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Economy’s turnaround options

The PTI led next government will face tough challenges on the economic front because of mismanagement of the economy by two previous governments. Asad Umar, the law maker expected to get the most important job of bringing the faltering economy on its feet. Unlike the finance managers of PPP and PML-N governments, he is more inclined to give preference to other options instead of taking recourse to the International Monetary Fund (IMF) bail out with more tough conditions. The conditionality of abnormally jacking up gas and power tariff has hit hard the manufacturing sector of the economy, increased the cost of doing business and pushed the country to 147th position on the World Bank Ease of Doing Business Index.

The finance Minister in waiting has told that new government’s preferred options include boosting exports, offering overseas Pakistanis profitable bonds and seeking bilateral funds before looking for multilateral cash.

Former Finance Secretary Dr. Waqar Masood , who was partner in crime of economic mess of the past 10 years, has pleaded for giving preference to IMF bail out at the toughest conditions over other options to which the conditions of further rise in tariff of energy inputs and privitisation of public sector enterprises will be attached. It was he who negotiated the IMF bail out packages of 2008 and 2013, the outcome of which is the prevailing precarious state of economy.

Independent economists support the preferences of upcoming government for the inflow of foreign capital. Dr. Shahid Zia argues that incoming government will have to explore all options available to it for securing funds and stall the balance-of-payment crisis. He said IMF funds are needed for forced structural reforms and fiscal discipline. A great chunk of fund money will go back to it as Pakistan already owes $ 6.4 billion to IMF. Economists like Dr. Hafeez Pasha that IMF dollars will have many economic and non-economic strings attached to it. The fund is not going to hand cash to the next government without demanding something in return.

The incoming government’s finance team will acquire funds from every available source—multilateral, bilateral and overseas Pakistanis to invest in their homeland—until exports are boosted by exploiting their full potential. The inflow of dollars from these sources can help avert the looming crisis. The PTI government will have to take some unpopular decisions and people will be required to tighten their belts. Spending cuts, bringing the potential tax payers into the tax net can help the new government to rectify the balance sheet. The previous government had increased annual discretionary spending to Rs. 130 billion which was one of the major causes of mounting budget deficit. The next Prime Minister Imran Khan has already set an example of absolute austerity by refusing big protocol and deciding not to live in the highly luxurious Prime Minster House.

Exploiting the untapped potential of exports will substantially reduce the current account deficit. Release of duty drawbacks to exporters will help increase the quantum and value of exports. There is a significant increase in the export of un-milled wheat and sugar. Export of net wear and ready made garments has gone up by 9 percent and 12 percent respectively, while shipment of raw cotton has surged to39 percent. Exports of chemicals and pharmaceuticals have increased by 36 percent. However, growth was mostly driven by exports subsidies and currency depreciation. The export market needs diversification by exploring markets in Africa and Latin America. At present, there are only five top destinations for Pakistani product which include the US, the UK, Germany, China and Afghanistan. There is a big deficit in trade with China, Indonesia and Turkey. The terms of Free Trade Agreement with China need a thorough review. Exports from Pakistan to China face high taxes and non-tariff barriers whereas the same products from India have been given the concession of zero tax. On the other hand Pakistan has given the concession of zero duty to China on 35 import tariff lines.

Composition of exports also needs a significant change with more emphasis on value addition, quality improvement and refinement of products. The prices of primary commodities like rice and cotton fluctuate in the international market. The top 10 industrial products exported from Pakistan belong to textile industry, but 200 textile mills are closed due to high gas and power tariffs. A vibrant domestic manufacturing sector is necessary to promote economic growth. The International Trade Centre’s Exports Potential Map suggests that Pakistan has $ 12. 5 billion untapped export potential. Hence long term policies must be introduced to promote exports rather than focusing on short term gains that are unlikely to be sustainable in the long term.



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Islamphobia in China

In western democracies, hate wave against Muslims has been institutionalized in the form of legislation against full-face veil in France Belgium and Denmark. In Germany far right political parties are clamouring for such legislation and in Austria seven mosques have been closed down and 40 Imams have been expelled. In Communist China, hate against Muslims has been demonstrated as outright crackdown against them which is on from 1990s. Authorities in Northern China has delayed the demolition of a large centuries historical mosque on Saturday after thousands of people demonstrated to stop its destruction, amid a nationwide government’s drive to unnecessarily tighten restrictions on religious activities.

Across China, officials have sought to restrict religious freedom for Muslims as a part of widespread attempt to bring believers in line with the dictates of ruling communist party. Protestors began gathering on Thursday ahead of deadline to demolish the Grand Mosque in the town of Weizhou in the Northern Nigxia region. The Muslims in this region are Han Chinese. Videos posted on social media in recent days showed protesters gathering in front of Mosque building as police with riot shields stood by. Holding Chinese flags they sat quietly on the building’s steps and milled around a large plaza, before heading to Friday night prayers, showed a video. The government claims that it is an illegal building but in fact it is not. The mosque has hundred years of history, told a restaurant owner.

