Pakistan, whose credit default swaps (CDS) have more than doubled since October 2007 because of growing political uncertainty and tension between rival parties, is expected to join Markit's iTraxx Asia ex-Japan Index of credit-default swaps. This follows a dramatic increase in demand to trade on the credit default swap contracts for Pakistan, reports Bloomberg.com. Pakistan is also slated to join the 20- member sub-index for non investment-grade governments and companies.
Credit-default swaps are an indicator of the cost of bond insurance that varies with the risk of bond default. Credit default swaps are usually bought by bond holders from credit insurance companies like Ambac, FGIC, and MBIA. These insurers reimburse bondholders in case the bond issuing companies or governments default. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year. This is the first time Pakistan is being included in an index of bond default swaps since it got a B+ rating from S&P and started raising capital through borrowing in the international commercial debt market. Prior to this, Pakistan was considered such a high-risk that it could only borrow from IMF, World Bank, Asian Development bank and other similar institutions that lend to the poor nations deemed not credit-worthy. Pakistan did not have access to the commercial credit markets in the 1990s. Pakistan is becoming more active in raising money in global capital markets despite its volatile politics. Last month the country said it was considering issuing a sovereign bond issue, although it has yet to provide further details behind its plan.
It should be noted that the international and the US bond markets have been seriously unsettled recently due to the sub-prime mortgage backed securities crisis. Just yesterday, the Federal Reserve had to bail out Bear Stearns in the United States. Still, the value of Bear Stearns stock dropped by a half in a single day. There are serious concerns about the default of collateralized debt obligations (CDOs) and the ability of the bond insurers such as Ambac to protect the holders of such securities. This has led to a severe credit crunch in which the major banks are unwilling to loan money to each other.
Sunday, March 16, 2008
Saturday, March 15, 2008
Obama Under Fire For His Pastor's Views
"We bombed Hiroshima, we bombed Nagasaki, and we nuked far more than the thousands in New York and the Pentagon, and we never batted an eye," Rev. Jeremiah Wright said in a sermon on Sept. 16, 2001. This is not all. Sen Barack Obama's pastor Rev Wright went on to touch the third rail of the American politics: He criticized the US support for Israel against the Palestinians.
"We have supported state terrorism against the Palestinians and black South Africans, and now we are indignant because the stuff we have done overseas is now brought right back to our own front yards. America's chickens are coming home to roost," he told his congregation.
These remarks by Rev Wright in video-recorded sermons are being played over and over again the US media for the last day or so. The US media are reporting that Rev. Wright married Obama and his wife Michelle, baptized their two daughters and is credited by Obama for the title of his book, "The Audacity of Hope." The early reactions indicate that the Obama support is being eroded in spite of Mr. Obama publicly disagreeing with the pastor's candid views and distancing himself from his pastor.
An ABC News review of dozens of Rev. Wright's sermons, offered for sale by the church, found repeated denunciations of the U.S. based on what he described as his reading of the Gospels and the treatment of black Americans.
"The government gives them the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing 'God Bless America.' No, no, no, God damn America, that's in the Bible for killing innocent people," he said in a 2003 sermon. "God damn America for treating our citizens as less than human. God damn America for as long as she acts like she is God and she is supreme."
In his latest book "Marching Toward Hell" Michael Scheuer, the former head of CIA's Bin Laden unit seems to agree with the "chickens coming home to roost" theory. According to his research on what motivates Bin Laden and his supporters to attack the US and Western interests around the world, he blames the US foreign policy. In fact, he has condensed his learnings in two books published last year. The first is titled "Imperial Hubris" and the the most recent one is "Marching Toward Hell". In both of these books, he rejects the common refrain heard in the United States that "Al-Qaeda hates us because we stand for freedom and democracy". Instead, he argues that it is our interventionist policies around the world that motivate our enemies to be so determined to commit violence against our interests. He singles out our policies in the Middle East and our unqualified support for Israel as the biggest obstacles to a peaceful coexistence between Islam and the West. Among the prominent US political elite, all of the mainstream parties and leaders disagree with Sheuer's message. The only two people that show any agreement with Sheuer are Congressman Dennis Kucinich, who recently dropped out of the Democratic primaries and Congressman Ron Paul, the Republican candidate running a distant third in the Presidential primaries. Ralph Nader, the latest to announce his entry into the presidential race, has similar views but his bid is unlikely to gather much support.
It is worth noting here that Rev Wright's views are not too different from those of Rev Martin Luther King expressed in the 1960s. Reverend King called the United States "the greatest purveyor of violence in the world today" back in the 1960s at the height of Vietnam War. From Vietnam to South Africa to Latin America, King said, the U.S. was "on the wrong side of a world revolution." King questioned "our alliance with the landed gentry of Latin America," and asked why the U.S. was suppressing revolutions "of the shirtless and barefoot people" in the Third World, instead of supporting them.
At the time, the Reverend Martin Luther King also became a target of criticism by the national media. Time magazine called it "demagogic slander that sounded like a script for Radio Hanoi." The Washington Post also chimed in saying "King has diminished his usefulness to his cause, his country, his people."
The media reactions to the Rev Wright videos are quite predictable. The commentators and the pundits are clearly having a field day. The real question now is how the voters would react. The voter reaction could make or break Obama's bid for presidency.
"We have supported state terrorism against the Palestinians and black South Africans, and now we are indignant because the stuff we have done overseas is now brought right back to our own front yards. America's chickens are coming home to roost," he told his congregation.
