Maulana's revelations bring no surprises

To some, JUI-F chief Maulana Fazlur Rahman triggered a political earthquake late Thursday when, during a television interview, he revealed that former army chief Gen Qamar Javed Bajwa and spy chief Lt Gen Faiz Hameed had organized and orchestrated the 2022 vote of no-confidence that resulted in Imran Khan’s ouster.

A day later, he corrected himself in a different interview, saying he had taken the ex-spy chief’s name by mistake, and that it was his successor that he had, in fact, been referring to.

“They were in contact with all political parties regarding the no-confidence motion, and they told us the way of going about it,” he had initially said.

The PDM parties went along with the plan, but they were merely rubber-stamping the move, the JUI-F chief claimed.

Maulana’s confession ended up causing quite a stir on social media, with most PTI sympathizers describing it as confirmation of their party’s long-held stance on the cipher conspiracy, under which they believe that army generals acted to topple the PTI’s elected government in collusion with/ or on the instructions of officials from the Biden administration.

On the other hand, the Maulana’s detractors were quick to dismiss him, with many speculating that he had only made a statement to secure a few positions in the next government for himself or one of his family members.

It certainly seemed hypocritical of him to claim that he never wanted a role in the no-trust vote and that he only went along due to peer pressure. He had, after all, been heading the PDM at the time.

Regardless, to those familiar with the security establishment’s behind-the-scenes machinations, this revelation outlined another link in the larger scheme of interference and control ongoing for the past many years.

From the ouster of Nawaz Sharif in 2017, to the pre-poll rigging before the July 2018 elections to keep him out; the post-poll creation of the PTI government with the help of independents; Gen Bajwa’s service extension; the subjugation of the media; and, finally, the ouster of Imran Khan’s government — Gen Bajwa remained active throughout, supported in his political adventures for most of that period by Gen Hameed, who served first as DGC and then as DG ISI.

It is time for both gentlemen’s actions during this extended period to be investigated thoroughly and, if their misconduct is proven, for them to be appropriately punished on each count. It ought to be noted that this current cycle of instability started with Nawaz Sharif’s ouster in 2017, and has only gotten worse since then.

It may be too late to rectify the original sin, but it is never too late to stop repeating mistakes. Recognizing this will put the country on a path to recovery.

Courtesy: Dawn

Pakistan: Two rival parties agree to form new government

Reportedly, Nawaz Sharif and Bilawal Bhutto's parties in Pakistan have reached a deal to form a government. Bhutto's PPP said it would help Sharif's PML-N elect a prime minister after last week's election. The two parties were previously in a coalition that ousted Imran Khan from power in 2022.

This time, independent candidates backed by his Pakistan Tehreek-e-Insaf (PTI) party unexpectedly won the most seats.

PPP leader Asif Ali Zardari told a press conference that although his party and PML-N had contested elections against each other, they had come together in the interests of the nation.

"It is not necessary that [we fight] forever," Zardari said.

The PML-N said in a statement that both parties had agreed to cooperate in the interests of political stability.

The results, in which independents backed by the PTI took 93 out of 266 directly elected seats, had left voters uncertain about which parties would form the next government.

Sharif's PML-N won 75 seats while Bhutto's PPP came third with 54 seats.

In addition, parties will be allocated more seats from the 70 reserved for women and non-Muslims. These additional seats are not available to independent candidates.

According to PML-N Marriyum Aurangzeb, party leader Nawaz Sharif plans to nominate his brother Shehbaz to be prime minister. Both men have previously served as prime minister.

Bhutto says his party will help elect a PML-N prime minister, he earlier said it would not take any cabinet positions.

Imran Khan and his party have continued to emphasize that they believe the elections were rigged against them and plan to challenge the results.

Khan said, "I warn against the misadventure of forming a government with stolen votes. Such daylight robbery will not only be disrespect to the citizens but will also push the country's economy further into a downward spiral."

 

Pakistan: Shehbaz Sharif caught between a rock and a hard place

Reportedly, the PML-N-led coalition government appears unwilling to take the blame for any unpopular decisions it may have to take to fix the economy. It wants guaranteed backing of the powerful military establishment to help it see through the remaining period of its tenure till August 2023.

