As the headlines in Pakistan proclaimed the formation of the PPP-PML(N) coalition at a summit meeting between Asif Zardari and Nawaz Sharif, there were obvious signs of rift emerging within the PPP. Makhdoom Amin Fahim, the PPP leader who faithfully guided the party during Beanzir Bhutto's self-imposed exile, told the news media that he was not invited to join the negotiations with PML(N) nor was he present during the announcement. In fact, he learned of the news through the media reports. While still maintaining his loyalty to the party, he was clearly agitated by this development.
There have also been reports of Sind-Punjab tussle on the choice of the prime minister within the PPP. In the Geo News show ‘Who would be the prime minister’, Makhdoom Amin Fahim said that the prime minister should be from Sindh and he was the candidate for this post. He said that he was a senior member of the party.
Mohtarma Benazir Bhutto and Asif Ali Zardari had also offered him the PM slot.
On the other hand, Chaudhry Ahmad Mukhtar insisted that the PM should be from Punjab. He also claimed to be a senior member of the party, as his family's had a long association with the Bhutto family since 1967. He also challenged that Makhdoom Amin Faheem was ever offered to become PM. Other names that have been mentioned are Raja Mahmood Qureshi and Syed Yusuf Raza Gilani.
The fact that Mr. Zardari has chosen to make deals with other parties without Mr. Fahim's participation is the clearest indication yet that Amin Fahim is either out of the running for the position of prime minister or, that he would not be fully empowered even if he gets the nod from Zardari. The real power will, in fact, continue to be in the hands of Mr. Zardari.
This is clearly an inauspicious beginning for the PPP and the new coalition. It calls into question Zardari's intentions and personal ambitions. It raises issues such as how the PPP unity can be maintained in the absence of an adult Bhutto at the head of the party. It also creates doubts about the durability of any coalition arrangements with other parties. This situation is likely to strengthen President Musharraf's position in dealing with the new civilian government.
Sunday, March 9, 2008
Is Hillary Clinton Muslim?
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?
This debate has not been lost on the stand-up comedians such as Jon Stewart and Stephen Colbert of the Daily Show. Of particular interest to the bigots has been Obama's middle name which they emphasize greatly. Here's a take on this as applied to Hillary RODHAM Clinton's middle name to make the point:
This debate has not been lost on the stand-up comedians such as Jon Stewart and Stephen Colbert of the Daily Show. Of particular interest to the bigots has been Obama's middle name which they emphasize greatly. Here's a take on this as applied to Hillary RODHAM Clinton's middle name to make the point:
Saturday, March 8, 2008
Are Women In Pakistan Better Off Today?
As the world celebrates International Women's Day today, it is natural to ask if Pakistani women have made substantial real progress in the last 5 years under President Musharraf. The answer to this question depends on who you ask and how you judge women's progress. In terms of the women's political representation in the nation's parliament, there has clearly never been a better time. The discriminatory laws such as the Hudood ordnance have been repealed. There are other indicators such as women's presence in the traditional male professions such as law, medicine, business, the police and the military. We have seen women inducted and grow in numbers in each of these male-dominated areas. Women's ranks have also grown in the nation's mass media and they are much freer than ever to express themselves in the choice of appearance, speech, dress, arts, entertainment etc. There have even been performances of The Vagina Monologues in Pakistan. Localized with Urdu and Punjabi words, The Vagina Monologues was first staged in Islamabad in 2003 for an audience of 160, mostly women, followed by performances for mixed audiences in Karachi and Lahore. Organized with AMAL, an NGO working on gender rights in Pakistan, the actresses added information about local incidents of violence against women and honor killings.
Along with the signs of women's progress in Pakistan, there have also been high-profile incidents of violence against women, such as the rape of Mukhtaran Mai that forced an honest discussion and debate on the status of women in rural Pakistan. Most of the women represented in Pakistani parliament are from the same privileged, feudal class that is largely responsible for discrimination against women in Pakistan. The women in parliament have not been particularly vocal in raising the women's issues in parliament and they have not offered any serious legislation other than the Women's Protection Bill that was offered and passed because of President Musharraf's personal intervention. The word "feudal princess" often used to describe late Prime Minister Benazir Bhutto applies well to the majority the women members of parliament in Pakistan. There is a continuing large literacy gap of as much as 45 percent between men and women and the opportunities for rural women's education remain elusive.
In summary, the Musharraf era has seen measurable progress in improving the situation for women. However, a lot more needs to be done. What is really needed is a fundamental change in social attitudes toward women, particularly in rural Pakistan. A massive effort is required to make both men and women aware of the need and the benefits of women's empowerment for a better future of Pakistan. Healthy, educated and empowered women can help bring up better children to build Pakistan as a modern society that cares for its people.
