policy & development ~ january 2012 issue

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Monthly Policy & Development | January 2012 |

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The actually existing state of Pakistan Institutionalised exploitation of the civil bureaucracy and the military is far greater in scale

and scope than the ‘corruption’ of Zardari and his cohorts By Aasim Sajjad Akhtar

One of the most enduring myths of the modern age is that of the state. By this I do not mean that the state is complete illusion, but that a particular popular conception of the state persists despite ordinary peoples’ very incongruent everyday experiences with state power. Benedict Anderson has written about the almost transcendental quality of modern nationalism, about its ability to make people who will never know one another feel as if they share some primordial bond. The state is the structure within which nationalism has been nurtured, and it is thus hardly surprising that it has come to acquire a larger-than-life quality.

Pakistanis in particular tend to be very ‘grateful’ for the fact that they have a state at all. The particular narrative of Muslim nationalism in British India that we are fed from an early age necessarily makes us feel like we would have been completely devoured by the spiteful Hindu if we had not carved out a separate state in 1947. This socialisation reifies the concept of both state and citizen in a way that has little to do with the actually existing state and the reality of Pakistani citizenship. Of course, those of us who have never been on the receiving end of state excess remain convinced of the pristine image of the Pakistani state — it is this particular group of ‘citizens’ that tends to be the most vigorous defenders of the guardian of the state itself, the Pakistani military.

On the other hand, in the eyes of ordinary Pakistanis, the myth of the Pakistani state is only sustained through a dualistic understanding of state power. The majority of ‘citizens’ in this country are routinely subject to excess on the part of state functionaries (thana, katcheri, etc.) and are thus hardly deluded about the character of the ‘local’ state with which they come into regular contact. At this level, it is a cruel joke to even suggest that any meaningful notion of citizenship exists; it would be not be incorrect to argue that state functionaries treat ordinary people more like ‘subjects’ than citizens.

However, many ‘subjects’ at the local level still remain convinced that they are ‘citizens’ of the state, thus reinforcing the eternal myth. In other words, ordinary people distinguish between the state functionaries that oppress them at the local level and the proverbial benevolent rulers with whom they will never come into contact. ‘If only they knew what their subordinates were doing to us, they would never allow things to come to this’, is not an uncommon refrain.

This is not to suggest that ordinary Pakistanis do not dwell on the self-aggrandisement of those in the corridors of power in Islamabad (due in large part to the prodding of the corporate media). These days there is incessant focus on a handful of individuals and their ‘corruption’, particularly President Zardari. But herein lies the primary obfuscation at the heart of the state myth — we go on and on about those currently in government, particularly if a Zardari-type ‘bad guy’ is in the mix, yet functionaries of the state at the highest echelons tend to be completely exempt from public scrutiny. And here I refer particularly to the men in khaki.


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Most Pakistanis rarely come into contact with military personnel (although populations at the receiving end of brutal military operations are notable exceptions). Add to this the influence of formal education and the popular media and it is easily understood why the myth of the state is associated most closely with the ‘selfless’ defenders of our borders. To be sure, this myth of the military as the ‘only institution that works’ and the reason why we still maintain a modicum of ‘sovereignty’ has been cultivated for decades on end, and continues to be.

Popular perception of the ‘bureaucracy’, including its higher level, tends not to be as positive, presumably because ordinary people have plenty of contact with this bureaucracy at the lower level and recognize that individuals higher up the hierarchy are likely to be no less committed to personal gain. Nowithstanding ordinary people’s experiences, the bureaucracy is not targeted in the popular media in anything like the same way as politicians.

Thus a false binary of state versus government is constructed and maintained. Indeed, while there is, to an extent, a recognition amongst some ordinary people of the distinction between the permanent state institutions (like thanas and katcheris) and the elected government — let’s just say the distinction between ‘sarkar’ and ‘hukoomat’ — it is actually the (urban) middle class that tends to be largely silent about the structural dimensions of state power whilst constantly going on about the ‘corruption’ of ruling politicians.

An example will help illustrate the point: this past Thursday and Friday (1-2 December), around 3 dozen people from Muzzaffargarh district held a token hunger strike outside the office of the World Bank (WB) in Islamabad — not for the first time — to register their protest against the WB and the Punjab Irrigation Department for continuing to paper over the social and ecological fallouts of the WB-funded Taunsa Barrage Emergency Modernisation and Rehabilitation Project (TBEMRP). The protestors also demanded that the WB shelve its plans to dole out more money to the provincial bureaucracy to rehabilitate the Jinnah Barrage, seeing as the latter project suffers from the same basic design flaws as the TBEMRP.

For the record, the provincial irrigation bureaucracy — not only in Punjab — has been inflicting pain and suffering upon local communities under the guise of ‘development’, with the gracious support of the WB and Asian Development Bank, for the best part of four decades. In recent times the banks have been forced — due to pressure from activists across the world — to ensure that ‘development’ projects that they fund conform to basic environmental and social norms. So, for example, any WB or ADB project that causes involuntary displacement must be accompanied by workable plans for resettlement and compensation. Despite the haughty claims of social responsibility on the part of both the WB and Irrigation Department, affectees of the TBEMRP have spent at least half of the compensation money paying bribes to officials of the said department.

In this case, and many others like it, there are no politicians fleecing ordinary people. It is the bureaucracy (and donors) doing their bidding at the cost of local communities. I believe that the institutionalized exploitation of the actually existing state — the civil bureaucracy and the military — is far greater in scale and scope than the ‘corruption’ of Zardari and his cohorts (or whoever else is in power, for that matter). Yet the popular myths that project the permanent state apparatus as the epitome of everything good about Pakistan persist. It


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is clear that some Pakistanis believe that it is necessary to maintain the myth of an omnipotent and inclusive state in the face of ‘external threats’ to our ‘sovereignty’. What about the sovereignty of the tens of millions of ordinary Pakistanis whose basic rights — including the basic right to life — are violated on an everyday basis by the very state of which we are ostensibly proud? Is this ‘internal threat’ — posed by the state itself — not bigger and more urgent than the abstract ‘external threat’ that apparently brings us all together in an ode of deference to our ‘guardians’?

National Human Rights Commission (NHRC) Bill We need a greater commitment in the form of a parliamentary pledge that this country will

never have a law that contravenes the rights of the people By Peter Jacob

Finally, the bill that shall give birth to a National Human Rights Commission (NHRC) is on the National Assembly’s to-do List. Though it will still take some time to pass the bill in both houses, have approval of the President and put the Commission in place, yet it is good news. Many nations have found NHRCs useful for: strengthening norms and values based on human dignity and rights, reducing burden on the justice delivery system and dealing with rigidity of obsolete laws. As ‘The Statement of Object and Reasons’ attached to this bill explains, 56 countries have this arrangement in place recommended by several UN bodies and international treaties.

Besides the significance of reporting this development to the UN Human Rights Council’s session in October 2012 that shall review human rights situation of Pakistan (second time during the incumbency of this government), forming a human rights institution will have an added value in the present circumstances of Pakistan. There is a tremendous potential in this proposition as it seeks to build an institution over universally agreed upon standards of rights and liberties. Minus any expediencies and bureaucratic hurdles, a truly independent and effective NHRC can give new life to the dream for a democratic and autonomous Pakistan, much beyond the political rhetoric.

Nevertheless, it would be a big challenge for the NHRC to function and deliver in the midst of feeble government machinery, massive human rights abuses and high expectations. Just imagine the flood of complaints that is bound to pour in the good offices of the proposed Commission, with given misunderstanding among the citizens on the difference between rights and charity.

The 11 member body is going to need an elaborate arrangement and mechanism to process and respond to a huge number of complaints of human rights violations. While an adequate number of motivated and skilled staff is a must, the provincial governments must either be required to provide an outreach infrastructure to match the needs of a large demographic and geographic spread as Pakistan or legislate to form such Commissions at provincial levels as well. India, for instance, has one for each of its States besides a NHRC. The Provincial autonomy will have to be given a due regard, however, parochial approaches will have to be discouraged. The South Korean NHRC model would be also good to look at that dealt with the aftermath of prolonged autocratic rules in their country.


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The impact of this initiative will largely depend on the role assigned to this institution, its formation and autonomy with regard to rules of business. A clause in the bill that requires NHRC to report to the government, which would be some ministry, looks an impediment as far as autonomy of the new entity. It would serve the purpose well if the proposed Commission should only report to the Parliamentary Standing Committee on Human Rights once a year, in collaboration with but without the approval of any ministry.

With the experiences at hand of such Committees and Commissions in the past that could deliver a little and met enormous difficulties owing to the lack of financial and legal autonomy, the parliament will have to abridge these gaps in the bill. Without restricting the mandate of NHRC in the area of human rights, choices will have to be made with regard to its terms of reference. A distinction in gross and systematic human rights violation will help the course of action and modes operandi of remedial as well as investigative work of the Commission. Bringing Directorate of Human Right under the NHRC would be logical. Apart from the logistics and modalities there are challenges regarding the conceptual issues and education of the citizens in human rights?

The biggest challenge is about building a culture for human rights in social, legal and political systems that have become averse to rights and freedoms. What plans the well-intentioned people in the government and in civil society have to go about this? If the political parties claim a commitment to peoples’ rights, this commitment needs to be reflected in serious and result oriented actions.

Along with the proposed NHRC, we need a greater commitment in the form of a parliamentary pledge that this country will never have a law that contravenes the rights of the people of Pakistan, that the country will get rid of discrimination in whatsoever form and manifestation. That equality of citizens is not going to be a bookish concept but it will become part of daily life.

Once the NHRC becomes a reality the two big political parties — PPP and PMLN — can congratulate themselves for having achieved another goal set out in the Charter of Democracy (CoD). As far as institutional reforms, Pakistan also needs to have a Truth and Reconciliation Commission, something that COD pledged to establish as well. Issues concerning transitional justice are a cause of lurching confusion; be it May 2nd incident or other tragic incidents in the life of the nation. There is a long way to go in structural, institutional and sectoral reforms, through reforming laws and policies. We better make a resolute start and catch up with time.

A small beginning Banks must simplify and re-structure their lending mechanism

By Tahir Ali

Financial help of farmers is necessary for the modernisation of farming and farmers’ prosperity. But small farmers who, according to some estimates, constitute 85 percent of the total 6.6 million farmers in the country, have negligible share in the agriculture credit disbursed in the country in general and Khyber Pakhtunkhwa in particular. Those residing in the far-flung hilly and tribal areas are particularly affected by it.

Financial exclusion of the small farmers who have little resources to approach the research and extension systems, coupled with their illiteracy and poverty, keep away from commercial farming and expose themselves to low productivity, eventually adding to severe financial hardships.


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They, in turn, have to rely on informal sector for their credit needs offered at higher rates, leaving them in a vicious debt-cycle and poverty trap.

Acknowledging that agricultural credit disbursement was worse in KP, the SBP launched some agriculture-credit schemes as part of its financial inclusion programme for KP but credit disbursement ratio couldn’t improve.

Countrywide, less than 2 million farmers of the total 6.6 million, get agriculture credit facility. The situation in KP, which accounts for less than 4 percent of the national agriculture credit disbursement and where over 90 percent are characterised as small farmers, is particularly dismal. Khyber Pakhtunkhwa accounted for Rs 7.9bn or only 3.4 percent of the total agriculture credit of Rs233bn in 2009. Only six percent of farmers in Khyber Pakhtunkhwa have access to agriculture credit against 21 percent for the country.

Various easy credit schemes, support price mechanism and subsidy regimes in the past were designed for small and medium scale farmers, but they scarcely benefited from the schemes and big landlords were the main beneficiaries.

One of the main reasons of small farmers’ financial exclusion is their inability to be bankable — to be able to provide collateral (the explicit or implicit guarantee against the possible risk associated with the loan) to banks as most of them are tenants, who don’t have any property registered in their names or own land below the required level.

Plenty of these farmers, especially those in villages, are also influenced and kept from applying for credit by the Riba-element, a necessary part of credit but avoided by most on religious grounds.

Small farmers have been practically neglected in the existing provincial agriculture policy developed in 2005. The policy has, however, yet to be updated to focus them despite several announcements.

As per the prudential regulations for agriculture financing, banks are required to ensure disbursement of working capital/short term loans within seven days but it is usually delayed. “The entire formalities for any agriculture loan require lengthy documentation and procedure and take around two to four months to get the loan,” says a bank manager on condition of anonymity, when asked about the process of loan delivery.

“Small farmers should be given loans on personal guarantee. Group-based credit schemes are being followed by small banks but needs to be taken up by the main private banks as well to improve credit disbursement ratio in the country. Crop and life insurance is the best way to decrease the risk of farming community against losses and of banks against non-repayment,” he adds.

Some farmers hold the banks responsible for low agriculture credit in the province. “The banks are risk-averse. They avoid lending loans to farmers for fear of default. Much has been said of the one-window operation but no bank as yet has come out with a fast track mechanism for credit disbursement. The banks must simplify and re-structure their


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agriculture lending mechanism and mobile credit officers should reach farmers at their doorsteps to boost credit delivery,” says Shahid Khan, a farmer in Mardan.

Last year, the KP government revived the erstwhile cooperative bank and promised to provide Rs1 billion seed money for easy farm and non-farm loans to small farmers from the bank but practically just Rs200mn were released. This year too, Rs400mn will be released. How can credit ratio be improved with this?

Under agricultural loans scheme through the passbook system, banks are bound to allocate 70 percent of their loans to subsistence farmers but whether the law is followed is not clear.

In group-based lending, developed by the SBP, small farmer groups are formed by the lenders involving 5-10 members having identical needs and registered with the former. Collateral is generally not used and is replaced by personal guarantee —-a joint liability agreement/undertaking — takes its place wherein each member takes the responsibility of the outstanding debt of all group members. In case of any change in the group, a fresh guarantee would be signed by the members.

A group coordinator acts as facilitator of the group and agent of the bank. The bank ensure that group coordinator is executing the assigned tasks as prescribed like liaison with members, arrangement of meetings, etc, and if need be replace him, with the consensus of the group, in case he fails to deliver. Group members ensure that the bank receives timely repayments from individual borrower/group members. But if a borrower dies, liability lies to remaining group members. However life insurance is urged to safeguard the interests of both the borrowers and lenders.

Everyone who owns or is a tenant or lessee over up to12.5 acres of land or have more than 40 sheep, has computerised national identity card, residence in the village and membership in the village organisation, is eligible for crop or non-crop loans in the scheme.

Though globally 12.5 acres of land is the threshold of subsistence farming but in Pakistan one having that much land is considered a rich person given the phenomenon of small land holding in the country. According to an estimate, cultivated land per person in Khyber Pakhtunkhwa stands at just at 0.2 acres. The benchmark needs to be brought down for bank credit if small farmers are to be benefited.

Repayment schedule for farm loans may be set as per production cycle of crops and for non-crop activities, like livestock farm establishment, it should be three to five years.

Data-based decision making There is a need to make structural changes in the census procedures as well as involvement of women in census enumeration. The mirage of electoral democracy that holds the country

together will be in jeopardy if the plans for decennial census are poorly accomplished By Amjad Bhatti and Nadeem Omar

A census is inevitably a blend of politics and science — politics because power and money are linked to how many people live where, science because the technically complex undertaking draws on many scientific disciplines. — Kenneth Prewitt, 2011.