The coalition, despite pressure from within its ranks to clear the air about the possibility of early polls or taking unpopular decisions, is looking to the powers that can make its tenure peaceful. With each passing day, the government’s indecisiveness is taking a toll on the already sinking economy, as well as governance.

The current rulers appear reluctant to take up a ‘perceived offer’ from the establishment to enter into a bailout deal with the IMF, present the federal budget next month and immediately announce the date for polls.

This is a sticking point at the moment, the coalition parties are of the view that taking difficult decisions on the economic front for a short term will cost them dearly if elections are held early.

It appears that all allied parties have agreed on completion of the 15-month term. The problem is that if the IMF agrees, the economy can be revived. But raising petroleum prices does not seem acceptable. PML-N wants the support from ‘all sides’ to steer the country out of the crises, without being blamed for taking unpopular decisions.

Shehbaz Sharif, who has a reputation of being an efficient administrator, could not assert himself. His role seems to have been reduced to an ‘interlocutor’ among his elder brother Nawaz Sharif, the establishment and the coalition partners — PPP and JUI-F in particular.

Sharif looked very enthusiastic during the first couple of weeks after assuming charge, now seems to have lost the steam and is finding it hard to negotiate the difficult position his government finds itself in today.

The dire situation facilitates the ‘architect’ of the ruling coalition, PPP co-chairman Asif Ali Zardari, to once again reach out to the heads of all allied parties to come up with a fresh strategy. On Saturday, he called on Shehbaz Sharif and discussed the challenges in detail.

The meeting also assumed importance as Zardari flew in to Lahore from Islamabad in the backdrop of the denial of relief to Prime Minister Shehbaz from a special court in a money laundering case that declined to confirm his bail.

A brief statement issued after the over 90-minute meeting said, “The meeting discussed the current situation, especially the economy, in the country. The coalition partners expressed their complete confidence in the leadership of the premier and praised the incumbent government for its steps for the welfare of the people.”

The fast-changing political scenario, followed by ousted premier Imran Khan’s pressure through massive rallies and an impending long march on the capital, has forced the main players of the coalition to review the strategy they formed before toppling the PTI government early last month.

The coalition believes it can handle the PTI march if other things are sorted out with the establishment. Interior Minister Sanaullah has expressed his wish to arrest Khan provided he gets the ‘go-ahead’, as he thinks even one day in prison would make the ousted premier forget politics.

PML-N Vice President Maryam Safdar also voiced her father’s views on it, saying “Nawaz Sharif is ready to say goodbye to the government, but not pass on the economic burden to the people of Pakistan, as there is no point in carrying the weight of the blunders of Imran Khan. It’s better to go to the masses to seek a fresh mandate.”

The coalition government is likely to take a decision about whether to stay in government or go for fresh polls after its final ‘backdoor talks’ with the establishment next week. The perception is, “If things don’t work out, the coalition will immediately rush for electoral and accountability reforms and to announce the date for elections.

Supreme Court verdict stays short of disqualifying Pakistan Prime Minister Nawaz Shari

Supreme Court verdict stayed short of disqualifying Pakistan Prime Minister Nawaz SharifIn a split 3-2 decision, the Supreme Court (SC) while forming a Joint Investigation Team (JIT) stayed short of disqualifying the Prime Minister (PM) in the eagerly awaited Panamagate decision on Thursday, allowing the PM to continue holding office.

The JIT [to be comprised of one senior official each from the FIA, NAB, SECP, SBP, ISI and MI] has been tasked to investigate offshore assets [incl. money transfer to Qatar] of the PM’s family.

In this regard, the SC also ordered PM Nawaz Sharif, and his sons Hasan and Hussein to appear before the JIT.

The JIT will be formed in the next 7 days and has also been ordered to present a report every two weeks before the five-judge SC bench and conclude the investigation in 60 days.

Our take

The efficacy of the agencies represented in the JIT to conduct an independent investigation against a sitting PM is going to be challenging, in our view, as some of these agencies have reportedly expressed an inability to conduct an inquiry citing various reasons such as immunity of public office holders, lack of evidence, legal jurisdiction, etc.

