Pakistan risky country for US diplomats

US citizens warned of security concerns in Pakistan

By Mariana Baabar

ISLAMABAD: US President George W Bush and his entourage of hundreds will be visiting Islamabad this week but interestingly the US Embassy in the capital on Tuesday warned US citizens of what it called security concerns in Pakistan.

According to the travel advisories, due to "the ongoing concerns" about the possibility of terrorist activity directed against American citizens and interests, the US Department of State continues to warn US citizens to defer non-essential travel to Pakistan.

The US Embassy in Islamabad and the consulates in Karachi, Lahore and Peshawar are operating with reduced staff. Family members of the American officials assigned to the embassy and consulates in Pakistan were ordered to leave the country in March 2002 and have not been allowed to return.

According to the website of the US Embassy, 16 advisory notices have been posted from January 1 this year, the last one posted this Monday. Updated travel and security information for Pakistan is issued periodically via the emergency alert system (the warden network).

Pakistani Kids Rally Over Prophet Cartoons(Shouting Hang those who insulted the prophet)

Pakistani Kids Rally Over Prophet Cartoons

By ZARAR KHAN

The Associated Press
Tuesday, February 28, 2006; 6:56 AM

KARACHI, Pakistan -- About 5,000 children chanting "Hang those who insulted the prophet" rallied in Pakistan's largest city on Tuesday in the latest protest in the Islamic nation against the publication of cartoons of the Prophet Muhammad.

The children, ages 8 to 12, burned a coffin draped in U.S., Israeli and Danish flags at a traffic intersection in the port city of Karachi as police in riot gear looked on.

ADB says most FBS data unreliable

ADB says most FBS data unreliable

Staff Report

ISLAMABAD: Most economic data compiled by the Federal Bureau of Statistics (FBS) is not reliable and there is a need to make the data based on facts so that the future line of action could be drawn more realistically, said the Asian Development Bank (ADB) here on Monday.

"The economic data of FBS is, often, not based on facts. It is often contradicted by senior officers of the government," said ADB official Ghulam Qadir while replying to a question at a briefing in the presence of the ADB country director Peter L. Fedon.

He said the FBS had given data recently that had suggested that the country's exports were growing by 28 percent. While the fact was that Pakistan's exports were growing at around 13 percent in the first six months of the current financial year, he said.

Mr Qadir hoped that the government would take notice of this serious flaw and everything will be streamlined by December this year.

Update: There's a history of such actions

IMF Executive Board Reviews Pakistan Misreporting, Remedial Steps

In response, a mission from the IMF's Fiscal Affairs Department went to Islamabad in January 2000 to assess the magnitude of the discrepancies, and the factors responsible for the discrepancies. As a result of subsequent data revisions, Pakistan's budget deficit for 1997/98 was revised upward by 2 percent of GDP to 7.5 percent of GDP, and the deficit for 1998/99 was raised by 1.4 percent of GDP to 5.9 percent of GDP.

They noted that the misreporting of fiscal data had in part resulted from negligence in compiling and reconciling the fiscal reports for 1997/98 and 1998/99. In addition, weaknesses in the fiscal accounting, reporting, and audit procedures--including the absence of systematic data reconciliation processes and a mechanism to fully involve the Accountant General Pakistan Revenue (AGPR) in the preparation of fiscal reports--contributed to the discrepancies in the fiscal data.

Pakistan cooking it's economic books

Writing on the wall

By A.B. Shahid

When players in the financial sector opt in favour of acting merely as intermediaries diluting their vital role of giving business and industry a sense of direction by prioritizing investment in sectors that will ensure economic growth on a sustainable basis, it is time to act, more so, because displaying a sense of social responsibility is going out of fashion. The proof: record credit expansion without a commensurate rise in GDP

THE after-effects of over-exuberance are finally showing as key economic indicators flash red signals. For the present, the signals are weak but if brakes are not applied slowly, the economy could swerve on to a bumpy track.

The view is shared even by those who, until now, advocated rapid de-regulation, ‘freeing’ of markets and ‘rationalization’ of monetary and import policies.

With government borrowing overshooting its full-year target by over 28 per cent in six months, trade deficit at $6.5 billion and threatening to overshoot $10 billion by June, and core inflation up 7.5 per cent over its July 05 level, policymakers need to act to stop further over-heating of the economy. But it will take more than the usual ‘popular’ shifts in the policies.

When players in the financial sector opt in favour of acting merely as intermediaries diluting their immensely vital role of giving business and industry a sense of direction by prioritizing investment in sectors that will ensure economic growth on a sustainable basis, it is time to act, more so, because displaying a sense of social responsibility is going out of fashion. The proof: record credit expansion without a commensurate rise in GDP.

The problem escalated after 2002. Yet, we never saw a credible expression of what was claimed all along – tightening of the monetary policy. Glib-talking bankers dissuaded policy-makers from really tightening the policy because it would have squeezed the profits banks were booking by aggressively lending to all and sundry, realizing little that misallocation of resources would eventually over-heat the economy.

Current indicators, especially the demand-propelled inflationary rise, suggest that a large chunk of the enormous inflow of resources after 9/11 was not channelled into productive investment and many of the relaxations in import restrictions were ill-advised. It was amazing to see how (with oil price rise beating all past records) Pakistan, which never a BOP surplus in the past half a century, could keep the exchange rate of its currency virtually static.

The anomaly was pointed out time and again but policymakers didn’t budge from the stand they had taken although it amounted to subsidizing imports an enormous chunk of which formed non-essential consumables.

Contrary to the belief held by some regulators, in Pakistan, where the lure of short-term gains often takes the better of the business community’s senses, they had to play a more active role during the recent phase of de-regulation.

Regulators overlooked the fact that over-friendly regulation eventually weakens economies in vitally important areas. We now face such a situation. The imprudence of relaxing controls on import of consumables whose import utilized precious reserves generated by privatisation was pointed out, but to no avail. True, that WTO regime prohibits imposing direct controls on imports but timely adjustments in the exchange rate could have had the desirable restraining effect.

Pakistan now faces the highest ever trade deficit, while inflow of bulk of the privatisation proceeds (that were to contain this deficit) will take longer then envisaged. That being the case, we now hear of another floatation of dollar bonds, which will only restore the level of external debt back to its pre-2002 level.

How many errors of judgment we make in pricing the bonds this time, and what would be the eventual cost of rectifying them, is anybody’s guess given the track record of the first floatation. Rumour has it that pricing errors in the first bond issue are still being rectified.

Public sector borrowing propelled by fiscal deficit is a cause of concern but overshooting of the target wasn’t wholly the result of bad fiscal management. No one could predict the financing needs that surfaced in the wake of the October 8 earthquake.

But, to begin with, targeting the deficit at four per cent of the GDP was more a wish than a target. Pakistan is, in no way, comparable to the developed countries many of which are finding it hard to contain this deficit around four per cent of their GDP.

India ran this deficit close to 10 per cent of its GDP for several years but during those years it spent the borrowed resources carefully to build the infrastructure needed to put the country on road to progress.

On the contrary, we never spent enough to fill this gap because our policymakers remained focused on winning the meaningless trophies reserved for those who play number games – the focus of short-sighted corporate executives hired on contract.

Until recently, finding resources for funding the deficit was not a problem; it was the choice government exercised for funding it. In the last two years, the government kept borrowing from SBP against its T-Bills but didn’t allow SBP to monazite that debt, i.e. borrow from the banking sector.

As a consequence thereof, nearly Rs515 billion worth of public sector debt was funded by SBP, a large part thereof, perhaps, by printing new currency notes. At least, the soaring inflation conveys that impression.

Left with few choices, banks began consumer lending that has been fuelling demand. Presently, the situation is bad because bulk of the bank deposits (that could now fund increased public sector borrowing) were palmed to marginally productive high-risk borrowers.

Many of these borrowers opted for investing the loan funds in speculative transactions. The baffling rise in share and house prices and the advent of the “on-money”, are indicators there of.

The unprecedented amount of money circulating in the economy instead of being deployed in real investment also reflects the reality that most categories of bank deposits – the investment alternative – could earn only hefty negative real returns, courtesy the faulty FBS inflation estimates that no saver believed in.

Another major contributing factor was government refusal to borrow long-term from the banking sector. This short-termist attitude left surplus liquidity in the banking sector and also undermined the sentiment for saving; it encouraged consumption that kept fuelling inflation.

These trends must be reversed if the economy is to regain any semblance of rationality and stability. Developing the foresight to forestall such outcomes requires regulators to institutionalise a governance culture that tempers regulatory flare with vision that enables them to distinguish between economic and nominal returns.

There is ample evidence to suggest that in an environment of intense competition – the gift of ‘freeing’ the markets rapidly – market players don’t worry about low economic returns; they sometimes have to be goaded into doing so.

