Quest for price stability

PRIME MINISTER Shaukat Aziz announced the Ramazan package well before the onset of the holy month promising price reduction in most items of daily use sold by the government-run utility stores. Total subsidy to these items will be Rs 650 billion. Vanaspati ghee is to be sold at Rs 6 per kilo lower than market price, atta at two rupees less per kilo and rice and a large variety of pulses at 10 per cent below the bazaar prices.

The prime minister is taking personal interest to ensure that his package promise is fulfilled in toto and that the hardships of the poor are reduced. He has appealed to the traders to abide by the spirit of Ramazan and not take to profiteering as usual.

He has asked the provinces to come up with their own packages and asked for the personal intervention of the chief ministers. He wants Sunday and Friday Bazaars to be promoted avidly. He has also urged federal ministers to visit markets and monitor any rise in prices. Members of parliament have also been asked to do like wise.

In Sindh, chief minister Dr Arbab Ghulam Rahim says he wants stability in prices round the year and will take stern action against price manipulators. The city government has also come up with its own price list to which the traders should conform.

Will all that produce a trick the prime minister hopes for? But before the Ramazan package was announced, the utility stores had raised prices of 450 items by 8-10 per cent so that new prices after the subsidy could be almost the same as the old prices. And it has been reported that the utility stores raise their prices every year before the Ramazan package brings them down in varying measures. It is more of a one step forward, one step backward price shuffle which the utility stores play every year.

Despite the fact that the utility store prices are usually about 10 per cent lower than the bazaar prices, the quality of the products is not usually as good as that of the goods available in many other stores. But the utility stores are small in number (550), compared to the general stores. It has now been suggested that the utility stores cannot be a success if they confines their activities to the retail market. The Utility Stores Corporation should also enter the wholesale and middle level market and have 450 new stores and 16 more warehouses at an investment cost of Rs 812 million. Now at a time, when the government is opting for privatisation of public sector enterprises, is it proper for it to enter the retail market in a big way and if it does, can it succeed? The ministry of industries and production which has suggested such an expansionist move has asked the planning commission to consider its feasibility and the possibility of carrying out the expansion successfully and the PC is taking its own time to decide.

The Utility Stores Corporation was in fact marked earlier for privatisation, but the process was delayed as other projects got a higher priority. But now it may be expanded and asked to play the role of a price stabiliser to checkmate the profiteers in the private sector. The government faces a Hobson’s choice when it comes to seeking price stability. It cannot successfully persuade the traders to sell goods at fair prices as the businessmen habitually opt for maximum profits.

And it cannot manage the utility stores very competently. Even if 450 more stores are added to the existing list of 500, to make a total of almost 1000, that will still be a drop in the ocean, compared to the actual need of the masses. Except in the case of the low income consumers, living close to the utility stores, others have to spend money on transport which is high now and that makes them lose what they gain by shopping at a distant utility store.

When it comes to the Sunday and the Friday Bazaars, the low income groups may not have enough money to do bulk buying but when they follow the long queues at the utility stores, there are complaints about inordinate delays in buying anything from there and of the rude behaviour of the stores staff.

Prices rise in Pakistan is a constant factor because of the ever-widening gap between demand and supply. The government tries to make up this gap through liberal imports. Food imports during the first 11 months of the last financial year cost the exchequer $1.7 million. A great deal of that was spent on importing sugar. Even when the supply is adequate or in surplus, traders manage to create a shortage by hording items and manipulating the prices. They manage to do that through a cartel system they operate in the economy. But now the monopolies commission which could not break the cartel system is to be turned into a competition promoting agency. And it is taking a long time to become active.

The same problem exists in India, in agricultural commodities. The mandis were created to help the farmers to sell their products at better prices, but these soon fell into the hands of the rapacious middle men. So major enterprises like the Reliance in India are setting up units to buy agricultural products straight from farmers and deliver them to supermarkets and other outlets and reduce the prices greatly by that process.

