As individual and institutional investors scour the globe looking for higher returns on their investments, they are discovering markets in emerging economies outside the well known BRIC (Brazil, Russia, India and China) countries. Karachi Stock Exchange in Pakistan represents such a discovery. Four Pakistani companies are now in a new index fund called the Frontier Index fund launched by Merrill Lynch today. To be included in the index, companies must have a market capitalization of at least U.S. $500 million, a three-month average daily turnover of at least U.S. $750,000 and a foreign ownership limit above 15 percent. The composition of the index will be reviewed twice a year, in February and August.
Stocks listed in the Middle East make up 50.0 percent of the new index, followed by a 22.6 percent share for Asia, 14.1 percent for Europe and 13.3 percent for Africa. The top three countries represented in the index are the UAE (23.1 percent), Kuwait (18.1 percent) and Pakistan (13.6 percent). Banks dominate the index (39.4 percent), followed by financial services companies (25.7 percent) and oil and gas firms (13.6 percent).The largest country weight outside the Middle East is Pakistan, with four companies included. Despite the political turbulence in Pakistan this year, the benchmark KSE 100 index is up 5%, while neighboring India's key index is down almost 20%.
It should be noted that the KSE-100 has been one of the hottest stock markets in the world for several years in a row. It rose 44% last year in spite of the political uncertainty and ongoing violence in the country. Pakistan's economy has seen strong growth of 7-8% per year for several years now. Pakistan is among the "Next-11" counties designated by Goldman Sachs as attractive investment markets and it has been called "safe haven" for foreign investors by Merrill Lynch Asia Chief Strategist Mark Matthews.
Wednesday, March 5, 2008
Tuesday, March 4, 2008
Record Profits Repatriated From Pakistan
Talking about foreign direct investment (FDI) in emerging economies, former US Federal Reserve Chief Alan Greenspan says: “But clearly the Licence Raj (in India) has discouraged foreign direct investment. India received $7 billion in FDI in 2005, a sum dwarfed by China’s $72 billion. India’s cumulative stock of FDI at 6 per cent of GDP at the end of 2005 compares with 9 per cent for Pakistan, 14 per cent for China, and 61 per cent for Vietnam. The reason FDI has lagged badly in India is perhaps no better illustrated than by India’s unwillingness to fully embrace market forces. That is all too evident in India’s often statist response to economic problems. Faced with rising food inflation in early 2007, the response was not to allow rising prices to prompt an increase in supply, but to ban wheat exports for the rest of the year and suspend futures trading to ‘curb speculation’ — the very market forces that the Indian economy needs to break the stranglehold of bureaucracy.” (p. 322 of "The Age of Turbulence" by Alan Greenspan.)
Since Mr. Greenspan wrote the words above, the FDI in Pakistan has continued to rise
and remains a success story. The total investment grew by 21.4 percent or 23 percent of the GDP and Foreign Direct Investment (FDI) posted a growth of 71 percent from US $ 3.5 billion to US $ 6.0 billion in 2006-07. The FDI represents a deeper and longer term commitment than portfolio investments which tend to be less durable and less reliable. This has happened in spite of the continued political instability and security issues.
As Mr. Greenspan points out, this dramatic increase in FDI for Pakistan has been made possible by the Pakistani government's liberal policies of allowing foreign investments in many sectors of the economy and the ability of the foreign investors to repatriate 100% of their profits in US dollars. These profits have continued to rise as the Pakistani economy has boomed with the GDP doubling over the last 5 years.
Foreign investors sent $519 million as their profits abroad during first seven months of the current fiscal year as compared to $467.9 million of the corresponding period of 2006-07, depicting an upsurge of some 11 percent.
State Bank's statistics show that profit repatriation by foreign investors registered a significantly increase of $51.4 million during July-January of the current fiscal year. The major share of repatriation was seen in the power sector, in which foreign investors have made new investments during the last few years due to the power shortage in the country, reports the Business Recorder, a Pakistani financial daily newspaper.
One of the downsides of liberalization has been an upsurge in inflation in Pakistan which India has attempted to curb by actions such as banning export of wheat and suspending futures trading which Greenspan criticizes in his book. While India has succeeded in the short-term in controlling wheat prices, the longer term consequences of such policies are usually detrimental to the economy.
