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Pakistan and Politics

by ikram ul haq

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THE SECOND MINI BUDGET

TRADE, VIP CARS,KARACHI,CBR

THE NEW FACTION,DOWN WITH JAGIRDARS,FEUDALS?

THE GREAT DANE IS KNOCKED OUT

DISQUALIFICATION, BOMBS,STRIKES,MURDERS

THE PTCL BUDGET

THE BUDGET

NATIONAL AGENDA

THE SECOND MINI BUDGET--29.6.1998

• In response to the govts dithering policy on foreign exchange rates and FE accounts the remittances by overseas pakistanis fell from $5million a day to $1million a day. The main reason is the govts daily change in policy and undependability. The main culprits are obviously the Finance minister and the Governor SBP who have been unable to instill confidence by their unexplainable actions.
• The govt inits third installment of the budget has devalued the rupee to Rs 46.46. This move will not help much as the Foreign Currency situation is still pretty volatile and the govt still does not have the confidence to defreeze foreign currency accounts.
• In the first open dissent case the brother in law and cousin of the primeminister abused the Ehtesab Cell chief in parliament which was visibly applauded by some PMLn members. He also criticisized Nawaz Sharif and Shahbaz Sharif for victimisation and harrassment.
• A new chapter has been added to pukhtun history as ANP leader Ajmal Khattak has declared the kalabagh dam to be a problem of ghairat rather than provincial animosity. Pukhtuns regularly change the neaning of ghairat. Usually pukhtuns kill each other on matters of ghairat. So is Ajmal Khattak threatening the countries prime minister? Since Ajmal Khattak is threatening violence shouldn't the PMLn be doing something about it or dint they have any ghairat?
• The govt inits continuing vendetta against the IPP's has cancelled the agreement with Southern Electric Power on unknown technical grounds. The govt has also given notice to six other power companies including Uchh Power, Kohinoor Energy, Saba Power, AES Lal Pir,AES Pak Gin and Habibullah Coastal. In other related news Wapda has refused to pay Hubco at the present exorbitant rates.
• In a sheikhupura by election which the PPP lost by a wide margin the PPP chief Benazir alleged that only 8000 votes were cast while the rest were stuffed in ballot boxes by govt officials.
• Four alleged pakistanis were arrested in Thailand on suspicion of having participated in the World Trade Center bombing in New York.
• Violence in karachi continues and the prime minister has finally taken notice after almost a month and the murder of more than a hundred people. The Sindh Rangers have been given more powers to deal with the situation. The prime minister has urged his allies the MQM to stop the violence within a few day otherwise governor rule might be imposed with the dissolution of the provincial assembly. There are also suggestions that the courts might be moved for banning the violence prone MQM and all its factions.

