Political and Internal Developments

The political and military leadership in Pakistan is trying hard to live down the wikileaks disclosures. While President Asif Zardari rubbished the leaked cables by calling them fabricated and saying that they would soon become a thing of the past which no one will remember, the Defence Committee of the Cabinet called the disclosures a nefarious conspiracy to harm the image of the country. The Pakistan army, meanwhile, issued a statement expressing support for the political setup and clarifying that the army chief, Gen. Ashfaq Kayani, held all political leaders (read Nawaz Sharif) in high esteem. While publicly, the PMLN has expressed satisfaction over the Army’s statement, it is an open question whether the PMLN is also reassured of the neutrality of the army in political affairs.

The PMLN, which has been losing political ground both because of its ‘friendly opposition’ to the government as well as its lacklustre governance in its bastion, Punjab, has decided to try and force mid-term polls in the country by going hammer and tongs at the corruption and mal-governance of the PPP-led coalition government. The top party leadership has given up the idea of either an in-house change or using street pressure to bring the government down. Rather, it will create conditions that make the continuation of the government impossible. The refusal of the PMLN to support the Reformed GST (RGST) bill is part of this new strategy under which the party will support a populist cause to recover lost ground and at the same time put immense pressure on the government.

If it was only the PMLN which was opposing the RGST bill, the government might have still been able to push through the highly contentious bill through the National Assembly. The problem is that the PMLQ has also stiffened its stand on the bill. What is worse, the JUIF which was earlier ambivalent on the RGST bill, has made its opposition to the bill quite clear last week. This is believed to be an effort on the part of the JUIF to limit the damage caused by the Wikileaks cables which have shown Maulana Fazlur Rehman as lobbying with the Americans for the post of Prime Minister. These revelations have isolated the Maulana from both the Taliban as well as religious parties. Add to this the MQM, which despite being a coalition partner, has been among the most vocal opponents of this tax reform measure, and it appears to be quite an uphill task for the government to push through this measure. The only ally which continues to stand by the PPP on the issue of RGST is the ANP, which is itself in a bit of crisis with senior party leaders joining issue with the party president Asfandyar Wali over the question of the next president of the party.

The politicking over RGST is taking place despite finance minister Hafeez Shaikh sounding dire warnings of a total economic meltdown unless the bill was approved. While debt default will become unavoidable if RGST is not passed – the IMF and even the Americans have made it clear that all aid to Pakistan could come to a halt unless Pakistan initiates economic reforms, in particular impose the RGST – there are fears that the budget deficit could go through the roof and with it inflation which is already over 15%. Already borrowing by the government from the State Bank of Pakistan has risen some 20 times from Rs 13.5 billion last year to Rs 281 billion this year.

Meanwhile, the circular debt crisis in the energy sector has once again reared its head and has risen to Rs 304 billion which in turn has raised the spectre of default in international oil payments. The brunt of the deteriorating fiscal situation is being felt on the social sector with the health budget having been slashed by 46%. However, wasteful expenditure continues afoot, an example of which was the revelation that in 2007-08 the ministry of information and broadcasting distributed Rs 570 million from its ‘secret fund’ to buy journalists. That this sort of a thing is still happening became apparent after the ‘fake wikileaks’ news story maligning India appeared in all the top dailies of the country. It is another matter that the lie was caught almost immediately and the entire ‘free’ press of Pakistan had egg on its face.

The Balochistan Chief Minister Aslam Raisani had a narrow escape after a suicide bomber targeted his convoy in Quetta last week. The attempt on Raisani’s life comes within days of another attempt on the life of the Balochistan Governor Zulfikar Magsi. It is however not quite clear as to who was responsible for the attack, what with the Tehrik-e-Taliban Pakistan (TTP), the Lashkar-e-Jhangvi Al Almi and the Baloch separatist organisation, Balochistan Liberation United Front all claiming responsibility for the attack. Raisani, like a good lackey of the Pakistani establishment, has meanwhile claimed that there was no Taliban presence in Balochistan and the only Taliban in the province were students of religious seminaries who had nothing to do with militancy. Of course, Raisani has tried to balance his role as an agent of the Pakistani establishment by making noises on autonomy for Balochistan. He has demanded that the control over the Frontier Corps in the province be placed under the provincial government and has halted the operations of 10 licensees carrying out exploration and mining at the Reko Diq gold and copper mines.

A Supreme Court order banning any transfer of land in Gwadar to private parties by the Ports Authority of Singapore (PSA) has also come as a shot in the arm for those agitating against the loot of Balochistan. The Supreme Court also passed a landmark judgment in the controversial Rental Power Plants case when it asked one of the licensees to immediately return the mobilisation advance given to it by the government because of violation of license conditions.

Perhaps the biggest victory in the cause of civil rights was the admission of the ISI that it has the custody of 11 terror suspects who had been acquitted by the courts. After weeks of stonewalling and denials the ISI was finally forced to accept that it had the custody of the suspects and explained its conduct by giving a cock and bull story of the 11 men having been taken away by their associates who were disguised as intelligence agency personnel and that the men were arrested during a raid on one of their operational areas.

