Do the US citizens know how many people have been killed using tax payers’ money?

A few days back I posted a blog “US: Peace Broker or War Monger” and my conclusion was “United States is the biggest war monger”. This morning I read one of the most popular Global Research 2017 articles, its tile is “US has killed more than 20 million people in 37 victim nations since World War II. This prompted me to arrive at another conclusion “The US Citizens have hardly bothered to find out where tax payers’ money is being used”. I have taken extracts from this article to remind the US citizens to open up their eyes and try to stop the government from spending their money on wars.

After the catastrophic attacks of 9/1, monumental sorrow and a feeling of desperate and understandable anger was inculcated in the American psyche. A few people at that time attempted to promote a balanced perspective by pointing out that the United States had also been responsible for causing the same feelings in people in other nations, but they produced hardly a ripple. Although, Americans understand in the wisdom of people around the world empathizing with the suffering of one another, such a reminder of wrongs committed by their government was soon overshadowed by an accelerated “war on terrorism.” The efforts of US citizens must continue to develop understanding and compassion in the world. Hopefully, this article will help in addressing the question “How many 9/11s has the United States caused in other nations since WWII?”

The causes of wars are complex. In some instances nations other than the US may have been responsible for more deaths, but if the involvement of United States appeared to have been a necessary cause of a war or conflict it was considered responsible for the deaths in it. In other words they probably would not have taken place if the US had not used the heavy hand of its power. The military and economic power of the United States was crucial.

This study reveals that US military forces were directly responsible for about 10 million to 15 million deaths during the Korean and Vietnam Wars and the two Iraq Wars. The Korean War also includes Chinese deaths while the Vietnam War also includes fatalities in Cambodia and Laos.

The US citizens are probably not aware of these numbers and know even less about the proxy wars for which the United States is also responsible. In the these wars from 9 million to 14 million people have been killed in Afghanistan, Angola, Democratic Republic of the Congo, East Timor, Guatemala, Indonesia, Pakistan and Sudan.

But the victims are not just from big nations or one part of the world. The remaining deaths were in smaller ones which constitute over half the total number of nations. Virtually all parts of the world have been the target of US intervention. The overall conclusion reached is that the United States most likely has been responsible since WWII for the deaths of 20 million to 30 million people in wars and conflicts scattered over the world.

To the families and friends of these victims it makes little difference whether the causes were US military action, proxy military forces, the provision of US military supplies or advisers, or other ways, such as economic pressures applied by the US. They had to make decisions about other things such as finding lost loved ones, whether to become refugees, and how to survive.

The pain and anger spreads even further. Some authorities estimate that there are as many as 10 wounded for each person killed in these war. Their visible, continued suffering is a continuing reminder to their fellow countrymen. It is essential that Americans learn more about this topic so that they can begin to understand the pain that others feel. Someone once observed that the Germans during WWII chose not to know, the US citizens must not allow history to say this about them.

Let every reader keep this in mind that gathering the actual count of deaths is not easy. The collection of data was undertaken with full realization of this fact. These estimates will probably be revised later either upward or downward, but undoubtedly the total will remain in the millions.

Indian Frustration or War Mania

According to news reports, New Delhi has called off a meeting between the Pakistani and Indian foreign ministers on the sidelines of the United Nations General Assembly, just a day after confirmation.

The reason for cancellation of meeting was stated by Indian External Affairs Spokesperson Raveesh Kumar, "unclean intentions" on Pakistan's side. He said, "It is obvious that behind Pakistan's proposal for talks to make a fresh beginning, the evil agenda of Pakistan stands exposed and the true face of the new Prime Minister Imran Khan has been revealed to the world in his first few months in office," he said. "Any conversation with Pakistan in such an environment would be meaningless."

Pakistan’s Foreign Minister Shah Mahmood Qureshi termed the development "unfortunate", saying, "We had already told India that if they take one step towards us, we will take two. However, it seems that they faltered after taking just one step."

PPP Senator Sherry Rehman sent a Twitter condemning the move, saying, "Shame that on International Peace Day, India has refused to talk peace with Pakistan in even a routine manner at the UN on the sidelines of the General Assembly." "Running from talks won’t change the fact that this time Indian repression in Kashmir has been noticed in a UN report ", she added.

The Indian arrogance can be attributed to a recently signed agreement between the US and India that would pave the way for New Delhi to buy advanced American weaponry and to share sensitive military technology, strengthening their military partnership as both powers warily eyes the rise of China. The countries also promised to hold joint land, sea and air military exercises in India next year.  

On the day Jim Mattis, the US Defense Secretary had said, “Today’s fruitful discussion illustrated the value of continued cooperation between the world’s two largest democracies. We will work together for a free and prosperous Indo-Pacific.”

If I refer back to the visit of Jim Mattis, Defense Secretary and Mike Pompeo, State Secretary, despite the friendly handshakes and flattering remarks exchanged as the two met with their counterparts, their counties remain deeply skeptical of each other.

The US is worried about how willing India will be to openly counter China as the Chinese expand their influence in the waters between the Indian and Pacific Oceans. It is also unhappy about India’s reluctance to cut trade relations with Iran.

India views the Trump administration as erratic, and it is troubled by the United States’ recent barriers to trade, which threaten to impose tariffs on Indian goods and force New Delhi to import more American products.

I would also attribute Indian attitude as assign of frustration, because the US has failed in convincing Pakistan to allow Indian goods to pass through for Afghanistan and Iran. It is irony of fate that the US remains dependent on Pakistan for the passing of NATO supplies. The US has not forgotten the adversities faced after Pakistan put a temporary embargo on the movement of NATO supplies.  

US attempt to contain Iranian oil export aimed at keeping crude prices high

I have often wondered why the US is adamant at containing oil export from Iran. This morning I have found some clue after reading the weekly email sent to me by Oil &Energy Insider, captioned “A Crucial Period for Oil Markets”. It covers many news but two most important for me are: "Oil prices rose this week on the back of continued outages from Venezuela and Iran. The EIA also warned “We are set to enter a 'crucial period' for oil markets”.

The report also gave details that U.S. Energy Secretary Rick Perry held two high-profile meetings, one with his counterpart from Saudi Arabia and the other with his Russian counterpart. These meeting were aimed at ensuring ample supply of crude oil after re-imposition of sanctions on Iran become into effect in November. Perry praised OPEC as a whole and Russia for responding to higher prices by increasing production, even using the word “admiration” as something the cartel and Russia deserved for their efforts to keep oil prices under control. For my readers understanding the US objective will become much clear after reading the following details.

By pulling itself out of the agreement with Iran, the US aims at achieving multiple objectives, the top of the agenda item being initiating the hype for the change in regime in Iran. The sole purpose of the US is to cripple the Iranian economy to an extent that could lead to regime change. However, observers familiar with Iranian politics have warned this is an unlikely outcome. Crippling Iranian economy will also please Saudi Arabia, which has been brainwashed to the level for singing the manta, “Iran is a bigger enemy as compared to Israel”.