TRADE, VIP CARS,KARACHI,CBR--26.6.1998

• In one of the few praiseworthy steps that does not benefit the rich the govt has banned the import of duty free cars for VIP's. Over the last thirty years whoever became prime minister, governor, president or armed service chief the first thing they did was get in touch with the mercedes dealers to import a duty free car which they than disposed of making a few cool millions.
• The new export policy effectively devalues the rupee as exporters will also be paid Rs46 to the dollar. After realising that trade does not improve without govt incentives the govt has made it more easier to export. Materials imported for export will not be taxed. SBP will provide 8% markup export financing. Import of gold has been facilitated.The govt has however failed to setup an EXIM bank and the SBP will arrange export financing of around Rs10 billion
• Seven faijis were killed in Puma helicopter crash in Multan. This is the second army helicopter crash within the last few months.
• Political victimisation of the Opposition leader continues as the accounts of the ZAB Charitable Trust have also been frozen.
• In continuing violence in karachi twelve people were killed on the 25th including a women DSP and six on the 26th. The female DSP some suggest was killed in retaliation for the MQM murder of a male investigating DSP. About 121 people have been killed in karachi since the beginning of June.
• Water and Power Minister Nadir Pervez has termed the provincial opposition to kalabagh dam as jahalat. However there seems tobe overall public support for the kalabagh dam.
• The govt has allowed banks to set their own exchange rates for Foreign Currency accounts. In theory that allows banks to offer market rates to their customers. The govt has also decided to pay home remittances a premium of 1.044% over the Rs46 rate already announced.
• The govts Foreign Exchange reserves have fallen below the one billion level to around $890 million. That amounts to a fall of over half a billion dollars since the sanctions. The govts refusal to announce import restrictions are thought to be a major cause.
• Expatriate pakistanis can buy a very expensive plot of around 600 sq yds for $50000 in two new islamabad sectors.
• The cash strapped pakistani govt is to spend over Rs800 million to improve the infrastructure of their internal revenue service the CBR. Most of the money is tobe spent on importing computers, buying software and overseas training of staff. Despite a resource crunch the govt is not limiting imports or useless spending. The govt has to set priorities to deal with the situation but the govt is obviously blind toits basic tasks.
• PTV organized a half day transmission to collect donations for Nawaz Sharifs govt but failed to make a dent in peoples pockets. The govt is now preparing lists of the countris crore pattis who who will have to donate a crore each!

THE NEW FACTION,DOWN WITH JAGIRDARS,FEUDALS?---22.6.1998

• Nawaz Sharif seems tobe amongst the group who is against jagirdars and feudals. These are people who have most of the lands over the past centuries and have benefited from the largesse of british and the former rulers of india. It is like saying that 200 years hence the nawaz family which is slowly building a monopoly in certain industrial sectors will be asked to give up its industrial estate for distribution amongst unemployed industrial workers.Most jagirdars have traditionally supported the PMLn. However mohajirs and industrialists like Nawaz Sharif are annoyed with such types as they have tried to keep hold of their family lands and the nawaz sharif types have had to gain control of govt to acquire huge pieces of land. In effect nawaz sharif is the modern jagirdar while the legharis, tammans, bhuttos, bugtis, marris are of the older variety. Bhutto too started his political campaign with tirades against the 22 families which benefitted from the early years of pakistan. Now those 22 have become 2200 and there is remarkedly less jealousy aginst them vis a vis the people. However the jealousy amongst the rich themselves is still there. Nawaz himself was the target of nationalisation and despite recovering tobe much richer than before he bears the scars on his psyche against the feudals/jagirdars who nationalised. It was the feudals against the zalim industrialists than and now it is the industrialists against the zalim feudals/jagirdars
• Over the last two days 17 people were killed in karachi including three policemen.The MQM which is behind most of the violence says that it is an attempt to create another faction. One wonders how daily murders can be seen as an attempt to create another faction. The reasons according to most people lie in the release from prison of a huge number of MQM terrorists who were previously involved in similar violence. The distribution amongst the MQM of around Rs200 million could be the cause too as it releases the MQM terrorists from financial worries
• The govt is going to create an EXIM bank to finance imports and exports. Exports and import targets are both being set at $10 billion in order to reduce the trade deficit to zero.
• The govt has again allowed the opening and operation of individual foreign currency accounts after imposing meaningless restrictions. The State bank will not provide any cover for such accounts and banks can retain deposits and use them at will. The banks it is surmised will attempt to make rupee accounts more attractive to lure customers into exchanging their foreign exchange. With the rupee devaluing constantly over the last decade few people tend to give up their dollars. Foreign exchange accounts have been beneficial as despite the low profit rates the constantly falling rupee has provided overall profit rates of 10-20% annually.The govt however intends to give old account holders and new expatriate deposits a special exchange rate of Rs46 which is about Rs3 lower than the market rate.

