Saturday, May 31, 2008

US Backs Musharraf as Rumors Swirl

In a show of support, White House spokeswoman Dana Perino said U.S. President George W. Bush spoke with Mr. Musharraf Friday.

According to the Wall Street Journal, the White House said the conversation was a follow-up to Mr. Bush's recent meeting in Egypt with Pakistani Prime Minister Yousaf Raza Gilani. "The president reiterated the United States' strong support for Pakistan, and he indicated he looks forward to President Musharraf's continuing role in further strengthening U.S.-Pakistani relations," Ms. Perino said.

The rumors of President Musharraf's departure have gained strength last week with the following three reports in Pakistani media:

1. PPP Chairman Asif Zardari called Musharraf a "relic of the past" and called for his resignation.

2. Nawaz Sharif said that Pakistan’s ruling coalition had agreed to “expel” President Pervez Musharraf from power.

3. A late-night meeting between Musharraf and his successor as army chief, General Ashfaq Kiyani, fueled speculation that Musharraf was being forced by the army to resign.

President Musharraf has dismissed the rumors, declaring that he continued to have good relations with the institution he used to lead before quitting as army chief last year. An army spokesman also contradicted the report.

But many political analysts say it is becoming increasingly difficult for Musharraf to hang on to power. "He has no power base left. The army is at the very least neutral, if not against him," said Shafqat Mahmood, a former federal minister. Mr. Mahmood, recognized by the media as an "independent analyst", appears to be part of the dis-information campaign by Nawaz league.

While Zardari is holding his cards to his chest, the Nawaz League, their "civil society" surrogates, and their media cheerleaders are spinning a rumor mill about President Musharraf's departure that is driving down the business/investor confidence and the Pakistani economy and stock market with it. Not only is the Pakistani economy in danger of imminent collapse, but Zardari and the PPP are almost certain to be the next target of the "civil society" and its uncivil campaign that has been characterized by violence on the streets from its inception in Islamabad and Lahore. By continuing with their agenda of ensuring chaos, the Sharif brothers are attempting to overturn the verdict of the people and deny the PPP its chance to govern Pakistan peacefully as the single largest party.

If the Pakistani economy does "melt down" (as Zardari put it) as a result of the politics of confrontation, the biggest losers will be the average Pakistanis whose modest expectations of "roti, bijli and paani" will remain unfulfilled. Long term damage to democracy in Pakistan is also likely if people are permanently disillusioned with democratic institutions as a means of solving their basic problems.

Sources: Wall Street Journal
Geo TV
Press Trust of India

Friday, May 30, 2008

"Economic Meltdown" in Pakistan

Modern economies and markets are largely driven by business, investor and consumer confidence. The movers and shakers of business and investment world look to the national political and economic leadership and their pronouncements and actions for cues on what is to come. When they sense a lack of competent leadership, their confidence drops and the markets and the economies come crashing down, as has been observed in Pakistan recently.

In his first comments about Pakistani economy since the formation of PPP-PML(N) coalition government, the PPP co-chairman Asif Ali Zardari told a press conference on May 17 that the economy is headed toward "meltdown". These remarks came immediately after Finance Minister Ishaq Dar had pulled out of the cabinet on the issue of the judges restoration. Yesterday, Nawaz Sharif said that Pakistan’s ruling coalition had agreed to “expel” President Pervez Musharraf from power, further contributing to market unease.

As the PPP and PML leaderships continue their political posturing, the larger story is the massive loss of confidence by business/investment community in Pakistan. It is worrying to see a sudden halt to foreign investments and the flight of capital by Pakistani investors to investments elsewhere in the world.

State Bank has raised interest rates from 10% to 12.5%, the rupee is in free fall, the dollar reserves are disappearing and both S&P and Moody’s have cut Pakistan’s credit ratings.

KSE 100 index has lost 2992 pts during May 2008 starting at 15122 & ending at 12130. The index has lost 879 pts during the week ended May 30th , 2008, standing at a nine month low.

Credit-default swaps on Pakistan's government debt increased 10 basis points to 530 in Hong Kong, according to Morgan Stanley's prices. That means it costs $530,000 a year to protect $10 million of Pakistan's debt from default for five years.

As Pakistan's foreign currency reserves dwindle, the ability to borrow additional cash has been impaired by Pakistan's credit rating cut for the first time in nine years by S&P and Moody's Investors Service, which cited "growing economic imbalances and renewed political difficulties."

"The ratings could impact Pakistan's effort to raise debt overseas or sell shares in companies," said Zaheeruddin Khalid, head of research at Al-Meezan Investment Management Ltd. in Karachi, which oversees $270 million in stocks and bonds.

A recent report on Pakistan’s Geo TV said that Pakistani real estate companies have been moving capital out of the country to the tune of at least $15 billion so far to invest in Gulf real estate. Such steep loss of capital will inevitably lead to job losses in Pakistan and contribute to further economic and political instability.

Unfortunately, it takes time and serious effort to create confidence in markets and economy. But it is very quick and easy to destroy such confidence by ill-conceived, impromptu statements. Zardari's comments such as Pakistani economy heading toward a "meltdown" add fuel to the fire and weaken confidence in Pakistan's economy and drive away investors. What Pakistan needs more than anything else is a sense that the leadership understands the issues and working seriously in a focused manner to resolve the economic issues. They need some sense of political stability and predictability.

Thursday, May 29, 2008

India, Pakistan Oppose Cluster Bomb Ban

As diplomats from more than 100 nations agreed on a treaty Wednesday to ban cluster bombs, India and Pakistan were conspicuously missing along with United States, Israel, Russia and China. The absence of these six countries, the biggest producers and/or users of cluster bombs today, raises doubts about the effectiveness of the treaty in eliminating large numbers of civilian casualties from the use of such munitions.

This is the second time in recent history that Pakistan has found itself opposing treaties banning munitions blamed for killing and maiming of innocent civilians caught in the battles. In 2002, India and Pakistan both opposed the land mines ban treaty signed in Ottawa in 1999. Both countries are major producers and users of land mines along with US, Israel, Russia and China.

Cluster bombs, launched by ground artillery or dropped from aircraft, spread dozens or hundreds of "bomblets" across an area as big as two football fields to attack concentrations of troops and vehicles. They have been used with devastating impact on battlefields around the globe, most recently in Afghanistan, Iraq and Lebanon. But critics contend the explosives often fail to detonate and later cause tremendous loss of civilian lives, from farmers who step on colorful bomblets in their fields to children who mistake them for toys.

Prior to the Ottawa Treaty banning land mines, 131 states possessed stockpiles, estimated at over 260 million antipersonnel mines. The Landmine Monitor now estimates that 54 countries have stockpiles, totaling 180 million antipersonnel mines. Based on this history, there is an expectation that the cluster bomb ban would similarly lead to a reduction in stockpiles and use of such munitions.

Given the terrible human misery caused by landmines and cluster bombs, it is disappointing to see that Pakistan has chosen not to seek high moral ground on this issue by failing to participate in either of these highly laudable treaties.

Sources: Associated Press

Gilani Wants "Democracy Dividend" For Pakistan

Prime Minister Yousuf Raza Gilani of Pakistan wants to "deliver democracy dividend" to the people. To understand the term "democracy dividend" you'd have to think of the 1990s in the United States. When the cold war ended, there was a "peace dividend" that went to the people of the United States. It came in the form of defense budget cuts that freed funds to stimulate the US economy and wipe out the budget deficits during the Clinton administration. It seems like a very distant memory now as the US debts are piling up again and the war in Iraq continues to be a serious drain on the US economy.

So what does Mr. Gillani have in mind about "democracy dividend" in Pakistan? Talking with Zahid Husain of the Wall Street Journal, Mr. Gilani said further U.S. assistance "will help deliver a democracy dividend to the people" after Pakistan held landmark elections for a new parliament in February. He also said further aid is needed to help provide political and economic stability as the nation seeks to fight terrorism. Pakistan has received more than $11 billion from the U.S., most of which has gone to the military, since it joined the U.S.-led fight against terrorism following the Sept. 11, 2001, attacks. Mr. Gilani didn't specify how much further assistance Pakistan is seeking. He made his case for further aid during a recent meeting in the Middle East with President Bush.

