Pakistan's Infrastructure and M2 Motorway

As Pakistan struggles to bring a sense of stability and security amidst daily carnage, it is important to recognize that there is more to Pakistan than meets the eyes of a casual consumer of the images and reports by the world's media. For example, Pakistan is a developing country with functional bureaucracy, well-organized police force, democratic institutions and a powerful army. And Pakistan has more advanced infrastructure than its neighbors, including India. Among the modern infrastructure pieces in place in Pakistan are its motorway system, extensive road network, mobile telecommunications systems, airports, high-speed Internet system, extensive railroad network, gas pipeline etc. A British writer William Dalrymple who visited and compared India and Pakistan on their 60th anniversary described Pakistan as follows:

"On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country's visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation. In many ways the infrastructure of Pakistan is much more advanced: there are better roads and airports, and more reliable electricity. Middle-class Pakistani houses are often bigger and better appointed than their equivalents in India. Moreover, the Pakistani economy is undergoing a construction and consumer boom similar to India's, with growth rates of 7%, and what is currently the fastest-rising stock market in Asia. You can see the effects everywhere: in new shopping centers and restaurant complexes, in the hoardings for the latest laptops and iPods, in the cranes and building sites, in the endless stores selling mobile phones: in 2003 the country had fewer than three million cellphone users; today there are almost 50 million."

More recently, Alistair Scrutton filed a Reuters report about Pakistan's infrastructure, particularly its 367 Km long M2 motorway that connects Lahore with Islamabad:

"Indeed, for sheer spotlessness, efficiency and emptiness there is nothing like the M2 in the rest of South Asia.

It puts paid to what's on offer in Pakistan's traditional foe and emerging economic giant India, where village culture stubbornly refuses to cede to even the most modern motorways, making them battlegrounds of rickshaws, lorries and cows.

There are many things in Pakistan that don't get into the news. Daily life, for one. Pakistani hospitality to strangers, foreigners like myself included, is another. The M2 is another sign that all is not what it appears in Pakistan, that much lies hidden behind the bad news.

On a recent M2 trip, my driver whizzed along but kept his speedometer firmly placed on the speed limit. Here in this South Asian Alice's Wonderland, the special highway police are considered incorruptible. The motorway is so empty one wonders if it really cuts through one of the region's most populated regions.

"130, OK, but 131 is a fine," said the driver, Noshad Khan. "The police have cameras," he added, almost proudly. His hand waved around in the car, clenched in the form of a gun.

On one of my first trips to Pakistan. I arrived at the border having just negotiated a one-lane country road in India with cows, rickshaws and donkey-driven carts.

I toted my luggage over to the Pakistan side, and within a short time my Pakistani taxi purred along the tarmac. The driver proudly showed off his English and played U.S. rock on FM radio. The announcer even had an American accent. Pakistan, for a moment, receded, and my M2 trip began."

Here are another western tourist's impressions of M2 from nomadic-one.com:

A strange relief to get to drive 3 lane asphalt in such serene quietness! It was unreal, we had to pinch our arm if this was really happening. Is this Pakistan? We decided to spend the night at the 3rd big service area with restaurant, gas station, police and clean toilets. It was strange to see there was no trace of locals selling stuff on the curbs – something which is really normal in Pakistan. Probably these place are off limits to the small business men.

Going to India – something we have long looked out for. We’ve heard a lot about India from other travellers – good and bad experiences. One thing’s for sure – India must have a LOT of people, each and every traveller from India has mentioned this explicitly. With Pakistan and Nepal (1998) as context we’re curious and somewhat anxious how we will experience India. We’re not crowd maniacs and both appreciate a ‘bit of air’ between people. Anyhow India happened quicker than we expected – we left Islamabad on the 25th, the next day we already sat in the garden of Ms Bandari’s Guesthouse. The superb M2 motorway with overnight parking and the road to the Indian border was uneventful. We drove the canal bank road through Lahore a long drive on a straight road. But look carefully to find this road separated by a canal – it’s sign posted rather miniscule by “Wagah border”.

"The road to Amritsar was like wading upstream in extreme suicidal traffic – the independence day ceremony must be something special. It must be totally worth risking your life for this. Naturally we had our usual ‘end of the day – near dark – took the wrong turn in mega dense traffic’ exercise. Just to make our arrival in Amritsar a little bit more special. We arrived in the dark - asking directions many times. This way we came a few 100 meters closer to Ms Bandari’s guesthouse each time we asked. We nearly seen the golden temple by truck. Ain’t that a relaxed truck ride in the dark! Cool!
And yes, even with GPS coordinates of the place it’s still a nice puzzle to solve after a border crossing day like this."



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.

Pakistan Energy Infrastructure (Source: PPECA)

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, the M2 motorway has already paid for itself and now generates revenue for Pakistan government.

Here's a video clip of British Writer William Dalrymple comparing India and Pakistan:



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



Here is a video with pictures of Pakistan's extensive roads network:



Related Links:

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Digital Maps of Pakistan
Pakistan's daily carnage

Pakistan's Road Network
Life Goes On in Pakistan

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Pakistan's Telecom Boom
Pakistan's Infrastructure Assessment by World Bank
ITU Internet Data

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Musharraf's Economic Legacy

Infrastructure and Real Estate Development in Pakistan

Pakistan's International Rankings

Assessing Pakistan Army Capabilities

Pakistan is not Falling

Jinnah's Pakistan Booms Amidst Doom and Gloom

Pakistan Leads South Asia in Use of Clean Energy

As the Copenhagen climate change summit gets underway, India is facing the reality of being a major polluter in the world mainly because of extensive use of coal as source of energy for its economy. Pakistan, on other hand, relies more heavily on natural gas for energy and uses very little coal, in spite of having large deposits of it in Sind province. South Asia is among the regions that will be most heavily affected by climate change.

