce its writ?

FG: Irsa simultaneously have too much powers and no powers at all. It is Irsa's mandate to implement the 1991 water accord but the authority does not have financial, administrative or judicial powers to get it implemented. Irsa is dependent on the finance department for its salaries and other running expenses. It was founded in good faith but due to the lack of these powers it has been rendered ineffective. Irsa should have powers to build dams and resolve water-related disputes.

TNS: If Irsa is that powerless, how can the provinces resolve the issue of water pilferage?

FG: Though the government has installed telemetry system at the cost of Rs 25 crores (to measure water levels at various dams and barrages) but this system has failed to end the allegations of water pilferage. There have been instances when 80,000 cusecs of water were pilfered out of 100,000 cusecs flowing through the Indus system but the equipment did not register it. Now if (the federal government) wants to stop water pilferage and distribute water among provinces honestly, it needs to thoroughly investigate who is stealing how much water, where and when. The mere setting up of a measuring system cannot deliver on its own.

TNS: What do you say about the observation that the 1991 Accord was unjust?

FG: The basic formula of the 1991 Accord was that the area already under cultivation will not be touched. Also, the accord did not change water schemes that were being executed and the water that was being historically used by different provinces. It meant a large amount of water given to Sindh and Punjab for irrigation without having to increase allocation of water to the Frontier and Balochistan, which do not have vast tracts of irrigated land and elaborate canal systems. I favour a first come, first serve formula. As water goes away from the source, losses increase both through seepage and evaporation. If the upper riparian lands are irrigated on priority basis, losses will will be little. It is not enough that we irrigate our lands only through gravity flow. We should also use lift irrigation techniques. Under the current situation, the Frontier province is at an extreme disadvantage because most of its land is located above the gravity level.

There is another gross mistake committed in the 1991 Water Accord. It divides 117 million acre feet of water while the actual available amount is 105 million acre feet. Thus 12 million acre feet of water have been distributed without their being present in the system. What was the purpose of this trick? Was it meant to create room for the construction of new dams or was it aimed at making every province feel happy?

TNS: You are the originator of a Grand Pakistan Canal idea. What's that?

FG: I suggested the construction of a barrage at Chashma in 1960. It was subsequently built. When Katzara Dam gets built, the water flowing through the Indus should be divided at Chashma or at some other place close to it. On the right side of the Indus, a mega-canal -- Pakistan Grand Canal, as I named it -- should be built to carry the divided waters to irrigate Dera Ismail Khan, Dera Ghazi Khan, Kachhi area of Balochistan and even upper Sindh. This will be a lined canal which minimises water losses. The rest of the water in the river should be properly channellised, by reducing the width of the river from 14 miles and confining the flow in the old river bed. This would speed up the velocity of water. It will create the added benefit of four million acres of reclaimed land on both sides of the Indus. Moreover, due to channelised bed, no one will be able to steal the water.

Residents of many villages in Jhang district are teetering at the brink of the Jhelum river. Nay, the brink is rushing unto them -- every year creeping a few hundred metres into their homes and farms. During the last few years, the river has changed its course so much that now it flows where the bustling settlements of Siddha, Umrana Janoobi and Lashkary once stood.

People in many other neighbouring villages -- on the western bank of the Jhelum, just before it joins the river Chenab -- are literally living on the edge. This unenviable position is making the residents of these villages a few kilometres upstream Tarimu Headworks to see themselves as permanent losers. "We lost our ancestral lands when the headworks was built in 1938," says Muhammad Hayat, a retired soldier and the head of a community-based organisation in Kamra village.

His family had to migrate to Layyah when their farmland was taken away by the government, along with another 111,000 acres or so from 22 villages in the area, to accommodate the headworks' pond area. After about 40 years in wilderness, his clan returned to its roots in 1970s, not knowing that another loss lurked just round the corner. As 2000s rolled on, Hayat's family -- along with hundreds of others in the area -- is helplessly watching vast swathes of land being taken up by the river.

