Dawn Editorial 15 October 2019

Beyond deficits

ONLY a day after the financial adviser to the prime minister, Hafeez Shaikh, announced that both the critical deficits — fiscal and external — that have plagued the economy — are under “complete control”, the World Bank reminded us that far more remains to be done. In a new report in which the bank takes a deep look at growth, its risks and drivers, in the greater South Asian region, the picture that emerges is a bleak one. The entire region is plagued by a grinding slowdown, and industrial activity is actually contracting in most countries. Exports are showing a mixed performance, with some countries such as Bangladesh continuing to power ahead, albeit on the back of an almost razor-thin competitive advantage in ready-made garments alone, while India and Pakistan are struggling. For the first time in many years, South Asia is no longer the world’s most dynamic region, mainly because of the slowdown in India.
But the bank does point out the “idiosyncrasies” in the regional dynamic, those elements that are unique to each country, and in this department, Pakistan continues to face an uncertain future. Yes, the current account deficit has shrunk, as Mr Shaikh proudly underscored during his weekend press conference, and, yes, the fiscal balance is improving. But the cuts in public spending are key drivers of a massive, across-the-board slowdown in the economy, and this slowdown in turn is compressing demand. This is far from a policy triumph. It only means that the symptoms have been addressed.
Once the phase of stabilisation ends, the real policy challenge will remain, ie how to get growth started again. The bank points out that this cannot happen in any sustainable way without meaningful improvement in competitiveness and deep structural reform. If the growth engine of the economy were to be primed once again without this reform, the deficits would simply reappear and we would be back to square one, as we have already been so many times. So it is worth remembering that this is not the first time we have seen the fiscal and external deficits contracting like this. Each time this has happened in the past, those in power simply squandered the policy space earned through so much toil and tears by resorting to the same old formula of low interest rates, high public spending and an artificially fixed exchange rate to give us one quick growth spurt. Somebody with Mr Shaikh’s background, and level of understanding, should not need to be reminded that the real challenge has yet to begin. The World Bank report says that in Pakistan “measures to restore macroeconomic stability weigh heavily on growth”. At the same time, the burden of the past will weigh heavily when the time comes to restore growth. That is when the financial team’s mettle will really be tested.

 

 

PM in Tehran

THERE is little doubt that any outbreak of violence between Saudi Arabia and Iran will have a destabilising impact on Pakistan for a variety of reasons. Perhaps this helps explain Prime Minister Imran Khan’s shuttle diplomacy between Tehran and Riyadh.
Mr Khan was in the Iranian capital on Sunday and met Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani. The prime minister is due in Saudi Arabia today. While in Tehran, Mr Khan said that efforts to facilitate dialogue between the Saudis and the Iranians were his own initiative. The prime minister added that he wanted the “brotherly countries to iron out their differences”. He had also said on the sidelines of the UN General Assembly last month that the US president had asked him to “de-escalate” the situation with Iran.
Considering the combustible situation in the Gulf, there are signs that multiple efforts are underway to bring down the political temperature, mainly through backchannel means, but also through public diplomacy like that of the prime minister.
There have been reports of a secret UAE effort to open channels of dialogue with Iran, while Saudi Arabia is also said to have sent messages to Tehran via Iraq. Such efforts must be encouraged. A peaceful resolution to the crisis in the Gulf pitting Iran against Saudi Arabia and its allies is a far more preferable course than confrontation.
In this regard, Pakistan is indeed in a unique position. Both Shias and Sunnis call this country home, while it shares a long border with Iran, as well as maintains cordial relations with the Saudis. Therefore, it can act as a bridge between Tehran and Riyadh and help facilitate a dialogue.
On the other hand, should things go awry, Pakistan will be among the first victims of instability. The religious factor means that sectarian passions will be inflamed, while violence in the Gulf, not far from this country’s waters, will have a debilitating effect on the national economy, as will the spiralling oil prices.
The task before the leadership is complex; the Saudi-Iranian rivalry has now entered its fifth decade, and both states are in two distinct geopolitical camps with opposing agendas and visions for the Middle East. It will take a high level of diplomacy and trust for Pakistan’s efforts to pay off. But as it appears, the response from Tehran has been positive. It remains to be seen what the public reception to the idea of facilitation is in Riyadh.

 

 

Selling poison

FOR years, health authorities have warned about the harmful effects of gutka — a chewing tobacco made of betel nut, lime water and other substances — that is widely consumed in powder form throughout the province of Sindh. Its use is particularly pervasive amongst the poverty-stricken coastal communities, even amongst small children, and is often used as an appetite suppressant or mild stimulant. The harmful habit — in fact, addiction — can only be described as a culturally acceptable choice of slow poison since a wide range of diseases have been linked to its use: mouth ulcers, oral submucous fibrosis and oral cancer in the most tragic instances. According to the World Cancer Research Fund, Pakistan has the second highest rate of oral cancer in the world, and it is also the most prevalent form of cancer amongst men in the country.
Keeping these harrowing realities in mind, the Sindh High Court slapped a ban on the sale and manufacturing of gutka and mainpuri across the province this August. All violations of this law will be registered under Section 337-A of the Pakistan Penal Code, which criminalises those who cause ‘intentional’ harm to others. As noted by the high court at the time of passing the directive, this is not for the first time that the authorities have tried to push the provincial government to act against the sale and manufacture of such toxic products. Following the most recent stern orders, the Sindh Police claimed to have registered 211 cases against offenders across the province, predominately in the city of Karachi. They hope that this will act as a deterrent against the prevalent use of gutka and mainpuri products. While some have objected to the current move as being too ‘harsh’, one must keep in mind the harsh realities of such harmful products and the suffering they cause to the vulnerable sections of society, thus necessitating strict action. Keeping past failures in mind, however, one can only hope that the authorities can sustain the change this time around.

 

 

 

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