Along with the signs of women's progress in Pakistan, there have also been high-profile incidents of violence against women, such as the rape of Mukhtaran Mai that forced an honest discussion and debate on the status of women in rural Pakistan. Most of the women represented in Pakistani parliament are from the same privileged, feudal class that is largely responsible for discrimination against women in Pakistan. The women in parliament have not been particularly vocal in raising the women's issues in parliament and they have not offered any serious legislation other than the Women's Protection Bill that was offered and passed because of President Musharraf's personal intervention. The word "feudal princess" often used to describe late Prime Minister Benazir Bhutto applies well to the majority the women members of parliament in Pakistan. There is a continuing large literacy gap of as much as 45 percent between men and women and the opportunities for rural women's education remain elusive.
In summary, the Musharraf era has seen measurable progress in improving the situation for women. However, a lot more needs to be done. What is really needed is a fundamental change in social attitudes toward women, particularly in rural Pakistan. A massive effort is required to make both men and women aware of the need and the benefits of women's empowerment for a better future of Pakistan. Healthy, educated and empowered women can help bring up better children to build Pakistan as a modern society that cares for its people.
Thursday, March 6, 2008
New Indian Billionaires And Growing Rich-Poor Gap
The booming Bombay stock market in 2007 and the benefits of globalization have seen India's billionaires list swell to 40 on the Forbes Billionaires List. The Indian billionaires combined wealth has more than doubled from $170 billion to $351 billion in 2007. While Bill Gates has slipped to number three spot from number one, the number 4, 5, 6 and 8 spots in the top 10 are now occupied by Lakshmi Mittal, Mukesh Ambani, Anil Ambani and KP Singh from India.
The news of the newly-minted Indian billionaires is bringing sharper focus on the growing rich-poor gap in India. The Times of India reports Communist Party leader Sitaram Yechury claiming that on the one hand, 36 Indian billionaires constituted 25% of India’s GDP while on the other, 70% of Indians had to do with Rs 20 a day. "A farmer commits suicide every 30 minutes. The gap between the two Indias is widening," he said.
The growing wealth gap is also a big concern in other BRIC countries such as China and Russia. Fully a third of the new billionaires come from Russia (35), China (28) and India (19). The Chinese government is trying to tackle the growing rich-poor, urban-rural divide, a major cause of the rise in incidents of social unrest and violence in the world's most populous nation. The estimates of the urban-rural income gap vary by anywhere from 3 times to six times.
It is not unusual to see the rich-poor gap in the early stages of explosive growth in economies where the focus is on wealth creation rather than distribution. However, if this continues for an extended period of time, there is significant potential for widespread social unrest and serious political insatiability that can threaten the very foundations of a nation. From the recent speeches by the political leadership in India and China, it is clear that there is an acknowledgment of the issues and willingness to work on more equitable distribution of the fruits of progress.
Click here for complete list of Forbes Billionaire.
Here's a video clip of Prof Jayati Ghosh of Nehru University talking about growing rich-poor gap in India:
The news of the newly-minted Indian billionaires is bringing sharper focus on the growing rich-poor gap in India. The Times of India reports Communist Party leader Sitaram Yechury claiming that on the one hand, 36 Indian billionaires constituted 25% of India’s GDP while on the other, 70% of Indians had to do with Rs 20 a day. "A farmer commits suicide every 30 minutes. The gap between the two Indias is widening," he said.
The growing wealth gap is also a big concern in other BRIC countries such as China and Russia. Fully a third of the new billionaires come from Russia (35), China (28) and India (19). The Chinese government is trying to tackle the growing rich-poor, urban-rural divide, a major cause of the rise in incidents of social unrest and violence in the world's most populous nation. The estimates of the urban-rural income gap vary by anywhere from 3 times to six times.
It is not unusual to see the rich-poor gap in the early stages of explosive growth in economies where the focus is on wealth creation rather than distribution. However, if this continues for an extended period of time, there is significant potential for widespread social unrest and serious political insatiability that can threaten the very foundations of a nation. From the recent speeches by the political leadership in India and China, it is clear that there is an acknowledgment of the issues and willingness to work on more equitable distribution of the fruits of progress.
Click here for complete list of Forbes Billionaire.
Here's a video clip of Prof Jayati Ghosh of Nehru University talking about growing rich-poor gap in India:
Is Democracy Right For Pakistan?
Pakistan's Constitution:
As Pakistan lurches forward to hopeful and positive change in the wake of the recent elections, there is a lot of talk about what is the right form of viable democracy for Pakistan. Examples of democracy in India, the United Kingdom and the United States come to mind. Given our colonial past and common history with India, many Pakistanis naturally gravitate toward the British and the Indian models as also reflected in Pakistan's 1973 constitution. The assumption is that the 1973 constitution will serve us well as a basis for democracy. Let's examine this assumption and look at a realistic transition to democracy.
