PAKISTAN: The government’s strategy on the IP pipeline has been dominated by the issue offinancing the Pakistani leg of the pipeline, public pressurestemming out of acute power shortages and a political consensus that demandsstanding up to the threat of US sanctions. However, an overemphasis on these three factors should not hamper our ability to analyse other important dynamics involved in this project.
Indeed, the price at which Pakistan would contractually purchase Iranian gas is linked to international crude oil prices. Iran itself imports gas from Turkmenistan at USD 4/MMBtu while the price at which it would export to Pakistan is an exorbitant figure of USD 14/MMBtu. According to a recent report by Sustainable Development Policy Institute (SDPI), this would bring about a “death sentence” for Pakistan’s economy. Thus, if the pipeline project was to continue, Pakistan might end up having surplus supply of gas that consumers and local industry cannot even afford.
Moreover, Turkey, a current importer of Iranian gas still faces trouble getting adequate supply of gas from Iran during winter months, a time when Iran’s own domestic demand for gas peaks. On October 1, Iranian Oil Minister Bijan Namdar Zanganeh himself raised concern about Iran facing serious gas shortage because of slow progress in raising levels of production from South Pars – the field that is supposed to fill the IP pipeline. If such factors were seriously taken into account, the pipeline agreement would likely have never been signed at the first place.
In addition to exploring other options from Pakistan’s indigenous resources and renewable energy sector, the question that policymakers should now be asking is how the IP pipeline project can best come to an end so that Pakistan’s international standing is not damaged. It is thus important to explore the various exit strategies Pakistan could adopt and what implications each of them entails.
First, as Pakistan seems to do with other problems, politicians might be comfortable blaming the potential pullout on US pressure. However, this will not only prove unfavorable for the goal of reviving Pakistani-US ties, but will also seriously hamper the approval ratings of the new Pakistani government.
The second way out is to blame the previous government. While this option might be easy to digest, it has serious long-term repercussions. Holding the previous administration accountable for the failure creates a precedent in which a new Pakistani government can arbitrarily scrap an international agreement. This in turn creates a lack of trust among potential regional and international partners in Pakistan’s ability to see its agreements through from one administration to another.
The third possibility is to keep the project lingering. This will attract more energy aid projects from the United States and cheaper oil offers from Saudi Arabia. However, given that Pakistan will be liable to pay a $3 million per day penalty to Iran if its side of the pipeline is not completed by the end of 2014; this option is also not plausible.
The fourth possibility is to renegotiate the gas prices and the terms of the agreement with Iran. Though this option might be successful in de-linking gas prices from those of international crude oil, it would neither solve the financing issue nor the security concerns in regard to Balochistan.
These flawed options make the situation seem discouraging, in this conundrum lies a tremendous diplomatic opportunity which if articulated well could provide Pakistan with a win-win outcome.
Instead of provoking Iran’s anger by scrapping the gas pipeline deal without offering anything against it, Pakistan should replace it with another contract to import more Iranian-produced electricity. Pakistan is already importing Iranian electricity at Rs.10/unit and could enhance its import to the efficient levels of the current transmission capacity. Even increasing this capacity by building more transmission lines is a cheaper and a more viable option than to proceed with the IP pipeline project. Furthermore, it will also be in Iran’s interests to establish more power plants within the country which could be used for both, its domestic production and as well as for importing gas to Pakistan.
Meanwhile, pulling out of the project will also give Pakistan greater leverage with the United States and Saudi Arabia – the two staunchest opponents of the pipeline. Pakistan could use this leverage to procure favorable oil prices from Saudi Arabia, as well as assurances of heavy investment from the United States and other international partners to exploit shale gas and renewable energy such as solar, biomass, and tidal energy – sectors that are estimated to have tremendous potential. This will also improve Pakistan’s energy diversity and, in so doing, strengthen its energy security in the long run.
This exit strategy will allow the Pakistani government to save face without having to compromise its relations with either Iran or the United States. Additionally, it will increase the government’s ability to proceed with other necessary yet unpopular steps to put the economy on track. Even Iran will experience no short-term loss as a result of this plan; the 900 km pipeline it has completed on its side of the border is still necessary for its own domestic supply of gas.
KARACHI: Expressing satisfaction over the ongoing targeted operation of the security forces against criminals and terrorists in Karachi, Prime Minister Nawaz Sharif Friday said law and order situation in the metropolis has improved due to efforts of Rangers and police.
He was chairing a high level meeting at Pakistan Rangers’ Headquarters, said a press release issued here.