A continuing wide gulf between credit expansion and GDP growth reflects a cavalier attitude to financial regulation. The trend led to a scenario wherein scarce resources could not be retrieved from marginally productive investments for extended periods placing those economies under sever strains.

It is time regulators undertook a stiff qualitative assessment of banks’ asset portfolios and adjusted the rupee-dollar parity so that it doesn’t reflect a grossly over-valued Rupee.

Finally, the government must come out of its shopkeeper mould; its must create a credible environment for long-term planning by everyone. Its ill-advised back-office accountant approach would damage this environment for years to come. A developing country that has to build infrastructure in virtually every field can’t afford such experiments.

Ahmed Rashid: OBL in Pakistan, Pakistani army too frightened to patrol the mountains of Waziristan

He's Welcome In Pakistan

By Ahmed Rashid
Sunday, February 26, 2006; B01

LAHORE When President Bush lands in Islamabad later this week, it may be the closest he ever comes to being in the same neighborhood as Osama bin Laden. His nemesis is probably only a few hours drive away in Pakistan's Pashtun belt, now considered to be al Qaeda Central and one of the world's most dangerous regions.

During the past 12 months or so, CIA and Pentagon officials have quietly modified the line they employed for three years after the Sept. 11, 2001, attacks -- that bin Laden was hiding out "in the tribal areas along the Pakistan-Afghanistan border." Now the same officials say with some confidence that he is "not based in Afghanistan." Whatever ambiguity there was in the past is gone: Bin Laden is in Pakistan.

What's left is the question: What are the United States and its ally, Pakistan, doing about it?

Not enough, according to high-ranking Afghan, Pakistani and Western officials I've spoken to here. Indeed, the disastrous policies of the United States and Pakistan, starting with the aftermath of the war in 2001, have only hastened the radicalization of northwest Pakistan and made it more hospitable to bin Laden and his Taliban allies. The region has become a haven for bin Laden and a base for Taliban raids across the border back into Afghanistan which they had fled.

Not that you'd be able to tell any of that from what Bush administration officials have been saying. Almost everything the administration claims about the al Qaeda leader is tinged with bravado and untruthfulness. "We are dealing with a figure who has been able to hide, but he's on the run," Secretary of State Condoleezza Rice said earlier this month. Here in Pakistan, however, the view is different. Bin Laden is not considered to be on the run, but well protected by friends who are making his life as comfortable as possible.

After all, his number two, the Egyptian doctor Ayman al-Zawahiri, appears to have a busy social calendar in Pakistan's Pashtun belt. U.S. missiles narrowly missed him at a dinner party held in his honor on Jan. 13.

This represents a change in venue for bin Laden and his lieutenants. Before the attacks of Sept. 11, 2001, bin Laden's zone of influence was among Pashtuns in Afghanistan, which was the center of the Taliban's power and its major recruiting base. The Pashtuns are Afghanistan's largest ethnic group and have ruled the country for the past 300 years. They were artificially divided by the British so that today millions of Pashtuns also live across the border in Pakistan, many of them in seven so-called tribal agencies where control by the government has been minimal.

It was in eastern Afghanistan that bin Laden made his last public appearance in Jalalabad on Nov. 10, 2001, just after the northern cities had begun to fall to the anti-Taliban alliance. He addressed an estimated 1,000 Pashtun notables and militants, urging them to continue resisting the American invaders, according to U.S. journalists working in the region at the time. He dished out wads of U.S. and Pakistani cash and then disappeared into the mountain fastness of Tora Bora, never to be seen again. (The CIA didn't learn of the meeting for several days.)

Few Afghan Pashtuns would have dared to betray him then. But times have changed in Afghanistan. The majority of Afghan Pashtuns now want the benefits of peace -- economic development, roads and schools.

Pakistan's Pashtuns, by contrast, have become more radicalized than they ever were before 9/11. And the bloody Taliban-al Qaeda resurgence now under way has relied on Pakistan's Pashtun belt for most of its recruitment, logistics, weapons and funding.

Bin Laden's new friendship zone stretches nearly 2,000 miles along Pakistan's Pashtun belt -- from Chitral in the Northern Areas near the Chinese border, south through the troubled tribal agencies including Waziristan, down to Zhob on the Balochistan border, then to the provincial capital Quetta and southwest to the Iranian border. The region includes every landscape from desert to snow-capped mountains. Sparsely populated, it provides bin Laden an ideal sanctuary.

Al Qaeda's money, inspiration and organizational abilities have helped turn Pakistan's Pashtun belt into the extremist base it is today, but U.S. and Pakistani policies have helped more. Although the Taliban and al Qaeda extremists were routed from Afghanistan by U.S. forces, Secretary of Defense Donald H. Rumsfeld's refusal to put enough U.S. troops on the ground let the extremists escape and regroup in Pakistan's Pashtun belt. The Taliban settled in Balochistan where they had originated before 1994, while al Qaeda members hid in the tribal agencies they knew well. Bin Laden had built tunnels and caves there for the anti-Soviet mujaheddin in the 1980s.

What followed was a disaster: For 27 months after the fall of the Taliban regime, Pakistan's president, Gen. Pervez Musharraf, Washington's closest ally in the region, allowed the extremists free rein in the Pashtun tribal areas to re-establish training camps for militants who had escaped Afghanistan. These included Arabs, Central Asians, Chechens, Kashmiris, Africans, Uighurs and a smattering of East Asians. It was a mini-replay of the gathering in Afghanistan after bin Laden arrived there in 1996.

Musharraf did capture some Arab members of al Qaeda, but he avoided the Taliban because he was convinced that the U.S.-led coalition forces would not stay long in Afghanistan. He wanted to maintain the Taliban as a strategic option in case Afghanistan dissolved into civil war and chaos again. The army also protected extremist Kashmiri groups who had trained in Afghanistan before 9/11 and now had to be repositioned.

Indeed, in March 2002, just three months after the defeat of the Taliban, the United States began to withdraw its Special Forces, surveillance satellites and drones from Afghanistan to prepare for war in Iraq. Distracted by Baghdad, it did not notice what was happening in the tribal agencies. By the time the Pakistan army entered South Waziristan in March 2004, the extremists were so well entrenched that 250 Pakistani soldiers were killed in the first encounters.

Since then, with no consistent political strategy to woo the Pashtun population away from bin Laden, the army has steadily lost ground. The political agents, who ran the tribal agencies with a mixture of bribery and pressure, have been replaced by arrogant generals ignorant of local conditions. Today the extremists rule over North and South Waziristan and other tribal agencies, while the 70,000 Pakistani troops stationed there are boxed up in outposts, too frightened to patrol the mountains. More than 100 pro-government tribal elders have been assassinated by extremists for divulging information to the U.S. or Pakistani secret services.

Meanwhile down south, the Balochistan provincial government is controlled by a coalition of pro-Taliban fundamentalist parties, which came to power in elections in 2002. Jamiat-e-Ulema-i-Islami, the party that controls the key ministries, openly supports the Taliban.

This has created a new stronghold from which the Taliban can launch attacks back in Afghanistan. The 99 U.S. soldiers killed last year in Afghanistan were mostly targeted by the Taliban based in Balochistan. While Washington's principal aim has been to capture bin Laden and decapitate al Qaeda, whose members are believed to be in Waziristan, the United States has failed to pressure Pakistan to deal with the Taliban, despite protestations from Afghan President Hamid Karzai. On a visit to Islamabad this month, Karzai handed Musharraf intelligence dossiers detailing how suicide bombers are being trained in Pakistan. In the past few months, at least 30 attacks have killed nearly 100 people in Afghanistan, including NATO peacekeepers and a Canadian diplomat.

The dossiers listed the names and addresses of Pakistani recruiters and people who equip suicide bombers with explosives before sending them to Afghanistan. Much of the recruitment takes place at a radical Islamic bookshop, several mosques and some madrassas in the port city of Karachi, while the training is done at safe houses in Quetta and Chaman, in Balochistan province.

"We have provided President Musharraf with a lot of very detailed information on acts of terrorism . . . and we discussed in great detail what actions Pakistan could now take," Karzai told me on Feb. 17 in Islamabad. ''Americans are dying, a Canadian diplomat has been killed, our people are suffering. So it is time that action is taken to stop these acts of terrorism and interference in Afghanistan internal affairs," he said. "We expect results."

Getting those results won't be easy. Bin Laden has fighters and sympathizers down the length and breadth of Pakistan's Pashtun belt. No Pakistani Pashtun has reason to betray bin Laden, despite the $27 million reward for his head. Thanks to the drug trade in Afghanistan and the suitcases full of cash still arriving from backers in the Arabian Gulf, neither al Qaeda nor the local Pashtuns are short money. The Pakistani army's failure to offer Pashtuns a greater political role in the national framework has not inspired any loyalty among the tribesmen. And misguided U.S. interventions, such as the January missile strike that killed women and children, do the rest.