Since Mr. Greenspan wrote the words above, the FDI in Pakistan has continued to rise
and remains a success story. The total investment grew by 21.4 percent or 23 percent of the GDP and Foreign Direct Investment (FDI) posted a growth of 71 percent from US $ 3.5 billion to US $ 6.0 billion in 2006-07. The FDI represents a deeper and longer term commitment than portfolio investments which tend to be less durable and less reliable. This has happened in spite of the continued political instability and security issues.
As Mr. Greenspan points out, this dramatic increase in FDI for Pakistan has been made possible by the Pakistani government's liberal policies of allowing foreign investments in many sectors of the economy and the ability of the foreign investors to repatriate 100% of their profits in US dollars. These profits have continued to rise as the Pakistani economy has boomed with the GDP doubling over the last 5 years.
Foreign investors sent $519 million as their profits abroad during first seven months of the current fiscal year as compared to $467.9 million of the corresponding period of 2006-07, depicting an upsurge of some 11 percent.
State Bank's statistics show that profit repatriation by foreign investors registered a significantly increase of $51.4 million during July-January of the current fiscal year. The major share of repatriation was seen in the power sector, in which foreign investors have made new investments during the last few years due to the power shortage in the country, reports the Business Recorder, a Pakistani financial daily newspaper.
One of the downsides of liberalization has been an upsurge in inflation in Pakistan which India has attempted to curb by actions such as banning export of wheat and suspending futures trading which Greenspan criticizes in his book. While India has succeeded in the short-term in controlling wheat prices, the longer term consequences of such policies are usually detrimental to the economy.
Monday, March 3, 2008
Crucial Primaries: Obama's Faith Questioned
In a nation which proudly proclaims constitutional separation between religion and state and promotes secular democracy aboard, it is strange but true that Barack Obama's religion has become an election issue in the United States. As Obama gets closer to making history by clinching the Democratic nomination for US Presidential Elections in 2008, a number of stories are beginning to proliferate in the US media on the following questions: Is he really Christian as he says he is? Or is he secretly a Muslim? Why is his middle name Husain? Did he attend an Islamic School in Indonesia as a child? Is he really committed to supporting Israel? Would Obama take oath of office on the Bible? Why is the Black Muslim leader Louis Farrakhan endorsing him? Why does Obama want to talk to Iran without preconditions?
In spite of repeated affirmations by Obama that he is Christian, these stories have taken on a life of their own. Though it is hard to prove but not hard to imagine as to the purpose and the origin of such questions and rumors. It is crunch time in the election campaign. There is desperation in both the Clinton and the McCain camps as the polls show that Obama is the most likely Democratic nominee and Obama will easily beat McCain. The attacks on Obama have suddenly stepped up from both Hillary Clinton and John McCain and their surrogates. Hillary Clinton obviously wants to be the nominee and McCain would rather go against Hillary than Obama in November. As polarizing as Hillary is, she will help energize the Republican conservative base to support McCain.
While I understand the nature of politics in the US and elsewhere in the world, I am still mystified as to the relevance of the President's religion in terms of the constitution of the United States. Are we all just pretending about the separation of church and state in the constitution? Or do we really mean it? Is this truly a constitutional and secular democracy? Or are we all hypocrites?
In spite of repeated affirmations by Obama that he is Christian, these stories have taken on a life of their own. Though it is hard to prove but not hard to imagine as to the purpose and the origin of such questions and rumors. It is crunch time in the election campaign. There is desperation in both the Clinton and the McCain camps as the polls show that Obama is the most likely Democratic nominee and Obama will easily beat McCain. The attacks on Obama have suddenly stepped up from both Hillary Clinton and John McCain and their surrogates. Hillary Clinton obviously wants to be the nominee and McCain would rather go against Hillary than Obama in November. As polarizing as Hillary is, she will help energize the Republican conservative base to support McCain.
While I understand the nature of politics in the US and elsewhere in the world, I am still mystified as to the relevance of the President's religion in terms of the constitution of the United States. Are we all just pretending about the separation of church and state in the constitution? Or do we really mean it? Is this truly a constitutional and secular democracy? Or are we all hypocrites?
Sunday, March 2, 2008
The Future of US Dollar As Reserve Currency
There are mounting global concerns about sharp decline in the value of US dollar against the euro and other major world currencies. Not only has it fueled inflation with higher prices of basic commodities such as food grains, oil and metals but it has also diminished the value of the reserves held in dollars by the vast majority of central banks around the world. These issues are giving to rise to a discussion of how long can the US dollar remain as the currency of choice for central bankers. To understand this discussion, let's look at the history of reserve currencies in the past and the current situation with global trade.