Governor Sindh Dr Ishratul Ibad Khan, Chief Minister Syed Qaim Ali Shah, Interior Minister Chaudhry Nisar Ali Khan and other senior officials also attended the meeting.
The prime minister was briefed in detail about the achievements and the modus operandi adopted by the Rangers for a “successful, across the board operation against criminals and anti-social elements.”
Sharif expressed confidence in Rangers saying improvement in law and order situation of the port city is a testimony of the effectiveness and potential of the force.
He urged the high command of the paramilitary force to continue with the targeted operations and enhance the tempo to get rid of the menace of lawlessness and ensure an enduring peace.
The premier was received by DG Rangers Sindh Maj-Gen Rizwan Akhtar upon his arrival at the headquarters and was introduced to the sector commanders and senior staff officers.
Karachi, the largest metropolitan city and economic capital of Pakistan, is riddled with targeted killings, gang wars, kidnappings for ransom, extortion and terrorism.
Targeted operations led by Rangers’ forces with the support of police are ongoing in the city under a directive issued by the federal government against criminals already identified by the federal government and military and civilian agencies.
Karachi operation to continue till complete restoration of peace
The prime minister categorically stated that the ongoing operation will continue till peace and tranquility is fully restored in Karachi.
Speaking to the media following his visit to the Rangers headquarters, he said there was absolutely no deadline for the operation’s conclusion.
“We want to restore writ of the government,” said the premier adding that the operation was being conducted across the board without any consideration, political or otherwise.
Sharing details of the briefing given to him by the Rangers, he said 6,780 arrests were reported to him to have been made during the exercise.
Three of the accused have been convicted while cases of 1,408 are ready for trial as are already referred to the courts with 635 of them acquitted and 49 released on bail, he added.
He said the government in the province with absolute support of the federal government was fully committed to bring the criminals and terrorists to task and completely restore normalcy, a prerequisite for restoration of trade and industrial activity in the commercial hub.
“Peace and normalcy in Karachi is directly linked to progress and development of the country,” he said.
On business activities in Karachi and Taliban talks
Speaking to Karachi’s business community earlier, Sharif said criminal elements will be dealt with an iron hand and without any discrimination, to ensure peace in Karachi.
“There will be no politics on this issue, as this operation is against criminal elements....criminals will be dealt indiscriminately and according to law regardless of their political affiliation.”
Without naming anyone or party, he said, “the government will not let anyone exploit the situation and will in no way be blackmailed on this issue.”
He sought the cooperation of businessmen and media to address the issue.
About the issue of terrorism, Prime Minister Sharif recalled that the government had finalised the programme to initiate dialogue with Taliban and a delegation was also scheduled to leave next day when the process was impeded.
The government has accused the United States for sabotaging the peace process by killing Tehrik-i-Taliban Pakistan (TTP) chief Hakimullah Mehsud through a drone strike last week.
The premier reiterated the government's desire to have dialogue with Taliban for making Pakistan a peaceful country.
“We have made efforts in the past, and we will continue to make more efforts to hold talks with all those involved in militant activities,” he said. “At the moment this looks like the best way to ensure peace, and my sincere desire is that violence ends in all those areas which have been badly hit by violence in the past few years.”
The prime minister said he will have a detailed meeting with the business community soon.
“I have some economic reforms in my mind which I want to discuss with you people to ensure their implementation. Either I will call you in Islamabad or have an exclusive session on economy here very soon,” he said while making an apology for lack of time.
APP quoted the prime minister as saying said that the PML-N government with massive public mandate is determined to make strong and long-lasting decisions critical for pulling the country out of the present difficult situation. This, he added, included the energy crisis, which is as important as restoration of law and order.
“For the very purpose we at the very outset adopted a pragmatic approach and successfully addressed the circular debt issue via payment of Rs500 billion,” he said.
Moreover, an energy policy has been formulated under which a series of power plants, mainly hydro and coal based, are to be built.
“These are time consuming and are major projects which, however, have low running cost as compared to solar, wind-mill and other categories of power plants,” he said.
The envisaged hydro and coal power projects were scheduled to be completed in three years time, he said.
Mr Sharif said that the crisis be it energy or of any other type had no short-cut solutions and the entire country would have to share the responsibility in meeting the challenges.
“Instead of giving false hope we, besides adopting a pragmatic approach, have… attempted to bring on board the masses about the factual situation and interventions adopted by us.”
In reply to a question about the fate of Pak-Iran gas pipeline, he said issues of funds were involved besides chances of sanctions. “Yet we are keen to address our energy crisis and would look for every opportunity in the larger national interest.”