Washington's recent decison to start pulling U.S. troops out of Afghanistan this year has only reinforced al Qaeda's belief that it is winning. After nearly five years of avoiding capture or death, every single day that bin Laden stays alive is a day that inspires the extremists who protect him and join his ranks.

Ahmed Rashid, a Pakistani journalist, is the author of "Taliban: Militant Islam, Oil and Fundamentalism in Central Asia" (Yale University Press) and "Jihad: The Rise of Militant Islam in Central Asia" (Penguin Books).

Masood Hassan on how the US sees India and Pakistan

Neither here nor there

Masood Hasan

Where are we going if we are going anywhere at all? President Bush, addressing the Asia Society just prior to leaving for his trip to India and Pakistan, spoke at considerable length on February 22, forcefully and emphatically. The first half of his speech -- no, it was more like 85 per cent of his speech -- was focused on India as he reviewed our neighbour's remarkable progress. Fact after impressive fact came forth and the US president made it very clear that here was a nation that was a serious and committed partner in fields too diverse to cover in this column.

What came across was a partnership of two great nations, trading and exchanging technology and products across the board, both committed to a long-term partnership – some initiatives going beyond the year 2050. This was not the senior partner talking down to the junior partner -- this was a partnership of tremendous promise and respect. The US president made it abundantly clear that the US saw India as a great and lucrative market, and the exchanges between the countries a way forward for both the people of India and the United States. It was a clear, candid and strong commitment that the president expressed, with pride and satisfaction. One can perhaps only imagine how the Indians who dominate the Asia Society must have felt as indeed the millions who saw the address live on television.

But we are not Indians – not yet anyway – and as a buffeted, confused believer in Pakistan whose slender faith in this nation is put to the test every day, it was with great trepidation that I waited for the president to turn to Pakistan. As was to be expected, there was virtually nothing to show for the great trading partnerships between our country and the United States and there was no mention of any significant gains made in the fields of economic activity, technology transfer or rising trade graphs. Instead, predictably, Pakistan's reference point was only one as far as the United States was concerned -- terrorism. The president spoke about this one single factor alone and traced the brief sequence of events from the time we recognised the Taliban, then quickly ditched them (strategic turnaround I recall was the euphemistic term coined by Islamabad) at the time of that famous phone call post-9/11, when we caved in and became front-line allies (again) in the US war on terror.

This was the core subject that the president's address to the Asia Society touched on and there was a thin bit of icing on the cake here and there, but to any one listening to the broadcast, the difference was even starker than chalk and cheese. The tenor of his voice, the open admiration in his assessment of India, the excitement at the rapid strides India has made and continues to make was as clear as the pure water they serve in crystal goblets in Islamabad. In one reference, the president mentioned Air India's order of 68 wide-bodied aircrafts from Boeing, the largest single order in the history of civil aviation in India. This was a business partner talking with pride about his business partner. The Indians eat Domino pizzas, wash clothes in Whirlpool machines, use GE technology and run an IT empire that is the stuff dreams are made of. What do we do? We burn KFC, steal the food, trash the restaurants, loot Citibank ATMs, torch Japanese motorbikes and cars, burn Norwegian investments, destroy four ambulances and a fire tender, set on fire our Assembly building -- a veritable historical icon of our past -- and create economic mayhem in a country where sugar sells for Rs40 per kg and gasoline at God knows what price last week. As far as the US president's tight summarisation was concerned, and he did not have to mention it, there is simply no comparison between the two countries. Depressing stuff.

But relax and rejoice because the hardworking moral brigades are not sitting around belching after another round of cholesterol-loaded halwas and puris. Twenty-two parties, no less, are taking to the streets on February 26 to join in the MMA march against the publication of the caricatures or whatever the wacky Danes printed and then reprinted until the whole world sat up and took notice. Not only are these boys going to cruise on every street they can find but they are going to do it peacefully, which is akin to asking camels to start looking pretty. The protestors want the government to send back all the ambassadors of the countries where the caricatures were printed and while they are at it, to kindly hand over all the people involved in this ghastly business, to be arrested and sent to an Islamic country (of their choice?) where they can be appropriately beheaded. However, the good news is that rumours about Qazi Hussain Ahmed abandoning his US properties, asking his children to renounce their green cards and return home to serve the motherland are highly exaggerated. The good Qazi has instead told them to keep the flag flying high and stay on to fight Satan.

Mr Butt, not of Butt Sweets, has announced in Lahore that the government should free all those picked up the other day, drop all charges and make no attempt to block their processions or else the local government would be held responsible. This is good thinking because there is nothing nicer than holding someone else responsible. The funny thing is that the way the Pakistan government has behaved so far indicates that perhaps it is, after all, the sole guilty party that published the caricatures. The MMA has vowed to carry on protesting until all the newspapers apologise and promise never to repeat this again. Strikes have been announced for just about most days of the week with a biggie on March 3 -- beware the ides of March and a 'million march' on March 5. After that, since you can't have too much of a good thing, the MMA Supreme Council will repair to Quetta and have another session there to plan more strikes.

In the meantime, the country continues to lose face and suffer very heavy losses. Every Muslim is angry about what happened and we have done all the protests we need. What is the point of more? Is it that there are people who still think the message hasn't gone through? The joke doing the rounds is that all that the enemies of Pakistan have to do is print one caricature a day and in a few weeks' time Pakistan will be wiped off the map. There is a law of diminishing returns at work here -- the more these strikes go on, the more we will damage ourselves. While I applaud the MMA and its related brethren for their fire-belching defence of their religious creed, it would be a dream scenario were they to exhibit the same passion for the rising poverty, the pitifully small allocations given to education and health and the absence of justice in the country where they also live and thrive. On such issues there is stony silence -- and that is why all this public show of piety does not cut much ice with anyone at the end of the day.

US president to push Pakistan on Kashmir ‘terrorist camps’

US president to push Pakistan on Kashmir ‘terrorist camps’

WASHINGTON: US President George W Bush said on Friday he would push President Pervez Musharraf during an upcoming visit to Islamabad to close “terrorist training camps”.

“On my trip to Pakistan, I will, of course, talk about the terrorist activities, the need to dismantle terrorist training camps and to protect innocent life,” Bush told Doordarshan state-run television of India, AFP reported. Bush leaves late on February 28 for India, and from there will travel to Pakistan for his first visit to both countries. In a separate interview to PTV, Bush said a democratic Pakistan can set an example for the Muslim world of a religious state that is not extremist.

“President Musharraf, in his democracy initiative, can show the whole Muslim world, and the world itself, that it’s possible to have a religious (state) that is not extreme,” Bush said in the interview, according to a transcript provided by news agency SANA. “And I will, of course, continue to talk to my buddy and my friend (Musharraf) about his goals for a democratic Pakistan.”

The US president said the aim of his visit was to reinforce his good relationship with Gen Musharraf and reach out to the people of Pakistan. “President Musharraf and I can set a tone for the relationship because of our capacity to talk to each other,” he said. “A good relationship between me and the president tends to permeate throughout our governments.”

“Secondly, I want the people of Pakistan to know that the American people care about them, that ours is a relationship that’s much bigger than just the war on terror; that when our Chinooks flew supplies into the rural part of Pakistan … it was out of a sense of care and concern about the individuals ... this (trip) will give me a chance to speak to the people of Pakistan and say, look, we care for you,” he said. Bush said Pakistan and the US could make their relationship more durable through trade and student exchanges. “And we’ll be talking about a bilateral investment treaty,” he added. He said anti-terror cooperation was crucial because Al Qaeda was a threat to Pakistan as well. “Nobody should want foreign fighters in their soil wreaking havoc. And it’s hard for a part of a country to develop if there are people in that part of the country that are willing to kill innocent life to achieve an objective.” Asked what role the US could play in resolving the Kashmir issue, Bush said he had already started to play a role when, in a recent speech to the Asia Society, he encouraged both sides to continue seeking a solution “acceptable to all sides”. “I will use my trip to urge the leadership to continue solving this issue, with the idea that it can be solved,” he said. agencies

Bush's journey to India

Washington and New Delhi see benefits in a new relationship

3/6/06

NEW DELHI--Where, in a world rife with anti-Americanism, can you find most people owning up to warm feelings for the Bush administration? One of those few places is here, in the South Asian giant of India, where President Bush arrives this week to mark rapidly warming relations between the world's oldest democracy and the world's largest.