These remarks by Rev Wright in video-recorded sermons are being played over and over again the US media for the last day or so. The US media are reporting that Rev. Wright married Obama and his wife Michelle, baptized their two daughters and is credited by Obama for the title of his book, "The Audacity of Hope." The early reactions indicate that the Obama support is being eroded in spite of Mr. Obama publicly disagreeing with the pastor's candid views and distancing himself from his pastor.
An ABC News review of dozens of Rev. Wright's sermons, offered for sale by the church, found repeated denunciations of the U.S. based on what he described as his reading of the Gospels and the treatment of black Americans.
"The government gives them the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing 'God Bless America.' No, no, no, God damn America, that's in the Bible for killing innocent people," he said in a 2003 sermon. "God damn America for treating our citizens as less than human. God damn America for as long as she acts like she is God and she is supreme."
In his latest book "Marching Toward Hell" Michael Scheuer, the former head of CIA's Bin Laden unit seems to agree with the "chickens coming home to roost" theory. According to his research on what motivates Bin Laden and his supporters to attack the US and Western interests around the world, he blames the US foreign policy. In fact, he has condensed his learnings in two books published last year. The first is titled "Imperial Hubris" and the the most recent one is "Marching Toward Hell". In both of these books, he rejects the common refrain heard in the United States that "Al-Qaeda hates us because we stand for freedom and democracy". Instead, he argues that it is our interventionist policies around the world that motivate our enemies to be so determined to commit violence against our interests. He singles out our policies in the Middle East and our unqualified support for Israel as the biggest obstacles to a peaceful coexistence between Islam and the West. Among the prominent US political elite, all of the mainstream parties and leaders disagree with Sheuer's message. The only two people that show any agreement with Sheuer are Congressman Dennis Kucinich, who recently dropped out of the Democratic primaries and Congressman Ron Paul, the Republican candidate running a distant third in the Presidential primaries. Ralph Nader, the latest to announce his entry into the presidential race, has similar views but his bid is unlikely to gather much support.
It is worth noting here that Rev Wright's views are not too different from those of Rev Martin Luther King expressed in the 1960s. Reverend King called the United States "the greatest purveyor of violence in the world today" back in the 1960s at the height of Vietnam War. From Vietnam to South Africa to Latin America, King said, the U.S. was "on the wrong side of a world revolution." King questioned "our alliance with the landed gentry of Latin America," and asked why the U.S. was suppressing revolutions "of the shirtless and barefoot people" in the Third World, instead of supporting them.
At the time, the Reverend Martin Luther King also became a target of criticism by the national media. Time magazine called it "demagogic slander that sounded like a script for Radio Hanoi." The Washington Post also chimed in saying "King has diminished his usefulness to his cause, his country, his people."
The media reactions to the Rev Wright videos are quite predictable. The commentators and the pundits are clearly having a field day. The real question now is how the voters would react. The voter reaction could make or break Obama's bid for presidency.
Friday, March 14, 2008
Shaukat Aziz Urges Support for New Government
Former Pakistani Prime Minister Mr. Shaukat Aziz visited Southern California recently and met with a group of Pakistani-Americans. Here are some of the excerpts of what he said as reported in Pakistan Link, a California weekly covering news and issues of interest to Pakistani-Americans:
Shaukat Aziz said the US should continue unimpeded assistance for the new democratic government in Pakistan. The two countries should focus on strengthening the relationship, deepening and broadening multi-faceted cooperation, and promoting greater people-to-people friendship.
Aziz stated that he was elated that the elections in Pakistan were free, fair and safe. Underscoring that the polls had proved that the majority of Pakistanis were "progressive and moderate", he expressed the hope that the new government would "take Pakistan forward on the path of stability, development and progress".
Aziz said Pakistan has a unique relationship with the US. It is the most allied and the most sanctioned ally of the United States.
"Pakistan-US relations are important for both countries as well as for peace, security and development at the regional as well as international levels," he pointed out.
"One of the key challenges is effectively dealing with difference of perceptions on some important issues", Mr Aziz observed that despite a close relationship between Pakistan and the USA, "anti-Americanism in Pakistan or misunderstandings about Pakistan and its society in the US commitment to fight terrorism and extremism and its contribution and sacrifices in the counter-terrorism struggle are not always fully recognized in the US".
"Continued assertions that Pakistan is not doing enough to combat terrorism contribute to a perception of mistrust about the relationship. There have also been threatening statements about the possible military strikes against terrorist targets inside our tribal areas. In order to avoid any negative fallout there has to be a realistic appreciation of the scope of counter-terrorism cooperation and better understanding of Pakistan's contribution and sacrifices in this endeavor", he added.
Mr Aziz asserted: "It is imperative to avoid any assertions or action that would undermine our sovereignty, be inconsistent with international law, unacceptable to the people of Pakistan and detrimental to the ongoing counter-terrorism cooperation." He claimed that he served the country with zest in the last eight years without taking a day off. He was enjoying time off to "recharge".
Shaukat Aziz said the US should continue unimpeded assistance for the new democratic government in Pakistan. The two countries should focus on strengthening the relationship, deepening and broadening multi-faceted cooperation, and promoting greater people-to-people friendship.
Aziz stated that he was elated that the elections in Pakistan were free, fair and safe. Underscoring that the polls had proved that the majority of Pakistanis were "progressive and moderate", he expressed the hope that the new government would "take Pakistan forward on the path of stability, development and progress".
Aziz said Pakistan has a unique relationship with the US. It is the most allied and the most sanctioned ally of the United States.
"Pakistan-US relations are important for both countries as well as for peace, security and development at the regional as well as international levels," he pointed out.