Two big incidents of terrorism took place in the tribal areas last week. The first was the suicide bombing of a meeting of pro-government elders in Mohmand agency in which nearly 50 people were killed. The second attack was in Kohat where a suicide bomber hit a bus and killed around 20 people. Both the attacks were claimed by the TTP and are believed to be part of a strategy to reclaim ground lost to the Pakistani security forces. These attacks have come even as Gen Kayani, during a visit to South Waziristan, claimed that the entire tribal agency had been cleared of the militants. Interestingly, there were reports that the insurgents fired rockets in an area that Kayani had visited along with the Air Chief, Rao Qamar Suleman shortly after they left the area. The army’s spokesman however denied these reports.
Quite aside the fact that Kayani does not include ‘strategic assets’ like Maulvi Nazeer who targets his attacks against the NATO troops in Afghanistan in the ranks of militants, the Corp Commander Peshawar has also claimed that nearly 80% of the tribal belt had been cleared of militants and that the remaining 20% was in North Waziristan where he said an operation was already underway with 6 brigades being deployed.

Foreign Relations / Foreign Policy

The trade concessions granted to Pakistan by the EU have remained stillborn after WTO upheld the objections filed by countries, including India, affected by these concessions. While the EU has told Pakistan that it will try and get a waiver from WTO in March 2011, the Pakistanis have decided to go on a diplomatic offensive to get these concessions through.

There was further heartburn in Pakistan after two Arab nations – Syria and UAE – supported India’s claim for a permanent seat in the UNSC.

Prime Minister Yusuf Raza Gilani visited Kabul last week where he made common cause with Afghan President Hamid Karzai to debunk the wikileaks cables. Karzai put a positive spin on the leaked cables and said that they had helped to bring Afghanistan and Pakistan closer together. He cautioned Gilani to not fall for what is being said by the West and to “be smart enough to understand their tricks”. Addressing a joint press conference, Karzai said that “realism and experience showed there was no option other than strengthening friendship with Pakistan” because Afghanistan could not be stable without a cooperative Pakistan.

The Joint Statement issued after the summit meeting recognised “terrorism and violent extremism” as a threat to stability and peace in the region and committed both countries to “effectively cooperating, combating and defeating these threats and eliminating their sanctuaries wherever they are.” Pakistan supported the ‘reconciliation’ efforts of the Afghan government and the two countries decided to strengthen “interaction among the security and counter-terrorism institutions of the two countries for promoting effective cooperation” and also examine “ways to enhance capacity building and human resource development of their peoples.” On the economic front, the two countries pledged to enhance trade and economic cooperation between them in order to achieve the target of $ 5 billion bilateral trade by 2015. The two sides also infrastructure development projects, including the railway lines to Jalalabad and Kandahar from Peshawar and Quetta and joint economic projects.

Expectations are high in Pakistan on the visit of the Chinese Premier Wen Jiabao later this month. Pakistan not only is expecting the finalisation of a deal for a 1 GW nuclear power plant but is also hopeful of agreement on a currency swap agreement that will facilitate trade between the two countries and help it reach the $ 15 billion target. There is also talk of the two countries entering into a ‘strategic dialogue’ of the sorts that Pakistan has with the US. Predictably enough, given the growing dependence of Pakistan on China, the Pakistanis toed the Chinese diktat and boycotted the Nobel Prize ceremony which was to award the Nobel Peace Prize to the Chinese dissident Liu Xiabao.

There are reports that the US has been obstructing Pakistan's efforts to expand the Friends of Democratic Pakistan (FoDP) forum by not allowing countries like Russia to become members of the forum. Meanwhile, even as the US has denied any involvement in Pakistan's political system, the US ambassador to Pakistan Cameron Munter has been exhorting the Pakistanis to undertake the necessary economic reforms which will make it easier for the US administration to fight Pakistan's case in the Congress. Munter has said that failure to impose the RGST will be a “blow to the international community’s efforts to bolster Pakistan's economy”. Despite MQM chief Altaf Hussein castigating Munter for lobbying for RGST with the MQM in Karachi, it doesn't seem to have had any impact on Munter who has gone ahead and said that privatisation of Public Sector Enterprises which constitute a major drain on resources is imperative for pulling Pakistan's economy out of the hole it finds itself in.

Relations with India

There are reports of behind the scene efforts being made by India and Pakistan to resume the stalled dialogue process. While Pakistan is insisting on a roadmap for restarting the Composite Dialogue process, India is tying up progress in the 26/11 case with the dialogue. There are also reports that India has agreed to allow a judicial commission from Pakistan to question the convicted 26/11 terrorist Ajmal Kasab as well as the Indian officials handling the case.

A virtual cyber war broke out between Indian and Pakistani hackers last week. After Indian hackers defaced dozens of Pakistani government websites, a team of Pakistani hackers targeted the website of the Central Bureau of Investigation in India.

Pakistan has reacted strongly to the Indo-French civilian nuclear deal saying that it has “serious strategic implications” for the region and that making an exception for India is a step backwards in terms of promoting a peaceful nuclear cooperation.

In an indication of the possible use of nuclear weapons for terrorism in India by Pakistani based terrorist groups, the chief of the United Jihad Council Syed Salahuddin has hinted at the possibility of getting hold of a nuclear weapon. Giving a talk at the Jamaat Islami office in Rawalpindi, Salahuddin said that “Kashmiri Mujahideen always used to buy arms, ammunition and explosives from India and we might get a nuclear weapon from it as well”.

The president of the Federation of Pakistan Chambers of Commerce and Industry has said that while the Pakistani business community is in favour of granting MFN status to India, there will continue to be impediments and obstacles to trade between the two countries. He called on India to lower tariffs for Pakistani products and remove the non-tariff barriers that are preventing Pakistani exports to India.