So what does Mr. Gillani offer the US in return for further assistance? The prime minister said Pakistani forces would remain deployed along the border. And he emphasized the need to increase the strength of Afghan troops on the Afghan side of the border, saying there is an inadequate force to protect against border crossings.

Mr. Gilani said he would maintain a working relationship with Mr. Musharraf for now. "I have no problem working with him, but will go by the party's decision," the prime minister said.

Based on the contents of the Wall Street Journal interview, it seems Mr. Gillani is willing to work with President Musharraf and continue to fight the war on terror alongside the US. However, convincing the US of Pakistan's seriousness would be difficult. As widely reported, there are efforts to undermine President Musharraf's powers in a new package presented by the PPP. The other irritant will be Pakistan's decision to make deals with the militants in the tribal and settled areas in defiance of the US wishes.

Wednesday, May 28, 2008

Is the McClellan Iraq War Disclosure a Surprise?

The former White House press secretary Scott McClellan has come under blistering attacks from the Bush surrogates and the media for his memoirs implicating Bush, Cheney, Rove, and the media in the Iraq war deception. McClellan writes in "What Happened: Inside the Bush White House and Washington's Culture of Deception" that the Iraq war was sold to the American people with a sophisticated "political propaganda campaign" led by President Bush and aimed at "manipulating sources of public opinion" and "downplaying the major reason for going to war."

McClellan writes in the new book that President Bush "veered terribly off course" and "rushed" to an unnecessary war in Iraq.

Regarding the media complicity, McClellan writes, "And through it all, the media would serve as complicit enablers. Their primary focus would be on covering the campaign to sell the war, rather than aggressively questioning the rationale for war or pursuing the truth behind it… the media would neglect their watchdog role, focusing less on truth and accuracy and more on whether the campaign was succeeding."

While the Bush team and the media are expressing utter surprise and shock at these revelations, the fact is that other former Bush officials have said similar things after their departure, though not as explicitly as McClellan has.

"From the very beginning, there was a conviction that Saddam Hussein was a bad person and that he needed to go," former treasury secretary Paul O'Neill told CBS, after the release of his tell-all book in 2004. "For me, the notion of pre-emption, that the U.S. has the unilateral right to do whatever we decide to do, is a really huge leap." The implication in O'Neill's remark is that the Iraq war decision was made well before any of the "facts" such as Saddam's WMD were invented to support it.

"The truth is that for reasons that have a lot to do with the U.S. government bureaucracy, we settled on the one issue that everyone could agree on which was weapons of mass destruction as the core reason," former deputy defense secretary Paul Wolfowitz was quoted as saying in a Pentagon transcript of an interview with Vanity Fair in 2003.

In terms of media complicity, the term "embedded journalists" was invented during the Iraq war. The deceptive selling of Iraq war was exemplified by the WMD reporting by Judith Miller for the New York Times. She was eventually let go by NY Times after her reputation was completely tarnished for her false WMD reports and involvement in the Valerie Plame affair. Earlier, Judith Miller was accepted in media circles to be an expert in weapons of mass destruction as well as on Islam, despite her lack of a science background and her inability to speak Arabic. When she initially joined the Times staff, Miller’s beat was the banking and securities industry.

It is clear that both the Bush supporters and the media are faking a surprise here at McClellan's "revelations". Too many of them were participants in the conspiracy to invade Iraq. What the Americans need now is to be alert to the coming deception to invade Iran or Pakistan or some other country in the last days of the trigger-happy Bush-Cheney administration. Such an invasion would create another huge mess for the next president who'd already be saddled with massive deficits generated by what Nobel Laureate economist Joseph Stiglitz calls "The Three Trillion Dollar War".

Tuesday, May 27, 2008

Mehsud to US: No Deal

"There can be no deal with the US." said Baitullah Mehsud at a press conference in South Waziristan this week as reported by the BBC.

If there's any thing that both Mehsud and the US administration agree on, it is outright rejection of any negotiations or deals with each other. Each side is determined to completely defeat and destroy the other.

Mehsud, a former US captive at Guantanamo, was released in March 2004 after the Americans determined that he would not pose a threat. But it seems that Guantanamo has turned him into a much bigger threat to Pakistan, US and the world than he might have been before he was captured in Afghanistan. Now described by some as more dangerous than Usama Bin Laden or Mullah Omar, Baitullah Mehsud keeps a much lower profile. He refuses to be photographed and keeps his face covered in public. He reaches out to his people through FM radio broadcasts. He crosses the border into Afghanistan at will to fight against the "crusaders." Baituallah Mehsud has been accused of ordering a series of suicide bombings inside Pakistan recently. Pakistani, US and British intelligence agencies also believe he orchestrated Benazir Bhutto's murder last year.

Here is how the BBC correspondent Syed Shoaib Hasan described his encounter with Mehsud this week: In our garden meeting, "Amir Sahib" (honored leader) - as Baitullah Mehsud is affectionately called by his men - smiles and shakes his head when this query is raised. Around us, dozens of militants armed to the teeth listen intently to their leader. The query: "Will your recent deal with Pakistan last?" The answer: "We do not want to fight Pakistan or the army. But if they continue to be slaves to US demands, then we our hands will be forced."

This answer makes it clear that this new deal and the latest ceasefire between the Taleban and Pakistan will be as fragile as the previous ones. Americans and NATO are players in this unfolding drama. They have to be part of any lasting deal. Just as the Taleban must be an essential part of any lasting deal. As long as they are unwilling, the war in Afghanistan and Pakistan's tribal belt will continue and will likely spill over into the rest of the region.

Pakistan's Spring Wheat Crop Threatened

A relatively new, aggressive strain of black stem rust, called Ug99 for its 1999 discovery in Uganda, has spread to Kenya, Ethiopia, Yemen and Iran. Most commercial wheat grown world-wide has no resistance to the disease. The threat comes at a time when wheat stockpiles have shrunk because of bad weather and strong demand for wheat-based foods, reports the Wall Street Journal this morning.

Ug99 poses a more serious threat to commercial crops than even the U.S. black-stem-rust epidemic of 1954 that destroyed 40% of the U.S. wheat crop, experts told the Wall Street Journal.

Fears that the disease may have spread to Pakistan haven't been confirmed, experts say, but Pakistan is a concern because of its proximity to India, the world's third-largest wheat producer with over a billion mouths to feed.

The potential for crop loss in Africa, the Middle East and South Asia is higher. Based on wind patterns and the rate of spread, the United Nations Food and Agriculture Organization says countries in the immediate path of Ug99 grow 25% of global production.

While wheat traders are aware of the disease, it hasn't significantly affected wheat-futures prices yet. Friday, the July wheat contract on the Chicago Board of Trade rose 7.5 cents a bushel to $7.5250 ($276 per ton). A metric ton of wheat has 36.744 bushels.

There are also concerns about the lack of rain in Australia impacting the wheat crop this winter. Wheat futures are likely to rise sharply if the forecast rain fails to materialize in Australia’s main eastern growing state of New South Wales, leaving farmers anxiously waiting to plant their next crop. Australia is normally the second-biggest wheat exporter in the world, after the United States.

This latest news adds to the worries about much higher wheat prices driven by potential real shortages exacerbated by speculators in the world futures markets. It would hit poor countries in Africa and South Asia particularly hard with the increased probability of a serious famine.

Monday, May 26, 2008

Should Pakistanis be Proud of Their Country?

Guest Post By Tariq A. Al-Maeena

On the day of our departure for Jeddah, with our bags packed and goodbyes dispensed with, our group found itself together at the coffee shop of the hotel. There each one of us talked about whether this trip had changed our opinions of Pakistan and its people.

This is a country of about 160 million people scattered about four provinces and Azad Kashmir. As the world's fifth largest democracy, Pakistan has had its share of questionable leadership, but there is enough evidence that the country's progress had not taken a back seat.

We all agreed that the media had been over blowing Pakistan's lack of safety and security. Never once had we felt threatened for our personal safety during our entire trip, and there were many times when individually we would set off on our own to the busiest sections of the cities we had visited.

Nether were our pre-visit ideas about a dirty and poor country justified, for we saw enough to prove otherwise. The infrastructure wherever we went was either intact or in the process of being upgraded.

We also felt that in the context of their internal politics, news of Pakistan's emerging industries and economies were continuously being relegated to the back pages of the media.

