Thursday, December 31, 2009

American CIA's "Secret" War in Pakistan

The publicly-acknowledged recent deaths of several CIA agents and Blackwater personnel in a suicide bombing in Khost, Afghanistan, have once again brought the CIA's and its private contractors' combat role into sharp focus. Apparently, the attacker was a potential CIA "asset" recruited to identify targets for covert missions in Pakistan. He appears to have worn an explosives-laden suicide vest under an Afghan National Army uniform, two NATO officials told the media. The attack happened close to dusk, when some people at the base were relaxing before dinner. In a statement to the C.I.A.’s work force, President Obama said that the spy agency had been “tested as never before,” and that C.I.A. operatives had “served on the front lines in directly confronting the dangers of the 21st century.”

The CIA personnel regularly take foreign agents onto their base along the border before sending them on intelligence collection missions in eastern Afghanistan and across the border into Pakistan, said one Pentagon consultant who works closely with the C.I.A. in Afghanistan, according to a report in the New York Times.

The CIA's drone war over Pakistan has recently been in high gear. Under the Obama administration, the CIA launched more than 50 reported robotic strikes, killing several hundred people, reportedly mostly civilians. Compare that to 2008, when there were just 36 drone attacks, according to an article by Noah Schachtman in Wired magazine. Slightly at variance with the Wired report, Pakistani government estimates indicate there were 44 predator strikes carried out by US drones in the tribal areas of Pakistan over the past 12 months, and only five were able to hit their actual targets, killing five key Al-Qaeda and Taliban leaders, but at the cost of over 700 innocent civilians. These statistics represent the loss 140 innocent lives for every militant killed by US drones, a reckless disregard for lives of Pakistanis in the tribal belt. And now there are strong rumors of further expansion of the U.S. drone strikes inside Pakistan in 2010, with potential for even greater innocent civilian casualties fueling further unrest in the country already wracked by extreme violence.

The false denials by both the American and the Pakistani officials of the existence of an understanding on the drone attacks and the presence of Blackwater personnel on Pakistani soil have been exposed by the investigative media and Google Earth images showing U.S. Predators parked on a Pakistani runway. In fact, the CIA publicly acknowledged what it has been doing for years when it announced that it was cutting Blackwater’s contract for servicing and arming the drones in Pakistan. The US Air Force acknowledged its attacks in Pakistan when it let slip that their drones were running missions east of the Durand Line. But counterinsurgency experts continue to worry that the robotic attacks could destabilize the region as they continue into 2010 and expand to a new front: Yemen.

While the new and more restrictive guidelines have been enacted for drone attacks by the US Air Force in Afghanistan to prevent growing civilian death toll, the CIA drone strikes in Pakistan remain essentially unconstrained. As the CIA demands cooperation from the ISI, it refuses to share with the ISI any intelligence from the CIA informants and "assets" on the ground in Pakistan that help pick the targets. Such secrecy raises suspicions that the CIA agents and "assets" in Pakistan are possibly engaged in subversive activities that the Americans want to hide from their Pakistani allies. There are also concerns about the Americans preparing to "secure" Pakistani nuclear weapons as alleged in a recent New Yorker article by Seymour Hersh.

In addition to the increasing drone attacks and rising suspicions about the role of the CIA, there are new and explosive revelations about the role and the strength of Blackwater contractors in the region. A former Blackwater employee and an ex-US Marine have alleged that Blackwater chief Erik Prince "views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe," and that Prince's companies "encouraged and rewarded the destruction of Iraqi life." The number of US contractors working for the US military and the CIA in the region exceeds the total strength of the US troops and CIA personnel, according to estimates by Jimmy Scahill who has researched and written extensively about Blackwater. The presence of over 80,000 US military and intelligence contractors in Afghanistan and Pakistan makes the level of privatization of war unprecedented.

There have also been credible reports by Jeremy Scahill in the Nation that Blackwater has been working with US special forces JSOC on American forward operating bases (FOBs), like the one in Khost, in various parts of Pakistan, including Karachi, on "snatch and grabs" of high-value targets and other sensitive actions inside and outside Pakistan. The US FOBs in the region are known to recruit and create an informants network, as confirmed by the accounts of what happened with suicide bombing and killing of CIA agents at Khost FOB in Afghanistan.

While Pakistanis must accept responsibility for their own unwise actions in the past, there is no doubt that the US presence in the region has had a huge negative impact on Pakistanis. Some of the actions by Americans, starting with the use of the "Mujaheddin" during the Soviet war in Afghanistan, have clearly contributed to the problems Pakistan faces today. These problems have been further exacerbated by the use of heavy-handed US tactics in the region, American policy of targeted assassinations by the CIA, and the use of private contractors like Blackwater who view themselves as "Christian Crusaders tasked with eliminating Muslims and the Islamic faith from the globe". There were few religious militants and no incidents of suicide bombings in Pakistan before the US invasion of Afghanistan in 2001. There was only a small presence of the Taliban or al Qaeda in Pakistan prior to the tragic terrorist attacks of September 11, 2001 in the United States. But in recent years, thousands of Pakistani soldiers have died fighting, killing or capturing the militants who fled into Pakistan from Afghanistan. And the civilian death toll from terrorist attacks in Pakistan is continuing to increase on a daily basis. The US secret war in Pakistan is not so secret any more, and it is clearly counterproductive with the rapidly deteriorating situation threatening to destabilize the nuclear-armed Islamic nation.

Pakistan is just too big to fail. Although things are likely to get worse with the latest US surge before they get better, the United States will eventually leave the region, in a year or two. And in spite of all of the serious problems it faces today, I remain optimistic that Pakistan will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a democratic government accountable to its people.

Here's a video clip of Jeremy Scahill talking about the US covert war in Pakistan:

Here's former CIA official Michael Scheuer talking to NPR about the Chapman incident involving suicide bombing and killing of CIA agents:

Related Links:

Blackwater Bribing in Pakistan?

Obama's High-Tech Warfare in Pakistan

America Escalating Covert War in Pakistan?

Facts and Myths About Obama's Afghan Surge

The US Secret War in Pakistan

The Wired: Danger Room

The CIA's Expanded Role on Front Lines

Blackwater Founder Implicated in Murder

Vanity Fair on Blackwater

US Covert War in Yemen

Defending the Arsenal By Seymour Hersch

CIA's Silent War in Pakistan

Valuing Life in Afghanistan and Pakistan

Marching Toward Hell by Michael Scheuer

Wednesday, December 30, 2009

Can Thorium Energy Save Planet Earth?

In addition to green energy from water, wind and sun, is there a source of clean, renewable and plentiful energy that can satisfy the growing needs of the humankind without destroying the planet earth? The answer is a qualified yes. Many scientists believe that the answer lies in developing and exploiting the abundant but mildly-radioactive element thorium in a redesigned nuclear fuel cycle. Large deposits of thorium oxide are found in many countries of the world, including United States, China, India and Pakistan. There are significant concentrations of thorium oxide in Kerala, India and Mardan, Pakistan. Research conducted by Dr. Muhammad Haleem Khan at Punjab University's Institute of Chemistry found thorium oxide concentrations of 6.5% in Badar near Mardan in Pakistan, and 5.9% in Kerala, India. (Reference: Dr. M.H. Khan, 1992, Chapter 4, Page 114).