The prime minister sought to encourage some German cash-n-carry stores to do the same in Pakistan, but the stores have been slow in coming up. Meanwhile he has suggested there should be more than one wholesale market in a city. In such a context, the government is forced to fall back on the utility stores and instead of privatising them, it is expanding them to play a far larger role in a distribution chain.

In the past, the operations of the utility stores have been marred by massive corruption, for there is plenty of room for it there because of the nature of the trade. Will the expansion of the stores and their increase in number raise the possibility for corruption and what protective measures are proposed? Meanwhile, the provincial governments have created small brigades of price inspectors. They are 658 in all and include 225 in the Punjab, 138 in Sindh, 150 in the Frontier province and 145 in Balochistan. Why has Sindh got the smallest number of price inspectors, although it has the second largest population among the provinces.

Will the price inspectors be able to enforce the prices like those that the city government has come up with, or will they be prevented to do so by the strikes which the traders may resort to and hence calling off the whole inspection exercise. The issue is much larger than profiteering at the retail level. If the banks are encouraged to make 100 per cent profit or more why cannot retailers do the same, they ask.

Food inflation has registered a double digit rise — 11.12 per cent in August. Prices of many essential items went up in the month from 10 to 130 per cent. The sensitive price index for income groups up to Rs 3,000 has registered a double digit inflation compared to the same period last year.

Ramazan is usually a difficult month in terms of prices. It is a period in which the growers and traders seek as high prices as possible. For consumers, it is a Hobson’s choice. But they also contribute to this extraordinary price hike by opting for high-level consumption of essential items, particularly the food items which go up by about 50 per cent or more. As a result, shops are well stocked and the prices are high and as the demand increases, the prices go up still higher until the Eid.

Many consumers are not in a mood to squabble over prices particularly in respect of fruits and vegetables. So as Ramazan began, this time, the prices of milk, eggs and meat went up and the trend may persist during the whole month, particularly in respect of fruits.

One reason for the price hike is increase in demand created by the rise in money supply. Private sector bank credit increased by Rs 450 billion in the last financial year ending June, compared to the preceding year when the private sector credit was Rs 480 billion. It was less by 30 billion, but the overall money supply including easy consumer credit was large enough to give a push to inflation despite the State bank of Pakistan’s policy of exercising monetary restraint. Add to that the inflow of $4.6 billion as home remittances or (Rs 275 billion) and the demand pressure all round increases. The official policies pump up the private sector credit to sustain the economic growth level and that makes a higher level of inflation inevitable in place of the targeted 7.5 per cent.

In this context the All Pakistan Textile mills association has come up with an advertisement protesting against the high cost of the inputs for exports and the taxes on exports and lamenting the fall in exports. The exporters and the common man feel the financial squeeze and call for relief. The government wants to provide some relief to the common man but does not know how to do that effectively.

Consumers in Pakistan are not organized and are, therefore, exposed to various privations. Consumer protection is more of a slogan with the government as well as with political parties. No collective or sustained effort is made to protect the consumer’s interests so the government does not feel under great pressure to act decisively. Consumer interests suffer by default all around.

Abuse of official privilege

GENERAL Musharraf’s current visit to the United States, the longest for any Pakistani president or prime minister, is an abuse of official privilege to promote his personal ambitions and for personal profit. Such state visits are undertaken to conduct official missions of high sensitivity which cannot be conducted through diplomatic channels or through the visits of lower officials (in our case the prime minister or the foreign minister).

The principal justification for the current visit was to allay US fears about inadequate Pakistani measures to deny safe haven to foreign Muslim militants in Pakistan who were fomenting trouble near the Afghan-Pakistan border. In particular, Gen Musharraf had to explain to the US president the recent agreement in North Waziristan with the local tribes to stem the flow of cross-border movement of foreign militants between Pakistan and Afghanistan. This has raised eyebrows in influential US political circles and is viewed with suspicion even among official circles. It seems, however, that instead of removing the misgivings of Washington, the statements he has so far made and what has been in his book have whipped a hornet’s nest.