At 8 feet below sea level, Pakistan's financial capital Karachi shows up on the list of world's mega-cities threatened by global warming. Other South Asian cities likely to come under rising sea water in the next 100 years include Mumbai, Kolkata and Dhaka.

However, it's not just the big cities in South Asia that will feel the brunt of the climate change. The rural folks in India are already seeing rising crop failures, increasing poverty and frequent farmer suicides.

Both India and Pakistan are investing in green energy projects. The European Investment Bank (EIB) and Asian Development Bank are contributing a total $660 million to a $2.2 billion program to develop renewable energy projects in Pakistan.

Pakistan is now using domestically and exporting CNG kits to various countries including China, Brazil and Italy. Almost 2 million vehicles on the country's roads have dual fuel options with Suzuki having the highest in quantity. Here's a report from last year about India significantly lagging Pakistan in clean energy and CNG usage:

India is way behind Pakistan in terms of its gas pipeline network, with the neighboring country’s network stretching around 56,400 km against its 10,500 km, connecting only 20 cities compared to Pakistan’s 1,050, industry body Assocham said.

Pakistan’s pipeline density, at present is 1044 km/mmscmd (million metric standard cubic meter per day) per day compared to 116 km/mmscmd of India, Assocham said in its paper on gas sector "A Comparison between India and Pakistan".

The neighbouring country has created a 31,000 km distribution network to serve its domestic and commercial consumers in large locations, against the 11,000 km network that have so far been build in India to serve the needs of its consumers in limited pockets, the report said.

While Pakistan has nearly 1,600 CNG stations, India has 380. The gas throughput in Pakistan is 38 mmscmd per day as against 8.5 mmscmd gas in India.

The number of gas customers and vehicles running on CNG in Pakistan is about 19 lakh and 15.6 lakh respectively, while in India the number is 5.50 lakh and 4.60 lakh.

“The gas availability in Pakistan is undoubtedly quite large, compared to India but given the imports of gas and even its domestic availability in India, its pipeline network is extremely poor and the main reason attributed for the low and limited pipeline network in India is because this sector has been thoroughly regulated which has now been opened for competition,” Assocham president Venugopal Dhoot said.

The paper added that since the pipeline network in India does not reach out to most of the potential demand centres, a number of industrial projects, which would ideally run on gas, have to depend on much more costlier and more polluting alternative fuels.

“Thus the unmet gas demand in India is probably much higher than what is reported,” he said, adding India, “at present has only one major cross country pipeline in the form of Hizira-Bijaipur-Jagdishpur pipeline and there is estimated to be considerable unmet demand even in the states serviced by this pipeline”.

With the increased availability of gas, the country needs to gear up quickly to meet the increased requirement of cross country as well as regional and local downstream gas distribution networks, he said. — PTI



Here's another story from Dawn on the use of coal in India:

A thin coat of coal dust covers everything from trees to houses in Korba, a coal mining town in central India which lies at the heart of the country’s struggle to balance economic growth with climate change concerns.

The air is heavy with smoke and dust spewing out of numerous mines and power plants in a region that powers hundreds of factories in the country’s industrial west and lights up millions of homes.

Although India has announced a new climate plan which identifies renewable energy such as solar power as key elements,

Coal remains the backbone of energy supply in a country where almost half the 1.1 billion population still has no electricity.

‘Coal-fired power will stay for the next 20-25 years at least,’ said R.D. Sonkar, chief engineer at one of Korba’s many thermal power stations.

‘Look at the high cost of solar and wind energy. Can we afford? Power from renewable energy will have to wait, I think.’

As the world meets in Copenhagen for crucial negotiations on a global pact to fight climate change, part of the debate will be on how developing countries such as India tackle the use of fossil fuel without hampering their growth.

India, the world’s fourth largest greenhouse gas emitter though still low on per-capita emissions, is under pressure to cut pollution to battle climate change while demand for power increases as its middle class clamours for more cars, TVs and housing.

India set a goal on Thursday for slowing the growth of its greenhouse gas emissions, saying it was willing to rein in its ‘carbon intensity’ — the amount of carbon dioxide (CO2) emitted per unit of economic output — by between 20 and 25 per cent by 2020, from 2005 levels.

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NRO Amnesty Voided By Pakistan's Supreme Court

In a historic decision, the Supreme Court of Pakistan, led by Chief Justice Iftikhar Chaudhry, has unanimously declared NRO null and void ab initio, according to Dawn News:

ISLAMABAD: The Supreme Court has declared the controversial National Reconciliation Ordinance (NRO) null and void in a short order.

In a landmark decision, the apex court unanimously decided that the ordinance was unconstitutional.

All old cases that had been dismissed under the NRO stand revived and can now be reopened as per the court orders.

The court said that all orders that were passed and all acquittals under the NRO were illegal and never existed.

The apex court in its order also said that all convictions that were held prior to the enactment of the NRO stand revived as well.

Now the Zardari camp is expected to argue that, under the constitution of Pakistan, President Zardari is immune from prosecution as long as he is in office.

While the final outcome of the NRO beneficiaries' cases and the fate of corrupt politicians and bureaucrats remains uncertain, I welcome the fact that the Supreme Court of Pakistan's verdict has refused to legitimize corruption in Pakistan. It is a giant step toward strengthening rule of law and restoration of confidence in the nation's top judiciary.

