Diplomatic bargaining at the edge — I —Prof. Ijaz Khan

Prof. Ijaz Khan is an academic and active commentator at various discussion forums, mailing groups and social networks. He is associated with Peshawar University and is Chairman, Department of International Relations.  He annotates on US Af-Pak policy, Pakistan Afghan policy and its implications on the region and the people living in it. Here’s first part of his take on the current row of overheated bargaining between US and Pakistan and Pakistan wishlist in post US withdrawal scenario in Afghanistan.(ali arqam)

The conflict in the Af-Pak region has entered a new phase, which may be termed the pre-2014 phase. This phase is currently witnessing a serious row between the US and Pakistan, supposedly allies in the ‘war against terrorism’. All parties want to influence the outcome in 2014 so that the post-2014 situation best meets its perceived interests. To influence that outcome Pakistan and the US are pursuing policies that appear to be at odds. Both also consider the behaviour of the other to be vital for achievement of its goal. So they are using various means to influence each other’s behaviour. The current row between the two allies can be explained as an overheated diplomatic bargaining.

President Obama announced disengagement from active combat in Afghanistan by 2014, thus the withdrawal of US combat troops from Afghanistan. This was announced along with a plan to enable the US to do so after succeeding in Afghanistan and not losing the war there. The plan was based on the US’s increased action at different levels: one was an increased military action through increased military presence, the so-called ‘surge policy’, and two, raising of the Afghan Army and a viable governance system. The strategy also includes peeling away as much of the Taliban as possible through negotiations. The purpose is to strengthen the Afghan government in relation to the Taliban resistance. The US does not intend to abandon Afghanistan, as it does not want a repeat of the 1990s when Afghanistan became a safe haven for terrorists from all over the world, especially Al-Qaeda.

Given adjustments for language, style and rhetoric, Pakistan’s Afghan policy has continuously been guided by two considerations: security threat perceptions from India and the question of the Durand Line. It was hosting most of the mujahideen leaders of the 1980s since the early 1970s or becoming a front-line state in the 1980s against Soviet intervention in Afghanistan or the half-cooked ideas of ‘strategic depth’ in the 1990s leading to the rise of the Taliban. Pakistan appeared to have taken a U-turn after 9/11. However, that perception soon proved wrong by what Ahmad Rashid called a ‘double U-turn’. Pakistan has been playing the role of a broker between the US and the Taliban even before 9/11. After 9/11, Pakistan — while announcing support for the US — tried its best to salvage whatever was left of its Afghan policy that banked on a Taliban-controlled Afghanistan. Pakistan tried to bridge the gap between the Taliban and the US, with the aim of saving the Taliban from any military action against them. It continued its diplomatic relations with their government in Kabul to the very end. However, when the US attacked and dislodged the Taliban government, Pakistan adjusted its policy accordingly. Since then its policy has aimed to get a government in Kabul in which it will have a strong say and Indian influence will be minimum. For that end, Pakistan has been acting against the Taliban with a policy that will limit them but not eliminate them. Pakistan also wishes to see a complete withdrawal of the US from Afghanistan, however only after meeting Pakistan’s concerns. Pakistan now wants to limit Afghanistan’s military capability as well, so a recent Pakistan foreign policy elite study proposed limiting of the Afghan Army.

Pakistan’s relations with the Taliban have been quite complex. It is like you construct a canal to direct the flow of water over whose flow you do not have much control. You stop the Taliban from acting where you do not want them to and shut your eyes when they act where you want them to. Whether Pakistan controls some of them and to what extent is debatable, however, it finds their defeat unless Pakistan’s concerns are met as not desirable. Its actions or inaction against them must be understood in this background. It is this policy that angers and frustrates the US.

The US is also facing a dilemma. It is aware of Pakistan’s position and its role. It also knows how vital that role is for the current phase of the Afghan imbroglio. Admiral (retd) Mullen’s as well as other statements, including those from the White House itself, clearly establish that the US has not been able to make Pakistan act the way it wants to with a policy that can largely be described as that of carrots and the threat of use of sticks.

With 2014 approaching fast, the US’s choices are getting limited. The American leadership seems to be getting convinced that carrots are not convincing enough and neither are the threats. Pakistani policy makers know that the US will bend over backwards as much as possible to avoid materialising of the threats — to avoid the use of sticks. They bank on US calculations that it must not entangle itself in a country bigger than both Afghanistan and Iraq put together. This does not mean that Pakistan is a match for the US militarily. Even the Pakistani establishment knows that. This means the US would need much more troops afterwards and still much more resources. Pakistan cannot be just hit, destroyed and left for the extremists to take over. If the US ever decides to hit decisively against Pakistan then it has to commit for a much longer, bigger and direct commitment than it can be worth in terms of interests — security or economic, both immediate or strategic. This is what emboldens Pakistan and pushes it to bargain hard.

Read the 2nd part here..

Courtesy: Dailytimes


Relief for the poor

Business Recorder reports1:

Punjab Finance, Planning and Development Minister Tanvir Ashraf Kaira has said poor, salaried class and farmers will get relief in the coming budget for the fiscal year 2008-09, saying, “Our main focus would be to give target subsidy to the poor in the budget.”