The real purpose of the general’s visit, as has now become abundantly clear, is the promotion of his book ‘In the Line of Fire’, published by Simon and Schuster, which was been launched with a lot of fanfare. For writing in autobiography he is reportedly being paid one million dollars. If Gen Musharraf had been a private citizen and his book had been solely the result of his own authorship and the events related to his private life or if he had written the book after retirement, no one would have grudged his long visit and the handsome royalty payment.

However, the fact is that the central theme of the book is in the public domain and it capitalises on the circumstances in which Pakistan became an ally of the United States in the war on terror, almost overnight, while its intelligence services, which have always enjoyed a rare degree of autonomy, continued to have close relationship with the Taliban.

The general’s trip is thus an attempt to benefit from his official meeting with the United States president, who publicly made a sales pitch for the book at the press conference following his meeting, which reportedly gave a 1,000 points boost to his book in the best-seller ratings. However, it still trails behind by a large margin Naom Chomsky’s book on American hegemony, now heading the best-seller list in the US since it received an unsolicited boost from the Venezuelan President, Hugo Chavez, who acclaimed it from the podium of the UN General Assembly. It is quite unlikely that any leader of the Non-Aligned Movement, whose summit meeting President Musharraf attended before getting kudos in Washington, would endorse his book, which is the outcome of his narration of American threats and insults.

The general’s publicity campaign, organised by his publisher, included an interview with C85’S 60-Minutes programme which focused on the book. Both Simon and Schuster and CBS are owned by media giant Viacom, whose property includes Paramount Pictures, MTV and Blockbuster.

The propriety of writing his memoirs while still in office in itself is highly suspect, but to use his official position to promote its sale and project his political image is questionable. Many may also question the wisdom of a serving army chief of staff publishing his memoirs and accepting monetary gain, and also of revealing secret information relating to Kargil and the authenticity of Pakistan’s claim as a nuclear power in 1999. The parliament will be well within its rights if it decided to debate the issue.

President Musharraf’s visit has become even more controversial in view of some rather sensational statements made in his interview and purportedly contained in his book. However, he has mustered enough courage and confidence to embarrass the US president who feigned ignorance about Mr Armitage’s threat of bombarding Pakistan and pushing it back to the Stone Age (although the majority of the country’s population does not live far from that age), allegedly made to Pakistan’s intelligence chief who was then visiting the US and was fired three months later.

While the sketchy contents of the book are already available, some of Gen Musharraf’s contentions assertions will no doubt be widely questioned both at home and abroad. The most questionable aspect of the episode is the way in which the current regime in general and Gen Musharraf, in particular, have exclusively arrogated to themselves the task of ‘raising Pakistan’s image’ as a modern and enlightened Islamic state. In fact, they have succeeded in doing just the opposite.

The self-congratulatory tone of the book, as well as the statements regarding the regime’s achievements, is unconvincing. Typical of the statements made in this vein is the one relating to Kashmir, which says: “I would like to state emphatically that whatever movement has taken place so far in the direction of finding a solution to Kashmir is owed considerably to the Kargil conflict.” (as quoted in the lead story of Dawn, Sept 24, entitled ‘Kargil boosted Kashmir cause’). This ignores the vital role played by other factors, including the American involvement and the back-channel diplomacy.

Kargil did, however, play a defining role in establishing the military’s supremacy over the incumbent civilian government, which Gen Musharraf bypassed along with the Lahore agreement between Vajpayee and Nawaz Sharif. Kargil also left deep scars on the Indo-Pakistan relationship, which Gen Musharraf’s one-sided version of the episode can only help strengthen the Indian apprehensions about the Pakistani military’s future intentions. It seems highly unlikely that Dr Manmohan Singh will be able to carry through the promise of renewing the peace process with Pakistan, after the publication of this book.

Another important issue raised by ‘In the Line of Fire’ is the manner in which the decision to join the war on terror was made and the motivations for taking that decision. With the benefit of hindsight and the startling disclosure made in the book about the way the Americans twisted the arm of a faltering military regime, it is becoming clear that the so-called U-turn by Gen Musharraf was an attempt to make a virtue out of necessity.