When the 20th century began, the U.S. was already the world's biggest economy, but the British pound still accounted for nearly two-thirds of official foreign-exchange reserves held by the world's central banks. The dollar didn't become the dominant currency until after World War II. Even then, some commodities still traded in pounds: The London sugar market didn't jettison sterling for a dollar-denominated trading contract until around 1980. The history lesson here is that, while the reserve and trade currencies can and do change, it takes a significant re-architecture of the world economy and trade and significant amount of time for it to happen. Nearly two-thirds of the world's central-bank reserves remain denominated in dollars, according to data from the International Monetary Fund, despite widespread fears of a mass exodus from the currency. The euro accounts for about a quarter -- up from 18% when it was introduced in 1999, but less than its predecessor currencies' share in 1995. Because the U.S. is such a huge trading partner for so many countries, the reserve buildup isn't easily unwound.
According to the Wall Street Journal, the dollar is also deeply entrenched in world trade. Businesses lower their transaction costs by dealing in a common currency. More than 80% of exports from Indonesia, Thailand and Pakistan are invoiced in dollars, for instance, according to the latest figures available in research by the European Central Bank, although less than a quarter of their exports go to the U.S.
While many nations want to change at least part of their reserve holdings from US dollars to euros, they know if they sell a significant share of their dollar reserves, it would weaken the dollar's value. That would potentially hurt their own trade competitiveness, and push down the value of their remaining dollar reserves. If they keep the dollars, a buildup of unwanted assets would only mount.
"There is no alternative to the dollar as a trading currency in Asia," Andy Xie, a Hong Kong-based economist told the Wall Street Journal. "Eventually, the renminbi [yuan] will replace the dollar in Asia, perhaps in our lifetime. But it will take at least 30 to 40 years."
When the 20th century began, the U.S. was already the world's biggest economy, but the British pound still accounted for nearly two-thirds of official foreign-exchange reserves held by the world's central banks. The dollar didn't become the dominant currency until after World War II. Even then, some commodities still traded in pounds: The London sugar market didn't jettison sterling for a dollar-denominated trading contract until around 1980. The history lesson here is that, while the reserve and trade currencies can and do change, it takes a significant re-architecture of the world economy and trade and significant amount of time for it to happen. Nearly two-thirds of the world's central-bank reserves remain denominated in dollars, according to data from the International Monetary Fund, despite widespread fears of a mass exodus from the currency. The euro accounts for about a quarter -- up from 18% when it was introduced in 1999, but less than its predecessor currencies' share in 1995. Because the U.S. is such a huge trading partner for so many countries, the reserve buildup isn't easily unwound.
According to the Wall Street Journal, the dollar is also deeply entrenched in world trade. Businesses lower their transaction costs by dealing in a common currency. More than 80% of exports from Indonesia, Thailand and Pakistan are invoiced in dollars, for instance, according to the latest figures available in research by the European Central Bank, although less than a quarter of their exports go to the U.S.
While many nations want to change at least part of their reserve holdings from US dollars to euros, they know if they sell a significant share of their dollar reserves, it would weaken the dollar's value. That would potentially hurt their own trade competitiveness, and push down the value of their remaining dollar reserves. If they keep the dollars, a buildup of unwanted assets would only mount.
"There is no alternative to the dollar as a trading currency in Asia," Andy Xie, a Hong Kong-based economist told the Wall Street Journal. "Eventually, the renminbi [yuan] will replace the dollar in Asia, perhaps in our lifetime. But it will take at least 30 to 40 years."
Radicals Target Pakistan Peace Jirgas
Fundamental Change in Tribal Order
The latest of a series of suicide bombings in Pakistan's north west frontier tribal belt targeted a meeting of the elders in Dara Adam Khel town. There were reports of 40 dead and scores injured. Traditionally, tribal leaders were held in high respect and their decisions were generally accepted by the tribal population in all matters. This attack further reinforces the belief that there is a fundamental shift taking place in the social and political order that existed for centuries.
