Pakistan Elections 2024: Likely Outcomes

According to a report by Pakistan’s leading brokerage house, Topline Securities, after a lot of uncertainties, Pakistan Elections are all set for February 8, 2024, to elect representatives for the National and Provincial Assemblies for the next five years.

Many political analysts a few weeks back were not sure about timely elections due to legal, operational, and weather-related issues. Now it seems that all these issues have been settled, and the process is likely to be completed on time.

According to detailed strategy note titled 'Stock Market Recovery Has Just Begun; Index Likely to Reach 75,000 in 2024,' dated November 18, 2023, mentioned that things are now looking stable, and elections are likely to happen on February 8, 2024, contrary to earlier fears that elections may be delayed for a few years.

A smooth transfer of power to an elected government will help overcome concerns of bilateral and multilateral lenders, including the IMF, at a time when Pakistan is facing a severe external debt repayment challenge.

IMF in its country report in July 2023, stated that the new Stand By Agreement (SBA), can play a crucial role in anchoring policies ahead of the national elections due in the fall and until a new government is formed. IMF team also met with leaders of major political parties in Pakistan to get assurances of support for key objectives ahead of final approval of US$3 billion SBA in July 2023 crucial to save the country from default.

With only two weeks left for the Elections, political activities and election campaign is not what it used to be. This could be due to lack of interest by political parties or may be due to lesser competition in most of the constituencies after PTI did not get the “Bat” symbol.

Looking at the manifestos and promises of major parties, it seems no one is addressing the key economic challenges faced by Pakistan. Most of the parties are focusing more on the popular measures to gain public confidence amid record high inflation.

Comparing the performance of three large political parties in their last tenure, PML-N and PTI have performed relatively well on key economic indicators as against PPP. This has also being endorsed by a recent news analysis by Bloomberg whereas per Misery Index, PML-N (score 14.5%) has better record on managing the economy followed by PTI (score 16.1%) and then PPP (score 17.2%).

Considering the recent developments, the question investors are interested in is not who will win the elections but whether the new government will get a majority or if it will be a weak coalition government. As reported by leading political experts, it looks like PML-N will form a new coalition government. This is also supported by few recent surveys.

The brokerage house believes that in case one party gets 50% plus seats, that will definitely boost investors' confidence and markets will react positively. This will also give a positive signal to the IMF and other lenders. On the contrary, a coalition government with support of smaller parties will remain fragile and may struggle to implement the much-needed economic reforms.

Another key area to look for is how the new government will manage economic challenges, especially to deal with the IMF for a long-term program. Considering the not-so-pleasant experience with the PML-N nominated Finance Minister in the last opposition-led government of PDM, investors are eager to see the finance team of the new government.

The new government and its Finance Minister can play a significant role in negotiating with friendly countries for debt rollover/debt re profiling and finalizing a new IMF program that requires a lot of painful reforms.

Furthermore, it will be interesting to evaluate the new government's relationship with the establishment. Pakistan has a poor history of worsening civil-military relationships that have badly affected the political continuity, with negative implications for the economy and the markets.

Pakistan Stock market recovery is likely to continue in the year 2024. The brokerage house expects benchmark KSE-100 total return index to reach 75,000 by December 2024. However this is based on current low PE multiples without assuming any re rating amid high risk of debt sustainability. Investors may also see a post election rally in line with historical trend.

Smooth transfer of power to new government after elections, new long term funding program from IMF and expected fall in Interest rate will be the key drivers of equity market in 2024.

In spite of recent rally, Pakistan market is currently trading at PE of 3.7x based on 2024 estimated earnings. This is far lower than last 5 year and 10 year average PE of 6x and 8x respectively. This is even lower than countries that have defaulted on external debt. 

The brokerage house prefers high quality private sector companies with strong cash flows. In cyclical sectors it prefers Cement and Steel due to expected decline in policy rate and better volumetric sales. It also likes Banks due to unmatched valuation.

Its 2024 top picks include Meezan Bank (MEBL), United Bank (UBL), MCB Bank (MCB), Mari Petroleum (MARI), Lucky Cement (LUCK), Maple Leaf Cement (MLCF), Fauji Cement (FCCL), Engro Corporation (ENGRO), Pak Elektron (PAEL), Indus Motors (INDU) and Interloop (ILP).

On the other hand some mid and small caps have the potential to provide above average gains that includes Pakistan Aluminium Beverage Cans (PABC), Mughal Iron & Steel (MUGHAL), Image Pakistan (IMAGE), Tariq Glass (TGL), Century Paper & Board (CEPB), Panther Tyre (PTL), and Murree Brewery (MUREB).