DADU: The first concrete gravity dam in Sindh has been completed at Nai Baran near Jhangri village in Jamshoro district by a Chinese company and the Water and Power Development Authority (Wapda).
A joint team of Chinese and Wapda dam engineers invited the media on Monday to visit the site.
Wapda Hyderabad general manager (water-south) Amir Bux Mirani told the media that the project had been completed within the stipulated period of three years.
According to the British Dam Society, it is called a ‘gravity dam’ because gravity holds it down to the ground stopping the water in the reservoir pushing it over.
Construction of Darwat Dam by Sinohydro Corporation Limited began on June 30, 2010 at an approved project cost of Rs9,300 million, he said. It has a live water storage capacity of 89,200 acre feet and dead water storage capacity of 32,400 acre feet, he added.
Gul Mohammad Junejo, the project director, said that this was a significant structure as it would irrigate 25,000 acres of barren land of the Kohistan area and additionally there would be round the clock water supply.
“It has one main canal with a water supply of 156 cusecs and three other distributaries with a water supply of 156 cusecs.
These canals and distributaries have a total length of 28 miles.
Jamshoro and Thatta are the two districts that will benefit from the dam with the main reservoir of the dam’s site located in Jamshoro district and the irrigation system in Thatta district.”
The project’s additional director Mohammad Iqbal Shaikh said that nearly all the canals and distributaries were ready except for one minor. “The residents of the area did not let us construct the minor because of a land acquisition issue.
The Wapda and Chinese engineers had approached the villagers and asked them to submit their documents for land compensation.
They were told they would be paid only after the verification of the land records by the revenue department.
However, the revenue officials of districts concerned said that the documents were fake whereas the villagers insisted they were genuine. Hence, the matter was stuck in a limbo.”
Miao Yu Liang, project manager of the Sinohydro Corporation, spoke about features of the concrete gravity dam. “The normal storage level of water in the dam was 112.55 metres, the highest flood level 119.86 metres and the top level 121 metres. Darwat Dam will store rainwater through Nai Baran river.
It was a challenging task for the engineers to construct a concrete gravity dam here. With a life span of 50 years, the dam has also been fitted with a parallel system to cleanse silt through large pipes.”
Mr Lixin, deputy manager of the firm, said that his team of engineers had completed the project despite a pending bill of Rs1.3 million.
When the additional director of Wapda was asked about the claim, he agreed that
the bill was pending and efforts were on to expedite the matter.
Mr Lixin said that according to the agreement, his firm was required to carry out repair and maintenance of Darwat Dam for two years.
Another official of the firm, Tian Zhao Jun said that cement grouting along with rocks was used throughout the site till the top level of the dam to control seepage.
Earlier, Wapda chairman Syed Raghib Abbas Shah visited dam and said: “This is an excellent achievement as the dam will enable us to get barren lands of Sindh irrigated.”
According to Wapda documents relating to the dam, the provincial government had decided to distribute state-owned lands around the dam site to 100 landless peasant women.
However, only 25 women have received the ownership rights (documents) of a total of 25 acres so far.
KARACHI: Pakistan on Tuesday conducted a successful test fire of Short Range Surface to Surface Missile Hatf IX (Nasr), according to the Inter Services Public Relations (ISPR) website.
The test fire was conducted with successive launches of 4 x missiles (Salvo) from a state of the art multi tube launcher.
Nasr, with a range of 60 Kilometers and in-flight maneuver capability is a quick response system equipped with shoot and scoot attributes.
The test was witnessed by the Chief of Army Staff, General Ashfaq Parvez Kayani, Director General Strategic Plans Division, Lieutenant General (Retd) Khalid Ahmed Kidwai, Chairman NESCOM, Mr Muhammad Irfan Burney, Commander Army Strategic Forces Command, Lieutenant General Tariq Nadeem Gilani, senior officers from the strategic forces and scientists and engineers of strategic organisations.
The Chief of Army Staff, General Ashfaq Parvez Kayani, congratulated the scientists and engineers on this outstanding achievement which consolidates Pakistan's deterrence capability.
LAHORE: Pakistan Tehrik-i-Insaf (PTI) chief Imran Khan vowed Saturday to block Nato supplies from crossing through Khyber Pakhtunkhwa in response to the US drone strike that killed Pakistani Taliban chief Hakimullah Mehsud and 'sabotaged' peace talks.
Khyber Pakhtunkhwa is one of two key routes Nato supplies move in and out of Afghanistan and is seen as crucial as US-led allied forces prepare to drawdown from the war-torn country in 2014.
Opposition parties in Pakistan have accused the US of using the drone strike to stymie the peace process before talks proper had even started.