The Origins of Change
During and after the Afghan war against the former Soviet Union in the 1980s, a large number new radical madrassahs have proliferated in Pakistan's tribal areas. Because of the power of these madrassahs, there seems to be a new dynamic affecting the traditional role and influence of the Federally Administered Tribal Areas (FATA) elders. The radical young graduates of these madrassahs are not willing to accept the traditional role of the elders and their decisions in all matters. In addition to the latest attack in Dara Adam Khel, there have been many instances of tensions reported between the local tribal elders and the Taleban on both sides of the Pakistan-Afghan border.In December 2007, AP reported that suspected Islamic militants fatally shot eight tribal leaders involved in efforts to broker a cease-fire between security forces and insurgents in Pakistan's volatile northwest. Last year, there were also several reports of clashes between the tribal elders and the Al-Qaeda/Taleban operatives.
Will Democracy in Pakistan Cure Terrorism?
There have often been theories and claims made that democracy and talks with the tribals will bring peace in Pakistan. The facts seem to contradict such theories. Not only has there been progress in Pakistan toward democracy but the Musharraf administration has made serious efforts to engage with the tribal elders repeatedly to make deals that included withdrawing the Pakistani military from their areas. The results of such efforts have been an intensification of attacks in the tribal areas like Dara Adam Khel as well as the settled areas of Pakistan such as Swat valley.
The data from India and China also debunks the assumption that democracy is the answer to terrorism. According to one study conducted between 1976 and 2004 as quoted in Newsweek by Fareed Zakaria, there were over 400 terrorist incidents in democratic India and only 18 in authoritarian China. This could be because the terrorists find it easier to plot and carry out such attacks in open societies. In the last five years, Pakistan has been a semi-open society, something between authoritarian China and democratic India. Making it more democratic would not fundamentally alter the situation emanating from the north west frontier region. If anything, it could make it worse if the newly elected civilian coalition government completely abandons the use of force in favor of negotiations.
The Taleban & Al-Qaeda
The Taleban and Al-Qaeda have both become part of the tribal society in Pakistan and Afghanistan. They are a second power center after the tribal elders. And, I believe, there is an ongoing power struggle between the two. It is this power struggle that is largely responsible for the scuttling of several peace agreements that the Musharraf government made with the tribal elders in Waziristan region. It is this situation that makes it difficult for Pakistan to do what the US has done in Al-Anbar province in Iraq with the support of the tribal sheikhs there.
Ideas for Solution
The real solution has to be political and diplomatic in the long term. It's absolutely essential that the fundamental issues of poverty that attract people to the madrassahs are addressed. This will require massive spending on modern education, job creation, food, housing etc. The US and Saudi Arabia are quite capable of such spending, as they have demonstrated by their support during the Afghan resistance against the Soviets. Both abandoned the tribal belt after the defeat of the Soviet Union and left it to the Taleban and Al-Qaeda. In the meanwhile, both the Pakistani and the US governments must do everything possible to re-establish the role and influence of the tribal elders who want to make peace. At the same time, the war against the radicals challenging the authority of the elders must be conducted with sensitivity to avoid mass casualties of the ordinary folks in FATA. Indiscriminate bombing will not win any hearts and minds. It will only stoke the fires of revenge for a long time to come.
The latest of a series of suicide bombings in Pakistan's north west frontier tribal belt targeted a meeting of the elders in Dara Adam Khel town. There were reports of 40 dead and scores injured. Traditionally, tribal leaders were held in high respect and their decisions were generally accepted by the tribal population in all matters. This attack further reinforces the belief that there is a fundamental shift taking place in the social and political order that existed for centuries.
The Origins of Change
During and after the Afghan war against the former Soviet Union in the 1980s, a large number new radical madrassahs have proliferated in Pakistan's tribal areas. Because of the power of these madrassahs, there seems to be a new dynamic affecting the traditional role and influence of the Federally Administered Tribal Areas (FATA) elders. The radical young graduates of these madrassahs are not willing to accept the traditional role of the elders and their decisions in all matters. In addition to the latest attack in Dara Adam Khel, there have been many instances of tensions reported between the local tribal elders and the Taleban on both sides of the Pakistan-Afghan border.In December 2007, AP reported that suspected Islamic militants fatally shot eight tribal leaders involved in efforts to broker a cease-fire between security forces and insurgents in Pakistan's volatile northwest. Last year, there were also several reports of clashes between the tribal elders and the Al-Qaeda/Taleban operatives.
Will Democracy in Pakistan Cure Terrorism?