"One of the key challenges is effectively dealing with difference of perceptions on some important issues", Mr Aziz observed that despite a close relationship between Pakistan and the USA, "anti-Americanism in Pakistan or misunderstandings about Pakistan and its society in the US commitment to fight terrorism and extremism and its contribution and sacrifices in the counter-terrorism struggle are not always fully recognized in the US".
"Continued assertions that Pakistan is not doing enough to combat terrorism contribute to a perception of mistrust about the relationship. There have also been threatening statements about the possible military strikes against terrorist targets inside our tribal areas. In order to avoid any negative fallout there has to be a realistic appreciation of the scope of counter-terrorism cooperation and better understanding of Pakistan's contribution and sacrifices in this endeavor", he added.
Mr Aziz asserted: "It is imperative to avoid any assertions or action that would undermine our sovereignty, be inconsistent with international law, unacceptable to the people of Pakistan and detrimental to the ongoing counter-terrorism cooperation." He claimed that he served the country with zest in the last eight years without taking a day off. He was enjoying time off to "recharge".
Karachi Booming in Spite of Power Outages
A Tale of Two Pakistans:
A little more than six years ago, immediately after the Sept. 11 attacks on U.S. cities, few sane investment advisers would have recommended Pakistani stocks.
They should have. Their clients could have made a fortune.
Since 2001, the nuclear-armed South Asian country, blamed for spawning generations of Islamic militants and threatening global security, has been making millionaires like newly minted coins.
As Western governments have fretted about Pakistan's nuclear weapons falling into the hands of militants, the Karachi Stock Exchange's main share index has risen more than 10-fold.
And it is not just that Karachi is a thinly traded market, able to be dragged skyward at time by speculators. Profits have taken off as well.
Even last month's assassination of opposition leader Benazir Bhutto, and the brief but terrifying tornado of violence it unleashed, failed to make much more than a dent in the market.
Businessmen are more worried than brokers, but all agree it will take more than Bhutto's death to destroy this boom, which has been based on open-door investment policies and privatization.
"It's sad, and it does affect the business, but I guess it's been happening for so long that people just get used to it," shrugged Omer Sabir, who sells luxury sports cars from upwards of $100,000 each at Karachi's only Porsche dealer.
Home to 14 million people, Pakistan's biggest city is booming.
The port city, notorious as the place where U.S. journalist Daniel Pearl was kidnapped and beheaded by Islamist extremists in 2002, has seen property prices soar and shopping malls sprout up.
Foreign banks such as Standard Chartered and ABN AMRO have bought up local banks. Just this month Bank Muscat and Japan's Nomura Holdings agreed to a $200 million takeover of Pakistan's Saudi Pak Bank.
Barclays is also looking to build a local business.
Even during frequent power blackouts, Pakistan's bankers can see by the light of their generators that profits are good, among the strongest bank returns in the world, says Invisor Securities.
At Karachi's underground night-club scene, which is literally, underground, sons and daughters of the upper middle-class drink vodka, whisky or just soft-drinks in glittering semi-darkness and listen to DJs play the latest beats.
But right now, the party might be coming to an end.
The stock market is still trading just 3 percent below its life-time closing high of 14,814.85 points, but the outlook is far less certain than six years ago, when President Pervez Musharraf began his reforms, spurring local and foreign investment.
The economy, which averaged around 7 percent annual growth in the five years to June 2007, is slowing and inflation is rising. Foreign investment and the farm sector, two important drivers of Pakistan's economic success story, have also moved down a gear.
The street is also getting angry.
For many Pakistanis, the boom has been mainly a spectator sport. They can see the new shopping malls but cannot afford to buy anything there. About a quarter of them still live in poverty, earning around 1,000 rupees, or $16, a month, though the proportion has been falling, according to 2006 government data.
A few blocks away from the Porsche dealership, men and women line up in vain for hours to buy a bag of flour at a government store. Power blackouts make the winter bleaker still.
"I have been coming here for a month and, look, my hands are empty," said Taj Fareed, showing his palms as he stood near a crowd jostling at the door of a government store to buy flour.
So if these Pakistanis find their voice in elections scheduled for Feb. 18, will there be changes in store for broad economic policy and the rich crust of Pakistan society?
The answer from businessmen, political analysts and economists seems to be a unanimous but rather hopeful "no."
"Whoever comes in next, I can assure you that they will follow the same policies," said Javed Faruqi, leaning back in his chair in the high-rise executive suite of Samaa, one of several new TV channels born out of a surge in advertising spending.
Samaa occupies the same tower as business channel CNBC Pakistan, a Middle East-backed franchise launched in late 2005.
"I don't see it going into reverse but there may be a struggle with the forces who do want it to go into reverse," admits Tahir Ikram, programming director for CNBC Pakistan.
Islamist parties, and their campaigns against Western decadence and corruption, appeal strongly to the poor, but recent polling suggests the mainstream parties will dominate the next government, assuming the Feb. 18 elections are free and fair.
Bhutto's party, Pakistan's biggest, has been campaigning under the slogan "Food, Shelter, Clothing" and still plans to contest the elections, but political analysts do not expect it to usher in a state-driven economy if it wins power.
"The overall direction of the Pakistan economy would be the same," said political analyst Hasan Askari Rizvi.
Riaz Haq's Note: This Reuters story was published in January 2008, prior to the elections of Feb 2008 in Pakistan. The investor enthusiasm has not dampened in spite of the defeat of pro-Musharraf PML(Q) and increasing violence in major cities. On the contrary, the KSE-100 has made new highs above 15000 level in March 2008. Please see my blog post: Pakistan's Stocks Continue to Defy Gravity.
