Killing for a cause or in sheer frustration?

The drone attacks have become a way of life [read: death] not only for civilians but now also for military men. Pakistan’s sovereignty is under threat, in fact being shredded into pieces and trashed, by no else but a super-power who occasionally claims to be a partner of the country now the target of its deadly attacks through unmanned aerial vehicles. And it attacks the target of its  fury, not only on militants’ hideouts, it also rockets its military posts. The military which is sacrificing so that Toms, Dicks and Harries and their offspring in the land of milk and honey remain safe, is now target of the fury of all these Toms, Dicks and Harries. And still they ask; why Pakistanis hate us in spite of our aid?

It seems that the world, and particularly Afghanistan, is slipping out of its grip like sand. No wonder, the frustration and decisions taken in a fit of rage are enough to strip you of the title of superiority and being the sole super-power. It is not losing one’s cool, it is losing one’s values which make one the laughing stock of history. Sometimes it looks rather unbelievable that USA is following the foot-prints of USSR. Is this fit of rage and frustration a part of some Great Game being played by some divine invisible forces to write yet another chapter in the history of mankind?

If it is so, then it is rather swift. Nations and their power do not evaporate in decades; it takes them centuries to become of part of history’s graveyard. But someone somewhere is accelerating the turn of events. A new world order, yet again....published in these pages discussed in detail the prospects of a bi-polar world, script of which is being written in the national accounts of China. The article predicted that by 2050, China will be able to challenge the superiority of the USA but the way events are taking place, that eventuality may take place in the near future, not for our coming generations to witness, but for a sorry spectacle of our own eyes.

An analysis appearing in the current issue of Foreign Policy titled “Addicted to Drones” was rather disturbing. The journal said that these recent drone strikes epitomize an important trend: When confronted with a foreign-policy problem that threatens U.S. national interests, civilian policymakers routinely call on limited military force such as drone strikes, cruise missile attacks, and special-operations raids. Many experts -- from pundits to anonymous U.S. officials -- laud such drone strikes as a low-cost, highly responsive, and effective military tactic. In practice, however, drones -- like other uses of limited force -- have substantial downsides that deserve attention given their increasingly prominent role.

The paper also says that under pressure to act in response to a threat and seduced by the allure and responsiveness of limited force, presidents elevate military options above other instruments of statecraft. Inevitably, after the missiles are launched, they announce their intention to keep the pressure on targeted adversaries with a follow-on campaign using all elements of national power. Once the bombs have been dropped, however, and the politically necessary "do something" box has been ticked, complex, robust secondary measures rarely come to fruition.  How very realist….and very unscrupulous….

It is apparent that the American public is largely unaware of the easy-going attitude of American establishment which causes death and destruction elsewhere. But those who know do not like it.  The question, however, remains; will the establishment of the US care unless the people of Pakistan practically demonstrate how much they dislike foreign elements threatening their security, and these foreign element include not only Arab, Uzbek and African fighters, these also include Americans of the Black-water variety and those sitting in Washington DC ordering drone attacks.  

Pakistan's M2 provokes some jealousy across the border....

Indians have at least something to envy or to be jealous about Pakistan. Although both countries have different identities, they have so many things in common also. The corrupt practices of the public functionaries wherever there is involvement of contractors, is something which both can equally boast about. In the area of corruption, the public “servants” of both the countries have a common DNA.

Over the decades, the public works have consumed so much of the capital outlay that it bled the economy profusely without any tangible returns. The budgetary deficit was caused by corruption wherever construction was involved. Eventually, funds for development fell short of resources forcing borrowing. It is a common belief that works completed by public works department are 50% more expensive and 50% more unreliable as far as the quality of construction is concerned. 35% of the project funds are pilfered by functionaries with 15% paid to contractors in excess of his rightful claim. These are rough statistics of Pakistan and India would be no better.

It is for this reason that roads are built and rebuilt many times over making “them” rich at the cost of taxpayers. And as the ratio of indirect taxes dominates direct taxes, we can safely assume that 100% population of Pakistan pays taxes. These roads are built and are “maintained and repaired” every year then rebuilt after every five years but these are never of any international standard and are never in good conditions on both sides of the border.

However, there is one road,  which impressed even Indians and that is M2, Pakistan first motorway between Lahore and Islamabad completed in November, 1997. But alas! We have hardly any reason to be proud of because this road was never built by Pakistani Highway money minters, it was built by South Korean engineers. Wall Street Journal has reported that a major conundrum to those who visit both India and Pakistan is why the roads are so much better in the latter. For all its problems, Pakistan’s 367-kilometer-long M2 motorway between Lahore and Islamabad strikes a visitor as being streets ahead of India’s decrepit inter-state roads.

For one, there’s a disciplined motorway police that patrol Pakistan’s highways and don’t take bribes. If you go above 120 kilometers an hour, and are caught on camera, a fine awaits you at the toll gate. Nonpayment means you can’t get out. The M2 motorway passes through the densely populated Punjab countryside but there are no cows, rickshaws or motorbikes coming at traffic on the wrong side of the road which is a common experience in India. The M2 road was built in the late 1990s by South Korean firm Daewoo, whose name is still emblazoned on the modern service stations that line the route.