There have often been theories and claims made that democracy and talks with the tribals will bring peace in Pakistan. The facts seem to contradict such theories. Not only has there been progress in Pakistan toward democracy but the Musharraf administration has made serious efforts to engage with the tribal elders repeatedly to make deals that included withdrawing the Pakistani military from their areas. The results of such efforts have been an intensification of attacks in the tribal areas like Dara Adam Khel as well as the settled areas of Pakistan such as Swat valley.
The data from India and China also debunks the assumption that democracy is the answer to terrorism. According to one study conducted between 1976 and 2004 as quoted in Newsweek by Fareed Zakaria, there were over 400 terrorist incidents in democratic India and only 18 in authoritarian China. This could be because the terrorists find it easier to plot and carry out such attacks in open societies. In the last five years, Pakistan has been a semi-open society, something between authoritarian China and democratic India. Making it more democratic would not fundamentally alter the situation emanating from the north west frontier region. If anything, it could make it worse if the newly elected civilian coalition government completely abandons the use of force in favor of negotiations.
The Taleban & Al-Qaeda
The Taleban and Al-Qaeda have both become part of the tribal society in Pakistan and Afghanistan. They are a second power center after the tribal elders. And, I believe, there is an ongoing power struggle between the two. It is this power struggle that is largely responsible for the scuttling of several peace agreements that the Musharraf government made with the tribal elders in Waziristan region. It is this situation that makes it difficult for Pakistan to do what the US has done in Al-Anbar province in Iraq with the support of the tribal sheikhs there.
Ideas for Solution
The real solution has to be political and diplomatic in the long term. It's absolutely essential that the fundamental issues of poverty that attract people to the madrassahs are addressed. This will require massive spending on modern education, job creation, food, housing etc. The US and Saudi Arabia are quite capable of such spending, as they have demonstrated by their support during the Afghan resistance against the Soviets. Both abandoned the tribal belt after the defeat of the Soviet Union and left it to the Taleban and Al-Qaeda. In the meanwhile, both the Pakistani and the US governments must do everything possible to re-establish the role and influence of the tribal elders who want to make peace. At the same time, the war against the radicals challenging the authority of the elders must be conducted with sensitivity to avoid mass casualties of the ordinary folks in FATA. Indiscriminate bombing will not win any hearts and minds. It will only stoke the fires of revenge for a long time to come.
Thursday, February 28, 2008
Pakistan Focused US Mutual Funds
Pakistan's Karachi Stock Exchange has been one of hottest stock markets in the world. Backed by strong economic expansion and double digit profit and revenue growths in the major private sector companies, the KSE-100 rose 44% last year. Pakistan has been designated among the "Next-11" emerging economies by Goldman Sachs and called a "safe haven" for investors by Merrill Lynch Asia Chief Strategist Mark Matthews.
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, there are at least two 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.
If the Pakistani economy and markets continue to perform well and the US individual investor interest in Pakistan continues to grow, I see more mutual fund management companies developing focused funds to take advantage of the high investment returns in Pakistan.
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, there are at least two 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.
If the Pakistani economy and markets continue to perform well and the US individual investor interest in Pakistan continues to grow, I see more mutual fund management companies developing focused funds to take advantage of the high investment returns in Pakistan.
Tuesday, February 26, 2008
Wheat Price Up 400 Percent
Wheat Price Touches $900 Per Ton
Triggered by wheat export curbs by Kazakhstan and the lowest world inventory in 26 years, wheat price hit a new record at $25 per bushel or about $900 per ton. This translates into Pakistan Rs. 55 per kilo for raw wheat in bulk excluding transportation, milling and bagging. It represents a 400% increase in less than a year. According to the U.S. Department of Agriculture's Foreign Agricultural Service, Kazakhstan is the sixth-largest exporter of wheat, behind the U.S., Canada, Russia, Argentina and the European Union. Kazakhstan is in the belt of wheat production that stretches from Ukraine through southern Russia. It already has exported nearly seven million tons of grain, of the available 10 million tons from the 2007-08 crop, Agriculture Minister Akhmetzhan Esimov said.