A little more than six years ago, immediately after the Sept. 11 attacks on U.S. cities, few sane investment advisers would have recommended Pakistani stocks.
They should have. Their clients could have made a fortune.
Since 2001, the nuclear-armed South Asian country, blamed for spawning generations of Islamic militants and threatening global security, has been making millionaires like newly minted coins.
As Western governments have fretted about Pakistan's nuclear weapons falling into the hands of militants, the Karachi Stock Exchange's main share index has risen more than 10-fold.
And it is not just that Karachi is a thinly traded market, able to be dragged skyward at time by speculators. Profits have taken off as well.
Even last month's assassination of opposition leader Benazir Bhutto, and the brief but terrifying tornado of violence it unleashed, failed to make much more than a dent in the market.
Businessmen are more worried than brokers, but all agree it will take more than Bhutto's death to destroy this boom, which has been based on open-door investment policies and privatization.
"It's sad, and it does affect the business, but I guess it's been happening for so long that people just get used to it," shrugged Omer Sabir, who sells luxury sports cars from upwards of $100,000 each at Karachi's only Porsche dealer.
Home to 14 million people, Pakistan's biggest city is booming.
The port city, notorious as the place where U.S. journalist Daniel Pearl was kidnapped and beheaded by Islamist extremists in 2002, has seen property prices soar and shopping malls sprout up.
Foreign banks such as Standard Chartered and ABN AMRO have bought up local banks. Just this month Bank Muscat and Japan's Nomura Holdings agreed to a $200 million takeover of Pakistan's Saudi Pak Bank.
Barclays is also looking to build a local business.
Even during frequent power blackouts, Pakistan's bankers can see by the light of their generators that profits are good, among the strongest bank returns in the world, says Invisor Securities.
At Karachi's underground night-club scene, which is literally, underground, sons and daughters of the upper middle-class drink vodka, whisky or just soft-drinks in glittering semi-darkness and listen to DJs play the latest beats.
But right now, the party might be coming to an end.
The stock market is still trading just 3 percent below its life-time closing high of 14,814.85 points, but the outlook is far less certain than six years ago, when President Pervez Musharraf began his reforms, spurring local and foreign investment.
The economy, which averaged around 7 percent annual growth in the five years to June 2007, is slowing and inflation is rising. Foreign investment and the farm sector, two important drivers of Pakistan's economic success story, have also moved down a gear.
The street is also getting angry.
For many Pakistanis, the boom has been mainly a spectator sport. They can see the new shopping malls but cannot afford to buy anything there. About a quarter of them still live in poverty, earning around 1,000 rupees, or $16, a month, though the proportion has been falling, according to 2006 government data.
A few blocks away from the Porsche dealership, men and women line up in vain for hours to buy a bag of flour at a government store. Power blackouts make the winter bleaker still.
"I have been coming here for a month and, look, my hands are empty," said Taj Fareed, showing his palms as he stood near a crowd jostling at the door of a government store to buy flour.
So if these Pakistanis find their voice in elections scheduled for Feb. 18, will there be changes in store for broad economic policy and the rich crust of Pakistan society?
The answer from businessmen, political analysts and economists seems to be a unanimous but rather hopeful "no."
"Whoever comes in next, I can assure you that they will follow the same policies," said Javed Faruqi, leaning back in his chair in the high-rise executive suite of Samaa, one of several new TV channels born out of a surge in advertising spending.
Samaa occupies the same tower as business channel CNBC Pakistan, a Middle East-backed franchise launched in late 2005.
"I don't see it going into reverse but there may be a struggle with the forces who do want it to go into reverse," admits Tahir Ikram, programming director for CNBC Pakistan.
Islamist parties, and their campaigns against Western decadence and corruption, appeal strongly to the poor, but recent polling suggests the mainstream parties will dominate the next government, assuming the Feb. 18 elections are free and fair.
Bhutto's party, Pakistan's biggest, has been campaigning under the slogan "Food, Shelter, Clothing" and still plans to contest the elections, but political analysts do not expect it to usher in a state-driven economy if it wins power.
"The overall direction of the Pakistan economy would be the same," said political analyst Hasan Askari Rizvi.
Riaz Haq's Note: This Reuters story was published in January 2008, prior to the elections of Feb 2008 in Pakistan. The investor enthusiasm has not dampened in spite of the defeat of pro-Musharraf PML(Q) and increasing violence in major cities. On the contrary, the KSE-100 has made new highs above 15000 level in March 2008. Please see my blog post: Pakistan's Stocks Continue to Defy Gravity.
Thursday, March 13, 2008
Insights into a Suicide Bombing in Pakistan
While Pakistani authorities have had little success in catching perpetrators in most of the bombings, there have been several arrests in a November suicide attack on a Pakistan Air Force bus near an air base in Sargodha, 120 miles west of Lahore.
According to Associated Press, the probe by police and intelligence agencies into the attack provides insight into how the NWFP-based militant groups function and shows they are attracting recruits in other regions and ethnic groups.
Interrogation of a key suspect, a 19-year-old former madrassah student, Omer Farooq, who is accused of helping prepare the motorcycle-borne bomb used in the attack that killed at least eight people, revealed how he shuttled between his home village near Sargodha and South Waziristan during the planning.
A police report on his questioning obtained by the AP says Mr. Farooq learned as a youth how to handle guns and explosives at training camps in Kashmir, a predominantly Muslim region split between Pakistan and India. Islamic separatists have pursued a bloody insurgency in Indian held portion for years.