Perhaps it has more to do with Pakistan's preoccupation with conflicts at their northern borders over recent times, but little is written on the fact that with more than 100 universities and 150 research institutes, Pakistan produces 100,000 engineering graduates annually, and another 100,000 technically trained graduates.

More than 50 foreign companies have set up R&D facilities in Pakistan recently. Some of these include multinationals such as GE, DuPont, Bell Labs, IBM and Microsoft. In the business of automobiles, Pakistan manufactures and sells engine components to five of the world's largest manufacturers. Suzuki and Hyundai are recent entrants to the manufacturing buzz in Pakistan setting up full-fledged plants, with Pakistan taking its rank as the ninth largest automobile manufacturer in the world.

Along with heavy industry, Pakistan is also one of the world's largest exporters of textiles and related products. Garment exports alone are expected to fetch in $8 billion by year's end.

In its quest for self-reliance, Pakistan is among seven countries in the world that launch their own satellites. It is also among a few countries that have developed and built their own nuclear power capabilities using their own indigenous technology.

New emerging industries in areas of interest include mecha-tronics, biotechnology, pharmaceuticals and clinical research. And foreign investment has shown a remarkable increase in recent years. Ironically, Gulf countries awash with high returns on the sale of oil have yet to take advantage of an educated labor pool and invest heavily in this growing economy.

And as with the aspirations of the Saudi ambassador in Pakistan, we too wished well for our Pakistani hosts, for they do have a country that should make Pakistanis everywhere proud and more determined to develop their political participation in a positive manner. It is their country, and they should all join hands under the crescent and the star, the symbol of their flag to ensure a secure and stable government, free from personal agendas.

As we settled in our seats for the flight back home, individually we all vowed Insha Allah that we would one day return to Pakistan with our families. We had had but a glimpse into this land of tourism and resilience and all of us wanted more.

Pakistan Revisited — VI: A Time for Reflection
By Tariq A. Al-Maeena,
Saturday 17 May 2008 (11 Jumada al-Ula 1429)

Saturday, May 24, 2008

Israel in Alaska?

"Our proposal is: Give a piece of your land in Europe, in the United States, in Canada or in Alaska so that they can create their (Jewish) state," said the Iranian President, Mahmoud Ahmadinejad, back in 2005 at a conference in Mecca, Saudi Arabia.

To the extent that Alaska was mentioned as a proposed homeland for Jews, it seems that a former US Interior Secretary Harold Ickes beat Mr. Ahmadinejad by almost 70 years. The 1940 proposal by Secretary Ickes to lease a piece of land in Alaska for 60 years to Jews was vehemently opposed by Alaskans and other Americans and died before making it to the floor of the US Congress for a vote.

The Yiddish Policemen's Union is the title of a 2007 novel by Michael Chabon that just came out in a new paperback edition. In a "what if" story, Michael Chabon paints the picture of an imaginary Jewish homeland in Sitka, Alaska, that could have become reality had the Ickes proposal been adopted by the US Congress. Imagining Sitka as home for the three million European Jews — and their children and grandchildren — saved from the Holocaust, Mr. Chabon naturally gives them Yiddish as their national language as he sees life through the eyes of Meyer Landsman. Detective Landsman is a secular Jew investigating serious crimes including murder in Sitka. At times, the main character is quite irreverent. "I don't care what is written," Meyer Landsman says. "I don't care what supposedly got promised to some sandal-wearing idiot whose claim to fame is that he was ready to cut his own son's throat for the sake of a hare-brained idea. I don't care about red heifers and patriarchs and locusts. A bunch of old bones in the sand. My homeland is in my hat. It's in my ex-wife's tote bag." As both Muslims and Jews revere Abraham, many practicing Jews and most Muslims would find this language about him extremely offensive and the author worthy of strong condemnation.

The author points out that European Jews have not been able to settle down and live anywhere in the world for very long periods of time. They have always had to deal with "canceled leases" and forced to move many times in history. They expect the same in this imaginary homeland in Alaska as the lease is about to run out.

Talking about imagining alternative history, it would be interesting to see how Palestinians would have fared had Israel not been established where it is in the Middle East. Would they be like other Arab states in the neighborhood like Syria or Jordan or Egypt? Or a weak state like Lebanon controlled by a bigger neighbor? Authoritarian? Undemocratic? Or would they have chosen a different, more liberal, more secular and democratic society? Or would they have become a conservative Islamic state like Iran? Would they have lived in peace with their neighbors?

Friday, May 23, 2008

Pakistan's Economic Crisis Deepens

The Karachi Stock Exchange's 100 share index lost 615.26 points, 4.5%, to an eight month low of 13,011.74. The KSE index is now down 17% from its peak at the end of April amid growing loss of confidence in the country's leadership.

The latest drop in the KSE-100 was triggered by the country's central bank's decision to raise interest rates to 12.5% from 10% to slow the inflation rate. However, the key issue for business and investment community in the last few months has been growing anxiety over the lack of economic and political leadership. Finance Minister Ishaq Dar's ill-advised and ill-timed statements talking down the economy have also contributed to the loss of confidence in the Pakistani markets. The result has been the flight of capital from Pakistan. Instead of continuing to invest in Pakistan, the capital is now flowing away to the Gulf and invested in real estate by Pakistanis.

A recent report on Pakistan’s Geo TV said that Pakistani real estate companies have been moving capital out of the country to the tune of at least $15 billion so far to invest in Gulf real estate. Such steep loss of capital will inevitably lead to job losses in Pakistan and contribute to further economic and political instability.

As the average Pakistanis' suffering deepens with the growing lack of "roti, bijli and paani" (food, electricity and water), the elitist media and the self-proclaimed "civil society" led by the lawyers and the Nawaz league appear to be completely disconnected from the ground realities. They continue to harp on restoring deposed judges and are bent on exacting revenge from Musharraf, regardless of the disastrous consequences of their actions on common people's livelihood.

This coalition, while well-intentioned, now appears to have been a serious negative distraction for Mr. Zardari and the PPP government. It is time for Mr. Zardari and Prime Minister Gillani to acknowledge this reality and get on with focusing on the real priorities of the people to address their basic economic issues of survival.

Thursday, May 22, 2008

Gen Petraeus Says Pakistan Most Dangerous

At the Senate Armed Services Committee hearings today, General David H. Petraeus, the newly-nominated head of the US Central Command, answered in the affirmative to a question by Sen Jack Reed if he agreed with the intelligence community and Chairman Mullen's assessment that the next terrorist attack on the United States would most likely come from the Pakistan-Afghanistan border area.

With this answer, there seems to be consensus emerging in the United States that Pakistan's tribal areas represent the greatest terrorist threat for America. The US intelligence Community, the Chairman of the Joint Chiefs and future CENTCOM commander all agree that Pakistan is the greatest danger. There is also a seeming shift on diplomacy with Iran with General Petraeus agreeing with Defense Secretary Gates that the US needs a comprehensive approach to Iran that includes real diplomacy and engages on all issues. The US presidential candidate Barack Obama is already on record with his diplomatic outreach to Iran while at the same time calling for stiffer action along Pakistan-Afghan border.

As the Pakistani leadership currently focuses on restoration of judges, peace deals with the Taleban in tribal areas, and calls for UN inquiry into Bhutto assassination, this new consensus in the US has the potential to blind-side the newly elected government with sudden escalation along the border with Afghanistan. It is time for the new Pakistani leaders to start to pay attention to Pakistan's vital relations with the West and prevent any precipitous action by US and NATO along the Pak-Afghan border.

There is, however, some hope that a precipitous and purely military action along the western border can be avoided. The new CENTCOM commander General Petraeus believes in the use of diplomacy along with the military. “In most of the issues we'll address, a purely military approach is unlikely to succeed,” he noted, “and our strategy must recognize that.”

He said he’d seek to deal with the underlying causes of challenges in the region.

Wednesday, May 21, 2008

Sharia in Swat: Is This Appeasement?

Under a peace deal signed by the NWFP provincial government, the authorities say they will withdraw security forces and allow the pro-Taliban militants to impose Sharia law in Swat in return for promises to close training camps and end attacks. This is particularly astonishing as it involves secular nationalists of the Awami National Party that trounced the right wing JUI party in the last elections.

