Cricket diplomacy 27-3-11

INDIAN Prime Minister Manmohan Singh’s invitation to President Asif Ali Zardari and Prime
Minister Yousuf Raza Gilani to watch the Cricket World Cup semi-final between the two countries
is not quite a googly — cricket diplomacy has been used in the past — but can something come
of the gesture? First, the positives. The peace process, stalled since November 2008, appears to
be cautiously edging back on track. The interior secretaries of the two countries are to meet on
Monday-Tuesday in New Delhi; next month, the commerce and trade secretaries are to meet;
and in July the foreign secretaries and ministers are scheduled to meet in New Delhi. All these
meetings will take place in the light of the reasonably promising joint statement issued in Thimphu
in February by the foreign secretaries, which read in part:

“[The foreign secretaries] agreed on the need for a constructive dialogue between India and
Pakistan to resolve all outstanding issues. They affirmed the need to carry forward the dialogue
process.”

Off the cricket field, there are also some quick diplomatic ‘wins’ that are within grasp. Siachen and
Sir Creek remain two problems to which the solutions have long been known and all but agreed
on. But in Pakistan there is a perception that the Indian military has dug its heels in on both
issues. For example, from a military perspective, India has the upper hand in Siachen and that
appears to be something the Indian military is unwilling to give up. Similarly, a more relaxed visa
regime and some trade concessions by both sides are within reach — if both sides de-monstrate
the necessary maturity and spirit of understanding.

While there are positives to be found in the present situation, there remain many reasons to be
cautious. The Indian prime minister may have his legacy in mind while reaching out to Pakistan,
but scandals at home have weakened both his and his government’s position. Even if he wants
to, it is far from clear if the Indian prime minister can go beyond gestures and offer something
substantive. Equally, on this side of the border, there are reasons to be cautious about the
establishment’s ability to compromise on India at the moment. From Indian involvement in
Afghanistan to India’s hydro projects on rivers that are a lifeline for Pakistan, there are serious
concerns here about India’s actions that could have a chilling effect on whatever gains the
diplomats may be able to engineer. But both sides must be careful to not endlessly roam the
space between a breakdown in ties and a breakthrough — talks for talks’ sake will fatigue both
publics.

Tough challenge

REAL estate in Pakistan is expensive. The advertisements in Sunday newspapers are evidence
of this — the sales price quotes run into multiple millions of rupees. Given that each sales
transaction is subject to tax, the federal and provincial governments ought to be earning
significant amounts of revenue. That is the theory. In reality, the government earns only a tiny
amount of the sum exchanged since property is officially registered at a fraction of its market
value. The official price of the land, which is meant to be reviewed annually, is kept low by a
nexus of corruption which deprives the government of tax revenue that would contribute
significantly towards solving its financial problems. Real estate transactions are conducted in
effec-tively two ‘stages’, the first where the payment is based on the official rate, and the second
where the balance dictated by the market price is transferred. It is not just private individuals that
defraud the public exchequer in this way. Government and other agencies such as the
development authorities in Islamabad, Lahore and Karachi, the Defence Housing Authorities and
Cantonment Boards in various cities are to a greater or lesser extent all colluders in the under-
valuing of expensive real estate. Some banks offering mortgage loans issue more than one
cheque.

It is therefore encouraging that early reports about the next budget say that there are plans to
revise the system. A senior FBR official told this newspaper on Thursday that an exercise is
under way to link the tax imposed on transactions to the market-rate value of property. If
achieved, this would significantly improve the financial situation of the federal and provincial
governments. However, the challenge faced by the FBR is daunting. It will face tough opposition
from the people and organisations, many of them functionaries of the government, that are
benefiting from the current system. The FBR must stand firm, though. The official value of real
estate must match its market price. Real estate transactions involve massive sums of money and
there is no reason why corrupt practices should deprive the government of its legitimate revenue.

Afghan nationals

A NEWS report based on last Thursday’s proceedings in the Khyber Pakhtunkhwa Assembly
offers evidence of what could be called the country’s preferential ‘AFAM’ policy that lumps
together two close allies. The report suggests the Afghans and the Americans exist outside the
government’s definition of foreigners. Incredibly, only five US nationals are shown by the Khyber
Pakhtunkhwa home department ledger to be staying in the pro-vince right now. This is a ‘huge’
presence considering that official figures fail to record the presence of any Americans in the
province in 2009-2010.

At the same time, the Afghans are also not considered foreign enough to make it to the list of
aliens, even though some 350 of them receive their visas daily from the Pakistani embassy in
Kabul alone.

The Afghans and their neighbours in the Pakistani areas speak the same language, are
connected by familial ties and brought together by cultural and business interests. These linkages
did make it easier for millions of Afghan refugees to assimilate in Pakistan. But here we are
talking about people with a foreign passport and a Pakistani visa. Even in the case of Afghan
refugees, while they were extended special treatment here, in recent years much emphasis has
been put on their repatriation based on an assertion of their identity as Afghan nationals. Why
would the authorities then not want to register bona fide Afghan visitors to Pakistan? Indeed, it
may be easier to have records for them than for many others who travel to and fro without
documents. The fact that even Pakistani nationals are routinely required to prove their origins to
the picket-minders here should have made exemptions that much more difficult. This laxity is not
new to Pakistan. However, with each new incident, it is more frustrating than it was in the past.

