Fifth South Asia Economic Summit (SAES-V)

Making Growth Inclusive and Sustainable in South Asia
 

Background

At the time of writing of this concept note four key developments are taking place on the global front. First we are being reminded that the effects of global financial crisis are here to stay for a little longer. This has been validated by the Euro zone crisis that has already started to impact South Asia. Second is 17th Conference of the Parties of the United Nations Framework Convention on Climate Change held at Durban which is now being vowed as an important step towards combating global climate change. The third development is regional in nature carrying significant importance for South Asia’s future. The 17th Summit of the heads of South Asian Association for Regional Cooperation (SAARC) was held in Maldives and witnessed signing of some important agreements between member states. Finally and most concerning of all that economic growth in the South Asian region has been projected to decline at least for the next two quarters. We briefly discuss these four developments below in order to set in sequence the priorities for the next South Asia Economic Summit.
The origins of the Euro zone crisis were varied for the member countries. All sort of problems collided to make a plethora of challenges for the governments – who now had to deal with toxic financial assets, ballooning budget deficits and restructuring of debt. But going forward some key challenges remain, for example how to rebalance demand within a single currency block? A question which has forced economic managers to rethink how member countries should be selected to form a currency union. Whatever the current state of crisis it has certainly started to impact the South Asian economies. India and Bangladesh have officially reported the status on cancelled export orders. Pakistan is fearing that migrant workers in EU may be laid off in big numbers which in turn may result in a decline in future remittance inflows. Afghanistan has indicated that aid flows from EU may be slashed on account of already high budget deficits being faced by leading member states including France, Italy, and Spain.
The global financial crisis had put the climate change agenda on the backburner due to the developed countries envisaging a downward pressure on (restoration of) economic growth in case climate change commitments were observed. The restructuring of economy into a low carbon mode will imply reduction of output and employment growth in agriculture sub-sectors such as crops, forestry and may be livestock. The Durban talks however led to an important intellectual breakthrough towards resurrecting the climate change negotiations. The Durban Platform for Enhanced Action aims at bringing all greenhouse-gas emitting countries under a common legal regime by 2015. This legal understanding will bind these countries to cut emissions by 2020.  A group has been put in place to provide proposals on the financing of Global Climate Fund that is planned to provide $100 billion annually by 2020 to poor countries. Some decisions were also taken with regards to the manner in which carbon offsets should be allocated under the Clean Development Mechanism to carbon capture and storage projects. Finally in the interest of capacity building of developing countries a Climate Technology Center and Network will be established which will ensure systematic transfer of technology.
There have been interesting developments at the regional front during the past few months. The 17th SAARC Summit held in Maldives ended on an upbeat note. Several agreements were signed which included the SAARC agreement on Rapid Response to Natural Disasters, the SAARC agreement on Multilateral Arrangement on Recognition of Conformity Assessment, the SAARC Seed Bank Agreement and the SAARC Agreement on Implementation of Regional Standards.
A strong resolve was exhibited to continue efforts towards finalizing framework for improving connectivity through rail and sea which will ultimately also result in a regional railways agreement. It was decided that by the end of next year formalization of Indian Ocean Cargo, Motor Vehicle agreement and Passenger Ferry Service will also be completed. A demo run of a Bangladesh-India-Nepal container train will soon be initiated. Increased interest was indicated towards inter-governmental agreement for energy cooperation and regional power exchange.
While the usual emphasis on the implementation of South Asian Free Trade Area (SAFTA) was reiterated, it was highlighted that there are significant barriers to intra-regional trade which are hurting producers as well as consumers in the region. A focused effort is required to slash the number of items under sensitive lists, harmonize standards and customs processes, and eliminate non-tariff barriers.
In view of the above mentioned two largest countries in the SAARC region came forward with positive steps in order to prove their seriousness towards the regional cooperation agenda. Pakistan announced that it was ready to provide most favored nation status to India and will also reduce its sensitive list by 20 percent and allow tariff concessions on further 233 items under SAFTA by February 2012. India also announced that its sensitive list for LDCs will now be limited to 25 items.
Going forward the key challenge faced by several South Asian economies will be to restore and sustain economic growth and put it on an inclusive path. In the wake of Euro zone crisis, international and national projections indicate a downward pressure on growth in SAARC member countries. In India the high interest rates which were maintained to tame inflation have resulted in discouraging investment and have particularly hurt the performance of industrial sector. The Indian economy is exposed to the troubles facing European financial sector which in turn has also put the Indian currency under pressure.
In case of Bangladesh growth in the real sector has been cradled through market access to readymade garments and rising inflow of remittances. However growth in foreign direct investment, move towards value addition in exports and diversification in overall structure of growth has been slow to come by due to issues related to security, governance, tax structure and vulnerability to natural disasters. These factors threaten the sustainability of growth in the longer term and will also pose challenges to policy objectives related to poverty and inequality improvements.
A similar story in Pakistan suggests that growth will remain depressed on account of energy crisis facing the industrial sector. Furthermore the negative repercussions of war on terror are thought to keep foreign and domestic investment growth at low levels. The country has benefitted on account of remittances and rising export prices – a trend which is forecasted to saturate in the coming days. To add to these difficulties the country has been facing floods on recurrent basis which have caused loss of agricultural activity and displacement of substantial number of people in Punjab and Sindh.
Finally most of these economies are dependent on proceeds from Diaspora, bilateral inflows of foreign assistance, export receipts from commodity based items – all of which are prone to volatility in the wake of Euro zone crisis, lack of consensus on global initiatives on trade, investment and climate change, war on terror, and increased political instability in several SAARC member countries.  These and other issues that arise from decades-old political differences in this region require a collective solution. There has never been a more important time to consider a regional approach towards common objectives of inclusive and sustainable growth which can in amalgam with micro-level interventions lead to welfare improvement for the people of South Asia.