Rising concerns about climate change caused by carbon emissions are forcing a second look at nuclear energy. But the uranium-based nuclear power has had a bad name for various reasons, including potential for more disasters like Three-Mile-Island and Chernobyl, as well as genuine worries about nuclear weapons proliferation from uranium/plutonium byproducts, and highly radioactive waste disposal.

Just yesterday, a fire at an Indian nuclear research facility killed two people, according to the BBC News. And last month, more than 90 Indian workers suffered radiation injuries due to contamination of drinking water at the Kaiga Atomic Power Station in Karnataka, India.

In addition to the high-profile case of nuclear proliferation by Pakistani scientist AQ Khan, there have been other cases posing the nuclear proliferation threat from India, particularly as it dramatically expands its nuclear energy production after the US-India nuclear deal. In July 1998, India’s Central Bureau of Investigation (CBI) seized eight Kg. of nuclear material from three engineers in Chennai. It was reported that the uranium was stolen from an atomic research center. The case still remains pending. On November 7, 2000, IAEA disclosed that Indian police had seized 57 pounds of uranium and arrested two men for illicit trafficking of radioactive material. IAEA had said that Indian civil nuclear facilities were vulnerable to thefts.

Thorium-based reactor technology addresses many of the above concerns to a great extent. Dr Hashemi-Nezhad of Australia's Sydney University says thorium has all of the benefits of uranium as a nuclear fuel but none of the drawbacks. Dr Hashemi-Nezhad believes thorium waste would only remain radioactive for 500 years, not the tens of thousands that uranium by-products remain active. The thorium reactor byproducts are not suitable as fissile material for nuclear weapons, reducing concerns about dual-use of peaceful nuclear technology.

"In fact, the green movement must come behind this project because we are moving in a direction to destroy all these existing nuclear wastes, to prevent nuclear weapons production, to [prevent] Chernobyl accident happening again," the Australian ABCOnline quotes Dr Hashemi-Nezhad as saying.

Although thorium itself cannot support a nuclear chain reaction, subjecting thorium to a stream of accelerated neutrons from plutonium inside a nuclear reactor turns this element into uranium-233, which can support fission. For this reason, the designers of nuclear plants have long considered the possibility of combining thorium with a fissionable isotope, which would prime the reaction. Increasing concerns about the diversion of plutonium from spent nuclear fuel to the construction of nuclear weapons has prompted a revival. Thorium-based nuclear fuels would leave far less waste plutonium than conventional fuels. What is more, the plutonium created is of a type that is not weapons-grade. The nuclear power industry is unlikely to adopt thorium for economic reasons alone, but should policymakers mandate its use in an effort to limit the proliferation of weapons and alleviate waste-disposal safety concerns, the technical modifications required of nuclear power plants would be readily achievable.

The idea of thorium reactors for nuclear energy is not new, according to a story published by Wired Magazine. It was first detailed in 1958 in a book titled "Fluid Fuel Reactors" under the auspices of the Atomic Energy Commission as part of its Atoms for Peace program. But it was not pursued at the time because the US was in the midst of a major nuclear arms buildup requiring large amounts of enriched uranium and plutonium for its WMDs. The use of thorium would not help in the weapons production, because the waste from thorium is not suitable for weapons.

The Wired Magazine article features Kirk Sorensen who is championing the revival of research and development into thorium reactors in the United States. Sorenson runs a blog "Energy from Thorium" that is bringing together a community of engineers, researchers, amateurs and enthusiasts talking about thorium.

When Sorensen and his online community of scientists began delving into the history of thorium work done by Alvin Weinberg at Oak Ridge National Lab, they discovered not only an alternative fuel but also the design for the alternative reactor, according to the Wired story. Using that template, the Energy From Thorium team helped produce a design for a new liquid fluoride thorium reactor, or LFTR (pronounced “lifter”), which, according to estimates by Sorensen and others, would be some 50 percent more efficient than today’s light-water uranium reactors. If the US reactor fleet could be converted to LFTRs overnight, existing thorium reserves would power the US for a thousand years.

Currently, there are active research programs in the United States, China and India, the biggest coal users and polluters in the world, to develop thorium fuel cycles. The research teams are exploring various approaches, including Ur+Th oxide rods and Ur and Th fluoride solutions, the latter preferred in the United States for its higher efficiency and safety. While there is promise in the technology, it is far from ready for commercial exploitation. In the mean time, the best way to tackle the climate change menace is to reduce the use of coal and other fossil fuels, and focus on hydro, solar and wind energy development in the foreseeable future.

Related Links:

Renewable Energy to Tackle Pakistan's Energy Crisis

Pakistan Leads South Asia in Clean Energy

Uranium Is So Last Century--Enter Thorium

Scientist Urges Switch to Thorium

Energy from Thorium Blog

US-India Nuclear Deal

Saturday, December 26, 2009

Pakistan's Decade of 1999-2009 in Review

This December 31, 2009, is not just the end of the year; it brings a momentous decade of achievements in Pakistan to a chaotic and bloody end. After a relatively peaceful but economically stagnant decade of the 1990s, the year 1999 brought a bloodless coup led by General Pervez Musharraf, ushering in an era of accelerated economic growth that led to more than doubling of the national GDP, and dramatic expansion in Pakistan's urban middle class.

The decade also cast a huge shadow of the US "war on terror" on Pakistan, eventually turning the nation into a frontline state in the increasingly deadly conflict that shows no signs of abating. Along with the blood and gore and chaos on the streets, there are hopeful signs that rule of law and accountability is beginning to prevail in the country with the restoration of representative democracy and independent judiciary, largely in response to an increasingly assertive urban middle class, vibrant mass media and growing civil society. Let's look at some of the highlights, low lights and then discuss the shape of things to come.


1. Pakistan's tax base and government revenue collection more than doubled from about Rs. 500b to over Rs. 1.2 trillion.

2. Pakistan's GDP more than doubled to $170 billion (nominal) since 1999. It has reached $440 billion in terms of purchasing power parity (PPP).

3. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01.

4. The country has experienced a mass media revolution. There are now multiple, competing television channels catering to almost every niche, whim and taste---from news, sports, comedy and talk shows to channels dedicated to cooking, fashion, fitness, music, business, religion, local languages and cultures etc. It seems that this media revolution has had a profound influence on how many young people talk, dress and behave, emulating the outspoken media personalities, actors, preachers, singers, sportsmen, celebrities and fashion models. In addition to a smorgasbord of TV channels born out of a surge in advertising spending, there are many newspapers and tabloids, and serious and glossy magazines, and many FM radio stations providing local news, sports, weather and traffic.

5. The strong consumer demand in Pakistan drove large investments in real estate, construction, communications, automobile manufacturing, banking and various consumer goods. Millions of new jobs were created. By all accounts, the ranks of the middle class swelled in Pakistan.

