Monday, September 22, 2014

The Political Opera

Majyd Aziz

Accusations of rigging in elections in Pakistan are a normal afterthought of the losing candidates. Some political parties even boycott the elections for reasons best known to them. However, during the 2013 elections, the politico-religious Jamaat-e-Islami withdrew halfway on Election Day. I was present in the voting line on Election Day when all of a sudden, JI announced they were boycotting. At the same time, 2 MQM workers were caught red-handed trying to stamp the ballot papers. I immediately called the MQM candidate for Sindh Assembly (he is an industrialist and one of my successors as Chairman of SITE Association of Industry which represents 3100 industries in an industrial estate called SITE and is the source of atleast 25% of the nation’s revenue) to come and sort out the issue. This is one micro example. In Interior villages and small towns, political dynasties, feudal class, and other VIPs routinely do it. So, there is nothing new in this political game.

The success of the Pakistan Muslim League-N, both in Islamabad as well as in the largest Province, Punjab, was acclaimed as a new era of economic progress and the loud hurrah from trade and industry manifested the confidence in Premier Nawaz Sharif and his team. The Sharif government has gone full force in trying to implement an Energy Policy and for that they have gone in each and every direction to sign MOUs, agreements, and proposals. However, these are not immediate solutions although the impression Sharif and his Ministers give is that uninterrupted and affordable electricity would be available in few months. The rhetoric has been over-hyped and when people face 12 hours load shedding then the e.coli hits the fan. The massive country-wide demonstrations against power outages and exorbitant electricity bills have, at times, been violent and destructive.

A peculiar trait of Sharif tenures (present and past) is to announce grandiose projects that, although in the long run are beneficial and facilitative, but in the short term place a heavy burden on the meager financial resources of the Treasury. Moreover, Sharif and his Finance Minister (and father in law of his daughter), Ishaq Dar, have heavily relied on massive loans from International Development Institutions such as IMF, WB, ADB etc. The external loans portfolio of Pakistan is abnormally bloated and would, in the years to come, sledgehammer very critically on the ability to discharge financial obligations.

Another damaging attitude of Nawaz Sharif and younger brother Shahbaz Sharif, who is the Chief Minister of Punjab, is to concentrate on Central Punjab while both the regimes dynamics are primarily focused on cronyism, nepotism, and family rule. No wonder Pakistan Tehrik-e-Insaf Chairman Imran Khan calls it a monarchy. To the chagrin of the denizens of the port city of Karachi, elder Sharif is also not too keen about Karachi from Day One. Same is the case with the younger Sharif.

Moreover, the arrogance and haughtiness of his core Ministers has alienated the establishment, media, civil society and business community. One paramount reason why there is this backlash against Sharif.  It would have done Sharif well if he had side-lined atleast four of his Kitchen Cabinet Ministers and brought in fresh and moderate faces. The anti-Army statements regurgitated by the Defence, Railway and Information Ministers further widened the gap between Army and Sharif. More than 90% of Army is against Sharif according to senior political leaders. This is more or less corroborated by the buzz on the streets and in the drawing rooms. Furthermore, the regal style of him and his family, the accusations of heavy commissions in mega projects, the stories of corruption and accumulation of wealth are all factors that are impacting negatively on his approval rating. In short, according to many analysts and critics, the peculiar mindset of Sharif may bring about another exile to Jeddah or London.

Imran Khan does not have an overwhelming support within the trade and industrial community as much as he has, or had, with the youth. He is another arrogant, anti-Karachi politician and will probably not learn from mistakes made by Sharif. But, the fact is that he has been able to galvanize a substantial following mainly due to his charisma, his successes on the cricket field, and also due to his philanthropy such as the Shaukat Khanum Cancer Hospital in Lahore and the NUML University in his constituency in Mianwali in rural Punjab.

He garnered 34 seats in National Assembly and his PTI is also the major coalition partner ruling in KPK. There is a good chance of him gaining lot more seats in the next elections mainly by accepting the entry of many political fence-sitters (or Lota in Pakistan’s political lexicon) in PTI. But then he will have to pay the piper. The same faces will show up and the status quo will be maintained and further entrenched. If he can move away from this old system, as he often pledges, then there would be the possibility of a paradigm shift in the political milieu.

There is the probability of many families of the Armed Forces (active and retired) supporting Imran Khan. One cannot say for sure whether there is any official backing from the uniformed people as there is no such obvious indication. Imran Khan’s statements and oratory usually points towards a bias towards the motives and ideology of the Taliban although he is dead set against their terrorism and extremism. He deplores drone attacks and is rabidly anti-American in his public orations. He would, if elected, gradually favor Indo-Pak trade and investment because this is going to be a reality whether anyone is in favor or against.