These articles attempt to map out issues related to census and statistics management in Pakistan exploring cross linkages of data generation and management with politics of gender, ethnicity, elections and resource distribution in Pakistan.


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Pakistan is among the 49 countries conducting census this year in 2011, which, rightly so, has been called as the ‘global census year’. Coincidentally, acknowledging the significance of demographic information that census generates, Pakistan has also declared 2011 as the ‘Population Year’.

Population and Housing censuses are essential tools for policy, development planning and monitoring purposes. Reliable, disaggregated data on socio-economic indicators derived from censuses are extensively used as inputs for result-based management and tracking of progress towards national goals and international goals such as Millennium Development Goals (MDGs). Most importantly, the census data has strong sectoral linkages with the constitutional provisions and administrative arrangements. Since its inception, the demographic profile of the population in Pakistan has been the basis of distribution of funds to the provinces, determination of seats in the parliament, recruitment and educational quota on civil posts and educational institutions.

Pakistan inherited a long history of census undertaking that provides valuable data for analysis, but it has unfortunately not been fully utilized. No serious attention has ever been devoted to study Pakistan’s diverse population and to explore the implications it holds for country’s development and politics and ultimate stability. Pakistan’s wide diversity in topography, weather and climate, language, ethnicity, culture, polity and distribution of resources presents a real challenge for the census undertaking. With the first census in 1951, Pakistan has inadequately deployed an integral tool of development planning by being able to conduct only five decennia lpopulation and housing census in 1951, 1961, 1972, 1981, and 1998 with increasing lapses of years. The 1998 Census puts Pakistan’s population at 132.4 million, with 48 percent females, making it the seventh most populous country in the world. In all five censuses information on the following ten topics was solicited: name, sex, age, marital status, religion, language, and literacy, employment and industry. Certain topics were added on to the list, because of their multiple uses for different socio-economic development policy and planning. These topics are: enrolment into educational institutions, field of education, duration of continuous residence of migrant population, and nature of visible disability from which a person is suffering.

For one hundred year from the inception of decennial census in 1881 to 1981, the census have been on the schedule. However, in the last thirty years, the census undertaking has become an irregular practice indicating a deepening crisis of governance. The census scheduled for 1991was delayed for seven years and could only be conducted in 1998, thereby pushing the date for next decennial census to 2008, which sadly still awaits completion. The delays in holding national census, points to weakening territorial writ of the state over its citizens but also reflects the contested nature of rights and privileges administered to the population on the basis of census. Every single census in Pakistan conducted under close military supervision, had led to storms of protests from the disenfranchised ethnic and religious groups, but without eliciting any changes in the census structure, categories and schedule. As a result, the struggle for power among various groups in the society draws on the imbalance between census figures and the situation on the ground.

The international organizations such as UNFPA, UNFIEM, and UN-Habitat contribute substantively to the effective planning, management and execution of the Pakistani


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censuses, while encouraging the use of population data for policy development. The donors have made efforts in training the enumerators, providing the logistic supports and technical capacity building of the Population Census Organization (PCO) for the Census in 2011, but their efforts have not brought to fruition due to lack of political consensus on the census. Inter-agency groups of UN have invested to jointly enhance and develop the capacity of the existing Geographic Information Systems for the statistic divisions of census offices in Islamabad, Karachi, Lahore, Peshawar and Quetta. They will also help train those using the systems in modern technology and the latest GIS software. The use of GIS will replace conventional maps with Google maps, and will minimize the chances of errors in house and building counts.

The statistics on urbanization in Pakistan are most unreliable, given the out-dateddefinition of urban population, and the challenges of urban enumeration, created by vested political interest groups in the cities. In Sindh, a coalition of political parties, has questioned the transparency of the census procedures and disputed the results of recent household census in Sindh, which is to provide a base for population census. The population and household survey has not yet begun at the scheduleddate in September.

As in other spheres of citizenship, Christian population is discriminated and under reported in the census. In the last census of 1998, the total Christian population was estimated to be 5m, whereas the Church records state them to be around 10 M. Most independent observers estimate it to be around 13m.

Attention needs to be placed on the census categories which form the basis of public policy planning and administration. In the past five censuses, there was no direct question as to ethnicity of Pakistani citizens. The ethnic identity is inferred indirectly through the question on language or mother tongue. In a large number of cases in all the provinces in Pakistan, due to a variety of reasons of upward mobility, migration and resettlement, the ethnic groups lose their vernaculars/ethnic languages and adopt other national or cosmopolitan languages. At the same time, they remain culturally aligned to their ethnic group and follow the customs and kinship practices and land tenure of their descent group. In other words, language is one of the determinants of the ethnicity, and cannot be reduced to it. With no question to document the claims to ethnic identity, irrespective of language, it will be a sociological error to subsume ethnic groups under the linguistic categories.

The gender biases in the census have not been addressed. To make women’s work visible, there is a need to make structural changes in the census procedures as well as involvement of women in census enumeration. Male enumerators have invariably been deployed in all of Pakistan’s censuses to collect information on the population and its characteristics, on the housing stock and associated facilities. The enumeration generally occurs during the day, so the enumerators usually face female respondents. As many women in Pakistan find it difficult to disclose personal information to men, even familiar ones, responding to the census enumerators is frequently extremely problematic, and women may provide incomplete, inadequate or erroneous information, or may simply refuse to cooperate.

Although, the scheduled census activities for census 2011 are underway, and the first stage in the census operations, the household listing launched on April 5 has been completed, amid controversies. The Council of Common Interests had already expressed concerns about the latter’s usability in August, 2011 and the census activities are suspended till the resolution of objections in the CCI, whose next meeting has still not been called. According to some reports, PML-N questioned the abnormal rate of urbanization in the house listing census, which saw 84 percent growth of households in Sindh between 1998-2011, in contrast to 32 percent growth in Punjab. Ironically, according to the house listing census,


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Hyderabad, Karachi, Jacobabad and Jamshoro districts recorded 129, 114, 111 and 102 percent increase while Lahore district showed only 0.94 growth in its households.

It is alarming to note that household census, which is the basis of population head count, will be outdated, if the population census does not commence by December, 2011. The most likely scenario is that census process is likely to suffer delays and may not take place this year due to resource constraints and attention being diverted to the preparation required to hold forthcoming national election in 2013.

The financial resources required for authentic and transparent census operations can be partially met nationally and international donor support and private sector investments must be provided to the government.

Although conducted by the federal government, the provincial government plays a critical role by coordinating and supervising the activity and providing the field staff. The task of door to door verification of voter lists by Election Commission of Pakistan and NADRA is performed by the same set of field staff in the provinces who are to undertake the population census.

On a positive note, the Census Ordinance of 1959, which formed the basis of statistical management in Pakistan and under which the past five censuses were conducted has been revised and expanded this year under the Eighteenth Amendment.

According to the decision of Implementation Commission, 11 subjects related to collection, compilation and management of statistical data — earlier being managed by the abolished 17 ministries — have been re-allocated to the Federal Bureau of Statistics.

As a follow-up legislation to the 18thConstitutional Amendment, the Parliament has passed the General Statistics Act 2011. The General Statistics Act 2011, for the reorganization of statisticalsystems in Pakistan, provides a fresh opportunity for reviewing the instruments of census, methodology, and institutional mechanisms for producing timely, reliable authentic and transparent data.

Surprisingly, the Act does not subscribe any role to NADRA, a federal body for civil registration, for negotiating with thereorganization of statistical regimes in Pakistan. The linkages between various institutions of statistical management are not clearly spelled out in the revised Act.

The alleged use of fake, duplicate, and unauthorised Identity Cards (Ids) during the voting on polling stations is repeatedly cited as one of the most common instruments of rigging and proxy representation in Pakistani elections. Currently, NADRA and Election Commission of Pakistan are working jointly to bring about the regime of transparent data management of electoral roles for next election.


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The population increase would lead to increase the number of voters requiring updated electoral role for next election. A new strategy of One CNIC, One Vote is being introduced by NADRA and the Election Commission of Pakistan.

It is important to note that NADRA has increased the registration of population from 55 percent to 91 percent in last three years. Official data indicates following provincial breakdown of registration: 98 percent of the population of Khyber Pakhtunkhwa, 82 percent of Federally Administered Tribal Areas, 92 percent of Punjab, 85 percent of Sindh, 73 percent of Balochistan, 99 percent of Islamabad and Azad Jammu and Kashmir. “In Sindh and Balochistan, the ratio of women’s registration has increased to 78 percent as compared to the previous ratio of 28 percent.

The 7th NFC Award indicates a radical shift in the process of resource distribution between federation and the federating units. The Award has adopted by consensus a set of multiple criteria for determining horizontal distribution of resources against a historical trend of using a single criterion of Population.

Multiple criteria for distribution of revenues amongst the provincial governments was used for the first time in the history of Pakistan. The four point criteria include: population, poverty or backwardness, revenue collection, or generation and inverse population density with the ratio of 82 percent, 10.3 percent, 5.0 percent and 2.7 percent respectively.

Evidently, the mechanism of resource distribution from federation to provinces and between provinces is based on four indicators mentioned in the 7th NFC. Inevitably, that necessitates developing disaggregated data on all four indicators as basis for accurate and predictable resource distribution. However, apart from outdated population data, other three indicators do not have any credible data generated by provinces or the federation. This has critical implication on the implementation of 7th NFC as pre-requisites of fiscal decision-making will remain missing unless authentic and accurate data is not generated, collated and interpreted for the fiscal management at federal and provincial levels.

The turbulent history of census in Pakistan, especially in Balochistan and Sindh indicates the over politicization of census in Pakistan, which has jeopardised the national planning process. Without reliable census figures, macroeconomic management is bound to fail and so is the forthcoming electoral process based oncensus figures fraught with the duplicity.

The accuracy and authenticity of the census figures are critical for transparent, free and fair elections. Given the rapid changes in the demographic profile of Pakistan due to urbanisation, migration, displacements and changes in the federal structure of the state, it is imperative to review the changes in the statistical management regime of Pakistan and suggest measures to reform the traditional censuses with exhaustive information.

To democratise the process of census undertaking, data generation and statistics management, the Council of Common Interest (CCI) should convene a special session to iron out some appropriate framework. Governments should raise awareness about the importance of the census for socio-economic development.

It should highlight the linkages between the reliable statistic and equitable resource allocation and just political representation. Women’s involvement in the census process should be enhanced. No systematic attempt has been made by the government to involve women in planning, designing and implementing census data collection.


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To enhance public participation in the census, publicity campaign should be conducted through panel discussions on television and radio, and to a lesser extent display of some posters, jingles and songs carrying census messages on TV, and quiz programmes, jingles and songs on radio.

The effort to improve public participation in the census activities and the census data on gender sensitive issues should be broadcasted on television and radio. Using television is the most effective way to have census messages trickle down to the general public, respondents and enumerators in order to elicit their cooperation.

The involvement of NGOs in the census taking process should be enhanced. All census data users and stakeholders should be consulted on the census questionnaires. All concerned departments of the public sector, including research organisations, universities, NGOs dealing with population and housing data and relevant international agencies were invited to put forward their requests for questions to be incorporated into the census.

Women’s organisations dealing with population should also be contacted. The mirage of electoral democracy that holds the country together will be in jeopardy if the plans for decennial census are poorly accomplished.

Drowning in debt If the government wants to bring the debt situation under control, reduction in fiscal deficit

and stability in exchange rate are the main solutions By Muhammad Adnan

Pakistan’s debt and liabilities has increased to a record mark of Rs. 11.9974 trillion (66.4 percent of GDP) including domestic debt and liabilities 6.8280 trillion rupees and external debt and liabilities 5.1694 trillion rupees (US $ 60.12 billion) at the end of first quarter FY2011-12, according to the State Bank of Pakistan (SBP).

The debt directly owed by the government from domestic and external sources is called public debt. Debt is owed to manage expenditures for boosting productivity, alleviation of poverty, generating employment, social and economic development, and to increase economic growth. Increase in Public debt, due to sharp increase in domestic borrowing lead to inflationary pressures on the economy. Furthermore, debt servicing in the future hinder allocation of funds to other sectors of the economy.

Pakistan’s debt dynamics has undergone substantial changes in the last three-and-a-half years. At the end of March 2008 Pakistan’s outstanding public debt and liabilities were 6.159 trillion rupees (59 percent of GDP), including domestic debt and liabilities 3.267 trillion rupees and external debt and liabilities US $45.9 billion (Rs2.892 trillion), the present government has accumulated 5.8384 trillion rupees including 4.6154 from domestic sources and US $14.22 billion (Rs1.2230 trillion) International Financial Institutions (IFI’s) in between April 2008 to September 2011. Furthermore, the present government has borrowed 1.473 trillion rupees in between March to September this year, as Pakistan’s debt and liabilities till March 2011 were 10.524 trillion rupees including external debt and liabilities US $59.5 billion (Rs. 5.061 trillion).

Behind this gigantic debt accumulation by present government, there are two main reasons. The first and foremost is budget deficit on average has been 6 and 6.5 as percent of GDP over the last four years, the huge budget deficit occurred due to continuous policy of maintaining untargeted subsidies and to sustain the loss making public sector enterprises.


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The other main reason is sharp depreciation of exchange rate as Rupee is depreciated from 62 per dollar to 88 per dollar in the above said period. The sharp depreciation of exchange rate, contributed to the rise in public debt; this depreciation alone has contributed roughly, 1.3 trillion rupees of debt.

Saqib Sherani, former principal advisor to the government, is of the view that “if the same policy of borrowing money continues and the debt situation is not stabilised, the government will become even larger borrower in domestic markets. Two things will happen, firstly the private sector will be denied credit so there will be pressure on availability of credit and secondly the government will be biting up the price of the credit, so the interest rate will go up very sharply and for a very long time. What will happen is that both availability and pricing of credit will be affected for the private sector”.

Large debt always causes more interest payment and interest payment on Pakistan’s domestic and external debt and liabilities has increased to 806 billion rupees (4.46 percent of GDP). Debt servicing is also at very higher side and it stands at 1.4755 trillion rupees (8.2 percent of GDP), including above said interest payment at the end of first quarter FY 2011-12.

Debt-servicing and defence expenditures eat up the mainstay of Pakistan economy, i.e. revenues, leaving little space for development and social sector. Speaking at Lahore Chamber of Commerce and Industry in October, Chairman FBR Salman Siddique said, “the tax department’s almost whole revenue collections go to debt-servicing or defence expenditures, as out of total Rs1,558 billion revenue collected by the FBR during the last fiscal year, 750 billion rupees were used for debt-servicing and 441 billion rupees were used for defence expenditures”.

Talking about debt incurred from the IMF which is US $8.9 billion at the end of first quarter FY 2011-12, Pakistan paid about US $267.67 million (22.9 billion rupees) as debt-servicing, including US $174.16 (14.9 billion rupees) as interest payment on this debt to the IMF. Because of this serious repercussion, the aftershocks of the abstruse decision made by culpable former finance minister Shaukat Tareen will start coming from next year and Pakistan will be in a severe debt crisis in the next 2-3 years as the IMF debt payment will start from February 2012 and Pakistan will have to repay almost US $8 billion to the IMF in 3 years.