According to the report, Mr. Farooq said he took orders for the November attack from another Sargodha-based militant, Mohammed Tayyab, who provided the money to buy potash, an explosive material often used in Pakistan for making firecrackers.
Mr. Farooq said he and another militant recruit he refers to only as Bilal bought the potash at a market in Lahore. They transported it by public bus to Mr. Farooq's home, where he packed it into milk containers attached to a motorbike, with the help of the bomber, Mohammed Abid, whom he said came from Waziristan to stage the attack.
Mr. Farooq, who has not faced trial and does not yet have a lawyer, told of Mr. Tayyab warning them that the plan to attack a military vehicle was "an order of the high command," the report says.
"He added this is jihad and this is what we must do to secure the blessing of God. He threatened us, whoever tries to ditch the operation, his head will be cut off," the report quotes Mr. Farooq as saying.
Aftab Khan Sherpao, who was the top civilian security official in the outgoing national government, said that despite dozens of arrests of major terrorists in the six years since Pakistan abandoned its support of the Taliban regime in Afghanistan, the suicide bombing network is spreading.
"The fact is that they are moving from tribal areas to the cities. They have carried out attacks in Rawalpindi, Sargodha and Lahore," Mr. Sherpao told the AP. "They are present in all of our major cities."
Authorities have blamed Taliban militant leaders like Baitullah Mehsud for the wave of attacks, including the Dec. 27 assassination of former Prime Minister Benazir Bhutto. Mehsud operates from the lawless South Waziristan region, where al Qaeda leaders are also believed to hide.
Recruits for suicide bombings, which became a favored militant tactic in Afghanistan two years ago before spreading to Pakistan, often go for training in Waziristan before staging attacks, officials say.
But reaching into Pakistan's main province of Punjab, the country's business and farm hub where people have different ethnicity and language to the Pashtun tribesmen in the northwest, requires local help.
"You need to have the support of local facilitators to carry out such attacks, and no suicide bomber can operate without such support," Mr. Sherpao said.
Source: Associated Press
According to Associated Press, the probe by police and intelligence agencies into the attack provides insight into how the NWFP-based militant groups function and shows they are attracting recruits in other regions and ethnic groups.
Interrogation of a key suspect, a 19-year-old former madrassah student, Omer Farooq, who is accused of helping prepare the motorcycle-borne bomb used in the attack that killed at least eight people, revealed how he shuttled between his home village near Sargodha and South Waziristan during the planning.
A police report on his questioning obtained by the AP says Mr. Farooq learned as a youth how to handle guns and explosives at training camps in Kashmir, a predominantly Muslim region split between Pakistan and India. Islamic separatists have pursued a bloody insurgency in Indian held portion for years.
According to the report, Mr. Farooq said he took orders for the November attack from another Sargodha-based militant, Mohammed Tayyab, who provided the money to buy potash, an explosive material often used in Pakistan for making firecrackers.
Mr. Farooq said he and another militant recruit he refers to only as Bilal bought the potash at a market in Lahore. They transported it by public bus to Mr. Farooq's home, where he packed it into milk containers attached to a motorbike, with the help of the bomber, Mohammed Abid, whom he said came from Waziristan to stage the attack.
Mr. Farooq, who has not faced trial and does not yet have a lawyer, told of Mr. Tayyab warning them that the plan to attack a military vehicle was "an order of the high command," the report says.
"He added this is jihad and this is what we must do to secure the blessing of God. He threatened us, whoever tries to ditch the operation, his head will be cut off," the report quotes Mr. Farooq as saying.
Aftab Khan Sherpao, who was the top civilian security official in the outgoing national government, said that despite dozens of arrests of major terrorists in the six years since Pakistan abandoned its support of the Taliban regime in Afghanistan, the suicide bombing network is spreading.
"The fact is that they are moving from tribal areas to the cities. They have carried out attacks in Rawalpindi, Sargodha and Lahore," Mr. Sherpao told the AP. "They are present in all of our major cities."
Authorities have blamed Taliban militant leaders like Baitullah Mehsud for the wave of attacks, including the Dec. 27 assassination of former Prime Minister Benazir Bhutto. Mehsud operates from the lawless South Waziristan region, where al Qaeda leaders are also believed to hide.
Recruits for suicide bombings, which became a favored militant tactic in Afghanistan two years ago before spreading to Pakistan, often go for training in Waziristan before staging attacks, officials say.
But reaching into Pakistan's main province of Punjab, the country's business and farm hub where people have different ethnicity and language to the Pashtun tribesmen in the northwest, requires local help.
"You need to have the support of local facilitators to carry out such attacks, and no suicide bomber can operate without such support," Mr. Sherpao said.
Source: Associated Press
Wednesday, March 12, 2008
India's Arms Build-up and Problems with Russia
India is in the midst of a huge arms build-up with massive defense spending planned for the next five years. With 10% increase year-over-year, India's defense budget for this year is $26.5b. The question facing the Indian defense establishment is where to get the sophisticated new equipment and training they need. In spite of the tall claims of India's indigenous development and production capacity, more than 80% of what they own today has come from their traditional supplier Russia. It is well known that Russia's industrial base and support infrastructure have significantly atrophied since the demise of the Soviet Union. Russia now derives such a disproportionate amount of revenue from oil and gas that the non-energy industrial sector has diminished in significance for the Russian economy. According to Times of India, India has complained to Russia about the unreliability of some of its weapon systems as well as tardy product support in execution of several projects. Top-level sources say it has been made very clear to Russia that apart from "quality control" of the military equipment being bought from it, India wants assurances on maintenance of delivery schedules of contracted weapon systems, uninterrupted supply of spares and life-term product support. The Indian Air Force is upset with the "distortions" on the canopies of the Sukhoi-30MKI Phase-3 fighter jets. This comes at a time when India is on the verge of signing a $1.6-billion deal with Russia to acquire another 40 Sukhoi-30MKIs, in addition to the 190 such jets already contracted through two big deals in 1996 and 2000. In addition to several recent crashes of Russian-built fighter aircraft, the BBC reports that there have been issues related to the acquisition of the aircraft carrier named Admiral Gorschkov. From a negotiated price of $700m, the Russians subsequently demanded $1.2bn with delivery delayed till 2013.