Another key US objective is to mend its relationship with Russia. While the US administration has been trying to bring down Iranian oil export to virtually zero, it is encouraging Russia to keep its production at the highest level to ensure there will be enough oil even when Iran’s exports slump. There is a need to understand the shift in the US policy towards Russia. The situation is particularly interesting as U.S.-Russian relations are at a historic low but Russia is one of the world’s top oil producers, enjoying the power to control global oil supply and prices.

According to Russian Energy Minister Alexander Novak, the global oil market remains fragile because of production declines and geopolitical unrest. “This is huge uncertainty on the market – how the countries located in Europe and Asia Pacific region, which buy almost 2 million barrels per day of Iranian oil will act. The situation should be closely watched, to make the right decisions,” said Novak. He also said Russia could step in if the market needs more supply. Russia has potential to raise production by 300,000 barrels per day.

Worries of OPEC, led by Saudi Arabia are multiple. OPEC has cut its 2019 oil demand forecast because of economic uncertainties arising from Sino-US trade war. The 1.41 million barrels per day (bpd) demand growth forecast is 20,000 bpd lower than last month’s figure. “Rising challenges in some emerging and developing economies are skewing the current global economic growth risk forecast to the downside,” said an OPEC report.

The protests and riots in Iraq’s oil-rich southern region are flaring up again, potentially posing a threat to the country’s record oil export levels. Some companies have taken their foreign workers out. Production hasn't been hit yet, but if anyone facility goes down, the production loss could be as high as 800,000 bpd, so it's a big story to watch. Global experts also highlight that the lack of spare capacity makes such an outage especially worrisome. They also say that the real problem right now is limited availability of options to absorb shocks.

Within the US, Hurricane Florence is battering the coast of North and South Carolina, but there very little fallout is expected for the oil market since no oil refineries or upstream production facilities are located in those states. But if the Hurricane travels further inland into the Appalachian region, it could curtail shale gas production.

The US shale companies emerge clear winners. They took advantage of relatively high oil prices in the second quarter to lock in hedges beyond 2019. Permian shale drillers increased 2020 hedging by 431 percent in the second quarter of this year, an indication that E&Ps are worried about pipeline bottlenecks stretching beyond 2019. The quantum of hedging appears unusual. The risk of hedging is that some companies could eliminate upside exposure if pipelines are completed on time and oil prices rise.

It may not be wrong to infer that after minimizing oil exports from Libya and Venezuela, the next likely US targets are Iran and Iraq. It is also evident that in the US pursuit to keep oil prices high, it is fully supported by Saudi Arabia and Russia. A point to be watched microscopically is how many countries succeed in acquiring US exemption to buy oil from Iran?

US: Peace Broker or War Monger

On Friday, 14th September 2018 I was among the audience who were invited by Institute of Business Administration (IBA) Karachi to a talk led by Dr. Moeed Yusuf, Associate Vice President, Asia Centre, United States Institute of Peace. The other two worthy speakers were former Defence Secretary of Pakistan (Rtd) Lt. Gen. Tariq Waseem Ghazi and former Chairman of Pakistan Nuclear Regulatory Authority, Jams­hed Hashmi.

Dr. Yusuf spoke about his latest book ‘Brokering Peace in Nuclear Environments: U.S. Crisis Management in South Asia’, in which he studied environments where nuclear weapons were present which changed the dynamics of any crisis. He also proposed the theory of ‘brokering of peace’, and crisis management in the regional nuclear environment of Pakistan and India.

Dr. Moeed said, “My findings suggest that you will always have stronger third parties who want to influence the crisis because they are worried that things may escalate to the nuclear level. These third parties will show up on their own; for instance the US exaggerates the risk of nuclear escalation because of the lesson it drew from the Cold War which was that nuclear war, if it ever happens, will happen not because countries deliberately want it, but despite them not wanting it.”

“It is not that Pakistan and India want the third party,” he elaborated. “However, when the third party shows up to offer mediation and help mitigate the crisis, Pakistan and India recognize they do not have any dependable bilateral ties to bank on. Also, both states then tend to force the third party to deliver concessions rather than directly engage with the opponent. Both Pakistan and India try to use the third party, in this instance the US, to get concessions.”

Tariq Waseem Ghazi disagreed with this model. According to him, there is a general disregard from India’s side to engage with Pakistan on a bilateral level as well as in the presence of a third party, whether it be the UN, the US or China. “Indians say everybody else is irrelevant and wish to solely dictate the terms of engagement. In the last 10 years we have been trying to do exactly what Moeed has been proposing for crisis resolution and conflict prevention, but no proposal from us has been acceptable to India.”

Jams­hed Hashmi was of the opinion that the US tends to do more harm than good when trying to deescalate crises between Pakistan and India. “The US will continue to ‘broker’ conflicts and we have to accept that. However, nowhere during this brokerage has the biggest point of contention between Pakistan and India — Kashmir — ever been debated on or the crisis resolved.”

Having listened to the worthy speakers, a question came to my mind, is US a peacekeeper or a war monger? With reference to Pakistan I am witness to many frustrating experiences with the US. Some of these include unwillingness of the strongest super power to mediate in the resolution of Kashmir issue, which is often termed flash point. The super power didn’t play any role in stopping East Pakistan becoming Bangladesh. The US first used Pakistan along with Taliban to fight USSR troops in Afghanistan and post 9/11 Pakistan was used against Taliban. Over the years ‘do more’ manta continues. Now Afghans have been brain washed to a level where they consider Pakistan a foe rather than a friend.

During the cold war era, India was provided military hardware by the US to equip it to fight against China. The US also facilitated India to attain the status of regional super power. The program has been further accelerated after the commencement of work on China Pakistan Economic Corridor (CPEC). The relationship between Iran and India are being supported to counter relationship between Saudi Arabia and Pakistan. A closer look in the neighborhood shows proxy wars going on in Afghanistan, Iraq, Syria, Yemen and Lebanon for years.

Based on Pakistan experience and ongoing US proxy wars in the region, one is forced to arrive at a conclusion that US is not a peacekeeper but warmonger. Having said this, I would like to thank Dr. Moeed for providing an opportunity to the newly elected government of Pakistan to understand the paradigm shift in US foreign policy, imposing itself as a peace broker on Pakistan and India. My suggestion to the Indian government is also to engage with Pakistan directly, rather than asking the US to mediate.  