Curbing this situation and increasing efficacy, former economic advisor to the Finance Ministry, Dr. Ashfaq Hassan Khan suggests, “the only way to reduce the debt burden is maintaining fiscal discipline, meaning budget deficit should be brought down to 3 percent of GDP in the next three years. This will reduce the borrowing requirements of government and the pace of debt accumulation will also slow and debt as percent of GDP will keep on declining. Pakistan also has to maintain stability in exchange rate, as the depreciation of exchange rate that not only contributes to surge in public debt but it is also inflationary by definition.”

Therefore, if the government wants to bring this debt situation under control, reduction in fiscal deficit and stability in exchange rate are the main solutions.


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Strolling debt management requires great aplomb for making onerous and pragmatic long term planning about repayment obligations, and to deplete the debt. If the country needs to borrow more, it should borrow prudently. On the other hand, FBR needs to make lucrative tax policy, and the government needs to develop such projects which further generate revenues, and also it needs to manage expenditures without leakages.

Lastly, if the trend of borrowing is not controlled by enhancing the ability to reduce debt through generating income from lucrative tax policy then Pakistan development spending and other necessary non-development expenditures will get squeezed and the inimical debt situation will have huge impact on inflation, growth, investment and fiscal stability and the country will stuck in stasis.

Politics of free trade Bilateral and multilateral trade treaties are going to grow in importance

By Jazib Zahir

“Imagine the world were one unified country. What do you suppose it would look like?” challenged Adil Najam, new VC of LUMS in one of his first public appearances after taking over the office. The occasion was the annual gathering of alums of Harvard Business School in Pakistan held on November 24thand the topic under the scanner was, “The Economics and Politics of Free Trade Agreements made by Pakistan”.

In addition to graduates of the hallowed lawns of Harvard, there were noted academics, industrialists and other high profile guests. Seema Aziz of CARE foundation, former chairman of PCB Ijaz Butt and Nadeem Elahi of TRG were all seated around the dinner tables eager to hear authoritative opinions on the future of Pakistan’s trade relations.

Adil Najam posited that the globe as a whole had the likeness of a Third World Nation suffering from abject poverty and severe resource constraints. He thus claimed that strategic planning for global trade could learn more from the case study of a country like Pakistan than more developed nations around the world. He discussed the heritage of GATT and WTO and flashed colorful diagrams that showed how the inter-linkage arising from multi-lateral and bi-lateral treaties were making the world a more complicated place. His parting message was powerful: “We need trade for development. We need development for security.”

Adil Najam was followed on stage by Yusuf Shirazi, chairman of the Atlas Group. Yusuf identified under-invoicing and tax evasions as major banes of the country. But he expressed hope that the robust textile sectors and untapped mineral resources would prove key assets as Pakistan attempted to build on its trading tradition.

This was followed by a panel discussion. The team included noted industrialists and financiers like Razzaq Dawood and Mian Mansha, academics like Ishrat Hussain and ministers like Zafar Mahmood. The granting of MFN status on India remained in the


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backdrop of the analysis. All the speakers shared a positive view on trade and the belief that such trade treaties ultimately benefited all players in the market. But they differed in why they believed trade was important and the best way to approach it.

Razzaq Dawood was perhaps the most exuberant. He subscribed to Schumpeter’s ideology of creative destruction which suggests that resources must be periodically re-allocated to the most efficient producers, thus putting inefficient ones out of business. While this approach may seem clinical and ruthless, it is a key tenet of the modern market economy that is a survival of the fittest.

Dawood accepted that enhanced trade channels with India would mean that the most inefficient producers in both markets would be squeezed out. But he felt that this was in the best interest of both countries. He was extremely critical of the national tendency to lobby for subsidies and breaks that allowed inefficient actors to benefit. He urged businessmen to compete on a level playing field and attributed the current climate of power shortage to a misguided policy of lavish subsidies.

Mian Mansha, too, was excited about the opportunity for more trade with India. Like his peers, he was fascinated by the sheer scale of the Indian market. He pointed out that a cement factory in Pakistan priced a bag at Rs350 while one in East Punjab in India would price it at Rs500. He hoped more trade with India would eliminate such inefficiencies in the market. He and Mr. Dawood were keen for Pakistani and Indian setups to source their raw material at the same price so that inefficient producers would get exposed and be forced to exit the market.

While Zafar Mahmood shared this sanguine point of view, he chose to tread more cautiously. He gave the example of several countries which eliminated tariffs, quotas and barriers in a staggered manner spanning several years. He felt that such a staged process would ultimately benefit all the parties and mitigate some of the challenges of an abrupt change.

Mahmood also cited the example of the NAFTA trade agreement between the United States, Mexico and Canada. He suggested that while there were concerns over free trade with Mexico, the treaty ultimately helped improve the economic situation there and counter the specter of drug trade and illegal immigration that was plaguing its porous border with the United States. All the panelists shared the optimism that trade with India would enhance peace and stability.

During the interactive question and answer session, the audience adopted a more pessimistic stance on trade. Many cited personal difficulties of trading with India. Others suggested that even in the case of China, while trade relations were rosy on the surface, many traders had struggled to get the benefits they expected.

In conclusion, all the speakers accepted that bilateral and multilateral trade treaties were going to grow in importance and reiterated their belief that free trade activities were bountiful and more trade with India could only make things better.

Saying “no more” to cartels Calls are being made for developing countries across the world to strengthen their

competition law enforcement processes to deal with cartelisation By Pradeep S Mehta


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“Our competitors are our friends, our customers are the enemy” is an actual statement made by an executive of Archer Daniel Midland, in the famous case of the lysine (a feed additive) cartel, which was caught on videotape by the FBI. As the international competition community once again gears up to observe the second World Competition Day on 5th of December this year dedicated to the theme, “Cartels and their harmful effects on consumer”, there is a need to reflect on measures to protect consumers from cartels, and sharpen such measures to the extent possible.

This would not only shake up entities that have flagrantly engaged in exploitative practices, but would also bring the average consumer closer to the process of competition reforms in the developing world.

There is need to appreciate that consumers in different countries are affected differently by cartels depending on the extent to which their economies have put institutions in place to protect them against such cartels. The World Competition Day (in response to a global call by CUTS) for this second year allows a scope for greater discussions and dissemination of the beneficial effects of competition on the average consumers — either directly or indirectly.

In effect, it is expected to result in greater public understanding and support on the issue. This year’s events should allow stakeholders to say out loud ‘No More’ to the perpetrators of cartel activities. This article urges countries, competition agencies to stand up and protect their consumers against the harmful effects of cartels.

Indications on the ground show that developing countries are very prone to cartels, because they often lack effective competition regimes. For example, the latest news is the cartelisation is in the cement sector. In India, recently the real estate developers body National Real Estate Development Council has approached the Competition Commission of India (CCI) seeking intervention against alleged cement cartelisation hitting real estate developers. One has to wait and watch how the same is handled by CCI.

In other jurisdictions too, the cement manufacturers association have been penalised along with the colluding firms. For example, the Pakistan Competition Commission imposed a fine of about $77 million on 20 cement companies found guilty of operating as a cartel and raising prices under mutual agreement. Actions were also taken by the Egyptian Competition Commission in order to break cartel activity by referring twenty executives from Egyptian cement firms to a criminal court for conspiring to fix prices.

Across the globe, cartel activities are being penalised. Record fines of more than $1.00bn have been levied by the UK, US and other competition authorities on airlines on cargo freight. There are other airlines too, such as Korean Airlines, etc. British Airlines is also facing action under the EU laws and other jurisdictions. Furthermore, the affected consumers in the US have also filed for class action damages against BA.

It is not difficult to understand why the developing countries are more prone to cartels. Firstly, firms have realised that there is a low possibility of being punished from being involved in cartel activities, given that even in countries with a competition law, sanctions are not too prohibitive. Cease and desist orders and fines that are often lower than profits from cartelisation cannot act as effective deterrents. Secondly, the probability of getting


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caught is very low in many other countries, given the absence of competition laws in them or limited provisions thereof.

We have been advocating for an International Competition Fund to be created out of fines levied by developed country authorities on international cartels, which have an impact on developing countries. For example, the global air cargo cartels have affected many developing countries but have not been prosecuted in any developing country, mainly because of a lack of capacity. Such a fund can be used to build capacity of competition agencies and advocacy groups in the developing world to be able to do better and more in arresting the malaise.

For many products, the elasticity of demand is very low, which gives cartels an opportunity to raise prices and gain more revenue. Many markets are highly concentrated due to both behavioural and structural factors and this is often aided by vested interest, resulting in higher prices due to limited options for consumers. Fourthly, consumers in developing countries rarely possess the bargaining buyer power needed to force suppliers to take them seriously. Consumers are seldom united, like in other parts of the developing world, which makes it difficult for them to fight against perpetrators of cartels.

Furthermore, across many developing countries, the business associations that have been formed across many sectors provide a platform for producers to meet and discuss viability strategies. Although these associations are prohibited from discussing pricing or common business arrangements in order to prevent cartels, their discussions are rarely monitored by competition authorities or other watchdogs. However, there are exceptions, in 2010 the Competition Commission of Pakistan (CCP) imposed a penalty of 50 million Pakistani rupees on the Pakistan Poultry Association for alleged cartelisation in the chicken and egg markets and also imposed a penalty of 23 million Pakistani rupees on the Pakistan Jute Mills Association and its ten-member mills on the charges of cartelised behaviour and other malpractices.

The prevalence of cartels in developing countries is also a cause of concern from the development and poverty alleviation perspective. The most critical sectors of the economy, such as food, health and transport are not spared, leaving consumers with no option but to pay large amounts of money for scarce goods and services.

It is within this context that calls are being made for developing countries across the world, through the World Competition Day, to strengthen their competition law enforcement processes to effectively deal with cartelisation. In countries without a competition law, consumer organisations need to team-up with parliamentarians, media and policy makers to spread the word around. Consumers have long being victims of exploitative practices of firms — and let’s say ‘No more’ this December 5th!

Running out of gas By Khurram Bari Khan

It's green, economical and abundantly available in wells, but not cheap any more. The precious natural gas reserves - that we have been burning carelessly for the last sixty years - are depleting fast, thanks to unbridled consumption, muddle-through approach of governments and poor security in areas where these reserves are located. From household stoves to gas-guzzling power turbines, consumption in Pakistan has largely been frivolous, without any thought-out plan. And that has led us to a crisis of the


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commodity that has once been readily available in the country. The heat of the situation was felt in the port city of Karachi last week when Sui Southern Gas Company stopped supplies to Compressed Natural Gas (CNG) stations, crippling majority of the transport system. Pressed by the industry to end power outages that soared to 12-hour a day amid high demand winters, the utility shifted gear to feed power units and curtail gas to motorists for two days every week.

"Even if you invent a car that runs on water, the next thing you will see in Pakistan is its price going up till it becomes a scarce commodity," remarked a disgruntled consumer outside a closed CNG station.

Vehicles returning empty from gas stations, thin traffic and low attendance in offices, schools and factories might be a new experience for Karachiites, but not for the people dwelling in the Northern part of the country where gas remains scarce even in summers because of high demand and low supply pressure.

Gas requirement this winter has risen to 5.5 billion cubic feet per day, almost 25 percent higher than summer, leaving behind a shortfall of 2 billion cubic feet. Power and industrial sectors, particularly fertilisers, are also reeling under the gas shortage, despite their sought priority treatment against the value they add to the economy.

Gas is a major fuel having 44 percent weightage in Pakistan's energy mix. Its usage in vehicles has seen a humungous growth since the beginning of the 21st century, making Pakistanis the largest CNG consuming nation. Almost 40 percent the price of petrol, the fuel gives better mileage without harming the engine and that makes it a fuel of choice for motorists. According to the Economic Survey 2010/11, about 2.5 million vehicles plying on road use gas, pumped by over 3,000 stations spread across the country. Because of the price difference, even buses have been converted from diesel to CNG-compatible petrol engines. According to Karachi Transport Association data, around 18,000 buses in the city are running on CNG.

But energy analysts predict that the honeymoon for CNG users is now over. With a growth of less than one percent last year, gas production in the country has almost stagnated. Around 28 private and public exploration companies in the country have failed to bring new fields online, leaving a huge gap in demand and supply of gas. On the other hand, the consumption in vehicles is increasing at a pace of 14 percent, more than household, cement and industrial sectors. Locally produced fuel is half the price of imported gas, which indicates that the price is bound to increase in coming days.

Nauman Khan, an analyst at Topline Securities, said "there is no option for the government, but to bring the price of CNG at par with petrol. Otherwise, CNG stations will be closed for more days.”

Without realising the perils of issuing unlimited licences of CNG stations, governments have been blindly promoting the commercial use of CNG to the point that it has now become a scarce commodity. Muddle through approach in making policies has only made the matter worse as plans of import through transnational pipelines and Liquid Natural Gas (LNG) terminal have become more of a dream than reality. Former SSGC managing director Munawar Baseer Ahmed said that the gap in supply had been identified back in 2005 and a coverage strategy was made part of the energy plan. "Around 500 million cubic feet of additional gas was to come online from the newly-discovered fields. But foot-dragging by Oil and Gas Development Company and Pakistan Petroleum caused a delay of five years, leaving behind a steep rise in gas demand," he


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said.

Exploration companies have yet to develop the gas fields discovered five to six years ago, that have plenty of reserves and gas of good quality.

After electricity, the gas shortage in the country is here to stay unless the government comes up with a clear-cut strategy. Regardless of the upcoming electioneering, policy makers will have to bring down the price differential between CNG and petrol to 20 percent from the current 40 percent and restrict its supply to public transport only. Exploration companies need to be pushed to bring dormant fields online by making necessary investments and installations. Demand has to be curbed and conservation be practiced in true spirit to pull the country and its people out of the quagmire of crisis after crisis.

Growing, but slow By Mushfiq Ahmad

Demand for computers, particularly laptops, continues to increase in Pakistan, but the growth remains inhibited by high tax rate, inflation and falling rupee value. The increasing trend of using computer for work and education continues to create demand, particularly in businesses and educational institutions. Tahir Chaudhry, president Computer Society of Pakistan, says the government departments, educational institutions and major businesses are the actual drivers of growth in computer use in the country. "Last year Punjab government gave 40,000 desktop computers to schools. This year it plans to give 100,000 laptops to university graduates." Chaudhry says universities are playing a vital role in boosting the computer industry.

The import of computers stands between 500,000 and 800,000 units a year, which includes 100,000 laptops. Half of the computers imported in the country are old ones. The demand for laptops has increased very sharply over the last few years, thanks to its low prices. Used laptops are available for as low as Rs9,000, something which could not have been dreamt of five years ago.

Old desktop computers (Pentium III and IV) are available for Rs6,000 to Rs12,000. New desktop computers for which parts of branded companies are imported from China for assembling here are available for Rs22,000 to Rs50,000. Laptops are not assembled in Pakistan.

The country imports old computers from the developed countries such as the United States, the United Kingdom, Australia and Germany. New systems come from China. President Pakistan Software Houses Association Jehan Ara says the import of old computers is of little use for the country because new software cannot be used on those and their performance is also below par.