There is always that crowd that likes to amplify loudly that Pakistan is a failed state and they indulge in the doom and gloom scenario. The so-called social media activists are mainly employees of multinationals or are part of NGOs. Some are in the media. They have little to lose as they can get employment positions at home or in Middle East etc. They vitiate the already fragile situation and brazenly enjoy trolling on social media. They don’t represent the masses so it is better to ignore them because they have no other entertainment but to take up lost causes and then abandon them midway. The fact is that despite the law and order situation, despite infrastructure shortages, despite political instability, Pakistan is managing to survive and gradually progress. It is a fact that The Global War on Terror has played havoc with the fragile economy, with human lives, and with peace but the country moves on.

Change in the political landscape seems imminent and this may come by mid-December. Sharif will not be able to rule in the manner and style that he is accustomed to and that would be his downfall. Right now the only face-saving measure is that he should vacate the office for a few months and that there is Governor Rule in Punjab while his brother also resigns. Those who were killed in Model Town Lahore must be paid substantial Diyat (is financial compensation, or blood money paid to the heirs of a victim) while accused policemen and politicians are given stiff prison sentences. Atleast three of his arrogant Ministers must resign “voluntarily” from their offices. All cases against the protestors must be withdrawn. The Speaker of National Assembly should NOT accept resignations of PTI MNAs.  Army Chief and Chief Justice Supreme Court must act as “guarantors” although there is no such provision in Constitution. The Election Commission has to be restructured. Census must be commissioned on priority basis.

Pakistan needs sincere leaders who are not juvenile or conspiratorial and are serious about reforms and good governance. Then, and only then, would there be economic progress, with emphasis on inclusiveness and poverty alleviation. Pakistan has to improve the negative image in the global environment. Meantime, in the present scenario, Imran Khan and the cleric Tahir-ul-Qadri must be given official protocol and prominence and, hopefully soon, Tahir-ul-Qadri will return to Canada. In all aspects, a National Government is desirable for maximum two years so that the political mess is mostly cleared. Of course, the mindset and the old habits of politicians must undergo a fundamental change otherwise it would be back to Square One and another Islamabad Opera. And, then, the Fat Lady may actually sing.

Sunday, September 7, 2014

Munabao-Khokhrapar: Dilemma of Distrust

Majyd Aziz

The process of trade liberalization between Pakistan and India is akin to being on the Space Mountain roller coaster ride at Disneyworld in Florida. Those enjoying this ride are not sure about the horizontal and vertical movements of the ride because it is in a dark environment. Although the ride is only for few minutes, the thrill is mind-blowing, but when the ride ends there is this dampening of the spirits. Exhilaration and then disappointment. This, in short, is the scenario in the sub-continent and is more relevant in the context of opening up the facilities for the Munabao-Khokhrapar trade and people movement. The decision on opening up of the Munabao-Khokhrapar route is another victim of a security cul-de-sac.

The perceived national security concerns, in whatever ways and means, are the major hurdles in this matter. There is another mis-conceived notion floated around that Indian goods would flood the domestic markets if allowed through the Munabao-Khokhrapar route. The frequent borders skirmishes also negatively impact upon the possibilities of opening of more entry/exit points apart from Wagah-Attari. There are twelve such points (4 in Punjab, 1 in Delhi, 2 in Rajasthan, and 5 in Gujarat) but any and all decisions related to opening up of other points are suppressed as soon as they are brought up for decision making. As stated above, there is this self-generated fear that Munabao-Khokhrapar would enhance people-to-people contact and movement and this would be detrimental to security considerations.

There is an added front loading of the cost factor due to defense concerns. The security driven technologies and procedures have escalated the transaction costs and are burdensome for many businesses, especially the SME and cottage industrial sectors. It is ironic that undocumented cross-border trade is routinely facilitated but when it comes to official cross-border movement of goods, there are all kinds of blockades. Pakistan and India are not the only two countries that have, or should have, cross-border trade. This is no Kabbadi match or a wresting bout. This is a win-win situation. Thus, anger-jingoism or patriotism should not be deciding factors, especially in this context.

Whenever the issue of Munabao-Khokhrapar pops up at various fora, the opponents or naysayers characteristically come up with two basic arguments to defuse the debate by asking what are the items of trade that Pakistan could export and that this route would make Indian goods cheaper. At the outset, it is important to understand that enumerating sectors, items, products or services that would be more facilitated if Munabao-Khokhrapar is open for trade is really short-sightedness and reflects a myopic concern for the trade mechanisms. Trade follows the best, quickest, cheapest, and safe route and it is plain economic sense that doing business does not mean wastage of time, money, and opportunity.

