Political and Internal Developments

The dismissal by the 8-judge Supreme Court bench headed by Chief Justice Iftikhar Chaudhry of Prime Minister Yusuf Raza Gilani’s intra-court appeal against an earlier Supreme Court judgement indicting him on charges of contempt of court did not come as a surprise. Even before the Supreme Court ruling on the PMs appeal, the observations made by some of the judges on arguments forwarded in the latter’s defence by his counsel Aitzaz Ahsan, left no doubt that the judges mind was already made up and unless he agreed to write to the Swiss authorities for reopening the money laundering case against President Asif Zardari, it would try him for contempt. The rejection of the appeal means that Prime Minister Gilani will have to appear before the Supreme Court on February 13 when contempt charges will be framed against him. Earlier, despite the reported reluctance of Prime Minister Gilani to file an appeal before the Supreme Court – he is said to have wanted to ‘get over with it’ probably because he didn’t expect any relief from the judiciary – he gave in to the advice of his counsel who raised 54 questions of law and fact in defence of the Prime Minister’s refusal to write to the Swiss authorities.

Notwithstanding this setback, Gilani continued to put up a brave front and addressing a public gathering earlier in the week in Lahore, he said that he would respect the Supreme Court’s verdict even if it sent him to jail. At the same time, he referred to ‘conspiracies’ to prevent the Senate elections from taking place in order to deny the PPP control of the Upper House of Parliament. Almost on cue, a TV journalist with dubious connections with the ‘establishment’ and terrorist organisations, Mubashir Lucman, and the rising star of Pakistani politics, Imran Khan, filed petitions in the Supreme Court seeking a stay on the Senate elections and by-elections to vacant seats of parliament.

Another setback to the PPP government came from the judicial commission investigating the ‘memogate’ scandal which agreed to record the statement of Mansoor Ijaz via videoconferencing from the Pakistan High Commission in London. The Commission also decided to send its secretary to London to collect all ‘documentary and physical’ evidence that Ijaz wanted to hand over. The possible resurrection of the memogate case could once again push the already beleaguered government in a corner. As if this were not enough, the Supreme Court admitted a petition seeking a court directive to the government to not sack the army and ISI chiefs. Two weeks earlier, the court had asked for a written assurance from the government that it will not remove them.

The petition creates a ticklish situation for the government at a time when it is trying to put its relationship with the army back on the rails, something that became apparent from the U-turn made by the Prime Minister on the issue of appointing a serving military officer as Director General Military Lands and Cantonments, a civilian post on which the Prime Minister’s Office had earlier refused to appoint a military officer. If the government now opposes the petition restraining it from sacking the army and ISI chiefs, it could sow doubts in the army about the government’s intentions; if it accepts the prayer in the petition, it will end up tying the government’s hand insofar as taking any disciplinary action against the military top brass is concerned.

The Supreme Court also ordered the suspension of the 28 legislators from the Senate, National Assembly and Provincial Assemblies pending the passage of the 20th Amendment bill which aims to provide legal cover for their election to the various assemblies. These lawmakers got elected in by-elections conducted by an Election Commission that was not fully constituted in line with the provisions laid down under the 18 ^thAmendment. In other words, these elections were conducted in the period after the 18 ^th Amendment had been passed but before the EC had been reconstituted by including four Election Commissioners (one from each province) in addition to the Chief Election Commissioner. The immediate impact of the ruling was that the finance minister and the petroleum minister ceased to be members of the Senate, forcing the government to immediately issue a notification appointing them as Advisor to the Prime Minister with the same responsibilities they held as ministers.

The suspension of the legislators also forced the government to present the 20 ^thAmendment bill to regularise the by-elections. Despite claims that the PPP-led coalition enjoyed a two-thirds majority in both houses of parliament, the government was forced to seek the support of the main opposition party, PMLN, for passing the constitution amendment bill. Although around 8 lawmakers of the PMLN were also affected by the ruling, the PMLN used the opportunity to enter into negotiations with the government and link its political demands regarding the appointment of members of the EC and caretaker government that will conduct the general elections with its support for the 20 ^thAmendment. After intense negotiations, the government and the opposition are believed to have settled on three of the four issues raised by the latter. These are: a) increasing the term of office of Election Commissioners from two to five years, b) ensuring the independence of the EC by giving them a constitutional protection similar to that enjoyed by judges of the Supreme Court, and c) giving political parties the right to change their list of nominees for reserved seats for women and minorities any time after the elections. The big stumbling block however is the opposition’s insistence to replace the word ‘consultation’ with ‘consensus’ between the Prime Minister and Leader of Opposition for the appointment of the Election Commissioners and Caretaker Government. PMLN chief Nawaz Sharif has declared that unless the government accepts the condition of ‘meaningful consultations’ with the Leader of Opposition, his party will not support the 20 ^th Amendment.