 

Julia Sebutinde: Only ICJ judge opposes all measures against Israel

Julia Sebutinde, Uganda’s representative to the International Court of Justice (ICJ), has become a hero amongst Israel supporters, though her country distanced itself from her. She was among the 17 judges who deliberated on interim measures in the case concerning the Application of the Genocide Convention in the Gaza Strip. She uniquely voted against all proposed provisional measures, standing out as the sole permanent judge to do so, in contrast to Ad hoc Judge Aharon Barak, who opposed most but supported two.

In her dissenting view, she argued that the core of the dispute was fundamentally political, not legal, and asserted the absence of a credible indication of genocidal intent by Israel.

Adonia Ayebare, Ambassador and Permanent Representative of Uganda to the United Nations, criticized Sebutinde on X.

“Justice Sebutinde ruling at the International Court of Justice does not represent the Government of Uganda’s position on the situation in Palestine. She has previously voted against Uganda’s case on Democratic Republic of the Congo (DRC).

Uganda’s support for the plight of the Palestinian people has been expressed through Uganda’s voting pattern at the United Nations,” the ambassador tweeted.

69-year-old Julia Sebutinde is a distinguished judge from Uganda, serving her second term on the International Court of Justice (ICJ) since March 2012. She is the first African woman to hold this position. She has a rich background in law, having graduated from Makerere University, obtained a diploma from the Law Development Centre in Kampala, and a Master of Laws from the University of Edinburgh, after which she worked in various legal capacities in Uganda, Britain and Namibia. Sebutinde's notable career includes serving as a judge in the Special Court for Sierra Leone, presiding over high-profile corruption inquiries in Uganda, and her election to the ICJ, reflecting her significant contributions to international justice.

“In my respectful dissenting opinion, the dispute between the State of Israel and the people of Palestine is essentially and historically a political one,” she wrote in her dissenting opinion.

“Calling for a diplomatic or negotiated settlement, and for the implementation in good faith of all relevant Security Council resolutions by all parties concerned, to find a permanent solution whereby the Israeli and Palestinian peoples can peacefully coexist,” she wrote.

 

 

 

 

 

Genocide in Gaza by Israel would have not been possible without silence of Muslim rulers

Many analysts, including me, have not been able to comprehend the reasons of silence of Muslim rulers on the genocide going on in Gaza for more than 100 days. Today, I read a post at LinkedIn and sharing it with readers of my blog.

In November 2023 Israeli Prime Minister Benjamin Netanyahu said, "I say to the Arab leaders, if you want to preserve your interests, you must do one thing, Remain silent."

They have complied with this demand as if it were a command revealed by Allah (God). Abdullah of Jordan has mobilized his armed forces to protect the border for the IDF, Sisi of Egypt has ensured the Israeli terrorist genocide continues in all its forms including starvation and preventing aid from reaching Gaza. Even Erdogan from Turkey did not want to be left out in serving Netanyahu, he has increased trade with the Zionist entity ensuring they have essential resources such as steel for weaponry and munitions.

It will not be wrong to say that the Muslim rulers have played a pivotal role in this genocide and have worked tirelessly to silence their own populations and have threatened their own armed forces from even thinking of taking action to save the people of Gaza.

It is easy to infer that these rulers are truly loyal servants of Israel and without their help genocide in Gaza would not have been possible.

Israeli President Herzog should confer the most prestigious award, ‘The Israeli Presidential Medal of Honor’ to these rulers.

 

Bangladesh: Apparel export to EU falls 20%

Bangladesh’s apparel exports to the European Union (EU) in the 11 months, from January to November 2023, declined by 19.92% to 16.26 billion euro from 20.30 billion euro during the same period of 2022.

Exporters said that the shipment of readymade garments to the EU market decreased in recent months due to the economic slowdown caused by the Russia-Ukraine war.

Global brands and buyers also placed orders in lower quantity due to the election time in Bangladesh but the orders started to increase after the national election in the country.

They hoped that the export to EU would rebound in the next quarter as buyers started to increase their orders thanks to easing inflation.

According to data from Eurostat, the statistical office of the European Union, the readymade garment imports of the EU from the world in January-November 2023 fell by nearly 10% cent to 82.71 billion euro from 91.89 billion euro during the same period of 2022.

Apparel imports of the EU from China in the first 11 months of 2023 declined by 21.42% to 21.15 billion euro from 26.92 billion euro during the same period of 2022.