A recent poll found that nearly 3 out of 4 Indians hold a favorable impression of the United States, solid base for the visiting president. "I like Bush," volunteers a young Indian riding a train bound for the capital, New Delhi, from his home in Agra, best known for the famed Taj Mahal. Adds Mohandas Pai, chief financial officer for Infosys Technologies, one of India's IT whiz companies in the southern city of Bangalore, "He's good for the world. He's the only person who can stop the spread of al Qaeda." Predictably, India's still-strong leftist parties are planning anti-Bush protests, and some ultranationalists also oppose closer ties with Washington. But the government here seems determined to produce happy images for the Bush visit.

The president's stops in New Delhi and the developing high-tech center of Hyderabad will underscore a remarkable turnaround in the once prickly relationship. In the Cold War days, Indian governments viewed the United States as a bully that propped up archrival Pakistan; American leaders were angered by India's pro-Soviet tilt as a leader of the so-called nonaligned movement. India's nuclear test blasts in 1974 and again in 1998 ran afoul of U.S. nonproliferation laws, leading, for a time, to sanctions and to this day to a ban on nuclear trade. But the mood has come nearly full circle. The Bush administration is now engaged in an audacious bit of geopolitical engineering: Its goal, a senior administration official said last year, "is to help India become a major world power in the 21st century. We understand fully the implications, including military implications, of that statement."

Despite enormous problems with poverty, infrastructure, and corruption, signs of India's rise can't be ignored. The economy is projected to double in size in a decade, growth fueled by continuing reforms and privatization. Indian companies are buying rights to foreign oil fields and acquiring computer and steel firms in the United States. Its IT sector is growing at 15 percent a year. India is the No. 1 arms buyer in the developing world, last year eclipsing China and Saudi Arabia, and its active armed forces rank No. 3 in size, behind China and the United States. Its population, already about 1.1 billion, will surpass China's within decades. And Washington gets it. Says Nicholas Burns, the under secretary of state for political affairs, "I think if you look at American foreign policy worldwide, the greatest change you will see in the next three or four years is a new American focus on South Asia, particularly in establishing a closer strategic partnership with India."

Deadline. Already, this is reflected in a broad set of initiatives on trade and investment, energy, democracy promotion, space exploration, HIV/AIDS, agriculture and science, and defense. Last week, Burns flew here to try to rescue what is supposed to be the centerpiece of the Bush trip: a breakthrough deal on civilian nuclear cooperation. Indian officials reported progress in the talks, though it was unclear whether key obstacles had been resolved. Washington's terms for lifting trade restrictions on nuclear technology would require India to separate civilian from military facilities and accept international nonproliferation inspections. India's powerful nuclear establishment, however, has dragged its heels out of fear that its nuclear arsenal--believed to amount to 30 to 100 weapons--will be constrained from further growth. India, which touts its record of never having transferred nuclear know-how to others, is keen on shedding its status as a nuclear pariah--and on getting badly needed access to nuclear fuel and new technology. The deal "effectively means recognizing India as a nuclear power," says Sanjaya Baru, spokesman for Prime Minister Manmohan Singh.

For that reason, the deal is controversial. Nonproliferation specialists warn that carving out an exception for India to the rules of the Nuclear Nonproliferation Treaty--which India never signed--could encourage other countries with aspirations for the Bomb while doing little to restrain India's nuclear arsenal. The Bush administration counters publicly that the deal will strengthen the overall cause of nonproliferation by placing first-ever safeguards on India. But it is also engaged in some realpolitik. "India is special because of its size, because of its potential," explains a senior administration official. The president concluded, says the official, that "we'd be better off creating a special niche for India."

The administration is not alone in its zeal for India. The advocates for closer ties begin with powerful U.S. business interests. India's nuclear market, if opened to the world, could be worth upwards of $100 billion. And Washington has freed contractors like Lockheed Martin and Boeing to pitch sales of F-16 and F-18 fighter planes. American corporate giants have made India, with its low-cost English-speaking workforce, a top destination for IT and business-processing operations. The Indian-American community, nearly 2 million strong and increasingly active politically, is also lobbying for closer ties.

Hastening India's rise draws support across a wide ideological spectrum. Foreign-policy realists in the United States want to harness India's clout on counterterrorism, weapons proliferation, and revision of global rules on trade and investment. Backers of Bush's spread-democracy theme see India's multiethnic democracy as a powerful model for other countries. Likewise, India's fight against terrorism by Islamist militants--an outgrowth of the ongoing conflict over Kashmir--makes it a country confronting the same threat as the United States. Some neoconservatives bluntly view India as a counterweight to communist China. After the December 2004 Asian tsunami struck, the U.S. Navy joined with those of India, Japan, and Australia to rush humanitarian relief to the devastated areas. That effort may have been a harbinger of power politics: the region's militarily capable democracies banding together--sans China. The administration, sensitive to not offending China, plays down such considerations. Yet a former senior official recalls Vice President Cheney and Secretary of Defense Donald Rumsfeld as focused on India's strategic value: "They look at India as a counterbalance to China, which they see as the Soviet Union of the 21st century."

That view, if it ever emerges as official policy, will encounter heavy resistance in India. Here, autonomy and independence are enshrined as core values of the state. So it was not surprising that a firestorm erupted a month ago when U.S. Ambassador David Mulford predicted--in stating the political reality--that the U.S. Congress might kill any nuclear deal if India did not join in censuring Iran for its suspected drive for nuclear weapons. Indian officials bristled at the link, and leftist lawmakers demanded that Mulford be recalled. He was not, and, as it turned out, India did vote with the United States at the International Atomic Energy Agency.

But the flap serves as a reminder that India's hard-won independence still colors its view of other powers, including the United States. "Anybody who thinks you can turn India into a client state hasn't spent a lot of time here," allows a senior U.S. official. The Indians couldn't agree more.

Bush to push Pakistan on Kashmir camps

Bush to push Pakistan on Kashmir camps

US President George W. Bush said Friday he would push Pakistani President Pervez Musharraf during an upcoming visit to Islamabad to close "terrorist training camps".
"On my trip to Pakistan, I will, of course, talk about the terrorist activities, the need to dismantle terrorist training camps and to protect innocent life," Bush told Doordarshan state-run television of India.
The US president had been asked about "the terrorist training camps and training infrastructure in Azad Kashmir".
"One of the real dangers of the terrorist movement is that they'll kill innocent people to achieve an objective. And India and president Musharraf, as well as our country, cares deeply about innocent life," Bush added.

Pakistani-American terrorist(Hayat) praised Al-Qeada, jihad

Informant Recalls Talk of Jihad by Lodi Man

From Associated Press
February 24 2006

SACRAMENTO — The FBI informant who befriended a Lodi man charged with attending an Al Qaeda training camp said Thursday that the defendant took an interest in terrorist groups and spoke admiringly about jihad.

A federal prosecutor asked the informant, Naseem Khan, how defendant Hamid Hayat saw himself in relation to the Taliban, Al Qaeda and other such groups.

"He never, ever considered himself American," said Khan, who was on the witness stand during the fourth day of testimony in Hayat's terrorism trial in U.S. District Court.

During long conversations at Hayat's home, Khan said, Hayat praised Al Qaeda, expressed support for religious governments in Pakistan and Afghanistan and talked about issues surrounding jihad.

Hayat, 23, is charged with three counts of making false statements to the FBI about attending an Al Qaeda camp in Pakistan in 2003 and with providing material support to terrorists. He faces up to 39 years in prison if convicted. His father, 48-year-old Umer Hayat, faces two counts of making false statements to the FBI about whether his son attended the camp. Both have pleaded not guilty.

Assistant U.S. Atty. Laura Ferris questioned Khan on Thursday about conversations he had with Hamid Hayat, many of which were secretly recorded and are contained in hundreds of hours of audiotape.

Hayat, a U.S. citizen who has been in custody since June, listened without expressing any emotion as the man he'd considered a close friend described conversations they had had over cups of tea.

The focus of one conversation was a scrapbook Hayat had filled with newspaper articles he had collected during previous trips to Pakistan. The articles described political figures and developments in that country and Afghanistan. One photograph appeared to show a mounted machine gun that was described as a weapon of the Taliban.

At one point, according to Khan, Hayat praised Al Qaeda as "a tough group," adding, "They're even smarter than the FBI, friend."

Transcripts of the conversations show Hayat eager to tell his new friend about what he learned in Pakistan and the people he met there.