Pakistan Stock Exchange witnesses 22 percent decline in daily trading volume

With a modest recovery in the first couple of days, the benchmark index of Pakistan Stock Exchange (PSX), lost most of the gains posted recently. The week ended 7th September closed at 40,855 points, down 2.1%WoW. Showcasing all the tell-tale signs of a highly volatile, illiquid (average daily trading volume shrinking  by 22%WoW) and dampened near term outlook, investors remained cautious. The news impacting the market included: 1) a number of crucial and time sensitive decisions for the new government where clarity is awaited and 2) growing risk of a cyclical downturn in consumption led demand where monetary tightening and high fuel prices suggest reduced spending. Other news affecting investors’ sentiments were: 1) US Secretary of State Michael Pompeo stating that his visit to Islamabad led to an agreement that it’s time for the United States and Pakistan to deliver on their commitments, 2) the central bank announcing auction of Rs5.15 trillion worth Market Treasury Bills and Pakistan Investment Bonds during the four remaining months of the current calendar year, 3) Prime Minister Imran Khan approving 46% increase in gas prices as proposed by OGRA, along with ordering steps to control annual gas theft of Rs50 billion and 4) President on the advice of the Prime Minister reconstituting the Council of Common Interests (CCI), and constituting the Cabinet Committee on China-Pakistan Economic Corridor (CCoCPEC). Volume leaders for the week were: BOP, KEL, AGL and EPCL. While the gainers were led by: ABL, KAPCO, UBL, KEL, the laggards included: PIOC, DGKC, CHCC and NCL. Volatility is expected to mar investors’ sentiments over the coming weeks because of some difficult to comprehend decision, also lacking prudent thinking. Accumulating positions on dips and tactical sector switching could yield returns. Overall, market participants will be closely monitoring policy decisions, particularly regarding gas and electricity tariff hikes (proposed by OGRA and NEPRA with ECC's formal decisions pending) and near term measures to curtail the external account deficit.

Ballooning current account deficit (CAD) due to the hefty debt repayments have led to a mammoth external financing gap (US$20.42 billion for FY18) as insufficient external inflows (US$14.35 billion loans in FY18) plunged the foreign exchange reserves held by State Bank of Pakistan to US$9.79 billion, down US$6.34 billion during FY18. Going forward, an estimated CAD of US$17.8 billion for FY19 with additional drags from upcoming redemption of Eurobond and commercial borrowing repayments are likely to push gross external financing to US$22.44 billion for FY19. In this regard, inadequate external inflows estimated at US$13.45 billion (excluding bailout financing should translate into a net shortfall of US$8.84 billion by the end of FY19, plunging the reserves to unsustainable levels. Moreover, for recent policy makers, the path to possible remedies for the prevailing BoP shortfall include: 1) approaching international debt market, 2) investments from non-residential Pakistanis, 3) Chinese bailout, 4) 'gifts' from friendly countries, and 5) eventual IMF financing facility. With each mode of financing carrying inherent benefits and associated risks, GoP conceding to another IMF financing facility along with accompanying caveats (with the sole purpose of improving on external vulnerabilities). Under an IMF facility, GoP could likely tap in other external avenues as well as fetch better yields in international debt market to create a blend of financing to bridge the external gap.

Pakistan’s largest exploration and production company OGDC has announced its FY18 earnings at Rs78.74 billion (EPS: Rs18.31) as compared to R63.80 billion (EPS: Rs14.84) for FY17, up 23%YoY. The Board of Directors has also approved payment of a final dividend of Rs2.5/share, taking the cumulative full year payout to Rs10/share for the year. The results are above market expectations on account of higher gross profit, translating into higher profitability. Net sales were up 19%YoY mainly due to the hike in international oil prices by 25%YoY and depreciation of Pak rupee by more than5%, despite falling hydrocarbon volumes. Exploration expense were reported at Rs16.19 billion, may be due to recording of a previously suspended well at Ranipur. The quantum of other income was almost at the level of previous year. During 4QFY18 fourth earnings rose to Rs21.92 billion (EPS: Rs5.10) from R16.21 billion (EPS: Rs3.77), on the back of favorable macro/oil price shifts, overcoming the drop in volumetric output (gas volumes were stagnant but oil volumes declined by more than 7%YoY). At present the scrip is being traded at a heavy discount to its 3 year historical price. While the likely positive is further hike in international oil price, the dry wells in Baluchistan or a decline in global oil prices could pose risks to the profitability of the Company.

The decline in petroleum, oil and lubricants (POL) sales plunged by 18% MoM/46%YoY during August 2018 as volumetric offtake declined to 1.35 million tons, proving to be the lowest monthly for sales since February 2007. The lofty decline was observed in FO sales falling by 46%MoM/79%YoY. Along with this retail fuel segment also tapered (HSD and MOGAS sales also posted decline of 20%MoM/38%YoY and 1%MoM/11%YoY) respectively, the 8MCY18 cumulative volumes also declined by 18% YoY. Among all the products, only MOGAS recorded a 3%YoY increase, while HSD/FO offtake declined 7%MoM/45%YoY, sapping growth from overall sales. Sizeable shifts in market share PSO, APL, and HASCOL during 8MCY18 was observed as smaller unlisted players were seem to be claiming bigger chunk in the pie.

Some of the worth mentioning corporate announcements were: 1) National Foods (NATF) announced its 4QFY18 result posting consolidated EPS of Rs4.37 up 100% YoY as compared to EPS of Rs2.19 for the corresponding quarter last year. Sales improved by 13% YoY, while distribution cost declined by 18% YoY. Earnings were considerably up despite 1) increase in administrative expenses by 75% YoY, 2) hike in financial charges by 37% YoY, 3) decline in gross margins and 4) fall in other income by 65% YoY. NATF also announced cash dividend of Rs3.75 per share along with issue of 20% bonus shares. 2) Engro Polymer and Chemicals (EPCL) informed PSX that the Company has decided to enter Hydrogen per Oxide business through a Greenfield manufacturing facility with a CAPEX of US$23 million, funded through internal cash generation. 3) Pak Suzuki Motor announced that it would stop production of its much sought-after and low-priced Mehran from next year.

Reinvigorating capital market of Pakistan

The newly installed government in Pakistan faces a mammoth task of reinvigorating capital market of the country. This should be among the top five most important items of the economic agenda. The fiscal consolidation requires some other unpopular measures that include: 1) improving tax collection to bridge budget deficit, 2) containing extravaganzas for spending more on development, 3) boosting exports by making Pakistani manufacturers/exporters competitive in the global markets and 4) privatizing state own enterprises to save one trillion rupees which these units swallow annually. Since the role of the government is to facilitate the business community in making fresh investment for the creation of new job, stock exchange is one of the most important institutions that play a key role in the mobilization of capita. An effort has been made to review the factors affecting the performance of Pakistan Stock Exchange (PSX) and suggest the impetus to make it more vibrant. To read details please click http://www.pakistaneconomist.com/2018/09/03/reinvigorating-capital-market-of-pakistan/

Race for the position of next President of Pakistan

 The five-year term of incumbent President of Pakistan, Mamnoon Hussain, elected by the previous ruling party Pakistan Muslim League, Nawaz Sharif faction (PML-N), ends on 9th September 2018. He is eligible for re-election for the second term, but has declined to participate in the election.