The feelings of anger, outrage and indignation against the planned demolition of a historic mosque has also impacted other parts of China. People had come hundreds of kilometers from other Muslim regions to show support for their brethren in Weizhou and brought food for them. Security forces have been brought in to secure perimeter around the area, not allowing outsiders in. It is like a virtual siege of the town of Weizhuo. Internet and 4G mobile phone had been cut off to area resuming some 14 Kilometers away from the besieged town.

Islam is one of the five officially recognized religions in China, home to 23 million Muslims. Pressure has been building on Muslim community in recent months as communist party moves to tighten the rein on religious expression. China’s top leader recently called for the ‘Sinicisation” of religious practice with a view to bringing it in line with “traditional” Chinese values and culture. A new regulation on religious affairs came into effect in February sparking concerns among human rights groups.

The measure increased state supervision of religion in a bid to “block extremism” and in areas with significant Muslim population; authorities have removed Islamic symbols, such as crescent from public places. This move will turn out counter productive and will further fan the tendency towards extremism. The crackdown and high handedness of Chinese leadership is not confined to Han Chinese adherents to Muslim faith. Uighur Turk Muslims are on the receiving end in Xinjiang region for almost three decades. It is nothing but the worst form of Chinese imperialism perpetrating atrocities on the Muslim community of China.

The tension between the Uighur Muslims and Chinese authorities started when actions were taken to change their demography and curbs were imposed on the fundamentals of Islam. Buddhist Han Chinese were brought to Xinjiang autonomous region in large numbers to settle there. It is the largest of China’s administrative regions, which borders eight countries including Magnolia, Russia, Kazakistan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan and India. Until recently its population was mostly Uyghur. They are Muslims and Islam is an important part of their life and identity. Their language is related to Turkish and they regard themselves as culturally and ethnically close to Central Asian nations.

The settlement policy of Buddhist Chinese in large numbers has swollen their population to 40 percent in Xinjiang. The authorities give preference to Han Chinese over Uighur Muslims in giving high paid and lucrative jobs. Right groups and Amnesty International, in a report published in 2013, said authorities criminalised what they call illegal religious groups and blame them for separatist activities to justify the clamp down on peaceful expressions of cultural identity. In July 2014, some Xinjiang government departments banned Muslim civil servants from fasting during the holy month of Ramadan.

China has been accused of intensifying crack down on Uighur after street protests in 1990 and again in the run up of Beijing Olympics in 2008. But things escalated in 2009 with large scale ethnic rioting in the regional capital, Urumqi. Some 200 people were killed, most of them Han Chinese. The crack down on Han and Uighur Muslim communities, particularly the actions of the state to change their religious and cultural identity is not justified and the Islamic countries should take up the matter with China through diplomatic channels. The Chinese government must realize the fact that a Muslim country of South Asia, Malaysia has a significant population of Buddhist Chimes, lest they may not get the backlash.