At the present moment, Pakistan only allows 137 Indian goods to cross Wagah despite the negative list of only 1209 items that are stipulated in SRO No 280 (I) /2012 issued on March 22, 2012 by Pakistan’s Commerce Ministry. These 137 items are in many cases a catalyst for undocumented informal trade either through the borders, in connivance with corrupt border security, or are channelized through third country route. Of course, the blow hot, blow cold attitude by Pakistan towards granting Non Discriminatory Market Access to India further complicates the fragile liberalization process. India has now hinted that it would allow mobile phone connectivity for Pakistani cellphones. One very positive move and a real Confidence Building Measure, no doubt. It is hoped that Pakistan would reciprocate too.

The decision to open up Munabao-Khokhrapar as an alternate to Wagah-Attari is not palatable to many quarters as it is a fact that once this route is made operative, most of the Indo-Pak trade and people movement could be done through this route. However, the significance of Wagah-Attari will not diminish nor would this route be unfeasible. The future lies in opening up more entry/exit points and thinking of trade and investment under the SAARC umbrella instead of just Indo-Pak trade. Opening up of Munabao-Khokhrapar will be the harbinger of economic regional integration that is a prime objective of the people of South Asia, in general, and Indians and Pakistanis, in particular.

In 2003, the then Indian Foreign Minister, Jaswant Singh, recommended the re-opening of the Munabao-Khokhrapar railway service. In February 2006, the Thar Express commenced operations after being in limbo for over 50 years. It is imperative that this second active rail connection between the two nations, after the Wagah link in Punjab, is designated as the primary channel for goods and people movement within Rajasthan, Gujarat and Sindh. The Thar Express would usher in a process of connect rather than the prevalent atmosphere of divide.

Although this matter is usually shoved beneath the carpet under the notions of provincial harmony and cohesion, the bare fact is that there is a sense of resentment when it comes to the importance of Karachi as the business and financial hub of Pakistan. The importance of a place or person is directly related to the critical mass present in that place or person. Karachi is business oriented, Karachi pays 67% of the Pakistan’s revenue, and Karachi is truly a metropolitan city and Pakistan’s melting pot. Karachi also happens to be the home for most of the people who migrated after Independence in 1947. Policies have generally been formulated where Karachi would get the least direct benefit. Despite all such actions and decisions, the importance of Karachi maintains its growth and its velocity.

The dilemma is that there seems to be an inherent distrust about the citizens living in Karachi or in Interior Sindh by certain elements in the corridors of power and this has also been the overarching factor in conjuring up flimsy excuses to delay the opening of the Deputy Indian High Commission in Karachi. The Indian DHC was renovated and made ready some years back for Consular and other diplomatic activities. Today, it is again showing signs of neglect and ruin. Indecision and misplaced concerns about trade and investment liberalization, facilitation, and encouragement would also lead to the continuation of a fear mindset instead of defusing tensions and facing challenges, thus deferring the desired objective of regional economic integration.

Alexis Tocqueville very rightly hoped that “Trade is the natural enemy of all violent passions. Trade loves moderation, delights in compromise, and is most careful to avoid anger.”

Munabao-Khokhrapar: Economic Gateway

Majyd Aziz

Munabao-Khokhrapar is not just a destination or the ultimate in liberalization and facilitation of movement of goods, services and people across the Indo-Pak border. It is neither a political issue nor is there a national security concern. The fact of the matter is that the opening up of this corridor has a strong bearing on enhancing the economic and social aspects of the bilateral relationship. Stakeholders, primarily trade and industry, and also the denizens of Southern part of Pakistan who need to reduce travelling time, are more inclined towards the opening up of this pivotal route. 

Munabao is a village in the Barmer district in Rajasthan in India bordering Pakistan. Khokhrapar is a border town situated in Tharparkar District, Sindh. The distance between the two is about 2300 km. Khokhrapar is only 147 km from Karachi. According to Wikipedia, “Khokhrapar railway station was established in 1870. Before the partition of India, the Sind Mail ran between Hyderabad, Pakistan and Ahmadabad, India via Mirpurkhas, Khokhrapar, Munabao, Barmer, Luni, Jodhpur, Pali, Marwar and Palanpur. After partition Khokhrapar was the last railway station in Pakistan on Hyderabad, Pakistan - Jodhpur, India railway line and used for customs and immigration till it was closed down after the 1965 war. In February 2006, Mirpurkhas-Munabao railway line reopened after the conversion of meter gauge railway track to broad gauge.”

There is also the zero priority accorded to completing the access road to the border at Khokhrapar. According to the information available, about 50 km road needs to be paved and made usable for traffic. There has been no allocation for this project in the Sindh Budget 2014-15. The political representatives of the area are also not pro-active in preparing project proposals to address this road issue.