Call for Abstracts

At the time of this call four key developments are taking place on the global front. First we are being reminded that the effects of global financial crisis are here to stay for a little longer. This has been validated by the Euro zone crisis that has already started to impact South Asia. Second is 17th Conference of the Parties of the United Nations Framework Convention on Climate Change held at Durban which is now being vowed as an important step towards combating global climate change. The third development is regional in nature carrying significant importance for South Asia’s future. The 17th Summit of the heads of South Asian Association for Regional Cooperation (SAARC) was held in Maldives and witnessed signing of some important agreements between member states. Finally and most concerning of all that economic growth in the South Asian region has been projected to decline at least for the next two quarters. It is important to take a stock of these developments in order to set in sequence the priorities for the next South Asia Economic Summit to be held between 17-19th September 2012 in Islamabad, Pakistan.
We encourage original contributions from researchers particularly from South Asian countries who wish to study the various themes towards making economic growth more inclusive and sustainable in South Asian economies. Some proposed themes are given below and others can be seen at the Summit webpage: http://www.sdpi.org/saes/.
Tentative Panels:

• Macroeconomic stability and responses to internal and external shocks
• Revisiting the trade barriers in South Asia
• Connectivity between people and places in South Asia
• Regional cooperation for energy and water security
• Future prospects of migration and remittance flows to South Asia
• Climate change, natural disasters, food security and livelihoods
• Poverty and inequality impact of growth policies in South Asia
• Growing urbanization and rising middle class in South Asia
• Regional options for inclusive entrepreneurship and innovation
• Women and youth engagement in South Asia

Abstracts submitted should cater to one of the above mentioned themes (word limit 400-500 words). Other themes of pressing importance to South Asia’s socio-economy can also be suggested. Country-specific case studies are welcome. The abstracts should be submitted by 9th April 2012 to vaqar@sdpi.org  and afsheen@sdpi.org. Short-listed abstracts will be invited to write papers of 6,000 – 8,000 words in length that will later be presented at the SEAS-V (17-19th September 2012). Authors will be given three months to write the first draft of the paper. Final version (after incorporation of comments from the Summit presentations) would be requested after the Summit in November 2012 and will be published as part of book compilation. A modest honorarium will be provided to the Authors for their contributions. For further questions and queries, please contact:
Afsheen Naz afsheen@sdpi.org , Fayyaz Yasin fayyaz@sdpi.org.

Making Growth Inclusive and Sustainable in South Asia

On the economic front, while South Asian networks have worked at length over issues related to relaxation in trade barriers there are many facets of cooperation that remain unexplored. It is important to question the pattern of growth in South Asia if this region is to give a human face to economic growth.  While the real GDP growth trends have been on an upward trend, it seems that this has been accompanied by rising food insecurity, commodity market bubbles, rent-seeking activities, regular occurrence of climate change led natural disasters, crime and related social evils.