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Targeting China’s friends

Stepping into the shoes of their un-predictable President, US senators seek to block International Monetary Fund (IMF) bail out for three countries having friendly relations with China. A bipartisan group of 16 US senators have urged the Trump Administration to block IMF from bailing out the countries that have obtained loans from China under its infrastructure development plan. The letter to the Secretary of State Michael Pompeo and treasury Secretary Steve Munchen mentions Pakistan, Srilanka and Djibouti among the countries that have accepted billions of dollars of loans from China but are unable to repay.
The loans come from $ 8 trillion Belt and Road Initiative (BRI) that China says is meant to develop infrastructure in developing countries for linking them to global trade routs. But there is no iota of doubt the BRI will solely benefit China and its industries, if relocated to nine special economic zones in Pakistan along with Chinese engineers and skilled workers, because Pakistan’s industries are not competitive due to their second generation technological base and less skilled working force.
The United State must not forget that these costly loans were obtained by former Prime Minister Nawaz Sharif, who was disqualified and convicted on corruption charges. He was the blue eyed guy of President Bill Clinton Administration and it is against the principles of justice that 220 million people of Pakistan are victimized for the misdeeds of a Washington favoured corrupt and ousted from power ruler.
The compound interest on Chinese loans is 13 percent, including insurance charges that were acquired for roads, Lahore Orange Train, Motorways, Metro Bus and health hazardous coal based energy projects by the previous PML-N government. The appalling rate of interest is irrationally higher than the one charged on the World Bank and Asian Development Bank project loans for ongoing and new development projects.
The article published on July 22, the Wall Street Journal had quoted Planning Commission Chief Economist as saying that China should rescue Pakistan with interest free loans. Otherwise “for what do we have this friendship [for]? As a belated damage control measure the Foreign Office asked the Planning Commission on August 4 to devise a “system whereby all government functionaries are barred from unauthorized comments.”A beautiful couplet from Ms Parveen Shakir (late) poetry perfectly fits in this scenario. “Bath tho such hai, Laiken bath hai roswai ki.”Translation: “It is a bare fact, but it brings disgrace.”
The government has issued an angry statement about media reports questioning the viability of CPEC and described it tantamount to fuelling skepticism. The statement appears to be in response to a few articles appeared in the international media regarding the terms on which loans have been given by China. The articles have candidly and rightly questioned the ability of Pakistan’s economy to service these loans. Ironically, for a number of years the pseudo-intellectual and lies spewing Planning and Development former Minster Ahsan Iqbal used similar language to swath away skeptical talk and all questions that were raised about CPEC but in vain. It is similarly useless for the caretaker government to resort to such indignant language.
It is note worthy the previous PPP government got IMF bail out of $ 11.3 billion and PML-N government received $ 6.2 billion. But the economy slipped down to recession and hyperinflation because these corrupt governments misappropriated the IMF loans. Pakistan still owes $ 5 billion to IMF. One may ask a pertinent question as to why the United States supported such like governments in Pakistan and eulogized those as democratic ones. Rampant corruption and economic mismanagement of the Washington favourite two previous governments has pushed the country to the verge of default and it immediately needs a financial assistance of $12 billion.
The business community has vociferously opposed the idea of knocking the door of IMF and urged the finance minister designate Asad Umar to chalk out a comprehensive economic development plans to boost trade activities inside the country and not aid since the latter foster dependency. Iftikhar Ali Malik Central Vice Chairman of United Business Group (UBG) said if the coming PTI government would follow the so called IMF Reforms Agenda, it will further deform the economy as it has always included rise in the tariff of gas and electricity, rupee devaluation, slapping taxes on agriculture and elimination of subsidies, which will result in closing down of more industries, increasing ratio of unemployment and price hike. It was the negative impact of IMF bail out of 2013 that 200 textile mills are already closed. In a private TV current affairs programme, Asad Umar hinted at reasonable reduction in the tariff of energy inputs. Hopefully, PTI government would avoid any such plan that could further fracture the economy.

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Urging result oriented research

Caretaker Federal Minister for Education and professional training Muhammad Yousaf Shaikh has emphasised for conducting result oriented research to enable both students and faculty to play their role in the economic development of the country. He expressed these views during visit to GIK. The Minister lauded the modern facilities available to the students and education acquiring environment in GIK institute.

Barring a few institutions, our higher education is plagued by numerous inefficiencies that negatively  impacts research environment. The lack of friendly attitude of the faculty, dearth of high-tech equipments in science and engineering labs, reference books and top notch international research journals hinder the result oriented research in public sector universities. Higher education receives the worst deal in resource allocations and even the scarce education budget is not judiciously utilised.

Higher education has been devolved to the provinces under 18th Amendment to the Constitution in 2010. Since then, the quality of education has rapidly declined. There is acute shortage of equipments in science labs and the available ones are obsolete. It is the availability of high-tech equipments that facilitates quality research in the institutions of higher education. Millions are being spent on the constructions of new buildings in public sector universities but instrumentations of science labs are utterly neglected. Instrumentation of labs and development of skills of both faculty and students to operate start-of- art equipments is essential to conduct quality research.

There is a dearth of books in the universities and the students can not afford the purchase of costly books to carry on their research of their M Phil and PhD programmes. Likewise, they can not pay subscription for downloading the research material from reputed international journals with high impact factor. It is the responsibility of the government to provide funds to the universities solely for the purpose of subscription to the top notch journals so that each enrolled student is provided with an access ID. This suggestion is not a new idea as it has been practiced in countries abroad.

The students face difficulties in publication of their research in international journals to remit a few hundred dollars because Pay Pal account do not exists. On the other hand banks facilitate billions of dollars money-laundering. It is for the government to remove this obstacle.

The curricula of engineering and pure sciences need updating to keep abreast new inventions and research works. In Pakistan, proper attention is not given to curriculum modernizations by introducing practical input. Higher Education Commission (HEC) was the only deciding authority before the enactment of 18th Amendment but the commission had no idea whatsoever to improve and enhance the quality or research, rather they shifted their hard work on quantity and not quality. If HEC had done their mandated job the situation would have been different and some universities of Pakistan could have achieved ranking in the 500 universities of Asia.