Around the same time, the Indian navy has refused to accept an upgraded diesel-powered submarine after delays in the installation of a missile system.
India's Admiral Mehta has called for a government review of military ties with Russia, amid growing resentment within the military about the Russian attitude to their needs. These irritants and other disagreements over trade and India's foreign policy have all served to put a strain on once close relations, according to the BBC.
The US and European suppliers present alternatives for the Indians with warming ties between India and the West after the end of the Cold war. However, this would be a dramatic change for the Indian military to integrate their new equipment into the existing units trained and equipped to use Russian-made weapons systems. While it is possible to do so, it would take a long time and a lot of work to pull it off. In the meanwhile, the transition is likely to damage relations with Russia which have already cooled recently. According to BBC reports, when India's foreign and defense ministers visited Moscow last year, President Putin allegedly refused to meet with them. In fact, Foreign Minister Pranab Mukherjee, next only to the prime minister in seniority, was not even given an appointment by the Russian prime minister. And when Indian Prime Minister Manmohan Singh travelled to Russia at the end of last year, he curtailed his visit to just 28 hours.
Around the same time, the Indian navy has refused to accept an upgraded diesel-powered submarine after delays in the installation of a missile system.
India's Admiral Mehta has called for a government review of military ties with Russia, amid growing resentment within the military about the Russian attitude to their needs. These irritants and other disagreements over trade and India's foreign policy have all served to put a strain on once close relations, according to the BBC.
The US and European suppliers present alternatives for the Indians with warming ties between India and the West after the end of the Cold war. However, this would be a dramatic change for the Indian military to integrate their new equipment into the existing units trained and equipped to use Russian-made weapons systems. While it is possible to do so, it would take a long time and a lot of work to pull it off. In the meanwhile, the transition is likely to damage relations with Russia which have already cooled recently. According to BBC reports, when India's foreign and defense ministers visited Moscow last year, President Putin allegedly refused to meet with them. In fact, Foreign Minister Pranab Mukherjee, next only to the prime minister in seniority, was not even given an appointment by the Russian prime minister. And when Indian Prime Minister Manmohan Singh travelled to Russia at the end of last year, he curtailed his visit to just 28 hours.
Is the PPP-PML(N) Coalition Up To The Task Ahead?
The drama between the PPP and the PML(N) and within each party that has unfolded during the last 48 hours clearly shows the lack of competence and maturity of their leadership in handling the very basic political disputes in their ranks. In the midst of rising terrorist violence claiming many innocent lives on a daily basis, the petty personal differences and mutual suspicions have clearly trumped any discussion of how to deal with the real challenges Pakistan faces today. The simplistic answer being parroted by the two parties and their mindless followers seems to indicate the belief that everything would be fine as soon as Musharraf steps down and the judiciary under Iftikhar Chaudhry is restored. I believe this answer is misleading. Pakistan's problems are much bigger than any one individual or institution. The resolution to these problems of rising violence, high worldwide inflation of food and fuel prices and continuing political instability will require all Pakistanis to work as a team. What Pakistan needs is a unifying leadership, not a divisive bunch with personal ambitions and vendettas against others.
The very public and crude manner in which a PPP stalwart Makhdoom Amin Fahim has been snubbed by both parties is nothing short of absolutely astounding. Not only does it smack of personal ambitions of a few individuals gone awry but also of the ethnic prejudice. But beyond that, it inspires little confidence in the leadership qualities of Asif Zardari and Nawaz Sharif and their closest lieutenants.
As the entire Pakistani nation holds its breath waiting for a peaceful power transfer, the coalition can not even agree on who will be the prime minister in the new set up. This clearly does not augur well for democracy in Pakistan.
The very public and crude manner in which a PPP stalwart Makhdoom Amin Fahim has been snubbed by both parties is nothing short of absolutely astounding. Not only does it smack of personal ambitions of a few individuals gone awry but also of the ethnic prejudice. But beyond that, it inspires little confidence in the leadership qualities of Asif Zardari and Nawaz Sharif and their closest lieutenants.
As the entire Pakistani nation holds its breath waiting for a peaceful power transfer, the coalition can not even agree on who will be the prime minister in the new set up. This clearly does not augur well for democracy in Pakistan.
Tuesday, March 11, 2008
Can Pakistan End Suicide Bombings?
With yet another incident of twin-bombings involving suicidal attackers taking their toll in Lahore today, there are clearly mounting concerns about this scourge. From six suicide bombings in 2006 in Pakistan, the tally went up to 62 in 2007, more than tenfold increase in just one year. According to the South Asia Terrorism Portal, at least 1,523- civilians were killed in terror-related violence in 2007 and more than twice that number injured. The average is now more than one per week – the last week saw three in a row. No one is safe from this scourge. Those praying in mosques, or at funerals have been no safer than others at political rallies or while crossing a street.