British Democracy:
The British democracy has its roots in the Magna Carta issued in 1215. The Magna Carta was the first document which was forced onto an English King by his subjects to limit his powers by law. In practice Magna Carta mostly did not limit the power of the King in the Middle Ages; by the time of the English Civil War however it had become an important symbol for those who wished to show that the King was bound by the law. So the Magna Carta was meant to limit the powers of individuals and create some checks and balances in the governance. The United Kingdom does not have a written constitution. The British democracy has gone through many ups and downs as it evolved over the last 800 years based on the Magna Carta to its modern form with institutions of executive led by the prime minister, judiciary led by the law lords in the upper house and the the legislature consisting of mainly the British house of commons. In spite of the long history of democracy, the British government is known to have acted without the support of its people in matters such as the decision to join the US invasion of Iraq.
The US Democracy:
The US democracy began with the the revolutionary war motivated by the people's desire for participation in decision making of the government. It was inspired by the slogan "No taxation without representation". It was a revolt against the British monarchy. In its early days after independence, one of the US founding fathers Alexander Hamilton said, " The masses are asses". US democracy restricted voting rights to "white men owning property" for a long time. Blacks were held as slaves and women denied suffrage for more than a century. The biggest single addition to the US constitution was the addition of the "Bill of Rights", the first ten amendments to the US constitution which, like Magna Carta, focused on limiting the powers of the government. In 1867,fourteenth amendment passed Congress, defining citizens as "male". The women finally got their voting rights by the passage of "Susan B. Anthony amendment" in 1920, after a long struggle. It took a hundred years after the bill of rights and a bloody civil war for the black slaves to be freed by the emancipation proclamation. And another hundred years after that to repeal segregation and pass voting rights act. So the US democracy has taken a long time, blood and sweat to get to where it is today. And yet it remains imperfect: Today, the US elections, legislation and policies are heavily influenced by the corporate money and powerful lobbyists. Neocons supported by the military-industrial complex have led us into a disastrous war that Nobel Laureate Joe Stiglitz describes as a "Three trillion dollar war". George W. Bush has been hard at work to shred the bill of rights and packing the courts with judges that support giving extra-ordinary powers to the executive branch, particularly the president.
Indian Democracy:
The Indian democracy is modeled after the British democracy but with a written constitution and the president substituting the queen as the head of state. Indians have had more than a dozen largely free and fair general elections in the past 60 years and smooth, peaceful power transfers. There are strong institutions such as an elected parliament, powerful judiciary and a functioning executive.
In spite of living up to the definition of a functioning democracy, the Indian democracy has failed to serve the vast majority of its people who remain mired in extreme poverty, lack of education and basic health care. The license raj and official corruption are rampant and the people of India continue to suffer from the excesses of the powerful government bureaucracy. The few high-profile high-tech companies and several Indian billionaires cited as the successes of Indian resurgence fail to hide the fact that there are very few jobs being created relative to the needs, and high rates of poverty and low wages make life difficult for an average Indian.
Pakistani Democracy:
Pakistan has had checkered history of attempts to establish democracy. The failure of the politicians and the interventionist military have made things difficult. Compared to India, the Pakistani economy and the average standard of living have not been bad. As William Dalrymple of the Guardian wrote in August 2007, "...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." So while democracy in Pakistan has been missing in action, the reality on the ground is that the people in Pakistan are slightly better off than the the people in India. While free, fair and peaceful elections by Musharraf in Pakistan are very welcome, I am a little leery of accepting this as a fundamental change in Pakistan. This vote is more a protest vote based on basic bread, security and electricity crises they were subjected to in the last few months as the polls showed Musharraf going from 60% favorable rating down to 15% within about a year. People have responded by recycling the old, failed, and thoroughly corrupt feudal politicians and given them a third chance hoping things will improve. If they fail in solving the basic problems of food and fuel and security (a tough challenge by any measure), I wouldn't be surprised to see the same voters yearning for and welcoming another coup with a new general as a strongman. Let's all hope I'm wrong but we have seen this film replayed several times in Pakistan's 60 year history. Let's hope the PPP and the PML(N)leaders are returning to power as a duly chastised and reformed bunch.
The Future of Democracy in Pakistan:
In the long run, I do remain hopeful that Pakistanis will find a way to a form of democracy that best suits them. As the experience in the US and the UK shows, it will probably evolve over time if the democratic process, however flawed it may be, is allowed to continue to play out. Let's hope Pakistan achieves a better system of democracy in a lot less than 200 years, a democracy that is responsive to the needs of its people and serves them well.
As Pakistan lurches forward to hopeful and positive change in the wake of the recent elections, there is a lot of talk about what is the right form of viable democracy for Pakistan. Examples of democracy in India, the United Kingdom and the United States come to mind. Given our colonial past and common history with India, many Pakistanis naturally gravitate toward the British and the Indian models as also reflected in Pakistan's 1973 constitution. The assumption is that the 1973 constitution will serve us well as a basis for democracy. Let's examine this assumption and look at a realistic transition to democracy.
