Imagining isolation
FOR a country with very weak fundamentals, we are playing in a league beyond our capacity.
I’ve heard many people over the past few months talk about Pakistan’s deteriorating relationship with the US and felt a little dumbfounded at the ignorance that lies behind such talk.
I’ve heard people glorify Iran and the enormous isolation it is drifting towards as some sort of example to be emulated by our leaders. Many of the same people return from Dubai shopping trips laden with bags of consumer junk purchased from super malls.
The contradictions between the lives they are leading, and the actions they are demanding from their leadership never strikes them.
So if isolation is something that we want for our country, because we don’t like the way the world talks to us sometimes, then it’s a good idea to first lay out what exactly such isolation will look like.
First the good news. Our economy is largely agrarian in nature, and we are food self-sufficient. So unlike countries like Japan and Saudi Arabia, for instance, that are almost entirely dependent on imports for food, apart from edible oil, we hardly import any of our food items. So in the event of sanctions, or restricted imports, our country will not starve.
Now the bad news. We are almost totally dependent on imported oil. What’s more, we have only one point of entry for all of this oil cargo: Karachi.
Stopping Pakistan’s oil imports will not be a difficult task, all it could take would be one message from a hostile navy with a presence in the area that ships ought to avoid Karachi for the time being due to security concerns. That’s it. After this insurance charges for vessels will skyrocket and most shipping companies will prefer to avoid the port altogether.
Oil imports will be severely curtailed, and whatever oil cargoes manage to arrive will be frightfully expensive. Shortages would ensue. Our stock of natural gas, dwindling as it is, would provide some cushion against the full force of this curtailment, but choices will then become even more stark in allocating this gas.
The month of June last year saw shortages at pumps across Punjab. These were blamed on late arrivals of some oil cargoes, delays caused by liquidity problems at PSO due to the circular debt. It took about three days for the delays in cargo arrivals at the port to travel down the oil supply chain straight to the pumps because we have no reserves as such in the country.
So with a couple of oil tankers delayed, pumps across Punjab ran dry within days and transport began to grind to a halt. Under these circumstances, it will be hard to shut down CNG as a vehicular fuel without shutting down entire cities, making the job of gas allocations even more difficult.
In rural areas it is normal practice for households to stock a year’s supply of grain. But in urban areas food is brought in by truck, and in some cities like Karachi, hundreds of trucks arrive every morning at the new sabzi mandi at the entrance of the city bringing in the food supplies that keep the city going.
And that is the Achilles heel of our ‘food self-sufficiency’: movement of food supplies depends on oil in our country, and oil is an imported item, and its curtailment means that bringing food to urban areas will slow to a trickle, causing urban food prices to start skyrocketing as speculation and manipulative pricing kicks in with the shortages.
For perspective, consider that Karachi carries about one month of supply of vegetables at best. But if fresh arrivals of vegetables into the city are interrupted even for two days, it sparks hoarding and speculative behaviour almost immediately and prices begin to rise. One reason for this fragility in the food supply chain is lack of cold storage where longer term supplies can be maintained. Wheat is a slightly different story. The Sindh government maintains huge stocks of wheat in the city, in vast warehouses in Landhi. From here they sell to the millers, who also maintain large storages for their use. The millers then sell on to the retailers where you and I make our purchases.
This supply chain is a little more robust because wheat doesn’t require cold storage. But movement of wheat, even within the city, requires a lot of heavy transport because of its bulk.
According to some estimates provided by big market players and association leaders, most cities have large holdings of wheat but the weakness in the supply chain lies in the ‘last mile’, so to speak, between the millers and retailers, where ample room exists to create artificial shortages, starve the market and sell in black at exorbitant prices.
Another key area of vulnerability is foreign exchange. We depend on inflows from two critical sources: exports and remittances. If the kind of isolation that our macho urban warriors crave means going all the way down the Iran road, then our banking system will be unplugged from global funds transfer mechanisms.
Please understand what this means: no banks will be able to open an LC, no foreign exchange can be remitted or received. All foreign trade will grind to a halt, imports and exports.
And as foreign exchange inflows completely dry up, the speculators will swoop in, causing the value of the rupee to plummet so fast you’ll literally feel the currency flying out of your hands. I wonder what squeaks of machismo we’ll be able to muster then.
With prices of food and oil touching levels we cannot even imagine, with the currency on an endlessly downward spiral, with our electricity vanishing almost completely, with vehicular transport becoming a rarity, what muscle will we flex?
For those of us who have seen what our supply lines for food and energy look like, isolation is a nightmare that is difficult to imagine. [END]
The writer is a Karachi-based journalist covering business and economic policy.