It should not be banned, but there should be strict monitoring of old computers import so that only those computers are brought in that can operate new software, she says. The use of computer at home in the lower and the lower middle income groups remains much lower, however. "An old personal computer costs Rs6,000 to Rs10,000. Around 25 percent of this price goes to the government kitty under different taxes," says Sohail, a


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dealer at Karachi's Naz Plaza market of old computers. "If the government eliminates taxes, individuals of lower income group will also be able to buy their children computers for education."

Munawar Iqbal, central president of the Pakistan Computer Association, says his association has been trying, for last four years, to persuade the government to do away with sales tax on computers, but to no avail. "We held a number of rounds of talks with top authorities including the prime minister and the finance minister, but there has been no change in the policy."

He says computers remained exempted from general sales tax until 2006-7. A large number of young people had been doing small businesses in computers and earning money to support their families before the GST was imposed, he says. "But increased taxation has halted the growth of such jobs. Computers are a tool for education. If you impose GST on an educational tool, it means you are impeding investment in the country's young generation."

The depreciation of rupee in the last four years has also slowed down the growth in computer use. "Dollar has moved from Rs62 in early 2008 to Rs89 now. This has made computers expensive, like other imported items," says Sohail. "The prices of food and utilities are already very high. Common man does not have money enough to afford a computer for his children."

Entrepreneurs say that the computer industries in Pakistan's neighbouring countries have progressed a lot thanks to their governments' supportive policies and consequently they have boosted their economies. "Look at India. Look at Singapore and China. Their growth is supported by the computer industry," says Abdullah Malik, a businessman in Islamabad. "The regional countries are much ahead of us in computer industry. Our economy can also do miracles if computers are available here at cheaper rates."

Importers say customs officials withhold containers or damage the imported material on one pretext or the other if they are not paid bribe. This results in prices getting higher than they ought to be.

Chaudhry also acknowledges that economic slowdown and the depreciation of rupee have hurt growth. But he adds quickly that the growth rate is still quite high between 20 and 25 percent. "There is no need to worry. The use of computer is growing and will keep growing, even if at a slow pace," he says, confidently.

Learning to innovate By Alison Zaman

The hugely well-attended Children’s Literature Festival in Lahore recently provided a valuable opportunity for children to experience drama, puppet shows and storytelling, making learning fun. However in the data sets and analyses of how to accentuate and augment business innovation, insufficient attention is perhaps being given to how minds develop and habits form at a much earlier stage of learning.

Why is it that Pakistan with a population three times the size of the UK, produces so little scientific and technological innovation? In 2005, the most recent statistics available, Pakistan produced 368 scientific and journal articles, compared with 48,288 by the UK.


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Pakistan has a huge untapped potential in its population of 185 million people. The educational statistics are appalling. The average number of years schooling of adults in Pakistan is only 3.9 years. In 2004, Pakistan had the worst record in the world for children out of school, with more than 6.5 million children not receiving an education. Of those who enter education, the dropout rate before the end of primary school is almost 50 percent, and only 24 percent of girls continue to class 10. However these global statistics only skim the surface. What about the quality of education that is being provided? The government education statistics report on the availability of electricity, latrines and drinking water, which are essentials taken for granted in most countries. Children need to be physically comfortable in order to learn well. Half of rural primary schools have only one or two teachers. The average teacher pupil ratio in primary schools is 38 to 1, often in cramped classrooms, which make pupil involvement and active learning difficult.

Experience of working in a school in a poor area of Karachi, reveals that teaching in the early years relies on rote learning, with the children being drilled until everyone in the class has retained the information. There is a strong emphasis on compliance. The contrast with education in the UK and Europe where preschool education is play based is stark. There is an erroneous assumption that by starting teaching literacy skills at 3 years the children will do better, but this is at the expense of their speaking and listening skills, and confidence.

Developmentally many three year olds do not have the physical coordination skills to control a pencil well, cognitively they may not yet be drawing recognisable objects, yet they are drilled to write letters. Because children are not ready to do these tasks it takes them longer to achieve them, which may leave them worried and anxious. There are lots of tears and few smiles.

In art children are shown how to draw an apple and colour it red. I have been struck that colouring is seen as art, whereas it is a manual skill. Art should be about creativity and free expression. It is a means to order ideas and express feelings. Give a child who has been trained to draw an apple and colour it red, a piece of blank paper and ask them to draw anything and they tend to draw a red apple but in reality apples come in different shapes, sizes and colours. There are also many more things to represent. Even young children taught in this way need immense encouragement to break free and express their own ideas on paper. It is important that early experiences of education should be positive, so children want to attend school and see learning as interesting, motivating and fun.

Young children in Karachi's top schools, who have every privilege, smaller teacher pupil ratios, and a more interesting curriculum are said to be "ahead" of their European counterparts. Yet they lack the confidence and independence of children following more child-friendly, play based early years curricula. It is through play that children develop their social skills. They learn to share, take turns, resolve differences. They also develop their communication skills as they have to listen to each other, and express their ideas. The best predictor of academic success in preschool children is their speaking and listening skills, in particular their ability to break words into their constituent sounds and blend sounds into words, not their knowledge of the alphabet, or ability to write.

What relevance does early years education have to the production of academic papers? Our formative educational experiences teach us what is expected, and how to learn. If individual thought and creativity are not allowed then we learn that compliance is valued and important. Rote learning is not suitable for a rapidly changing world. Young people today need to learn how to find information and evaluate it, they need to learn the tools to solve problems and ultimately they need to learn to think effectively. Most of us work in


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teams, so social skills, the ability to present ideas and to listen and discuss are also important.

With commitment it is possible to combat illiteracy and improve education standards. Pakistan can learn from countries like Vietnam, which improved its literacy levels dramatically over a short period of time. The time is ripe for true commitment to a good standard of education for all children so that Pakistan is able to play its part in science, technology, art and design.

Take on the tax havens! Countries that lose tax revenues become more dependent on foreign aid

By Huzaima Bukhari and Dr. Ikramul Haq

Half the world’s trade passes through tax havens. They are hiding trillions of dollars on behalf of criminals, dictators, wealthy individuals and multinationals. — http://www.tackletaxhavens.com

Tax Justice Network (TJN), an international body, promotes transparency in international finance and opposes secrecy. It supports a level-playing field on tax and opposes loopholes and distortions in tax and regulations, and the abuses that flow from them.

It campaigns for tax compliance and opposes tax evasion, tax avoidance, and all the mechanisms that enable owners and controllers of wealth to escape their responsibilities to the societies on which they and their wealth depend. Tax havens, or secrecy jurisdictions as TJN prefers to call them, lie at the centre of their concern.

Recently, TJN has launched a worldwide campaign called ‘Tackle Tax Havens’ (www.tackletaxhavens.com) which must be joined by Pakistan as well. We are victim of tax evasion, money laundering, loot and plunder of national wealth. The campaign can help educating the general public—creating awareness about problems caused by the offshore finance system.

The campaign describes how offshore centres are used by “criminals, dictators, wealthy individuals and multinationals to salt away money illegally withdrawn from countries where law-abiding residents are left to foot the bill”. The campaign outlines the following three simple measures which, if taken, can eradicate tax evasion and make the single biggest contribution to solving the world’s financial crisis:

All tax havens should give details of the ownership of all companies and trusts located there, and the accounts of those organisations.

All multinational companies publish accounts that reveal their use of tax havens.

All tax havens should be required to exchange information each year on the income recorded within them belonging to the citizens of other countries with the places where those people really live.


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The above measures, the campaign pleads, would shatter the secrecy of tax havens for good, and that means those committing tax crimes will no longer have places to hide the proceeds of their crimes. “Nothing could make a bigger contribution than this to solving the world’s financial crisis right now”, it adds.

Economists, tax and financial professionals, accountants, lawyers, academics and writers of the world have a consensus that tax is the foundation of good government and key to the wealth or poverty of nations. But this foundation is under threat by tax havens.

Tax havens offer not only low or zero taxes, but something broader. What they actually do is to provide facilities for people or entities to get around the rules, laws and regulations of other jurisdictions, using secrecy as their prime tool. TJN, therefore, prefers the term “secrecy jurisdiction” instead of the more popular “tax haven” and highlights following serious problems:

Tax havens help rich people hide money that should be spent on schools, hospitals, roads and other public services

Tax havens force poor people to pay taxes due from the rich Tax havens help criminals hide their loot Tax havens help dictators and their cronies plunder resources of developing countries Tax havens allow banks to dodge financial rules and regulations Tax havens corrupt markets, concealing insider dealing and supporting aggressive

tax dodging by multinational companies Tax havens create a private world of secrecy, impunity and power for rich elite Tax havens widen the gap between the rich and poor people Tax havens make laws in secret which affect us all Tax havens degrade our faith in democracy

According to TJN, “the corrupted international infrastructure allowing élites to escape tax and regulations is also widely used by criminals and terrorists”. As a result, tax havens are heightening inequality and poverty, corroding democracy, distorting markets, undermining financial and other regulation and curbing economic growth, accelerating capital flight from poor countries, and promoting corruption and crime around the world.

The offshore system is a blind spot in international economics as it blurs our understanding of the world. The issues are multi-faceted, and tax havens are steeped in secrecy and complexity, which helps explain why so few people have woken up to this scandal and why civil society has been almost silent for so long.

Now many government and non-governmental bodies are seeking or supplying expertise to help open up tax havens to proper scrutiny at last, and to make the issues understandable by all.

The fight against tax havens is one of the great challenges of present day world. It challenges basic tenets of traditional economic theory and opens new fields of analysis on a diverse array of important issues such as foreign aid, capital flight, corruption, climate change, corporate responsibility, political governance, hedging funds, inequality, morality — and much more.


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Assets held offshore, beyond the reach of effective taxation, are equal to about a third of total global assets. Over half of all world trade passes through tax havens. Developing countries lose revenues far greater than annual aid inflows.

According to studies conducted by TJN, the amount of funds held offshore by individuals is about $11.5 trillion — with a resulting annual loss of tax revenue on the income from these assets of about 250 billion dollars. This is five times what the World Bank estimated in 2002 was needed to address the UN Millennium Development Goal of halving world poverty by 2015.

This much money could also pay to transform the world’s energy infrastructure to tackle climate change. In 2007 the World Bank endorsed estimates by Global Financial Integrity (GFI) that the cross-border flow of the global proceeds from criminal activities, corruption, and tax evasion at US$1-1.6 trillion per year, half from developing and transitional economies. In 2009 GFI’s updated research estimated that the annual cross-border flows from developing countries alone amounts to approximately US$850 billion — US$1.1 trillion per year.

Offshore finance is not only based in islands and small states, it has become an insidious growth within the entire global system of finance. The largest financial centres such as London and New York, and countries like Switzerland and Singapore, offer secrecy and other special advantages to attract foreign capital flows.

As corrupt dictators and other élites strip their countries’ financial assets and relocate them to these financial centres, developing countries’ economies are deprived of local investment capital and their governments are denied desperately needed tax revenues. This helps capital flow not from capital-rich countries to poor ones, as traditional economic theories might predict, but, perversely, in the other direction.

Countries that lose tax revenues become more dependent on foreign aid. Recent research has shown, for example, that sub-Saharan Africa is a net creditor to the rest of the world in the sense that external assets, measured by the stock of capital flight, exceed external liabilities, as measured by the stock of external debt. The difference is that while the assets are in private hands, the liabilities are the public debts of African governments and their people.

Of late, globalisation, international trade and finance have earned a bad name. Each brings opportunities and risks. It is time that international community addresses seriously what may be the biggest risk of all: tax abuse, and tax havens and everything they stand for.

Local problem The system should have an inbuilt mechanism to solicit feedback from citizens on a periodic basis

By Gulbaz Ali Khan

The fruits of 18th Amendment are yet to be reaped by the common man as the provinces are reluctant to devolve their powers to the local tiers. The evidence has proved that local service delivery is efficiently and effectively achieved through the people-centered and controlled governments.


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The need for local governments in our country has now got immense importance due to the recent wave of youth movements observed in the political parties’ activities in large urban centers across the country. Experts also expect change in the upcoming elections due to the large presence of youth in the current population structure of the country.

The petition by one of the political party in the Supreme Court and consequent actions by the Election Commission of Pakistan to re-enumerate the current ballot sheets will also result in inclusion of large majority of unregistered youth voters.

The recently held general assembly of Civil Society Organisations (CSOs) and citizen groups in Dar-es-Salaam, Tanzania on November 18 and 19, 2011 called for open, transparent and inclusive budgets which will ensure full human rights — civil, social, political, economic, cultural, and environmental.

It is also accepted across the globe that citizen’s engagements in the budget process can enhance improved outcomes of public spending for the poor and marginalised segments of society. The general assembly also calls upon governments to ensure budget openness and transparency at local level and engage with CSOs for bringing social equity.

The recent political turmoil has undermined the need for developing this country into a livable place for citizens, which is only possible if the provinces are ready to devolve their powers to the local people. It seems unacceptable to all the political parties.

The provinces want to drive the local tiers through the strong hand of bureaucracy rather than involving people into the development process. The countries on the globe adopt such systems in which the local people are involved in the planning, implementation and monitoring process, which really makes difference in the lives of common people.

Porto-Alegre, city of Brazil adopted participatory budgeting process way back in 1990s and became one of the success stories around the world. At the grass root level, it involves people into the local budgetary planning process and prioritized the key development sectors which not only enhances effectiveness of the development-spending but also enhances the tax revenues due to citizen engagement. The successful Porto-Alegre model was adopted by more many cities in Brazil.

Do we really need the system, if yes, what type? Where the executive has unlimited powers to control, spend and monitor the public money, to which they do not belong to? Do we need citizens’ engagement at the local level to plan, implement and monitor development projects? The answers to these questions must be sought from four chief ministers to whom this responsibility rests with under the federal devolution plan.

In the past, chief ministers did not seem interested in local government system and wanted to control districts through appointed representatives to whom they can send orders within to overturn any policy or document. However, the current provincial governments are heading towards local systems but at a snail’s pace. Consultation processes are going on


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and on only with the political parties, Government and political parties do not consult CSOs and ordinary citizens.

The question arises about these local systems which will be presented in the provincial assemblies without consultation of ordinary citizens. Will it be acceptable to the people they govern? Or will they include ordinary citizens into the local government in such a way that it enhances oversight on implementation and monitoring of public spending?

Poor participation of citizens will lead to greater leakage of public money, weak ownership of public infrastructure, weak accountability and transparency. The current state of mal-governance will exacerbate as public oversight and accountability mechanism could not deliver. This has really pushed forward the need of demand side of governance and social accountability mechanisms. The current system lacks citizens’ voice in the supply side accountability mechanisms.

The local government system in the provinces must be people-centered with maximum inclusion of local people. The provincial government must take affirmative actions for more participatory approach towards drafting the local government system that includes the concerned citizen groups, CSOs and ordinary people. Once the draft is prepared, it must be consulted at the local levels before presenting it to the assembly for any discussion.

This system should have inbuilt mechanisms to solicit feedback from the citizens on periodic basis such as the “Citizen Report Card” on delivery of key services by the district governments.