Most dangerous destinations 2006

Forbes

Most Dangerous Destinations 2006

• Afghanistan

• Burundi

• Cote d'Ivoire

• Democratic Republic of the Congo

• Georgia

• Haiti

• Iraq

• Liberia

• Pakistan

• Papua New Guinea

• Russia (Chechnya)

• Somalia

• Sudan

• Zimbabwe

US views of other countries. 66% positive for India, 31% Saudi Arabia, Pakistan 30%

Iran least popular country in U.S.
The annual Gallup poll on U.S. views of other countries finds Canada is the most-favored nation while Iran is the most hated.
The survey, conducted Feb. 6-9, asked respondents to give their view of 22 countries.
Eighty-nine percent of those surveyed had a favorable view of Canada, while 88 percent like Britain best. Japan clocked in at 81 percent and Germany -- which has risen considerably as memories fade of its refusal to back the Iraqi invasion -- had a 79 percent favorable rating.
The other countries with more supporters than detractors were Israel (68 percent), Taiwan (67 percent), the Philippines (67 percent), India (66 percent), Mexico (64 percent), Egypt (58 percent), Russia (54 percent) and France (54 percent).
China was in a class by itself, with 44 percent having a favorable opinion and 49 percent a negative one.
Moving down the list, only 31 percent had a positive view of Saudi Arabia while 62 percent had a negative one. It was followed by Pakistan (30 percent), Afghanistan (27 percent), Libya (22 percent), Iraq and Cuba (21 percent), the Palestinian Authority (11 percent), North Korea (10 percent) and Iran (7 percent).

Update: Link to Gallup poll

Moderately Positively Rated Countries
	Very favor- able	Mostly favor- able	Mostly un- favor- able	Very un- favor- able	No opin- ion	Total favor- able	Total un- favor- able
2006 Feb 6-9	%	%	%	%	%	%	%
Israel	21	47	18	5	9	68	23
Taiwan	12	55	14	5	14	67	19
The Philippines	11	56	17	4	12	67	21
India	10	56	16	7	11	66	23
Mexico	14	50	24	8	5	64	32

Moderately Negatively Rated Countries
	Very favor- able	Mostly favor- able	Mostly un- favor- able	Very un- favor- able	No opin- ion	Total favor- able	Total un- favor- able
2006 Feb 6-9	%	%	%	%	%	%	%
Saudi Arabia	3	28	44	18	7	31	62
Pakistan	2	28	43	16	11	30	59
Afghanistan	3	24	42	23	8	27	65
Libya	2	20	42	16	20	22	58

Future of US-Pakistan relations

Future of US-Pakistan relations

By Touqir Hussain
AS President Bush heads for South Asia, a look at the strategic direction of US relations with India and Pakistan will be timely. In Pakistan, our self-image and worldview has been anchored in a belief that the rest of the world should look at India through our eyes.

For years we have measured others’ friendship on a scale of their relations with India. The fact is India has a place in the world, and its growing ties with the US only reflect this reality which we must not resent.

As for our own relations with the United States, while Washington may have loomed large in our foreign policy the reverse is not true and cannot be. Relations between a big power and a small country are always imbalanced, and those between Pakistan and the US have been particularly so, for many reasons.

Firstly, US-Pakistan engagements have been single issue relationships that have prospered in the neglect of some of their other vital interests. Secondly, being a weaker party, Pakistan’s loss has been heavier. Pakistan did not get the best value for its services as much of the US help was non-monetary by way of political support to military regimes which was no doubt priced into the deal. In more ways than one, the legitimacy for such regimes thus came at the country’s expense.

It is not a good idea to concentrate political power and determination of national interests and priorities in a single institution with a legitimacy problem. President Musharraf is to be commended for bringing a modicum of stability to the country and igniting a debate on the need for reforms. But this does not obscure the fact that while people may welcome, and indeed tolerate, for some time, military interventions in national affairs for damage control and stabilization, they would not endorse its long-term appropriation of political power.

Serious problems of the country require a fully fledged and autonomous political process, however imperfect, and also policies that rely on national effort at issue solving rather than on external help that may force us to make flawed compromises on our vital interests.

There has been another problem in the US Pakistan relationship. Pakistan has traditionally responded to regional impulses, and the United States to global dynamics. As a superpower it has also been neither compelling nor easy for the United States to harmonize its strategic and tactical goals, short- and long-term agenda, and global and regional interests.

As a consequence, US Pakistan ties have lacked continuity, a larger conceptual framework, and a broad shared vision. It is no wonder, then, that as soon as the United States achieved its objectives vis-‘-vis Pakistan in past engagements, US Pakistan policy consensus would break down.

The current US engagement with Pakistan shares some of the past weaknesses. But South Asia has changed due to the post Cold War world, globalization and the war on terrorism, and so has the basis of US relations with it. In the past, the region was the focus of US interest because of the threat from outside to inside. The threat now is from inside to outside to which, as the US sees it, Pakistan has contributed significantly both with its internal dynamics and external behaviour.

An unstable Pakistan fosters militancy, endangers its nuclear assets, raises the potential for conflict with India over Kashmir, and threatens its own internal cohesion. But India compels attention with the projection of its military power, marked economic and technological achievement and potential, its democratic structure, aspirations for a big power status, and as the likely balancer to a resurgent China and a factor of stability in South Asia and its periphery. It thus offers US great strategic and economic opportunities.

There are not only strategic incentives but compulsions as well for the US to woo India. America may have become the sole superpower but its grip over its allies has loosened. Europe has become too autonomous, and the Middle East is in the grip of a religious based revisionism making its future relations with the US uncertain.

If America is looking for a back-up sphere of influence and source of energy now, why not go to a country and a region that is seeking US help and patronage — India in realizing its big power ambitions, Pakistan in its salvation from chronic weaknesses and consequences of a profligate living, and Central Asia in balancing the weight and influence of China and Russia? The object may well be not only to facilitate the emergence of a Central and South Asian integrated market that will enhance the potential for US trade and investment but also pursue a policy of benign encirclement of China and containment of Russia by courting countries on their periphery.

But regrettably, Pakistan and Afghanistan are an impediment as potential source of instability and extremism that not only impact on global security but also threaten India, the centrepiece of future US policies, in the region.

For more than five decades, Pakistan has figured in US foreign policy in various forms — a staunch ally, a troublesome friend or a threat. Now, for the first time, it is all of these things. While India presents to the US a great opportunity, Pakistan is a big challenge. While India is an asset, Pakistan is a liability. Pakistan diminishes the prospects of US strategic interests in the region, and along with Afghanistan, it is at the root of policy issues the US faces in the region.

Afghanistan and Pakistan occupy a pivotal place in America’s war on terrorism specially the part aimed at the decimation of Al Qaeda and emasculation of the Taliban. The United States is doing so directly in Afghanistan but indirectly in Pakistan. Contrary to public perceptions of any American unhappiness with Pakistan’s support in the war on terrorism and Pakistan’s “anger” at incidents such as Bajaur, the two sides have so far been comfortable with the existing perimeters of their cooperation.

Statements to the contrary are for domestic consumption on both sides and meant as a pressure tactic. Pakistan is cooperating but may not want to know everything so as to retain the option of plausible deniability. But future troubles cannot be ruled out.

There will be other problems to come. Since US Pakistan relations have merged with Pakistan’s own reform effort, America’s evolving economic and strategic relationship with the region, the war on terrorism, nuclear proliferation and Iran, many variables have come to play on Pakistan, and may affect the country’s future.

The war on terrorism, for instance, has created as many problems for us as it has solved. Firstly, Pakistan may be played out of Afghanistan strategically. Secondly, it is clear the US is trying to create a new balance of power in Afghanistan unduly weighted against the Pashtuns, being seen as prone to extremist influences and more tolerant of the Taliban and, by virtue of their presence on both sides of the border, providing a sanctuary to them in Pakistan.

The tribal areas in Pakistan are already being treated by the Taliban as their alternative power base and they are radicalizing its culture by evoking religion, sub nationalism and anti-Americanism, to enlist their support for their continued resistance in Afghanistan. All this presents serious challenges for Pakistan. Apart from inflaming regional feelings in Pakistan it has incited tensions with the US-backed regime in Afghanistan which may have made common cause with Iran and India to exploit the Balochistan situation for their own purposes. The US plans for the region thus may be getting undermined by its own allies and by Iran which opposes the American fiat anyway.

As for India-Pakistan relations, India is pursuing a policy of maximum benefit at a minimum cost thanks to Pakistan’s self-restraint and US influence. India’s hope is that in time the so-called CBMs between the two countries will become their own reward, and that perhaps with increased economic and commercial exchanges, cultural interplay, and trends toward moderation in Pakistan, Pakistanis will develop a different perception of India and Kashmir.

India also hopes that other critical issues, such as energy, sharing of water resources, security, and good neighbourly relations, may eventually take precedence over Kashmir in defining the countries’ relationship, freeing India to find an internal solution to the dispute, facilitated by Pakistan’s diminished leverage and unforced concessions. There might be gains for Pakistan in the relationship with India, but not in Kashmir, whose centrality to India-Pakistan relations will have gradually eroded.

But if Pakistanis feel let down by continued lack of progress on the Kashmir dispute, the public, or at least the Islamist hardliners, may end up blaming Musharraf of a sell-out and America for weakening Pakistan’s hand in Kashmir. This might cause problems for US-Pakistan ties. If the US launches any military strike against Iran that will be another wild card and may well spell the end of US-Pakistan engagement.

