The federal budget

THE budget for the next fiscal year, presented by the minister of state for finance, Omar Ayub Khan, in the National Assembly on Monday, carries a substantial package of relief for the common man. It also makes a tentative attempt to broaden the direct tax base by bringing some important parts of economic activity, like the real estate business, under the tax net. A number of attractive measures have been proposed to encourage investment as well, especially in the dairy and IT sectors. The proposal to increase the minimum basic wage from Rs 3,000 to Rs 4,000, the dearness allowance of government employees by 15 per cent, pension scales by 10 to 20 per cent, transport allowances for low-grade employees by 50 per cent, monetary assistance for the marriage and education of children of low-grade employees and teachers’ salaries, will surely come as a great relief for a large section of the population tottering under the weight of rising prices and declining incomes. There is also the welcome proposal to give enhanced income tax relief to senior citizens and to grant exemption from income tax to those employees drawing up to Rs 150,000 in annual salary. The rates of income tax have also been rationalised in favour of this class. The proposal to provide subsidised food items like pulses and sugar through utility stores is also commendable. The self-employment scheme costing Rs 12 billion to be launched for providing loans to people between 18 to 40 years to start their own businesses is an innovative idea.

However, here it must be emphasised that the practice of narrow targeting to tackle the problems of poverty and inequality, as some of the proposed measures envisage, has very rarely yielded the desired results. While not rejecting such schemes out of hand, one must point out that narrow targeting usually carries considerable hidden costs, resulting from the fact that it is difficult to reach the poor because the wealthier segments seldom fail to capture the subsidies meant for poor people. Also, administering narrowly targeted programmes is twice as expensive as running untargeted ones. It has been seen that whenever the poor are asked to register their eligibility, they tend to be left out because it involves expenses, such as transport and filing of forms (a formidable task for the illiterate) and getting all that authenticated by some inaccessible official. The poor being voiceless, such programmes fall by the wayside for lack of stakeholdership and, therefore, programmes meant for them frequently turn out to be abject failures. This brings us to the urgent question of equitable distribution of the fruits of growth. Experience has shown that sustained inequality ultimately retards economic growth by delaying policy reforms and entrenching special interests. Unless a fair degree of redistribution of assets such as land, water, roads, livestock and micro-credit is ensured, one cannot hope to reduce inequality. Enabling circumstances are also needed for fair competition among smallholders and small-scale enterprises to ensure redistribution. Above all, the universal coverage of basic services like health, education, water, power and transport needs to be ensured to allow a level playing field to each and every citizen of the country. The new budget makes only a feeble attempt to tackle these issues. Its emphasis continues to remain on consumption taxes, which both the poor and the rich pay, while taxes on income and wealth continue to remain relatively low, and the existing loopholes in the income tax laws and their lax enforcement continue to favour the rich.

The budget does not address the issue of generating more revenue through progressive taxation. A deeper analysis of the measures proposed reveals that the government has decided to use the foreign trade sector, especially imports, to fight its way out of an economy in which greenfield investment is not taking place and where heightened pressure from rising prices is limiting budgetary options. In the last 12 months, the rupee has devalued by at least five per cent. But, perhaps in order to facilitate imports, the government continues to hold on to an artificial exchange rate. This is a sure recipe for more inflation and for the widening of the trade deficit even beyond the outgoing year’s level of over six per cent of the GDP. Imports are to take care of domestic supply shortages and increase revenue incomes through custom duties and sales tax and also, at the same time, drive up the export sector. There is no explanation how the yawning trade gap is to be bridged.

Perhaps the hope that remittances will once again fetch over four billion dollars next year and the expectation that proceeds from the sale of the residual part of the ‘family silver’ will cover up the rest, has emboldened the government to take this risky road to prosperity. Experience has shown that trade liberalisation does not automatically yield pro-growth, pro-employment and pro-poor results. Premature trade liberalisation has often been seen to have resulted in unsustainable trade deficits, which create macroeconomic instability and undermine efforts to reduce poverty. The WTO, notwithstanding its many global benefits, has rendered the international trading regime more intrusive vis-à-vis human development because it embraces intellectual property rights, services and investment rules. Experts have found that the global trading system has now a larger impact on a country’s food security, public health and labour market. While welcoming the relief measures proposed for the poor and middle classes and those which have been proposed to accelerate investment in the country, one would like the government to further fine-tune the budget during the debate in the National Assembly so as to rationalise its overall growth strategy and also temper it for distributive justice. The income tax net needs to be broadened not just by announcing the intention but by enforcing the relevant law strictly. Once tax evaders are convinced that the law is blind and inexorable, they will comply. The proposals to raise additional revenue amounting to a paltry Rs 10.8 billion from additional taxes under the income tax head are too meagre to send such a stern signal. As it is, nobody discloses in official documents the actual amount that changes hands in real estate transactions. So, the two per cent capital value tax on such transactions will only reflect the artificially low price that is documented. And there is no explanation as to how the government proposes to collect five per cent on house rent.