The political negotiation between the PMLN and PPP, in which the JUIF chief Maulana Fazlur Rehman is also believed to be playing a role so that a deal can be worked out between the politicians for holding early elections (by around September/October this year), has given an opening to Imran Khan to attack both Nawaz Sharif (against whom he expects to face off in Punjab) and Maulana Fazlur Rehman (against whom he will face off in Khyber Pakhtunkhwa). In an interesting formulation, Imran Khan has said that instead of the troika of yore which comprised the President, PM and army chief, a new troika has taken over comprising Asif Zardari, Nawaz Sharif and Maulana Fazlur Rehman. Accusing Nawaz Sharif of supporting Asif Zardari in the name of saving the system (nizam) and Maulana Fazlur Rehman backing Zardari in the name of saving Islam, he said they had brought ruin on Pakistan. Stories of Imran Khan being backed by the ‘establishment’ received further traction after he indicated his willingness to tie up with MQM albeit with the caveat that the MQM renounces violence. For its part, MQM leader Farooq Sattar has acknowledged that some ‘friends’ were trying to bring the two parties closer to each other. Not very long back, Imran Khan had been raving and ranting against the MQM and its chief Altaf Hussein and not only had he called it a terrorist party but he had also approached the authorities in Britain with ‘evidence’ of the violent politics practised by the MQM.

With all political parties getting into election mode, there are reports that the PPP Core Committee has decided to ‘give relief’ to the people in the next budget. This is a clear indication that fiscal prudence will be thrown to the winds – there are plans to freeze the power tariff, settle the circular debt through deficit financing even if this means the fiscal deficit going through the roof, and giving handouts in the form of development projects to the people of which the Benazir Income Support Programme and the Waseela-e-Haq programme are important components – and a very populist budget will be presented by the government, provided of course that it survives till May and gets an opportunity to lay out the goodies in the hope of winning votes.

Unfortunately for the government, the IMF’s latest report on the state of Pakistan's economy paints a very dismal picture and makes recommendations which if accepted will not just mean that the government will have to give up its populist budget plans but also take measures that could end up losing it whatever little support it is expected to get in the next elections. According to the IMF the government has underestimated expenditure by around Rs. 317 billion and overestimated revenues by around Rs. 215 billion, thereby hiding an additional deficit of around Rs. 530 billion which when added to the budgeted deficit of Rs. 985 billion will mean a fiscal deficit of around Rs. 1.45 trillion during the current fiscal. Apart from a 7% fiscal deficit, the IMF has estimated that the economy is likely to grow not more than 3.4% with inflation hovering around the 12% mark. The inflation numbers could get worse in the short term if the government devalues the currency in line with the IMF’s calculations which estimate that the Re is overvalued by around 10%. Adding to the bad news is the IMF estimate of unemployment in Pakistan which the Fund calculates to be around 33% instead of the Pakistan government estimates of 6%.

Meanwhile, the situation in the restive province of Balochistan appears to be going from bad to worse. The murder in Karachi of the wife and daughter of a Balochistan MPA Bakhtiar Domki – the two women were the grand-daughter and great-grand daughter of the slain Baloch leader Nawab Akbar Bugti and sister and niece of his grandson Brahmdagh Bugti – has seen widespread unrest, protests, demonstrations and strikes all across the province. The Balochistan Provincial Assembly, and the National Assembly and Senate have seen uproarious scenes with lawmakers levelling thinly disguised accusations against the infamous intelligence establishment for being responsible for the brutal killings. Perhaps, if the protests had remained confined to Balochistan or even Pakistan, the security establishment would have simply ignored it. But the decision of a US House Foreign Affairs Subcommittee on Oversight and Investigations to hold a hearing on the situation in Balochistan has shaken up the Pakistani establishment. Pakistani senators have accused the US Congress of direct interference in Pakistan's internal affairs and the Pakistani foreign office has conveyed its ‘serious concern’ to the US administration. At the hearings, Pakistan's terrible human rights record in Balochistan were exposed and there were calls from organisations like Amnesty International to apply the Leahy Amendment that forbids the US from giving any assistance to an army that is found involved in gross human rights violations. While calls supporting independence for Balochistan were rampant during the hearings, the non-committal response of the US State Department spokesperson to a question on whether the US supports independence for Balochistan would surely send alarm bells ringing in Islamabad. Specifically, the US spokesperson in response to a query stated “our view on this has not changed, and you know where we’ve been on Balochistan. We encourage all the parties in Balochistan to work out their differences peacefully and through a valid political process” and adding that the “hearings don’t necessarily imply that the US Government endorses one view or another view”. In other words, there was no emphatic dismissal of the demand for independence for Balochistan.