6. Pakistan's KSE-100 stock index surged 55% in 2009, a year that also saw the South Asian nation wracked by increased violence and its state institutions described by various media talking heads as being on the verge of collapse. Even more surprising is the whopping 825% increase in KSE-100 from 1999 to 2009, which makes it a significantly better performer than the BRIC nations. BRIC darling China has actually underperformed its peers, rising only 150 percent compared with energy-rich Brazil (520 percent) and Russia (326 percent) or well-regulated India (274 percent), which some investors see as a safer and more diverse bet compared with the Chinese equity market, which is dominated by bank stocks. According to Tariq Iqbal Khan, Chairman of Pakistan National Investment Trust(NIT), KSE-100 equities provided investors with average annual return of 21 percent during the decade 1999-2009 while the average inflation during this period was 7.2 percent.

7. The Wall Street Journal did a story in September 2007 on Pakistan's start-up boom that said, "Scores of new businesses once unseen in Pakistan, from fitness studios to chic coffee shops to hair-transplant centers, are springing up in the wake of a dramatic economic expansion. As a result, new wealth and unprecedented consumer choice have become part of Pakistan's volatile social mix."

8. The PPP leadership under former Prime Minister Benazir Bhutto returned to Pakistan in 2007 following a US-sponsored amnesty signed by former President Musharraf. Unfortunately, Ms. Bhutto was assassinated before the elections in December 2007. However, the results of the free and fair elections held in 2008 were respected by former President Musharraf that allowed the PPP, led by Benazir Bhutto's widower Asif Ali Zardari, to assume control of the government. Later, Mr. Zardari forced President Musharraf out and succeeded him into the office of the president.

9. Persistent and powerful mass movement led by Pakistani lawyers forced the PPP government to restore Chief Justice Iftikhar Chaudhry and several other senior judges earlier this year. The NRO amnesty that facilitated the PPP leaders' return has since been annulled by the Supreme Court of Pakistan, and all of the corruption and criminal cases against Mr. Zardari and many of his ministers have been re-opened. The chief justice appears determined to pursue accountability and rule of law against all odds.

10. Pakistan's information technology(IT) sector revenue grew from almost nothing to about $2.8 billion in 2008, with about half of it from exports.

11. Higher education reform initiated by Dr. Ata-ur Rehman Khan under President Musharraf resulted in over fivefold increase in public funding for universities, with a special emphasis on science, technology and engineering. The reform supported initiatives such as a free national digital library and high-speed Internet access for universities as well as new scholarships enabling more than 2,000 students to study abroad for PhDs — with incentives to return to Pakistan afterward. The years of reform have coincided with increases in the number of Pakistani authors publishing in research journals, especially in mathematics and engineering, as well as boosting the impact of their research outside Pakistan.

12. The telecom boom increased mobile phone penetration from near zero in 1999 to over 50% now, along with the expansion of Internet access to double digits.

13. Pakistan joined the ranks of the top destinations for business process and technology outsourcing. According to oDesk, Pakistan experienced 328% growth in its outsourcing business in 2007-8, second only to the Philippines (789%) on a list of seven top locations that include US (260%), Canada (121%), India (113%), the Ukraine (77%) and Russia (43%).

14. Over two dozen Pakistani scientists are doing research on large hadron collider at CERN in Switzerland. More scientists are engaged in research at Pakistan's Jinnah research station in Antarctica.

15. Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster. The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.

16. Along with increasing internal rural to urban migration, there has also been a wave overseas migration from urban areas in Pakistan to urban centers overseas, especially the Middle East. The Middle East, with its vast oil wealth, has provided many opportunities for overseas workers to work and earn a living building and maintaining infrastructure in various Arab states, especially in the Persian Gulf. In recent years, overseas Pakistanis have been contributing to Pakistan's economy with remittances exceeding $8 billion a year.

17. A new class of entrepreneurs has emerged in Pakistan during this decade who, in small but significant ways, have challenged the religious orthodoxy. They present a sharp contrast to the rising wave of Islamic radicalism that the U.S. and others in the West view as an existential threat to Pakistan. And with many well-traveled Pakistanis importing ideas from abroad, they are contributing to Pakistan's 21st-century search for itself.

18. Pakistan's arms industry came a long way from making small arms as a cottage industry in the last few decades. The US and Western arms embargoes imposed on Pakistan at critical moments in its history have proved to be a blessing in disguise. In particular, the problems Pakistan faced in the aftermath of Pressler Amendment in 1992 became an opportunity for the country to rely on indigenous development and production of defense equipment. Not only did the country become a significant arms exporter, the defense production went high tech this decade, with the growing private defense production sector.

19. The current PPP government hailed Pakistan's progress under President Musharraf in its 2008 MOU with the IMF as follows:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1).


1. There appears to be a serious lack of leadership in the face of daily carnage unfolding in Pakistan's cities and towns. In the 51 weeks so far in 2009, Pakistan has suffered at least 44 attacks. The death toll from this steady stream of violence stands at more than 650. And if the past few days are any guide, that horrifying annual tally is not yet complete.

The past three months have been particularly bloody. More than half of Pakistan's terrorists attacks this year have occurred since the beginning of October, a few weeks after the Pakistan military launched an operation to drive the Pakistan Taliban out of its stronghold in South Waziristan.

The country has suffered at least 25 terrorist attacks in that brutal ten-week phase. The latest one was in Peshawar, killing at least 4.

2. In spite of the IMF bailout of Pakistan, the economy is practically in recession, barely keeping pace with the population growth. According to Economic Survey 2008-09, presented by Finance Minister Shaukat Tarin, Pakistan's economy grew by a mere 2.0 percent, barely keeping pace with population growth. The growth fell significantly short of the 4.5 percent target for the year, which was already very modest compared with an average of 7% economic growth witnessed from 2001-2008.

3. Long, recurring and daily power outages are severely impacting all business, economic and social activities in Pakistan. Adding further to the public pain are the multiple crises of sugar shortage, food price rises, and water scarcity, and deteriorating security situation making life extremely difficult for ordinary people.

4. In spite of the fact that Pakistan's Human Development Index (HDI) has risen by 1.30 percent per year from 0.402 to 0.572 during 1980-2007 period, and it has accelerated to 1.9% increase since 2000 when it was reported to be 0.499, its progress is not yet sufficient to improve the nation's ranking relative to other countries in regions like East Asia, which have been moving considerably faster. Pakistan's index grew by 1.75% in the 1980s but slipped to less than 1.3% during the lost decade of the 1990s.

5. Low levels of literacy continue to threaten Pakistan's future. Although literacy in Pakistan has grown by about 13% this decade to about 56%, it remains woefully low when compared to other South Asian nations. Ranked at 141 on a list of 177 countries, Pakistan's human development ranking remains very low. Particularly alarming is the low primary school enrollment for girls which stands at about 30% in rural areas, where the majority of Pakistanis live.