Faculty is not appointed on merit but under the influence of university syndicate and political elite. Attitude of the faculty plays a vital role in the dissemination of knowledge. The friendly attitude of faculty stimulates and encourage students’ quest for modern knowledge and their oppressive behavior discourage students yearning for knowledge. It is a common practice in public sector universities that supervisors do not vet the research work on time. The public defense and viva of BS student’s takes place one year after the completion of course work and they wait another year for the award of degree. The duration of course work and research of M Phil programme is two year, but due to the delaying tactics of supervisors students get their degrees after four years. Likewise, the supervisors take more than one year to vet the research work of PhD students and that could not be sent to external examiners abroad for evaluation on time. The long cherished goal of result oriented research could be achieved only when research environment is improved in the institutions of higher education.

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Improving fundamentals of economy

Asad Umar, the lawmaker tipped to be the new finance minister, has promised to separate economic matters from politics and vowed to give administrative independence to key government institutions in a bid to turn around their fortunes and pave the way for boosting the economy. He said that his party government would appoint reforms oriented chairperson of Federal Bureau of Revenue (FBR). H e also assured complete autonomy to Pakistan Bureau of Statistics (PBS)—the national data collecting agency that remained at the centre of controversy and allegations of manipulations of economic growth and data.

While criticizing the mismanagement of PML-N government Asad Umar Said, “The first real relief can be given to the people is that economy will be run on fundamental rather than political gains.

Transparency and austerity are the important fundamental of the economy. These are all pervading norms in developed countries. The hallmark of previous PML-n government was excessive discretionary spending, massive corruption in mega development projects and pilferage in funds doled out to law makers of the ruling party and allied parties, The World Bank and International Monetary Fund gave repeated warning against massive slippages in public expenditures. But their advice was sarcastically rejected. The reckless expenditure resulted in a fiscal deficit close to 7 percent of GDP.

The deliberate rocking of the boat of the economy reflected in an unsustainable growth of 74 percent in public debt. The debt burden rose to 24.5 trillion or 72 percent of the total size of the economy—the highest level of debt in 15 years due to the unscrupulous and corrupt economic management. If the rising trend of public debt is not contained, the debt level will further increase to 74 percent of the Gross Domestic Product (GDP). The Public debt of Rs. 24.5 million includes Rs. 16.5 trillion domestic debts and external debt of Rs. 8 trillion, which is equal to $ 94 billion. The World Bank in its Report “South Asia Focus Fall 2017”issued in August that year forewarned the PML-N government to immediately initiate corrective measures to address the macroeconomic imbalance of bulging trade and budget deficits and ballooning public debt. But the planning minister Ahsan Iqbal, who was also de facto finance minister, showed obduracy and rejected the sane advice of international lending agencies.

The new government would need to immediately follow the fiscal consolidation path by restricting expenditures and enforcing a radical plan for domestic revenue mobilization. Asad Umar has hinted in a current affairs programme of a private TV Channel that PTI government would slashed down the tax rate but expand the tax base by bringing potential tax payers who are so far out of the tax net. He said that reliance on regressive indirect taxes will be reduced. But it is pertinent to mention that in General Musharraf government the number of active tax payers was 2.4 million which dropped by 50 percent to 1.2 million in PML-N government. In 2017, 43 percent listed companies and registered partnership firms did not file tax return with the FBR. The tax amnesty on domestic and offshore assets did not yield the desired results. The active tax payers who have slipped out of the tax net have to be brought back and the available data of 3.8 million wealthy people with the FBR should be utilized for imposition of tax.

Another of grave concern is the snowballing power sector circular debt of Rs. 550 billion. It does not include the power sector debt of Rs. 641 billion which has been parked in Power Holding Limited (PHL).

The previous government paid a circular debt of Rs. 180 billion. Out this amount Rs. 80 billion were paid for the purchase of electricity and Rs. 100 billion for the idle capacity of thermal power plants owned by private power companies. The government had to pay Rs 22 billion as penalty for not making the payment of circular debt on time. A legal solution has to be sought to get out of the cobweb capacity clause of agreements made by Benazir Bhutto and Nawaz Sharif with private power producers for personal illegal monetary benefits at the expense of national interest.

Administrative authority to PBS is inevitable because this government department was used by former finance minister Ishaq Dar to make projection of rosy picture of the economy with fudged data, whereas the economy was in shamble. PBS was not granted administrative approval to change the base year from 2007-08 to 2015-16 for accurate estimation of the growth of the economy. It is worth mentioning that in the United States, President Jimmy Carter adopted the method of ‘Zero Base’ budgeting to avoid overstatement about the state of economy. Hopefully the new government will introduce economic reforms to turn around the economy and develop a Pakistani class of professionally competent legal experts to renegotiate and change the contracts with private power producers and the LNG agreement made with Qatar.