This announcement by Senior Minister of NWFP Bashir Ahmad Bilour followed a ceasefire announced by Taleban leader Baitullah Mehsud last month. There were also reports of a 15-point draft deal that called for an end to militant activity and an exchange of prisoners in return for the gradual withdrawal of the Pakistani military from part of the tribal region of South Waziristan.

The latest deal has been agreed in spite of the United States and NATO warnings to Pakistan against negotiating an agreement with militants along its border with Afghanistan.

The Bush administration has said such a deal would give the militants a free hand in Pakistan's tribal areas, which have long operated outside the central government's full control.

A previous deal reached with the militants by President Pervez Musharraf in 2006 was abandoned after accusations of violations by both sides and the US missile strikes on alleged militant targets inside Pakistan. The new deal is broader in the sense that it accepts the implementation of Shariah Law acceptable to the pro-Taleban elements in Malakand and Sawat.

Al Qaeda members as well as Taliban militants are believed to have taken refuge in North and South Waziristan, part of Pakistan's Federally Administered Tribal Areas, after US-led forces ousted the Taliban from Afghanistan in 2001.

This deal is likely to bring some peace and stability in the short term, if it is not immediately undermined by the US and NATO by missile strikes on targets inside Pakistan's tribal region along the Afghan border. However, it is likely to be seen as appeasement by many within and outside Pakistan who see this latest deal as the beginning of a slippery slope toward a full-fledged Taleban-style rule in the entire country. Such a scenario would put Pakistan in direct conflict with the West that could be very damaging to the interests of Pakistanis at large. It could mark the beginning of a brief period of peace followed by endless conflict involving US, NATO, Afghanistan, Pakistan and other regional players.

It is possible to avoid endless conflict and its devastating consequences for the entire South Asian and Central Asian regions and the world. However, this would require a broader strategy with political participation of the US, EU and the regional players. Pakistan can play a crucial role here by persuading its friends in the US and EU to go beyond the rhetoric of simply denouncing the Taliban as evil, refusing to engage with them politically and vowing to destroy them by military action alone. Unlike Al-Qaeda, the Taliban do have roots among the people of Afghanistan and Pakistan's tribal population. Such refusal adds to the "mystique of resistance and struggle" of the Taleban, in the words of Newsweek columnist Fareed Zakaria. Without dealing with the Taleban as a political entity, it is not possible to have a political strategy to fight and dilute the appeal of the Taliban or to marginalize the extreme elements within its fold.

Sunday, May 18, 2008

TiEcon and HDF Fundraiser in Silicon Valley

South Asians in Silicon Valley had a big weekend with both TiE(The Indus Entrepreneur)and HDF(Human Development Foundation)holding their annual events. These events brought out the powerful, rich and famous with origins in the sub-continent including former Pakistani Prime Minister Shaukat Aziz, Lord Nazir Ahmad and celebrity politician Tariq Aziz. While Mr. Shaukat Aziz was the keynote speaker on Thursday evening at the TIE Global charter member reception, the Human Development Foundation annual fundraiser was addressed by Lord Nazir Ahmad and Tariq Aziz, among others.

TiEcon 2008

Mr. Shaukat Aziz was warmly received by the The Indus Entrepreneur charter members as he spoke about the opportunities for American and South Asian entrepreneurs and investors in both India and Pakistan. "They can help lower the temperature and build trust, which is needed to resolve disputes," he said of TiE effect on the political animosity between India and Pakistan.

Beyond the TiE Global charter member event on Thursday night,the TiEcon 2008 conference continued through Friday and Saturday. There were some 4,000 attendees at the Santa Clara Convention Center, packing keynotes and parallel panel discussions on topics such as the Internet economy, life sciences, green technologies, what's hot - and not - in mobile phones to next-generation enterprise software programming.

HDF Silicon Valley Fundraiser 2008

The fundraiser was attended by over 500 Silicon Valley Pakistani-Americans and others at the Wyndham Hotel in San Jose, CA. It featured Lord Nazir Ahmed as the keynote speaker as well other speakers including Ethan Casey, author of a travelogue "Alive and Well in Pakistan" and Prof John Mock, a professor of Hindi and Urdu at University of California Santa Cruz. The event raised over $140,000 for building schools for the poor children in Pakistan. As usual, Mr. Javed Khan, Mr. Shahid Khan and Mr. Ather Siddiqui were at the forefront of this effort.

Lord Nazir, in his keynote, talked about the continuing difficulties faced by Pakistanis. He said that Pakistanis have lowered their expectations from "roti, kapra and makaan" to "roti, bijli and paani" and were still struggling for the lowered expectations. He was critical of Musharraf. Ethan Casey, however, said he has been going to Pakistan for over twelve years and he found all successive governments from Bhutto to Sharif to Musharraf all deeply flawed. Casey felt that Pakistanis are quite used to dealing with continuing crises and they will rise to the occasion and address their problems without relying on the governments. He particularly thought that the Pakistan expatriate community can help.

Though Lord Nazir Ahmed was a keynote speaker, he almost stole the show from comedian Azhar Usman with his jokes. For example, he said his mother does not understand what a British lord is. She thinks he has become a Tehsildar, a notch above the Numberdar, the highest government official in the village where he was born near Mirpur. What he said sounded a lot funnier in Punjabi. Then he had a sirdarji joke about a sikh who told him he was "Lord Ranjit Singh". When Lord Nazir expressed surprise about not having seen him in the British House of Lords, Ranjit Singh explained, "I was a landlord in Punjab. I left the land back home. So, in the UK, I am just a lord, not a landlord."

The speeches and fudraising were followed by stand-up comedy performances by Samson Koletkar (who claims to be "the world's only Indian Jewish comedian") and Azhar Usman (Allah Made Me Funny) who looks like Osama Bin Laden and jokes about it.

Samson is young and emerging desi star comedian who warmed up the audience before the better known Azhar Usman took the stage. Samson has pretty good material but his delivery was a bit lacking in its effect. He had a couple of very good jokes about his Jewish-Indian parents.

For example: "Most comedians say their dad is so cheap that.... When I hear that I say to them "You talk about cheap. My dad is an Indian Jew. Now beat that!"

Another one: " My Jewish mother in India wanted me to marry " a nice Jewish girl", a Jewish mother in New York wants her son to marry " a Jewish girl". But a Jewish mother in San Francisco just wants her son to marry "a girl".

Azhar's famous intro line that gets the audience laughing is " Hello, I am not Osama Bin Laden. I am his cousin Osama Bin Laughin". He had a lot good material about desi and Muslim humor in the US. For example: "You often hear Muslim men described as terrorists and Muslim women as oppressed. Have these people actually been inside a Muslim household to observe it? If they really do, they'll find the reverse to be true. Muslim men oppressed and terrorized by their women."

Another example: " Desis are the biggest bootleggers. They buy one copy of my CD and copy it for a hundred people and sell it. Once I asked my dad to buy me a Nike
pair of shoes costing a hundred dollars in Chicago. My dad's response: "Pagal ho kiya? Soo dollar ka joota pehno gai?" Then my dad took me on a trip to Patna market in Bihar where he found me a Nike pair that looks exactly like the one I saw in Chicago. But when you look closely at the logo, it says "Nice".

As the population of South Asians of various ethnicities, religions and opinions grows from tens of thousands to hundreds of thousands in this high-tech hub, it seems that Silicon Valley is becoming a center of South Asian culture and business in the West. This region can serve as the bridge between this great nation and the emerging economic and political powers in South Asia.

Friday, May 16, 2008

Yom Ha'atzmaut and the Nakbah

يوم النكبة Yawm Al-nakba (The Catastrophe Day) and ום העצמאות Yom Ha'atzmaut (The Independence Day) occur on May 14 each year. But this year is special as it is the 60th anniversary of the events of May 14, 1948 which the Israelis celebrate as their independence day and the Palestinians recall the horrors of massacres of Palestinians and expulsions from their homes in what is now the state of Israel.

For a long time, the Israeli textbooks have either not mentioned or completely denied any violence and forced expulsions of Palestinians by Israelis. This is beginning to change. In July of 2007, the Israeli Education Ministry agreed to approve a text book for use in the state's Arab schools that for the first time describes Israel's 1948 war of independence as a "catastrophe" for the Palestinian population. However, it balances it by also including the Jewish narrative of the establishment of the state, including that the Arab parties rejected the United Nations' 1947 partition plan for Palestine while the Jews were willing to accept it.