6. Lack of opportunity in rural areas is pushing more and more young people to cities and towns which is further straining the already overburdened infrastructure and municipal services in major cities. In a recent interview with Wall Street Journal, Pakistan's former finance minister Salman Shah explained that "Pakistan has to be part of globalization or you end up with Talibanization". "Until we put these young people into industrialization and services, and off-farm work, they will drift into this negative extremism; there is nothing worse than not having a job," Shah elaborated. But increasing urbanization in South Asia represents both a challenge and an opportunity for India, Pakistan and Bangladesh. It is a challenge because it imposes a rapidly growing burden on the already overcrowded megacities such as Mumbai, Delhi, Dhaka and Karachi. Such a massive challenge will require a tremendous focus on providing housing, transportation, schooling, healthcare, water, power, sanitation and other services at an accelerated pace.

7. There has been rising intolerance and violence against minorities in Pakistan. This year has been particularly traumatic for Pakistani christian community. In August, an angry and armed mob of radical Muslims attacked a Christian village in Gojra, Punjab, firing indiscriminately, throwing Molotov cocktails and looting houses. About 70 houses were burnt to the ground and at least seven Christians died in the flames. Sectarian violence has also increased against Shia and Ahmedi minority communities.

8. Violence against women and wide gender gap continue to hold Pakistan back. The status of women in Pakistan continues to vary considerably across different classes, regions, and the rural/urban divide due to uneven socioeconomic development and the impact of tribal, feudal, and urban social customs on women's lives. While some women are soaring in the skies as pilots of passenger jets and supersonic fighter planes, others are being buried alive for defying tribal traditions.

9. Pakistan's water crisis became more acute during this decade. According to the United Nations' World Water Development Report, the total actual renewable water resources in Pakistan decreased from 2,961 cubic meters per capita in 2000 to 1,420 cubic meters in 2005. A more recent study indicates an available supply of water of little more than 1,000 cubic meters per person, which puts Pakistan in the category of a high stress country.

10. Even after significant reduction in poverty, the number of poor people earning less than $1.25 a day remains high. Center for Poverty Reduction (CPRSPD), backed by the United Nations Development Program(UNDP), estimated that Pakistan's poverty at national level declined sharply from 22.3 percent in 2005-06 (versus India's poverty rate of 42%) to 17.2 percent in 2007-08. The poverty has most likely increased in 2008-09 with the disappearance of economic growth.

The Future:

While Pakistanis must accept responsibility for their own unwise actions in the past, there is no doubt that the US presence in the region has had a huge negative impact on Pakistanis. Some of the actions by Americans, starting with the use of the "Mujaheddin" during the Soviet war in Afghanistan, have clearly contributed to the problems Pakistan faces today. These problems have been further exacerbated by the use of heavy-handed US tactics in the region, American policy of targeted assassinations by the CIA, and the use of private contractors like Blackwater who view themselves as "Christian Crusaders tasked with eliminating Muslims and the Islamic faith from the globe". There were few religious militants and no incidents of suicide bombings in Pakistan before the US invasion of Afghanistan in 2001. There was only a small presence of the Taliban or al Qaeda in Pakistan prior to the tragic terrorist attacks of September 11, 2001 in the United States. But in recent years, thousands of Pakistani soldiers have died fighting, killing or capturing the militants who fled into Pakistan from Afghanistan. And the civilian death toll from terrorist attacks in Pakistan is continuing to increase on a daily basis.

Pakistan is in the midst of multiple crises of confidence ranging from lack of basic security and political stability to continuing economic stagnation, many of which are of their own making. More than anything else, what the nation needs now is sincere, strong and wise leadership to deal with both internal and external threats. Pakistan needs leaders who can not only respond to the urgent national security problems now, but those leaders who can also ensure a better future looking beyond the current "war on terror" and US demands on Pakistan to a time when the US will leave the region and Pakistanis will have to live with the consequences of their actions in support of the United States. Pakistanis should use force when necessary against the militants and murderers, but they must not shun other avenues of political dialog and necessary reforms to build a national consensus for peace, stability, social justice, and shared economic benefits.

Pakistan is just too big to fail. In spite of all of the serious problems it faces today, I remain optimistic that country will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a democratic government accountable to its people.

Here is a slide show of some of the infrastructure development projects underway in Pakistan:

Here is British Writer William Dalrymple talking about India and Pakistan:

Related Links:

Pakistan Economic Update 2009 by World Bank

FDI in Pakistan

Video: Who Says Pakistan Is a Failed State?

Pakistan's LOI With IMF 2008

Pakistani Entrepreneurs Survive Downturn

Online Political Activism in Pakistan

Foreign Direct Investments in Pakistan 1999-2009

Urban Middle Class Clout in Pakistan

Blackwater Founder Implicated in Murder

Daily Carnage in Pakistan

Musharraf's Economic Legacy

List of Companies in Pakistan

NRO Amnesty Annulled By Pakistan Supreme Court

EDC's Pakistan's Country Overview

Eleven Days in Karachi

Is Pakistan Too Big to Fail?

Urbanization in Pakistan Highest in South Asia

Pakistani Entrepreneurs in Silicon Valley

Pakistan's Defense Production Goes High-Tech

Post-911 Economic Boom in Pakistan

Pakistan Economic Indicators 1999-2009

Karachi Stock Exchange Presentation

Friday, December 25, 2009

Celebrating Quaid-e-Azam M.A. Jinnah's Birthday

Lauded as a "Great Indian" recently by former Indian foreign minister Jaswant Singh in his book published this year, Pakistan's founder Mohammad Ali Jinnah was born 133 years ago on Christmas day in Karachi.

Quaid-e-Azam Mohammad Ali Jinnah (1876-1948), the father of Pakistani nation, was a brilliant Muslim lawyer and a great statesman who lived a life that could be described as essentially westernized and secular. He was born in an Ismaili Shia Muslim family, raised in Karachi, receiving his early schooling at Karachi's Sindh Madressah and then received his law education in the U.K. He returned to the Sub-continent in 1896, married a Parsi woman Ruttie Petit, and practiced law in Bombay while waging a struggle for the independence of India from the British. He dressed mostly in the latest English-style suits of his time and spoke mostly in English with occasional Gujarati and Urdu. He did not have religious education and most ulema of his time agreed that his life did not conform to what most ulema considered "Islamic principles". In fact, the ulema on both sides of the partition debate, including Maulana Hussain Ahmad Madani and Maulana Shabbir Ahmed Usmani, questioned Jinnah's credentials as a "good, practicing Muslim". He fought for India's freedom, first as the President of Indian National Congress, and then as the head of the Muslim League.

Having worked hard but unsuccessfully for Hindu-Muslim cooperation and unity, the Quaid--i-Azam was disillusioned with the Indian National Congress. He decided to join the Muslim League in 1935. After joining the Muslim League, his goal was to create a separate, independent homeland for Muslims of the Indian Sub-continent, where they could flourish freely without interference from or competition with the politically, educationally and economically dominant Hindu majority in South Asia. But he clearly opposed a "theocratic state" ruled by the religious elite (something like Iran's Guardian Council) with the ultimate veto power over the will of the people and the democratic processes and institutions. In fact, he believed in the separation of church and state, just as much as he favored the superiority of political leadership over the military officer corps in running the nation's affairs.