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Lever of power pricing

The lever of power pricing is in the hands of private power producers with whom PPP and PML-N governments made shady deals against the interest of the country and its people. Irrational power tariff slapped by thermal power producers ha rocked the economy, resulting in declining exports, and steep fall in the production of manufacturing sector. Doing business is getting tougher with each passing day. The power sector policy is now determined by the deals made with private power producing companies in Benazir second tenure of government and Nawaz Sharif third tenure.
Because of the kickbacks received at the time of finalizing agreements with private power producers, the electricity generated by their companies is the most expensive in this region. It will be right to say that electric power is being produced on paper instead of added to the national transmission system, as it is being generated in the record of power companies but it does not reach the national grid. The payment to power producers is made on their power plants generation capacity, which remain largely idle, rather than actual supply to the national grid. Is it not the bitter fruit of oligarchic so called democracy of PPP and PML-N the high price of which is being paid by the poor people of Pakistan in terms of highly inflated electricity bills and burden of default by political elite and business tycoon which has swelled to Rs. 850 billion? That is why the tall claim of previous PML-N government of adding 10600 megawatts (MW) power to the national grid dissolved in thin air and chronic problem of power outages refuses to go away.
Mindboggling calculations are made every minute in Pakistan to determine what amount each of these power produces would get from the national Kitty on generation capacity. The cost of idle capacity and actual addition of electricity to the distribution system should be calculated separately and if the payment is delayed, the financial cost—mark up upon due payments- make the third head. This third head is now the major issue for the relevant people in Islamabad. They kept mum over it till the end of PML-N government, the creator of this mess. Out of Rs. 571 billion circular debt, government paid Rs. 180 billion by the end of June 2018, which was long overdue. Only Rs. 80 billion were paid on account of power additions these producers made and Rs. 50 billion each was dished out for idle capacity and financial cost. It is worth mentioning that a close buddy of Nawaz Sharif Mian Mansha and an intimate friend of Asif Zardari also have greater financial stakes in private power producing companies. The companies do not allow audit of the cost of production of electricity they produce.
The three years old cycle of circular debt swelling, punctured now and then to allow it fireball again, has high jacked the public finance system. On the other hand it has pushed the cost of electricity beyond all probable reckoning. Power tariff is now 15 percent of textile exporters cost, who have never been hit so terminally. The textile mills owners are also hard hit by the exorbitant power tariff. Almost 50 percent textile industry is in a state of shutdown and 40 percent has relocated to Bangladesh because power tariff there is reasonably low.
The production lines of textile sector, which is leading component of manufacturing sector, have gone dormant and market forces surviving around it are having the biggest worry of history. The electricity cost has risen by the same percentage for other sectors as well, after private sector’s share in power generation became 10000 megawatts (MW). But textile is the leading foreign exchange earner which gives public finance managers additional worries. The private power producers are entirely “New specie” in Pakistan investment arteries. They were created by Benazir Bhutto and nurtured to greater extent by her government. They were then adopted by Nawaz Sharif and nourished them to become hydra headed monsters. They were greeted with a package no other investor dreamed about it in any other country. Did Nawaz Sharif government not see this coming? If it did how it would go about fire walling the export sector? The tax duty fiscal packages alone would never be enough to offset the negative impact of power pricing upswing.
The would-be finance minister in the new government said that electricity and gas tariffs will be brought down. Can it be done without changes in agreements with private power producers and LNG deal with Qatar? The repeated fiascos of losing cases against power produces in the international courts of arbitration have created a disappointing scenario. A legal remedy to clear the mess created in power by previous governments must be explored.

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Revelation about KB dam

The myth of Anti-Kalabagh Dam stance is going to shatter. Speaking at a news conference, Caretaker Minster for Water and Power barrister Ali Zafar has hinted at foreign involvement in the opposition to the construction of Kalabagh Dam (KBD) and has asked the incoming government to work on building a consensus on it. He very aptly pointed out that India has been watching Pakistan’s inaction over construction of KBD—as well as other dams—and is violating river rights of Pakistan.

The minster disclosed that anti-KBD conferences organized abroad were better organized and seemed better funded than the seminars held in Pakistan. This startling disclosure is noteworthy for the Prime Minister in waiting Imran Khan who is a proven formidable crusader to defeat the conspiracies hatched against the country.

Barrister Ali Zafar lamented that India constructed Kishanganga Hydropower project in violation of 1960 Indus Water Treaty (IWT) and then went on to alter the project design after sharing it with Pakistan. He said the New Delhi was also planning to begin work On Rattle Hydropower project as well other dams in violation of the treaty. The Minister deplored that following the IWT, India had managed to build about 4000 dams and reservoirs on the eastern rivers—Sutlej, Bias and Ravi—while Pakistan had not even managed to build KBD. Even the 15.1 million acre feet (MAF) storage from Tarbella and Mangla has declined to 13 MAF. He said it was strange that KBD, which was part of the 1960 plan after the signing of IWT, had not been built so far for the lack of consensus among the provinces and the disagreement kept on increasing over time. But it is bizarre and extremely unfortunate that we have not been able to construct other such dams and reservoirs.