For many decades since 1948, the Israeli narrative in the history textbooks and the media have claimed that the Palestinians had simply abandoned their country, not fought hard enough for it and left for friendly Arab countries. The narrative conveniently defined the Palestinians as ignorant and cowardly. But since the opening of the Israeli archives in the past decade, that myth has been destroyed by a younger generation of Israeli historians - Avi Shlaim, Benny Morris, Ilan Pappe, Tom Segev and others - who have argued that the period from December 1947 to May 1948 involved a series of massacres designed to terrorize the native population into abandoning their homes and fleeing to safety.

In addition to faulty history, the Israeli textbooks also mislead Israeli students by showing Israel's territorial conquests in the 1967 war - the West Bank, Gaza, East Jerusalem and the Golan Heights - as part of Israel. There is no acknowledgment of the fact that international law deems them occupied land that Israel has illegally settled.

On the 60th anniversary, Israel demanded that the UN strike the word "Nakba" from its lexicon after an official statement released by Secretary-General Ban Ki-moon made specific reference to the Al-Nakba marking the 60th anniversary of the expulsion of hundreds of thousands of Palestinians from their lands with Israel's inception in 1948. Israeli Radio quoted a Ban spokesperson as saying the secretary-general "phoned Palestinian President Mahmoud Abbas to stress his support for the Palestinian people on Nakba Day." Danny Carmon, Israel's deputy ambassador to the UN, told the radio that the term "Nakba is a tool of Arab propaganda used to undermine the legitimacy of the establishment of the State of Israel, and it must not be part of the lexicon of the UN."

Benny Morris is considered one of the most important Israeli historians of the 1948 war. From his first book 20 years ago, Morris has documented Israeli atrocities and the expulsion of the Palestinians. He was considered part of a group of so-called ‘revisionist’ historians who challenged conventional Israeli thinking about 1948. However, unlike his critics to the left, Morris did not consider the expulsions to be part of a systematic Israeli policy of transfer.

Though there were many reports of the massacres of the Palestinians by the Jewish settlers in 1947 and 1948, the horrors of Dir Yassin are well documented. It was the killing of between 107 and 120 villagers, the estimate generally accepted by scholars, during and possibly after the battle at the village of Dir Yassin near Jerusalem in the British Mandate of Palestine by Jewish irregular forces between April 9 and April 11, 1948. It occurred while Yishuv forces consisting of the Jewish settlers in Palestine, fought to break the siege of Jerusalem during the period of civil war that preceded the end of the Mandate.

Contemporary reports, originating apparently from a commanding officer in Jerusalem of one of the irregular forces involved (the Irgun, headed by Nobel Peace Prize winner Menachem Begin, who later became Israel's prime minister), Mordechai Ra'anan, gave an initial estimate of 254 killed. The size of the figure had a considerable impact on the conflict in creating panic and became one of the major causes of the 1948 Palestinian exodus.

The Dir Yassin incident was universally condemned at the time, including repudiations from the Haganah command and the Jewish Agency. The Haganah were the Jewish paramilitaries in Palestine that later became the Israeli Defense Force (IDF).

Instead of recognizing each others' great suffering, the Israelis and the Palestinians have often engaged in either denying or belittling each others suffering. Many Palestinians deny or belittle the Holocaust and many Israelis reject the Nakba. And both continue to suffer, though some might justifiably argue that the Palestinians have suffered much more than the Israelis in the last several decades. In the words of former US President Bill Clinton, the Palestinians have been "dispossessed and dispersed". Mr. Clinton was referring to the dispossession of 78 per cent of the land of the Palestinians, an event that saw 700,000 of them (most of the population) driven out of historic Palestine. Israel vehemently opposes the return of those driven out and their children under any proposed peace settlement.

While many nations including Australia and the United States are attempting to correct their narratives and come to terms with the historic injustices against the natives in their lands, most Israelis continue to deny the injustices perpetrated against the Palestinians.

And both the Palestinians and the Israelis have continued to undermine mutual trust and further exacerbate the situation: Israel by insisting on Israeli settlement expansions and by building walls of separation and both parties by perpetuating a cycle of violence by recklessly (even deliberately) attacking each others' civilians.

The United States remains the only country in the world with significant leverage on both sides of the ongoing violence. But the US has not exercised that leverage wisely in the last seven years of the Bush administration, with the US foreign policy held hostage by the neo-cons, the right-wing Israeli lobby and the far right evangelical Christians. Unless the next US administration begins to play a serious and patient mediation role as an honest broker, the chances of peace will remain elusive. And both the Israelis and the Palestinians will continue to suffer.

Sources: Wikipedia
Sydney Morning Herald
Democracy Now!
Reliable Media Reports

UPDATE: A video presentation by Miko Peled, author of the General's Son:

Thursday, May 15, 2008

US Democrats Score Hat Trick

With the recent Travis Childers' win in Mississippi, Democrats have won three US congressional seats in a row, seats that were considered safe and reliable for Republicans. Childers' victory came one week after Rep. Don Cazayoux won a House seat in the Baton Rouge, La., area that had been in Republican hands for three decades. Over the winter, Rep. Bill Foster won an election in Illinois to succeed former House Speaker Dennis Hastert, who had been in Congress more than 20 years.

There is a rising tide of discontent against the Republican party in the United States after President George W. Bush's seven years of disastrous rule. In spite of vicious attacks against Childers and Cazayoux by linking them to Obama and his former pastor, the Republicans were unable to hold on to these seats. The smear tactics by Republicans against the Democrats have backfired.

With the 2006 take-over of US Congress by the Democrats and continuing wins recently,
Republican Rep. Tom Davis of Virginia wrote the leadership in a bluntly worded memo that "The political atmosphere ... is the worst since Watergate and far more toxic than the fall of 2006 when we lost 30 seats."

Contrary to the noises from the Republican spin doctors and their media friends, all the indications are that the Democratic nominee for the President is likely to win by a landslide this year in November. Barring any major terrorist attacks on US soil, the only thing that can hurt Democrats is their continuing in-fighting with the Democratic primaries becoming more nasty.

Wednesday, May 14, 2008

Entrepreneurs See Opportunity In Food Crisis

Richard Spinks, a 41-year-old British entrepreneur, is going door-to-door, leasing small plots of land from hundreds of thousands of poor farmers in western Ukraine. His company, Landkom International PLC, has planted wheat, barley and rapeseed (aka Canola) on a combined 25,000 acres. Landkom expects to reap its first big harvest this fall, according to the Wall Street Journal.

As the world food crisis becomes acute, entrepreneurs see opportunities to tackle it and make big money. Such efforts could give a much-needed boost to feed the growing population of the world. For years, big agribusiness companies have used new seed and fertilizer varieties to push yields higher. But as technology gains have slowed, the search for additional arable land has intensified. That's created an opening for entrepreneurs with visions of re-collectivizing the land in former communist countries and boosting production.

The total combined arable land in Russia, Ukraine and Kazakhstan that fed the former Soviet Union adds up to about 437m acres, almost the same as the total arable land in the United States. Among other nations with large arable acreage, India has 400m acres, China has about 350m acres and Brazil 146m acres. Of these countries, only China and Brazil have increased total arable land by about 10% over the last decade while others have shrunk. Compared to these nation, Pakistan has about 50m acres of arable land. And, given appropriate investments, Pakistan can increase its arable land by 10-20% over the next decade.

The current food crisis presents an opportunity for entrepreneurs and investors to invest in Pakistan's farm sector and reap big benefits. The new government in Pakistan should seize this opportunity by formulating a new policy of investment in the agriculture sector to bring prosperity to rural areas in Pakistan and help feed the nation and the world.

Sunday, May 11, 2008

Pakistan Coalition Collapsing as US intervenes

The rift between the PPP and PML(N) on the question of restoring judges appeared to have widened on Sunday as Nawaz Sharif prepared to leave London amidst reports of continuing deadlock.

Ahsan Iqbal, federal minister for education and a spokesman for Mr. Sharif's Pakistan Muslim League (N), said his party would quit the cabinet if the judges weren't restored by Monday, according a report in the Wall Street Journal. "We will have no justification to remain in the government if the judges were not reinstated," said Mr. Iqbal. The party is expected to announce its decision on Monday.