Although China remained the top apparel exporter to the EU in value, the Eurostat data showed that, in terms of volume, Bangladesh emerged as the highest knitwear exporter to the market in January-November 2023.

Bangladesh’s woven garment exports to the EU in the first 11 months of 2023 were reported at 6.89 billion kilogram while those of China were 5.74 billion kilogram.

In value terms, Bangladesh’s knitwear exports to the EU in January-November of 2023 were reported at 9.94 billion euro against China’s exports of 10.48 billion euro during the period under review.

Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan recently said that apparel exports to the EU would come back on a positive track in the second quarter of 2024 as the inflation was coming down in the western countries and retail sales were getting better.

He also said that not only Bangladesh but also all the major RMG suppliers witnessed negative growth in the EU and the United States as the global demand decreased due to the economic turmoil.

Apparel imports of the EU from Turkey in January-November of 2023 declined by 13.42% to 9.20 billion euro from 10.62 billion euro during the same period of 2022.

India’s RMG exports to the EU in the first 11 months of 2023 also fell by 11.87% to 3.81 billion euro from 4.33 billion euro during the same period of 2022.

As against this, apparel imports of the EU from Vietnam during January-November of 2023 grew by 2.48% to 3.49 billion euro from 3.40 billion euro during the same period of 2022.

Netanyahu must be removed, reports CNN

According to a CNN report also published in Saudi Gazette, more than 40 senior former Israeli national security officials, celebrated scientists and prominent business leaders have sent a letter to Israel’s president and speaker of parliament demanding that Prime Minister Benjamin Netanyahu be removed from office for posing what they say is an existential threat to the country.

The letter was sent to Israeli President Isaac Herzog on Thursday and to Knesset Speaker Amir Ohana on Friday. Neither the president nor the speaker has the power to remove a prime minister from office unilaterally.

The signatories on the letter include four former directors of Israel’s foreign and domestic security services, two former heads of the Israel Defense Forces (IDF) and three Nobel Prize winners.

The letter blasts the coalition Netanyahu assembled to form the most right-wing government ever in Israel, along with his highly controversial efforts to overhaul Israel’s judiciary that they say led to security lapses resulting in the October 07 attacks, the deadliest day in Israel’s history.

“We believe that Netanyahu bears primary responsibility for creating the circumstances leading to the brutal massacre of over 1,200 Israelis and others, the injury of over 4,500, and the kidnapping of more than 230 individuals, of whom over 130 are still in Hamas captivity,” it reads. “The victim’s blood is on Netanyahu’s hands.”

Netanyahu’s popularity has fallen dramatically since starting his sixth term as prime minister, just over a year ago. Critics have blasted his judicial reform efforts – which threatened to trigger a constitutional crisis and divided the country, with months of massive, regular demonstrations.

“Leaders of Iran, Hezbollah, and Hamas,” the letter says, “openly praised what they correctly saw as a destabilizing and erosive process of Israel’s stability, led by Netanyahu, and seized the opportunity to harm and damage Israel’s security.”

Among the 43 signatories are former IDF chiefs Moshe Ya’alon and Dan Halutz, Tamir Pardo and Danny Yatom, who ran the Mossad intelligence agency, and Nadav Argaman and Yaakov Peri, who were directors of the domestic security service, Shin Bet. Former CEOs, ambassadors, government officials and three Nobel laureates for chemistry — Aaron Ciechanover, Avram Hershko and Dan Shechtman — also signed the letter.

A poll released this week by Israel’s Channel 13 suggests that Netanyahu’s political party, Likud, would now come in a distant second if elections were held today.

The frontrunner in the poll was the National Unity Party led by former IDF chief of staff Benny Gantz, currently a member of Netanyahu’s war cabinet.

The next elections aren’t planned until late 2026, though there have been protests and calls for early elections, including from one of Israel’s main opposition leaders, Yair Lapid.

“The situations that brought Israel to elections beforehand are almost nothing in comparison to what Israel is going through now,” said Haim Tomer, a longtime Mossad officer who retired after heading the agency’s intelligence division and who signed the letter demanding Netanyahu’s removal.

“Everybody understands that Netanyahu is incompetent to lead Israel,” Tomer told CNN.

In the past week Netanyahu has repeatedly expressed his opposition to Palestinian sovereignty for security reasons, as Israel’s main ally, the United States, continues to call for a two-state solution.

The letter’s signatories accuse Netanyahu of spending years propping up Hamas in Gaza at the expense of the Palestinian Authority, which the US has argued should be revitalized to govern both the West Bank and Gaza.