The caretaker minster minister said that KBD is very important. It is life and it should be built as priority, adding Pakistan had been declared a water scarce country, because of its per capita water availability which has dropped to 1000 cubic meters. He said that the caretaker government had considered advice fro international experts, and after discussion with various domestic departments has finalised 10 points reform package for Pakistan’s water priorities. He said that conservation method of water resources by lining canals could save 6.5 million acre feet, which is almost equal to storage capacity of any of the two existing dams, and that is much cheaper than building one.

Barrister Ali Zafar deplored that Pakistan still employing 200 hundred years old agriculture techniques including mechanism to manage flooding. He said it was ironic that nations were irrigating their deserts with modern techniques; while Pakistan is wasting clean drinking water.

The caretaker minister for water and power has done a great service to the nation by unmasking the Anti-Kalabagh Dam lobby and informing the people that well organized Anti Kalabagh Dam conferences have been held abroad with the involvement of foreign elements. It is matter of record that feasibility study had been completed in the government of President Ayub Khan. Land had been acquired for the site of the dam and residential colonies. The project was put on the backburner by first PPP government of Z.A Bhutto. If the process of executing this project had moved on as planned, then launching of KBD would have become a reality without any opposition just after the completion of Tarbella Dam. But the elected government of 1972-77 did not perform the national duty of launching the dam downstream Tarbella on River Indus.

The project was revived in 1980s and at that time the leadership of only one regional political party, Awami National Party and Governor KPK Fazal Haq were opposing its construction. There was no opposition to this project in Sindh and a Sindhi Prime Minister Mohammad Khan Junejo sincerely did a lot of efforts to take the KP government on board and his last minute move to get approval in a high level meeting held in Governors House Peshawar in 1985 could not succeed. Benazir Bhutto jumped on the Anti-Kalabagh Dam band wagon in her election campaign in 1988.

To deflate the balloon of smear campaign against Kalabagh Dam, Chairman WAPDA Lt. General (Retd) Muzzamil Hussain has proposed to give the operational control Of KBD to Sindh in order to address reservations about its share in water consumption. Briefing Senate Standing Committee on Water Resources on June 7, WAPDA Chief said, “Reservation of Sindh are justified and operational control of Kalabagh Dam should be handed over to the province if the dam is built.”

Kalabagh Dam will benefit Khyber Pukhtunkhwa in a big way. Out of 3 million acres cultivable land 1.8 million acres are in the six southern districts of the province. The dam will provide irrigation water to 1 million acres through high level canals, bringing a green revolution. In 2018 elections, the Anti-Kalabagh Dam political parties have been rejected by the people in KP. The humiliating defeat of ANP Supremo Asfaniyar Wali and Chairman Qaumi Wattan Party Aftab Sherpao confirms that the people of the province did not buy the ‘Deluge Theory’ of self serving politicians by building a scenario that KBD will drown the districts of Nowshera and Charsadda. Efforts are needed for achieving consensus on this project.


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Oil price surge, proven reserves

Minister for Maritime and Foreign Affairs, Abdullah Hussain Haroon said on Friday the Excom Mobil has indicated that it is close to hitting huge oil reserves near the Pak-Iran border, which could be even bigger than the Kuwait reserves. Addressing business leaders at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) the minister said that Excom Mobil—an American multinational oil and gas company—has so far drilled up to 50000 meters close to the Iranian border and is optimistic about the oil find. He said that government of Pakistan has already taken an undertaking from the company to set up a generation complex worth $ 10 billion.

The prospects of oil and gas finds in Baluchistan have always been high. But ever since lat 60s, the initiative of oil exploration has been taken the province has witnessed a sudden wave of insurgency ignited by the world and regional powers to deprive Pakistan from exploiting the natural resources of this province. Even political instability was created all over the country. It is a good omen that the latest wave of insurgency that started 12 years ago has almost ended. However, incidents of terrorism still occur. The new governments at the center and in the province of Baluchistan will have to closely coordinate to provide a peaceful and secure environment for oil and gas exploration joint ventures between the multinational and national companies.

National oil and gas companies have also made commendable achievements in oil and gas exploration and production. The noteworthy success story is that in the year 2000 Oil and Gas Development Company explored oil and gas reserves in collaboration with Zever Petroleum in Shakardara area of Kohat district in Khyber Pukhtunkhwa. In the succeeding years of President Musharraf government, OGDC in collaboration of multinational companies succeeded in more oil and gas reserves discoveries in KP Southern districts of Hangu, and Karak. These are now oil and gas producing districts whereas Lakki Marwat has also proven oil and gas reserves. But over the past 10 years the successive governments of PPP and PML-N failed to undertake exploration work for more oil and oil and gas reserves exploitation. The PML-N government even frustrated the PTI provincial government efforts to set up an oil refinery and gas run power plant in Karak district.