The election for new president has been scheduled for 4th September 2018. In Pakistan, president is elected by the Electoral College, which comprises of Senate, National assembly and the provincial assemblies. Each member cast his/her vote at the respective assemblies to elect the next present.

The three candidates, who have filed their nomination papers for the election of president, are Arif Alvi nominated by the ruling party, Pakistan Tehreek Insaf (PTI). He has also won one seat in National Assembly. Aitzaz Ahsan is a former senator of Pakistan Peoples Party (PPP) from Punjab. Maulana Fazal-ur-Rehman, chief of JUI(F) is the joint candidate of Muthaida Majlis-e-Amal (MMA) and PML(N). It is worth mentioning that Maulana was not elected by the voters from two of the constituencies of his own hometown Dera Ismail Khan. It appears that he is playing the final gamble to fetch the post of President of Pakistan to save his dignity, whatever is left.

PTI is not likely to face any competition in winning the presidential elections because the opposition that came in assemblies bragging to be a strong opposition and claiming to give a tough time to PTI and its allies is proving a house of cards. They could not remain on the same page regarding nomination of the joint candidate. The complacency of PTI is based on the fact that it already enjoys support of 346 members of the National Assembly, Provincial Assembles and Senate. PTI is also backed by MQM(P), GDA, PML(Q) and Baluchistan Qaumi Movement.

The irony of the fate is that the opposition failed in arriving at consensus on the name of the joint candidate. To disassociate PML(N) take refuge behind the allegation that Aitzaz Ahsan in one of his public speech during the election campaign used some derogatory remarks Kulsoom Nawaz, wife of convicted prime minister Nawaz Sharif. PPP seems adamant by not pulling out Aitzaz Ahsan to make Maulana a joint candidateof the opposition. If one peeps into the history, Maulana has enjoyed support of both PPP and PML(N), which kept him Chairman of Kashmir Committee.

The lust for power of Maulana is evident from his recent visit to Karachi and seek support from MQM(P). Both the parties extended their hospitality but very politely expressed their stance; they are already in alliance with PTI.

If one examines the prevailing scenario carefully the PTI confidence is not out of the place. Due to the opposition in complete disarray, soon PTI, allied parties and their vote bank throughout the country will be celebrating victory of presidential election. All the credit will not only go to all the alliance parties for supporting PTI, but historian will also write that opposition offered the position to PTI by not showing its unity.

Moral of the story is that Maulana Fazal-ur-Rehman has enjoyed his days and time has come for him to announce retirement from politics and confine himself to religious preaching to develop interfaith harmony, if he can. He accused Pakistan Army for ‘engineered election’ and also made efforts to convince elected members not to take oath.

Time for mending US Pakistan relationship

It is becoming visible that the US administration has already started applying undue pressure on Pakistan. The Foreign Secretary is scheduled to visit Pakistan during first week of September. In the past the US mantra was ‘do more’, which is likely to get louder as the newly elected government has taken charge.

The first evidence came when the US issued instructions to the IMF to be more cautious in lending money to Pakistan. Ironically this announcement came without taking into account many ifs and buts. The recent handout of the US administration further spoiled the already deteriorating relationship. It has therefore become imperative for the US administration to revisit its foreign policy towards Pakistan.

Let it be clearly understood by the US administration that the public pressure on the government has been on the rise to bid farewell to the US proxy war in Afghanistan. The masses now openly ask the reasons for the presence of thousands of troops in Afghanistan, the US had announced to pull out its troops from Afghanistan by 2014. Even at that time I had written a blog that troops will stay in Afghanistan forever and the prediction came true as the number of troops has increased rather than reducing.

I had also written that the US has lost war in Korea and Vietnam in the past and was on losing spree in Iraq, Syria and Afghanistan. The US must accept its defeat in Afghanistan and pull out its troops immediately. The newspaper reports indicate that more and more area of Afghanistan is being recaptured by anti US fighters, enjoying the support of local population. The control of Afghan regime that shrank to Kabul is now shrinking to Presidential Palace only.

Many geopolitical analysts have the consensus that after the decision to pull troops the US administration is getting jittery about the safety of its soldiers as well as military hardware. It can’t be ruled out that the anti-US forces may allow evacuation of troops in exchange for military hardware. The hardware that was accumulated in Afghanistan in more than four decades can’t be moved out in weeks or months. The US had used Pakistan backed fighters in repulsing USSR troops and again expects Pakistan to provide a shield as the retreat of troops and military hardware starts.

The analysts fear that retreat may not be as easy as being perceived by the US administration. I am sure that the US administration is fully cognizant of the fact the Anti US fighters are now backed by global and regional super powers and all of them would not like to miss the opportunity to settle their accounts. The real issue is that the US troops can’t move an inch without the local support as they are not familiar with the terrain. This inadequacy was one of the prime factors of the US defeat in Korea.

Establishing peace in Afghanistan is as not as easy as being perceived by the US administration. The presence of local war lords and fighters supported by the US troops make the jigsaw puzzle more complicated. One of solutions, which may not be acceptable to the US administration, is destruction of all the US owned military hardware in Afghanistan. However, it creates a situation chicken or egg first.

For the safe exit of the US troops and avoid anarchy/civil war after the departure of US troops, the US must consider destruction of military hardware. It is also suggested that Pakistan should not get involved in any adventure. The US has started the war in Afghanistan and it will have to ensure peace after the withdrawal of its troops. Trillions of US dollars, tax payers’ money, have been wasted in four decades. If the British crown can let its colonies get independence why can’t the US accept it defeat and pull out troops from Afghanistan, Iraq and Syria?

Examining the likely facets of Pakistan’s new foreign policy

The stage is being set for the oath taking of Imran Khan as Prime Minister of Pakistan. Concurrently the names to head finance, foreign affairs and defense ministries are being finalized. These three ministries are critically important as these will set the pace of economic development and contain cross border terrorism.

In one of my earlier posts I have outlined the top priorities for Asad Umar, the finance minister in waiting. While he is expected to keep his focus on two prime deficits, budget and trade, the influx of foreign exchange to meet debt servicing will be dictated directly by foreign policy. Most probably funds will be released on the instruction of Saudi Arabia and United States or China will have to extend more loans to facilitate Pakistan payoff loans obtained in the past.

The US, which in the past had been more than gracious in advising International Monetary Fund (IMF) to lend money to Pakistan, now seems very hostile. In the prevailing scenario, Pakistan has no option but to approach other friendly countries, Saudi Arabia and China that can extend soft-terms loans to avoid default.

Reportedly, Islamic Development Bank (IDB) has been instructed by Saudi Arabia to lend US$4 billion to Pakistan after Imran Khan takes oath as country’s next prime minister. The offer was made immediately after a statement by Asad Umar that Pakistan would decide on whether to seek a bailout from IMF or friendly nations such as China and Saudi Arabia. A point yet to be clarified is whether the loan by IDB would be in addition to a three-year US$4.5 billion oil financing facility for Pakistan activated in July 2018.