CNN has reported that for years Qatar delivered cash-filled suitcases to Gaza with Netanyahu’s blessing, despite concerns from his own government.

The money was intended to pay civil servants’ salaries and retirees’ benefits. It is now delivered via bank transfers rather than in cash, and as recently as last month, Qatar said it was continuing to pay it.

To form his current government, Netanyahu brought together other parties well to the right of Likud and assembled the most right-wing government in Israeli history.

Two of its most prominent members, Bezalel Smotrich and Itamar Ben Gvir, have been called out by the Biden administration for arguing that Palestinians should leave Gaza.

The letter accuses Netanyahu of refusing to take responsibility for the October 7 attacks, instead “blaming others and inciting against those who had fought to save the Israeli democracy from his destructive actions and plans, and now mobilize whole heartedly to support Israel’s national war efforts.”

It concludes with a plea to the Israeli president and Knesset speaker to replace the prime minister, as well as a warning, “The Israeli nation and Jewish history will not forgive you if you don’t fulfill your utmost national responsibility.”

The right people need “to get their hands on the steering wheel,” said Tomer, the former Mossad official.

“I think people start to look from the outside towards Israel and ask themselves what happened to this country,” Tomer said. “What’s happened to this country with very, very smart people that are now being led with some idiots?”

“The word that we have been using in the circles that I’ve been participating in is: we need a restart, we need a restart.”

Israel has come under intense international criticism for its war in Gaza, which has killed more than 25,000 Palestinians and displaced almost two million people since the October 7 Hamas attacks.

Israel has repeatedly insisted that its war is not against the Palestinian people but Hamas militants who are holding more than 130 hostages in dire conditions in the war zone.

Netanyahu told a news conference last week that politicians who are asking him to step down are essentially asking for a Palestinian state.

Israel’s actions in Gaza are the subject of a genocide case in the International Court of Justice (ICJ), initiated by South Africa that accuses the country’s leadership of intending to “bring about the destruction of its Palestinian population.”

Israel denies the allegations, arguing that the war is being fought in self-defense and that its leadership has not displayed genocidal intent.

 

ICJ Ruling: Greatest political dilemma for Joe Biden

In both a national and international context, the ICJ decision poses a huge problem for the Biden administration. White House and State Department officials took the absolute position immediately after South Africa filed their petition to the ICJ that the claim of genocide was meritless.

A close to unanimous court ruling that Israel’s assault on Gaza is plausibly genocidal — and with the singular US judge standing with the majority — that dismissive attitude, and related claims that ​the UN is biased against Israel will not get much traction.

“The much-anticipated decision by the International Court of Justice ​marks the greatest moment in the history of the court” says Richard Falk, a noted international law professor and former United Nations Special Rapporteur on Human Rights in the Occupied Palestinian Territory.

It strengthens the claims of international law to be respected by all sovereign states — not just some, Falk says about the ICJ’s ruling that South Africa’s magisterial presentation of evidence ​was sufficient to conclude Israel may be committing, conspiring to commit, or publicly inciting the commission of genocide against Palestinians in Gaza.

The ICJ decision gave new strength to South Africa’s groundbreaking accomplishment — demolishing the taboo against holding Israel accountable for its crimes. As South Africa’s foreign ministry put it, “Today marks a decisive victory for the international rule of law and a significant milestone in the search for justice for the Palestinian people.”

“The decision is a momentous one,” says the foreign ministry, noting how important the determination is for the implementation of the international rule of law. ​“South Africa thanks the Court for its swift ruling.”

The decision was a significant victory beyond what most observers hoped for — not only the recognition that Israel’s actions are plausibly genocidal, but because of the imposition of provisional measures based on measures South Africa requested in order to stop Israel’s actions that are continuing to kill and put Palestinians at risk. 

The ruling was also particularly important because of the overwhelming majority of judges who supported it, including the sole US judge on the court. When the president of the court, Judge Joan Donoghue, who was a longtime State Department lawyer before being elected to the ICJ, read out the provisional measures, she included the line-up of how judges voted on each one. And she was among the 15 or 16 out of 17 judges who supported every one. 

 

While judges serve as individuals and are not supposed to represent their governments, there is no question that national allegiances and other political considerations often emerge. In this case, only the judge from Uganda opposed all the court’s measures while the temporary Israeli judge opposed four out of six.

It should not have been a surprise that this preliminary finding recognized that Israel’s war against the entire population of Gaza may well constitute genocide.