Khan, whose party leads the provincial government in Khyber Pakhtunkhwa, said: “Even if we lose our provincial government, we will not let Nato supplies pass through as long as drone strikes do not stop.”
He was speaking at a news conference in the eastern city of Lahore after a meeting of the party’s central committee.
He said the all parties’ conference had decided to pursue the path of peace talks, and that the Taliban had only put forth the condition of halting drone attacks.
Commending the interior minister, he said Chaudhry Nisar Ali Khan had brought the government to a stage where the peace dialogue process could be taken forward.
“This drone strike has sabotaged the dialogue process. It has proved that they (the Americans) do not want peace in Pakistan,” said the cricketer-turned-politician.
Urging all political parties to unite “in this defining moment”, Khan said that their party would pass a ‘unanimous’ resolution in the KP assembly on Monday. He said the party would also raise the matter of stopping Nato supplies in Parliament on Monday.
Other political parties have also condemned Friday’s drone strike.
Jan Achakzai, spokesman for the Jamiat Ulema-i-Islam Fazl (JUI-F) religious party whose head Fazlur Rehman is helping government in contacts with Taliban, also condemned the drone strike.
“It is a setback for a peace camp in Pakistan. The drone attack has been carried out a time when there was an enabling environment for peace talks and despite the Americans saying they supported the internal reconciliations,” he said earlier.
PAKISTAN: Prime Minister Nawaz Sharif told a business gathering in Washington last week, “there are few places in the world today that so uniquely offer the promise of land, geography and people as does Pakistan”. This sounds a bit delusionary.
On the other hand, within five months into his term, he seems to have lost both the opportunity and the momentum to launch some desperately needed economic reforms.
Foreign exchange reserves continue to fall and are down to $4.1 billion; just enough to cover five weeks of imports. Getting the $6.5 billion loan from the International Monetary Fund was hardly an achievement. The IMF didn’t have a choice with letting Pakistan default being the only other option.
Some believe the elimination of $4.8 billion in circular debt (it’s accumulating again and touched the one billion dollar mark this month), raising electricity tariffs and thereby reducing subsidies, hiking sales tax, and announcing the privatisation of 31 state enterprises are measures in the right direction. This is a simplistic and superficial view.
Pakistan has been down this path many times before and back to square one. Is this time any different? It is not an industrialised country like Britain, where major issues could be addressed by just privatisation. The Asian Development Bank recently warned that the IMF’s new programme is at risk, as “most of the required reforms have political and governance dimensions which posed formidable barriers in the past”.
The greatest barrier is the unwillingness of the ruling elite to tax the rich and powerful, that is, themselves. The second is the patronage-based personalised style of governance.
These barriers, not the IMF, are principally responsible for persistent fiscal deficits, inflation, misallocation/abuse of resources, and under-investment in physical, social, and administrative infrastructure.
If the PML-N believes it can produce a miracle by attracting huge foreign investment through privatisation and by launching mega projects while doing just enough to get the next few tranches from the IMF, it is wishful thinking, not a plan.
Pakistan is unlikely to attract large-scale private sector foreign investment now or in the foreseeable future, given its precarious security situation and a weak state with dysfunctional institutions that are often at odds with each other.
Pakistan’s chronic economic issues are affecting the viability of state structures, and can no longer be addressed by prescriptions offered by conventional thinking (of both local and foreign experts), because it mostly focuses on the symptoms, while the rot turns into a gangrenous mess.
Take, for example, the energy crisis. The core problem revolves around the energy mix and the generous terms given to the independent power producers. Subsidy in that context is a misnomer, because it’s a consequence of a structurally flawed energy policy and not a simple case of providing goods below a price determined by the free market.
Re taxes: it would not take more than a few months to raise the rate of collections from direct taxes, but no government wants to do it, as one World Bank official once told me.
The security situation needs a revolutionary approach to strengthen the capacity of an out-of-date state apparatus to control terrorism. For instance, why do we need 20-22 infantry army divisions, given the tectonic changes in the nature of both external and internal threats? Shouldn’t we at least think about redeploying resources away from 4-5 of these divisions to form a well-trained, well-equipped and technologically sophisticated modern counter-terrorism force?
The very act of convening the all parties’ conference to initiate talks with the un-named militants signified the government’s lack of will to do what’s really needed: take the bull by the horns. Instead, it chose to pass the buck. Sharif does not want to assume responsibility for making tough decisions and take any risks. He would have to take risks — unless he just wants to survive in the office like his predecessor — to address issues of the state’s credibility and investor confidence.