The rhetoric and to some extent policy practice of inclusive growth has traditionally involved actors which include regulators, civil service, entrepreneurs and civil society organizations (CSOs). However stronger input from two constituencies is still required. These are members of academia and communities at the micro level. While CSOs claim to represent the wider society however holistic representation of communities is excluded due to barriers related to language, culture and accessibility.

A new insight into inclusive growth is desired which can start by taking account of demographic trends in South Asia, analyze future production, trade and employment patterns. The focus on job creation will be extremely necessary and this need not come from South Asian countries competing in western markets. A greater level of aggregate demand can be leveraged through cooperation with in South Asia. The key sectors to consider here are services such as wholesale and retail, banking and finance, transport and communications, education and health services etc. Finally South Asia has been one of the worst hit due to climatic changes. It is now common to witness recurrent melting of glaciers, floods, earthquakes and region-specific changes which have adversely impacted the eco-system. The fast growth of urbanization in South Asia has not only posed pressures on municipal services but led to environmental and health issues particularly in slum areas.

The unprecedented rise in remittances from abroad has been in the literature claimed to have boosted rural productivity, farm output and led to smoothening of consumption in lower middle and low income households in South Asia. While the origin, source and composition of these remittances in many countries has come under critique however the developing economies have ignored these views attaching greater importance to overall balance of payments security. Recent research in South Asia is now starting to point towards some evidence of ‘Dutch disease’ owing to rising remittance inflows.

It will be an opportunity for participants in this year’s SAES to take a stock of the situation keeping the following new and upcoming development priorities under consideration.

Beyond Millennium Development Goals (MDGs): The Human Development Report 2011 explains at length how the business-as-usual approach towards pressing issues related to production, trade and environment are increasingly making the world and unsustainable place.1 The report also recognized that power structures and gender inequalities in development countries dictate the access to most basic services. In this context Rio+20 and its follow up will shape a new beyond-MDGs agenda. Any new discourse should focus on the increased value of accountability and democratic processes and community-led approach to development. There is a need to see how institutions in developing economies can be made more inclusive so that due attention can be given to women, minorities and marginalized groups.

Post-Global Financial Crisis: The experiences of global financial crisis have shaken the intellectual foundations of capitalism. While the world has gone a long way from ending slavery and towards achieving freedom and basic rights. However it is still not clear what shape will a ‘well-behaved capitalist’ paradigm take. Leading economists have advised that regulatory environments in sectors such as banking and finance should evolve with the markets. This will require a global effort towards understanding the nature of speculative bubbles and the actors that leverage these bubbles. This is not restricted to banking and finance but also for sectoral markets such as oil and gas. An additional challenge will now be to reform the global commodities market operations. The bitter experiences of 2007-08 have shown how global food shortages can lead to serious implications for food security, health and nutrition. All in all there is now a need to think towards ‘sustainable capitalism’.

Non-traditional security threats: While spread of free market, deregulation of trade and investment, and greater people to people cross-border interaction has increased mobility and allowed people to exercise basic socio-economic rights, however this has given rise to several forms of non-traditional security threats. These include (but are not limited to), a) governance, security and justice, b) food security and livelihoods, c) conflict-led and disaster-led migrations, d) health epidemics, e) cross-border and in-country terrorism,  and f) environmental security. One of the key pre-requisites of inclusive growth are regular efforts to ensure peace and enforcing legal contracts in a manner that provides security of assets and profits. Sense of belonging, faith in community and security lessen brain drain and bring more harmony in economic players at all tiers. While the medium term development plans (sometimes referred to five year development plans) in South Asian countries have mostly focused on accumulation of physical capital, the mention of human capital has only appeared a decade back. However the more concerning aspect is that plan and policy formulators still have not given due importance to social capital.

Basic Infrastructure and Social Services: A resource constraint in the public sector and rising costs of building and maintaining infrastructure (partly due to rising commodities prices) have led to competing demands on otherwise public goods. While the rich and influential manage to gain access to such needs through their privileged channels, there are many who get left behind in the process of economic growth or when growth falls apart. It is these challenges that provide a case for regional cooperation for poverty reduction. A matter of great interest for all South Asian countries is cooperation in energy and water sectors. Such a cooperation can create internal economies of scale in the region and also lead to benefits that originate from country-specific specialization in these sectors. In case of social sectors there is a growing body of literature that points towards how inequality in education continues to keep societies poor. It is important to question as to who are the students that manage to reach university level education in South Asia and how current structure of higher education continues to strengthen ‘elite capture’ of all forms of national resources.