Price Doubled Since Dec, 2007
In my January 15, 2008 blog post Wheat Flour Shortage in Pakistan, I wrote as follows: " Former Prime Minister Shaukat Aziz announced in Sept, 2007 that the Pakistani government would import one million tons of wheat, stating that this action was necessary to “maintain a reasonable buffer stock for the future.” The export price for Pakistani wheat during the April-May export window was approximately $225-232 per ton. For December 2007 delivery, Pakistan is now looking at an estimated import price of $380-400 per ton, exclusive of transportation." Well, here we are in February 2008 and the price of wheat has more than doubled yet again since Dec, 2007. In fact, the inflation of wheat prices now exceeds all other commodities including oil, gold, metals etc.
Implications For Pakistan
Like most developing nations, the average person in Pakistan has very low discretionary spending,with the bulk of his or her income spent on food, clothing and shelter. The dramatic increases in commodity prices, particularly food, is very troubling for the vast majority of populations living in the developing countries such as Pakistan, India, China and the African nations. The exceptions, of course, are the nations with their own significant production of food and fuel and other natural resources. The nations producing and exporting food, fuel, and metals actually benefit from this trend of higher commodity prices.
The incoming government in Pakistan will face a very difficult challenge in containing tremendous inflationary pressures on basic commodities such as food and fuel. A failure in this effort can lead to significant instability and has the potential to threaten the future of democracy in Pakistan.
Triggered by wheat export curbs by Kazakhstan and the lowest world inventory in 26 years, wheat price hit a new record at $25 per bushel or about $900 per ton. This translates into Pakistan Rs. 55 per kilo for raw wheat in bulk excluding transportation, milling and bagging. It represents a 400% increase in less than a year. According to the U.S. Department of Agriculture's Foreign Agricultural Service, Kazakhstan is the sixth-largest exporter of wheat, behind the U.S., Canada, Russia, Argentina and the European Union. Kazakhstan is in the belt of wheat production that stretches from Ukraine through southern Russia. It already has exported nearly seven million tons of grain, of the available 10 million tons from the 2007-08 crop, Agriculture Minister Akhmetzhan Esimov said.
Price Doubled Since Dec, 2007
In my January 15, 2008 blog post Wheat Flour Shortage in Pakistan, I wrote as follows: " Former Prime Minister Shaukat Aziz announced in Sept, 2007 that the Pakistani government would import one million tons of wheat, stating that this action was necessary to “maintain a reasonable buffer stock for the future.” The export price for Pakistani wheat during the April-May export window was approximately $225-232 per ton. For December 2007 delivery, Pakistan is now looking at an estimated import price of $380-400 per ton, exclusive of transportation." Well, here we are in February 2008 and the price of wheat has more than doubled yet again since Dec, 2007. In fact, the inflation of wheat prices now exceeds all other commodities including oil, gold, metals etc.
Implications For Pakistan
Like most developing nations, the average person in Pakistan has very low discretionary spending,with the bulk of his or her income spent on food, clothing and shelter. The dramatic increases in commodity prices, particularly food, is very troubling for the vast majority of populations living in the developing countries such as Pakistan, India, China and the African nations. The exceptions, of course, are the nations with their own significant production of food and fuel and other natural resources. The nations producing and exporting food, fuel, and metals actually benefit from this trend of higher commodity prices.
The incoming government in Pakistan will face a very difficult challenge in containing tremendous inflationary pressures on basic commodities such as food and fuel. A failure in this effort can lead to significant instability and has the potential to threaten the future of democracy in Pakistan.
Monday, February 25, 2008
Zardari Ready to Reconcile With Musharraf
As Mr. Asif Ali Zardari reviews his political options and the PPP-PML(N) coalition takes shape, there are clear indications that the PPP is ready to work with President Musharaf rather than seek confrontation. "The ground reality is that we do not have two-thirds majority in both the houses of Parliament" that would be required for a successful impeachment, Mr. Zardari said in an interview with the Wall Street Journal. The widower of former Pakistan Prime Minister Benazir Bhutto and leader of the party that won the most seats in parliamentary elections last week, said his coalition will be unable to impeach President Pervez Musharraf, and that he would instead seek a working relationship with the embattled leader.
As I said in my previous posts on post-election horse-trading and PPP's national character this recognition of "the ground reality" seems to be based on the following factors:
1. The PPP-PML(N) coalition lacks the two-thirds majority in both houses to impeach the President, as acknowledged by Mr. Zardari.
2. The outcome of the Feb 18 polls amounted to a split verdict: Together, the pro-Musharraf forces won the second largest number of seats after PPP.