People in Siddha, which once sprawled over a 52-kanal area a couple of kilometres north of Kamra, rue the loss of their "beautiful" mosque as much as they mourn the sweeping away of their homes and hearths. "Only two years ago, Siddha was full of life. Now it hardly exists," Shahadat Ali, a middle-aged resident of the village tells The News on Sunday during an informal gathering at the bank of the river.

With the village gone, its residents have spread far and wide, with only a few managing to stay in the area. The plight of those who worked as artisans and labourers is particularly galling. Some of them survive by sharing living quarters with friends, relatives and former neighbours and by working as sharecroppers and minions. Others are still clinging to what they have, because they have nowhere to go. "I don't know what to do," says dispirited Muhammad Iqbal, a father of six, who still lives in his family home, though it is only metres away from the river bank, already showing signs of decay.

This helplessness and survival through other means is creating conflicts where none existed when Siddha still prospered. "Those sharing farms and houses with others are completely at the mercy of their benefactors, who in some cases treat them very harshly and make them work without payment," says Iqbal. "Many displaced families are finding it extremely hard to protect their honour" while living on borrowed times.

Allah Ditta says the river erosion not just takes away their lands and houses, it also deprives them of the right to benefit from their own property. "Once a village or its lands become part of the river, the villagers are allowed neither to fish nor to cross the river using their own means. Both fishing and boating are contracted out by the government." Sometimes, says Shamsuddin Chishti district coordinator of Doaba Foundation, a civil society organisation based in Jhang and active in the area, farmers have to pay to cross the river from where once their own lands were." Those who try to catch fish to make ends meet are arrested," says Chishti.

Most of the villagers in the area put their plight to "increased erosion" caused by two changes in the river's behaviour. "Erosion has always been a fact of life here," says Allah Ditta, an ageing bearded farmer from Chauntra village. But recently it has changed its direction, raised its intensity and added to its destruction because the river now has more water during winter than it usually does. Also, the water now travels much faster than it did earlier," he tells TNS.

Conventional wisdom puts these changes down to annual closure of canals -- which means lifting of all the headworks' gates to allow water to flow at greater speed -- and added flow of water from the Indus river into the Jhelum through Chashma-Jhelum Link Canal. "This is not a natural calamity. It's a man-made disaster," says Shamsuddin Chishti.

Interviews with officials at the offices of Tarimu Headworks only confirm this. "Yes, water flow during winter is not regulated," says Rafiq Ahmed, a sub-engineer. He also verifies that there has been, during the last three years, increased water inflow through Chashma-Jhelum Link Canal because of the "repair work going on at Taunsa Barrage," downstream Chashma. The repairing has necessitated that the bulk of Indus water is not allowed to pass through Taunsa during winter when lesser water in the river makes repairing more feasible than during any other time of the year. "Most of the Indus water during that time is diverted to the Jhelum," Rafiq tells TNS at his office near the headworks.

His superiors at the Irrigation Department's provincial secretariat in Lahore tend to disagree. "River erosion in Pakistan has always been more severe in winter than in summer -- even before dams, barrages and headworks were built -- and this is not specific to one river, one area or a certain period of time in recent or distant history," says Israrul Haq, the department's additional secretary (technical). "The speed of the river water is always greater in winter than in summer. This is because water flow decreases in winter, allowing the river to flow through a narrower channel, thus increasing the velocity of its flow."

Israr agrees that during the last three years, the Chashma-Jhelum Link Canal has not been closed during the annual winter closure of canals because of the repairing of Taunsa Barrage. But this, he says, has nothing to do with the speed of the water or the erosion it is causing. "Canals are built in such a way that they don't allow water to rush through them. They have a gently declining level and Chashma-Jhelum Link Canal is no exception to this rule. It does not change the natural velocity of water in the Jhelum, even though it adds to its flow," Israr explains.

He also elaborates on why erosion along the river beds is not a function of how barrages and headworks are regulated and how much water a river has during a particular season. "The level of erosion depends upon the level of sediment a river carries at a certain time of the year. It also depends on the quality of the earth it strikes." In winter, according to him, erosion is greater because then the river water carries less sedimentation than it does in summer and the analysis of the earth on the river bank can easily verify that it is weaker in winters than in summers. "To acquire its natural equilibrium, the river picks up sediment from its banks which are already weakened by the wintry conditions."