Dr. Pervez Hoodbhoy, writing in Pakistan's Dawn newspaper on March 9, 2008, describes in detail how this menacing phenomenon is taking its toll and the factors that are contributing to its alarming increase. In addition to the American drones launching attacks and killing many innocent people in Pakistan, Dr. Hoodbhoy holds Pakistanis culpable for what he describes as "human drones" killing innocent Pakistanis in large numbers. He says: "Why do so many Pakistanis suddenly lose their voice when it comes to condemning suicide bombings? Is it because the bomber kills in the name of Islam? Are people muted in their criticism lest they be regarded as irreligious or even blasphemous?"
I couldn't agree with Dr. Hoodbhoy more. The real question is how do we stop this self-destruction of a nation that has serious consequences for the entire world and force a course reversal? If the great majority of Pakistanis including the apologists for the bombers truly condemn the actions of the few, would it be sufficient? These bombings have spawned a new culture with its roots in the Afghan resistance of the Soviet Union in 1980s backed by US, Pakistan and Saudi Arabia. This culture has developed in two decades in Pakistan's tribal belt and gained strength more recently. There are many culprits, Pakistanis of all stripes are culpable to varying degrees. But so are many others. In my humble view, there are no quick fixes. We (Pakistanis backed by Americans, Saudis, the Europeans etc.) must start by addressing what Dr. Hoodbhoy describes as the "enabling environment of poverty, deprivation, lack of justice, and extreme differences of wealth" making the environment "perfect for demagogues". At the same time, we must continue to act against those who orchestrate these crimes in the name of Islam. If we do one without the other,the chances of success are zero. If we do both, we can entertain the hope of ending it in a decade or two. It's in the best interest of all to begin this effort quickly and earnestly.
Click here for the full text of Dr. Hoodbhoy's piece in Dawn titled "The War of the Drones".
Dr. Pervez Hoodbhoy, writing in Pakistan's Dawn newspaper on March 9, 2008, describes in detail how this menacing phenomenon is taking its toll and the factors that are contributing to its alarming increase. In addition to the American drones launching attacks and killing many innocent people in Pakistan, Dr. Hoodbhoy holds Pakistanis culpable for what he describes as "human drones" killing innocent Pakistanis in large numbers. He says: "Why do so many Pakistanis suddenly lose their voice when it comes to condemning suicide bombings? Is it because the bomber kills in the name of Islam? Are people muted in their criticism lest they be regarded as irreligious or even blasphemous?"
I couldn't agree with Dr. Hoodbhoy more. The real question is how do we stop this self-destruction of a nation that has serious consequences for the entire world and force a course reversal? If the great majority of Pakistanis including the apologists for the bombers truly condemn the actions of the few, would it be sufficient? These bombings have spawned a new culture with its roots in the Afghan resistance of the Soviet Union in 1980s backed by US, Pakistan and Saudi Arabia. This culture has developed in two decades in Pakistan's tribal belt and gained strength more recently. There are many culprits, Pakistanis of all stripes are culpable to varying degrees. But so are many others. In my humble view, there are no quick fixes. We (Pakistanis backed by Americans, Saudis, the Europeans etc.) must start by addressing what Dr. Hoodbhoy describes as the "enabling environment of poverty, deprivation, lack of justice, and extreme differences of wealth" making the environment "perfect for demagogues". At the same time, we must continue to act against those who orchestrate these crimes in the name of Islam. If we do one without the other,the chances of success are zero. If we do both, we can entertain the hope of ending it in a decade or two. It's in the best interest of all to begin this effort quickly and earnestly.
Click here for the full text of Dr. Hoodbhoy's piece in Dawn titled "The War of the Drones".
Monday, March 10, 2008
Pakistan Stocks Continue to Defy Gravity
As growing concerns about the state of the US economy took their toll on share prices in Asia, the Karachi stock market continued its rally and KSE-100 touched a new peak of 15,085.18 points level during last week ending on March 8, 2008.
"The signs of formation of coalition government of PPP, PML (N) and ANP have revived investors' confidence and they have once again started investment in the share market, which pushed the index to new high level," analysts said, according to The Business Recorder, Pakistan's Financial Daily.
The KSE-30 index went up by 239.90 points, to close at 18,607.19 points level from 18,367.29 points.
Market capitalization jumped to a new peak of Rs 4.661 trillion from Rs 4.618 trillion, an increase of Rs 42.465 billion. Average daily trading volume of ready market stood at 285 million shares, while overall some 1.294 billion shares were traded during the week.
On Friday, the Indian market closed in the deep negative territory with the BSE Sensex closing below the psychological level of 16000 and the NSE Nifty settled below the 4800 mark. The market tumbled since the initial bell tracking the news from the global markets and remained in the negative territory throughout the trading session. Also, the rising of inflation to 5.02% in February 2008 added to the negative sentiments in the market. The inflation grew to nine months high due to rise in prices of fruits, vegetables and oil seeds. The BSE Sensex closed lower by 566.56 points at 15,975.52 and NSE Nifty fell by 149.80 points to close at 4,771.60. We expect that the market may remain volatile during the trading session.
The markets in Tokyo, Taipei and Shanghai did not fare any better. The Nikkei and other indexes in Asia were in negative territory. The stock market in Shanghai fell by 3.59% to a seven month low on continued inflation worries.
Taiwan's benchmark Taiex index fell 2.7%, which was its biggest fall for six weeks.