Out of total votes cast, the former ruling coalition received 10,844,233 votes followed by PPPP with 10,055,491 votes and PML-N with 6,240,343 votes.
3. PPP's US patrons are urging Mr. Zardari to work together with Mr. Musharraf. It shoud be noted that the US sponsored the return of Mr. Zardari under an amnesty signed by Musharraf. The US senators who reportedly called for Musharraf's resignation yesterday have denied that report. They clarified that they asked Musharraf to "step back", not "step down".
I believe that it is in the best interest of Pakistan, its democracy and its economy for all the key players to move forward in a conciliatory manner and focus on the serious challenges ahead rather than waste energies fighting each other. The conciliatory course is the wisest course for Mr. Zardari as the senior partner in the new coalition. Let's hope that Mr. Zardari can persuade Mr. Nawaz Sharif to abandon his personal vendetta against Musharraf. This will be the first real test of the coalition being formed.
As I said in my previous posts on post-election horse-trading and PPP's national character this recognition of "the ground reality" seems to be based on the following factors:
1. The PPP-PML(N) coalition lacks the two-thirds majority in both houses to impeach the President, as acknowledged by Mr. Zardari.
2. The outcome of the Feb 18 polls amounted to a split verdict: Together, the pro-Musharraf forces won the second largest number of seats after PPP.
Out of total votes cast, the former ruling coalition received 10,844,233 votes followed by PPPP with 10,055,491 votes and PML-N with 6,240,343 votes.
3. PPP's US patrons are urging Mr. Zardari to work together with Mr. Musharraf. It shoud be noted that the US sponsored the return of Mr. Zardari under an amnesty signed by Musharraf. The US senators who reportedly called for Musharraf's resignation yesterday have denied that report. They clarified that they asked Musharraf to "step back", not "step down".
I believe that it is in the best interest of Pakistan, its democracy and its economy for all the key players to move forward in a conciliatory manner and focus on the serious challenges ahead rather than waste energies fighting each other. The conciliatory course is the wisest course for Mr. Zardari as the senior partner in the new coalition. Let's hope that Mr. Zardari can persuade Mr. Nawaz Sharif to abandon his personal vendetta against Musharraf. This will be the first real test of the coalition being formed.
Comparing Ralph Nader and Imran Khan
Amidst the dismissive comments and the howls of protests from Democrats, Ralph Nader has entered the 2008 US presidential race. As expected, his reasons include the lack of debate among the mainstream candidates on what he sees as the core issues of the day. No stranger to US presidential politics, Ralph Nader (born February 27, 1934, in Winsted, Connecticut) is an Arab American attorney of Lebanese descent, author, lecturer, political activist, and currently a candidate in the United States presidential election, 2008. Areas of particular concern to Nader are consumer rights, humanitarianism, environmentalism, and democratic government. A recent documentary titled "The Unreasonable Man" chronicles the life of Ralph Nader. The title "The Unreasonable Man" comes from a famous quote attributed to the early 20th century British playwright George Bernard Shaw who said, "The reasonable man adapts himself to the conditions that surround him... The unreasonable man adapts surrounding conditions to himself... All progress depends on the unreasonable man."
Laying out the case for his candidacy, Nader has told the media that include NBC's "Meet The Press" that he wants to bring significant but neglected issues to the table such as the lack of single-payer universal health coverage, the bloated US military budget and the failed US policy of unqualified support for Israel in the Middle East. Attacking both Clinton and Obama in an interview, Nader said, "Obama is an overly cautious captive of his handlers and Clinton is a panderer and a flatterer.”
Nader took Obama to task for changing his position on the Palestinian issue. It should be noted that in March 2007, Obama said at a small gathering in Iowa, "Nobody's suffering more than the Palestinian people. But here's Obama's position in February 2008: "The Security Council should clearly and unequivocally condemn the rocket attacks against Israel.… If it cannot...I urge you to ensure that it does not speak at all," Obama wrote to Ambassador Khalilzad, adding he understood why Israel was "forced" to shut down Gaza's border crossings." What has happened in the 11 months between then and now is an object lesson and a reminder of the intense pressure under which presidential candidates stake out positions on the Israeli-Palestinian conflict, and the demonstrated effectiveness of the Israeli lobby in the United States.