Meanwhile, U.S. Assistant Secretary of State for South Asia, Richard Boucher met with the two party leaders in London. A spokeswoman for the U.S. embassy in Islamabad said the meetings were part of Mr. Boucher's regular interactions with a wide range of Pakistani political leaders and denied the talks had anything to do with the restoration of judges. "The restoration of judges is Pakistan's issue to solve. It is not for the United States to prescribe solutions," the spokeswoman, Elizabeth Colton, said in a statement.

A senior member of the PPP, which leads the two-month old coalition, said the U.S. official advised the Pakistani leaders not to take measures that could push the government into direct confrontation with Mr. Musharraf. The failure of Messrs. Zardari and Sharif to reach agreement on the mechanics of the judges' reinstatement raises the prospect of an end to their partnership.

In spite of the US statements to the contrary, the timing and the location of these meetings with Boucher are seen an unwarranted intervention in Pakistan. The US contacts at this crucial moment raise great suspicions among Pakistanis. It seems, however, that the differences between Mr. Zardari and Mr. Sharif on this issue are so deep that the coalition collapse is imminent, with or without the US intervention.

It is clear that Mr. Zardari fears the return of "partisan" judges who have clearly shown an affinity with PML(N) backed by the lawyers movement in Punjab. Many of these judges have shown animosity toward the PPP and Mr. Musharraf on the question of the National Reconciliation Ordnance which granted amnesty to the PPP leaders. The US was instrumental in arranging the NRO and supports its full implememtation. The return of these judges could spell trouble for both Mr. Zardari and President Musharraf and help Mr. Sharif in his pursuit of unchecked power exercised through friendly activist judges of the Supreme Court. Understandably, Mr. Zardari is highly suspicious of Mr. Sharif's motives and that has prevented any progress on this issue.

Friday, May 9, 2008

Can Pakistan Enhance World's Food Security?

While the term "energy security" has been in vogue for many years, the term "food security" seems to be competing with it for an equal or higher ranking on the world agenda. Food Security is particularly high on the list for countries such as China with the world's largest population to feed and the Middle East nations such as Saudi Arabia and Libya who depend on imported food.

So what are these countries doing? They are acquiring farmland in the nations considered world's breadbaskets. Countries in Africa, Latin America, and Eastern Europe who have plenty of farmland but not a lot of money. While these efforts will help increase food production, a downside of an aggressive policy for more farmland is that it will accelerate deforestation and hurt the environment.

The Chinese agriculture ministry has drafted a proposal to support the acquisition of farmland, especially in Africa and South America, to help guarantee China's food security, the Financial Times reports. Beijing already promotes aggressive foreign acquisition by Chinese oil, banking and manufacturing firms -- to mixed receptions abroad at a time of heightened suspicion surrounding sovereign-wealth investments. A Chinese official tells the FT that there shouldn't be any problem getting the policy approved, but that Beijing worries that foreign governments may be "unwilling to give up large areas of land."

And at a time of relative food shortages and soaring prices for cereals and other nutritive commodities, China will already have some competition, says the Wall Street Journal. In the Middle East, the region most dependent on imported food, Saudi Arabia has said it plans to invest in farm and livestock projects overseas to get a handle on its commodity prices and ensure supply, while Libya has been talking to Ukraine about the possibility of growing its own wheat there. Any shift of economic power from the Middle East to the likes of poorer Ukraine, one of the world's biggest wheat producers, could revive the Heartland Theory of 19th-century and 20th-century geographer Sir Halford John Mackinder, who argued control of the natural resources of the East European breadbasket region was key to controlling the "World Island" of Europe and Asia, and thus the world.

This developing new dynamic creates an opportunity for Pakistan to form partnerships with the Chinese and the Saudis aimed at dramatic improvement in the productivity of its farmland in Sind and Punjab without actually selling the land to foreigners. Farm modernization to realize the full potential of its farmland is a goal Pakistan must set for itself for this decade. If pursued with a clear plan and strategy, Pakistan can not only feed its own population well but it could also become the breadbasket for the world and improve the living standards of Pakistan's rural population.

Prior efforts beginning in 2000 toward corporate farming have met significant opposition. For example, an official of Pakistan's Ministry of Food and Agriculture said in July 2000, "We are working to finalize a policy for introducing corporate agriculture in the country where large farm holdings will be allowed to companies which would seek listing in the stock exchange."

Under the proposal, foreign companies were to be granted a 30-year lease on government-owned land that could be extended for another 20 years. However, food rights campaigners expressed the fear that profit-driven agribusiness transnational companies (TNCs) would use Pakistan as a base for exporting cash crops which would replace staple cereals on the country's farms.

Since the failure of the effort in 2000, Pakistan has again initiated efforts in 2007 to build serious agribusiness using modern techniques as part of a mega project sponsored by the Ministry of Food, Agriculture and Livestock, with the technical and financial assistance of Asian Development Bank. The executing agencies include Ministry of Food, Agriculture and Livestock (MINFAL), Department of Agricultural & Livestock Products Marketing & Grading, State Bank of Pakistan, Provincial Agriculture, Livestock and marketing Departments, and the Agriculture and Livestock Departments of FATA, FANA and AJK. The Project has its headquarters in Islamabad and implementation offices in Punjab, Sindh, NWFP, Balochistan, Federally Administered Tribal & Northern Areas and Azad Jammu and Kashmir.

To the dismay of biodiversity advocates and environmentalists, Brazil has become a dramatic success in food production by making use of the Cerrado (literally meaning Closed), a region of grassland near the equator that was considered not cultivable. The large scale American agribusiness investments have transformed the region into a major producer of soybean and made Brazil a food exporter rivaling the United States. Soybean is a major source of protein for livestock. Livestock farming is in big demand as the world consumes more meat and dairy products. Brazil is also the largest producer and consumer of biofuels and self-sufficient in energy.

The world food and energy crises clearly present opportunities for investors to invest in countries such as Pakistan with plenty of fertile farmland but very low farm productivity. By bringing the farm expertise and enhancing crop yields, agribusiness companies such as Archer-Daniel, Cargill, Bunge, Dow and Monsanto and their international competitors have tremendous opportunities in South Asia. So do companies like Caterpillar, John Deere, Kubota, Hyundai, Mahindra and others in the farm machinery and construction business. While many South Asians may be concerned about the negative impact of big agribusiness on the society and the environment, the over-riding need for efficiency to feed the growing population and international export opportunities will likely trump these concerns.

US Withdraws Hood Posting in Pakistan

In the wake of the outrage in Pakistan, New York Times is reporting that the Bush administration has decided to cancel General Jay Hood's appointment to the US Embassy in Pakistan. General Hood is the former head of the US prison in Guantanamo Bay in Cuba, where hundreds of Muslim prisoners, many from Pakistan, have been held without charge since the prison was set up following the 11 September, 2001 attacks on the US. There have been widespread reports of torture at the prison. The General admitted in 2005 that there had been a number of incidents involving Guantanamo guards showing "mishandling" the Koran.

Even though no formal announcements has been made, it is known that Pakistan had refused to accept this appointment. Pakistani Foreign Minister Shah Mehmood Qureshi said his government had "genuine reservations" over the appointment of Maj-Gen Jay Hood.

The Hood appointment was announced in March. According to the NY Times, this appointment reflected the military's aim to put a crisis-tested veteran in a critical job at a pivotal time in the fight against al-Qaeda and the Taleban in Pakistan's tribal areas. The paper quoted a US Central Command spokesman as saying Gen Hood was now being considered for "a different, equally important job" at command headquarters.

Thursday, May 8, 2008

Rivals: Asians Against Asians Or Asian Union?

Bill Emmott, a former editor of The Economist and a longtime Asia-watcher, says in his recently published book "Rivals" that China will continue its remarkable rise for years to come. But he thinks that a modernizing India and a resurgent Japan could end up jostling for supremacy in Asia, pitting "Asians against Asians." A balance-of-power politics could evolve resembling Europe's in the 19th century.

Talking about the Bush administration's growing ties with India, Emmott says the US recognize the fact that while Al-Qaeda and its cohorts pose the biggest short-term and perhaps medium-term challenge to America, in the long term it is the expected shift in the world’s economic and political balance towards Asia that promises to have the greatest significance.