At the same time, the plaintiffs will also have to produce a new set of supporting evidence as the ruling deems the current evidence to be inconclusive. This can be challenging for both the plaintiffs and the JIT to complete the investigation in the stipulated 60 days.

Market Reaction

The market has reacted positively (KSE100 up 3.85% intra-day to close with a gain of 2.57%) as the delay in the Panamagate verdict had clearly been an overhang on market sentiments (momentum which picked up in the closing months of 2016 petered out with the KSE100 marginally down 0.4%CY17TD).

In this backdrop, daily value traded is materially down to average US$113.7mn in Apr’17-to-date compared to US$274.4mn in Jan’17 and to its 6 months average of US$194.87mn.

The market has been in a consolidation mode (down ~3%) since the verdict was reserved on Feb 23’17. In this regard, the benchmark has regressed from  close to +2 standard deviation towards +1 standard deviation (vs. the one year moving average) in the review period.

With political uncertainty now relatively lower, we expect the market sentiments to improve with focus now being upon the upcoming MSCI EM inclusion and Budget FY18. In this backdrop, we recommend a thematic exposure in front line Banks (double digit loan growth from CPEC related activities expected to counter pressure from a relatively lower interest rate environment) with UBL (fwd. PB/PE 1.6x/9.7x) as our preferred pick, OMCs (robust volumetric growth as the industry prepares to increase storage) with HPL (CY17/18F PE of 19.6/15.1x) as our preferred pick in the space, Cements (double digit domestic demand growth with a vibrant private construction environment) with LUCK (FY17E PE 20.01x) as the preferred pick and Autos (healthy order book indicating steady demand, ability to increase prices) with INDU (FY17E/18F PE of 11.4/11.0x) making the cut in the auto space. 

Upcoming Checkpoints

·         Formation of JIT in next 7 days with investigation to be concluded in 60 days

·         Inclusion in the MSCI EM space in May’17 where Pakistan is slated to have a weight of around 19bps

·         Federal Budget FY18 expected to be announced on May 26’17. This would be the last budget of PML-N before general elections in May’18

·         Major political parties are expected to kick-start their election campaigns shortly

Panamagate Recap

·         Prior to the closing of hearing (reserved since Feb 23’17), the Supreme Court heard petitions in the Panama Papers leaks case filed against PM Nawaz Sharif, his family members and others.

·         To recall, the Panama Papers leaks in Apr'16, showed the Sharif family's connection to offshore entities registered in tax havens with assets vastly exceeding legal income sources.

·         No offshore company in the Panama Papers is in the name of Nawaz Sharif or his brother Shahbaz Sharif, Chief Minister of Punjab.

·         However, several entities are listed in the names of the PM’s three children, Mariam, Hasan and Hussain, who were owners or had the right to authorize transactions.

·         That being said, the PM and his children are accused [in the Panamagate case] of money laundering and owning offshore assets without disclosing the source and trail of funding.

·         The opposition led by the PTI (ruling party in the province of KPK, second largest party in opposition) began a spate of protests, threatening a street movement to force PM Sharif to face a proper inquiry over the claims in the leaks (ended on Nov 1’16 as the Supreme Court announced to hear multiple petitions in the case).

·         The delay in announcing a verdict had been due to the unavailability of SC judges hearing the case as they were in different registries of the SC.

A report by Pakistan’s leading brokerage house, AKD Securities

Pakistan: Musharraf Treason Case

On the floor of National Assembly Prime Minister, Nawaz Sharif has given a policy statement on trial of ex-President and retired General Pervez Musharraf. He wants this treason case to go to its logical conclusion, with the consensus and support of all the political parties.

However, some constitutional experts warn that this could open Pandora’s Box. Some experts go to the extent of saying that going further on this sensitive case could destabilize the country, which can prove detrimental to the continuation of PML-N government but more importantly initiating extreme instability in the country.