Finally, one feels that it was more of an election speech than a presentation of budgetary proposals for the next year for parliament to debate and scrutinise. The minister for finance spent more time challenging and provoking the opposition than explaining his budgetary proposals. Almost a quarter of his written speech was directed at comparing the 9/11 bonanza-driven economic ‘achievements’ of the seven-year military-led government to the ‘failures’ of the governments that had ruled in the 1990s when Pakistan had become the most sanctioned country in the world after Libya. The minister used the word inqilaab as many as six times in his budget speech and called many of the new measures ‘unprecedented’. He challenged the government’s detractors to come forward if they dared to refute his claims. In fact, in balance, his speech was generously garnished with rhetoric and hyperbole. He tended to bury some of the welcome relief measures and other good proposals in an avalanche of tall claims and grandiose promises.

Dead certainties in wartime

ON July 25, 1950, American soldiers in No Gun Ri, about 100 miles south of Seoul, were driven from nearby villages and herded towards a railroad embankment in front of the US lines. The following day, they were attacked without warning by US aircraft. As survivors sought shelter under a railroad bridge, they were shot by troops of the 7th Cavalry.

Some US soldiers claimed fewer that 100 Korean refugees died in the No Gun Ri shootings, which lasted three days; others spoke of “hundreds” of deaths. Korean survivors of the massacre say the toll was about 400, most of them women and children.

The sordid tale of No Gun Ri emerged in a Pulitzer prize-winning Associated Press (AP) report in 1999. That’s right: 49 years after the event. The Pentagon offered to investigate, and after a 16-month inquiry concluded that although “an unfortunate tragedy’ had indeed unfolded on the day in question, it hadn’t been “a deliberate killing”. According to AP, the Pentagon report “suggested panicky soldiers, acting without orders, opened fire because they feared that an approaching line of families, baggage and farm animals concealed enemy troops.”

However, in Collateral Damage, a book published earlier this year, American historian Sahr Conway-Lanz reveals that in a letter dated the very day the atrocities began, the US ambassador in Seoul, John J. Muccio, wrote to assistant secretary of state Dean Rusk about a decision taken at a high-level meeting the previous evening: “If refugees do appear from north of US lines, they will receive warning shots, and if they then persist in advancing, they will be shot.”

This suggests that the soldiers at No Gun Ri weren’t trigger-happy out of panic. They were simply following orders. And Washington was well aware of what was going on.

No Gun Ri wasn’t by any means an isolated incident in the Korean war, any more than the massacre 18 years later in the South Vietnamese village known as My Lai 4 was an aberration.

The latter has gone down in history as the single most abhorrent episode of the Vietnam war. The details seem almost as shocking today as when Seymour Hersh first revealed them in 1970: up to 500 infants, children, women of all ages and old men, all of them non-combatants and clearly unarmed, shot dead at close range by Charlie Company under the command of Captain Medina and Lieutenant Calley.

The first official press release on My Lai issued by the US army spoke only of 128 “enemy soldiers” being annihilated after they were trapped in a pincer movement by two American companies. There was not a shred of truth in it, but that didn’t prevent General William Westmoreland, the commander of US forces in Vietnam, from cabling his congratulations to Charlie Company.

If My Lai has become a byword for particularly egregious wartime atrocities against civilians, that’s not only because of the nature of war crimes that took place there, but also because details of comparable incidents are harder to come by. Which does not mean other villages did not suffer the same fate.

Of late, My Lai has received more than the occasional mention in accounts of, and comments on, last November’s massacre in Haditha (Iraq). And there can be little question that, although the scale is smaller and the circumstances somewhat different, this particular instance of indiscriminate lethal violence against Iraqi civilians does fit the pattern.

According to US and British media reports, citing eyewitnesses, what happened was fairly straightforward. A roadside bomb went off as a US marine convoy was passing. A 20-year-old soldier behind the wheel of a Humvee died in the blast. His comrades decided to exact revenge. They did so by raiding houses in the vicinity one by one and murdering their occupants. No one was deliberately spared: not infants, nor the elderly. At least 24 Iraqis were killed that night. Most of them were shot at close range. The dead included four students and a taxi driver who happened to have arrived in Haditha at a less than propitious moment.