It is encouraging that now a Government Holding (Private) Limited (GHPL) is working on a plan to enhance its share holding in oil and gas fields that have proven reserves with objective of ramping up domestic energy reserves to meet the growing demand of the country. GHPL, which is 100percent owned by the government, monitors and manages government’s working interests in upstream on shore and offshore oil and gas fields. With 133 joint ventures including 51 exploration licenses and 82 development and production leases, GHPL is the fifth largest Exploration and Production Company in Pakistan. It is working with foreign operators and the proposed the plan would attract other companies to follow the model.

Notwithstanding the high priced the shady deal with Qatar, liquefied Natural Gas has given some breather but the solution lies in focusing on exploiting the domestic oil and gas reserves. Besides injecting the capital, GHPL expects foreign investment of hundreds of million dollars through farm-in initiatives with sufficient gas flows into the system along with thousands of barrels of oil production. These new initiatives will also contribute to the national exchequer in terms of dividend, taxes, royalty and creating new jobs. Apart from the strategic initiatives, capacity building programmes have been planned and massive investment will be made in new software and hardware to upgrade data analysis and MIS.

GHPL is a lean organisation compared with other public sector exploration and production companies like Pakistan Petroleum Limited and Oil and gas development Company. This provides an excellent opportunity for lucrative returns as overheads and operational expenditures are very low. These factors will give impetus to exploration and production activities of national and multinational companies that can get access to a strong database for inve3stment in upstream oil and gas sector of Pakistan.

The surge in oil prices in the world market has increased the import bill to $ 5 billion annually. Pakistan is short of foreign exchange and the Islamic Development bank has re-activated the credit line of $ 4.5 billion to finance the oil import bill of Pakistan. Consumption of petroleum products is on the rise. It rose by 9.4 percent in 2017, leading to higher import bill. The demand is set to go up more following the increase in CPEC related activities. Based on the GDP growth of 7 percent, Oil and Gas Advisory Committee report forecasted that annual demand of petroleum products will reach around 55 million tones in 2030 from the 2018 estimated demand of 29.6 million tones. It necessitates fast tracking efforts for boosting domestic oil production.


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A decision worth appreciation

The federal cabinet is learnt to have approved a plan to formulate stricter laws and strengthen institutions to curb terror financing. Pakistan needs to comply with 26 points of o Financial Action Task Force (FATF) action plan to get off the task force’s ‘grey list’ over the next 15 months. The plan was approved last in a cabinet meeting chaired by the caretaker Prime Minister Justice (Retd) Nasirul Mulk.
The federal cabinet has authorized the Ministry of Finance to bloster the financial monitoring Unit (FMU). The ministry was also empowered to suggest changes in the Anti-Money Laundering ordinance of 2010 and Foreign Exchange Regulation Act of 1947, increasing punishment and penalties to curb currency smuggling, one of the four areas of FATF concerns. As NACTA and FIA have shied away from the responsibility of preparing the crucial National Risk Assessment (NRA) report because these agencies needed the assistance and input of other government departments. Hence, a joint meeting of NACTA, FIA, SECP, SBP and CTD was held the other day to deliberate over the broad parameters of the report.
There is no denying the fact that Pakistan’s existing institutional framework is incapable of enforcing the action plan that needs to be implemented by September next year. The previous PPP and PML-N government deliberately avoided to strengthen the Anti Money Laundering law to protect the vested interest although Pakistan was placed on ‘grey list’ in 2012 and removed from it in 2015 when the government assured the UN that it is serious to streamline the Anti-Money Laundering and counter terrorism financing regime. But later did not fulfill its responsibility and the country was again placed on ‘grey list’ in June. The action plan implementation will determine whether Pakistan remains on ‘grey list’ or will be let off the hook.
Nine conditions of UN Security Council Resolutions highlights concerns about weak terror financing regime. Eight more relate to commitment addressing concerns regarding prosecution of terror financing cases while four are about curbing cross border currency movement and five recommendations relate to improving the supervision of mechanism of banks and companies. The country would have to implement all conditions within 15 months. Originally FATF wanted to allow just nine months for full compliance.
The FMU is working below its capacity because of shortage of staff to oversee policy implementation of anti-money laundering and countering financing terrorism. But this bitter fact must not be ignored that bulk of the money laundering had been done by the ruling political elite by coercing and compelling the public servants and executives of banks to collude with them. The Supreme Court verdict in Panama Papers case and the National Accountability Court order in Avenfield Reference against former Prime Minister Nawaz Sharif are the classic examples. The FIA probe in Rs. 35 billion money laundering against former President Asif Zardari and his sister Faryal Talpur and the arrest of Summit Bank President Hussain Lawai and two executives of Sindh Bank and UBL points to the insatiable lust of political elite for money laundering for which banking institution is used.
Interestingly, Faryal Talpur has submitted a reply in the Apex Court with regards to Rs. 35 billion money laundering scam in which she has taken a strange stance the Anti-Money Laundering Law applies to public servants only. But the law does apply to every person. Necessary legislation to strengthen the Anti-Money Laundering and counter terrorism laws will be done by the new government when it comes to power. According to the existing law, any person committing the offence of money laundering is liable to serve and imprisonment term of maximum 10 years, pay a fine extended to Rs. 1million and forfeiture of prosperity.
It has also been decided to set up a general Committee headed by Secretary Finance along with the Inter-ministerial Executive Committee headed by the Finance Minister to effectively address Anti-Money Laundering challenges. Another proposal is to set up a national steering group to endure timely implementation of policies and FATF related actions. A number of FATF’s 26 points Action Plan milestone fall within the purview of provincial police and home departments, which requires coordination with the Ministry of Interior, FIA and other authorities concerned. This necessitates closer coordination between federal and provincial authorities to enforce the action plan within the stipulated timeframe.