Sunita Kohli, a New Delhi-based interior designer who recently did work on a boutique hotel in Lahore, says she was impressed with the road compared to similar developments in India. “We really lag behind on infrastructure,” she said. “Now we’re trying to make up for lost time.”

That’s not to say Pakistan doesn’t face its own infrastructure challenges. Its most pressing need is to build more power plants and stop people from stealing electricity to avoid hours of blackouts across the country. And Pakistan’s motorways — at just over 600 kilometers in combine length — are only a small fraction of the total road network, much of which is old. Ms. Kohli says she sees the M2 as a “showcase.” India still slightly edges out Pakistan in the United Nations’ Human Development Index, which measures per capita GDP, literacy, life expectancy and other development criteria.

Until a couple of years ago, Pakistan’s economy was booming and there was plenty of public and private money for infrastructure spending. Now, foreign direct investment has dried up and the government, running a large deficit, has had to turn to the IMF for more than $11 billion in loans. But first-time visitors to Pakistan, many expecting a failed state, are surprised by some of the modern infrastructure. Apart from the roads, Pakistan’s broadband and wireless roaming speeds also compare favorably with India. Doing business in Pakistan is easier than in India and China, according to the World Bank.
With regular Taliban suicide bombings, though, Pakistan is unable to capitalize on these positives and continues to generate only negative headlines. [Article courtesy: Wall Street Journal]

Monopoly comes back to South Asian telecom markets, thanks to Etisalat ...

Pakistan is not the only monopoly of Gulf states, as apprehended in one of the previous posts in a sister blog. Etisalat, UAE's telecom corporation, is now fully geared up to take the entire South Asian telecom market under its monopolistic wings. It first bought Pakistan Telecom (PTCL) when Pakistan was selling family silver at throw-away prices. It won the bid and when the seller was totally entrapped, it dictated its terms and paid at will, not according to commitment. As it did not have any experience of operating in the competitive market, it brought with it the monopolistic practices of UAE’s over-regulated market, thus totally defeating flawed and tilted Telecom Deregulation Policy of 2003. Private sector companies who had obtained licenses were driven out making Pakistan a monopoly of UAE once again.

After successfully “buying” Pakistan telecom, Etisalat bought 45% stakes of Indian Swan Telecom. Financial Times has now reported that this state-owned Gulf monopoly is close to buying a 26 per cent stake in Reliance Communications, India’s second-largest mobile operator. In an attempt to overcome a number of regulatory hurdles, the two groups are also considering merging Reliance with Swan Telecom, the Indian company in which the United Arab Emirates-based group holds a 45 per cent stake.

The deal – which is estimated to be worth about $3bn – would give the government-controlled group known as Etisalat a big step up in the world’s fastest-growing large mobile market with more than 600m subscribers. On Friday, the market capitalization of Reliance, which has more than 100m subscribers, was $8.3bn, according to the Bombay Stock Exchange’s website. The alliance between the two groups could be completed as soon as mid-August. Another person said it could take up to the end of the year. Reliance and Etisalat declined to comment on any specific negotiations.

Financial Times has further reported that a successful outcome hinges on how fast Etisalat can free itself of the stake in Swan Telecom, a joint venture that it acquired in 2008, as Indian regulations do not allow one company to own more than 10 per cent in two telecom groups. “Once Etisalat has freed its hands the deal could happen very quickly . . . both sides are very keen to join forces,” said one person familiar with the matter. Another person said the two groups could merge to facilitate and speed the completion of the operation. Rajiv Sharma, a telecom analyst at HSBC, said a “merger may be a better option both for Reliance Communications and Etisalat”. However, he added that it would not be simple, as merger and acquisition regulations in India discouraged a union between the two groups.

Etisalat invested $900m in Swan Telecom, which has licenses for 13 areas of India, however, it has been unable to launch full services and since the beginning of this year it has been looking for alternative investment routes in India. Reliance has been working hard to cut its net debt, since it acquired the 3G mobile spectrum in 13 regions for Rs85.9bn ($1.8bn). The group has a net debt of Rs330bn, primarily due to a very competitive domestic environment that ate into its margins.

It now seems that Etisalat wants to turn the entire South Asian region into a literal monopoly. It seems that the price it is known to have agreed with the Reliance is much more than it paid for PTCL which has far dearer assets in the form of prime land in posh locations of Pakistan’s major cities. PTCL was far healthier than Reliance as it had no financial liabilities as a result of domestic competitive market because it had no competitor at all.

Karachi, the cheapest city of the world....but not for Pakistanis...