Here is an interesting video clip of a Pakistani minister's frank admission of the PPP involvement in bribery. Listen to Mr. Abdul Qayyum Khan Jatoi, Federal Minister for Defense Production, proclaiming that it is the “political right” of every politician to do corruption: “yaar, karrapshun pay humara haq nahiN hai, aur unn ka hai!”:



Here's a video report about the arrest of the same PPP minister Abdul Qayyum Khan Jatoi in 2008 by Islamabad Police at a Islamabad brothel called Cat Club before he was sworn in as a Federal Minister in the current cabinet:




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Housing Construction and Economic Growth in Pakistan

Housing construction is one of the largest sectors of most major economies in the world. In the United States, for example, housing is a significant contributor to the American economy, providing millions of Americans with jobs and generating hundreds of billions of dollars of economic output each year. It is also an important source of wealth building. Beyond economic measures, homeownership and adequate rental housing also contributes to society.

The construction and sale of new homes make direct contribution to GDP, based on the value of the housing built. However, the sales of existing homes do not enter into the calculation of the nation’s domestic output, just as a used car sales do not get entered because the transaction does not represent a new production. However, purchases related to the transaction of existing home sale do get included in the GDP. For example, all payments for services rendered, such as real estate agent commissions, home inspection, attorney, and loan origination fees, are included.

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.

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Pakistan Real Estate Report Q4 2009

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Witness a Failed State: Try Pakistan's M2

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Climate Change Worsens Poverty in India

At 8 feet below sea level, Pakistan's financial capital Karachi shows up on the list of world's mega-cities threatened by global warming. Other South Asian cities likely to come under rising sea water in the next 100 years include Mumbai, Kolkata and Dhaka.

However, it's not just the big cities in South Asia that will feel the brunt of the climate change. The rural folks in India are already seeing rising crop failures, increasing poverty and frequent farmer suicides.

Addressing a regional conference in Islamabad earlier this year, Dr Rajendra Kumar Pachauri, chairman of the Inter-governmental Panel on Climate Change (IPCC), said Pakistan was witnessing severe pressures on natural resources and environment.

He said: “Climatic changes are likely to exacerbate this trend. Water supply, already a serious concern in many parts of the country, will decline dramatically, affecting food production. Export industries such as fisheries will also be affected, while coastal areas risk being inundated, flooding the homes of millions of people living in low-lying areas.”

“The fact that global warming was unequivocal and there is no scope for scientific questioning, Pakistan faces potential environmental catastrophe,” said Dr Pachauri, who has been awarded the Nobel Peace Prize (on behalf of the IPCC) along with former US vice-president Al Gore.

Here's a recent LA Times report on the vicious cycle of poverty in rural India:

India has long been plagued by unscrupulous moneylenders who exploit impoverished farmers. But with crops failing more frequently, farmers are left even more desperate and vulnerable.

Reporting from Jhansi, India - She stops for long stretches, lost in thought, trying to make sense of how she's been left half a person.

Sunita, 18, who requested that her family name not be used to preserve her chance of getting married, said her nightmare started in early 2007 after her father took a loan for her sister's wedding. The local moneylender charged 60% annual interest.

When the family was unable to make the exorbitant interest payments, she said, the moneylender forced himself on her, not once or twice but repeatedly over many months.

"I used to cry a lot and became a living corpse," she said.

Sunita's allegations, which the moneylender denies, cast a harsh light on widespread abuses in rural India, where a highly bureaucratic banking system, corruption and widespread illiteracy allow unethical people with extra income to exploit poor villagers, activists say.

But here in the Bundelkhand region in central India that is among the nation's more impoverished areas, the problem is exacerbated by climate change and environmental mismanagement, they say, suggesting that ecological degradation and global warming are changing human life in more ways than just elevated sea levels and melting glaciers.

"Before, a bad year would lead to a good year," said Bharat Dogra, a fellow at New Delhi's Institute of Social Sciences specializing in the Bundelkhand region. "Now climate change is giving us seven or eight bad years in a row, putting local people deeper and deeper in debt. I expect the situation will only get worse."

An estimated 200,000 Indian farmers have ended their lives since 1997, including many in this area, largely because of debt.

A 2007 study of 13 Bundelkhand villages found that up to 45% of farming families had forfeited their land, and in extreme cases some were forced into indentured servitude. Tractor companies, land mafia and bankers routinely collude, encouraging farmers to take loans they can't afford, a 2008 report by India's Supreme Court found, knowing they'll default and be forced to sell their land.

"While a few people borrow for social status or a desire to buy a new motorcycle, in most cases it's for sheer survival," Dogra said. "When they see their children starving after several years of crop failures, many feel they have no choice."

Recent amendments to a 1976 law in Uttar Pradesh state have increased the maximum punishment for unauthorized money-lending to three years in jail, up from six months, but many loan sharks are well-connected and elude prosecution. The law specifies that lenders must obtain a state license, but the requirements for obtaining it can be vague, a situation that critics say gives bureaucrats significant leeway to enact arbitrary rules and exact questionable fees.

"I take occasional loans when we're desperate," says Jhagdu, 50, a farmer in Barora, 60 miles south of Jhansi, sitting on his haunches with teeth stained red from chewing betel nut. "When there's no rain, like now, you can't repay for a year, so the amounts can double."

The South Asian governments are sufficiently concerned about potential effects of global warming to warrant a meeting to hammer out a regional response. South Asian experts on climate change held two days of talks in Dhaka last year, ahead of a meeting of environment ministers from countries of the South Asian Association for Regional Cooperation (SAARC). According to Reuters, Bangladesh has proposed the creation of a fund to fight climate change in densely populated South Asia, which experts say is vulnerable to rising seas, melting glaciers and greater extremes of droughts and floods. For the rich South Asians thinking of fleeing to real estate in Dubai, the forecast for the GCC countries is no better. Experts believe the Palm and the World projects in Dubai will disappear underwater in 50 years if the issue of climate change fails to be addressed by governments.