Umar has expressed intention to seek a US$12 billion bailout package from IMF. However, after the response of the US president, other contingency arrangements have to be made. The PML-N government, which also enjoyed godfathering of Saudi Arabia, has left Pakistan with huge burden of external loans resulting in balance of payment crisis and massive depreciation of Pak rupee.

It goes without saying that global and regional super powers have special interest in Pakistan. The US is heavily dependent on Pakistan for logistic support for the combat troops stationed in Afghanistan. Pakistan also provides transit facilities to Afghanistan. In the prevailing scenario ‘do more’ mantra of the US goes on but it can’t afford to antagonize Pakistanis to disrupt NATO supplies. Despite being a super power, the US suffers from ‘bitten once shy twice’ situation that happened after attack on Salala post.

While the US considers Pakistan a partner in war against terrorism only, China has substantial economic interest in Pakistan. At no point in time China can afford a situation where pace of work on China Pakistan Economic Corridor (CPEC) may be jeopardize. Over the last one year Chinese loans have kept Pakistan afloat and support of any magnitude in the future can’t be ruled out. As the economic interest of China grows in Pakistan, it will also have to extend military support to save the country from any aggression. While President Trump may not be aware of this fact but the US administration is fully cognizant that any retaliatory move will allow China to get sold footing in Pakistan.

Whether people accept it or not, Saudi Arabia, India and Iran are three regional super power and all the three wish to maintain cordial relationship, but at their own terms. A past mistake of India to bid farewell to Iran-Pakistan-India gas pipeline project has caused it colossal losses. Even investment of millions of dollars in the construction of Chabahar Port in Iran by India has not provided it and efficient and effective access to Afghanistan. India is keen on the construction of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, which will also pass through Pakistan. Therefore, India is obliged to maintain minimum working relationship with Pakistan. In this endeavor it is support by Iran also.

Maintaining cordial relationship with Iran and Saudi Arabia is a must for Pakistan. The country can’t afford any hostility with either of the countries because it encourages terrorists to use its province, Baluchistan for cross border terrorism under the disguise of Baluchistan liberation movement. Some of the quarters allege that in the past terrorist using Baluchistan as safe sanctuary were provided fund and arms by the US through the courtesy of Saudi Arabia.

Saudi Arabia has enjoyed good relations with Nawaz Shariff and its concerns with the change of government are natural. Imran Khan has expressed to adopt a more independent course and also expressed willingness to mediate in improving relationship between Saudi Arabia and Iran but, it becomes a nightmare for Saudi Arabia that Pakistan develops cordial relationship with Iran.

In a phone call with Iranian President Hassan Rouhani, Khan has accepted an invitation to visit Tehran. Reportedly, Saudi Crown Prince has also expressed intention to visit Pakistan soon in a bid to strengthen bilateral relationship.

“We want to improve ties with Iran. Saudi Arabia is a friend who has always stood by us in difficult times. Our aim will be that whatever we can do for conciliation in the Middle East, we want to play that role. Those tensions, that fight, between neighbors, we will try to bring them together,” Khan said.

It is not an easy situation for Khan to handle. Saudi Arabia has welcomed US President Donald Trump’s withdrawal from the 2015 nuclear agreement that curbed Iran’s nuclear program and his efforts to economically strangle the Islamic republic with harsh sanctions.  Saudi Arabia has not forgotten that Pakistan’s parliament rejected in 2015 a Saudi request to authorize Pakistani troops to participate in its troubled military campaign in Yemen.

Appointment of Ms. Shirin Mazari as Defense Minister, also becomes a source of concern for the monarchy. She had openly criticized in a series of tweets the fact that Pakistani general Raheel Sharif commands the 41-nation, Saudi-sponsored Islamic Military Counter Terrorism Coalition (IMCTC). She had asserted that Pakistan should not cooperate in Saudi Arabia’s alleged pursuit of a US agenda and should instead forge ties to Iran and India.

Khan will have to follow the collective wisdom of maintaining cordial relationship with global and regional powers. However, he will also have to safeguard Pakistan’s sovereignty. Pakistan should not be made subservient to any country for seeking bailout packages. He will also have to nurture the culture of living within means, rather than enjoying extravaganzas on borrowed money.

United States leading wars around the globe

Just the other day I received this article in my mail box. I read it repeatedly and then decided to share with my readers. Many people outside Pakistan may have read it but still I want more people to read this.

Our attention has focused for the past 18 months on the alleged Russian interference in the 2016 election. If true, these seemingly heinous acts are said to strike at the very roots of American democracy. Understandably so. Someone spending $95,000 to prise out of the Democratic National Committee vaults details of how Debbie Wasserman-Schultz tried to rig the primaries in Hillary Clinton’s favor constitutes a grave threat to the integrity of the American electoral process. When we add to that offense the outrageous release of the transcript from Ms  Clinton’s highly lucrative chat with the financial heavies at Goldman Sachs, our heads swoon at the audacity of the perpetrators. So dense is this thicket, so heavily freighted with consequence, that the most diligent mind struggles to absorb it all during the lazy dog days of summer.

                       An effort to escape from this unnatural burden led me to boldly take the risk of flying UNITED toward a salubrious destination. The serenity of those ‘friendly skies’ provided the leisure to contemplate other recent news – in particular, the doings of the United States in upholding the principles of national sovereignty and political freedom elsewhere in the world. A short list of the places where we have been active follows.

Cheers

Michael Brenner

mbren@pitt.edu

1.       In ENGLAND, Trump aggressively promoted Boris Johnson as a brilliant leader despite his direct challenge to Prime Minister Theresa May last week.

2.      Also re. ENGLAND, Sam Brownback, the US ambassador for international religious freedom, protested to the British Ambassador the jailing of racist agitator Tommy Robinson who targets Muslims

3.       In SCOTLAND, Trump lashed out at Nicola Sturgeon, the leader of the Scottish National Party, with a barrage of highly personal insults.

4.       In GERMANY, Trump has striven to weaken the position of Chancellor Angela Merkel through denunciations of her judgment and domestic policies

5.       IN POLAND, the Trump administration has lent its full support to the ultra-nationalist, anti-democratic government when it was facing opposition to its autocratic moves

6.       In HUNGARY, it has done the same in support of Prime Minister Viktor Orban

7.       In SAUDI ARABIA, Trump warmly embraced Crown Prince Mohammed ben-Salman despite his shake-down of other Saudi leaders and dangerous crack-down on the Shi’ite community

8.       In ECUADOR, Washington has encouraged current Prime Minister Lenin Moreno to pursue a vendetta against former President Rafael Correa because of the latter’s social democratic policies and unwillingness to kow-tow to American business interests

9.       In NICARAGUA, the United States is backing the campaign to overthrow the democratically government of Daniel Ortega

10.   In BRAZIL, the Trump administration gave its full public backing to the ‘constitutional’ coup against Prime Minister Dilma Rousseff because of her independent foreign policy line on issues that went against the grain of American policies and her mild challenge to American financial interests

11.   In ARGENTINA, the CIA/FBI connived with political foes of then president Cristina Kirchner to resurrect long discredited accusations that she was implicated somehow in the 1994  bombing of a Buenos Aires synagogue ascribed (probably falsely) to Iran. That contributed to her loss in a run-off to  Mauricio Macri – scion to one of Argentina’s biggest fortunes and graduate of Columbia Business School. 