The definition, under the Convention on the Prevention and Punishment of the Crime of Genocide, says that two things are required to fulfill that definition: a specific intent to destroy all or part of a racial, ethnic, religious or other group (in this case the Palestinian population of Gaza), and the commission or attempt to commit any one of five specific acts to realize that intent.

South Africa presented evidence that Israel is already committing — and conspiring to commit and inciting commitment — of at least four of those acts: killing, seriously injuring members of the group, creating conditions that make survival of the group impossible, and preventing births within the group.

The ICJ decision was not a full determination of the facts and the law — as usual, those issues in international legal venues take years. This kind of initial finding requires a very low bar only that it is plausible that Israel’s military actions, the siege and more could plausibly be found to constitute genocide.

It took the court only two weeks to come to this ruling, though still too long given the numbers of people the Israeli military is killing on a daily basis. But it still represents a hugely important step that will play a major role in strengthening the growing, broadening movement for Palestinian rights that is now playing such an unprecedented role in U.S. and global politics.

And then the ICJ went further, imposing six provisional measures to try and ensure that the rights of Palestinians might be protected from those actions. The measures imposed by the court say Israel ​shall take all necessary measures to prevent the commission of any of the five acts named in the Genocide Convention, that it ensure that its military forces do not commit any of those acts, that it punish any public incitement to those acts, that it take all measures to provide humanitarian assistance, to prevent the destruction of evidence relevant to the charges of genocide, and to report to the court within one month on what Tel Aviv is doing to abide by the court’s ruling. 

The first measure was the only one weakened by the court. South Africa had requested the immediate suspension of military operations: a cease-fire.

The ICJ language refers only to taking all necessary measures to prevent the five genocidal actions, but without demanding an actual end to the military assault.

However, the Court’s second measure arguably answers that weaker language by keeping to the South African request that Israel make sure that the military does not commit any of the relevant acts — meaning that the IDF should stop killing people and be prevented from doing so.

Not just prevented from killing too many people, as President Joe Biden’s administration and others have urged, but prevented from killing any people.

Next Iranian Supreme Leader, Israeli Perspective

According to The Jerusalem Post, from 1997-2005 and again from 2013-2021, Iranian Supreme Leader Ayatollah Ali Khamenei experimented with Iranian presidents who were reformists and pragmatists, Mohammad Khatami and Hassan Rouhani respectively.

Although Rouhani was still in power in 2020, by that time the United States had pulled out of the Iran nuclear deal, which was a signature policy of Rouhani and Khamenei had already decided to cut anyone other than hardliners out of future power.

For the 2020 Iranian parliamentary elections, Khamenei not only disqualified reformists, the closest Iran has to a group that believes in some Western values, who had been disqualified from running for years.

He started to also disqualify pragmatists, whose bedrock values were as anti-Western as Khamenei’s hardliners, but who believed that trying to reach deals with the West to improve relations was a tactical imperative.

This continued in the 2021 presidential election of hardliner and Khamenei favorite, Ebrahim Raisi, with the shocking disqualifications of top Iranian officials First Vice-President Eshaq Jahangiri and former parliamentary speaker Ali Larijani from running for office.

These moves and the banning of hundreds of other candidates, by Khamenei, or technically by his Guardian Council, which does his bidding in banning undesirable candidates from running, brought voter turnout down to record lows.

While some areas still reached 40% or more in voter turnout, some areas had single digit voter turnout, as compared to 70% voter turnout in 2017.

At a collective level, whereas Raisi lost the 2017 election to Rouhani (back when Khamenei was still allowing partially free elections) by around 23.6 million to around 15.8 million, Raisi’s victory in 2021 saw him only rise to 18 million.

In other words, had all the voters who voted in 2017 voted again, Raisi still would probably have lost by a couple of million votes.

He only won because he had no real opposition and an artificial coerced drop in voter turnout.

Many reformists and pragmatists have been critical of Iran’s role in Syria’s civil war during the 2010s and other adventurous violent moves, such as the recent missile attacks on adversaries in Iraq, Syria, and Pakistan.

If the pragmatists had remained in power, there probably would have been a renewed nuclear deal JCPOA 2.0 in mid-2021, given that the US and Iranian pragmatist negotiators had agreed on around 90% of the terms.

Israel would not have liked America relieving sanctions pressure from Tehran, but the fact is that once China and Russia made the strategic decision to ignore sanctions, mere sanctions from the United States and the European Union were going to be insufficient to force the Islamic Republic to change its terrorist proxies and nuclear behavior.

Under Raisi’s hardliners, this has meant a constant push for enriching record levels of uranium to get to the nuclear threshold for not only one nuclear weapon but potentially for an arsenal.