According to a report by the Associated Press, the nonprofit Worldwatch Institute has compiled a list of 21 "mega-cities" of 8 million people or more that are in direct danger as a result of global warming and rising seas: They include Dhaka, Bangladesh; Buenos Aires, Argentina; Rio de Janeiro, Brazil; Shanghai and Tianjin in China; Alexandria and Cairo in Egypt; Mumbai and Kolkata in India; Jakarta, Indonesia; Tokyo and Osaka-Kobe in Japan; Lagos, Nigeria; Karachi, Pakistan; Bangkok, Thailand, and New York and Los Angeles in the United States, according to studies by the United Nations and others.

More than one-tenth of the world's population, or 643 million people, live in low-lying areas at risk from climate change, according to U.S. and European experts. Most at risk, in descending order, are China, India, Bangladesh, Vietnam, Indonesia, Japan, Egypt, the U.S., Thailand and the Philippines.

As a nation, Bangladesh has the most to worry about the effects of climate change in South Asia. A recent story in the Guardian talks about Bangladesh as "flood-prone" because of its geography. Situated across a vast delta where three great rivers join, Bangladesh is known to be flood-prone. Not only does it have monsoon rain to deal with, but the slow warming of the earth's atmosphere is releasing more water from Himalayan glaciers above the flatlands of Bangladesh. Climate change, say scientists, also means higher tides in the Bay of Bengal. The result is trillions more liters of water sloshing over the country, depositing billions of tons of sediment. Experts say a third of Bangladesh's coastline could be flooded if the Bay of Bengal rises three feet in the next 50 years, displacing 20 million Bangladeshis from their homes and farms, according to Reuters. Across the region, warmer weather could cause more intense and more frequent cyclones and storm surges, leading to more salt water fouling waterways and farmlands, the experts said. Corp yields in South Asia could decrease up to 30 percent by the mid-21st century, they added.

Bangladesh has taken the initiative by proposing a SAARC fund for climate change and allocated US$44 million for this purpose in its current fiscal year budget. "We want to find a common stand among the South Asian countries and will raise our voice together against the perils of climate changes," said Raja Devasish Roy, head of the Environment and Forest Ministry of Bangladesh, after opening the experts' meeting in Dhaka. Devasish said industrialized countries were the most to blame for global warming and should compensate poorer nations by providing them grants -- not loans -- to fight the effects of climate change.

While Bangladesh is admirably leading the charge to address the impact of climate change, it is important that the rest of South Asians, particularly India and Pakistan, join it to protect the planet in this noble effort. As part of this challenge, it is time for SAARC leaders to think of structural changes needed for a world without oil. The SAARC nations owe it to their future generations and the rest of the planet.

Related Links:

World's Biggest Polluters

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Indian Rural Poverty Worsens

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Pakistan Thrash India to Reach Champions Hockey Final

Pakistan and India have had two sports encounters this year at major international events in cricket and field hockey. Pakistan have won on both occasions to go on to the the final or semifinal. In September this year, Pakistan beat India in the ICC T20 Champions Trophy group match in South Africa to qualify for the semifinal. And today, Pakistan beat India 6-3 in a Champions Challenge hockey tournament semifinal at Salta, Argentina. These wins are very welcome at a time when Pakistanis need their spirits lifted to deal with the extremely difficult situation at home.


Here's a Times of India report Pakistan-India field hockey encounter today:

SALTA (Argentina): Pakistan beat India 6-3 to set up a final against New Zealand in Champions Challenge hockey tournament on Saturday.

New Zealand held out two-time defending champion and host Argentina 3-2 to reach Sunday's final, where the winner will qualify for the Champions Trophy next July in Moenchengladbach, Germany.

Pakistan took only two minutes to score, through Rehan Butt, who would collect a hat trick in another classic match between the archrivals.

While two Pakistan players were cooling off on cards, India forced a penalty corner and leveled through Dhananjay Mahadik. India continued to enjoy the run of play, but Pakistan nailed its chances with Butt shooting home and Sohail Abbas adding a penalty corner goal for a 3-1 halftime lead.

After the break, India dominated, but its desperation to score left the defense vulnerable, and Haseem Khan's goal against the run of play made it 4-1. There were four goals in the last eight minutes, with Butt claiming his third and Abbas his second. Mahadik also finished with a pair for India.

As in the Pakistan-India semi-final, New Zealand scored quickly, with Andrew Hayward converting a penalty corner to hush the home crowd. Argentina's penalty corner specialist Pedro Ibarra claimed his sixth goal of the tournament to draw level, but just before halftime Phillip Burrows finished a counterattack to send New Zealand ahead into the break.

After Shea McAleese's penalty corner goal 10 minutes into the second half gave New Zealand 3-1, Argentina's attack ramped up but continued to be bottled by the New Zealand defense until four minutes from the end, when Lucas Vila's counterattack field goal gave the home side renewed hope, but without enough time.

Related Links:

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India's Innovation Envy

There is a huge difference between original breakthroughs and incremental improvements in science and technology and new applications. What often passes as innovation in China and India and other emerging nations almost always fits in the latter category. Examples of the former category include Gutenberg printing press, incandescent light bulb, internal combustion engine, radio, telephone, transistor, semiconductor chip, microprocessor, the computer operating systems and programming languages, the Internet, and the discovery of the DNA Helix. All of these original ideas have come from the West, most of them from the United States.