British Democracy:
The British democracy has its roots in the Magna Carta issued in 1215. The Magna Carta was the first document which was forced onto an English King by his subjects to limit his powers by law. In practice Magna Carta mostly did not limit the power of the King in the Middle Ages; by the time of the English Civil War however it had become an important symbol for those who wished to show that the King was bound by the law. So the Magna Carta was meant to limit the powers of individuals and create some checks and balances in the governance. The United Kingdom does not have a written constitution. The British democracy has gone through many ups and downs as it evolved over the last 800 years based on the Magna Carta to its modern form with institutions of executive led by the prime minister, judiciary led by the law lords in the upper house and the the legislature consisting of mainly the British house of commons. In spite of the long history of democracy, the British government is known to have acted without the support of its people in matters such as the decision to join the US invasion of Iraq.
The US Democracy:
The US democracy began with the the revolutionary war motivated by the people's desire for participation in decision making of the government. It was inspired by the slogan "No taxation without representation". It was a revolt against the British monarchy. In its early days after independence, one of the US founding fathers Alexander Hamilton said, " The masses are asses". US democracy restricted voting rights to "white men owning property" for a long time. Blacks were held as slaves and women denied suffrage for more than a century. The biggest single addition to the US constitution was the addition of the "Bill of Rights", the first ten amendments to the US constitution which, like Magna Carta, focused on limiting the powers of the government. In 1867,fourteenth amendment passed Congress, defining citizens as "male". The women finally got their voting rights by the passage of "Susan B. Anthony amendment" in 1920, after a long struggle. It took a hundred years after the bill of rights and a bloody civil war for the black slaves to be freed by the emancipation proclamation. And another hundred years after that to repeal segregation and pass voting rights act. So the US democracy has taken a long time, blood and sweat to get to where it is today. And yet it remains imperfect: Today, the US elections, legislation and policies are heavily influenced by the corporate money and powerful lobbyists. Neocons supported by the military-industrial complex have led us into a disastrous war that Nobel Laureate Joe Stiglitz describes as a "Three trillion dollar war". George W. Bush has been hard at work to shred the bill of rights and packing the courts with judges that support giving extra-ordinary powers to the executive branch, particularly the president.
Indian Democracy:
The Indian democracy is modeled after the British democracy but with a written constitution and the president substituting the queen as the head of state. Indians have had more than a dozen largely free and fair general elections in the past 60 years and smooth, peaceful power transfers. There are strong institutions such as an elected parliament, powerful judiciary and a functioning executive.
In spite of living up to the definition of a functioning democracy, the Indian democracy has failed to serve the vast majority of its people who remain mired in extreme poverty, lack of education and basic health care. The license raj and official corruption are rampant and the people of India continue to suffer from the excesses of the powerful government bureaucracy. The few high-profile high-tech companies and several Indian billionaires cited as the successes of Indian resurgence fail to hide the fact that there are very few jobs being created relative to the needs, and high rates of poverty and low wages make life difficult for an average Indian.
Pakistani Democracy:
Pakistan has had checkered history of attempts to establish democracy. The failure of the politicians and the interventionist military have made things difficult. Compared to India, the Pakistani economy and the average standard of living have not been bad. As William Dalrymple of the Guardian wrote in August 2007, "...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." So while democracy in Pakistan has been missing in action, the reality on the ground is that the people in Pakistan are slightly better off than the the people in India. While free, fair and peaceful elections by Musharraf in Pakistan are very welcome, I am a little leery of accepting this as a fundamental change in Pakistan. This vote is more a protest vote based on basic bread, security and electricity crises they were subjected to in the last few months as the polls showed Musharraf going from 60% favorable rating down to 15% within about a year. People have responded by recycling the old, failed, and thoroughly corrupt feudal politicians and given them a third chance hoping things will improve. If they fail in solving the basic problems of food and fuel and security (a tough challenge by any measure), I wouldn't be surprised to see the same voters yearning for and welcoming another coup with a new general as a strongman. Let's all hope I'm wrong but we have seen this film replayed several times in Pakistan's 60 year history. Let's hope the PPP and the PML(N)leaders are returning to power as a duly chastised and reformed bunch.
The Future of Democracy in Pakistan:
In the long run, I do remain hopeful that Pakistanis will find a way to a form of democracy that best suits them. As the experience in the US and the UK shows, it will probably evolve over time if the democratic process, however flawed it may be, is allowed to continue to play out. Let's hope Pakistan achieves a better system of democracy in a lot less than 200 years, a democracy that is responsive to the needs of its people and serves them well.
Wednesday, March 5, 2008
Merrill Lynch Fund To Invest In Pakistan
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.
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.
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.
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