Connectivity: South Asia’s dream of a seamless border still remains to be fulfilled. The key areas that require further work revolve around easing of procedures that could facilitate movement of goods and people. In case of the former customs and quality standards procedures need greater harmony. In case of latter simple procedural difficulties such as visa issues are holding back aspirations of the people of South Asia. The lack of connectivity is no more limited to road, railways, aviation and port networks in South Asia (which have greatly improved over the past few years) but calls for a deeper understanding between governments to have conducive procedures in place.

Engaging youth and Diaspora: Given the youth bulge it is an ideal opportunity for this region to ride on the energetic and creative productivity of youth in South Asia. This region needs to look towards countries such as Israel, Malaysia, China and Australia who have put in place formal plans and strategies to leverage youth-led innovations. The other player now playing an increasingly important role in economic development of this region are the expatriates. SAES should contemplate on out of the box solutions where by the Diaspora of this region can be steered to take a mentoring role (similar to China). 

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1 UNDP (2011) Human Development Report 2011 – Sustainability and Equality: A Better Future for All. Washington DC.

 

 

The South Asia Economic Summit (SAES) Initiative

While there have been instances in South Asian history when the governments of SAARC member countries found themselves in a political deadlock, however a significant development in the region has been the rise of civil society organizations, many of whom have culminated in to think tanks of global repute.
These organizations help to keep the national governments on track as regards the multifarious nature of issues involving regional cooperation. Many of such issues go well beyond politics and economics and include concerns like food security and livelihoods, climate change induced natural disasters, migration, connectivity of people and places, energy and water cooperation etc.

In the same spirit SAES was launched in 2008 with the objective of bringing together leading academics, practitioners of public policy, members of business community and related stock holders to discuss regional approach to issues of mutual concern and also to learn from home grown solutions to common predicaments that can be replicated elsewhere in South Asia. Over the past four years it will not be an exaggeration to say that this event has become the ‘South Asian Davos’ following the example of World Economic Forum at Davos. A brief summary of previous summits is given below:

Events	Location/Date	Themes
First South Asia Economic Summit	Colombo/28th July to 3rd August 2008	Economic Integration in South Asia: SAFTA and Beyond
Second South Asia Economic Summit	New Delhi/10-12th December 2009	South Asia in the context of Global Financial Meltdown
Third South Asia Economic Summit	Kathmandu/17-19th December 2010	Regional Economic Integration, Climate Change and Food Security: Agenda for the Decade 2011-2020
Fourth South Asia Economic Summit	Dhaka/22-23rd October 2011	Global Recovery, New Risks and Sustainable Growth: Repositioning South Asia

It is now proposed to organize SAES-V in a manner that its observations and recommendations can be framed for the 18th SAARC Summit to be held in Nepal. Many of the participants of SAES-V will be actively involved (through the auspices of national governments) in the negotiation process that will take the SAARC agenda forward. This year SAES secretariat (Sustainable Development Policy Institute – Pakistan) will make a focused effort to involve politicians and civil servants from member countries besides have a number of experts already involved in Track-I and Track-II level of South Asian development agenda. 

The civil society think tanks from South Asia who participate every year in organizing the event include Sustainable Development Policy Institute (Pakistan), Institute of Policy Studies (Sri Lanka), Research and Information System for Developing Countries (India), South Asia Watch on Trade, Economics and Environment (Nepal), Center for Policy Dialogue (Dhaka). Besides these several other think tanks in the region will collaborate with SDPI in bringing together ideas and research of mutual interest.
  

 

Themes under SAES-V

In order to give economic growth process in South Asia a human face the broad theme of SAES-V to be held in September 2012 will be ‘Making Growth Inclusive and Sustainable in South Asia’. Within this broad sphere of thinking the following sub-themes are proposed:

• Macroeconomic stability and responses to internal and external shocks
• Revisiting the trade barriers in SAARC region
• Connectivity between people and places
• Regional cooperation for energy and water security
• Future prospects of migration and remittance flows to South Asia
• Climate change, natural disasters, food security and livelihoods
• Poverty and inequality impact of growth policies in South Asia
• Growing urbanization and rising middle class in South Asia
• Regional options for inclusive entrepreneurship and innovation
• Women and youth engagement in South Asia

 

Organizing SAES-V

The Fifth South Asian Economist Summit will be held in Islamabad in September 2012. The summit will be organized by SDPI in collaboration with its regional partner think tanks from SAARC member countries.