The following day, a US military statement said a roadside bomb had killed one American soldier and 15 Iraqi civilians. “Immediately following the bombing,” it went on, “gunmen attacked the convoy with small arms fire. Iraqi army soldiers and marines returned fire, killing eight insurgents and wounding another.”

This patently false account would have remained on the record but for the efforts of a local journalist, who took his video camera to the scene of the crime and recorded the aftermath. The tape eventually found its way into the hands of Time magazine — which, before publishing a report on March 19, shared the evidence with US military commanders in Baghdad. The occupation army promptly amended its official version of events, claiming that the 15 civilians had been accidentally shot by marines during the firefight with insurgents. In other words, the cover-up continued.

It has now become all but impossible to sustain, even though official results from a pair of parallel Pentagon investigations were still awaited at the time of writing and may not be made available until later in the summer. Whatever conclusions the army may reach, one fiction will undoubtedly be maintained: that what happened at Haditha was an isolated instance of US troops cracking under the pressure.

“We know that 99.9 per cent of our forces conduct themselves in an exemplary manner,” is how Donald Rumsfeld puts it, adding: “We also know that in conflict things that shouldn’t happen do happen.” For all we know, he may have been referring to the botched cover-up rather than the gratuitous killings. The chairman of the joint chiefs of staff, General Peter Pace, was singing from the same hymn sheet: “Clearly the individuals involved — if they are responsible for the things they are being accused of — have not performed their duty the way that 99.9 per cent of their fellow marines have.”

Yeah, right.

George W. Bush has spoken in similar terms, albeit without citing that figure; his speechwriters may have deemed 99.9 per cent to be a bit of a tongue-twister for the misleader of the free world.

One does not have to look to opponents of the invasion and occupation of Iraq for a contrary assessment. For instance, Iraq’s prime minister Nuri Al Maliki, who could hardly be described as an independent political entity, has complained about the “daily phenomenon” of violence against civilians by troops who “do not respect the Iraqi people .... They crush them with their vehicles and kill them just on suspicion. This is completely unacceptable.” His deputy, Salam Al Zubaie, was even more blunt. “As you know,” he said, speaking of Haditha, “this is not the only massacre, and there are a lot.”

According to former US infantryman Camilo Mejia, who was jailed for refusing to return to Iraq after his first tour of duty, “I don’t doubt for one moment that these things happened. They are widespread. This is the norm. These are not the exceptions.”

Mejia also reminds us that a process of dehumanisation facilitates callous disregard for the lives of others. The Vietnamese were “gooks” or “Charlie”; Iraqis are “Haji” or “Ali Baba”. It’s easier to take lives if the victims can be seen as less than human. If they can somehow collectively be held responsible for 9/11, that’s an added incentive for not taking too many prisoners.

More recent recorded instances of random brutality include a disabled middle-aged Iraqi being dragged out of his house and shot dead. An AK-47 and a shovel were subsequently planted next to his body in order to give the impression that he was setting up a roadside bomb: this is apparently standard procedure. A pregnant woman being rushed to hospital was shot dead alongside her cousin because their car failed to stop at a roadblock. In a village called Ishaqi, north of Baghdad, 11 civilians — including five children and four women — were shot dead during a raid, and it was claimed that they had died when their house collapsed during a firefight. Video evidence obtained by the BBC strongly suggested otherwise, but the US army concluded its soldiers had behaved correctly. The puppet government in Baghdad begs to differ and has vowed to carry out its own investigation.

Sure, war is hell and atrocities are inevitable. That is why so many people around the world oppose wars. That is why millions of them took to the streets in a futile effort to prevent the assault on Iraq. That benighted country’s woes are not the consequence of a war of liberation gone wrong. This is what happens when the largest war machine in the world is unleashed without reasonable cause. It has happened too often in the past. It is up to the people of the United States of America to make sure it doesn’t happen again.

What do No Gun Ri, My Lai, Fallujah and Haditha — and so many other such sites whose names have not been recorded because the cover-ups were more successful — have in common? Well, there’s the nationality of the perpetrators, for one. Americans don’t enjoy a monopoly on war crimes by any means, but no other country’s representatives have committed them with such impunity in so many different parts of the world during the past century. This is terrorism on a scale that the likes of Osama bin Laden can’t even begin to imagine. It has got to stop. The mass murderers’ licence to kill must be withdrawn. It will take strong and sustained popular demand in the US and among its auxiliaries to achieve that end.

Email: mahirali1@gmail.com