Uneasy Pak-US Relationship Pakistan and the US seem to be testing each other’s patience one more time

By Salman Abid

Is there going to be some change in Pak-US relations or will it revolve around the same give-and-take policy? Although military leadership and political parties, both inside and outside the parliament, had come out with a clear policy framework after the All Parties Conference (APC) yet results are still awaited.

It is unfortunate that slogans of no compromise on national security and national interest have lost charm. The reason behind this is the fact that our government takes diplomatic pressure of America. At the same time, the element of public sentiment is successfully used as a tool by the Pakistani leadership.

Same is the situation we have at hand on national political scene, particularly the recent NATO air raid on military checkpost in Mohmand Agency near Pak-Afghan border. Again, it has put so many question marks on Pak-US relations.

We have to see what happens now since Prime Minister Yousaf Raza Gillani has vowed to review agreements made by Musharraf with US, ISAF and United Nations. He said the government has talked to all stakeholders, including the military and political leadership.


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The first act of defiance came in the shape of boycotting the Bonn conference in order to make the world realize that Pakistan had an important role in the war against terrorism. It is interesting to see how for first time in Pakistan the political and military leadership saw the Nato strike as an opportunity to revise the entire terms of business on national and international issues made by the Musharraf government.

The government has assigned the national security committee of the parliament to prepare its recommendations over all important matters and submit these to the next joint session of the parliament.

If we have a look at Pak-US relations we find two divergent dimensions at the same time. First, in this war both of them are allies and strategic partners. Conversely, they have considerable amount of mistrust and confrontation in their relationship.

A few days ago, US Foreign Secretary Hillary Clinton said the two countries have consensus over 90 to 95 percent issues. But the recent NATO strike in Mohmand shows that something is creating misunderstandings between the two countries.

Understandably, that is why the US political and military leadership is putting great stress on formulating an aggressive policy against Pakistan. A number of US congressmen have been demanding that pressure on Pakistan be increased by putting a ban on civil and military aid or its terms be tightened.

We should also admit the fact that the war against terrorism lacked cooperation, coordination, and mutual trust, joint information sharing and understanding of its allies. All these bad developments seem to be pushing the US and its allies to the blind alley. It is upto the US if it revises its foreign and diplomatic policies in the light of the changing realities.

The US should adopt a policy of creating amity on the regional level and avoid animosity among allies by ensuring that incidents like May 2 and NATO strike will never take place in the time to come.

We know the US withdrawal from Afghanistan in 2014 is a great challenge indeed. Because US and its allies are bent upon carrying out decisions that would strengthen their interest and ensure political and administrative arrangements of their own choice.

Seemingly, the US contradicted itself as it engaged in dialogue with the forces against whom it has been fighting since long. But the Americans require full-fledged support of Pakistan military leadership and vice versa.

Now the issue is how long the stance taken by our political and military elite against US policies will last? Secondly, has Pakistan become strong enough to show reluctance to accept US policies?


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At present, our political and military leadership show their resolve of saying no to further compromises. Undoubtedly, the US action on May 2 was more significant than the NATO strike on Mohmand agency. The entire episode shows that, as some critics say, we may one day accept a bitter reality that the only centre of power in Pakistan is the military institution.

We should stop moving towards war phobia because of two things: the war is the failure of diplomacy and, secondly, we are not in a position and capacity to wage a war. It is sensible and advisable for both military and civilian leadership in Pakistan to revisit foreign policy and make it diplomacy-perfect. It is unwise to boycott the Bonn conference, the only result we can have is more political isolation of Pakistan.

We spoiled a grand opportunity of lodging a serious complaint against US and NATO strikes before representatives of countries at the Bonn conference. We should have been able to file a powerful case of our efforts and sacrifices of forty thousand causalities and RS3.5 billion losses to our national exchequer in the war against terrorism.

A policy cannot work in which civilian leadership and military establishment is dealing with Americans for their ‘gains’. Any review of the security policy, which has several aspects, should start with the nature of the threat emanating from within the country such as religious militancy.

More importantly, Americans are not the only complainant against militancy within Pakistan. China, Iran, and India have got the same apprehensions. The decision to re-visit national security paradigm must be finalised and implemented keeping these challenges in mind.

Politics of Governance Lawlessness must be replaced with initiatives of good administration

By Dr Noman Ahmed

During the past few weeks, we observed various types of street protesters trying to win over the government around their stated positions. Protests around power outages and load shedding, for instance, made the federal government immediately kneel down. It released eleven billion rupees to oil companies and other entities to ease the fuel supply which led to some improvement in power sector.

The railway staff resorted to a nationwide strike and protests and earned instant dividend in the form of payment of salaries. Students of higher secondary school in Gujranwala took law in their hands and destroyed assets of the board worth millions of rupees to press for cancellation of error-ridden results. They too came out victorious.

Instead of admonishing the miscreants, the Punjab government instantly rolled back the announced results. A judicial commission has been formed to investigate the matter, fix responsibility and formulate recommendations. Lady health workers in Punjab and Khyber Pakhtunkhwa have been organising marches, rallies, protests and sit-ins of sorts to make the regime buckle under their demands.


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The judge who authored and pronounced verdict in Salman Taseer murder case is reported to have left the country under pressure of protests, vigilantism and mob threats. PEPCO and WAPDA employees took to streets after sensing possible privatisation of their enterprises. The president is reported to have rolled back the decision as a consequence. These and many similar incidents refer to a very dangerous trend in state to polity relationship which can lead to many adverse consequences.

Pakistan is already in the grip of social unrest which has attained alarming dimensions recently. Many parts of Balochistan, Punjab, Khyber Pakhtunkhwa and Karachi have been constantly affected by rising tides of protests and agitation. Ironically, reasons for street action trickle down to the most basic functions of governance.

People now routinely come down on the street to register an FIR in a thana. It seems that the government considers it as a valid approach and mostly responds in the affirmative. Street agitators go back successful. These spot gains serve as a natural incentive for potential agitators from spread out ranks and profile.

The regime is unwilling to strictly deal with violators of law due to political considerations. The most glaring example is the episode of target killings in Karachi where the government only sprung into action after hundreds of people were ruthlessly exterminated. This inaction gives enormous encouragement to all law breakers with deep rooted ulterior motives.

Local youth with bad company and criminal orientation now align with extensions of political and sectarian outfits. With the power of gun behind them, they carry out multiple functions for their protection providers. From extortion to fund-raising for political rallies, diverse tasks are performed by the aimless youth.

With rising unemployment and limitation of formal income generation opportunities, the number of such wandering lads is on a steep rise. More young people are joining hands with brigades of political, religious and even banned outfits where a reasonable monetary compensation and patronage is guaranteed.

Pakistan has failed to positively utilise demographic dividend which is manifested in the form of this capable young population. No strength and number of law agencies can bring order to our society when full patronage would be covertly extended by elements of the state itself.

Impotence and inaction on the part of government functionaries is a key reason for agitation and subsequent mob action. The edifice of governance has been eroded progressively. Scores of new departments, commissions and public sector outfits are abounding. But either they do not deliver the tasks for which they have been enacted or people have very little faith in their sincerity and efficiency.

Thus, mobs do not hand over robbers or murderers to police. They prefer to deal with them on their own. The local governments have been struck down on a nationwide basis. No acceptable alternative has been made available. People find it most difficult to register their grievances on valid counts at a responsible platform.

Power outages, breakdown of law and order, petty internal disputes or dilapidated infrastructure are matters which are aggravated beyond respite. This country used to have public institutions facilitating linkage between potential employees and employers.


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Offices of the ombudsmen are indeed present but ordinary people are not always aware about their existence. Besides, the normal course of working of such offices is time-consuming. Most cases cannot wait.

If a young boy returns home with the news that he has resolved his educational problems ‘on his own’ he is appreciated. This reinforces no respect for sound morals or an acceptable behavior code.

If the basic tenets of state and arms of government continue to display inaction, it shall give rise to more street actions. For champions of democracy, this must come as a warning bell. Politics of lawlessness must be replaced with initiatives of good administration. Adhoc solutions like outsourcing or privatisation have already proved disastrous.

We can take a cue from the success story of Indian Railways under Laloo Prasad which has posted billions of dollars of profits after dipping into financial turmoil a few years ago. Nothing will be as effective for the regime as common folk’s trust in the leadership that could ensure dependable governance.

Reactionaries of the world unite! The Difa-e-Pakistan get-together does surely prove that the right is alive and kicking, but it

also makes clear that all is not well within its ranks By Aasim Sajjad Akhtar

It is difficult to ward away the feeling that Pakistan is on the brink of yet another major political upheaval. More than the ongoing Memogate trial or the suddenness with which Imran Khan and then Nawaz Sharif have started their mass contact campaigns, the gathering of the right-wing religious establishment on Sunday at Minar-e-Pakistan indicates that something serious is afoot.

It is instructive that anyone who wants to make a political splash these days is choosing to do so at the Pakistan Monument in Lahore. The implications are unambiguous; there is an epic struggle underway to define what Pakistan is and the right-wing — both moderate and radical — is both resorting to familiar symbols and invoking the age-old slogan of ‘Pakistan (read: Islam) in danger’.

To be sure, the ‘Difa-e-Pakistan’ rally on 18 December has established beyond a shadow of a doubt that the usual suspects are up to their usual tricks. Other than the religious parties, Ejaz-ul-Haq and Sheikh Rasheed Ahmed were notable participants, with the latter indicating in his typically cryptic manner that he had been ‘won over’ to Hafiz Saeed’s cause in recent times, thereby suggesting that the security establishment continues to hedge its bets on jihad as a foreign policy tool.

Maulana Fazlur Rahman was a conspicuous absentee, illustrating that cynical political interests often trump ideological affinities for even the most prominent of right-wing


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ideologues. Importantly, the Maulana has been accepted as a de facto ally by those who still consider themselves left-of-centre such as the Pakistan People’s Party (PPP) and Awami National Party (ANP) which suggests that pragmatism triumphs over principles on the other side of the political spectrum as well.

In any case, the Maulana’s exclusion notwithstanding, the Difa-e-Pakistan shebang is conclusive evidence for anyone who still doubted it that the religious right is structurally enmeshed into the power structure in Punjab and all the military operations in the world will not reduce its influence. Only a fundamental shift in the balance of power away from the permanent state apparatus and a bifurcation of Punjab as it is currently constituted is sufficient to cut the right down to size.

It is worth bearing in mind that it was only a few months ago that south Punjab was being decried as the hotbed of militancy and calls were being made for a military operation to eliminate the ‘terrorist’ threat. Much has changed in the intervening period, and it is now the calls for a Siraiki province that are dominating the discourse in south Punjab. Even the Muttahida Qaumi Movement (MQM) is tripping over itself backwards to play what it considers a popular card in the region — on Friday the MQM arranged a rally in Multan during which it reiterated its claim that it was the first party to explicitly support the Siraiki Suba demand.

Needless to say, the visions of the Difa-e-Pakistan folks and the principled political forces calling for the division of Punjab — as opposed to those like the MQM that are only playing populist politics — are diametrically opposed. It appears that the epic struggle for Pakistan that I referred to earlier is based largely in Punjab. To the chagrin of the security establishment and right-wing political forces, the Siraiki Suba cat is now out of the bag and the once almost unchallenged ability of a monolithically constructed Punjab to be both the defender of the unitary state and the heartland of the state’s Islamic ideology has given way to a much more fragmented reality in which the status of Punjab itself, let alone Pakistan, is up for grabs.

Lest we get ahead of ourselves however, weakness typically precipitates reaction. In the case of already reactionary forces such as the religious right, this means even more reaction than is usually the case. In this reaction, the right will be patronised in some measure by the security establishment, which is also feeling a little more insecure these days than it was some years ago before the Musharraf dictatorship started to collapse under the weight of its own contradictions and the growing pressure of its imperial patron.

Thus the increased suspicion amongst many observers that we might have another Islami Jamhoori Ittehad (IJI) on the cards. For the time being, it does not appear as if the religious forces are going to be propped up by a major party as did the Pakistan Muslim League in the case of the IJI. However, there are likely to be many twists and turns in the coming days, weeks and months and the Difa-e-Pakistan crowd now actually has more than one possible ally with Imran Khan’s Pakistan Tehrik-e-Insaf (PTI) emerging to challenge the Sharif brothers’ Punjab throne.

All in all, the polarizations that run rife through the polity appear to be growing more and more acute. The problem, as ever, is to conceive of a way out rather than assume despairingly that things are going to go from bad to worse. I fear that the liberals in our midst will dwell on the Difa-e-Pakistan gathering and will look again to some mythical liberators on horseback to ‘fix’ the ‘mullahs’, rather than taking advantage of the growing space to counter the structural presence of the right within the state. This means that the


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leadership of the Siraiki Suba movement, for example, will remain with the dominant classes within mainstream parties such as the PPP.

Meanwhile the political vacuum vis a vis class issues will remain a glaring one. It is this vacuum that new populists such as Imran Khan seek to benefit from. They can employ exceedingly vague language and propose no meaningful solutions yet can get away with it because everyone else is not even doing that much. In sum, the Difa-e-Pakistan get-together does surely prove that the right is alive and kicking, but it also makes clear that all is not well within its ranks. How things proceed is a question of how organized a front is put up by progressive forces to forge a new equilibrium.

At the cost of the poor Developed nations get five more years to cut emissions

By Alauddin Masood

Under the landmark 1997 Kyoto Protocol, it was obligatory for the developed countries to cut down carbon emissions to levels agreed by them by 2012. Well before the deadline, the developed nations have managed to get a big breather — at least five years extension under an accord adopted by a marathon 194-nation conference, on December 11 in Durban (South Africa).

Environmentalists criticise the Durban package — as did many developing countries during the 13 days of hectic talks — for failing to move faster and deeper in cutting carbon emissions. Logically, the time to act is now, scientists maintain. They say that unless carbon emissions, chiefly carbon dioxide (CO2) from power generation and industry, level out and reverse within a few years, the earth will be set on a possibly irreversible path of rising temperatures that lead to ever greater climate catastrophes.

Some states argued that the developing countries have less responsibility than industrial nations that caused the global warming problem through 200 years of pollution. Therefore, the Durban package does not seem equitable, especially for developing countries that account for a minute fraction of global warming but have to pay the heaviest costs in the face of erratic weather in Asia and Africa.

Environmentalists believe there are too many loopholes in the ‘Durban Platform’ to ensure a uniform regulatory policy. Furthermore, domestic political constraints make it unlikely that pledges in Durban for more green projects in the developed world and stepped up aid for developing countries will come to fruition given problems for government funding in Europe, USA and Japan.

The apprehension of the scientists seems to be quite weighty, as following the Durban conference Canada became the first country to formally withdraw from the Kyoto Protocol, saying the pact was preventing the world from effectively tackling climate change.

Canadian Environment Minister, Peter Kent said, “We believe that a new agreement with legally binding commitments for all major emitters that allows us as a country to generate jobs and economic growth represents the path forward.” Under the Kyoto agreement, curbs


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apply only to rich countries, excluding the United States, which has refused to ratify the accord.