In spite of the KSE-100 defying gravity seen in the rest of Asia and the world, there is still a big cloud hanging over the market with the expected transfer of power in the next few weeks. Any hint of serious confrontation between the new government and President Musharraf could easily erase all the stock market gains and pull the KSE-100 into deep negative territory.
"The signs of formation of coalition government of PPP, PML (N) and ANP have revived investors' confidence and they have once again started investment in the share market, which pushed the index to new high level," analysts said, according to The Business Recorder, Pakistan's Financial Daily.
The KSE-30 index went up by 239.90 points, to close at 18,607.19 points level from 18,367.29 points.
Market capitalization jumped to a new peak of Rs 4.661 trillion from Rs 4.618 trillion, an increase of Rs 42.465 billion. Average daily trading volume of ready market stood at 285 million shares, while overall some 1.294 billion shares were traded during the week.
On Friday, the Indian market closed in the deep negative territory with the BSE Sensex closing below the psychological level of 16000 and the NSE Nifty settled below the 4800 mark. The market tumbled since the initial bell tracking the news from the global markets and remained in the negative territory throughout the trading session. Also, the rising of inflation to 5.02% in February 2008 added to the negative sentiments in the market. The inflation grew to nine months high due to rise in prices of fruits, vegetables and oil seeds. The BSE Sensex closed lower by 566.56 points at 15,975.52 and NSE Nifty fell by 149.80 points to close at 4,771.60. We expect that the market may remain volatile during the trading session.
The markets in Tokyo, Taipei and Shanghai did not fare any better. The Nikkei and other indexes in Asia were in negative territory. The stock market in Shanghai fell by 3.59% to a seven month low on continued inflation worries.
Taiwan's benchmark Taiex index fell 2.7%, which was its biggest fall for six weeks.
In spite of the KSE-100 defying gravity seen in the rest of Asia and the world, there is still a big cloud hanging over the market with the expected transfer of power in the next few weeks. Any hint of serious confrontation between the new government and President Musharraf could easily erase all the stock market gains and pull the KSE-100 into deep negative territory.
Malaysia's National Front Suffers Setback
Malaysia's opposition made significant gains in Saturday's elections. The alliance of three opposition parties led by former Finance Minister Anwar Ibrahim won 82 of 222 seats in the national Parliament, up from only 19 seats. By controlling one-third of Parliament, opposition parties will be able to block government efforts to amend the constitution. They also took control of five out of 13 states, up from one state previously. They included Penang, home to much of Malaysia's industrial base and to billions of dollars in U.S. and other foreign investments. These elections were held amidst the usual allegations of vote rigging by international organizations such as the Human Rights Watch. The results signaled that Malaysia, one of the world's most economically advanced Muslim-majority nations and the U.S.'s 10th-largest trade partner, could become a model of peaceful democratic change in the Islamic world. Although the jury is still out, this perception is further reinforced by the recent Pakistani elections where the ruling coalition was trounced by the opposition.
Under the decades-long rule of Malaysia's National Front, Malaysian economy has been completely transformed from a natural-resource base to a modern industrial base. The former prime minister and a retired National Front leader Mahathir Mohamad founded the regional alliance ASEAN along with former Prime Minister Lee Kuan Yu of Singapore and late President Suharto of Indonesia. The three leaders, credited with the rapid economic and industrial development of the region, ruled with an iron hand for a long time. The current Malaysian opposition leader Anwar Ibrahim was abruptly removed as Deputy Prime Minister and Finance Minister, jailed and tortured by Mr. Mahathir Mohamad during his term in office.
As Yaroslav Trofimov of the Wall Street Journal reports, the spread of uncensored new media, such as the Internet and cell-phone text messaging, helped opposition parties break the government's stranglehold on information flow, harnessing public anger over mounting inflation, widespread corruption and inept governance. Combined with rising resentment by ethnic Chinese and Indian minorities over long-standing affirmative-action policies designed to benefit the country's Muslim ethnic Malay majority, this anger coalesced into a perfect storm of protest against Prime Minister Abdullah Ahmad Badawi's government.
Mr. Abdullah is now facing growing pressure to step down. Former Prime Minister Mahathir Mohamad, who named Mr. Abdullah to replace him in 2003, also demanded the premier's head, accusing him of "destroying" the National Front.
Under the decades-long rule of Malaysia's National Front, Malaysian economy has been completely transformed from a natural-resource base to a modern industrial base. The former prime minister and a retired National Front leader Mahathir Mohamad founded the regional alliance ASEAN along with former Prime Minister Lee Kuan Yu of Singapore and late President Suharto of Indonesia. The three leaders, credited with the rapid economic and industrial development of the region, ruled with an iron hand for a long time. The current Malaysian opposition leader Anwar Ibrahim was abruptly removed as Deputy Prime Minister and Finance Minister, jailed and tortured by Mr. Mahathir Mohamad during his term in office.
As Yaroslav Trofimov of the Wall Street Journal reports, the spread of uncensored new media, such as the Internet and cell-phone text messaging, helped opposition parties break the government's stranglehold on information flow, harnessing public anger over mounting inflation, widespread corruption and inept governance. Combined with rising resentment by ethnic Chinese and Indian minorities over long-standing affirmative-action policies designed to benefit the country's Muslim ethnic Malay majority, this anger coalesced into a perfect storm of protest against Prime Minister Abdullah Ahmad Badawi's government.
Mr. Abdullah is now facing growing pressure to step down. Former Prime Minister Mahathir Mohamad, who named Mr. Abdullah to replace him in 2003, also demanded the premier's head, accusing him of "destroying" the National Front.
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