It is healthy for Americans to be constantly looking over their shoulders to see how several emerging nations, including India and China, are making significant strides in trying to catch up with them. However, I believe a lot of the concerns today about the US losing its edge anytime soon are overblown, just like the concerns in the 1980s about Japan leaving the US behind in semiconductors. I remember how the Intel founder Gordon Moore responded to such concerns by the US media in the 1980s. He analogized Intel with a driver driving on a dirt road in the dark with no maps or signs, and the Japanese semiconductor industry following the tail lights of Intel as the leader in front. As long as the Intel tail lights are there, others can follow them. But the situation changes dramatically when the tail lights are no longer there and the follower has to find his or her own way. The situation is quite similar today, except that the number nations following the US tail lights has increased beyond the Japanese to include BRIC nations.

There are many ingredients that account for the significant edge the Americans continue to have over others. These include a)America's education system that emphasizes openness, free inquiry, creativity, reasoning, research, and debate rather than submissive rote learning, b) the culture of risk-taking backed by the availability of risk capital from venture capital firms, c) massive government investments in basic research, higher education, infrastructure, and human development, and d)insatiable demand for new ideas, products and services in the marketplace.

There have been many attempts to replicate Silicon Valley in many parts of the world, but none have had successes comparable to the original Silicon Valley in California. The original Valley is not the result of any planning, but the outgrowth of the culture of achievement, innovation and risk-taking that is hard to replicate. At least part of the success of the Valley comes from its ability to absorb people and ideas from across the world. Most high-tech companies in the Valley resemble the United Nations, with representation of men and women of all ethnicities, religions and races from all parts of the world, including China, India, Israel, and Pakistan.

Here is a New York Times story on the subject of innovation in India:

BANGALORE, India — In the United States and Europe, people worry that their well-paying, high-skill jobs will be, in a word, “Bangalored” — shipped off to India.

People here are also worried about the future. They fret that Bangalore, and India more broadly, will remain a low-cost satellite office of the West for the foreseeable future — more Scranton, Pa., in the American television series “The Office,” than Silicon Valley.

Even as the rest of the world has come to admire, envy and fear India’s outsourcing business and its technological prowess, many Indians are disappointed that the country has not quickly moved up to more ambitious and lucrative work from answering phones or writing software. Why, they worry, hasn’t India produced a Google or an Apple?

Innovation is hard to measure, but academics who study it say India has the potential to create trend-setting products but is not yet doing so. Indians are granted about half as many American patents for inventions as people and firms in Israel and China. The country’s corporate and government spending on research and development significantly lags behind that of other nations. And venture capitalists finance far fewer companies here than they do elsewhere.

“The same idea, if it’s born in Silicon Valley it goes the distance,” said Nadathur S. Raghavan, a investor in start-ups and a founder of Infosys, one of India’s most successful technology companies. “If it’s born in India it does not go the distance.”

Mr. Raghavan and others say India is held back by a financial system that is reluctant to invest in unproven ideas, an education system that emphasizes rote learning over problem solving, and a culture that looks down on failure and unconventional career choices.

Sujai Karampuri is an Indian entrepreneur who has struggled against many of these constraints.

His Bangalore-based company, Sloka Telecom, has developed award-winning radio systems that are more flexible, smaller and less expensive than equipment used by phone companies today. Mobile phone companies and larger telecommunications equipment suppliers are buying and testing his products, but he has not been able to interest Indian venture capitalists. For the last five years he has run his firm on $1 million he raised from acquaintances.

“I can only afford to trial with one customer at a time and that takes three months to materialize,” said Mr. Karampuri, who has considered moving the company to the United States to be closer to venture capitalists who specialize in telecommunications. “You are always worried about paying next month’s salary to people. Should you keep the money for this trial or next month’s salary?”

Companies like Sloka Telecom are important, analysts say, because they are more likely to create the next wave of jobs than large, established Indian technology companies, many of which are experiencing slower growth. These companies could also help offset some of the outsourcing jobs the country will likely lose because of greater automation and competition from countries where costs are even lower.

There are historical reasons that starting a business in India is difficult. During British rule, imperial interests dictated economic activity; after independence in 1947, central planning stifled entrepreneurship through burdensome licensing and direct state ownership of companies and banks.

Businesses found that currying favor with policy makers was more important than innovating. And import restrictions made it hard to acquire machinery, parts or technology. Inventors came up with ingenious ways to overcome obstacles and scarcity — a talent Indians used the Hindi word “jugaad” (pronounced jewgard) to describe. But the products that resulted from such improvisation were often inferior to those available outside India.

“We were in an economy where, forget innovation, expansion was discouraged, creating wealth was frowned upon, there was no competition to speak of,” said Anand G. Mahindra, who heads the Mahindra & Mahindra business group and has spoken about the need for more innovation.

Indian leaders began embracing the free market in the 1980s and stepped up the pace of change in 1991 when the country faced a financial crisis. Those changes increased economic growth and made possible the rise of technology companies like Infosys and Wipro, which focused on providing services for American and European corporations.

Yet, the government still exerts significant control, especially in manufacturing, said Rishikesha T. Krishnan, a professor at the Indian Institute of Management in Bangalore.

“To start a services company it really takes you just two or three days to get going,” said Mr. Krishnan, whose book, “From Jugaad to Systematic Innovation: The Challenge for India,” is to be published next year. “The moment you are looking at manufacturing, there are hundreds of inspectors and regulations.”

Raising money is one of the biggest challenges entrepreneurs face. Venture capital funds have flocked to India in recent years, but they are more likely to invest in established businesses than young firms.

In the United States, Israel and elsewhere, the initial, or seed, capital for many start-ups comes from rich individuals known as angel investors. But most rich Indians prefer to invest with family members or close friends because its considered safer and provides assurance that the lender will be able to borrow from relatives in the future.

“If you want to raise $3 to $4 million, it’s doable,” said Sumir Chadha, who co-heads Sequoia Capital’s Indian operations. “But it’s difficult if you want to raise $300,000 or $400,000,” a typical investment at the early stages of a company’s life.