Canada had agreed under the Kyoto Protocol to reduce CO2 emissions to 6.0 percent below 1990 levels by 2012, but its emissions of the gases blamed for damaging Earth’s fragile climate system have instead increased sharply. Pulling out of Kyoto now allows Canada to avoid paying penalties of up to CAN$ 14 billion (US$ 13.6 billion) for missing its targets.

According to Kent, Canada produces barely two percent of global emissions. “To meet the targets under Kyoto for 2012 would be equivalent of either removing every car, truck, tractor, ambulance, etc, from Canadian roads or closing down the entire farming and agricultural sector and cutting heat to every home, office, hospital, factory, and building in Canada.”

Furthermore, “It is an agreement that covers fewer than 30 percent of global emissions, by some estimates 15 percent or less,” Kent said. For Kyoto supporters, Canadian pullout can badly damage the UN climate process already weakened by divisions. For instance, it can encourage other industrial countries to follow suit and thus negatively impact the Green Climate Fund that the Durban conference had decided to establish to provide US$ 100 billion dollar, every year, by 2020 for projects, programmes, policies and other activities in the developing countries using thematic funding windows.

Amongst its other uses, the Green Climate Fund could help identify climate friendly technologies, facilitate their deployment and adaptation to the needs of the developing countries, build national/regional technology management capacity, and support the research, development and demonstration of new climate friendly technologies.

It goes without saying that the global warming poses grave threats to human civilisation. Concentration of greenhouse gases (GHGs) in the atmosphere have reached new heights and are very rapidly contributing to an average rise of 2 to 2.4 Celsius (C) in global temperatures. Scientists believe any rise above 2.0 C threshold could trigger far-reaching and irreversible changes on Earth — both over land and in the seas.

The earth can cope with maximum global warming of 1.5 to 2 degree C. Global warming at 3 degree can result in the crossing of many “tipping points,” including near-disappearance of the Arctic summer sea-ice, degradation of the Amazon rain forest, and instability in the South Asian summer monsoon, rendering any remedial action ineffective. In case global warming reaches 4 degree C, climate scientists warn, only one-tenth of the global population will survive.

The rapid rise in GHGs is not only reducing mankind’s ability to limit warming to safe levels, lending credence to apprehensions that the prospects of limiting the warming may close in this very decade. Furthermore, 13 of the warmest years recorded have occurred within the last decade-and-a-half and the year 2011 caps a decade that ties the record as the hottest ever measured since 1850 when accurate measures began.

Across the world over 710,000 people died from 1991 to 2010 from 14,000 extreme weather events, incurring economic losses in today’s terms of over 2.3 trillion dollars. When seen across this 20 year period, not a single developed country features in the top 10 for climate risk. Only one — Russia — featured in the top 20 as a result of July 2010 heat wave, but that was an exception. The results underscore the vulnerability of poor countries to climate risks.


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According to scientists, floods in Pakistan, forest fires in Russia, mudslides in China and droughts in Sub-Sahara Africa are manifestation of scenarios which they had been predicting since long due to the impact of greenhouse gases, like CO2, methane and nitrous oxide. These climate changes, scientists warn, can contribute to disasters like 2010 floods in Pakistan, happening more frequently and more intense in future.

The greenhouse gases build-up in the upper atmosphere and lead to climate change or global warming. In other words, when CO2 rises into atmosphere, it screens the sunlight, allowing the sunlight in but preventing the heat to leave. By the year 2040, environmentalists forecast, due to greenhouse gases the global temperature will increase by 3 C and by the end of the century by 5-6 C, triggering sand/dust storms, micro cloudbursts, cyclones and tsunamis.

The highlands, in particular, are vulnerable to Glacier Lake Outburst Floods as overall glaciers retreat and additional snow melt can increase the amount of water dammed in the vicinity of a glacier, and the added pressure enhances the likelihood of disastrous outburst flooding.

Pakistan has some 5,218 glaciers, over 13,680 square kilometres or 13 percent of mountains in the Upper Indus Basin, and 2,420 lakes of which 50 are reportedly to be highly dangerous and may cause flooding in the plains in Punjab and Sindh. Pakistan’s Indus delta also remains exposed to sea rise and sea intrusion, causing an upward shift of almost 400 metres in the coastline.

Amongst other damages of global warming, Pakistan is experiencing biodiversity loss, shifts in weather patterns and changes in fresh water supply. The phenomenon of global warming might impact the snow and rain patterns and the availability of snow melting during summer. Normally, Pakistani rivers receive almost 70 percent of their flow from snow melting.

These changes, particularly in patterns of rainfall, glacial retreat and snowmelt, could cause unexpected floods in rain-deficient regions and create drought like conditions in fertile areas. These changes could accentuate after 2050 when, scientists forecast, presently shrinking Himalayan glaciers could disappear.

The global warming, which has been caused by greenhouse gases, is the price of development that the human-being is paying. But the fruits of development have been harvested by the rich developed countries where development activities, factory emissions, modern techniques of agriculture and life styles are contributing in a big way to global warming. But developing countries like Pakistan with least contribution to this phenomenon have to bear the brunt of ravages that have been accentuated by the activities of rich counties.

Reforming the judicial apparatus Most of the goals set in Judicial Policy 2009 have not been implemented within the last two years

By Huzaima Bukhari and Dr. Ikramul Haq

In any society, administration and dispensation of justice should be the top most priority, as without it ‘representative democracy’ cannot be established. A society without a trustworthy and speedy judicial system, which does not ensure effective dispensation of justice cannot progress or survive for long. Administration and dispensation of justice in Pakistan needs


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serious attention. There are serious concerns amongst Pakistani citizens about “justice”, “rule of law”, “fairness”, “equity” and independence of judiciary.

The right of access to justice to all is a well-recognised inviolable right enshrined in the Constitution of Pakistan, but it is still a distant dream for the poor and weaker sections of society. Justice can only be done if there is reliable, competent and independent judicial apparatus. Goals, announced through the National Judicial Policy 2009 remain unfulfilled. The following short-term and long-term measures for early disposal of cases were announced under this policy:

All pre/post-arrest bail applications are to be decided within seven days. Criminal cases, punishable with imprisonment up to seven years registered after January 1, 2009, would be decided in the shortest period, which should not exceed six months and cases punishable with imprisonment exceeding seven years, including punishment of death, should be decided within one year.

Provincial governments to establish new jails at district level or enhance the capacity of existing jails by constructing new barracks. A High Court judge, along with District and Sessions judge, must carry out inspection of prisons periodically for ensuring compliance within prison rules and giving on the spot remedy/relief to prisoners according to the law.

In civil matters, all writ petitions under Article 199 of the Constitution should be fixed for preliminary hearing on the next date of its institution and disposed of as quickly as possible. Writ petitions involving service matters, including promotion, transfer and admission of students in professional colleges and allied matters, should be decided within 60 days. All stay matters under Order 39 Rule 1 & 2 read with section 151 CPC should be decided within 15 days of grant of interim injunction and in case of delay the reasons should be furnished to the high court.

Rent cases should be decided within four months in trial courts and appeals should be decided within two months. Family cases, including custody of minors, succession certificate, letter of administration, insolvency and maintenance, should be decided within six months. Civil appeals arising out of family cases, custody of minors and against interim order should be decided within 30 days.

Cases filed under Order 37 of CPC regarding suits upon bill of exchange, hundies or promissory notes shall be decided through summary procedure within 90 days.

Cases relating to banking and different taxes and duties such as income tax, property tax, etc., should be decided within six months.

Labour and environmental cases should also be decided through fast track system. Judges of labour courts and tribunals should be appointed from amongst the lawyers qualified for appointment as district and sessions judge.

Priority should be given to quick disposal of women cases, juvenile cases, rent cases, stay orders, bail matters, small claims and minor offences under the Small Claims and Minor Offences Courts Ordinance 2002. The power of small claims and minor offences court may be conferred to all civil judges.


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For clearing backlog under different categories, special benches are to be constituted for each category on the principal seat and branch registry of the Supreme Court and High Courts. There will be commitment of judges to decide the old civil and criminal cases up to 2008 within one year. District judges will also adopt such measures that ensure handling of 50 percent of cases from backlog (filed on or before Dec 31, 2008) and 50 percent from current cases.

For conducting elections, the services of judiciary in future will not be available. The focus of judiciary would be on disposal of cases to redress grievances of the people by dispensation of justice. If the government feels that the election should be held under the supervision of the judiciary, then a request may come and the NJPMC would decide as to what extent and in what form help can be extended in the conduct of elections.

Most of the goals set in Judicial Policy have not been implemented within the last two years. The huge back log still persists. There are no visible signs of improvement in the working of court system. Unless causes of litigation are removed, the system will remain choked. More and more judges will be required for coping with the ever increasing number of cases at all levels.

Everybody is totally dissatisfied with the existing socio-economic structure, which is the main root-cause of litigation. Those imparting justice complain of lack of facilities and huge number of cases with the complainants crying for early orders but having to wait for years (sometimes decades), and the government keeps on worrying about the blockade of colossal amount of money because of slow litigation process.

The first and foremost need is ensuring socio-economic justice. Justice system cannot be improved in isolation. It is part and parcel of an ailing system. The slogan of “independence” of judiciary is meaningless if divorced from empowering the weak and less privileged.

The costly litigation process works against the poor and favours the rich. Separation of judiciary from administration is Constitutional command, but enforcement of Article 10A requires providing justice to all without any hindrance. The present system where vested interest dominates appointment of judges destroys the very independence of the system. People’s court is the only answer to ensure true implementation of Article 10A of the Constitution.

The right of access to justice to all is a well-recognized inviolable privilege — now re-emphasised under Article 10A inserted by the 18th Constitutional Amendment — enshrined in the Constitution of Pakistan. It concludes “the right to be treated according to law, the right to have a fair and proper trial and the right to have an impartial court or tribunal.”

Justice, therefore, can only be done if there is economic equality. Replacing existing courts with people’s courts is the need of the hour. All judicial and quasi-judicial authorities should be appointed and supervised by a People’s Judicial Commission, elected by voters. This is the only way to ensure dispensation of justice in its true substance and constitutional requirement.

Another attack on rights Human rights violations in the past, including acts of torture and extrajudicial killings,

remained unpunished during 2010-2011 By Waqar Gillani


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Zarteef Afridi is no more — a human rights activist in the tribal belt along the Pak-Afghan border was shot dead last week by some extremist groups allegedly. He had been receiving threats from the extremists for the past many months.

Zarteef had at least 20 years of experience of working with Human Rights Commission of Pakistan (HRCP) in Khyber Agency. A tireless human rights defender, Zarteef dedicated his life to promoting human rights, tolerance and peace in a region beset with conflict.

Repeated threats to his life had failed to deter him from his work. Zarteef, survived by four daughters and two sons, was well known because of his tremendous efforts for education, peace and women rights. He was instrumental in organising a local jirga this year where he urged the elders to struggle against extremists.

He was one of the very few people in the area who went with their whole family, including women, to cast vote in the general elections, an area where women rights are denied.

A few months ago, he had managed to arrange as many as three million rupees in Peshawar for the education of displaced children of Khyber Agency who were living in refugee camps in Peshawar. Zarteef is one of the latest sad incidents where human rights defenders have been targeted.

The annual observatory report (2011) for the protection of human rights defenders titled, “Steadfast in Protest” jointly compiled by International Federation for Human Rights (FIDH) and World Organisation Against Torture (OMCT), reveals that the interferences and attempts to criminalise and repress human rights defenders in many parts of the world were one of the most prominent features of attempt to control civil society.

“The interference into the right to peaceful assembly in different regions of the world remained a particularly serious challenge throughout the year,” the report summery reads. The “control” approach manifests itself in the legal framework and judicial practice in all regions of the world covered by this report.

In 2011, human rights defenders were killed, subjected to assaults and threats. Such killings and assaults were not limited to a particular continent or region. HRCP launched this report in Pakistan, highlighting the problems faced by human rights defenders, especially in Pakistan. In Pakistan, the province of Balochistan and northern tribal area are the biggest security risk for activists and journalists

Throughout 2010 and the beginning of 2011, the government failed to provide a safe and enabling environment for human rights activists, who continued to be victims of killings and abductions, in particular, in areas that fall outside of its effective control, such as the provinces of Balochistan and Khyber Pakhtunkhwa.

Perpetrators of violations against human rights defenders were rarely brought to justice, and impunity remained widespread throughout the country. Extra judicial killings and enforced disappearances remained rampant, particularly in Balochistan, creating an extremely high-risk environment for human rights activists.


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The judicial process in both the Supreme Court and high courts is unnecessarily lengthy, contributing to a feeling of impunity. A high number of cases of enforced disappearances remained unresolved. Torture remained widespread this year, with security forces and other law enforcement agencies enjoying almost complete lack of accountability. Acts of torture committed in military custody or in detention centres run by the intelligence services were also endemic. Conditions of detention remained poor in all parts of the country.

Members of religious minorities remained particularly vulnerable. In particular, members of the Ahmadiyah religious minority faced threats, discrimination and violent attacks, as illustrated by the attack of two Ahmadi mosques on May 28, 2010, killing at least 70 members of the community. The Shia community was also victim of targeted killings, particularly in Balochistan.

In January and March 2011 respectively, the governor of the Punjab province and the Federal Minister for Minority Affairs were assassinated for opposing the blasphemy law. The UN High Commissioner for Human Rights noted that these high-profile killings were “symptomatic of pervasive violence against religious minorities in Pakistan and a lack of protection for their places of worship”.

Freedom of expression remained under attack by both government and non-state actors. Reportedly, 20 journalists and media workers were killed in 2010, making Pakistan one of the deadliest countries for journalists in the world. Widespread impunity surrounded the killing of journalists and other media workers, as reportedly not a single conviction was obtained during 2010 for killings of journalists.

Human rights activists also continued facing threats and attacks from non-state actors in Balochistan and the Khyber Pakhtunkhwa (KP) province. NGOs working in the health and education sectors, or those seeking to promote human rights, were often branded as “promoting obscenity” or “undermining Islam”. In addition, international organisations were required to seek “No Objection Certificates” (NoC) from the government, which hampered their freedom of movement outside Quetta in Balochistan, as well as in parts of the Federally Administered Tribal Areas (FATA).

Incidents of targeted killing and abduction for ransom forced international humanitarian NGOs to curtail their activities in Balochistan and the KP province as several of them closed down their offices or reduced fieldwork to prevent harm to their staff. On February 18, 2010, unidentified armed men abducted four employees of the international humanitarian NGO Mercy Corps in the Shankai area of Qilla Saifullah district, Balochistan, on their way to the main regional office of Mercy Corps in Pakistan. The abducted team members were working with local district health officials in Balochistan to implement health programmes.

HRCP Secretary General, I A Rehman, demands a certain mechanism of security for activists and journalists working on human rights issues, especially in the conflict-hit areas. “At least 40 percent journalists have left FATA because of security risk,” he says, adding, “There is no liberty and security in the country.” In 2011, till now, 16 journalists have been killed and many human rights defenders have ‘disappeared’.

Inadequate public security and lack of a conducive environment for human rights defenders continued to significantly impact the work of activists throughout the region (Afghanistan, India, Pakistan, Nepal, Sri Lanka, and Thailand).