Twitter: @khurramhusain
khurram.husain@gmail.com
We depend on inflows from two critical sources: exports and remittances..
The author ignored two sources. Drugs and Fake currency printing.
Every department should learn from each other can we do something better and more productive. I think personally there is alot to learn from army. They have experience in a number of fields as they are always involved in so many things. They could be really good planners in my opinion. They are also good at generating their own money. Anyone living in a cantt area can see the shops, schools , hospitals they run. Repair work they do in their colonies. Secondly they have worked in so many floods, earthquakes and made many housing schemes. One person i know after retiring from army started to work in private sector to provide security personal and arranging different security measures for different govt. institues.
The above article and most of the comments are undertandable and fine. But they all deal with the identification and re-identification of the problem. Nothing more.
There are three phases of solving a problem: 1) identification of the problem, 2) planning a solution, 3) action. All the complaining that we hear falls under the first stage. Nothing is done about the 2nd and 3rd stage, neither by the government nor by public. Complaining will not help anything. "The only thing that matters is what we do; not what we say."
A thoroughly researched article on a most important matter. Thought provoking. This subject ought to be widely discussed through all the Urdu media.
amazed over the passimism of an intellectual….who has a duty to instill confidence among the masses. Sadly the authors and the likes have only become prophets of doom and churning out future scenarios like a hollywood movie.
As a nuclear armed nation, no one in the world can pose sanctions against us. The author has failed to address the reality that we have over a 100 nuclear weapons now and this scenario is just not possible.
There is no pride in being declared the pariah country of the world no country should touch with a ten feet pole.
We're following in the footsteps of North Korea – sooner than we imagine a dictator will again come and put the final nail …
First of all, no one opts for Isolation by choice but if you cant collaborate with dignity and your self respect is on stake and you have this realization (which is a far cry in case of Pakistani leadership); One should let no stone unturned to get his respect back, on any cost, even if its as big as Isolation
"The contradictions between the lives they are leading, and the actions they are demanding from their leadership never strikes them."
A very good point raised – this is one of the biggest roots of problems in our country: the prevalent hypocrisy in our society. As long as double-standards remain, all this talk of right and wrong is nothing but thin-air.
This reminds me of an instance when I was in the middle of a discussion with a few fellow twenty-somethings about the wrongs of child labour, when one of the participants paused the discussion to scold her 10-year old nanny for not doing her job properly *sigh*
Extremely well written article based on hard facts and ground realities. Must be eye opener if someone realises. Hats off to the author.
I wish there were more journalists like you in the Urdu press.
A far sighted man.
Isolationism is different from self-reliance! Only self-reliant countries are taken seriously by the world. We have to strive to strengthen our fundamentals by prudent economic policies. If concentration of wealth can be controlled, an economy can become self-sustaining.
@Umesh Bhagwat: you mean Self-reliant country like North Korea , Iran or Afghanistan!!!! – think twice……
The world we are living today is a Global-Village – No One can live in Isolation…. Warnings stated by the writer of this article must be well understood before you start spanking any other country (US precisely).
Thought provoking, fact based analysis. Kudos tp the author.
For a Pakistan under sanction, securing oil supplies would not be a problem, with road-linked Iran already faced with tough sanctions finding it difficult to sell oil. Secondly, exports have been called a source of FE earnings along with remittances. If I recall correctly, we have a trade deficit of US $ 20 billion, and remittances at US $ 13 billion. So with no trade, no remittances, oil coming from Iran (through a mechanism not requiring dollars), I guess the only people hurt would be the 1% elite who would find it hard to get luxury items. Not really a nightmarish scenario for a common man already suffering immensely from power outages, rising food prices and all!
the volume of oil from Iran is extremely low….cargo ships bring in huge amounts as compared to oil tankers…..n ur forgetting one thing dear, Balochistan is a troubled province, with attacks and killing very common.it wouldnot be easy for oil tankers to cross into Sindh and Punjab that easily considering how much the balochis hate us…
and the one percent elite ur talking about, they will happily migrate to other countries and live quite comfortably
I agree with bilal. Though it seems like chaos it is not such a chaos to let go of all luxury items. Only the upper 1 or maximum 5 percentage would suffer. The rest will be fine in their mud houses.
Last i read pakistan produces 40percent of its oil and 60 percent is imported. Gas is also produced so that too helps. Secondly what is necessity people lived only 40 years ago with 1/4 of the items we used. Cars were a rarity. Living a simple life is not going down it means only living sensible.
Did you read the same article that I just read?
Excellent rebuttal. I hope Pakistan shows to the world how self sufficient we are.
No Comments please !
We don't want to face the MIRROR !