Some of the experts say that ‘Mian Sahib is running too fast and may lose the breath too early’. They say Mian Sahib should have waited for a while and focused on other pressing issues. In fact the biggest threat is fast changing scenario in Afghanistan, which could have severe impact on Pakistan. United States is directly negotiating with Taliban and also seems adamant at giving a major role to India, which certainly does not bode well for Pakistan.

Some experts go to the extent of saying that ranks and files of Pakistan Army will not tolerate life imprisonment or hanging of a retired General. Some of those who abrogated the Constitution of Pakistan will also have to face the music. If one person has to face the brunt, how can others remain insulated? They refer to Ziaul Haq who made Mian Sahib provincial minister, which led to his deserting the then Prime Minister, Mohammad Khan Junejo, in an attempt to get even closer to Ziaul Haq.

While Mian Sahib seems adamant at punishing Musharraf, a question also has to be answered, who issued instructions not to allow lending of Musharraf’s plane in Pakistan? The point has to be kept in mind that not only the life of Chief of the Staff was put at stake but had the plane ran out of fuel, all the passengers on board would have lost their lives.

Some insiders say that efforts were also made to push the plane into Indian Territory. They say India would have immediately shot down the plane or minimum brought it down, arrested, trialed and hanged the in service General and Chief of the Staff. This would have provided India and ideal opportunity to punish the ‘Kargil Hero’. Over the years Mian Sahib has been saying that Musharraf had taken the decision at his own without even informing him.

One of the conspiracy theories is that United States wishes to close ‘Musharraf Chapter’. This does carry some weight because aircraft carrying Ziaul Haq along with many generals, who played key role in Afghan resistance against USSR, was blown up. Ejazul Haq, son of Ziaul Haq has been saying over the years that blowing up of plane was not an accident but an act of sabotage, in which the US Ambassador in Pakistan and a brigadier general also lost their lives.

Some of the critics say that over the years Pakistan Army and ISI has been maligned badly and pushed to the wall. Musharraf has also been accused of conspiring to kill Akbar Bugti and Benazir Bhutto. Bothe these allegations are aimed at portraying that Army has been involved in some heinous crimes. Interestingly Musharraf is being trialed for issuing instructions to kill or abrogating the Constitution but hardly any action is being taken against those who claim responsibility of killing of dozens of people and attacking sensitive installations.

Courtesy: The Financial Daily

Pakistan: Can the rulers develop consensus?

According to the results of recently held elections all the political parties enjoy the status of ruling junta. If members of some of these parties will be sitting on opposition benches in the national assembly, they will form the government at provincial levels.

Interestingly, MQM that has remained part of ruling junta has decided to sit on opposition benches at the federal as well as provincial levels. Under the emerging set up it is expected that the parties will preferably come up with policies through consensus and avoid confrontation.

The real test of their consensus is deciding fate of the drone attacks. All the parties during their election campaign were critical of these attacks and now the time has come to tell the super power ‘enough is enough’. It is expected that prime minister in waiting, Mian Nawaz Sharif may not be able to convince the United States alone but if he enjoys support of all the elected members, he can negotiate a better deal.

In the worst scenario Pakistan has the right to intercept and down any aircraft breaching its airspace. 

However, it is believed that these attacks enjoy the blessing of Government of Pakistan (GoP), which is also extending ground support. It is often alleged that Pakistan provide the necessary details for these attacks because at times undertaking such precise attacks are not possible from ground.

The classification of Taliban into good and bad and Taliban/TTP extending support to JI, JUI-F, PML-N and PTI is not likely to allow the ruling junta to continue support for drone attacks. Many questions bother Pakistanis, what is the reality of Taliban/TTP? Are they friend or foe? If they are friend why are they at war with Pakistan Army?

One of the ways to rationalize good or bad Taliban is, those who cooperate with US-led Nato forces are called good and those who consider them ‘occupier’ have been clasified bad. Though, it has been decided to withdraw Nato forces from Afghanistan, there are fears that there will never be complete withdrawal. United States will retain bases in Afghanistan, party to keep Iran under pressure and partly to get control over the goods going to Central Asian countries via Afghanistan.

