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The second largest economy in the world is slowing down, but it is all part of the plan. China’s imports are decelerating to the slowest in nearly two years, according to the government. The results will be more thrift and a tighter economy overall.

Starting July, Christine Lagarde will begin her quest to bring sanity to the world financial markets.  As she accepted the position, she stressed that IMF and the EU need to resolve the Greek debt crisis and prevent contagion to other eurozone economies. She will also be supervising the financial bailouts of three Western European countries.

Many of us were thirsty for blood in the Fall of 2008. There was talk of hanging a few Wall Street Bankers, along with a couple Washington responsibles. With New York Times financial journalist, Andrew Ross Sorkin's Too Big To Fail  becoming an instant bestseller, and its HBO adaptation which premiered last week, we now have a fantastically rare glimpse of the behind-the-scenes wheeling and dealings on Wall Street.

Economic challenges faced by South Asian countries are enormous and multifaceted. Negligence of social sector development remains the most worrisome area having far-reaching ramifications for sustained economic growth. In health and education, for example, not only allocation of funds is inadequate in all South Asian countries but the spending, due to poor governance, is problematic — sleazed with wastage, underutilization and leakages. It is now universally accepted that economic development without social sector uplift can lead to all kinds of problems — financial crises, social unrest, commotions, clashes and, in the end perhaps, total collapse and anarchy. Realizing the key importance of the social sector for economic development, Asian Development Bank (ADB) and other donors, during the last many decades, have given munificent grants to South Asian countries for reforms in vital areas of the social sector — education, health, poverty reduction, gender empowerment and environmental protection, just to name a few.

Knowing that South Asia is home to more than one fourth of the world’s population, with tremendous potential to be an engine of growth for the rest of the world, ADB in its Strategy 2020, approved in April 2008, has pledged to make the Asia-Pacific region “free of poverty” and has reaffirmed its “mission to help its developing member countries in improving their living conditions and quality of life.” In 2008, the World Bank also approved a number of projects for South Asia and almost all of these focused on social sectors such as education, healthcare, poverty alleviation and agriculture. In these areas, Pakistan benefited substantially from the ADB assistance specifically since 1966. In 2009, the ADB disbursed $1.10 billion and invested $942.7 million in newly approved assistance, with the bulk of these supporting development initiatives in infrastructure, energy, social sectors, governance and transport in the four provinces and at the national level (http://adb.org/Pakistan/main.asp).

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The direction of Pakistan’s external trade is shifting. A more regional approach is in sight. We now import more from China than the U.S. In the last few years, Afghanistan has emerged as our third largest export market after the U.S. and the UAE. The pressure is also building up on the government to enhance trade ties with India. Pakistan and India have been able to break diplomatic ice and the two sides have agreed recently to restart the composite dialogue stalled after the Mumbai terror attacks.

“Hope springs eternal in the human breast, Man never is, but always to be blest.” -Alexander Pope

The number of problems Pakistan is beset with is countless. Their magnitude defies assessment. Living on alms from foreign donors and being led by the United States has become second nature for the Pakistani people. It is therefore not looked upon as degrading and a challenge to national self-esteem. To supplement the charity, the country borrows. The IMF exacts its pound of flesh “nearest the heart,” the U.S.A. not only demands that its charity be acknowledged in speech and writing and thanks be offered with head bowed low; it also asks for sacrifice of Pakistani lives.

And the money so received, whether outright charity or loan, goes not to improve the lives of the people. It goes to buy BMWs for the civil and military honchos and ministers and sustain a battalion of ministers, advisers and other hangers-on, and to pay for foreign junkets by the top brass.

Stepping forward after a well carved job back in South Asia, the Chinese leadership set out to redefine its regional interests with both Pakistan and India setting the trend to enter a bigger picture. The Chinese President Hu Jintao’s official visit to the U.S. in January maps out a peaceful cooperation on a wider range of subjects revolving mainly around economic issues and removal of suspicions on both sides.

Similarly, in painting a global picture of its ambitious economic dream, the dragon has started whipping its tail to meet the economic challenges the country would face in 2011. Chinese Prime Minister Wen Jiabao visited both India and Pakistan in December to wipe the road clear of debris to streamline its economic, political and strategic interests with both rivaling nuclear states.

When the Republicans were routed in the midterm elections during George Bush’s presidency, he said the party was “thumped.” When a similar fate met the Democrats recently, President Obama called it “shellacking.” Both epithets would apply to what India’s ruling Congress party suffered in the recent state assembly elections in Bihar and other south Indian states.

The Party has won two consecutive elections, -in 2004 and 2009. And the coalition with several other parties under the name of UPA has so long worked successfully. However, it seems the 2009 victory triggered a feeling of success as if the party would never end.

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China is a statistician’s paradise. Articles about China typically include figures relating to the country’s awe-inspiring economic growth, international trade, currency reserves and growing international clout as the new “Workshop of the world” – a phrase once proudly used to describe the United Kingdom. Suffice it to say that barring extraordinary events, the year to come will produce another set of impressive statistics. However, China is much more than economic statistics. It is a society in a delicate and potentially dangerous phase of modernization that is grappling with severe environmental problems, socioeconomic inequalities and the proximate possibility of political and strategic destabilization. 2011 is likely to be a difficult year for China though the problems likely to be encountered are not beyond the ability of the Chinese leadership to handle.

The most pressing problem seems to be growing tensions on the Korean peninsula. The bellicose and autocratic North Korean regime is intent on demonstrating its nuisance value to its far wealthier neighbors and is jealous of growing mutually beneficial trade and investment ties between its Chinese ally and South Korean nemesis. China’s handling of this situation will require all the depth and dexterity that its 2200 years old diplomatic tradition can muster. Clearly, China does not want war on the Korean peninsula for that would disrupt economic growth and probably result in the defeat of its North Korean ally. At the same time, the Chinese leadership is visibly reluctant to push North Korea completely into a corner and start knocking heads in Pyongyang, which is what the United States of America would like China to do. Thus far Chinese efforts to get the Six Party talks going again have failed owing to U.S. and South Korean unwillingness to talk to North Korea until it improves its behavior. The Chinese position is that modifying North Korea behavior without talking to it is unlikely to happen. To put the situation in more cultural-historical terms, the barbarian hermit kingdom of North Korea is demanding attention and tribute from the civilized world and paying a little tribute, disguised as aid for face-saving purposes, could save a lot of bloodshed and destruction.

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For a year that began with business shut down in the country’s biggest metropolis, 2010 couldn’t have been expected to offer great promises to Pakistan.

January 1, 2010 saw Karachi’s industrial and commercial hubs closed on account of the multiparty strike initiated by the Sunni Rahbar Council to express solidarity with the victims of the Ashura procession blasts and the affected traders.

The theme of strikes and lockouts continued throughout the year, as political infighting between ethnic groups was taken to the streets of Karachi – leaving scores dead, and dozens of shops, busses and other means of livelihoods blazed to the ground. This mayhem came side by side with the regular diet of terrorist-attacks, conducted sporadically across the country, allegedly by the TTP, Lashkar-e-Jhangvi and the likes.

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