After struggling for two years to establish its legitimacy and experimenting with various political groups to retain its power, the regime stumbled on this opportunity to consolidate its grip on the country’s economy and polity. That, rather than the threats and insults hurled by Powell and Armitage, which Gen Musharraf timidly swallowed in the ‘national interest’. Unconcerned about the semantics of sovereignty, he allowed operational facilities for the US air force and intelligence agencies. The real effect of this obeisance was not a diminution of terrorist activity or fundamentalist influence, but the reverse, as has also been the case in Afghanistan and Iraq.

The real beneficiary of Pakistan’s post-9/11 relationship with the US has been the military, which now has control over a significant part of the economy, and the cabal of political and industrial groups which have become its ardent supporters as a result of sharing the largesse of US and other international aid and loans, including those for the benefit of earthquake survivors.

It is significant that the chairman of the earthquake reconstruction and rehabilitation agency (Erra) is an industrial tycoon whose investment bank is under investigation for financial irregularities. With the anniversary of the 2005 earthquake only two weeks away, the reconstruction agency has not been able to disburse sufficient funds to enable the survivors to rebuild their houses and an overwhelming majority is living in worn-out tents given to them a year ago. With winter almost knocking at the door, the plight of these unfortunate victims in whose name about six billion dollars was claimed to have been raised is more pathetic than a year ago.

The regime is confronted with serious economic challenges, such as slowing growth, high levels of poverty, rising inflation and trade deficits. The social agenda, over which Gen Musharraf has often gloated, especially women’s empowerment, is being scuttled by his political and religious allies and is being used to divide the opposition in the hope of forging a dependable electoral alliance for the 2007 polls.

sm_naseem@hotmail.com

Charm and eloquence

THEY will miss him when he goes, no doubt about it. They’ll even miss the “Y’knows” and “I means” with the choked-up pauses. Will they ever find such election-winning political genius, such easy eloquence and clever charm as in this great middle England pleaser?

Once he had an animal instinct for the way the political wind blows. The deftness of his opening Cherie joke - “She won’t run off with the bloke next door” — was all the reminder they needed. Gordon could never do this.

This was Blair’s “My Way” speech. Regrets, he had a few, but then again, too few to mention. With stern ‘No Turning Back’ advice, he stamped his legacy on his goodbye. The party could continue his way, facing tough issues at home and abroad or they could retreat into an ideological comfort zone of anti- Americanism and unreformed public service. “So it’s up you. You take my advice. You don’t take it. Your choice.”

There were some damp eyes dabbed with hankies and men blowing noses. “Don’t go,” someone said. Even his assassination letter writer of just three weeks ago, Snon Simon, said: “It was a great speech. He is the greatest prime minister we have ever had. The nation owes him an enormous debt.”

Yet they know why he must go, for his winning days are over. Many wished he had said goodbye right here, right now, sudden and decisive. These delegates have seen their Labour stronghold councils fall, long-time Labour cities lost, Wales and Scotland in peril, local parties near defunct for lack of members — all poisoned by Iraq and that wider mistrust it came to symbolise. The greatest moments video to a handclapping hall left an ache of nostalgia for what 10 hard years in office has done to the man, to the party and probably to themselves.

Can they recapture the spirit of the early days? Whatever Gordon Brown will be, he has no miracle elixir for the party’s lost youth and innocence.

“This is a changed country,” Blair said and so it is, admirably. Think of the free art galleries, the right to roam, civil partnerships, a ban on smoking in public places, 800,000 fewer poor children, third world debt relief, tax credits ... he offered a cornucopia of success, reminders that this is so not just a richer but a better country. “The USP of New Labour is aspiration and compassion reconciled.”

Crime, schools, the NHS, wherever you look, the party was invited to relish all that has been done - more than any government before. It is a solemn moment for remembering how far, how fast Blair and his government have brought Britain, so rarely recalled by a short-memoried public that trousers every success without praise or gratitude and always asks for more.