Here are three excepts from Quaid-e-Azam Mohammad Ali Jinnah's most important speeches laying out his vision for Pakistan:

"You are free; you are free to go to your temples, you are free to go to your mosques or to any other place of worship in this State of Pakistan. You may belong to any religion or caste or creed that has nothing to do with the business of the State." Quaid-e-Azam M.A. Jinnah in address to first constituent assembly, Aug 11, 1947

"In any case Pakistan is not going to be a theocratic state to be ruled by priests with a divine mission. We have many non-Muslims-Hindus, Christians and Parsis -- but they are all Pakistanis. They will enjoy the same rights and privileges as any
other citizens and will play their rightful part in the affairs of Pakistan." Quaid-i-Azam, Feb. 1948

“Never forget that you are the servants of the state. You do not make policy. It is we, the people’s representatives, who decide how the country is to be run. Your job is to only obey the decisions of your civilian masters.” Quaid-i-Azam's Address to Military Staff College, June 14, 1948.

In the current circumstances when Pakistan is experiencing daily carnage on its streets and the nation is threatened from the forces of darkness, feudal democracy or dictatorships disguised as saviors of the nation, it is important that we understand clearly what the founding father intended for Pakistan. With the above speech quotes from the Quaid-i-Azam, I will let the readers be the judge of his intentions to gain clarity on what Pakistanis must do to translate Quaid-e-Azam's vision into reality.

Related Links:

Jinnah's Vision for Pakistan

Christmas Greetings From Pakistan

Jinnah's Pakistan Booms Amidst Doom and Gloom

Jaswant Lauds Jinnah as "Great Indian"

Introspection of Pakistan's Creation

Muslims in India:

All India Christian Council

South Asian Christians Celebrate Christmas in Fear

Haq's Musings

South Asia Investor Review

South Asian Christians Celebrate Christmas in Fear

Tens of thousands of Christians in India and Pakistan are languishing in refugee camps on December 25, 2009, majority of them in Orissa, India, but some in other places like Gojra, Pakistan. As we wish our Christian brethren Merry Christmas today, let's not forget their suffering in South Asia on this Christmas Day, and do what each of us can to alleviate their fear and pain.
Let's also remember that today is also the birthday of Pakistan's founder Quaid-e-Azam Mohammad Ali Jinnah who stood for equal rights for all of Pakistani citizens, including its Christian and Hindu minorities. Here are two excepts from Quaid-e-Azam Mohammad Ali Jinnah's most important speeches laying out his vision for Pakistan:

"You are free; you are free to go to your temples, you are free to go to your mosques or to any other place of worship in this State of Pakistan. You may belong to any religion or caste or creed that has nothing to do with the business of the State." Quaid-e-Azam M.A. Jinnah in address to first constituent assembly, Aug 11, 1947

"In any case Pakistan is not going to be a theocratic state to be ruled by priests with a divine mission. We have many non-Muslims-Hindus, Christians and Parsis -- but they are all Pakistanis. They will enjoy the same rights and privileges as any other citizens and will play their rightful part in the affairs of Pakistan." Quaid-i-Azam, Feb. 1948

Here are a few snippets of how Christmas is being celebrated in South Asia:

Christians in Pakistan:

This year has been particularly traumatic for Pakistani christian community. In August, an angry and armed mob of radical Muslims attacked a Christian village in Gojra, eastern Pakistan, firing indiscriminately, throwing petrol bombs and looting houses. Some 70 houses were burnt to the ground and at least seven Christians died in the flames.

The attack happened after an allegation that the Quran was defiled by Christians in Gojra, a claim later proved untrue. Blasphemy laws in Pakistan make defiling the Quran and images of the Prophet Mohammed punishable by death, and is often used to settle scores or persecute minorities.

“Given the anti-Christian events of the past few months it’s no surprise that Christians are being careful in how they will celebrate this day this year,” said Peter Jacobs, president of the National Commission for Justice and Peace. “Many are worried about coming in the limelight and attracting the attention of Muslims.”

Many Christians, however, said they would attend traditional midnight mass on December 24.

“I am planning to light candles on the boundary walls of my house on Christmas Eve,” said Nazeer Masih, a technician who lives in Yuhanabad, a community in Lahore.

“My wife is thinking of getting henna on her hands and buying glass bangles but I am advising her against it since going to marketplaces nowadays is not safe.”

In another house in Yuhanabad, plastic stars were hanging from the ceiling fan while one young girl excitedly showed off pink and red paper streamers that she was planning to use to deck out her living room.

“It’s for Christmas, you know,” she said.

Bishop Sebastian also said he was planning to pray for the country and the victims of violence during the mass he would deliver on Christmas Eve and on Christmas Day. “It’s a difficult time for the Christian community and it is a difficult time for Pakistan,” he said.

“Our country needs all the prayers we can give.”

The following is from All India Christian Council on Christmas Day 2009:

Up to 20,000 Indian Christians face Christmas as refugees – two years after a wave of attacks by militant Hindus in the state of Orissa.

Release International warns many displaced by the worst sectarian rioting in India are still unable to return to their villages for fear of death or forcible conversion to Hinduism. Many who were witnesses to the riots face threats and intimidation by mobs gathered outside courtrooms. Up to 75 people were killed in the ultra-nationalist riots and 50,000 were driven from their homes, yet two years on, hundreds of cases have yet to be dealt with effectively by the judicial system.

Release International, which is part of the Religious Liberty Partnership (RLP), is calling for the Indian government to do all in its power to bring about justice, and for churches around the world to remember at Christmas the Indian Christians who were victims of the riots.

Andy Dipper, CEO of Release International, which serves persecuted Christians worldwide, says: "Please pray for Christians in India this Christmas, especially those in Orissa who still face the high risk of attack and marginalization from the Hindu fundamentalists."

Release partner, the All India Christian Council, estimate up to 20,000 Christians who were driven from their villages by Hindu ultra-nationalists have been unable to return home. "Many village leaders are only allowing people to settle if they convert to Hinduism," says Release partner John Dayal, Secretary General of the All India Christian Council.

"We know many are living as refugees in various cities in Orissa and other parts of India," Mr Dayal told Release. "Many are struggling to find work. There have been reports of human trafficking of Orissa women."

But despite the lack of justice and the hardship and poverty suffered by many refugees, a recent visit by Release International to the area found a willingness to forgive, stand firm and to seek reconciliation.

"I found it particularly inspiring on my visit to the area to see men and women showing grace and forgiveness towards their attackers," says Andy Dipper of Release International, "Those who can, have chosen to remain living in the area, hoping for restoration once again. They are building strong Indian communities, of all faith and none. Please join with me, to pray for our Christian brothers and sisters in India today."

The Religious Liberty Partnership is calling on Christians worldwide to pray for India’s Christians this Christmas – especially the thousands displaced in Orissa, who have been unable to return to their homes.

Through its international network of missions, Release International serves persecuted Christians in 30 countries around the world by supporting pastors and Christian prisoners, and their families; supplying Christian literature and Bibles; and working for justice.

There is a lot more horrific news about the horrible treatment of Christians in India at

Christmas fair attacked in Bhopal, India:

An attack on a Christmas fair in Madhya Pradesh has spread panic among Christians in the state, says an organizer of the event.