THE GREAT DANE IS KNOCKED OUT---20.6.1998

• The great helmsman who knocked out Vajpayee by detonating the nuclear bomb has been unable to withstand the pressure of the sindhis on the kalabagh dam. Given Nawaz Sharifs inability to convince people coupled with his poor verbosity in comments and speech one is totally surprised that he is the leader of a political party. After boldly declaring that the kalabagh dam will be constructed in his controversial national agenda speech he has fallen back on to the slippery PPP stand that the kalabagh dam will be constructed after consensus is achieved. Apart from the dam everything else is obviously done without consensus.
• Violence continues in karachi with another 16 killedin the last two days. The police which is barred from arresting political troublemakers behind the violence fell back onits old ploy of arresting criminals who are probably for once not the cause of the violence. During the PPP era such violence was only controlled by putting behind bars all MQM activists.
• Former president Faruk has accused the nawaz family of imposing one family rule. He also stated that the sharif family had assets of around Rs300 million when Nawaz Sharif became chief minister of the punjab. Now he says only the loans of the Sharif family total Rs 11 billion and that they own 31 factories. Opposed to this the Benazir -Zardari wealth is estimated at Rs 22 billion( Saif says he has identified such asets while the PPP says it is just balckmail). Some suggest that if the assets of the Legharis, Sharifs and Bhuttos were seized and sold the pakistani net debt could be reduced by around $3 billion.
• The speaker and deputy speaker of the Azad kashmir assembly were voted out by a majority of 35 out of 48 members. Mumtax Rathore and Israr Abbasi both belonging to the PPP had rebelled against the Benazir decision of appointing Sultan Mahmud as the prime minister of AJK and had since been formenting trouble for the govt.
• The vote of noconfidence in the balochistan assembly was withdrawn by the PMLn after the pakistani flag was hoisted at Chagai and Nawaz was allowed to visit the nuclear test site.
• Sartaj Aziz announced a reduction furnace oil prices from Rs6296 to Rs 5500 per ton. Theoretically this should decrease cement prices and electricity rates by ½ a cent or 22 paisas per unit. He also announced the abolition of a 10% excise on locally made refrigerators and deep freezers.he also announced reduction in inport duties on computer components and deep freezers. The sanctions are apparently starting to pinch as the govt is trying to arrange imports of palmoil and petroleum products on a deferred payment basis or by commodity exchange.He also suggested that Rs80 billion in foreign aid which was already in the pipeline was being delayed by international finance organizations.
• It is surmised that the duty on higher cc cars has been lowered from 400% to 125% to benefit the ehtesab czar Saif ur Rehman. A news report suggests that Saif will now import 400 BMW's an expensive luxury car after which the duties will agin be raised.
• PMLn leaders including Sartaj Aziz and Mahbubul Haq are suggesting that royalty from hydel dams should be shared by all provinces to ease political opposition to such projects. At present the constitution requires that royalty only be paid to the province in which the hydel power station is located. That means that the royalty of Tarbela, Mangla, Ghazi Barotha and future dams could be shared equally or on the basis of population.
• The Friday times reports that the Nawaz family is trying to purchase the Habib Bank. They suggest that most of Nawaz Sharifs foreign tours are to line up funds and create a front company which might be saudi. He is also trying to arrange a team to takeover if his bid for the bank is allowed tobe successful.Acording to the press the present bank president will also be replaced by an expatriate loyalist ala Moinuddin Khan.Some people however suggest that Nawaz Sharifs excessive foreign tours are utilised to smuggle in banned components for use in misiles and other military hardware!! .

DISQUALIFICATION, BOMBS,STRIKES,MURDERS---18.6.1998

• There is mounting opposition to the kalabagh dam in opposition groups allied to the opposition especially in Sind and Nwfp.
• A strike on the call of the activist Jeay Sind Tehrik shutdown towns in rural Sind. Altaf Hussein reportedly also supported the strike.
• In karachi a police DSP who was handling MQM cases was killed by gunmen who charged into his house. Possibility of MQM involvement is almost certain.
• Again in karachi two punjabis were gunned down by motorcycle riding gunmen.
• Five PMLn mpa's from balochistan have been disqualified by Nawaz Sharif for not obeying his orders. The mpa's are Zulfikar Magsi the provincial PMLn chief, Sarwar Kaker, Saeed Hashmi, Jaffar Mandokhel and Abdur Rehman Khetran. The PMLn is opposed to a no confidence motion filed by its 11 Baloch mpa's against Akhter Mengal
• Two car bombs went off in karachi with minor casualties. The bombs could be related to indian, sindhi or mqm activism