The other day, ECC of the Federal cabinet was concerned about the fact that Pakistan is the most expensive country in the region as far as prices of essential food items are concerned. It is a fact that rising inflation has broken the back of low and middle income groups who find it hard to make both ends meet. But there is a breath of fresh air also. In this sea of difficulties, there still is an island which has been adjudged as the cheapest city if the world. But hold on…it is not the cheapest city for us locals…Business Recorder has reported that the only caveat is that this peculiar quality of the city is reserved only for the expatriates. Covering 214 cities across five continents and measuring the comparative costs of more than 200 items in each location, the Mercer World-wide Cost of Living Survey has revealed this reality which may be interesting but largely incomprehensible to the people actually living in the city because of sky-rocketing prices.

At the other end of the scale was Luanda, the capital of oil-rich but poverty-stricken Angola which was rated as the most expensive city for corporate expatriates. Tokyo, regularly rated as one of the most expensive cities, was in the second slot while Ndjamena, the capital of impoverished violence-ridden Chad, came in third. Asia's cities were also among the world's most expensive for expat postings: apart from Tokyo which was ranked second, Osaka came in at 6 and Hong Kong tied with Zurich at 8.

In Europe, Oslo at 11, Milan at 15, and London and Paris, both at 17, were the most expensive while the least expensive city was Tirana in Albania. Living in the Middle East wasn't cheap either: Tel Aviv (19) was the most expensive city in the Middle East, followed by Abu Dhabi (50) and Dubai (55). Tripoli (186) in Libya was the least expensive Middle Eastern location. Brazil's commercial capital Sao Paulo (21) was the most expensive city in all of the Americas due to strengthening of the currency against dollar.

In the US, New York (27) was the most expensive city, followed by Los Angeles (55). Washington D.C. was ranked 111 and the least expensive US city was Winston-Salem in North Carolina (197). It may be mentioned that New York was used as the base city for the index and currency movements were measured against the US dollar.

The Mercer Survey has obviously demolished certain myths about the cost of living in various cities of the world for the expatriates. It was generally assumed that cities in the developing world were cheap while Western cities such as New York and Washington were pricey but this is not necessarily true for expatriates working in different locations.

The change in perception as a result of the survey may affect the preference of the expatriates for their postings to a certain extent and induce the multinational companies to readjust their remunerations at various locations. However, the case of Karachi seems to be very peculiar and underlines the limitations of such surveys. It is true that this is perhaps the only survey after a long time which has showcased the country in a positive light but the reason for this high sounding and worthy ranking is not that glorious and its consequences may not be at all rewarding.

Most prominent factor for the city to be ranked as the cheapest in the world was a massive depreciation of the rupee against the US dollar in the recent past which could enable the expatriates to purchase more goods and services with the same amount of foreign exchange. Cheaper services in the city due to large unemployment could also be a reason contributing to this ranking. In other words, the city has earned a better slot not due to some healthy improvement in its parameters but because of a weaker economy which has led to deterioration in certain key macroeconomic indicators including the exchange rate. Such a conclusion could be confirmed by the deteriorating standards of living of the local population.

Purchasing power of the rupee has been eroded by about 35 percent in the last two years while unemployment has certainly increased and the level of real incomes has been generally stagnant. It is also obvious that expatriates are not likely to fall over each other to get an attractive posting in Karachi in order to save more for their families and, in the process, reinvigorate the economy of the city and create more employment.

They would already be well aware of the hazards of living in Karachi and would not like to risk their limbs and life for pecuniary gains. Intolerance and the absence of leisurely pursuits also make life difficult for foreigners in the city. Therefore, while such a ranking may be useful for other cities, it will not be possible for Karachi to reap any benefit from such a distinction. At best, Tourism Department of the government could have a positive point on its side when advertising the country as an attractive resort for the foreigners to develop hospitality industry and earn some foreign exchange.

Besides, people of Pakistan could feel somewhat elevated that their country which is generally ranked near the bottom of a global index has also some positive features to be listed at the top.

Market liberalization...myth or reality?...Comment.

The day Pakistan Government decided to de-regulate telecom industry in Pakistan; it was already looking for potential buyer to take over state-owned Pakistan Telecommunication Company Limited (PTCL). The idea to de-regulate telecom sector was aimed at doing away with telecom monopoly of PTCL. However, when the Telecom De-regulation Policy, 2003 was announced, the deregulation pundits were shocked to see that the entire policy revolved around PTCL. No private sector licensee could breathe in the liberalized environment without PTCL taking away its pound of flesh.

The PTCL was privatized. As a matter of fact, it was sold to those who were a strong monopoly in their own country and had no experience of competition whatsoever. Prior to that, nearly one dozen licenses were issued to companies desiring to set up long-distance international (LDI) systems in Pakistan. All these licenses and their business cases were not viable from day one because all of them were made dependent on PTCL for practically everything.

The PTCL in the new environment was Etisalat who was not used to private sector competitors. Using its muscles, borrowed at the time as it had not made promised payment to the government and was using its might to its advantage, it elbowed out nearly all the private sector operators. It had the advantage of support from conniving senior executives in the government. The last nail in the coffin of deceased telecom sector was take-over of private-sector Burraq Telecom by state-owned Qatar Telecom. Pakistan Telecom market has become monopoly of state utilities of Gulf States. So much for market liberalization of Mr. Shaukat Aziz.