Thugs chanting Hindu slogans torched representations of biblical scenes at the fair in the town of Gwalior on Dec. 20. The police have arrested one of four men they named in connection with the incident.

The group evoked the names of Hindu deities and started damaging the biblical artworks depicting scenes from the life of Christ, said fair coordinator Raju Francis.

The Catholic layman said that local Christians had held the two-day fair before Christmas for eight years on public land near a market.

"Everything went well on the first day," he said. On the second day, the troublemakers not only spoiled the fair but sent panic through the Christian community in the state, he said.

Archbishop Leo Cornelio of Bhopal said the attack "is a matter of serious concern for Christians especially when we are preparing to celebrate Christmas."

The prelate has sent a three-member fact finding team to Gwalior, headed by Father Anand Muttungal, spokesperson of the Catholic Church in the state. The archbishop has asked the team to submit its report in two days.

Archbishop Cornelio said he would in turn submit the report to the state government and seek protection for Christians and their institutions, especially during Christmas Eve midnight Masses.

Christians, who form less than 1 percent of the state's population, have experienced sporadic violence since the pro-Hindu Bharatiya Janata Party (BJP)) came to power in December 2003.

Archbishop Cornelio said, it is the government's duty to protect its citizens from attacks.

He says the morale of anti-Christian groups is "very high" as the state government seldom takes action against them.
www.ucanews. com

Call For Action:

How can we, as individuals, help fulfill the vision of Pakistan's founding father and fight this scourge of rising intolerance, abuse and hate crimes? In addition to supporting organizations that fight for religious tolerance and human rights such as various interfaith initiatives and Human Rights Watch, Human Rights Commission, etc, each of us should raise our voice against it through whatever platform is available to us. We can blog about it, write to newspaper editors, join the call-in shows and sign petitions to officials. Whatever it takes, it is important that we speak up for the basic rights of our fellow human beings everywhere in the world.

Related Links:

Quaid-e-Azam Mohammad Ali Jinnah's Vision

Fighting Agents of Intolerance

Remembering Sikh Massacre of 1984

Gujarat in 2002

21st Century Challenges For Resurgent India

Radical Hindutva Government in Israeli Exile?

India's Guantanamos and Abu-Ghraibs

Gujarat Muslims Ignored by Politicians

Rise of Hindu Fascism in India

The 21st Century Challenges For Resurgent India

Hindu Rashtra ideology was driving force for Malegaon conspirators

The Rise and Rise of Mangalore's Taliban

Who Killed Karkare?

Hindutva-Military-Intelligence Nexus

Malegaon Files

Samjhota Express Blast

Muslims Falsely Accused in Malegaon Blast

Hindu Nationalists Gang Up on Musharraf at Stanford

Christmas Greetings From Pakistan

Can India "Do a Lebanon" in Pakistan?

Muslims in India:

All India Christian Council

Violence Against Indian Christians

Priest Survivor: Hindu Radicals are Terrorists

Gujarat Pogrom of 2002

Haq's Musings

South Asia Investor Review

Wednesday, December 23, 2009

Pakistan's Tea Addiction Can Stimulate Economy

Pakistanis' great hospitality to strangers and strong addiction to tea has given birth to many proverbs. The best known of these is the one about the "three cups of tea" which goes like this: On the first cup, you're a stranger, and on the second, a guest. By the third cup, you're family.

Pakistan is the world’s third-largest importer of tea with nearly 175 million kg of annual consumption, costing an estimated $500 million, and increasing at about 4% a year. It imports tea from 21 countries, with the lion's share of black tea imports coming from Kenya, Bangladesh and Sri Lanka. The country's green tea requirements are met by imports from five countries led by Indonesia and Vietnam. Only a small fraction of Pakistan's tea imports come from neighboring India.

Tea prices, which hit record highs in 2009 due to droughts in India, Sri Lanka and Kenya, should stabilize in 2010 as weather has returned to normal in the main producing regions in Asia and Africa, the Food and Agriculture Organization (FAO) said. It is estimated that global tea production has been cut by as much as 20% this year.

The UN food agency said its Tea Composite price, the indicative world price for black tea, hit a high of $3.18 a kg in September, driven by the droughts and higher demand, up from an average price of $2.38 per kg in 2008. At 34 percent annual increase, tea prices have significantly outpaced overall food price inflation, which has also been running in double digits in recent years in Pakistan.

China, India, Sri Lanka, Kenya, Turkey, Indonesia, Vietnam, Japan, Argentina and Bangladesh are the top 10 tea producing countries in the world.

Pakistan is not a tea producing country but it is the third largest importer of tea in the world, behind Russia and the UK. Because of its high tea consumption, and the fact that it has no production of its own, it is a market which is keenly pursued by main tea exporting nations. Tea affects the taste buds; therefore, it is difficult to replace a particular variety with a substitute. This explains why certain types are favored by certain countries : for example, the Russians and former Soviet republics favor Indian and Sri Lankan teas. UK and Pakistan prefer Kenyan teas.

To cut spending on tea imports, trials have been conducted for growing tea in Pakistan, particularly Mansehra, Battagram, Swat and Azad Kashmir. These trials have shown good results in Northern Pakistan, but the necessary commercial investment needed to develop a viable industry has not yet materialized.

With the rising tea consumption and growing import bill, it is important for Pakistan to give incentives for investments for tea cultivation. Such a policy can help create jobs in the northern regions where they are most needed, while at the same time providing economic opportunity to young people to take a step toward creating the much-needed peace and political stability for the entire nation.

Related Links:

Food, Clothing and Shelter in India and Pakistan

Tea Growing Regions in Pakistan

How Much Tea Does Pakistan Drink?

Tea in Pakistan

FAO Data and Statistics

Solving Pakistan's Sugar Crisis

Pakistan's Water Scarcity

Food Inflation in India and Pakistan

Tuesday, December 22, 2009

Intellectual Wealth of Nations

In modern economies, land and manufacturing continue to be significant sources of wealth of nations. However, the developed world, with icons like Bill Gates, Steve Jobs, Sergey Brin and Larry Page, is in the midst of a major transformation to accumulation of wealth in the form of intellectual property. In this evolving new economy, there is much greater emphasis on intangible knowledge assets than on physical or tangible assets. The value of the intellectual assets determines the clout and competitiveness of the nations. Wealth generation through creation, production, distribution and consumption of knowledge and knowledge based products are the key characteristics of knowledge economy. The major growth industries such as computer software, micro-electronics, nanotechnology, renewable energy, pharmaceuticals, biotechnology and telecommunications industries derive their strength from the power of the human intellect. These knowledge based industries stimulate other industries in turn to become knowledge based. Until recently capital was a scarce commodity. With rapid globalization and better access to international finance, capital is much less scarce. It is the intellectual assets that are knowledge based, non-replicable, unique and proprietary which are increasingly becoming scarce. Recognizing the importance of such assets, the western nations led by the United States are aggressively pushing for creation and enforcement of laws protecting intellectual property in all parts of the world.