THE PTCL BUDGET---17.6.1998

• 23 people have been killed in the past few days bringing the total to more than 70 in the last three weeks. The latest killings include drive by killings which included two PMLn workers. The blame can only be placed on the shoulders of the PMLn-MQM govt leaders who have refused to take notice or even make an effort to arrest the killers.
• The first mini budget has arrived with Sartaj Aziz announcing new tariffs for telephone calls. The biggest sufferers will be the users of local calls and individual internet users. A duration of five minutes has been fixed per local call which was unlimited before. That will make charges for individual internet users jump from 20 to Rs 44 per hour. He has announced a 15% reduction for intercity calls and a rebate on internet usage for educational and research organizations. A new Rs2000 unlimited use internet category has also been announced. Sartaj Aziz who also announced restrictions on individual Foreign Exchange accounts seems tobe against individuals. Probably individuals donot have a lobby which makes them increasingly vulnerable to the Sartaj Aziz attacks. The reason for the price changes are not too apparent and an expected 50% rise in PTCL income is not foreseen. Probably PTCL is the cow that the finance minister expects to slay to raise the $1.5billion needed to offset sanctions.
• Anger and frustrations are rising at the restrictions placed on Foreign Currency accounts as people cannot even deposit money into such accounts. The inflow of Foreign exchange has therefore come to a halt pending a govt decision on the future of FE accounts.

THE BUDGET---17.6.1998

• The Budget which was presented in the backdrop of the nuclear test and sanctions on all new aid is seen by many as an ostrich budget or a pidgeon budget which closes its eyes to the danger of the prowling cat. It generally encourages imports. There are slight increases in taxation with the GST and a minor tax on phone bills and mobile phones. The GST supposedly will effect only 3000 large retailers with sales of 5 million and above.Taxes have been reduced on the imports of large cars and four wheel drives, cheese, footwear, spices, computers, bamboo, medical instruments, syringes, TV's, AC's, refrigerators, footwear,coffee,betelnuts,toiltries,film,blankets,toys, autoparts, crockery, bulk shampoos etc. Ostensibly the relaxation in import duties is to combat smuggling but it only seems to reflect a consumption of luxury items and will obviously damage local industry substantially. CVT has been removed on the sale of used local vehicles and a 10% surcharge imposed upon wealthtax and income tax. Some incentives have been announced for expatriates while almost shutting down Foreign Currency accounts. The incentives to expatriates seem silly. For example they are allowed to export to pakistan $10000 worth of goods w/o opening LC's, They will get a tax saving voucher of Rs 4 per dollar if they send Foreign Currency equivalent to $50000/100000 and the limit for customs exemption for returning expatriates has been raised. The budget comes at a time when tax generation is around 20% below targets with stagnant exports and reduced imports. The economy slowed down last year and inflation was said tobe decreasing. The budget in figures is Rs 606 billion= defence 147 billion + development 110billion+debt servicing 276 billion+ govt 43.5 billion +Provinces 166 billion. Income= Taxes 367 billion+ External Aid 142 billion +bank credits 43billion+ capital receipts 38 billion. There is general resource gap of around 12-13 billion to be met thru additional taxation. The govt could only collect around 250 billion last year and will barely be able to get to 300 billion this year. So the budgetry gap is around 142+70=192 billion. Sartaj Aziz says that they will be able to raise $1.5 billion thru various means . That leaves a gap of around 151 billion rupees. If present policy is followed than it will mean literally zero development funds and probably everyone will have to be satisfied with speeches and foreign tours. The govt has made a huge noise about reducing expenses by 50% but has only budgeted a 6% decrease.
• There are problems at the provincial level in all four provinces. The Sind Chief minister who heads a PMLn-independents-MQM coalition threatened to resign when his cabinet refused to support him on the kalabagh issue. His father mustafa jatoi has joined forces with benazir again due to the approval of the kalabagh dam.
• In the punjab ahuge police contingent carried out a raid on the factories of Chaudhry Pervez Elahi a cousin of interior minister Choudhery Shujaat and the speaker of the Punjab Assembly. Pervez Elahi is seen tobe a rival of Shabaz Sharif and there is reported rivalry between the two as Pervez expected to become the chief minister. The raid was carried out ostensibly to arrest Pervez Elahis ailing father Manzoor Elahi whose name is similar to the punjab chief minister during the caretaker regime. So the attempted arrest might possibly have a reason in history
• In the Nwfp Mehtab khan is seen at odds with the opposition ANP as well as with the son in law of the prime minister who everyone says struts around and issues orders as a defacto chief minister. Mehtab has earned the ire of the ANP and the NWFP press by supporting the kalabagh dam.Recently a PPP leader Pervez Khattak was arrested and released. Arrests of political leaders are rare in the NWFP
• In balochistan Akhter Mengal has lost the support of the 11 member PMLn party who have filed a motion of no confidence tobe debated on the 20th.Possible replacements Jam Mohd Jamali, Saleh Bhotani and Jafar Khan Mandokhel.
• There is also a no confidence motion against the AJK speaker Mumtaz Rathore who is at odds with AJK prime minister Sultan Mahmood