While Ralph Nader may succeed in bringing the neglected but important issues into the US political debate, he has almost no chance of being elected to any office. "Obviously, the system is triple-rigged against any small candidate," he said. "All we can do is try to loosen it up, challenge it, bring it to account in some court cases and build for the future. We can also keep an exciting, practical, progressive agenda before the American people — get more people to run for local, state and national office."
Ralph Nader reminds me of Imran Khan in Pakistan. Imran Khan is a well-meaning, well-respected, and honest former cricket hero bringing out the issues of democracy, civil society and rule of law, that the mainstream parties do not particularly care about. But the presence of Imran Khan on the Pakistani political scene does offer hope for the future.
Laying out the case for his candidacy, Nader has told the media that include NBC's "Meet The Press" that he wants to bring significant but neglected issues to the table such as the lack of single-payer universal health coverage, the bloated US military budget and the failed US policy of unqualified support for Israel in the Middle East. Attacking both Clinton and Obama in an interview, Nader said, "Obama is an overly cautious captive of his handlers and Clinton is a panderer and a flatterer.”
Nader took Obama to task for changing his position on the Palestinian issue. It should be noted that in March 2007, Obama said at a small gathering in Iowa, "Nobody's suffering more than the Palestinian people. But here's Obama's position in February 2008: "The Security Council should clearly and unequivocally condemn the rocket attacks against Israel.… If it cannot...I urge you to ensure that it does not speak at all," Obama wrote to Ambassador Khalilzad, adding he understood why Israel was "forced" to shut down Gaza's border crossings." What has happened in the 11 months between then and now is an object lesson and a reminder of the intense pressure under which presidential candidates stake out positions on the Israeli-Palestinian conflict, and the demonstrated effectiveness of the Israeli lobby in the United States.
While Ralph Nader may succeed in bringing the neglected but important issues into the US political debate, he has almost no chance of being elected to any office. "Obviously, the system is triple-rigged against any small candidate," he said. "All we can do is try to loosen it up, challenge it, bring it to account in some court cases and build for the future. We can also keep an exciting, practical, progressive agenda before the American people — get more people to run for local, state and national office."
Ralph Nader reminds me of Imran Khan in Pakistan. Imran Khan is a well-meaning, well-respected, and honest former cricket hero bringing out the issues of democracy, civil society and rule of law, that the mainstream parties do not particularly care about. But the presence of Imran Khan on the Pakistani political scene does offer hope for the future.
Sunday, February 24, 2008
Pakistan Blamed For Global YouTube Outage
Pakistan is responsible for almost total blackout of YouTube, the popular video site, around the world. The BBC is reporting that the hour-long global outage was almost certainly connected to Pakistan Telecom and Asian internet service provider PCCW.
The BBC News website's technology editor, Darren Waters, says that to block Pakistan's citizens from accessing YouTube it is believed Pakistan Telecom "hijacked" the web server address of the popular video site.
In the last couple of days, the Pakistan Telecom Authority was being attacked by the bloggers and others in Pakistan for attempting to block anti-government video content. Some believed it had to with alleged "election rigging" by MQM. In fact, the motivation was to block access to material deemed offensive to Muslims. It is thought that, unlike the filters in China and Saudi Arabia, Pakistani filters lack the ability to stop content selectively and block the entire domains instead.
A leading net professional told BBC News: "This was probably a simple mistake by an engineer at Pakistan Telecom. There's nothing to suggest this was malicious."
IP hijacking involves taking over a web site's unique address by corrupting the internet's Domain Name Servers (DNS) that resolve domain names to specific IP addresses and direct the flow of data around the world.
The BBC News website's technology editor, Darren Waters, says that to block Pakistan's citizens from accessing YouTube it is believed Pakistan Telecom "hijacked" the web server address of the popular video site.
In the last couple of days, the Pakistan Telecom Authority was being attacked by the bloggers and others in Pakistan for attempting to block anti-government video content. Some believed it had to with alleged "election rigging" by MQM. In fact, the motivation was to block access to material deemed offensive to Muslims. It is thought that, unlike the filters in China and Saudi Arabia, Pakistani filters lack the ability to stop content selectively and block the entire domains instead.
A leading net professional told BBC News: "This was probably a simple mistake by an engineer at Pakistan Telecom. There's nothing to suggest this was malicious."
IP hijacking involves taking over a web site's unique address by corrupting the internet's Domain Name Servers (DNS) that resolve domain names to specific IP addresses and direct the flow of data around the world.
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