Foreign Relations / Foreign Policy

Even as Balochistan starts to create another point of friction between the US and Pakistan, there are reports that the two sides are once again starting to engage each other. Not only have top Pakistani, US and Afghanistan military commanders held a trilateral meeting to discuss border security and cooperation, the US CENTCOM chief Gen James Mattis is expected to visit Pakistan soon to try and settle the spat caused by the killing of 24 Pakistani soldiers in a chopper attack in November last. Reports in the US media claim that the Americans could offer a formal apology to the settle the matter. The Pakistani press has reported that ISI and CIA have once again started cooperating with each other and the resumption of drone strikes by the CIA accompanied by complete silence by the Pakistan military establishment (which had earlier threatened to bring down the drones) is indicative of the efforts underway to restore a working relationship between the US and Pakistan. According to one Pakistani analyst, the change in policy on Pakistan's part is in large part the result of the massive economic crunch and the fact that the Pakistan budget is critically dependent on the flow of foreign aid. Meanwhile, Pakistan's defence minister has said that Pakistan will reopen the NATO supply lines, albeit under new terms and conditions which includes charging a fee for every container that traverses through Pakistani territory or uses Pakistani facilities.

The Americans are also claiming that they are keeping Pakistan fully in the picture about the ‘preliminary’ contacts and meetings between the US and Taliban in Qatar. But it is not only the Americans, the Taliban too are keeping the Pakistanis in the loop. According to a report in the Pakistani media, the Taliban are believed to have informed their Pakistani patrons that they are not holding talks with the Americans through the Pakistanis because they want to disabuse the world of the notion that the Pakistanis were calling the shots in the Taliban movement. Towing the same line has been Pakistan's foreign minister Hina Rabbani Khar who said in an interview that Pakistan had so far not played any ‘substantial role’ in the talks between the Taliban and Americans. She however added that Pakistan would push the Taliban and Haqqani network towards peace if asked to do so by the Afghan government. She also repeated the old tired line being peddled by Pakistan that it supports “an Afghan-led, Afghan-owned and Afghan-driven, Afghan-backed process which has the ownership of Afghan people”.

Prime Minister Yusuf Raza Gilani visited Qatar last week where it is believed he met participants of secret talks that have taken place between Afghan government, Pakistanis, American, Taliban, Haqqani network and Hekmatyar’s group. In his meeting with the Emir of Qatar, Gilani expressed an interest in importing LNG from Qatar. The Qatari government offered to invest around $ 5 billion in Pakistan and the Emir assured Gilani that Qatar would ‘maintain a strategic relationship with Pakistan regardless of the tactical calculation of profits and losses’.

Iran’s Vice President Ali Saeedlou visited Pakistan last week. The top Pakistani leadership, including President Asif Zardari, assured the visiting Iranian dignitary that Pakistan was committed to the Iran-Pakistan gas pipeline and in importing electricity from Iran. The two sides also discussed measures to increase connectivity between them and enter into a preferential trade arrangement. But despite all the pious statements calling for closer cooperation, the spectre of international sanctions was hanging heavy on the talks, something that is apparent from the fact that the two sides discussed entering into a barter arrangement for commodity and energy trade because of the difficulty in arranging payments through international banking channels. The Pakistani media has also reported that Pakistani traders are reluctant to trade with Iran because of the international sanctions imposed on Iran. For its part, the Iranians have tried to exploit Pakistan's economic crisis and bust the sanctions regime by not only offering to fund the Pakistani part of the IP gas pipeline but also offering Pakistan oil on a deferred payment basis through a pipeline. But notwithstanding the public defiance by the Pakistanis on the issue of the IP pipeline, they are quite mindful of the implications of going ahead with such a project. But since they cannot back off from the project directly, the Pakistanis seem to have devised a roundabout way of delaying the pipeline project. Perhaps for this reason, they have asked the Iranians for an independent, third-party evaluation of the gas reserves in the Iranian gas field of South Pars from where the gas for the IP pipeline is to be supplied.

Relations with India

It was India-bashing season last week, what with Pakistan observing the Kashmir Solidarity day on February 5. Prime Minister Yusuf Raza Gilani expressed his commitment to giving ‘diplomatic, moral and political support’ to Kashmiris and calling Kashmir the ‘cornerstone of Pakistan’s foreign policy.’ He however tried to balance his rhetoric by telling his audience that while Kashmir remained a flashpoint despite India and Pakistan having fought four wars, in the 21 ^stCentury wars were no longer affordable and it was better to try and solve the problem through dialogue and diplomacy. Maulana Fazlur Rehman, who is chairman of the Kashmir Committee of Parliament, said that MFN status should be given to India only after taking the Kashmiris into confidence on the pros and cons of the move. Islamist and terrorist groups like the Jamaat Islami and Jamaatud Dawa also went ballistic in their rhetoric against India with the JuD chief Hafiz Saeed warning India of dire consequences if it did not leave Kashmir and opposing any talks or trade with India until the Kashmir issue was resolved. Meanwhile, a report in the Pakistani press has said that the government of Pakistan has gone into a go-slow mode on the issue of MFN status to India because of opposition from the army, business community, political parties and the foreign ministry.