The future of US-Pakistan relations is thus hostage to much uncertainty. To avoid damage, the US needs to be sensitive to Pakistan’s internal dynamics and larger strategic interests in the region. Pakistan will also need greater support for its economy and help with its educational reforms.

The present status of the relationship will of course look good when the Bush visit takes place. It is essentially a visit to India with Pakistan stop being an unavoidable obligation. In India, the visit will be a great draw even though the nuclear deal is not going anywhere as it does not have support in the Congress yet. But even without the nuclear deal the relationship should mean a lot to India.

Pakistan may end up signing the agreements in the fields of investment science and technology, education, container security and preferential access to goods produced in designated industrial zones, but there will be no movement on the free trade agreement. President Bush will of course say nice things about Islam and the Muslim world. The outcome of the visit to Pakistan may not look all that unimpressive, but there is little doubt that India will be the star of the show.

The writer is a former ambassador. E-mail: thussain@gwu.edu

Pakistan will stand by China against US ‘siege’, says Rashid(Pakistani Information Minister)

Thursday, February 23, 2006

Pakistan will stand by China against US ‘siege’, says Rashid

BEIJING: Pakistan will stand by China if the US ever tries to “besiege” it, Information Minister Sheikh Rashid Ahmad has said. He said this while talking to a private television channel in Beijing on Wednesday.

Rashid said that President Pervez Musharraf’s visit to China will open new avenues of development and cooperation between the two countries in all sectors. Pakistan and China have signed 42 bilateral agreements during the president’s current visit, 13 of which have been reached at the government level and 27 are between the traders and entrepreneurs of both countries.

These accords are aimed at boosting cooperation in economy, defence, trade and the social sector. The information minister said that Pakistan and China are jointly manufacturing an F-17 thunder combat aircraft. He said that the test-flight of a second combat plane, an F-10, is scheduled for today (Thursday).

He said that Musharraf told the Chinese leadership that Pakistan wanted full membership of the Shanghai Cooperation Organisation (SCO). He said that Russian President Vladimir Putin, due to visit China next month, along with the Chinese leadership will help Pakistan acquire SCO membership. Cooperation of other SCO members – Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan – will also be sought, he said.

The president also expressed condolences for the killing of three Chinese engineers in Balochistan, he said. agencies

Pakistan among top 10 dangerous travel spots

Pak among top 10 dangerous travel spots'

FROM OUR CORRESPONDENT
ISLAMABAD - Pakistan and Afghanistan have been put in the list of 10 most dangerous destinations by international travel rating agencies owing to the travel advice released by different countries including the United States.
According to the rating published by Forbes, US and other international travel consultants indicated that travellers were under the threat of being kidnapped and murdered during travel in many countries. These included Afghanistan, Pakistan, Somalia, Burundi, Cote d’Ivoire, Congo, Georgia, Haiti, Iraq, Liberia, Papua New Guinea, Chechnya, Sudan and Zimbabwe.
In response, Ecotourism Society Pakistan (ESP) has strongly rebutted this claim saying there was no justification to put Pakistan in the said list. According to it, Pakistan has been placed in the list due to the government’s weak and apologetic response to such advisories.
The ESP has demanded the government to take a stance over this issue and negotiate with the respective governments so that the country is dropped from the list, as travel situation in Pakistan has never been like that in Somalia or Afghanistan.
The ESP maintained that countries in this list of top 10 are those where civil wars are going on and putting Pakistan in this list is unjustified.
ESP President Agha Iqrar Haroon, in a statement, said that countries in this list of top 10 were those where civil wars were going on and putting Pakistan in this list was unjustified and contrary to facts.
In Pakistan, around 400,000 people are working in this field as porters, guides, cooks, drivers, tour agents and in several other professions. Pakistan gained a momentum in tourism last year during which around 650,000 tourists visited the country.
ESP has also demanded international bodies to look into the realities instead and remove Pakistan’s name from the list.
According to the Pakistan brief in the ratings list, which bears a US State Department’s Travel Warning, India prompted copycat testing in Pakistan in 1998, and since then, militant and extremist groups have been congregating here and targetting American and Western interests. Islamabad and the tribal areas bordering Afghanistan are particularly dangerous, where members of al Qaeda and remnants of the Taliban still dwell.

The joke that is the KSE

Fault lines in Pakistan’s stock exchanges By Dilawar Hussain
KARACHI, Feb 18: Karachi Stock Exchange – Pakistan’s answer to Wall Street -has risen 17 per cent in less than two months this year and by a phenomenal 49 per cent since the winter of last year.

Into the fifth year of a superb performance, equities at KSE have fared better than most other regional markets. But while celebrating the good times that are rolling on, stakeholders ought to keep one eye on the fault lines, which could, if not taken care of, have the potential of transforming into outright fractures. The March 2005 crisis was a quake across one of those great fault lines: plugging of financing. Let’s examine some of the other fault lines:

KSE-100 INDEX IS FLAWED: Of the 100 shares in the index, as few as can be counted on finger tips of one hand can turn the tide one way or the other. Prominent are the Oil & Gas Exploration Companies (E&P stocks), which have 38 per cent weightage in the index. Oil & Gas Development Company Limited (OGDC); Pakistan Petroleum Limited (PPL) and Pakistan Oilfields (POL) rule the roost.

Here is a sample: During past week ended Friday, Feb 17, the KSE-100 index closed at its all-time high at 11,352 points, posting a gain of 300 points. But the credit went squarely to the three E&P companies: OGDC; PPL and POL, which contributed as many as 368 points to the index surge. Keeping those stocks aside, the market, overall had not risen, but plunged by 68 points.

If the index is flawed, one should scarcely be amazed by the deafening silence of the government; the corporate regulators and bigger stakeholders; it suits them all. The great anomaly in the composition of index that shows the market galloping when it is just trotting, makes the government comfortable as the world watches mercury rising in the barometer (stock market) so as to prove the 8 per cent plus growth in the economy; it suits the Securities and Exchange Commission of Pakistan (SECP), the chief regulator, for what else can be a clearer proof of the effectiveness of its reforms; it suits the Karachi Stock Exchange (KSE) for it reinforces their claim of being the “best performing stock market in the world”.

And of course it suits the stock broker fraternity for looking up at the index shoot through the roof, more and more investors would run up to the market to make a quick buck. It is not to cast doubts on the transparency of the index composition; just the methodology.

Generally speaking, KSE-100 is a market capitalization based index designed back in 1991. The entire world has changed since. For fairer display of market performance, it is essential to study global trends. The re-composition of index on free-float basis, has since long been on the agenda of the regulators and the sooner that gets introduced, the better. The important lesson learnt from the March 2005 crisis was that the rally was not broad-based and the index remained biased to one high cap stock.

LACK OF DEPTH: The bull-run at the local bourses had started at the beginning of 2002 when the benchmark KSE-100 Index was at 1,273 points. It is not to say that this addition of a staggering 10,000 points to the index in a little over four years is all the handiwork of a flawed index. Far from that. The equity values have individually seen sharp rise in prices. When the government offered a small portion of its holding in National Bank of Pakistan (NBP) at the par value of Rs10, three years ago, who would have thought that by Feb 17, 2006, the NBP stock would be trading at Rs273 - reflecting an incredible gain of 2,630 per cent! Such is the case with almost all listed stocks that are worth their while; most are now ‘fully or fairly priced’.

Improved economy; reforms; political stability and lately foreign investment ($444 million inflow till Feb this fiscal year), have all contributed to the market rally. But what next? Already too much money has begun to chase too few shares. It is imperative that the government step forward to increase the depth of the market. Privatization of big ticket companies: Pakistan Steel; Habib Bank; Wapda; PSO; the Sui twins; PPL and more of the stocks of already listed O&E companies could provide the necessary depth to the market. And let there be a bigger portion of the stake put up in IPOs, because in a market which is now worth $53 billion, divestment of shares worth as little as $700-$800m, is not of much significance.

REFORMS PROCESS: Demutualization; introduction of new products (options and derivatives); margin financing and others are on the list of second generation reforms. Of all of those, ‘demutualization’ looks to be the sticking point. Contrary to general belief, a senior stock broker, said: “Why should we be against demutualization; when that happens, we would be both brokers as well owners at the stock exchanges”. Valuation is surely in debate. But let knowledge and discussion precede introduction of a reform to make them successful.

Abolishing of COT system of financing, before banks were prepared for margin financing was a dumb move and had to be retracted. But is that not ingrained in our national psyche? To digress a bit, shortage of sugar would not have been a tormenting affair today, if the agricultural department had realized two years ago that growers were diverting from sugarcane to other crops and as a result shortfall would occur in years ahead.