SDPI is one of the premier non-governmental, non-profit, and oldest policy think tank in Pakistan – seeks to catalyze a transition towards sustainable development, defined as the enhancement of peace, social justice and well-being, within and across generations in Pakistan and the world. SDPI conducts empirical research not only for developing recommendations for improving environmental, livelihood, governance, and trans-boundary issues but to also foster conducive environments where change can occur. It is actively working on societal transformation and an active partner of “Track II diplomacy” with India. SDPI’s initiative “Imagine a New South Asia” has gone a long way to bring likeminded organizations – with their focus on people centered development and peace- into a viable network.

One of the strengths of SDPI is its institutional partnership and collaboration with local as well as international universities for various research and policy outreach assignments. Among others, SDPI is a partner of GC University Lahore (conducting joint research on sustainability sciences); FC University Lahore (conducting joint research on public policy and governance); University of Agriculture, Faisalabad (conducting joint research on livelihoods, food security, and natural resources management); Arid Agriculture University Rawalpindi (conducting joint research on rural economy); University of Peshawar (conducting joint research on environmental sustainability); and SZABIST University Islamabad (conducting joint research on gender studies). SDPI researchers not only conduct joint research with academicians of above mentioned universities but they also serve as members of supervisory committees for postgraduate students; members of Board of Studies of these universities; and members of Academic Councils. This is a two way partnership and various faculty members of these universities serve as visiting research fellows at SDPI. Additionally, SDPI also offers regular internship programs to students of partner institutes.

It is envisaged that around 150 participants will attend this summit including 45 foreign dignitaries from SAARC member countries. The concept note in its current form stands flexible where by co-organizers as well as development partners can add any themes of pressing importance. SDPI remains open to adding further panels to its tentative program given below.

While the proceedings of the summit will be collated and submitted for information and record of member governments as well as for consideration during 18th SAARC Summit, however in terms of producing tangible knowledge products it is envisaged that most speakers will be requested to write dedicated papers for their panel for which SDPI will provide a modest honorarium. These papers after some post-summit revisions will then be compiled in book form. SDPI’s web TV (SDTV) will prepare recordings of all sessions to be placed on a dedicated website. All sessions will be live-streamed on internet for viewers abroad.

Tentative Program

Day 1
Inaugural Session
Refreshments
Plenary-I: State of growth and sustainable development in South Asia
Lunch
Concurrent Sessions
A1: Challenges confronting investment, savings and economic growth in South Asia	A2: Expediting liberalization of trade in goods and services in South Asia
Refreshments
A3: Reforms for transport connectivity across South Asia	A4: The role of non-state actors in promoting people-to-people interaction in South Asia
Day 2
Plenary-II Impact of external economic shocks and South Asia’s response
Refreshments
A5: Regional cooperation for energy security	A6: Internal Migration, urbanization and rising middle class: learning from South Asian case studies
Lunch
A7: Challenges posed by scarcity of water resources and options for a regional solution	A8: Challenges faced by South Asian migrants abroad: Implications for Remittance inflows
Day 3
A9: Post-Durban state of climate change negotiations: South Asian perspective	A10: Availability, accessibility and demand for food: options for South Asian cooperation
Refreshments
A11: Regional options for promotion of entrepreneurship and innovation	A12: Regional options for engagement of women and youth in development process
Lunch
Plenary-III: Challenges confronting SAARC and options for a collective response
Closing session

Contact Details

Dr Vaqar Ahmed
Research Fellow
vaqar@sdpi.org

Afsheen Naz
Research Assistant
afsheen@sdpi.org

Fayyaz Yasin
Research Assistant
fayyaz@sdpi.org

Imrana Niazi
SDC Associate Coordinator
imrana@sdpi.org

For More Details Visit  http://www.sdpi.org/saes/index.html

In the right direction

India and Pakistan have shown some maturity in
talking trade; do they actually mean it? 