These intangibles are of far greater importance than some traditional economists might believe, and are directly linked to Pakistan’s acute crisis of governance. If the state is widely perceived as weak and ineffective, rest of the issues become rather secondary.
Mr Sharif’s style of personalised governance hasn’t changed much since the 1990s, although Pakistan has become too big and complex — with its society violently fractured and institutions dangerously weak — to be governed by a kitchen cabinet of loyalists and relatives. It must restructure its predatory institutions — particularly the police, lower judiciary, and bureaucracy — through radical reforms to institutionalise governance.
Unfortunately, the federal government is in a limbo for many practical purposes after the devolution of significant powers to the provinces, because while it has taken place on paper, the provinces’ governing capacity is quite limited, as they have long suffered from under-investment and been undermined by a meddling security establishment.
What does it all mean for businesses and investors? I had stated in an interview given to a foreign news agency, published May 15, 2008: “Pakistan’s economic performance in the next few years will be weak, with an average GDP growth of not more than around 3.5 per cent, high inflation, weak currency, dwindling foreign exchange reserves, a large current account deficit and low investment levels.”
The outlook is even more clouded now, given the worsened situation and because the government has demonstrated neither the will nor the capacity to meet the extraordinary challenges Pakistan faces.
Mr Sharif’s own conduct has done little to inspire much confidence. One hoped that his clear majority would enable him to start a new era of an assertive civilian leadership, but he apparently wants to please every ‘stakeholder’ and rule with ‘consensus’. Mr Sharif may draw on Machiavelli, who wrote in his classic political treatise The Prince, “any man who tries to be good all the time is bound to come to ruin among the great number who are not good”.
Pakistan is in urgent need of a bold and courageous leadership style at this point and not a dithering one which hopes to somehow muddle through whilst wishing the problems would just go away when they are actually getting worse.
Yousuf Nazar runs an international consultancy firm and is a former head of Citigroup’s equity investments unit
WASHINGTON: In a document issued after Prime Minister Nawaz Sharif’s visit to the United States, the White House has acknowledged improvement in a key area of US concern: the safety and security of Pakistan’s nuclear assets.
“Pakistan is engaged with the international community on nuclear safety and security issues and is working to ensure its strategic export controls are in line with international standards,” says the document.
“Pakistan is a state party to both the Chemical Weapons Convention and the Biological Weapons Convention and is a partner in the Global Initiative to Combat Nuclear Terrorism,” the White House notes.
“Pakistan is an active participant in the Nuclear Security Summit process and works closely with the International Atomic Energy Agency’s Office of Nuclear Security to promote best security practices,” it adds.
“Through our joint security, strategic stability, and non-proliferation dialogue, we have shared views on non-proliferation challenges, as well as on the multilateral regimes on chemical and biological weapons, export controls, and the importance of regional stability and security,” the White House says.
The safety of Pakistan’s nuclear weapons has been a major issue in the United States ever since the country tested its devices in 1998. US lawmakers, media and think-tanks often claim that Pakistan’s nuclear weapons are not safe and can fall into the hands of militants if the security situation there continues to deteriorate.
During a visit to Washington earlier this month, Finance Minister Ishaq Dar raised this issue at various forums, assuring Americans that the weapons were “in safe hands and there’s absolutely no possibility of militants having access to them”.
Although the US officials have supported Pakistan’s position in the past as well, mentioning it in a White House document further strengthens Islamabad’s case.
The White House document also acknowledges that Pakistan has “taken positive steps” over the past year to increase its controls and interdiction of the illicit supply of the materials used to produce improvised explosive devices (IEDs).
During the last two years, when relations between the two countries deteriorated rapidly, the Americans regularly complained that Pakistan was allowing militants to smuggle IED-making material into Afghanistan, which was then used to kill US soldiers deployed there.
Since the IEDs killed scores of US soldiers, the issue became a major irritant in bilateral relations. US lawmakers would often urge the administration to stop aid to Pakistan over this issue.
The US acknowledgement that Pakistan had taken “positive steps” for removing this threat also removes this major hurdle in the restoration of a key partnership in the war against terror.
The White House document underlines the significance of US-Pakistan defence and counter-terrorism cooperation as well, noting that the two countries were working jointly to “bring about the defeat of core Al Qaeda and the extremist groups” that threaten the security of both nations and the region. With US help, Pakistan has significantly increased the effectiveness of its operations against militant groups, the document says.
Since 2009, the United States has trained nearly 730 members of the Pakistan Army, air force, and navy. The United States and Pakistan also conduct military staff exchanges and joint training exercises each year to enhance coordination and interoperability between our militaries.