Narrowing the gap
THE rupee made a substantial recovery of 11.5 against the dollar in the open market a day after the State Bank allowed commercial banks to purchase the US currency from the interbank market for settling the credit/debit card-based international payments of their customers. The short-term move, which will expire on July 31 unless extended, has helped narrow the huge gap in exchange rates in the interbank and open market to about Rs15 from Rs27 a day before. The increasing premium on dollar purchases from the open market had recently led the IMF to advise the government to “focus on restoration of proper foreign exchange market functioning”. Thus it can be assumed that the move served its purpose, and the exchange rate gap may narrow further in the next few days with the appreciation of the home currency in the open market. How will the dollar-starved interbank market provide an estimated $30m to $40m a week for the settlement of international card payments? That is the question.
Many market players argue that the move will put more pressure on the interbank exchange rate as dollar outflows would escalate on the back of higher demand for foreign exchange for the settlement of card-based foreign transactions. Others insist that the reduction in the gap between the interbank and open market rates will prove to be an incentive for overseas Pakistani workers to send their money through banking channels and boost dollar liquidity in the system. Apparently, the State Bank is also not certain about the potential implications of the decision and, hence, has initially permitted the settlement of these transactions through the interbank market only for two months. The success of the move will largely depend on how vigilant the SBP and commercial banks are in detecting and stopping the use of card payments to circumvent restrictions on imports imposed over a year ago to slow down dollar outflows.
Published in Dawn, June 2nd, 2023
Rise in attacks
AN enduring security dilemma for Pakistan has been the issue of cross-border havens in Afghanistan for militants, particularly the banned TTP. While cross-border attacks also occurred when the Western-backed government ran Kabul, figures for the period since the Afghan Taliban have been in power do not present a comforting picture. According to a report by the Pak Institute for Peace Studies think tank, the number of terrorist attacks in Pakistan saw a 73pc rise between August 2021 — when the Taliban rolled into Kabul and sent the Ashraf Ghani dispensation packing — and April 2023, as compared to the corresponding period preceding the Taliban’s seizure of power. The number of people killed in terrorist attacks saw a phenomenal rise of 138pc, while KP and Balochistan were the worst affected. In between the Taliban takeover and the present day, there has been a botched attempt by the state to make peace with the TTP, which is believed to be behind the majority of attacks. The Afghan Taliban had supported talks, and while officials of the de facto government in Kabul deny that their soil is being used for terrorism, there is strong evidence that the TTP has found shelter in Afghanistan under the Taliban’s aegis.
Complicating matters is the fact that the Afghan and Pakistani Taliban share the same ideology, and that groups that later coalesced into the TTP are believed to have hosted the Afghan Taliban in their strongholds in Pakistan after the US invasion of Afghanistan. Be that as it may, the TTP problem, and indeed that of other extremists sheltering in Afghanistan, needs a permanent solution. The issue of militants finding sanctuary is not that of Pakistan alone; other regional states, most notably China and Russia, have shared similar concerns with Kabul’s present rulers. While there have been no large-scale terrorist attacks for several months, the militant threat remains, as frequent smaller-scale incidents have shown, the latest being the martyrdom of a soldier protecting polio workers in North Waziristan on Wednesday. A TTP ‘commander’ was also gunned down in D.I. Khan by law enforcement. Along with kinetic operations, Pakistan will need to keep up the heat on the Afghan Taliban, bilaterally and together with other regional states, and keep reminding them that despite their linkages with militants, providing them sanctuary to attack Pakistan is simply unacceptable.
Published in Dawn, June 2nd, 2023
POLITICAL equations are never easy to engineer, let alone solve. A political crisis should either be allowed to burn through or resolved via the electoral process — imposing any artificial solution on it will never address the social conflicts precipitating it.
Unfortunately, the many lessons from Pakistani history that substantiate this simple fact continue to be ignored. Instead of taking a laissez-faire approach to democratic processes, past practice has been to introduce new variables into the political equation to counteract a popular political force whenever it begins posing a threat to the status quo.
There are several extant by-products of this strategy. The Q-League, MQM-Haqiqi and Pak Sarzameen Party were carved out from the PML-N and MQM after the parent parties began asserting themselves in ways that were not approved of by the status quo elite.
Likewise, the National Awami Party, banned from Pakistani politics in 1975 by Zulfikar Ali Bhutto because of its dogged opposition to his politics and policies, has survived through its avatar, the ANP.
Based on recent news reports, it appears that several PTI leaders who recently deserted their party and said they were disavowing politics might have already been roped in for a fresh experiment.
Former information minister Fawad Chaudhry, former Sindh governor Imran Ismail and erstwhile PTI stalwarts Amir Kiani and Mehmood Moulvi on Wednesday made an attempt to convince PTI vice-chairman Shah Mehmood Qureshi to ditch the party.
Mr Chaudhry also revealed that he had reached out to other key leaders from the PTI for their support for the new venture. For now, his efforts have borne no fruit. It may be noted, however, that Mr Qureshi was recently named heir apparent to the PTI by the party’s chairman himself. This could make his departure, if it happens, rather devastating to the beleaguered party’s morale.
What is most intriguing, however, is that this new grouping has made it quite clear that it will be acting in opposition to the PDM parties. In other words, it will be seeking to prevent the PPP and PML-N from taking advantage of the PTI’s fall.
It is unclear how this wheeling and dealing will benefit the country, considering how polarised public opinion has become due to the PDM government’s economic mismanagement amidst worsening sociopolitical crises.
Only a legitimate government — elected through a fair electoral contest and backed by a strong public mandate — may be able to take the country out of its present crisis. Unfortunately, it appears that we may be heading in a completely different direction.
The parties in power must ask themselves if another hung parliament serves their political interests. They entered a marriage of convenience over their opposition to the PTI, but will this marriage last another five years amidst wide-ranging crises?
Published in Dawn, June 2nd, 2023