CONFLICT OF REGULATORS: Regulators and regulatees have eternally been in conflict. A closer coordination and atmosphere of cooperation may results in a healthy change of habits. Decisions have to be taken carefully but quickly. Two months into 2006 and the SECP is yet to place four of its nominees on the board of stock exchanges.

Without a full board and a non-member chairman for the first time, the bourses would doubtless be handicapped to take important decisions. And at both the frontline regulator (KSE) and the apex regulator (SECP), competent staff is known to be in short supply. SECP is trudging ahead without the basic all four commissioners and at KSE, some key executives are missing.

PROTECTION OF SMALL INVESTORS: Many stocks are currently priced at considerably higher than ‘fair’ price. Small investors who continue to hold them, could burn their fingers as happened in March. It would be cruel to dismiss small investors and day-traders as ‘satta wallas’ because speculation —in measured quantity — is spice of stock trading. They give the markets the high volumes. Efforts at investor education need to be stepped up. But best of all, small investors need to be explained the benefits of entering the equity market through mutual funds.

As the industry is growing by leaps and bounds, new products keep coming on offer to suit individual needs. Some of them being, Balanced funds; Islamic Funds; Equity Funds; Income Funds; Closed-end funds and Funds of Funds.

Poll reveals 40pc of Muslims want sharia law in UK

Poll reveals 40pc of Muslims want sharia law in UK

By Patrick Hennessy and Melissa Kite
(Filed: 19/02/2006)

Four out of 10 British Muslims want sharia law introduced into parts of the country, a survey reveals today.

The ICM opinion poll also indicates that a fifth have sympathy with the "feelings and motives" of the suicide bombers who attacked London last July 7, killing 52 people, although 99 per cent thought the bombers were wrong to carry out the atrocity.

Last night, Sadiq Khan, the Labour MP involved with the official task force set up after the July attacks, said the findings were "alarming". He added: "Vast numbers of Muslims feel disengaged and alienated from mainstream British society." Sir Iqbal Sacranie, the secretary general of the Muslim Council of Britain, said: "This poll confirms the widespread opposition among British Muslims to the so-called war on terror."

The most startling finding is the high level of support for applying sharia law in "predom-inantly Muslim" areas of Britain.

Forty per cent of the British Muslims surveyed said they backed introducing sharia in parts of Britain, while 41 per cent opposed it. Twenty per cent felt sympathy with the July 7 bombers' motives, and 75 per cent did not. One per cent felt the attacks were "right".

Huge trade gap may hit balance of payments, forex reserves fall to 11.4b$

Huge trade gap may hit balance of payments

By A Correspondent
KARACHI, Feb 17: Pakistan’s trade deficit increased to roughly $6.5 billion in the first seven months (July-January 2005-06) of the current fiscal year. This is even larger than $6.2 billion deficit seen in the entire fiscal year 2004-05. The pace with which trade deficit is rising during the current fiscal year indicates that at the end of the year it will touch an all-time high of $10 billion.

That naturally would also expand current account deficit. The current account deficit already reached $2.9 billion in the first half of this fiscal year, exceeding the deficit of $1.6 billion seen in the entire fiscal year 2004-05.

Sources at the ministry of finance say if the trade deficit reaches $10 billion, the current account deficit would touch an all-time high of $6 billion. But they hope that the financial account of the country will perform better than expected.

During the first half of this fiscal year, Pakistan’s financial account posted a surplus of about $2.5 billion. That was why despite a huge current account deficit of $2.9 billion, the country’s overall balance of payments (BOP) showed a nominal deficit of $290 million only.

But as the trade deficit is growing fast, it seems that in the second half of the current fiscal year it would be difficult for Pakistan to keep its BOP deficit at a low level despite a build-up in the financial account.

In that event, foreign exchange reserves of the country will decline and the extent to which it will fall will depend chiefly on the size of the BOP deficit. Pakistan’s liquid foreign exchange reserves have declined by 9.5 per cent or $1.203 billion so far during this fiscal year, falling from $12.623 billion at end-June 2005 to about $11.421 billion on February 1. What is important to note is that between July 1, 2005 and February 11, 2006, the reserves held by the central bank has declined by $774 million — from $9.791 billion to $9.017 billion.

But despite this much fall in foreign exchange reserves, and despite a deteriorating current account deficit, the rupee remains stable — thanks to the central bank’s intervention in the foreign exchange market. The rupee lost only 0.4 per cent of its value against the US dollar in the inter-bank market so far during this fiscal year, falling to 59.93 on February 17, 2006 from $59.67 on June 30, 2005.

Pakistan's Trade deficit with China rises by 72pc

Trade deficit with China rises by 72pc

By Our Reporter
ISLAMABAD, Feb 17: Pakistan’s trade deficit with China has increased significantly in the last two years from $865.211 million in 2003-04 to $1.488 billion in 2004-05, indicating a rise of over 72 per cent.

Officials data available with Dawn indicated that the consistent increase in trade deficit with China was due to ever-increasing quantum of import of machinery, and parts, textiles and chemical products from China particularly following the preferential trade agreement (PTA) effective from January 1, 2004.

Under the PTA, China had allowed tariff concession to Pakistan on 893 items, whereas Pakistan had given concession to China on nearly 200 items. This concession in tariffs on products helped the Chinese exports flooding the Pakistani markets.

Although China had given concession on more tariff lines to Pakistani products but that could not help in any tangible increase in export of Pakistani products to China. This showed the lack of proper projection and correct analysis of the products by the Pakistani trade officials while negotiating the treaty.

But, it also happened because of the fact that China had given concession almost on the similar products to India under the Bangkok Trade Agreement (BTA), which created great competition for Pakistani products.

The statistics showed that Pakistan’s trade deficit with China stood at $245.512 million during the year 1998-99; $291.201 million in 1999-2000; $225.781 million in 2000-01; $346.588 million in 2001-02 and $594.465 million in the year 2002-03.

The trade deficit had increased to $865.211 million during 2003-04 and $1.488 billion in the year 2004-05. Only in the first quarter (July-Sept) of the current fiscal year, the trade deficit with China was recorded at $571.992 million.

The trade gap with China would further widen during the current fiscal year as the early harvest programme (EHP) — zero rate of duty—, which would attract more Chinese products at cheaper price to Pakistani markets.

Pakistan’s export to China has increased by 22.8 per cent to $354.092 million during the year 2004-05 as against $288.259 million in the previous year after the implementation of the PTA.

While Chinese exports rose by 59.75 per cent to $1.842 billion during the period under review as against $1.153 billion during the same period last year.

Pakistan’s major export to China was cotton yarn, which increased by 0.73 per cent to $149.821m in 2004-05 against $148.735m in the previous year.

The product-wise analysis showed that Pakistan exported $52.057m worth cotton fabrics during the year 2004-05 as against $52.531m during the previous year; export of chemicals and compounds $37.724m as against $8.512m; leather stood at $26.136m as against no exports; fish and fish preparations worth $22.537m in 2004-05 against $19.565m in the previous year.

Export of ores and concentrates of iron and steel increased to $25.639m in the year under review as against $8.910m in the previous year, raw cotton rose to $9.666m as against $1.925m; made ups of textile including towels $2.74m as against $1.066m; cutlery $1.554m as against $0.964m; apparel and clothing $1.325m as against $0.470m; knitted or crocheted fabrics $2.497m as against $0.034m.

The value of import bill of machinery was $97m in 1998-99 from China, which increased to $808.468m in 2004-05.

China’s other major exports to Pakistan during the year 2004-05 were- chemicals and compounds ($130.8m); chemical materials and products ($118.885m); coal, coke and briquettes ($63.428m); vehicles and parts ($55.005m); iron, steel and manufacture ($51.197m).

Probe finds terrorists in U.S. 'training for war': Pakistani terrorist group Jamaat ul Fuqra

Probe finds terrorists in U.S. 'training for war'
Neighbors of Muslim encampment fear retaliation if they report to police

U.S. authorities have probed the group for charges ranging from links to al-Qaida to laundering and funneling money into Pakistan for terrorist activities. The organization supports various terrorist groups operating in Pakistan and Kashmir, and Gilani himself is linked directly to Hamas and Hezbollah. Throughout the 1980s, JF was responsible for a number of terrorist acts across the United States, including numerous fire-bombings.

Gilani was at one time in Pakistani custody for the abduction of American journalist Daniel Pearl. Intelligence sources have determined Pearl was attempting to meet with Gilani in the days before he disappeared in Karachi. Intelligence sources also suggest a link between Jamaat ul Fuqra and Richard Reid, the infamous "shoe bomber" who attempted to ignite explosives aboard a Paris-to-Miami passenger flight Dec. 22, 2001.

Lodi ice cream terrorist case: US government has satellite photos of terrorist camps in Pakistan

Testimony to begin in Calif. terror case

DON THOMPSON

Associated Press

SACRAMENTO, Calif. - Hamid Hayat's family says he went to Pakistan in April 2003 to attend a religious school and get married. The U.S. government believes he went to a terrorist training camp and planned to attack American hospitals and supermarkets.