While developing an industrial base is still necessary to build a large middle class and support the growth of intellectual capital, it is absolutely not sufficient. Clearly, the emerging economies, including China, India and Pakistan, require significant investments and efforts to develop human capital to catch up with the industrialized world in this new age of knowledge-based economy. They must start with sharper focus on basic human development through higher investments in nutrition, health and education. At the same, it is extremely important for the governments to pay greater attention to improving higher education and basic research.

Here is an interesting Op-Ed column by David Brooks in today's New York Times titled "The Protocol Economy" that amplifies on this topic:

In the 19th and 20th centuries we made stuff: corn and steel and trucks. Now, we make protocols: sets of instructions. A software program is a protocol for organizing information. A new drug is a protocol for organizing chemicals. Wal-Mart produces protocols for moving and marketing consumer goods. Even when you are buying a car, you are mostly paying for the knowledge embedded in its design, not the metal and glass.

A protocol economy has very different properties than a physical stuff economy. For example, you and I can’t use the same piece of metal at the same time. But you and I can use the same software program at the same time. Physical stuff is subject to the laws of scarcity: you can use up your timber. But it’s hard to use up a good idea. Prices for material goods tend toward equilibrium, depending on supply and demand. Equilibrium doesn’t really apply to the market for new ideas.

Over the past decades, many economists have sought to define the differences between the physical goods economy and the modern protocol economy. In 2000, Larry Summers, then the Treasury secretary, gave a speech called “The New Wealth of Nations,” laying out some principles. Leading work has been done by Douglass North of Washington University, Robert Fogel of the University of Chicago, Joel Mokyr of Northwestern and Paul Romer of Stanford.

Their research is the subject of an important new book called “From Poverty to Prosperity,” by Arnold Kling and Nick Schulz.

Kling and Schulz start off entertainingly by describing a food court. There are protocols everywhere, not only for how to make the food, but how to greet the customers, how to share common equipment like trays and tables, how to settle disputes between the stalls and enforce contracts with the management.

The success of an economy depends on its ability to invent and embrace new protocols. Kling and Schulz use North’s phrase “adaptive efficiency,” but they are really talking about how quickly a society can be infected by new ideas.

Protocols are intangible, so the traits needed to invent and absorb them are intangible, too. First, a nation has to have a good operating system: laws, regulations and property rights.

For example, if you are making steel, it costs a medium amount to make your first piece of steel and then a significant amount for each additional piece. If, on the other hand, you are making a new drug, it costs an incredible amount to invent your first pill. But then it’s nearly free to copy it millions of times. You’re only going to invest the money to make that first pill if you can have a temporary monopoly to sell the copies. So a nation has to find a way to protect intellectual property while still encouraging the flow of ideas.

Second, a nation has to have a good economic culture. “From Poverty to Prosperity” includes interviews with major economists, and it is striking how they are moving away from mathematical modeling and toward fields like sociology and anthropology.

What really matters, Edmund S. Phelps of Columbia argues, is economic culture — attitudes toward uncertainty, the willingness to exert leadership, the willingness to follow orders. A strong economy needs daring consumers (Phelps says China lacks this) and young researchers with money to play with (Romer notes that N.I.H. grants used to go to 35-year-olds but now they go to 50-year-olds).

A protocol economy tends toward inequality because some societies and subcultures have norms, attitudes and customs that increase the velocity of new recipes while other subcultures retard it. Some nations are blessed with self-reliant families, social trust and fairly enforced regulations, while others are cursed by distrust, corruption and fatalistic attitudes about the future. It is very hard to transfer the protocols of one culture onto those of another.

It’s exciting to see so many Nobel laureates taking this consilient approach. North, the leader of the field, doesn’t even think his work is economics, just unified social science.

But they are still economists, with worldviews that are still excessively individualistic and rationalistic. Kling and Schulz do not do a good job of explaining how innovation emerges. They list some banal character traits — charisma, passion — that entrepreneurs supposedly possess. To get a complete view of where the debate is headed, I’d read “From Poverty to Prosperity,” and then I’d read Richard Ogle’s 2007 book, “Smart World,” one of the most underappreciated books of the decade. Ogle applies the theory of networks and the philosophy of the extended mind (you have to read it) to show how real world innovation emerges from social clusters.

Economic change is fomenting intellectual change. When the economy was about stuff, economics resembled physics. When it’s about ideas, economics comes to resemble psychology.

Related Links:

Pakistan's Higher Education Reform

India's Innovation Envy

Pakistani Scientists Working on CERN Large Hadron Collider

Jinnah's Pakistan Booms Amidst Doom and Gloom

Pakistan Conducting Research in Antarctica

South Asians Primary Duty to Children

Food, Clothing and Shelter in India and Pakistan

Teaching Facts Versus Reasoning

Developing Pakistan's Intellectual Capital

Is America Losing Its Mojo?

Facts and Myths in Globalization Debate

Pakistan's Multi-Billion Dollar IT Industry

Digital Maps--Peshawar to Petaluma

Poor Quality of Higher Education in South Asia

Pakistani Military and Industrialization

Pakistani Defense Industry Goes High-Tech

South Asia Slipping in Human Development

Selling Jugaad to the West

Asia Gains in Top Universities

Pakistani Entrepreneurs in Silicon Valley

Venture Investing in India, China and Pakistan

Pakistan Ranks Among Top Outsourcing Destinations

Doing Business Rankings of Countries

Economic Challenges of India by Sean Kelly

Pakistani Entrepreneurs in Silicon Valley

Intellectual Capital Performance of Lahore Listed Companies

Pakistan: Sciencewatch Rising Star 2009

ASI: Creating intellectual capital, changing the climate of opinion

Intellectual Property Organization of Pakistan

Monday, December 21, 2009

Emerging Markets Expert Investing in Pakistan

Mark Mobius, a legend among emerging-market investors, is "overweight compared with everyone else" in Pakistani stocks, according to an interview published in the "2010 investment guide" issue of Businessweek magazine.

The 73-year-old fund manager, who oversees $33 billion spread across 35 Franklin Templeton funds, has been scouting for investment opportunities in unlikely places, including Pakistan, for over 30 years.

Mobius explains that for "our (Franklin Templeton's) Asia growth funds, we have been buying Pakistan Telecom, MCB Bank, and Indus Motor, which is a Toyota (TM) assembler and distributor". All three of these companies are listed on Karachi Stock Exchange.

There is considerable interest by individual US investors looking for opportunities to invest in Pakistan stocks. Unfortunately, there are no pure-play mutual funds investing exclusively in Pakistan. However, in addition to Franklin Templeton Funds, there are at least two other companies specializing in Asian economies that invest part of the portfolio in Pakistan along with India, Sri Lanka and other countries in Asia. These companies are Matthews Funds and Eaton Vance Funds.

Eaton Vance has Eaton Vance Greater India A Fund(ETGIX) that describes itself as follows: The investment seeks long-term capital appreciation. The fund normally invests at least 80% of net assets in equity securities of companies in India and surrounding countries of the Indian subcontinent. At least 50% of total assets will be invested in equity securities of Indian companies, and no more than 5% of total assets will be invested in companies located in countries other than India, Pakistan or Sri Lanka. The fund invests in companies with a broad range of market capitalizations, including smaller companies.