Kurram ambush 26-3-11

FRIDAY`S deadly ambush targeting a convoy of passenger vehicles in Kurram Agency seriously
threatens to scuttle the fragile peace that has barely held in the region. At least eight people were
reportedly killed while several were wounded as gunmen attacked vehicles on the Thall-
Parachinar road in Baggan. Several people were also kidnapped. Reports indicate that most of
the victims are Shia, which points to an overtly sectarian motive to the ambush as Shia and Sunni
tribes have been at daggers drawn in the region bordering Afghanistan. Observers say this is the
first attack inside Kurram proper since the Feb 3 peace deal was signed between the rival
factions, though there have been several acts of violence in the surrounding areas. A few days
earlier, militants kidnapped over 20 tribesmen from a village festival in Baggan while Thursday`s
suicide attack in Hangu, in which five people, including a policeman, were killed, is indicative of
the general insecurity that plagues the region.

There was guarded scepticism of the February peace deal — guaranteed as it was by the Taliban
— when its details emerged. The TTP had welcomed it largely for ulterior motives, as observers
said the sectarian conflict in Kurram was affecting the Haqqani network`s activities inside
Afghanistan. As incidents of violence continued, tribal elders called upon the government to
punish violators of the truce. Yet the political administration has failed to keep the peace and has
not been able to protect vital road links. While it is true that the Taliban are not a monolithic entity
and Friday`s ambush may have been the work of a militant faction not interested in honouring the
peace deal, the fact remains that regardless of the militants` intentions, securing the area remains
the state`s responsibility. The government`s lack of action has emboldened the militants.

The state — both the political leadership as well as the military — needs to be serious about
securing Kurram and its surrounding areas. Though sectarian problems in the region date back to
the Ziaul Haq era, matters have taken a turn for the worse ever since the Taliban arrived in 2007.
Some say the military has focused too much on Swat, ignoring the security threats in Kurram.
Also, critics point out that the security establishment claims the majority of Orakzai Agency —
which borders Kurram — has been cleared of militants; if this is so why do the attacks continue?
The state needs to prevent what is left of the peace process from completely falling apart. The
ambush may well trigger retaliatory attacks and if the government fails to secure Kurram in the
long run, this cycle of violence will never end.

Sign of a stable rate

THE State Bank of Pakistan`s decision to lift restrictions on forward booking of imports is a
positive development and will protect importers against adverse and unfavourable exchange rate
movements. The move completes the rupee`s transition to a free-floating currency as required by
the $11.3bn IMF balance-of-payment loan agreement. The facility, according to a notification
issued by the central bank on Tuesday, will be available to the `genuine` importers immediately
against their letters of credit for a minimum period of one month. The bank had `temporarily`
suspended this facility to importers three years ago in order to restrict imports on the back of fast-
depleting foreign exchange reserves and rising price inflation, which had caused the rupee to
shed 28 per cent of its value in the latter half of 2008. The restoration of the forward cover for
imports, thus, signifies stability of the exchange rate on the back of growing foreign exchange
reserves and an improving current account.

The bank`s initiative, however, is expected to increase the demand for dollars in the inter-bank
market and increase downward pressure on the currency. A slight increase in pressure on the
exchange rate is desirable because it will make exports cheaper and imports dearer. Additionally,
it will ease pressure on the interest rates and help the bank maintain its key policy rate at the
current level of 14 per cent even if it decides against lowering it in its forthcoming monetary policy
review. The rupee has shown resilience during the current financial year because of the growth in
exports and remittances from overseas Pakistani workers. Even the uncertainty regarding the
continuity of the IMF programme and the rapid increase in global oil prices have failed to
adversely affect the exchange rate. Yet the political conditions in the Arab world and the volatility
in the global oil markets demand that the bank remain cautious and alert to avoid a freefall of the
rupee as was witnessed two and a half years ago. Hence, it is advisable for the banks to put in
place strong checks to prevent the misuse of this facility.

Timely warning

THE need for Pakistan and India to share intelligence has been felt for long. The Interpol chief`s
disclosure about a terrorist plot to disrupt the cricket World Cup bonanza is further evidence that
this intelligence needs to be spread wide and far. The revelation came amid threats to the
Pakistani team by some right wing India-based groups. Shiv Sena is believed by some well-
informed Indian quarters to be preparing to make things difficult for Pakistani cricketers should
they reach the final, which is to be played in Mumbai on April 2. But more serious still, the
arrested suspect was apparently planning to disturb the World Cup in Sri Lanka. This serves to
reinforce the need for regional and international cooperation and the exchange of data to keep
track of terrorist planning and pre-empt tragedy. Even though Ronald Noble, the Interpol chief,
and Interior Minister Rehman Malik did not give details of the arrested suspect, Pakistanis
typecast as the international terror-mongers must have been relieved by Mr Malik`s declaration
that the suspect had `no connection` with Pakistan.

India and Pakistan had agreed in Havana some years ago to make sincere efforts to jointly
combat terrorism. And addressing a press conference along with Mr Noble on Thursday, the
interior minister said he had informed New Delhi that the Taliban had started their activity in India.
The attack in Mumbai in November 2008 which was linked to the jihadi Lashkar-i-Taiba in
Pakistan was preceded by the Samjhota Express carnage and the Malegaon bombing; the latter
two incidents warned of the growing danger to India from homegrown terrorist networks. This tells
us that typecasting a terrorist is an extremely hazardous profession. The terrorist threat has to be
combated locally, regionally and globally in all manifestations.