Unfortunately, a mention of Pakistan and India; and one gets ready to hear some unpleasant news. However, after a long time the meeting between Pakistani and Indian Commerce Ministers resulted in an excuse to rejoice. Not only that, after three and a half decades Pakistani Commerce Minister visited India. Both the ministers were also able to take some tangible and positive steps towards trade normalisation between their countries.

For the last many years, few of us have been advocating that small steps towards promotion of friendly relations between Pakistan and India should not be underestimated. There are no quick fixes for the chronic mistrust and misunderstandings between the two neighbours but to trust each other more.

It is said that trade follows the trust; but my theory is that trust follows trade. Despite its flaws, I am a believer in multilateral trading system. Trade between India and Pakistan would not only provide an opportunity for enhanced people-to-people contact but also turn the business community into a catalyst force for peace as they would have to safeguard their business interests. We have already observed this happening in case of “China and USA” and “China and India”. Normalisation of trade between India and Pakistan would also provide increased choices to consumers both in terms of quality as well as in terms of prices.

The cost of economic non-cooperation between the two countries is extremely high not only for both of them but also for the whole region. Pakistan and India had been the main stumbling block in success of South Asia Free Trade Agreement (SAFTA) which was signed in Islamabad in 2004. As per SAFTA, SAARC members have to bring their tariffs down to zero for each other by 2016. If implemented with political will and get accompanied by an agreement on trade in services as well as an agreement on investment; SAFTA has the potential to turn around the economy of whole region.

Although their bilateral trade grew over the last decades, their estimated mutual trade potential is around US$11 billion. Various studies have been suggesting that both Pakistan and India can save billion of dollars by importing from each other, the essential items that they have been importing from third countries.

As I mentioned earlier, there is no quick solution to the chronic bones of contention between India and Pakistan. However, the issues hampering trade could have been resolved following a fast track approach. Some of these issues include visa for business community; non-tariff trade barriers (NTBs) that Pakistan complains are being imposed by India on its products; “most favoured nation” (MFN) status that India requires from Pakistan; trade on negative trade lists versus positive trade lists; infra structure development for enhanced trade; treaty on free flow of investment; and mutual recognition of standards.

Both the countries showed the resolve to tackle these issues by jointly agreeing to work to more than double bilateral trade within three years, from current levels of US$ 2.7billion per annum to about US$ 6billion.

Pakistan complains India about its NTBs, especially on cement and textiles. However, India claims that its NTBs are not Pakistan specific. In fact, India is ranked 115th of 125 countries to impose trade tariff on “Trade Tariff Restrictiveness Index” (TTRI) by the World Bank. One of the positive developments of current talks between trade ministers is the identification of issues impeding trade in sectors such as cement, textiles, and surgical instruments. From Pakistan’s point of view this is quite substantial achievement as India has recognised that there are factors impeding Pakistani exports.

Another positive development is on the issue of visas. Both the ministers have showed consensus to issue multiple entry one year visas to the business community. Pakistani visitors would be able to travel anywhere in India unlike the current city specific visas. This initiative on its own, if implemented in letter and spirit, has the potential to double the bilateral trade over next three years.

Pakistan indicated to give India the MFN status. Here it is pertinent to mention that India gave Pakistan the MFN status in 1995 (since inception of WTO). We do need to raise awareness in Pakistan about the term MFN. Its Urdu translation has created so much media hype as Pakistan would declare India its best friend. Although both the countries should declare each other their best friends and live in peace and harmony so that billions of dollars which are being spent on military expenditures to counter each other’s defense power may be diverted to social sector development. Yet, MFN has nothing to do with friendship. Together with the principle of national treatment (i.e., there cannot be discrimination among WTO member states on the basis of nationality), MFN is one of the cornerstones of WTO trade law. In effect, if India gets an MFN status from Pakistan then Pakistan would have to treat it at par with all other WTO member countries. Here it is pertinent to mention that all WTO member countries are bound to give each other MFN.

There is also a welcome development on trade on the basis of negative lists during the recent ministerial discussion. Current “positive list approach” allows only those items to be traded which are on positive list. Everything else gets restricted by default. Whereas negative list approach, which is practised internationally will contain only those items which should not be traded hence creating new venues for bilateral trade.

Ministers have also agreed to improve the infrastructure facilities to promote trade at Wahga and Atari. India is also contemplating removing its blanket ban on capital inflows from Pakistan (Islamabad has no such ban on Indian investment). Another significant development that tool place during Pakistani Commerce Minister’s tour is that India has announced to withdraw its objections on the European Union trade concessions to Pakistan.