The week after his inauguration Macri flew to New York to cede $6.5billion dollars to Wall Street hedge funds which had speculated in Argentine debt in 2001 and was being hotly contested in the courts. He also submitted to a Washington demand that he give the U.S. armed forces basing rights in PATAGONIA. The Pentagon evidently sees the base as strategic counter to a move by Russia, China or Iran to threaten America by striking through the soft underbelly of the Western Hemisphere. That is in violation of the Argentinian constitution. But, then again, isn’t that what indebted friends are for?

12.   In HONDURAS, the United States strong-armed the OAS not to penalize the government of President Juan Orlando Hernandez for its blatant rigging of the election last year

13.   In BOLIVIA, the U.S. has been conspiring with business interests and the oligarchical elite to overturn the government of reformist President Evo Morales. In the recent past, the American ambassador coordinated their efforts to topple Morales through orchestrated demonstrations in the mining and business hub of Santa Cruz.

14.   In PARAGUAY, Washington encouraged the oligarchical establishment to usurp the powers of the Presidency by impeaching the first progressive head of state in over 60 years. In 2008 the voters chose Fernando Lugo, a former Roman Catholic Bishop whose reformist policies were anathema to landed interests and big business. His governing as a Gospel Christian could not be tolerated. He therefore was duly impeached on absurd trumped-up by a simple majority vote of the Colorado Party opposition in the legislature. The elites' economic performance while in office since 1945 had as its greatest accomplishment the maintenance of the world’s only railroad still fueled by wood – evidently an attraction of some sort to the Obama administration in its promotion of a neo-Liberal economic order. 

15.   In VENEZUELA, the United States has used every weapon short of military force to overthrow the democratically elected government of President Nicolas Maduro

16.   In UKRAINE, the United States continues its military, financial, and political support for President Poroshenko whose was brought to power by an American orchestrated violent coup against his democratically elected predecessor

17.   In RUSSIA, the United States pursues a relentless campaign of slander against the democratically elected government of President Vladimir Putin and provides direct support via its embassy to opponents

18.   In LIBYA, the United States and its European allies have arbitrarily attempted to impose an ersatz government lodged on a yacht in Algiers harbor that has no popular support or legitimacy 

19.   In SYRIA, the United States has stationed troops against the will of the sovereign government in Damascus and provides material support to jihadist opponents (al-Qaeda & Assoc) fighting to overturn it.

20.   In IRAN, Trump leads a thinly concealed campaign to overthrow the current government

21.   In YEMEN, the United States has chosen sides in a civil war that involves participation in a homicidal air campaign carried out by Saudi Arabia and other outside parties

22.   In the PHILIPPINES, Trump personally has bolstered President Rodrigo Duterte in his program to build a lawless autocracy

23.   In SUB-SAHARAN AFRICA, the United States is actively involved in the internal politics of a dozen or so countries

24.   In LEBANON, The United States has been relentlessly engaged in a campaign to consolidate the power of its US-dependent government led by Rafik Hariri and to undercut Hezbullah and President Aoun

25.   In AFGHANISTAN…..

26.   In IRAQ…

25 -  INFINITY

Then, lest we forget, there are the sub rosa programs of the United States to strengthen democracy world-wide. One: the comprehensive surveillance of electronic communications globally. The product upon occasion makes its way into the hands of our favorites in the political game of other countries. Two: we regularly conduct drone strikes on persons WE determine are a menace to somebody else’s welfare and serenity, e.g. in Pakistan, Libya. By some stretch of the imagination, killings by HELLFIRE missile on their own soil, too, might be considered political interference. Three: more specifically, cyber attacks on sensitive computers and data banks, e.g. STUXNET in Iran

Pakistan’s placement in grey list by FATF is nothing but arm twisting

Reportedly Pakistan’s name has been added to the Financial Action Task Force (FATF) "Grey-list". The overwhelming reaction to this move is being termed "arm-twisting" to add to the woes of the country already suffering from serious balance of payment crisis. A point worth exploring is that there is no official FATF terminology segregating countries into grey or black lists, Pakistan has never been identified as a potential risk to the international financial system, even after 9/11 and often being accused of supporting the various militant groups.

I am being inclined to refer to a report by Pakistan’s leading brokerage house, AKD Securities. The brokerage house has taken a cues from the    2008-14 period (public identification/monitoring status), a termed the report a non-event in terms of crucial flashpoints on the macro-front, namely: 1) Foreign ownership of equities, 2) economic assistance, 3) workers’ remittances and 3) foreign exchange reserves. Reflective of the same, the benchmark index has recovered strongly in the recent past. Post clarity regarding the FATF decision (expected by Saturday 30th June). Investor’s risk-reward profile would soon align with more dominant economic (interest rate hikes, further devaluation prospects) and ongoing electioneering.

In the backdrop of the US foreign policy with narrowing space for Pakistan and post the first plenary meeting of FATF in Feb 2018, news reports started highlighting that FATF has decided to place Pakistan back on its watch list for AML/CFT weaknesses.  The perception in Pakistan is that such news reports have been more disparaging with a tinge of exaggeration (particularly in regional and local outlets) which are not only baseless and not rooted in published reports of international organizations of repute (OECD, WB, IMF and Basel Institute of Governance). However, parsing through all FATF publications CY18TD including documentation released by the FATF after its February 2018 meeting show that Pakistan is not mentioned at all, particularly in a negative light or deficient category. That said, Pakistan has not taken the threat of being included in the watch-list seriously as it has since then taking action against non-complaints, introduce various legislations, reforms and protocols to strengthen its AML/CFT framework.

One of the immediate response is that international standards are not created equal: On a broader note, comparing Pakistan's rankings on similar global international AML/CFT benchmarks by global agencies (Basel Institute, OECD), brokerage house finds domestic regulations (post 2015) stringent enough to counter long-term structural deficiencies (grey financial flows, hawala/hundi, low financial inclusion and sub-par lending practices). The Recent efforts by the GoP have been more proactive in market by Pakistan's inclusion in the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax matters giving weight to GoP's measures (amnesty schemes, increasing declarations of foreign assets, raising the tax net).