NATIONAL AGENDA---12.6.1998

In a long drawn listless speech Nawaz Sharif anounced his national agenda which did not pan out well with most ordinary pakistanis except those who support the PMLn. He seems tobe frightened of india despite the nuclear tests and indian terrorism/ intransigence on kashmir and again offered talks on a mutual test ban. He however announced to unilaterally follow CTBT but is not willing to sign the treaty. Pakistan's state run television is trying to whip up enthusiasm for Nawaz by telecasting inspiring songs but is falling flat on a public already weary of the high cost of living. The steps announced are:

• To recover 1.25 million acres of land held illegally after the Bhutto land reforms and to distribute it amongst his cherished haris. The Supreme Court has already declared the land reforms illegal. It is rumoured that the illegal land holders might include Benazir Bhutto and Faruk Leghari who are preparing to defend their lands.
• Is vacating the newly built premier house and moving to a govt house in G-6. Premier House to now serve as a guest house.
• Governor houses also tobe vacated and tobe used as governor offices and state guest houses.
• The newly built prime minister secretariat and old state guest houses in provincial capitals tobe sold.
• Announced the building of the Kalabagh Dam thus blunting PPP/Zia era policies of seeking provincial approval for govt decisions.
• Building pakistans first women university at the old presidency in Rawalpindi
• Official residences and guest houses in district and divisional HQ's tobe sold thus rendering DC's, Commissioners and DIG's homeless.
• Because of loan default cases pending in courts Nawaz announced the handing over of his entire family empire to banks to recover loans. The Nawaz family is the biggest loan defaulter in the country
• Announced 3-50 lakh loans for mistris and skilled youth.
• Announced the usual loans for farmers(40 billion) and reduced prices of tractors from 3.90 to 3.05 lacs
• Removed sales taxes on combined harvesters, bulldozers, agricultural machinery.
• Offered 25000 plots for sale to expatriates.
• Wants expatriates to send $1000 to their families.
• 30 day notice given to loan defaulters after which their properties will be confiscated
• General Sales tax applied on shopkeepers and traders.
• wants rich people to pay taxes and says that he will personally pay 3 lacs in taxes from now on. Because of loopholes pakistans industrial and agricultural rich pay tiny amounts in taxes

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