Economists at Goldman Sachs estimate that if China continues with pro-growth policies and manages its economy reasonably well, it could overtake the United States as the world’s biggest economy by 2020. By 2050 India might also have overtaken the United States if it pursues vigorous economic reforms in this decade and beyond. India, at present the world’s 11th-largest economy, has long been thought of as a laggard compared with China: good at information technology and outsourcing but incapable of the sort of manufacturing that has powered China’s economic emergence.

Even if the dates and figures in forecasts such as Goldman’s are wrong, Asia is going to get richer and stronger, probably for a long time to come. The reason why Tibet and Tata come into the picture is that the rise of Asia is not just going to pit Asia against the West. It is going to pit Asians against Asians. This is the first time in history when there have been three powerful countries in Asia at the same time: China, India and Japan. That might not matter if they liked each other or were somehow naturally compatible. But they do not and are not. Far from it, in fact.

An array of disputes, historical bitternesses and regional flashpoints weigh down on all three countries. Conflict is not inevitable but nor is it inconceivable. If it were to occur – over Taiwan, say, or the Korean peninsula or Tibet or Pakistan – it would not simply be an intra-Asian affair. The outside world would be drawn in.

Such a conflict could break out suddenly. Last month’s unrest in Tibet has shown just how volatile China can be – and how easily one of those flashpoints could cause international tension.

If the Asians can manage their relations peacefully, it will not only help China make a successful transition to the world's great superpower, but a strong Indian performance might succeed in lifting people out of poverty throughout the whole subcontinent, including Pakistan and Bangladesh. The self-confidence that such an outcome would foster would make it easier for the three main powers to work together and, with the rest of Asia, to create a true single economy along the lines of the European Union.

What cannot be in dispute is that the outcome matters enormously. The catastrophic decisions that European nations made a century ago are still within our folk memory. The world still lives with the consequences of the First World War. We have to hope that Asia, now in some ways at a similar stage of development, manages to cope with its tensions better than Europe did.

Times Online
Wall Street Journal
The Independent

Mobile Internet in South Asia

When Intel puts its weight behind an initiative, it automatically gets a boost. But when Google and Intel together join forces, no one in their right mind can bet against such a combined force. Mobile Internet with broadband access has achieved that inevitability with Google backing a Wimax joint venture between wireless veteran Craig McCaw's Clearwire and Sprint-Nextel. In addition to Intel and Google, this venture is also supported by Comcast and Time-Warner.

As the world goes mobile, Intel's objective is to extend its leadership position in platforms used to access the Internet. Google is aiming at capturing the huge market for mobile advertising that is likely to grab a increasingly larger share of online advertising revenue.

The wireless carriers such as Verizon and AT&T have long been busy building walled gardens and controlling the distribution and content of mobile platforms. On the other hand, Intel and Google have long been arguing for an open model similar to the Internet access by PCs where the consumer is in charge. Such a model would obviously benefit both Intel and Google to extend their current dominance in the desktop/laptop user market into the mobile Internet space. Now the two giants appear to be succeeding with the roll-out of the Wimax network and Sprint-Nextel's willingness to work with them to beat Verizon and ATT Wireless as the incumbent carriers.

According to Wall Street Journal, the WiMax venture will create a network that potentially covers 120 million to 140 million people in the U.S. by 2010, the companies said. The venture, valued at more than $12 billion, will have a two-year head-start on rivals Verizon Wireless and AT&T Inc., which are just beginning to sketch out plans for their next-generation wireless networks.

While the potential for Wimax in the US market looks very good, I believe the really big opportunity is in the emerging markets, such as India and Pakistan, where the mobile phone has achieved greater than 50% penetration and the PC/Internet penetration remains in single digits. South Asia is witnessing some of biggest deployments of Wimax with a lot of consumer interest in both fixed and mobile broadband.

According to Juniper Research, South Asia will be the driving force behind the growth of Mobile WiMax, or the 802.16e standard. The Asia and Australia regions are expected to account for more than 50% of the total WiMax deployments by 2013.

Pakistan, being among the first countries in the world to roll-out a functional WiMax service, is experiencing tremendous growth in demand after Wateen Telecom’s launch of its WiMax service and roll-out plans announced by Mobilink.

India's state-owned Bharat Sanchar Nigam Limited is rolling out a Wimax network for broadband access in response to government requirement that 20 million broadband lines be in service by 2010.

Given the pent-up demand for the Internet access and the ubiquity of mobile phones, Wimax roll-out will likely spur the largest adoption of mobile Internet in South Asia first.

Related Link:

State of Telecom Industry in Pakistan

Wednesday, May 7, 2008

World Food Crisis Alarm Bells Ring Louder

"I am pleased to announce that ADB will provide $500 million as immediate budgetary support to the hardest-hit countries so that they can bring food to the tables of the vulnerable, poor and needy," the Asian Development Bank Chief Haruhiko Kuroda told a news conference, adding that he expected to make the first loans within weeks. But Mr. Kuroda said the best long-term solution to painful price spikes was through boosting agricultural output, adding that the bank would double lending to agricultural, natural resource and infrastructure projects to $2 billion in 2009.

As the alarm bells sound louder in the major world capitals, the rich nations and the multi-lateral institutions such as the World Bank, the Asian Development Bank, UN Food Program and others are showing a great sense of urgency in responding to the growing international crisis.

In the absence of any coordinated international effort to assure food supplies, nations are acting unilaterally to avert the crisis within their national borders. Export bans and prices floors established by main rice exporters China, Pakistan, Vietnam and India have increased price volatility and raised uncertainties about future supplies, according to the ADB. Indian sugar and soy-oil futures are dropping amid market talk that the government may halt trading to guarantee food supplies and rein in the inflation that is at its highest level in 3½ years. There is some evidence that, at least partially, the dramatic food price increases are being fueled by hedge funds and speculators. Investors fleeing Wall Street's mortgage-related strife have plowed hundreds of millions of dollars into grain futures, driving prices up even more. The US Federal Reserve efforts to pump liquidity into the markets have exacerbated the crisis.

"Trade measures or price controls are not efficient ways to combat the food crisis or food-price inflation. It distorts the market and could exacerbate the situation in the international grain market," Mr. Kuroda said in an interview carried by Reuters.

The World Bank, with its focus on poverty reduction, is concerned about reversals of the gains made in war against poverty if the food crisis is not dealt with effectively. “Based on a very rough analysis, we estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty,” World Bank President Robert Zoellick said. “This is not just a question of short-term needs, as important as those are; this is ensuring that future generations don’t pay a price too.” He reiterated his call for a “New Deal for Global Food Policy” to meet the food price crisis, which includes a call for US$500 million from donor governments to close an immediate gap identified by the UN’s World Food Program. To date, about half of the half-billion-dollar target has been met, Zoellick said.

US President Bush and Secretary of State Condeleeza Rice have also expressed serious concerns about potential instability in the low-income countries. The US is pledging to more than double its food aid in 2008-2009 to avert a major humanitarian and security crisis. Mr. Bush is also attempting to at least partially untie the US food assistance to purchases from US farmers. The European governments have already done so.

As the nations of the world and multi-lateral institutions wake up to the fact that there is a serious food crisis gripping the world, it is important that they work on a comprehensive strategy beyond just the emergency food aid. The strategy needs to focus on helping the farmers in poor nations with education, infrastructure and facilities to enable them to feed themselves and their nations. The small farmers in poor countries have very low productivity and crop yield due to lack of water management, good quality seeds, fertilizer, equipment, storage and transportation facilities, etc. Such investments are the best way to prevent backlash against globalization, reduce conflict and poverty and assure peace and security in the world.

Tuesday, May 6, 2008

Pakistan Rupee in Sharp Decline

Pakistani Rupee has hit a new low at Rs. 66.00 for a US dollar. The rupee decline seems to have accelerated against the weak US currency recently amid reports of rising imports, stagnant exports and falling foreign exchange reserves held by the State Bank of Pakistan.

“The fast erosion in the central bank reserves is creating pressures on the rupee,” the treasury dealer Rehanuddin at Invest Cap told the Gulf Times.

The central bank has so far lost around $4bn in the last five months to $12.65bn this week over $16.48bn on October 31. Analysts say the reserves will dwindle to $10bn by the end of the fiscal year on June 30. “Political uncertainty, lack of foreign investment and import pressures have badly hit reserves,” Aqeel Ahmed, senior analyst at First Cap Securities, said.