Despite Pakistan’s placement in "Grey-list", foreign participation is largely expected to remain immune. Removing outliers (early 2009 period post market freeze), foreign ownership of equities gradually increased during the review period ranging between a little over 6% in 2008 to over 8% by end-2014. In absolute Pak Rupee /US$ terms, foreign ownership increased considerably during this period.

Economic Assistance is likely to continue keeping in view the past practices. Over the years, disbursements by bilateral/multilateral agencies have averaged US$1.3 billion to US$2.3 billion annually (excluding the 3-year SDR4.4bn/US$6.2bn IMF program approved in September 2013). Even though disbursements remained weak during the 2011-2013 period, it is unlikely that Pakistan's status under the FATF had a tangible bearing on economic assistance. That said, overall assistance (including capital mobilization through floating foreign bonds, commercial borrowing and the IMF) improved substantially during the 2008-2014 period.          .

Worker's Remittances continue to play an important role in containing current account deficit, despite ever increasing imports and paltry exports. Stringent KYC/AML/CFT protocols have certainly increased the cost of transactions, inward remittances increased substantially over the years, indicating that inclusion in the FATF grey list may not have a material impact on the cost of inward remittances.

Pakistan’s foreign exchange reserves increased to US$18.6 billion at the end of FY15 from US$11.3 billion in FY08. This also indicates that the Government of Pakistan (GoP) was able to keep an adequate level to support imports and other official outflows. Reserves also received a boost in FY13 after Pakistan signed a 3-year IMF program worth US$6.2 billion.   

Risk of Pakistan facing economic sanctions would include a reconsideration of all business relationships with Pakistan by global financial institutions and any attempt to put Pakistan along with North Korea and Iran is totally absurd. Additionally, parsing through global financial standard authorities rankings, Pakistan is given an AML index score of 6.64 (out of ten where lower is better) giving 4/46 rank in South Asia/Globally out of 6/146 countries by The Basel Institute for Governance. Moreover, recent efforts by the GoP have been more proactive in addressing these deficiencies where Pakistan's inclusion in the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax matters (news reports indicate information sharing with tax authorities to commence from September'18) gives weight to GoP's "big-ticket".

Having a strong faith in the robustness of Pakistan’s financial system and the ongoing efforts to improve it the country’s placement in "Grey-list" is nothing but "arm-twisting". It is more than obvious that the US policies towards Afghanistan, Syria, Iran, China, EU countries and NAFTA members are aimed at establishing its hegemony around the world.

Pakistan Democracy on the Rough Terrain

On Friday, the last day of the week ended 6th July 2018, the accountability court announced its verdict imposing severe punishments and hefty fines on Nawaz Sharif (elected prime minister of Pakistan for the third time) and his family members. The decision is likely to severely impact general elections scheduled for 25th July 2018. There is a saying that history repeats itself. I am obliged to offer readers one of my articles written as back as April 2015. Its title was “Pakistan Democracy on the Rough Terrain”. To read details please click http://shkazmipk.com/democracy-in-pakistan/

Talk about re-imposition of sanctions on Iran an attempt to create storm in a teacup

Lately, the western media, controlled and run by Zionists, has been talking about re-imposition of economic sanctions on Iran, as 12^th May is approaching. The move has been initiated by the US president and many ‘me too’ are trying to please him. The crusade is led by Israeli prime minister, who is licking wounds caused to Israel in Lebanon by Hezbollah. The US is also adamant at taking revenge of its defeat in Syria, where it also faced Hezbollah. The west is never tired of accusing Hezbollah being supported by Iran but it is in no way part of Islamic Revolutionary Grads of Iran.   

The US commentators have very cunningly convinced OPEC led by Saudi Arabia to curtail crude oil output which has resulted in 1) substantial increase in crude oil price and 2) significant hike in the output by the US and Russia. At present, Saudi Arabia has slipped to third position in terms of daily oil output. The US has also emerged as one of the major exporter of crude oil. Therefore, Iran with a daily export of 2.6 million barrel has become ‘of no consequence’. Even if export of oil from Iran is stopped completely completely, it would be compensated by other producers very quickly.     

As a daily ritual, I have to write a few lines on commodities market and factors driving their prices. The most bizarre part is writing about the factors driving crude oil prices. The usual jargons used are increase/decrease in rig count in the US, movement in US stock piles, turmoil in Venezuela and MENA (countries including Iraq, Libya, Nigeria). Little reference is made to investment by hedge funds.  

I still remember once taking part in a live panel discussion on factors driving crude oil prices (more than ten years ago) I had said, “The price of crude oil may be driven by any factor, but certainly not by demand and supply”.  I could see the signs of disgust on the face of moderator. After the show was over he even went to the extent of saying, “Mr. Kazmi, today you said something which sounded totally absurd and I could have responded. However, I kept quiet and gave you benefit of doubt.”

Moral of the story is developed economies, through hedge funds make millions of dollars through movement in crude oil prices. To achieve their target they often breach agreements. Super powers are notorious for breaching the agreements to achieve their ulterior motives. Therefore, re-imposition of sanction on Iran will not be a surprise but an example of yet another blatant violation. However, they must not forget that even stopping oil export from Iran completely will neither make an immediate difference for Iran nor sky rocket the oil prices.

Making Pakistan hub of Islamic Finance by 2025

On the inaugural day of conference Dr. Miftah Ismail Adviser to the Prime Minister on Finance and Economic Affairs said the Ministry of Finance would soon set up a separate division for the promotion of Islamic banking in Pakistan. He was the Chief Guest at a two-day World Islamic Finance Forum (WIFF-2018). The international forum was organized by Institute of Business Administration’s Centre for Excellence in Islamic Finance IBA-CIEF in collaboration with key partners. The theme was “Expanding the Footprint of Islamic Finance: Innovation, Fintech and Regulations.”

In his visionary note, Shaikh Muhammad Taqi Usmani Chairman, Shariah Board of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) said the people of Pakistan origin were holding key positions in Islamic banking industry around the world, making contribution in developing regulatory framework and above all developing products that would meet the emerging needs of trade and industry. He urged the government to take concrete steps for making the economy Riba (interest) free. He also pointed out that Islamic financial institutions have ample liquidity and the government should work for creating new avenues for its deployment in remunerative options. He suggested that the ruling party should also include in its election manifesto that Riba would be eradicated totally from economy at the earliest.

Chairman AAOIFI Board of Trustees, Bahrain Shaikh Ebrahim Bin Khalifa Al Khalifa said it was heartening to note that Pakistan was striving to become another hub of Islamic finance. The country has all the basic ingredients — a population of 200 million predominantly Muslims, a robust banking and finance sector, vibrant agriculture, industrial and services sectors.

On the occasion were present the top officials of the apex regulators – State Bank of Pakistan (SBP) and Securities & Exchange Commission of Pakistan, Deputy Governors of the central bank, Jameel Ahmad and Shamsul Hasan talked about the central bank’s initiatives for the to promote Islamic banking in the country. The progress made over the last decade has been encouraging that has facilitated in achieving the target. They were also of the view that making Pakistan hub of Islamic finance would not be difficult.