When Cellworks Group, which has most of its operations in Bangalore, was looking to raise money last year, executives talked to venture capitalists here and abroad. But the company raised all of the money it needed in the United States, because most local investors did not have the expertise to evaluate the biotech firm, said Taher Abbasi, the chief executive.

Cellworks has planted its corporate headquarters and a small staff near San Jose so it can be close to investors and American universities for research collaboration on cancer drugs.

“To really kick off entrepreneurship without local money is very difficult,” Mr. Abbasi said.

Still, he said, India has its advantages. Engineers and biologists are plentiful, though they need to be trained more than their counterparts elsewhere. And operating costs are a lot lower than in the San Francisco Bay Area, which was critical more than two years ago when he and his partners started the company with their own money.

There may yet be hope for Indian innovation.

Some are looking to fill the venture fund vacuum. A group called Mumbai Angels holds Saturday meetings every two months at which entrepreneurs pitch ideas to affluent investors. Members of the group have invested in about 20 companies, said Prashant Choksey, a co-founder.

Separately, N. R. Narayana Murthy, the chairman of Infosys, recently sold $38 million worth of shares in his company to start a new venture capital fund. Mr. Raghavan, the former Infosys executive, has invested about $100 million in start-ups like Connexios Life Sciences, which is developing drugs to treat diabetes and other diseases. Many Indian universities have also started entrepreneurship programs and classes.

Vivek Wadhwa, a former technology entrepreneur who now researches innovation, said the climate for start-ups in India was a lot better than it was a few years ago. It should continue to improve, he said, in part because companies like General Electric have hired tens of thousands of engineers in India to work in research and development.

“Once they have been working on these projects for a few years they will outgrow the companies that they are working for,” he said. “They will hook up with these entrepreneurs that failed” on previous start-up attempts and create new companies.

Another change may augur well. Until early this decade, the Indian market was too small and isolated to make it very lucrative for businesses to develop products here, so most technology companies focused on selling services to the West, said Girish S. Paranjpe, joint chief executive of Wipro’s information technology business. “That will change dramatically because the Indian market has become bigger,” he said.

In the last eight years, the size of the Indian economy has roughly doubled along with the importance of foreign trade. There could still be something to envy and fear.

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Acquittals Revive Memory of Murtaza Bhutto's Murder

All of the twenty police officials charged with Murtaza Bhutto's murder have been acquitted by a Karachi court. Those acquitted include Shoaib Suddle, the then DIG of Sindh police; Masood Sharif, ex-director-general of Intelligence Bureau; SSP Wajid Durrani, ASP Shahid Hayat, SHO of the Napier police station Inspector Agha Mohammed Jameel, ASP Rai Mohammed Tahir, sub-inspector Shahbbir Ahmed Qaimkhani, ASI Abdul Basit, head constable Faisal Hafeez, head constable Raja Hameed, and police constables Ghulam Shabbir, Zulfiqar Ahmed, Zakir Mehmood, Zafar Iqbal, Ahmed Jan, Gulzir Khan, Ghulam Mustafa and Muslim Shah.

All of the police officials accused in the murder case were promoted after the incident, except one, Haq Nawaz Sial, who was instead found shot dead, having “committed suicide”; his wife says she saw a gunman running away from the scene of the alleged self-shooting.

Shoaib Suddle, one of the accused who was the Karachi Police chief at the time of the murder, was appointed by Zardari in June, 2008, to head Pakistan's intelligence bureau (IB) by Zardari, in spite of strong opposition from Prime Minister Gilani and against the advice of the military. He was given an extension of two years after he reached retirement age. In April this year, a Pakistan Supreme Court judge set aside the extension given to him and other police officers facing trial in connection with the murder of Murtaza Bhutto. In spite of this rebuff by the apex court, he was taken to the US and Europe by Zardari along with the Director General of the ISI. Shortly after his return from the trip with Zardari, Prime Minister Gilani had Suddle replaced by Javed Noor as the DGIB in deference to the Supreme Court judgment.



The Bhutto family, sitting left to right in back row: Nusrat, Shahnawaz, Zulifiqar Ali, Sanam. In front, Murtaza and Benazir.

Pakistan's Dawn newspaper has reported that the Murtaza's murder trial took over 13 years to conclude since a number of judges had sent references to the Sind High Court, arguing that they could not conduct the proceedings and requested transfer to other courts, lengthy cross-examination of witnesses by the defense, long delays sought by defense counsel, absence of Asif Ali Zardari when he was in self-imposed exile, and a lack of interest of the prosecution witnesses.

Zardari and Shakeeb Ahmed Qureshi, who was an SP at the time, were also charged in the case.

However, Zardari had moved a review application in the Sindh High Court and on April 9 last year, after the PPP election victory, and Justice Syed Pir Ali Shah allowed the plea and acquitted him.

Earlier, prior to the 2008 election, the trial court had dismissed the acquittal plea of Zardari. Qureshi was exonerated on Nov 14 last year when the sessions judge Abdul Rahman Bhatti allowed his acquittal application moved under Section 265-K of CrPC.

Here is an account of Benazir Bhutto's brother Murtaza's murder September 1996 in Karachi as reported by British journalist William Dalrymple in an article published in Times Online:

As the convoy neared home, the street lights were abruptly turned off. The police snipers were ready in position; some had climbed up the trees lining the avenue to get clear shots. Their guns were loaded, the roadblocks had been erected, the surrounding lanes sealed off. The guards outside the different embassies nearby had been told to retreat within their compounds in expectation of trouble. By nine o’clock, all 80 police were in position, commanded by four senior officers. There was complete silence, but for the occasional buzz of static on the police radios.