The villagers affected by erosion may not be satisfied by this 'technical' explanation. They would rather have something done about it so that it does not keep on wreaking havoc with their lives and livelihood. "We are treated by the government as if we are Palestinians living under Israeli occupation," says Ramzan Khan, a resident of Kamra. If we had been considered Pakistani citizens, somebody would have cared to ameliorate our suffering."

Officials at Tarimu say there are doing their bit to check erosion. We have proposed the construction of a spur to close a creek the river has created to flow westwards of its normal course. "The water flowing through this creek is causing all the erosion. So we have proposed that somehow we check the flow of water into it," says sub-engineer Rafiq. The project, which he claims is devised by the provincial irrigation authorities, is now lying with the federal government for approval and funding.

Israrul Haq does not know about any such project. "We, at the provincial secretariat, don't have plans for constructing the spur," he says; for a number of reasons. The foremost among them is the unsustainability of the project. "A spur cannot guarantee that the river will not keep moving westwards and bypass it sooner rather than later." Also, he says, we don't have model studies to know if the project can deliver. "We cannot perfectly simulate all the natural conditions. The results of a model study will, therefore, always fall short of the actual requirements." What is left is a hit and trial method. There is no guarantee that it will ever succeed."

Funding, according to Israr, is another problem area. "We receive about Rs 300-400 million annually from the federal government for the upkeep of the river system. Our priority areas are maintenance of headworks and barrages, keeping the irrigation system up and running and protecting infrastructure like roads, industries and big towns. Protecting small villages and farmland on the river bank are not our priorities," he adds.

Teetering on the brink of a perpetual disaster, the villagers upstream Tarimu may be forgiven for believing that these official preferences are tripping them over.

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The world heaved a sigh of relief when Iran found some positive aspects in the latest offer made by the five permanent members of the United Security Council plus Germany. The offer came after Iranian President Ahmedinejad wrote a letter to the president of the United States. This was viewed as a smart diplomatic move at a time when the United Nations was seriously considering imposing sanctions on Iran for continuing with nuclear enrichment. The Iranian gesture paid off, as pressure for sanctions changed into a new offer of incentives and some punitive measures if Iran fails to comply with the requirement of suspending uranium enrichment. While the European Union's foreign policy chief, Javier Solana, downplayed the punitive part of the new offer, it is unclear whether the conditional incentives will be taken up by Iran.

While the precondition is only to suspend and not halt uranium enrichment, Iran's supreme spiritual leader Ayatollah Ali Khamenei has rejected even that. Soon thereafter, however, the Iranian president called the offer a step forward. Even earlier than that, chief Iranian negotiator Ali Larijani had described the offer as containing several positive elements. Other hardliners in Iran wish to reject the offer outright as they want no preconditions. A cleavage is, therefore, appearing within the hardline group in Iran, with some wanting to consider and negotiate the offer coolly and others wanting to discard it completely.

While the full details of the offer have not been disclosed, some of the incentives include assistance in building light water nuclear reactors, provision of spareparts for ageing Iranian Boeing aircrafts, and other trade-related inducements. In the absence of details, it is not possible for distant observers to comment on whether the offer should be considered or not. In the interest of amity and peace, however, there are concerns that detached viewers may express.

First, Iran can enrich uranium for civilian purposes under the nuclear Non Proliferation Treaty (NPT). There is near consensus in the non-aligned independent circles that Iran is well within its rights under NPT when it comes to exercising them. This right cannot be taken away per force.

While there are double standards visible in the way the United States is behaving on the issue of Iran's nukes, most independent observers find it disconcerting to see China and Russia as well as Iran's erstwhile European allies playing ball with America even if to a limited degree.

Even though none of us thinks that Iran does not have the right to enrich uranium for civilian purposes, the fact that not even Iran's friends are fully supporting this right provides a lot of food for thought. Iran's friends, in Europe and Asia, would also like it to suspend uranium enrichment forthwith. Why? Because they want Iran to comply with the guidelines and requirements of International Atomic Energy Agency (IAEA).