The most serious substance of his speech concerned the global challenges that cannot be ducked. He scents a renewed urge in the party post-Iraq to retreat from the real world: not fortress Britain but confident global citizens, not anti-American or anti- European, no “craven act of surrender” in Iraq or Afghanistan, he urged. Don’t give up “power, weight and influence for Britain”, he warned. World trade, global warming, terror and Palestine can never be solved without America and Europe.

But then his feet seemed to leave the ground as he floated away into an illusory constellation of his own. “From now until I leave office I will dedicate myself ... to advancing peace in Israel and Palestine. I may not succeed. But I will try ...” Is that the reason why he is staying, really? His lost sense of reality has blotted out the damage he has done to his own role as peacekeeper.

Political stardust has its sell-by date: he fell to earth over Iraq and Bush. It changed him. The man who shot the breeze of public opinion turned into the sod-them-all leader, lone guardian of unseen tablets of stone proclaiming what must be done - abroad and in public services at home. There was no Third Way any more, only his way. Doubters were the “forces of conservatism”. “Forward” was wherever he led, even if his reforms travelled zigzag journeys: any other direction was “back”. And there was plenty of that tone in his speech: it wouldn’t be a Blair speech if he did not give his party a wigging as he goes. So his parting declaration - “I love this party” had an awkward ring.

How much will they miss him? It all depends, as everyone knows, on what comes next. Will Brown be better or worse? As they stand there, both men clutching the crown in a long arm-wrestle, that uncertainty stops Blair letting go. But does he fear Brown’s success or failure most? Perhaps both, a natural sentiment. So his obligatory praise for the chancellor was a tad perfunctory and ambiguous. “New Labour would never have happened and three election victories would never have been secured without Gordon Brown. He is a remarkable man.” Remarkable? Not quite enough, swiftly followed by the warning that the party faces a “real test of leadership” in the years to come. Only John Reid was singled out among the rest.

Anxiously viewing the bad months ahead, there was enough of a veiled threat here to alarm many in the party praying for peace. Yet though he fell far short of endorsing Brown, somehow in tone, in the very admonitions and advice, his every word was imbued with expectation that the chancellor was his inevitable successor. —Dawn/Guardian Service

Tortured by mistake

A COUPLE of years ago, President Bush might well have counted Maher Arar as one of the success stories of the CIA’s secret programme for detaining and interrogating suspected terrorists.

Mr Arar, a Canadian citizen, was arrested at New York’s John F. Kennedy International Airport in September 2002 because he was on a watchlist; Canadian police said they believed he had connections to Al Qaeda. Rather than being returned to Canada, Mr Arar disappeared into the CIA’s secret system — he was transported to Syria and handed over to its military intelligence service. For several weeks, Mr Arar was tortured by his Syrian captors. Eventually he broke and confessed that he had trained at an Al Qaeda camp in Afghanistan.

The problem with this story, as an official Canadian investigation reported Monday, is that Mr Arar was innocent. “Categorically there is no evidence” that Mr Arar was a terrorist or posed a security threat, the report stated. He never travelled to Afghanistan. The Canadian police intelligence about him was simply wrong. But after his coerced confession, he was held in a Syrian dungeon for 10 months and suffered “devastating” mental and economic harm before finally being released in 2003.

Mr Arar’s case vividly illustrates a couple of the points that veteran military and diplomatic leaders have been trying to impress on Mr Bush about the dangers of the CIA programme, for which the president is demanding congressional approval. From early 2002 until this month the agency held some Al Qaeda suspects in secret prisons and subjected them to harsh interrogation techniques that, though they don’t include beatings with cables, violate the Geneva Conventions and current U.S. law. Others, like Mr Arar, have been secretly handed over to foreign governments known to use torture in interrogations, including Egypt and Jordan as well as Syria — a practice known as “rendition.”

Mr Bush claims that the renditions, secret detentions and harsh US techniques — which most of the world regards as torture — have yielded important intelligence. But as the military commanders who oppose such methods have insistently and courageously pointed out, it is well known that the information they produce is unreliable. Many detainees, as Mr Arar did, will falsely incriminate themselves or others to avoid abuse. Over time, better intelligence can be obtained by working within guidelines mandating humane treatment of detainees.

—The Washington Post