In Afghanistan United States is also supporting India in maintaining its hegemony; in fact the US wants the countries located in the region to accept India as a regional power. This is aimed at keeping Pakistan under pressure. In such a scenario Mian Sahib may find granting India MFN status a difficult task. His other associates, religious parties are also not likely to support him in developing too cordial relationships with India.

To overcome energy crisis Mian Sahib is demanding Rs500 billion, which has to be mobilized through imposing new taxes and/or raising rates of existing taxes. It is feared that he may also resort to hike in electricity and gas tariff, which will not be endorsed by his opponents.

Ironically, Mian Sahib has not come up with any policy to contain rampant pilferage of electricity and gas and recovery of outstanding dues. It is necessary to remind him that hike in tariffs just can’t improve cash flow of electric and gas utilities.

Targeted killing has once again resurfaced in Karachi and the worst victim is Shia community. Ironically, some of the religious parties and banned outfits enjoy most cordial relationship with PML-N. The time has come to catch the perpetrators and give them exemplary punishment.

Pakistan: Can Nawaz Sharif Redefine Priorities?

The process of oath taking by the elected members has started. On Wednesday the elected members of Sindh Assembly sworn in and shortly members of other provincial assemblies and National Assembly will also take oath. Mian Nawaz Sharif will create the history by becoming Prime Minister of Pakistan for the third time. All the fellow countrymen wish him the best and wish his government completes its term. The haunting memories of dismissal of his previous two governments are still fresh.

In these pages it has been highlighted repeatedly that it will not be the bed of roses for the rulers, particularly for Mian Sahib. His party will form government at federal because it enjoys simple majority and in Punjab it enjoys two-third majority. However, his worst critics and opponents will form the government in remaining three provinces.

Since all the parties want to put economy of the country on fast development, resolve energy crisis, curb militancy and establish writ of the government establishing good working relationship is a must because they have consensus on the issues and also on the priorities. The management gurus say ‘a problem well diagnosed is half solved’.

Fortunately or unfortunately all the parties have consensus on four basic issues facing the country that are: 1) balance of payment, 2) energy, 3) law and order and 4) internal and external threats. It may be another thing that they may not priorities the way these have been listed here. During the election campaign political parties have talked a lot about these problems and the root causes. Now the time has come to come up with policies through consensus and implement these in letter and spirit.

To begin with the new government will have to finalize details of Saudi bailout package and IMF extended financial facility.  The two options will help in different ways, Saudi package will help in containing further erosion of existing paltry foreign exchange reserves and IMF facility will provide the much needed breathing space to come up with a home grown plan for overcoming balance of payment crisis. Delaying the decision for next 100 days to witness the impact of policies can prove fatal if desired results are not achieved.

People are disappointed with the statement of Mian Sahib that energy crisis is far worse than estimated. They had got some idea when PML-N leadership extended the period from three months to three years and lost hopes with the announcement that the government needs 500 billion rupees or five billion dollars to overcome the issue. Even the experts wonder how such a colossal amount could be mobilized and what will be the required measures to pay off this debt.

Some cynics say the country does not needs money but a solid plan to resolve the crisis. Both electric and gas utilities have to overcome blatant theft and improve recoveries to improve cash flow. At present about 6000MW electricity is produced at hydel plants which don’t require even a drop of oil and remaining 6000MW electricity is supplied by IPPs.

If NTDC clears all the outstanding amounts IPPs will have enough cash to buy fuel. The much talked about debate that ministry of finance is not releasing the required amount is spreading disinformation rather than helping in resolving the crisis. The federal government can pay the amount pertaining to federal and provincial governments, state owned enterprises and make the deductions at source.

Law and order situation can be improved by taking action against the culprits irrespective of their association with political parties or religious groups. Let one point be very clear that economic prosperity can’t be achieved without ensuring security of people and their assets. Operation in a particular area or against a specific ethnic group can’t resolve the issue.

Once the economy is put on track, the government can address internal and external threats, worst being growing militancy and sectarian killing. The time has come to weed out foreign militants, who are also being used by various local groups for settling scores. Across the board operation is required against the perpetrators, irrespective of their association with local political parties and religious groups.