They are insisting on that because Iran is perceived to have breached these guidelines and requirements on two counts. First, when Iran did not disclose its uranium-related activities even to the IAEA and came under stricter surveillance for this deviation. So, even though Iran did what it could under the NPT vis-a-vis uranium enrichment, the NPT also requires full disclosure of such activities, that Iran did not make and ran into trouble even with friends, who found its position indefensible on this score.

The second breach was more recent, when Iran unilaterally broke the moratorium on uranium enrichment that its previous government had agreed upon with the IAEA until such time as a negotiated solution is reached. This makes the Iranian position even more indefensible.

While it must be exasperating for the Iranian hardliners' to be dictated to by the world powers to stop uranium enrichment, they need to take a deep breath, pause, and consider in the interest of not just the Iranian nuclear programme but also in the larger interest of the people in the country, in the region, and in the world. They need to very strongly reflect on why they are cornered in a tight position and the extent to which they might also themselves have been responsible for that.

There is no denying the fact that the big powers want to keep expanding their zone of influence. We must, however, also try to understand the extent to which we provide them with reasons for doing so. Every time an agreement is breached, the one who breaks it is in a vulnerable position in a world dominated by powers with expansionist designs. So, every time we violate some clause of an international law, we provide the these powers with one more reason to dictate their terms to us with greater force. So, the NPT and/or its additional protocol should not have been signed by Iran. If it has done so, it should now adhered to it in letter and in spirit.

All is not lost yet, considering the support Iran still has in the independent quarters of the world.

Fortunately for Iran very few countries outside of the Security Council remember Iranian breaches. The debate is only about whether or not Iran can enrich uranium for civilian purposes.

While it might not have been very reasonable for Iran to not adhere to all clauses of the NPT, it is equally unreasonable to hear the US Secretary of State Dr Condoleezza Rice keep asserting arrogantly that Iran cannot acquire the technology that might subsequently enable it to build weapons of mass destruction. Iran cannot enrich uranium so long as it is not allowed to do so by the international community, she says. But for her the international community consists only of five permanent Security Council members. Much of the rest of the world thinks that these six countries cannot overwrite the NPT to suit themselves.

There is, therefore, extreme arrogance on the part of those at the apex of the international community. Much of their resistance to Iranian nuclear programme could also be emanating from extreme fear, that is accentuated by hardline statements such as "wiping off Israel" and "a nice world without the USA" often thrown in by the Iranian president. But at the same time, arrogant expressions from the US establishment, arouse even more belligerence in the Iranian regime. This mutually reinforcing counterproductive war of words needs to be slowed down if a negotiated settlement is to be sought. Both parties say they seek such a solution but cannot reach it unless this verbal targeting is reined in and attitudes turned around.

So, despite Ahmedinejad's undiplomatic swipes, his diplomatic move in the form of his letter to George W Bush appears like a tipping point. This moment needs to be seized by both Iran and the US. If the Iranians can come out of their mental block, they can perhaps even negotiate uranium suspension.

As for the US, President Bush must know by now that strong-arm tactics do not work with Iranians. If the US wants to make the most of the current offer, it must stop pushing Iran on a timeline. For, by now, the US ought to realise that Iran is not a country that can be bullied into submission. If the US pushes too much, Iranians will rally around their hardline regime that the US has disliked for over two and a half decades. The US ought to be treading deftly and should be learning from hindsight if nothing else.

Why did India and Brazil not join the recent mini-ministerial of the World Trade Organization (WTO) at Paris to move the stalled Doha Round of global trade talks? For two reasons: firstly, they were absolutely frustrated with no progress being made in the talks, and secondly, their realisation that the Geneva process was being suborned. Anyway the mini-ministerial did take place with only the United States, European Union, Japan and some other rich countries taking part. What came out was also nothing to write home about. However, one cannot sit back. There is a strong need to push for a resolution sooner rather than later.

The main problem with the WTO negotiations is and always has been agriculture, and the fact that both the EU and US accuse each other for not offering enough on this count makes this problem all the more obvious. To make matters more interesting and to divert attention from its own failure to put something substantial on the negotiation table, the US has thrown another