It was September 20, 1996, and Murtaza Bhutto, Benazir’s younger brother, was returning late from campaigning in a distant part of Karachi. He had come home to Pakistan the previous year after a long period in exile to challenge his more famous sister for a role in the leadership of the family party, the Pakistan People’s Party, or PPP. Benazir was then the prime minister, and Murtaza’s decision to take her on had put him into direct conflict not only with his sister, but also with her ambitious and powerful husband, Asif Ali Zardari.

Murtaza had an animus against Zardari, who he believed was not just a nakedly and riotously corrupt polo-playing playboy, but had pushed Benazir to abandon the PPP’s once-radical agenda fighting for social justice. By doing so, believed Murtaza, Zardari had turned their father’s socialist-leaning party into a political moneymaking machine for the PPP’s wealthy feudal leadership. But Benazir was deaf to the voluble complaints being made about Zardari, which had led to him being dubbed “Mr Ten Per Cent”. Instead of reprimanding him, she appointed her husband minister for investment, so making him the channel through which passed all investment offers from home and abroad.

A few weeks earlier, according to a widely reported story, an incident took place the truth of which is now difficult to establish. In view of their worsening relations, Murtaza is said to have rung Zardari and invited him for a chat at the Bhutto headquarters, 70 Clifton. It was agreed he should come without bodyguards, in order that the two might meet privately and try to settle their differences. Zardari agreed. But as the two men were walking through the garden, Murtaza’s guards suddenly appeared and grabbed Zardari. Murtaza took out a cut-throat razor, and after slowly sharpening it, personally shaved off half of Zardari’s moustache. Then he threw him out the house. A furious Zardari, who had presumably feared much worse than a shave, was compelled to remove the other half of his moustache once he got home.

Whether there is any truth to this story – and Murtaza’s family strongly deny there is – the two brothers-in-law had become irreconcilable by the end of the summer of 1996, and few believed the rivalry was likely to end peacefully. Both men had reputations for being trigger-happy. Murtaza’s bodyguards were notoriously rough, and Murtaza was alleged to have sentenced to death several former associates, including his future biographer, Raja Anwar, author of an unflattering portrait, The Terrorist Prince. Zardari’s reputation was, if anything, worse.

Around the time of the alleged moustache shaving, when Benazir’s mother, the Begum Bhutto, suggested that Murtaza be made the chief minister of Sindh, Benazir and Zardari’s response was to remove the Begum as chairperson of the PPP. Zardari was also said to have leant on Abdullah Shah, the man who held the chief ministership the Begum had wanted Murtaza to be given, and asked him to get his Karachi police to harass Murtaza and obstruct his election campaign. There were also hints of worse to come. So insistent had these rumours become that at 3pm earlier that afternoon, Murtaza had given a press conference saying he had learnt that an assassination attempt on him was being planned, and he named some of Shah’s police officers he claimed were involved in the plot. Several of the officers were among those now waiting, guns cocked, outside his house.

According to witnesses, when the leading car drew up at the roadblock, there was a single shot from the police, followed by two more shots, one of which hit the foremost of Murtaza’s armed bodyguards. Sizing up the situation immediately, and guessing that the police wanted to provoke his guards into retaliating, Murtaza immediately got out of his car and urged his men to hold their fire. Even as he stood there with his hands raised above his head, urging calm, the police opened fire on the whole party with automatic weapons. The firing went on for nearly 10 minutes.

In the silence that followed, as the wounded men lay bleeding on the ground, the police circled the bodies with pistols, administering the coup de grâce to several of the prostrate figures with assassin’s shots to the back of the neck. One of Murtaza’s aides, Ashiq Ali Jatoi, the Sindh president of Murtaza’s faction of the PPP, was standing up cradling a broken arm and begging to be taken to hospital when he was shot at point-blank range in the back of the head. It was all over in quarter of an hour, leaving seven men either dead or dying. The remaining more lightly wounded men were left to bleed on the road for nearly an hour before being taken for treatment.

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Indians Selling Jugaad to the West

I grew up hearing the word jugaad as commonly used in India and Pakistan to describe any unsophisticated, often dangerous, contraption built on the fly to solve a pressing problem to make do in the absence of a better, more elegant solution. Jugaad is how the mechanics in India and Pakistan manage to keep very old and outdated machines running with crudely made parts, long after the original manufacturers have discontinued making them. Now, a few Indian management gurus in the West have a found a way to sell jugaad as a sophisticated management technique to industry and academia.

An example of it I saw during one of my visits to India nearly killed me when my driver almost ran into an nondescript vehicle on the road between Delhi and Agra. It was a makeshift diesel engine mounted on a wooden cart with no lights or safety devices of any kind being used in near darkness to transport people. After the near-miss, it was described to me as Jugaad, with the warning to stay away from it, and other contraptions like it.

In a recent Upper East Side New York conference that attracted a dozen executives from companies including investment banks Rothschild and Goldman Sachs (GS) and tech research firm Gartner (IT), the invited speaker Navi Radjou, who heads the recently formed Center for India & Global Business at England's Cambridge University, talked up jugaad as the latest and greatest management innovation from India.

Already, companies as varied as Best Buy (BBY), Cisco Systems (CSCO) , and Oracle (ORCL) are employing jugaad as they create products and services that are more economical both for supplier and consumer, according to Reena Jana of Businessweek. "In today's challenging times, American companies are forced to learn to operate with Plan Bs," notes Radjou. "But Indian engineers have long known how to invent with a whole alphabet soup of options that work, are cheap, and can be rolled out instantly. That is jugaad."