It should be noted that the major trading partners of Indian businessmen are based in Karachi and then in Lahore. The single source of land route is Wagah-Attari where India has set up a multi-billion Rupees Integrated Check Post. Karachi or Interior Sindh based businessmen have to incur high trucking costs to utilize the Wagah-Attari facility. At this present moment, Pakistan has a severe shortage of upto 100,000 trucks of all sizes. During peak fruit season or during an excess demand for trucks for goods under the Afghan Pakistan Transit Trade Agreement, the inter-city rates for trucks shoot up. These severely impact on the transportation cost and are detrimental to trade enhancement. Therefore, for goods from Karachi destined through Khokhrapar, the shorter distance is feasible and there could be dedicated trucks for this route.

Indian and Pakistani textile related items could be transported through this route at less cost than taking the longer Wagah-Attari route. Powdered milk, pulses and other commodities can be cheaply transported too. There is strong demand for Pakistani cement in India. At present, cement is transported through Wagah-Attari or by ships. A direct channel can be established through Munabao-Khokhrapar route and in this way Pakistan can increase cement exports to India, especially to Southern India, where there is demand but the cost via Wagah-Attari is very prohibitive. Recently, the Pakistani High Commissioner again reiterated the possibility of electricity and oil imports from India. Moreover, Pakistani and Indian teams are negotiating the supply of Liquid Petroleum Gas from India into Pakistan.

There is demand for Pakistani Chrome Ore by Ferro-Alloy plants based in West Bengal and other cities in Western India. Pakistan has become a major Chrome Ore exporter. Indian Chrome Ore exporters can concentrate on China and through swap agreements with Pakistani counterparts have a common marketing strategy for China while Pakistanis can ship via land route to West Bengal etc. This is just one item but it is a manifestation of how to take favorable advantage of distance proximity.

More importantly, Pakistan has enacted the Special Economic Zone Act 2012. An India SEZ could be set up on Pakistan side of the border at Khokhrapar in which Indian investors could set up their plants to produce goods not only for Pakistani markets but for export either back to India or to Middle East, Afghanistan, and Central Asia. Indians are big-time investors and many mega names in India such as Godrej, Adani, Mittal, or Ambani, etc have evinced interest in investing in Pakistan. Joint ventures could also be possible in the SEZ.

The Sindh government has often raised the subject of Munabao-Khokhrapar and there have been instances of debate and questions in the Sindh Assembly. However, a planned, concrete and workable position paper has not been formulated yet that would provide the required impetus to decide on this sensitive matter. The business community has often tried to persuade the Sindh government to set up a Task Force to generate a campaign to open up this route for trade and people movement. This issue will be taken up soon at a detailed meeting with the Sindh Chief Minister, concerned Provincial Ministers and Members of the National Assembly from Sindh. This issue would be part of the Comprehensive Action Plan that is visualized to enhance trade and investment between Sindh and Rajasthan, in the first phase, and Sindh and Gujarat, in the latter phase. At the same time, businessmen from Mumbai and Karachi would be interacting in December to move the process faster. The Mumbai Chamber of Commerce and Industry and the Karachi Chamber of Commerce and Industry have already signed a MOU to set up the Mumbai-Karachi Joint Chamber of Commerce and Industry. Moreover, KCCI has already hosted and facilitated five exhibitions by different Indian organizations in Karachi.

The provision of facilities, the setting up of any projects, or the commissioning of any trade activity would always achieve full potential or maximum usage once they are in place and in operation. Every such initiative requires time, money and patience. The dynamics of the family and social relationships across the border are such that once a liberalized and free environment is achieved, people would then very comfortably and profitably take maximum advantage. This would also promote secondary benefits and attract economic activity along the route. In fact, the Munabao-Khokhrapar link may compel authorities on both sides to allow the setting up of Border Haats (common markets), such as those established at the India-Bangladesh border. This would be a boon for the area and increase the sense of camaraderie between people on both sides of the border. Notwithstanding all these positive features, the underlining fact is that unless the visa regime is liberalized and made people-friendly, all other initiatives would be long shots. The most prominent and paramount Confidence Building Measures are the liberalization of the visa regime, cell phone connectivity, and the opening of the Indian Deputy High Commission in Karachi.

There is a need for both India and Pakistan to revisit their focus on Munabao-Khokhrapar because the overall process of trade liberalization, future cross-border investment, relaxation in people movement, and the magnitude of fast track global trade have created urgency in removing bottlenecks and roadblocks. 2014 is vastly different from the narrow single-mindedness and parochial thinking of the 1990s. The moment to come out of the time warp is now.

Dale Carnegie pontificated that “Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.”