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Past and present human rights violations, including acts of torture, ill-treatment and extrajudicial killings, remained unpunished during 2010-2011, while public confidence and trust in the judiciary continued to erode in most Asian countries throughout the reporting period (Cambodia, Iran, Malaysia, Viet Nam).

“It is time to establish enabling domestic legal frameworks for human rights defenders, to undertake a systematic overhaul and repeal of legislation that unduly limits civil society and human rights defenders and, importantly, guarantee accountability for assaults on human rights defenders. More than that, however, it is vital to strengthen public repudiation of attacks on human rights defenders and move human rights defenders back into the centre of society,” the report says.

A step towards energy efficiency The goal is to save over 45 MW of installed capacity and the associated annual operational

costs for 115.5 GWh over the coming years By Jazib Zahir

Haji Shad Muhammad is a 49-year old who owns 60 acres of land in Peshawar. His dream of providing quality education to his children rests on his ability to extract copious quantities of crops from this finite resource. Such a dream can only be realised if he is able to pump out enough irrigation water from below the surface of the earth to satiate the crops. But the water table in the area has steadily receded till it is over 300 feet beneath the surface. The pump Shad uses as part of his tubewell setup has continued to guzzle expensive electricity yet its output has tapered off.

Shad was contacted by two field agents who conducted a rigorous audit of his pump and reported that the efficiency of the device was a pathetic 39.9 percent. Under the guidance of these agents, Shad was supplied with a higher performance motor pump set, starter panel and capacitor. The efficiency of the system surged to 55.5 percent and wheat, cotton and sugar-cane blossomed on the land. Shad has seen his annual income increase by Rs84,000.

Shad is not the only one experiencing a fairy-tale ending. There are over 1,550 such success stories across Pakistan with many more to come. Credit for this transformation goes to the Tubewell Efficiency Improvement Program (TWEIP) funded by USAID. It is one of six initiatives announced by American Secretary of State Hillary Clinton in October 2009 to mitigate Pakistan’s gaping power shortage that is rapidly exceeding 5,000 MW.

The programme targets the improvement of energy efficiency in the agricultural sector which contributes a fifth of our GDP. Pakistan remains the fourth largest consumer of underground water for irrigation purposes in the world. Any attempt to better manage underground water thus has potentially high impact on the economy.

“When you scrutinise the life cycle of a pump, you realise that your capital expenditure is trivial relative to the operational and maintenance cost which is about 84 percent of the total,” explains Omer Malik who is heading up the project. “Yet, consumers only focus on the capital expenditure when making their purchasing decision, neglecting the savings available by picking an efficient product.”


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TWEIP adds value by arranging field visits that result in accurate audits of the performance of existing tubewell infrastructure. It has also forged partnerships with several quality pump providers, including KSB, MAK, Peco, Flo Pak, Victoria, Peco and HMA that are committed to providing state-of-the art pumps that deliver efficiency enhancements of 20 percent or more without compromising on the quantity of water output. TWEIP also facilitates the process of obtaining these expensive pumps.

Under the existing scheme, the consumers pay just 50 percent upon purchase while the remaining amount is covered by TWEIP upon the understanding that the pump supplier will guarantee the agreed upon performance parameters. This subsidy helps to allay the cost of a major capital expenditure which will allow the consumer to reap benefits for many years to come.

TWEIP is in the process of launching a major nationwide advertising campaign under the banner of “Bijli Pani Week”. A special two-episode docu-drama is being telecast on both Sunday 18th and 25th December on major television channels. The protagonist of this drama is the Brand Ambassador Mr. Karmu who will demonstrate the social and economic benefits of such a programme through a powerful narrative.

In addition to the visual media, “Bijli Pani Week” involves the distribution of informational brochures, kiosks, wall paintings and utility bill advertising. The objective is to reach out to consumers who can benefit from the product but are not aware of it.

It is expected that following this awareness building stage, interested consumers may get in touch with the programme agents by phone. The agents will build a relationship with interested parties and help them navigate through the steps involved in getting their outdated equipment replaced. “The purpose of this campaign is to introduce the concept of energy efficiency and allow people to take ownership of this concept,” explains Samia Mehdi, who is managing Communications and Outreach for the group. “The marketing campaigns have been designed to show rather than tell people how energy savings can be achieved.”

The Tubewell Efficiency Program is described as a demand side energy management programme since it reduces peak energy consumption. It is estimated that the success of the programme to date has saved our nation 10.5 MW of installed power capacity which translates into some $12 million dollars that can be spent on an alternative cause.

But the programme is positioned to result in even more cost savings as its footprint expands. The goal is to save over 45 MW of installed capacity and the associated annual operational costs for 115.5 GWh over the coming years. With feasible alternative energy solutions like solar tubewells still a pipe dream, perhaps this is the infrastructure to invest in today to reap rich dividends tomorrow.

An unhealthy trend Unusual banking spread is one of the reasons of the stalled industrial and business growth

in the country By Tahir Ali

The huge banking/rate spread — the difference between the average rates of returns on deposits and the average rate of interest on loans — in the country may have helped increase the incomes of banks but it surely is one of the biggest reasons of the stalled industrial/business growth and below capacity production in industries that result in


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increased joblessness. It also leads to less saving, less investment and unjust income distribution.

Despite enhanced net income — after tax income of banks which was minus Rs2.8bn in 2000 rose to Rs54.5bn by 2009 — banks are reluctant to increase the rates of return on deposits as high rate spread is also one of the main tools of profitability for banks.

According to a bank manager at the national bank, who wished not to be named, the average deposit rate is 5 percent against 15 percent average rate of interest in the country.

While the average rate spread is around 3-5 percent in most countries, it is much higher in Pakistan. According to the SBP data, it was 4.63 per cent in June 2003 but increased to 8.90 percent in July, 2011, which means that the lending rate is greater by that extent from the rate of deposits.

If high rate-spread indicates lack of efficiency and competitiveness in the banking system on the one hand, it also signifies the failure of regulatory authority — the State bank of Pakistan.

The SBP, which is authorised under the SBP Act, the Banking Companies Ordinance and some other laws to make sure that banks do not exploit the depositors or the borrowers and earn profits through legitimate business practices, needs to review the existing rate spread and bring it down to a normal range.

Successive SBP governors, including Dr Muhammad Yaqoob and Shamshad Akhtar, while acknowledging that depositors were getting negative returns, had also urged large banks to increase the return on deposits or the State Bank would intervene to get results.

According to one estimate, interest rate in Pakistan is highest in the region. With business and industries already hit hard by terrorism and energy shortage, lending rates need to be brought down to a single digit to save them from bankruptcy, encourage private loans demand and spur economic growth in the country.

But if the banks reduce the rate of interest on loans but simultaneously cut down the deposit rates as well or increase both the rates of interests and rates of return on deposits by the same amount, the spread rate will practically remain high. So, any effort to slash the spread not only requires cutting down the lending rate but also increasing rates on deposits.

Despite inflation of around three percent, the United States decreased interest rates to almost zero percent and the European Union to just above one percent to push growth and create jobs.

High rate of interest, the main factor for huge rate spread on the back of small returns on deposits, is one of the main reasons for the rising loan defaults, below capacity working of industries, job cuts and surging non-performing loans calculated at Rs630bn in September 2011.


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The high cost of funds is not only leading to industrial closures and defaults, the government, taking huge loans from commercial banks, is also drastically affected by the trend and is compelled to slash development funds, increasingly rely on borrowing and printing of new currency to meet its fiscal needs.

The difference in the interest rate being paid by the government for the domestic and external loans will illustrate the point. At the current rate of interest (14-15 percent), the government’s debt servicing costs stand at $10bn on domestic loans of$80bn. Conversely, it has to spend only around $2bn on external loans of $61bn given at an average rate of three per cent.

It is worth asking that when some local entrepreneurs in Mardan could offer as much as 50 percent net profit per annum through their investment schemes, why banks can’t increase the amount of profit on deposits for the depositors, the lifeline of the banking system in any society?

“One thought that privatisation of banks would entail better services at reduced cost for most of the customers, but it has, conversely, made banking costlier, exploitative and anti-poor,” argues a lecturer of economics, wishing anonymity.

“Commercial banks are earning huge sums of money due to high interest rate on the one hand and giving less profit on deposits on the other. Why would people go for depositing their money in banks when they could reap comparatively higher returns on their savings by spending them in real assets like investment in real estates, transport and other businesses?,” he asks.

While the banks have reduced rate of returns and increased lending rates to augment their financial gains, the poor consumers have been the real losers. High rate of inflation of over 15 percent per year for the last several years has aggravated the problem.

Depositors receive negative returns on savings when the rate of return on savings is less than the rate of inflation. For example, if consumers are given 5 percent of returns on their savings and inflation rate is 15 percent, savers will annually lose 10 percent of the purchasing power of their bank deposits.0

Commercial banks, both public and private, are believed to have deprived the depositors of around Rs1100 billion profit during the last 10 years by only avoiding the inflation rate formula of 2001 applied to fix the profit rate, says a report.

The absence of a genuine investment opportunities or ignorance thereof on part of the people notwithstanding, people have but to keep their savings in these less attractive bank accounts.

Quite a few people in the country, under the urge to avoid Riba (fixed return on savings) keep their savings in current accounts with no interests thereon. But banks are free to use their amounts any way they want and even earn money over these amounts by lending it to others.


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According to a news report, bank deposits increased by 269 percent from 2001 to 2010, bank assets by 268 percent whereas growth in pre-tax profit has been 9,991 percent. He said banks earned Rs1.1 billion in 2001 which rose to Rs111bn in 2010 but the real average rate of return (minus rate of inflation) which was 3 per cent positive in 2001 came down to minus 6.5 percent in 2010.

Apparently, depositors are deprived of their due profit share because of the policy of writing off loans to the influential.

Banks, apparently, are more interested in interest profit than affording genuine and high rewarding investment chances to their consumers. And why would the banks increase the deposit rates and decrease interest on loans in the backdrop of excessive government borrowing which could help it overcome the low demand from the private sector.

“Loan defaults, frequent withdrawal by the deposit holders from their accounts, less fixed deposits, concessional loans, high rate of inflation and incessant devaluation of currency etc hinder banks from decreasing the spread,” says the manager.

Low-cost loans are opposed for reasons that they trigger inflation that’s why the SBP followed a tight monetary policy that kept the policy rate high. But the question is did this policy succeed? Could inflation be controlled and economy improved?

Tackling traffic Developing countries have started seriously dealing with traffic jams, will Pakistan follow?

By Alauddin Masood

After an interlude stretching over a little less than two decades, a bus service in the public sector has been launched in the provincial metropolis of Lahore for providing, as stated by Chief Minister Shahbaz Sharif, comfortable and affordable transport facilities to the people.

Modern CNG buses have been imported from a leading Chinese company for this project. The provincial government of Punjab has also entered into an agreement with another company for importing 575 new buses. Besides Lahore, these buses would be used for providing transport facilities in other big cities of the province. In addition to new buses, some 300 old buses are being refurbished and about 75 refurbished vehicles would start plying, on various routes, in Lahore by the end of the current month, reports say.

Introduction of efficient, comfortable, affordable and dependable mass transit infrastructure in major urban centres can minimise the difficulties and risks faced by road users. A simple example can illustrate how good mass transit systems can eliminate traffic chaos. Let us say a minor traffic jam in the morning consists of 60 cars at a signal and each car has on average two people in it, so there are a total of 120 people traveling in 60 cars. On the other hand, three large buses can accommodate about 120 people on seats alone and take up a maximum area of only 18 cars. This means that the same road which shrinks in the presence of 60 cars can be more than enough even if these 120 people travel on three or four different buses.


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Despite being a capital territory and a newly-built city, even Islamabad lacks proper public transport system. Non-availability of efficient and dependable public transport compels the people to use private vehicles. As a result, the number of cars has been growing in the country, which is neither good for the environment nor recommendable in terms of financial expenditures and heavy drain on the country’s precious foreign exchange resources.

To minimise traffic hazards, the developed countries focus on building and developing mass transit systems and adopting policies that discourage people to bring their cars on roads during peak traffic hours. Even many developing countries have successfully followed the more advanced countries of the world to solve the problems of traffic jams and environment degradation.

One may quote here the example of Brazil and Colombia, which have turned their two main cities into model cities for effective public transportation. The success of these cities in overcoming traffic jams and making road journey safer and easier is now being copied by many other developing countries.

For instance, till the end of the 20th century, the traffic situation in Bogota (Colombia) was not different from the one obtaining in Pakistan. However, when Enrique Peñalosa became mayor of Bogotá in 1998, he asked a question that is changing the way the global community now thinks about cities: “In Bogotá, where 85 percent of the people do not use cars for their daily transport, is it fair that cars occupy most of the space on the streets?”

The answers he came up with have reshaped Bogotá, home to seven million people, into a city so easy to negotiate by public transportation that people actually voted in favour of outlawing cars in the city, during rush hour, by 2015. In just a few short years, the metropolis has become a success story that enlightened city fathers around the world are now aiming to copy.

For decades Bogotá was inundated by urban problems typical of a major city in a developing country. Pollution from cars and buses shrouded the city, much of it trapped by the surrounding mountains. The city’s population boomed — more than 140,000 people move to Bogotá each year. About half of them immigrated from the countryside, many displaced by Colombia’s civil strife. Rampant crime and corruption had hampered past reform efforts. Rising incomes led to more cars (about 70,000 new cars hit the roads in Bogota every year) and more gridlock.

After taking office, Peñalosa implemented a number of measures designed to make living in the city easier. He built schools, paved roads, ran sewers to poor neighbourhoods, repaired parks, and instituted policies to restrict automobiles. At first, he was almost impeached for getting cars off sidewalks. But Peñalosa pressed ahead with his transportation reforms.

And as the city became easier to navigate, support for his efforts grew. The city built 70 miles of bicycle routes and prohibited entry of cars in several streets, converting them into pedestrian malls. More drastically, the city began to restrict car use during rush hours, banning each car in the city from the downtown area two days a week, based on the license plate number. The results were dramatic: the average commute time dropped by 21 minutes, and pollution reduced significantly.


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And then came the TransMilenio. The city had been debating a multi-billion dollar subway system for decades. But, Peñalosa decided to copy the significantly cheaper r apid transit bus system that had turned Curitiba (Brazil) into a model city for effective public transportation. With an initial expenditure of $350 million, 38 kilometer TransMilenio system was up and running in less than two years. The buses, running in separate lanes down the center of the city’s main arteries, are able to carry 780,000 people a day at an average speed of 26 kilometers per hour — considerably outpacing cars and private buses. Estimates have found that the system saves people an average of 300 hours of commuting time annually.

Unlike expensive subways or elevated trains, the TransMilenio runs at a profit. And the city plans to add a number of new lines to the system by 2015, so that 85 percent of residents live within 500 meters of a bus station.

Now, it is not only easier to travel around Bogotá, Peñalosa’s reforms have helped make the city considerably safer. Since 1998, crime rates have also dropped dramatically.

Since the growth of population in cities has outpaced all attempts to provide for roads, mass transit and other forms of public transport, the transformation in Bogotá is providing important cues for other cities around the world. There are about 300 cities in the developing world with populations of more than a million. These cities are not only saddled with the problem of how to move their people around, but also how to reduce transport generated air pollution.