To me all of the above-mentioned developments are extremely important milestones in the trade history of both the countries. Those of us who are always vocal in criticizing our policy makers and political leaders when they are in wrong should come forward to appreciate these positive developments that may lead to a sustainable peace in this region.

The writer is the executive director of Sustainable Development Policy Institute and is contactable at suleri@sdpi.org

Revival of local governments

A one-day consultation to discuss the revival of local governments was organised in Islamabad recently. Interesting political economy discourse took place during the meeting. The principal point of conflict that surfaced was between two groups, both comprising academics, activists and practitioners. One of them was of the view that the local government’s revival needs to be questioned in the context of its history, i.e. the military governments in Pakistan have instituted local governments for their own political purposes. The other group attacked politicians and political parties, blaming them for non-implementation of the constitutional requirements for setting up local governments and for their patronage politics.

The other argument was that, since, the national and provincial assembly politicians are allocated huge developmental budgets for their constituencies; they are opposed to local governments due to a fear of them cutting into their spheres of power. Both arguments have elements of truth in them. The real challenge, however, was to make both camps think about a way forward.

Setting aside the origins of the local government and its relationship with issues of legitimacy, the basic reality is that local governments are a constitutional requirement now. Article 140 A of the constitution states: “Each Province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local governments. Elections to the local governments shall be held by the Election Commission of Pakistan.” Articles 32 and 7 also support the local governments as public institutions.

The 18^th Amendment of the constitution is a truly historic document, in the way it has decentralised functions of the federal government to the provincial governments by doing away with the concurrent list. However, the buck does not stop with the provinces. Just as the federal government was working along the principles of administrative and financial concentration, now provincial governments have become the ‘new centres’. Hence, provincial governments do not want to devolve further to the local governments. The main issue, therefore, is how to create incentives for the provincial governments to move towards instituting local governments as per the constitutional requirement. A strongly supported courses of action was to encourage grass roots mobilisation to push for change. Once the provincial governments and politicians will see a groundswell in this direction, they may be inclined to call for elections for the local governments. One of the natural constituencies for such a mobilisation will be ex-nazims and counsellors, particularly in the marginalised community of peasants, workers and women.

Of course, some such process is underway in the provinces. Sindh has re-enacted the local governments, however, it needs to be presented to the provincial assembly. In the Khyber-Pakhtunkha, the local government bill is almost ready and needs to be presented in the provincial assembly. The Balochistan provincial government is sitting on the 1979 Local Bodies Ordinance draft. In Punjab, three different committees were formed to draft the local government’s law for the province and none of them have been successful in drafting a law. There is a need for massive push for the implementation of this constitutional requirement.

The situation is more complex in Sindh. Representatives from interior Sindh are highly apprehensive about ethnic economic marginalisation for Sindhi-speakers in the revived local governments system whereby they may lose their economic prospects to work and prosper in Karachi and Hyderabad. Such concerns are not new in history. Malays had similar concerns about the Chinese economic superiority in Malaysia. Mahatir, however, brilliantly resolved a potential ethnic economic conflict turning into political violence and retarding growth. This was done by explicitly granting economic rights to Malays and resolving the potential conflict. A similar way of alleviating Sindh’s grievances need to be worked out to make local government a just solution for everyone across the board.

One cannot emphasise the need for the local governments enough. Not only is it necessary to fulfil the constitutional requirements, it is also necessary to deal with disasters, deliver efficient services and empower women, peasants and workers.

Rain rhetoric

Our policy makers will have to adjust themselves to the demands of rains and flood-affected areas

Many laughed it away when a couple of years ago climate change gurus professed that Pakistan would be one of the most vulnerable countries to the impacts of climate change. Recent floods in Sindh and Balochistan did prove that seasonal variations due to climate change may not be ignored any more.

There is a visible change in rainfall pattern in Eastern Sindh. The average annual rainfall in district Badin used to be 120 to 280 mm. During the last few years, it increased to 440 mm, 560 mm, and this year Badin received a record rainfall of 1100 mm. The increase in average annual precipitation is also observed in Rajhisthan as well. One may say that weather changes due to seasonal variations are bound to happen. Natural calamities are hard to avoid. However, as I keep on repeating, a right set of policies and actions on those policies can stop getting the natural calamities turning into human disasters.