The age-old South Asian improvisation idea has found sufficient appeal to spawn a cottage industry offering jugaad instruction. Prasad Kaipa, a former manager at Apple's (AAPL) in-house training university, uses jugaad in the courses he's teaching at Hyderabad's Indian School of Business. The University of Michigan's Ross School of Business, where high-profile Indian-born professor C.K. Prahalad teaches, has opened a research office near Infosys' headquarters in India so faculty members can observe how Indian software companies come up with ideas. McKinsey consultants have begun talking up jugaad principles with clients, too.

Jugaad is the kind of new fad that has generated a lot of media buzz, thanks to the hype about everything Indian in the Western Press. Beyond the Businessweek story, the popular TechCrunch website has a post with the headline: "Can India Jugaad Its Way to Angel Investing?" The Wall Street Journal decided not to be left out of the buzz by publishing an article titled: " India's Indigenous Genius: Jugaad".

The idea that global companies can do good and do well at the “bottom of the pyramid”—that is, among the poor populations of developing countries—has generated excitement among corporations, governments, and NGOs in recent years.

Understanding the need to design for extreme affordability with scarce resources is giving birth to a new generation of entrepreneurs. These are entrepreneurs with a social conscience who are motivated by the desire to do good and do well at the same time. They are finding new ways to empower the poor by satisfying their basic needs, such as water, electricity and telephones, but the jugaad concept being taught by the Indian management gurus is definitely not for the social entrepreneurs in South Asia.

Personally, I think this jugaad idea is just another management fad, and a potentially dangerous one that encourages cutting every possible corner. "Jugaad means "Somehow, get it done", even if it involves corruption," cautions M.S. Krishnan, a Ross business school professor. "Companies have to be careful. They have to pursue jugaad with regulations and ethics in mind."

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Dubai's Debt Crisis May Hurt Islamic Finance

Dubai's debt woes are bringing the world's attention to the Islamic finance, particularly the Islamic bonds known as sukuk. Sukuk are Sharia-compliant bonds that do not pay interest. Instead, the sukuk sellers pay the debt holders a share of the rent or capital gains from non-cash physical assets or share of the profits earned from businesses purchased with the money raised. Unfortunately for the Nakheel sukuk holders, the real estate bubble in Dubai that promised big gains from rents and sales has collapsed. And the Islamic bond holders are facing the possibility of a major default, resulting in a dramatic sell-off of sukuk in the last few weeks. According to Data Explorers, a company that tracks how much of a company's stock or bonds are out on loan, about 75% of institutions holding the sukuk sold their position between the end of August and the end of November. "It's an extraordinary sell-off in a bond so close to maturity, when there was no indication of a problem refinancing. The data suggests they had some information that it was a good time to sell," said Data Explorers managing director Julian Pittam.

Dubai's recent request for a debt standstill for Nakheel, one of its biggest state-owned companies, has raised the possibility of the largest Islamic bond or "sukuk" default on record, raising alarms in the global Islamic debt markets.

Nakheel, the Dubai developer behind many of the Emirate's high-profile projects, has to find $4bn to repay sukuk by the middle of this month, according to a report in Financial Times.

If Nakheel doesn't get creditors to agree to a stay on their claims, the Dubai company could be declared in default after Dec. 14, 2009. A group of the sukuk holders, including New York-based hedge-fund firm QVT Financial LP, have appointed London-based law firm Ashurst to represent them in the matter, says the Wall Street Journal.

A December 2006 report on the Nakheel sukuk sale in Euroweek, a trade publication for capital markets, said about 100 accounts bought the notes. Of those, more than half were banks. By geography, about 40% of the issue was placed in the Middle East and 40% in Europe.


Beginning modestly in 2000 with three sukuk issuers collectively worth US$336 million, the Sukuk bonds exceeded $75 billion last year. Issuance of sukuk - both in domestic and foreign currencies - has been quite common in some countries. The most active issuers of sukuk in the past year include Malaysia, the UAE, Saudi Arabia, Pakistan, Kuwait and Bahrain.

The potential Dubai default is likely to negatively affect nations in Asia and the Pacific region planning to raise money by offering sukuk. Indonesia, Pakistan and South Korea are planning to sell Islamic bonds offshore in separate offerings. Jakarta plans to sell up to $1 billion of global sukuk by the second quarter of 2010, according to people familiar with the situation. Pakistan, the only other Asian nation to have issued offshore Islamic bonds, has just $600 million outstanding from its 2005 sale. It is looking to raise $500 million in Islamic bonds next year.

The Karachi city government is preparing to issue $500 million in municipal sukuk by February, 2010, a Pakistan finance ministry official said in September this year.

South Korea is looking to sell what would be its first ever sukuk as it continues to refine its tax laws to facilitate issuance. It wants to attract capital from Islamic nations to diversify its funding sources and reduce its refinancing risks. The Korean government has been planning a road show in Malaysia and the United Arab Emirates.

Since the start of this year, $8.1 billion of Islamic bonds out of the Asian-Pacific region have priced, exceeding the $6.4 billion volume in the same period last year, according to data provider Dealogic.

Last year's global economic crisis brought attention to Islamic finance as an alternative for both Muslim and non-Muslim customers. In an article, the Vatican newspaper Osservatore Romano voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Osservatore Romano said. “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Sukuk may be used to fund the "car industry or the next Olympic Games in London,” the article said.

Investors have been attracted by Islamic banking's more conservative approach: Islamic law forbids banks from charging interest (though customers pay fees) and many scholars discourage investment in excessively leveraged companies. Though it currently accounts for just 1% of the global market, the Islamic finance industry's value is growing at around 15% a year, and could reach $4 trillion in five years, up from $500 billion today, according to a 2008 report from Moody's Investors Service.

The unfolding debt crisis in Dubai is the severest test yet of the short life of the Islamic debt markets. The process and the outcome of the ultimate resolution of the debt crisis in the tiny Gulf Emirate will have a lasting impact on the future of the entire global Islamic finance.

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