Irfan Siddiqui, President Meezan Bank requested the federal government to set a target to acquire at least 25 per cent of the local funding through Islamic banking as Islamic financial institutions have ample liquidity and limited avenues for investment.

In his key note address, Dr. Ishrat Husain, Chairman, IBA-CIEF talked about the progress made by Islamic banking in Pakistan. He was of the view that the progress made during last one decade was enormous but new products need to be introduced to provide fresh impetus for growth.

IBA-CEIF Director, Ahmed Ali Siddiqui, welcoming the delegates, said the Centre had emerged as a regional platform for excellence in Islamic finance. He said focus areas of CEIF included development of Islamic finance professionals and new human resources talent pool through industry linkages and international collaborations.

Two of the closed-door meetings deserve special mention, though details discussed were not made public. In the first session players and regulators discussed details that could help in making capital market and mutual funds Shariah compliant. The issue of financial inclusion and outreach were the two important themes to be discussed at length. The second session was between Sharaih scholars and regulators for evolving regulatory frame work that can help in developing products to meet the needs of different income strata and those having different risk appetite.

Yet another initiative was presentation of research papers discussing contemporary issues. One of the sessions deserves a specific mention where lending to farmers was discussed. At present bulk of the loans are extended to farmers against passbook or the landownership document. This process mostly benefits the feudal lords. In this discussion the issue of warehouse receipt financing was also debated. However, it was evident that unless modern warehouses and collateral management companies are established warehouse receipt financing may not be possible. Authors of selected papers were awarded cash prizes.

The takeaways of the concluding remarks of Dr. Ishrat Husain were: 1) creation of Shariah Board at Ministry of Finance, 2) borrowing for infrastructure development projects through flotation of Rupee and Dollar denominated Sukuks, 3) focus on the development of Fintechs for extending outreach of banks and ensure financial inclusion and 4) development of alternative delivery channels.

     

Energy Crisis in Pakistan: Fact or Fiction

If one looks at the history of power sector in Pakistan, a few points are clear. These include: 1) a myth that the country has been persistently suffering due to the shortage of energy products, 2) the successive power policies have been have been introduced to serve the interest of local and overseas investors, 3) blatant theft of electricity and gas has been going on with the connivance of employees of utility companies, 4) regulatory authorities have failed in protecting the interest of consumers and remained subservient to the incumbent governments.

Energy shortage

Pakistan is blessed with an enormous potential of hydel power generation. According to the experts Mighty River Indus along has the potential to generate more than 40,000MW electricity per annum. Another 10,000MW electricity per annum can be generated from smaller hydel plants (run of the river type facilities which does not require construction of dams/reservoirs. In addition to that 50,000MW electricity can be produced annually from Thar coal. However, at present total hydel generation is around 8,000MW, which goes down when water level drops in dams. Thermal power plants (mostly owned and operated by the private) have the lion’s share in the total generation. The share of coal and nuclear power plants in the total electricity generated has remained minuscule. Though, a lot is being talked about changing the energy mix and curtailing use of gas for power generation, a little success has been achieved.

Serving vested Interest

Major hydel power generation facilities, i.e. Warsak, Mangla, Tarbella and Ghazi Brotha are located in the northen parts of the country and cater to the needs to KPK and upper Punjab. Karachi is hub of trading and industrial hub and it is totally dependent on thermal power generation. The city has 10% of the total population of the country but gets nothing from low cost electricity generated from hydel power plants. To be precise, K-Electric supplies electricity to some parts of Sindh and Baluchistan. If transmission of hydel electricity to Karachi is difficult or uneconomical, quota allocation of gas to K-electric should be doubled. Karachi is surviving on self generated electricity, the city has a latent demand of 5,000MW, whereas K-Electric is capable of meeting only half of this demand. One can still recall that in the early nineties E-Electric used to export electricity to Punjab. HUBCO was constructed to primarily meet Karachi’s demand, but it was ‘hijacked’ by WAPDA for meeting Punjab’s demand.

Blatant Theft

Blatant theft of electricity and gas been been going on for ages with the connivance of utilities. On top of all some of the parts of Pakistan are provided free of cost electricity. One may recall that at one time the average T&D losses of electric utilities were as high as 40%. Lately, gas UFG, which mostly comprise of theft hover a little less than 10%. On top of this, utility companies carry the load of billions of rupees of receivables, the probability of recovery is very low. According to some analysts, if K-Elecric pays off its outstanding dues, SSGC will be able to pay off almost all the payable amount to E&P companies. Containing theft or recovering outstanding dues does not require any rocket science, but a firm commitment. However, utilities fail completely helpless because of the pressure of political and linguistic groups. It is also necessary to put on record that utilities don’t provide connections, taking refuge behind non-availability of electricity/gas, but are prompt in providing ‘temporary connections, which are often without meters. Analysts term this ‘offical kunda’.

Regulatory Authorities

The Government of Pakistan (GoP) initiated the process of liberalization, deregulation and privatization. Under this policy, the private sector was encouraged to establish industries, which remained the exclusive domain of the state for decades and it was also offered the stake in state owned enterprises along with management control. Prior to that the World Bank has refused to lend more money to WAPDA and the shift in policy gave birth to HUBCO and other IPPs. 

IMF Recipe

Many analysts have the consensus that the International Monetary Fund (IMF) is the lender of last resort, but its recipes are not aimed at enabling any country to ‘stand on its own feet.’ Often the country is trapped in a vicious cycle of borrowing. However, the advantage is that if the country succeeds in developing its own home grown plan and meeting the condition imposed by the IMF, it may overcome the balance of payment crisis. 

Pakistan has a long history of remaining under the IMF support program. In one of the latest country report, the Fund has once again highlighted the need to introduce structural reforms for the power sector. These weaknesses identified are: 1) the persistence of circular debt, 2) DISCOs still operating under the state control, 3) high T&D losses, 4) failure to follow corporate governance and 5) lack of the mechanism for passing on input cost adjustments to end consumers.

Emphasizing US$55 billion in planned investments as a part of CPEC, the Fund anticipates improved economic activity made up of 19 Chinese sponsored power sector investments (US$17.7 billion) and non-CPEC energy projects (US$25.4 billion). Mode of financing for energy projects has been bifurcated into: 1) direct borrowing and investment from Chinese financial institutions, and 2) financing of projects by private domestic sponsors as well as government backed borrowing from multilateral lenders.

A detailed analysis of the power sector shows: 1) the country has enormous resources to produce low cost electricity, 2) if pilferage is contained cash flow of DISCOs will improve and 3) circular debt issue will be resolved. Appropriately managed conventional sources of power generation can help in meeting the electricity demand and there may not be an urgent need to invest in alternative sources of power generation.