"The import pressure is rising rapidly on high oil prices, our exports are not increasing due to food shortage while foreign investment is also slow and all these factors are contributing to the weaknesses of the rupee," said Syed Nabeel Iqbal, the chief of trading and research at Karachi-based Khanani & Kalia, one of the largest foreign exchange firms in the country.

According to market sources, three major Pakistani companies - Lucky Cement, the National Bank of Pakistan and Habib Bank - are planning to float Global Depository Receipts (GDRs) amounting to close around 1 billion dollars.

State-owned Oil and Gas Development Company Ltd is planning to float its bonds to be exchangeable with its lucrative stocks. It is hoped that the major privatization will help boost Pakistan's dwindling foreign currency reserves.

China announced in April it will provide Pakistan with 500 million dollars in balance-of-payment support.

'All this is positive news which may help the rupee in maintaining stability in its declining path, but when all these positive factors will figure in is a big question,' said said Khurram Shahzad, senior analyst at Invest Cap Securities.

Failure by Pakistan to arrest any further significant decline in rupee will accelerate inflation and add to the misery of the people already suffering high prices for basic commodities.

The bottom line, however, will be the competence of the new economic team in charge of Pakistan's finance and treasury in dealing with the challenges and taking advantage of the opportunities. Given the terrible track record of the current Finance Minister Mr. Ishaq Dar in the Sharif government of the late 1990s, it is hard to be sanguine about the prospects of Pakistan's economy.

Any hope of recovery will depend on how soon the Pakistani ruling politicians can rise above the nepotist politics and choose competent technocrats to navigate the Pakistani economy through troubled waters.

Sources: Gulf Times
Business News

Monday, May 5, 2008

PPP Cutting Deal With Musharraf

A few weeks ago PPP's senior leader and current Defense Minister Chaudhry Ahmad Mukhtar described President Musharraf as a "national asset". Now a report in the Wall Street Journal is describing the details of secret negotiations underway between the President's men and Zardari's representatives.

Let us not forget how we got where we are. It all started with President Musharraf signing the NRO (National Reconciliation Ordnance) that gave the PPP leadership blanket amnesty. This arrangement between General Musharraf and late Prime Minister Bhutto, brokered by the Bush administration, paved the way for the PPP leadership to return to Pakistan, participate in the elections and share power with Mr. Musharraf. It was only later that the Saudis insisted on Pakistan allowing Nawaz Sharif's return that apparently displeased the US and the PPP leadership. But Sharif's remarkable showing in the elections in Punjab has made him a very important player that the PPP has to deal with.

According to the Wall Street Journal report today, the terms under discussion are as follows:

1. The President is willing to agree to a constitutional change that would restrict the president's power to dismiss Parliament.
2. Mr. Musharraf isn't prepared to relinquish his power to appoint the chiefs of the armed forces.
3. The former judges would be returned but the new judges appointed by Mr. Musharraf after their dismissal would be retained.
4. Mr. Musharraf will be legitimized by the current parliament as Pakistan's president for a five-year term.

The talks involve Lt. Gen. Nadeem Taj, head of Pakistan's Inter Services Intelligence, and close presidential aide Tariq Aziz. The two emissaries have been in regular contact with top PPP leaders, including Asif Ali Zardari, Ms. Bhutto's widower who leads the party. PPP leaders have publicly declared that they are willing to have working relations with Mr. Musharraf.

The strains between the PPP and the PML (N) have given Mr. Musharraf's supporters a cause for optimism.

Sunday, May 4, 2008

Can Pakistan Attract More Foreign Capital?

Until mid-2007, foreign investment in Pakistan rose steadily. For the fiscal year that ended in June 2007, the country received $5.2 billion in foreign direct investment and $1.8 billion in portfolio investment. The investors have turned lukewarm since the second half of last year. In the eight months that ended in February, foreign investment was just two-thirds what it was in the same period one year earlier.

At the Karachi stock market, the numbers continue to look good. Even with the turmoil of 2007's last months, the KSE 100 index was still up 40% for the year. And its performance so far in 2008 compares very well not just with Western markets, but with the Bombay Stock Exchange's Sensex index, which has suffered double digit drop.

While the new government of Prime Minister Gillani faces many economic challenges including food and energy crises, the expectation of relative stability is likely to spur foreign investors to start pumping money back into the Pakistani economy.

One of the triggers investors are expecting is the resumption of privatization, particularly of the banking and the energy sectors. According to the Wall Street Journal, the new government's first test is coming up in the banking sector. Last year, Pakistan announced plans to sell stakes in the National Bank of Pakistan and Habib Bank through global depositary receipts, or GDRs, on the London Stock Exchange. As political storm clouds gathered, the sales -- expected to be for a 23% stake in NBP and a 7.5% stake in Habib Bank -- didn't materialize.

The Journal says that investors are asking if the new government, formed by parties that have promoted populist policies, can take the measures needed to avert an economic crisis. "Let's not skirt around the issue that these guys have been in power in the past and they've had a pretty bad track record in governance and also dealing with foreign investors," says Sakib Sherani, an economist with ABN Amro Bank in Pakistan.

In spite of the economic woes, some observers expect the Karachi market to gain 20% to 25% in 2008, in line with growth in corporate earnings. The expectations are based on the idea that some sectors of the economy, such as real estate, are undervalued, and on the continuing attractive valuation of Pakistani stocks. By some estimates, stocks in Pakistan have a historic average price-earnings ratio of 11. The prospects for outsize returns in Pakistan relative to the rest of the world are likely to revive Pakistan as a cash magnet in 2008.

Saturday, May 3, 2008

The US Food Aid and the Farm Lobby

The US Congress is expected to approve an additional $770m in international food aid to alleviate the food crisis arising out of an unprecedented inflation in world food prices. With the prices of various food staples for the poor doubling and tripling in about a year, it is not clear if this increased amount would help avert widespread hunger feared in parts of Africa and Asia.

In addition to the actual amount of US aid, the other key aspect is how this aid is delivered. If the aid is intended to be tied to purchases from US farmers to provide short-term relief to the poor, it will do nothing to solve the long-term issue of the poor nations' ability to feed themselves by increasing their domestic food production.

With food prices soaring, U.S. farmers are enjoying robust demand, and have less need for the government to buy some of their crop for use in overseas aid. And the U.S. increasingly has come under pressure from other developed countries to change the design of its food aid. Canada recently announced it would move toward more untied aid, and European countries made the switch in the 1990s, according to the Wall Street Journal.

The Journal goes on, "Attempts to shift a percentage to cash have met with aggressive opposition from the U.S. agriculture industry". The farm lobby in the US continues to flex its muscle and enrich itself, without regard for the severity of the hunger crisis in the poor nations. Three years ago, farmers and their allies in Congress effectively destroyed an effort by the Bush administration to begin this switch to untied food aid.

European governments switched to giving all-cash donations in the mid-1990s, arguing that cash allows more flexibility in responding to crises and that the U.S. uses its food aid as a form of farm subsidy. The Europeans understand that these subsidies run counter to the spirit of free trade and globalization being championed by the developed world as a way to open the emerging markets for their multi-nationals. The backlash from the hungry against global markets will be a commercial setback as well as a security issue for the entire world.

The outdated Public Law 480, signed in the 1950s by President Eisenhower, governing US food aid motivated by domestic politics and objectives has continued to live in various garbs. It has distorted the whole idea of helping end hunger and primarily served the interests of the farm lobby and re-election of the congressmen from farm states. It has also not helped in promoting better nutrition, health and fitness of the American people by subsidizing unhealthy dairy, meats and cereals while penalizing healthy options such as growing fruits and vegetables. It is one of the worst examples of the "special-interests" politics that dominates the American democracy.

As long as the US farmers and politicians continue to play selfish games with US aid to the poor, all of the US efforts will amount to nothing more than a superficial PR campaign disguised as generosity toward the poor. A little more sincerity may actually help feed the poor for more than just brief periods of acute crises and simultaneously address the fundamental issues of self-sufficiency. Unless there is fundamental change in the attitudes of the Midwest legislators, this will be another missed opportunity to help improve the battered US image abroad and contribute to stability and security of the US and the world.