Matthews Asia Funds has Matthews Asia Pacific Equity Income Fund (MAPIX) which describes its geographic focus as follows: The Asia Pacific Region, which includes Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

In spite of the daily mayhem, continuing political instability, and ongoing counterinsurgency operations in the country, foreign portfolio investors have pushed Karachi's KSE-100 up by 57.8% in rupee terms and 48% in US dollar terms in 2009. Pakistan's Karachi stock market is among the best Asian performers in 2009, along with Shanghai and Mumbai.

Currently, Pakistan has a serious housing crisis and needs about 7 million additional housing units now, according to the data presented at the World Bank Regional Conference on Housing last year.

According to BMI research, the country’s real estate sector continues to be dominated by the two major issues of a chronic shortage of housing against a backdrop of rapid urbanization and rising population and the impact of security factors on the risk appetite of investors and developers.

The first of these factors remains as intractable as ever, with the most recent estimates identifying shortfall of 7.9mn houses. By contrast, the current government is committed to building just 1 million houses. Other estimates paint a similar picture with the Punjab province, with a population of 82 million, said to be facing a shortage of 5 million houses. By some accounts, nationally there is an incremental demand for 700,000 units a year against the annual construction of just 150,000 units.

As to the second factor, the major projects currently moving forward are being executed by risk-tolerant developers from regions such as the Gulf Cooperation Council(GCC) and government or government-linked landowners in Pakistan. This has significantly reduced the scope to provide housing at the level required to supply the backlog. Recently, however, there are reports that Malaysian developers are coming to Pakistan, according to Malaysian news agency Bernama in August 2009. The Malaysian developers are negotiating to build some 500,000 low-cost houses annually in various parts of Pakistan.

The recent Dubai debt crisis will likely hurt some Pakistani workers in the Gulf region. However, the flip side of Dubai troubles is that many of these Gulf developers will look at Pakistan where real estate investments have always been winners, regardless of the political or economic environment. The supply has continued to lag demand for housing, retail and office properties.

The Gulf and Malaysian investments in housing can potentially help resuscitate Pakistan's currently moribund economy by creating millions of new jobs directly and indirectly. Construction is one of the most labor intensive economic activity requiring large numbers of workers, creating hundreds of thousands of jobs. And when the buyers move in, they will demand all kinds of products and services to furnish their homes, thereby creating further employment opportunities. All of this is offers a great recipe for reigniting economic growth and renewed prosperity in Pakistan.

A new wave of housing construction offers an opportunity to the PPP leadership to live up to at least one of their election promises included in their "roti, kapda and makaan" platform. Looking back at the history of the political platforms that have succeeded, what comes to mind is the name of President Franklin Roosevelt and his "New Deal" , as well as the successive US Presidents' policies on "The American Dream" of home ownership for all. These policies helped reduce poverty and enhanced education and housing for a large number of people in the US. New housing construction can also help reduce poverty in Pakistan.

According to BMI research, Pakistan has experienced a high level of activity in its infrastructure sector in 2008. This has mostly been focused on the power sector and the road network. In addition, construction of housing has been a top priority. However, the global downturn is hitting Pakistan hard, and the BMI's 2009 Annual Infrastructure Report for Pakistan is forecasting the construction industry to contract by 6.31% y-o-y in 2009. The power sector has been the major focus in Pakistan's infrastructure sector in 2008. Years of underinvestment in electricity generating and distributing infrastructure came to a head in 2008, when there was not enough supply to meet demand, further exacerbated by lack of rainfall almost knocking out Pakistan's large hydropower sector. It is currently estimated that there is a 3,300MW shortfall in capacity at peak hours; as a result, load shedding has been a common practice. In an attempt to combat the shortages, a US$30bn investment plan has been announced, which has seen the development of a number of projects. Construction started in 2008 on the 969MW Neelum-Jhelum power plant, which is being built by a consortium comprising Chinese Gezhouba Group Company and China Machinery Export Corporation. Construction of the Diamer Basha Dam, which will have a capacity of 4,500MW once completed, is expected to start in 2009. Within the transport sector, the roads have benefited from the majority of attention in 2008. This has been the result of the National Highways Authority's plans to invest US$5.36bn into the sector. The plans benefited from a US$900mn multi-tranche loan from the Asian Development Bank. The main project being pursued is the National Trade Corridor, envisaged as a main thoroughfare connecting the north of the country to the ports in the south; it is estimated to cost US$6.58bn. Construction of housing has been a major feature in 2008. Residential construction is being carried out under the prime minister's 'mega housing scheme' which involves the construction of one million low cost houses per year. Pakistan's economy has been hit hard by the global economic downturn and BMI's is forecasting real GDP growth of 2.5% y-o-y in 2009, down from 6.8% in 2007. In November 2008, the country received a US$7.6bn 23-month standby loan from the International Monetary Fund to "support the country's economic stabilization program". The move might help boost investor confidence in the short term; however, it may put off investors looking at long-term infrastructure investments.

The 2008 World Bank assessment says that Pakistan is one of the most water stressed countries in the world, and water resources are depleting rapidly. With its water infrastructure in poor condition, the report argues that Pakistan has to invest around Rs60 billion (US$1 billion) per year in reservoirs and related infrastructure over the next five years. In the energy sector, the country will face severe power shortages of around 6,000 megawatts by 2010. Similarly, inefficiencies in the transport sector cost the economy between 4-5 percent of GDP each year.

To overcome these constraints, the Government of Pakistan is tripling its annual infrastructure investment from an average of Rs150 billion (US$2.5 billion) to Rs440 billion (US$7.3 billion). However, the bank report points out that mega projects in the past have experienced frequent delays and cost overruns, illustrating a lack of capacity in the industry to plan, program, and execute large projects.

Many infrastructure projects in Pakistan, including power plants and motorways, are being built and financed on build-operate-transfer or BOT basis. Built on the BOT basis, some of the motorways have already paid for themselves and now generate revenue for Pakistan government and contribute to GDP.

Related Links:

Karachi Stock Exchange

Pakistan FDI Survey Report 2009

Emerging Markets: Brazil, China---and Pakistan?

Templeton's Asian Growth Fund

Pakistan Economic Survey 2008-2009

Pakistan's Infrastructure

Karachi Fashion Week

Is Pakistan Too Big to Fail?

How To Invest in Pakistan?

Karachi Fashion Week Goes Bolder

More Pictures From Karachi Fashion Week 2009

Pakistan's Foreign Visitors Pleasantly Surprised

Start-ups Drive a Boom in Pakistan

Pakistan Conducting Research in Antarctica

Pakistan's Multi-billion Dollar IT Industry

Pakistan's Telecom Boom

Pakistan Telecom Sector Investment Prospects

ITU Internet Data

Eleven Days in Karachi

Pakistani Entrepreneurs in Silicon Valley

Musharraf's Economic Legacy

Infrastructure and Real Estate Development in Pakistan

Pakistan's International Rankings

Foreign Direct Investments in Pakistan 1999-2009

Pakistan's Financial Services Sector

Assessing Pakistan Army Capabilities

Pakistan's Auto Industry

Pakistan is not Falling

Jinnah's Pakistan Booms Amidst Doom and Gloom