Meteorology department had already predicted about the possibility of sporadic rains in Sindh during the months of August/September. We also knew that like most parts of the country irrigation infrastructure that got damaged during last year’s flood has not been repaired to take care of more water.

The flaws of controversial left bank outfall drain (LBOD) are already known to us. LBOD was designed for saline water drainage only when the average yearly rainfall in Sindh never exceeded 280mm. Its carrying capacity is 6000 cusec ft. The rainwater is simply beyond the carrying capacity of LBOD. Even if it were not recent heavy rains and there were no design flaws in LBDO, the mere fact is that drain was blocked. There was no silt removal from the drain for ages. There was no unhindered flow of water in that drain anyway.

Badin is dead flat almost at sea level where the flow of standing rain water to sea would be a problem due to lack of natural flow. Things are getting further aggravated due to Kirther range (hills and elevations) from Khairpur to Hub. There can be at least four small hydel dams in that range. Rain water from Kirther range, coming towards lower Sindh, has the tendency to turn into flash floods.

Flash floods are very common in Balochistan too and this year again they have displaced a sizeable population in Balochistan, especially in Naseerabad district. Why is the NDMA not paying any attention to the flood affectees in Balochistan?

Unfortunately, despite the devastated floods of last year the government is still unable to come up with its flood policy and flood zoning. There is a big question mark on coordination of relief activities. NDMA is there but provincial and district disaster management authorities are non-existent. The later two were supposed to frame disaster management plans at district level. Obviously, when the institutions are not functional, the plans are not there either.

Initially, when the rains started everyone undermined their intensity and the government very clearly declared that it would not go to international community for a flood relief appeal. However, this appeal had to be made at later stages. As was expected, the response of international community is quite cold: partially because they face disaster fatigue in Pakistan. Unfortunately, Pakistan is facing disasters in a close succession since 2005; earthquake, Balochistan floods, internally displaced people of Swat, last year’s floods and now floods again. Thanks to the lack of preparedness on our part, we are gradually losing sympathies of the international community.

Another factor responsible for cold response from the international community is lack of a meaningful effort on government’s part to highlight major success stories in previous disasters. There must have been some good examples that may be shared with the rest of the world, showing how resilient we are. International community is also blank about individual and private charity. What to talk of contribution of individual donors, the international community is not properly aware of the role that organisations like Edhi Welfare Centre have played in relief and rescue efforts. All these efforts should be highlighted to prove that we the 180 million commoners are not beggars.

INGOs are also not able to deliver this time. There are visa restrictions on expatriates of various INGOs. If they do not come to Pakistan on an assessment mission how can they mobilise their humanitarian wings to deliver in the time of need.

One thing that concerns me most is that we have started tackling disasters at provincial level too. Dengue fever is supposed to be the problem for Punjab only and floods are only to be taken seriously by Sindhi politicians. I wish we could rise above these provincial prejudices and support the people in disaster.

Finally, I would again mention lack of effective policy responses. I remember that last year former advisor to CM Sindh made this excellent suggestion that opportunity should be availed to “rebuild better” the scattered goths of Sindh. His suggestion was that three to four hundred basic houses should be constructed in an elevated place in each deh (comprising of few goths). Inhabitants of small hamlets in Sindh should be settled in those newly constructed houses. This would have been cost-effective not only from disaster preparedness point of view but also from service delivery point of view. However, two feudal lords (parliamentarians) in that meeting strongly opposed that idea, partly because they had the fear to lose their control over their tenants.

I wish if Premier Gilani had not tried to gain political popularity through promising to dole out money via Watan Cards. He never had the fiscal cushion to pay the promised 100,000 rupees and that scheme is literally abandoned after release of first installment of Rs20,000. The same amount could have been more wisely spent.

The writer heads Sustainable Development Policy Institute and can be contacted at suleri@sdpi.org

Dr Kaveri Gill's Visit

International Development Research Center, IDRC has expressed satisfaction on the progress made at the Sustainable Development Policy Institute, under the world wide Think Tank Initiative. Senior Program officer for the Think Tank Initiative at IDRC, Dr. Kaveri Gill says, SDPI has utilized the core support facility to improvise innovative solutions for the policy research and advocacy. In an exclusive interview with SDTV in Islamabad, she says launch of the first development sector web TV in Pakistan can play an instrumental role in advocating researched policy solutions for sustainable development…