The relief would come primarily in the form of price controls. Abid Hasan, a former operations adviser for the World Bank, agrees with the goal, if not the means, in his take on the situation published in The News today2. His plan revolves around the introduction of a “poverty reduction surcharge” (his fancy name for “tax”) on what he considers superfluous luxuries like cars, cell phones, stock trading, and high utility bills.

Actually, at first I was encouraged because he takes the view that government subsidies and price controls have contributed to Pakistan’s economic woes. He argues, for instance, that by letting farmers sell at market prices, smuggling and black market loss would be reduced and farmers would have the resources to increase food production for next year. However, look at what Hasan proposes when it comes to cars:

More generally, tax policy should be used to switch consumption patterns appropriate to the country’s poverty status. As an example, in Pakistan for every one car sold, four motorbikes and four cycles are sold. The ratio for India is six motorbikes and 10 cycles, and in Vietnam it is 25 motorbikes and 10 cycles, for every one car sold. These two countries are almost the same or higher per capita income, and similar poverty profile, as Pakistan. And yet their population uses, relatively, more motorbikes and bicycles. Progressive tax policy – for example, zero rating bicycles, motor bikes and public transportation and high taxes on cars – and correct pricing of fuel would encourage this “pro-poor” switch.

He offers no justification for the implication that India and Vietnam have a healthier ratio of cars to motorbikes and bicycles. Why not tax cars so much that the ratio falls to 1:100? How is the proper ratio determined? Why isn’t it good that more Pakistanis can afford cars? Without the hard numbers, it’s hard to even say that Pakistanis can afford more cars, since it could just as easily be that fewer Pakistanis can afford motorbikes and bicycles, or that bicycles and motorbikes aren’t as useful to Pakistanis.

In the end, I’m just annoyed that Hasan takes the time to rail against socialist economic policies like price controls only to suggest that we solve the problem by introducing new socialist economic policies like high taxes on certain items to get various ratios into what the government determines is most healthy.

1 Budget will be poor-friendly: minister. Business Recorder. May 24, 2008.
2 Hasan, Abid. Spend on the poor to save Pakistan. The News. May 24, 2008.

Karachi stock market reflects political, economic uncertainty

The Karachi stock market closed down over 4.5% on Friday in the largest single-day loss of 2008. According to Dawn1, investors had expected a drop after the State Bank of Pakistan raised the discount rate to 12% from 10.5% on Thursday in a bid to curtail inflation. However, the size of the drop suggests that the rate increase was a pretext for exiting the market as Pakistan faces tough political and economic challenges. Since mid-April, the Karachi stock market has lost about 20% of its value. Inflation has increased dramatically, the government budget deficit has reached record heights, and foreign exchange rates have fallen.

1 Hussain, Dilawar. Billions wiped off on KSE’s ‘black Friday’. Dawn. May 24, 2008.

Pakistan’s credit rating cut

In the past few days, both Moody’s and Standard and Poor’s have cut the credit rating for Pakistan’s government bonds. This is primarily a result of two factors: political instability and a growing trade deficit. The new ratings will have a detrimental effect on foreign investment in Pakistan as investors lose confidence.

(May 22, 2008). Moody’s downgrades Pakistan ratings. Business Recorder.

(May 16, 2008). S&P cuts Pakistan rating on economy, politics. The News.

Food crisis and Pakistan

For the past few months, food prices around the world have risen dramatically and many are angry and fearful. This article in Pakistan’s “The Post” newspaper suggests that, for Pakistan at least, the government is to blame. Author Jawaid Imam argues that flour is being smuggled to Afghanistan where it can be sold for a higher price and that domestically the flour suppliers are selling flour privately rather than supplying the Utility Stores, where the poor can buy government-subsidized food. The government is turning a blind eye to these activities.

As Imam notes, farmers in countries like the USA, Brazil, and Argentina are profiting from the rising prices. He does not consider the plight of Pakistani farmers — when food prices are low, they must compete with foreign imports; when food prices are high, they are banned from exporting and profiting.

For me, the food crisis has made it clear that food security should be one of the top concerns of any nation. Hopefully when this crisis is over, Pakistan will take meaningful steps to help domestic farmers.

Article: Food crisis and Pakistan
Author: Jawaid Imam
Publication: The Post

Top Taliban leader vows revenge on America

Following US missile strikes on Damadola village, a militant stronghold in Bajur tribal region near the Afghanistan border, Faqir Muhammad, a top Taliban leader vowed revenge on the US. The attacks were also condemned by the governor of the NWFP. The NWFP government has been involved in peace talks with the Taliban and it is feared that these missile attacks will derail those talks. Later Thursday, several thousand protesters attended rallies called by Islamist political parties in Damadola and Khar, Bajur’s main town. Pakistan Foreign Ministry spokesman Mohammed Sadiq denied that Pakistan had given the US permission to target foreign militants on Pakistan soil.

Article: Top Taliban leader vows revenge on America
Author: Habibullah Khan
Publication: The Associated Press