Opening arguments are set for Thursday in the trial of Hayat, 23, who is charged with supporting terrorists by attending the camp in 2003 and 2004, and then lying about it to the FBI. A jury was selected Wednesday.

Testimony against his father, Umer Hayat, 48, is set to begin next week before a separate jury. He is charged with lying to the FBI about his son attending the camp.

Both men have been in custody since their arrests last June and have pleaded not guilty to charges. Both deny the son attended the camp.

Prosecutors say Hamid Hayat returned to his home in Lodi, an agricultural community about 35 miles south of Sacramento, with the intent of committing holy war.

Their case involves statements prosecutors say the men made to a confidential government informant in the United States, the men's purported videotaped confessions and the photographs they say show the actual camp.

The Pakistani government denied any of the camps exist. Prosecutors, however, said they have satellite images "of a location consistent in appearance with the militant training camp that Hamid Hayat ultimately confessed that he attended," according to the 60-page trial brief filed Tuesday night.

Defense attorneys have not offered an alibi to show that Hamid Hayat was anywhere other than where prosecutors say he was. But they contend the informant asked leading questions and that the FBI pressured the father and son to confess without a lawyer or interpreter present.

The prosecution document disclosed that the investigations of the Hayats and of two Lodi Islamic religious leaders were "separate but related," although they said the Hayats discussed the imams during conversations secretly recorded by the informant, who was paid by the government.

The two clerics and one cleric's son were deported to Pakistan last year for immigration violations.

Prosecutors also disclosed that the informant, who infiltrated Lodi's Islamic community shortly after the 2001 terrorist attacks, spent two days in jail in 1993 after he pleaded guilty to misdemeanor burglary. The conviction was dismissed after he completed probation.

Prosecutors asked U.S. District Court Judge Garland E. Burrell Jr. to rule before testimony begins that the defense cannot tell jurors of the previous conviction.

Umer Hayat is charged with two counts of making false statements to FBI agents and faces eight years in prison if convicted. His son is charged with three counts of making false statements to the FBI about attending the camp and with providing material support to terrorists. If convicted, he faces up to 31 years in prison.

Pakistan riots organized by the Lashkar-e-Taiba

‘Religious groups organised violence’

LAHORE: The chain of violent incidents across the city on Tuesday was orchestrated by a group of trained young activists of religious organisations, sources in intelligence agencies and the religious groups told Daily Times. They said that the activists belonged to Al-Dawa Students Organisations, which is affiliated to Jamaatud Dawa (formerly known as Lashkar-e-Taiba, which is officially banned in Pakistan), Islami Jamiat Talaba and Shabab-e-Milli, groups affiliated to Jamaat-e-Islami. The sources said that ten groups of at least 35 men each carried out most of the violence, including burning and ransacking buildings, across Lahore. The main group travelled around in a maroon jeep and motorcycles and most of its members had long hair, beards and were clad in commando uniforms. The Jamaatud Dawa flag hung from the jeep and motorcycles. All of them were trained and many were summoned to Lahore from other cities, the sources said. They were armed with petrol bombs, firecrackers, small weapons and a chemical fire accelerant. The main group was spotted at incidents of violence near a KFC restaurant on The Mall, the Punjab Assembly, a Mcdonald’s on Egerton Road and Metropolitan Bank. Lahore police started a crackdown based on intelligence information on Tuesday night and detained hundreds of the activists, the sources said. shahnawaz khan

Selig Harrison in the Washington Post: Pakistani Army bogged down in Balochistan

Pakistan's Costly 'Other War'

By Selig S. Harrison

Wednesday, February 15, 2006; Page A21

The usual explanation for Pakistan's failure to go all-out against al Qaeda and Taliban forces along the Afghan frontier is that Gen. Pervez Musharraf's armed forces and intelligence services are riddled with Islamic extremists. But there is also another, equally disturbing, reason. Musharraf has increasingly been forced to divert ground forces and U.S.-supplied air power from the Afghan front and from Kashmir earthquake relief efforts to combat a bitter, little-noticed insurgency in his strategic southern coastal province of Baluchistan.

Musharraf's "other war" against the Baluch, an ethnic minority of 4.5 million, has become increasingly bloody in recent weeks. According to U.S. intelligence sources, six Pakistani army brigades, plus paramilitary forces totaling some 25,000 men, are battling Baluch Liberation Army guerrillas in the Kohlu mountains and surrounding areas. The independent Pakistan Human Rights Commission has reported "indiscriminate bombing and strafing" by 20 U.S.-supplied Cobra helicopter gunships and four squadrons of fighter planes, including U.S.-supplied F-16 fighter jets, resulting in 215 civilian dead and hundreds more wounded, many of them women and children.

Visiting U.S. Undersecretary of State Nicholas Burns told human rights commission leaders recently that the Baluch conflict is an "internal matter" for Pakistan to resolve and that the United States has not raised the issue with Musharraf. This policy should be reversed, not only to stop the carnage but also because the United States has a major strategic stake in a peaceful accommodation between Islamabad and Baluch leaders. The administration should call on Musharraf to start negotiations immediately, and President Bush should keep up the pressure when he visits Islamabad in March.

Multiethnic Pakistan, dominated by the Punjabis, who control the army, is likely to become increasingly ungovernable in the absence of a political settlement with the Baluch. A continued military confrontation in Baluchistan could well intensify long-festering ethnic unrest in neighboring Sind and embolden various anti-Musharraf forces throughout Pakistan. Musharraf's ability to put adequate military resources into the fight against al Qaeda and the Taliban, already limited, would be further reduced, undermining U.S. efforts to stabilize Afghanistan.

The strategic importance of Baluchistan has grown since China started building a port for Pakistan at the Baluch port of Gwadar, close to the Strait of Hormuz, with a projected 27 berths, enough for a major Pakistani naval base that could be used by Beijing. The Baluch ancestral homeland stretches west beyond Gwadar into adjacent Baluch-majority areas of eastern Iran, where there is a nascent Baluch rebellion against President Mahmoud Ahmadinejad.

Iran fears Baluch nationalism, but India is more ambivalent. New Delhi wants a stable Pakistan that will negotiate a peace settlement on Kashmir. At the same time, many Indian commentators appear happy to see Musharraf bogged down in Baluchistan and hope that the Baluch crisis will force him to ratchet down Pakistani support for Kashmiri Islamic extremist insurgents.

Musharraf has presented no evidence to back up his accusations that India is aiding the Baluch insurgents. But New Delhi did say on Dec. 27 that it is "watching with concern the spiraling military violence in Baluchistan" and called for political dialogue. Both Baluch and Sindhi leaders have often said that they would welcome Indian intervention to liberate them from Islamabad.

At present, most Baluch leaders do not call for independence. They are ready to settle for the provincial autonomy envisaged in the 1973 Pakistani constitution, which successive military regimes, including the present one, have nullified. What the Baluch, Sindhis and a third, more assimilated ethnic minority, the Pushtuns, want above all is an end to blatant economic discrimination by the dominant Punjabis. Most of Pakistan's natural resources are in Baluchistan, including natural gas, uranium, copper and potentially rich oil reserves, both onshore and offshore. Although 36 percent of the gas produced in Pakistan comes from the province, Baluchistan consumes only a fraction of its production because it is the most impoverished area of Pakistan. For decades, Punjabi-dominated central governments have denied Baluchistan a fair share of development funds and paid only 12 percent of the royalties due to the province for the gas produced there.

The Baluch were forcibly incorporated into Pakistan when it was created in 1947 and have subsequently staged two short-lived rebellions, in 1958 and 1962, as well as a protracted struggle from 1973 to 1977 that involved some 80,000 Pakistani troops and 55,000 Baluch tribesmen.

The big difference between earlier phases of the Baluch struggle and the present one is that Islamabad is no longer able to play off feuding tribes against each other and faces a unified nationalist movement. Another important difference is that the Baluch have a better-armed, more disciplined fighting force. Baluch leaders say that rich compatriots in the Persian Gulf are providing the money needed to buy weapons in the flourishing black market.

It is clear that a continuing Baluch insurgency would pose a major threat to the Musharraf regime and to U.S. interests in Pakistan. Future military and economic aid to Islamabad should clearly be withheld until Musharraf stops his military repression in Baluchistan and enters into serious negotiations with Baluch leaders. Once the present crisis is defused, the United States should launch a sustained effort to promote a process of democratization in Pakistan that gives long-overdue recognition to its multiethnic character.

The writer, former South Asia bureau chief of The Post, is the author of "In Afghanistan's Shadow," a study of Baluch nationalism. He is director of the Asia Program at the Center for International Policy.