Peñalosa could succeed in Bogotá by focusing on improving the lot of people, not their cars. But a majority of the mega cities in the developing world, including Pakistan, continue to face the problem because their resources are being used to help the affluent avoid traffic jams rather than mobilizing the entire population and help people save hundreds of commuting hours annually and the country’s precious foreign exchange, which is being spent on the import of petrol and diesel.

Better late than never This 16 December we are as absorbed in talk about conspiracies against our holy land as we

were forty years ago when Bangladesh came into being By Aasim Sajjad Akhtar

Writing this column on 16 December, forty years to the day since the surrender of Pakistani forces in Dhaka and the formal christening of the state of Bangladesh. It is striking that there has been virtually no discussion this year — let alone organised events — on what Pakistanis like to call ‘Suqoot-e-Dhaka’. Presumably, this is because we are preoccupied with other more important concerns, such as Memogate and the president’s (temporary) sojourn in Dubai. Whatever the reasons, the silence of our intelligentsia and political elite on what has to be one of the most significant events of the post WWII period is deafening.

In contrast, preparations for the fortieth anniversary of independence have been ongoing for some months in Bangladesh. It is true that all the people of the Indian subcontinent waged a struggle for freedom from British rule, and, in this sense alone, 1947 represents the culmination of the anti-colonial movement. But whether we like it or not, Bangladeshis will always look on the period between 1947 and 1971 as one of gestation before they achieved their final national liberation. For them, Pakistan was exposed as a lie very soon after the British departure, a new colonialism which was in many ways more insidious than the Raj.


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What was experienced by those who lived in what we called east Pakistan is now no longer subject to serious dispute, at least as far as serious historians are concerned. There has been some debate in recent times about the accuracy of accounts of Pakistani army atrocities during the nine month civil war, and the reciprocal violence of the local population against non-Bengalis. It is important to reach a consensus on these brutal facts for the sake of posterity. But I am wary of those amongst us in Pakistan making a meal of the ‘misrepresentation’ of facts vis a vis 1971 — for 24 years prior to the eventual secession of the eastern wing, Bengalis were subject to systematic discrimination and occasional violence. While the violence against non-Bengalis in period March-December 1971 must be acknowledged, the far greater violence (structural and physical) perpetrated by the Pakistani state is the most important fact of all.

And this is why 16 December should be such an important day to us, at least as important as all the other days on which we pat ourselves on the back for being proud and independent country. To designate this day as the ‘Suqoot-e-Dhaka’ is an exercise in denial; what we should be doing is trying to understand, and teach our children, why it is that Pakistan is the only example in history of a majority (53 percent) seceding from a minority (47 percent).

It is, indeed, staggering that so few of us Pakistanis know very much about what happened in 1971 or about the relationship between Karachi/Islamabad and Dhaka in the 24 years between 1947 and 1971. We have satisfied ourselves with a series of caricatures and a plethora of selective evidence. Perhaps most damningly, many (then west) Pakistanis had very little exposure to the Bengali way of life, and, therefore, were content in the knowledge that the stereotypes peddled by the official propaganda machine were an appropriate reflection of Bengali society.

The parallels with the contemporary estrangement of the Baloch people are remarkable. A large majority of Pakistanis have never been to Balochistan and have very little grasp of what constitutes daily life for an ordinary person in that province. Indeed, many of us still do not realise that the term Balochi is used to refer to the culture and language of the Baloch people — that is, it is not correct to speak of Balochi people. Additionally, Baloch society is widely believed to be tribal, which is only partially true, and increasingly less so with urbanisation and the emergence of an educated and quite assertive middle-class. Perhaps the most unfortunate similarity in the way we perceive the Baloch and how we used to perceive the Bengali people is the association of both movements for autonomy/rights with India.

If there is one thing that we have been taught about 1971, and which remains our abiding memory of the secession of east Pakistan, it is that India fomented the ‘break-up’ of Pakistan. I must emphasise again how our official narrative of mourning and grief is so different from the narrative of national liberation proferred by Bangladeshis. The latter will acknowledge that India had a role in bringing the war to an end, but it is sheer madness to claim or even imply that those who fought against the Pakistani army in that war were all


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Indian agents or worse to ignore that more than two decades of neglect and outright exploitation preceded the very decision to take on the Pakistani state.

The same perverse thinking afflicts us when it comes to Balochistan. Presumably, the only explanation for the insurgency that rages across many parts of the province is India’s depraved desire to dismember Pakistan. There is no question that the Baloch people — or at least a segment of Baloch society — is genuinely aggrieved by the action of the Pakistani state, and military in particular. Indeed, it is easy to make India the bogeyman because this means that we are not forced to think about the alienation of our very own people from the state that is supposed to represent them.

What really troubles me, however, is the suspicion with which ordinary Baloch — like Bengalis before them — are viewed in the heartlands of Pakistan. It seems to me that racist attitudes run quite deep in our society, and that some of the polemic that was employed by the colonial state has been internalised quite deeply by many within society. So, for example, some Pakistanis clearly believe that they are more loyal, or martial, or even better Muslims, than others. Let us not forget that General Ayub Khan openly declared that Bengalis were prone to being disloyal because their ‘Muslimness’ was suspect, or to put it differently, that they were still under the influence of Hinduism.

This 16 December we are as absorbed in talk about conspiracies against our holy land as we were forty years ago when Bangladesh came into being as an independent state. It would appear, sadly, as if very little has changed. And indeed very little will change until and unless the young people who will shape this country’s future in years to come are exposed to the real facts about 16 December, and the years leading up to that day. We cannot continue to decry history as a conspiracy against an incorruptible Pakistan. We must own up to the reality of what Pakistan is if we are to make Pakistan into what it should be.

Fathoming Wealth of the Rich By Dilawar Hussain

THE “Occupy Wall Street” protest, starting out in the heart of America’s financial centre — the stock exchange on Wall Street — appears to have, all but collapsed. The movement was mobilised on the attractive slogan of fair share for 99 per cent dispossessed, against one per cent of the elite class that commands all the wealth and power. Yet, for the Americans it is easy to count the assets of the wealthiest citizens that mirror in various unchallenged documents. The Forbes magazine’s list of billionaires is one such source. It measures the wealth of individuals by their stakes in corporate America, which is why, the phenomenal price of stock in Microsoft makes Bill Gates the richest man in the world and the share in Berkshire Hathaway—the most expensive stock on the Wall Street – leads its founder Warren Buffet to closely follow on the heels of Gates. Even the richest Indian, Mukaish Ambani is able to build his billion dollars worth house in Mumbai, drawing his wealth from the exceptional growth in the value of his controlling stake in the largest Indian public listed company, the Reliance Industries. However, no one in Pakistan can name, with absolute confidence, the richest tycoon. One man in the business from insurance to textiles is thought to hold that top slot, but to figure out his total assets would be a risky task. An authentic list of the richest Pakistanis is almost impossible to make.


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It is difficult to count the assets of sponsors and corporate heads in companies listed and traded at the Karachi Stock Exchange, because many do not identify the major stakeholder, who is replaced by a proxy—a family member of a ‘benami’. Yet the stakes in the aggregate 638 listed companies on KSE may be only the tip of an iceberg. Listed companies account for no more than one per cent of over 60,000 companies that are registered with the Securities and Exchange Commission of Pakistan, the corporate watchdog. And then there is the fiercely huge unorganised, unregistered, untaxed economy.The enterprising wealthiest countrymen spread out their wealth, from agriculture to industry to real estate, in both the organised and the unorganised sectors. Invisible to the public view are the assets of major owners of privately held industries in such lucrative sectors as cellular companies, information technology, oil and gas exploration, fuel and energy, fertilisers, pesticides, pharmaceuticals, communication, services sector, food and beverages, transport, tourism, stock broking and real estate. With no foolproof system to measure the amount of money that people command, even the Parliamentarians — mainly the big land owners and rich feudals, submit, their wealth statements under solemn oath, that shows them as no more than paupers. Fast backward to April 21, 1968. The late Dr Mahbubul Haq, the then Chief Economist of the Planning Commission, first sifted the few rich and mighty families from the commanding number of poor in Pakistan. Dr Haq identified Pakistan’s 22 richest families that, according to his calculations, controlled 66 per cent of the industries and owned 87 per cent share in the country’s banking and insurance industry. Dr Haq placed Adamjees on the third slot after the Dawood and Saigols. Among the other rich and mighty, he identified the following financial/industrial groups: Colony, Fancy, Valika, Jalil, Bawany, Crescent, Wazir Ali, Gandhara, Ispahani, Habib, Khyber, Nishat, Beco, Gul Ahmed, Arag, Hafiz, Karim, Millwala and Dada. And the big families went into big businesses in which they could summon the greatest expertise. The 22 rich and the mighty had flourished during the Ayubian era, only to be swept away by the wave of nationalisation that followed Z. A. Bhutto’s coming into power and loss of East Pakistan. A veteran industrialist recalls that in the six years of his rule, Z. A. Bhutto nationalised as many as 31 key industries, 13 banks, 12 insurance companies, 10 shipping companies and two petroleum companies. Out of those, at least two dozen industries and almost all banks and insurance companies belonged to the 22 families. Some of those 22 have a record of surviving winds and storms that lashed across the corporate world. Those who were unable to withstand the onslaught were cast into dustbin of history. The countable extraordinary huge fortunes of Fancy, Valika, Beco, Arag, Millwala, Khyber and Hyesons groups have vanished. A friend often refers to the Chinese proverb that says: “Great fortunes do not see third generation.” The financial empires usually see disintegration and eventual collapse due to feuds on inheritances among third generation ‘cousins’. A comparatively recent example is that of ‘Hyundai’. Founded by a peasant’s son Chung Ju-Young, the world renowned South Korean conglomerate, was destroyed on succession battles between his sons, even before the old man had gone (in the second generation).


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A scion of one of the 22 families pointed out by Dr Mahbubul Haq back in 1968, now lives a quiet life in one floor of his family home in Karachi. Asked not to be named, he conceded that groups that were unable to escape the natural divisions and disintegration that follows one generation after another, faded into history. He says that the ravages of time sees grandsons and granddaughters of those who once hanged out at the then Karachi’s famous hotel ‘Columbus’—owned by the Dossa family, and drive around in sparkling ‘Chevrolets’ (the best car of the time) now toil quietly at nine to five jobs in the US and Canada. But if nature abhors vacuum, it is nowhere more true than in case of Pakistan’s business, economic and financial world. As most of the old guards of communities (Khojas, Memons and Bohras) who had sown the seeds of business and finance in Pakistan, packed up of what could be salvaged of their wealth and migrated mainly to US, Canada and Africa, the top slots were quickly filled up by the new breed of largely unidentifiable class, who had amassed the multi-billions. There is a perception (of the dispossessed of course) that much of the cash of the rich class is stashed away in foreign lands, the best known among them—the Swiss banks. That is not to say that all the assets of all visibly rich in Pakistan are an ill-gotten wealth. Many have worked hard and in the process made big fortunes for themselves and at the same time contributed to the country’s economy, to render it less poor.

Resurrecting power sector By Tahir Basharat Cheema

It was only a few days ago that a senior official of the finance ministry proclaimed that the power sector sucks up to 2.5 percent of the GDP amounting to Rs300-350 billion every year. The same official told that over Rs1 trillion had been gobbled-up by this sector during the last three years. One the other hand, the federal government takes the credit for removing a huge financial burden from the books of various Discos, NTDC and Wapda by the recent debt swap.

Additionally, there seems to be a large majority amongst politicians and business executives who categorically subscribe to the concept of governments leaving businesses to the private sector. They vehemently consider utilities like power, telecommunications, WASA, health and education and so on as having nothing to do with the social obligations of the governments. The argument is correct only in the developed world's context as in developing countries private sector's foray into utility business largely depends upon a very strong regulatory regime.

Leaving this issue aside, it is of prime importance that the power sector necessarily has to be resurrected as the sector is highly technical and beset with issues of technology and introduction/assimilation thereof, the need is for professionals to deliver solutions. Once experts are allowed to present the solutions, the present non-technical and non-professional edicts would automatically take the back seat. Incidentally, non-professional solutions presented in the last one year have resulted in great losses and the backwards march on the gains of 2009 and 2010.

In this context, the Institution of Electrical & Electronics Engineers Pakistan (IEEEP) has taken the lead and held the National Conference on Power Deficit in late October, 2011. The IEEEP, having a membership of over six thousand engineers relating to the fields of electrical & electronics engineering, inclusive of avionics, mechatronics, medical engineering and computer engineering disciplines, was able to attract the best of scientists, engineers


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and economists to the conference. Additionally, over 400 hundred delegates from all over Pakistan and abroad participated in the conference. The fact that the event had the backing of the country's premier technical university -- the UET Lahore, further provided impetus to the event.

The IEEEP had setup an independent panel of experts committee to firm-up recommendations of the conference. These recommendations have since been forwarded it to the federal government. All the speakers and delegates concluded that implementation of these recommendations would take the country out of the crises it is facing at the moment. The recommendations were very clear, all encompassing and based on ground realties and the requirements of the country.

These are as under:

Need to evolve a National Energy Policy with participation of all stakeholders to generate 100,000 MW by 2030.

The main pillar of this policy would be to utilise local fuel sources like, coal, large hydel, small & micro hydel and using local technology under a planned indigenization programme. Development and utilisation of Thar coal as a national policy, with the federal and all provincial governments pitching in as necessary stakeholders.

A new focus on renewable energy like solar, wind has to be developed to leap frog the technological curve and join the ranks of the developed countries in generating power with minimum carbon footprint.

Create industry-academia-government linkage to develop local human resource which can perpetuate the energy autarky plan by designing, development and production of all phases of power generation projects/re-designing of existing curricula/syllabi on the need basis. Development of infrastructure necessary to support the growth of energy sector in general and power sector in particular must be included in PSDP funding each year and amount of Rs100 billion must be allocated for infrastructure development in the power sector alone. Immediate mitigation of circular debt by paying off Rs300 billion and appointment of competent professionals in the power sector, which is to be followed by allocation of gas on a priority basis.

Regulatory authorities NEPRA/OGRA must be restructured and will be staffed by competent professionals.

Harnessing of 2,000 MW from the sugar power from the private sector by notifying upfront tariff. Additionally, the State bank of Pakistan should arrange low-interest finances for this effort as a national policy.

These recommendations actually form the roadmap for recovery and also a detailed plan for arranging an appropriate power sector infrastructure in Pakistan. The recommendations also provide answers to the affordability issue and the national quest for attaining the needed semblance of autarky in the power sector. As the conference pinpointed the present disconnect between the government, academia and industry and also the relegation of national needs to the backburner, correction thereof would have a laudatory effect on our development. This last point alone would assure the availability of the needed technical resource in the country as against the need for possible imports. More so, when the energy requirements are growing at a stupendous pace and when renewable energy has to make its mark on the Pakistani horizon in the immediate further.

policy & development ~ january 2012 issue

Documents

pakistani state

local state

separate state

state functionaries

receiving end of state

ordinary peoples

eyes of ordinary pakistanis

pakistani military