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Western democracy versus Muslims

The anti-Muslims Law passed by the legislature in Denmark in June came into force. The law prohibits wearing full-face veil by Muslim women in public, making it a cognizable offence liable to punishment in the form of fine. Wearing a Burqa, which covers a person’s entire face, or the Niqab, which only shows the eyes in public, leads to a fine of 1000 Kroner equivalent of $156 or 134 Euros. The ban also targets other accessories that hide the face such as balaclavas. Repeated violations will be fined up to 10,000 Kroner.
Human rights campaigners have slammed the ban as violation of women rights, while supporters argue that the legislation will facilitate better integration of Muslims into Danish society. A spokesman for Copenhagen police said that they did not plan to fine protestors who violated the ban.
A-30 years-old Muslim women interviewed in the daily Berlingske, identified as Sarah, said she had lost faith in the system. Born and raised in Denmark by parents who emigrated from Turkey she has worn Niqab since she was 18. She said, “I have realized that democracy does not work. Politicians boast of freedom and rights when they are making fun of Muslims. But when it comes to me, they take away my rights to choose how I want to dress.” “I have come to the realization that Muslims do not have the rights as others,” she added.
While presenting the draft of full-face veil ban law in the parliament, the Danish Justice Minister Soren Pape had said, “I do not think there are many who wear the Burqa in Denmark. But if you do you would be punished.” According to the Justice Minister Burqa and Niqab were not compatible with the values and sense of community in Danish society.
Amnesty International has condemned the law as discriminatory and violation of women rights, especially against Muslim women who choose to wear the full-face-veil. “If the intention of this law is to protect women rights it fails abjectly. Instead the law criminalises women for their choice of clothing—making a mockery of freedom Denmark purports to uphold,” Deputy Europe Director Fotis Flipoon said in a statement.
Over the last eight years, the religious and cultural values of Muslims are being targeted across Europe for which legislations are done. Full-face veil has become a hot button issue now. Last year European Court of Human Rights upheld a Belgian ban on wearing full-face veil in public. France was the first country to ban the Niqab in public places with a law that took effect in 2011. German law makers approved a partial ban on covering the face.
The new tide of Islamphobia has anti-Turkic connotations as the Turkish Muslims are particularly targeted. The political leadership in the West European countries is frequently getting flash-back of the grandeur of Ottoman Empire in Europe and Asia. The growing influence of Turkey in East European countries including Serbia, Bulgaria and Balkan States with majority Muslim population such as Bosnia and Herzegovina, Albania and Kosovo has irked the far right politicians in Germany, Austria and other countries of Western Europe. Most surprising for them is the blossoming trade and growing political relationship between Turkey and Serbia, where once anti-Turkish sentiments were wide spread. Serbian main highway, part of the artery linking Turkey with Western Europe, illustrates the change. In recent years billboards in Turkish have sprung up advertising hotels and restaurants for weary truck drivers. Signs pointing out the nearest mosques tend to use the Turkish word Mescit rather than the Serbian word Zamija. This explains the crackdown against Turkish community in Austria. Seven mosques were shut down there and 40 Imams were expelled. Turkish President Recep Tayyip Erdogan has emerged as a strong and vocal leader in the Muslim Ummah because of his assertive and aggressive foreign policy in the conduct of world affairs. But the European leadership must not forget that anti-Muslim legislations and virtual crackdown on Muslim communities will push back the hitherto tolerant and moderate western society to the ‘Draconian Era’ of Church inquisitions. The tide of hate against Muslims serves a lesson for those rulers of Islamic countries who acted as proxies of the United States in its global agenda of ‘New World Order.’