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Saarc’s future

WHILE regional groupings such as the EU and Asean have brought states — including
former enemies — closer, this formula has not worked in South Asia. In fact, this
region is often described as one of the least integrated in the world, and Saarc, founded
nearly four decades ago, has remained a moribund forum, primarily because of the
toxic nature of the Pakistan-India relationship.

In a recent tweet to mark Saarc Charter Day, Prime Minister Shehbaz Sharif indicated Pakistan’s
resolve to revive the eight-member bloc, while ruing the “missed opportunities” linked to lack of
integration. Idealistic rhetoric aside, the revival of Saarc is a tall order, but not an impossible task if
all eight members, primarily Pakistan and India, wish to use the forum to improve the quality of life
of the people of South Asia.

There is little consistency where ties with India are concerned, with the civilian authorities saying one
thing, and the powerful military establishment, which has an undeclared veto on all matters
concerning India, going in another direction.

Moreover, political parties, when in opposition, have also blasted the government in power for
wanting to trade with India. The fiasco earlier this year, when the PTI government decided to re-
establish limited trade ties with India, only to take a U-turn soon after receiving criticism, is a case in
point.

Where India is concerned, while many in New Delhi may feel that they don’t need Pakistan, and
Indian ministers and generals make bellicose noises about ‘taking back’ Pakistani territory, the fact is
that a peaceful South Asia is in everyone’s interest.

Despite poverty alleviation efforts, hundreds of millions of Indians continue to live in poverty — in
fact, more than the entire population of Pakistan. Surely, if hostility recedes, resources spent on
defence can be repurposed to help bring more people out of poverty.

As for Pakistan’s choices, the civilian administration and the military establishment need to be on the
same page where India is cornered. Without sacrificing our core concerns, such as Kashmir and the
treatment of Muslims in India, the elected leadership, supported by the military, should signal that it
is ready to talk peace if India is interested.

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Moreover, other Saarc members, particularly Bangladesh and Sri Lanka, can also make a greater
effort to help revive the bloc and reduce the Pakistan-India hostility. A quarter of the world’s
population will benefit immensely from reduced animosity, and greater connectivity.

Published in Dawn, December 12th, 2022

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Failing confidence

THE results of a recent business confidence survey conducted by the Overseas

Investors Chamber of Commerce and Industry are a disquieting reminder of just how
jittery key stakeholders have become due to the worsening state of the economy. The
OICCI’s Business Confidence Score, computed through a countrywide survey, has
plunged to negative 4pc from 17pc recorded in March and April. The steep drop has
been termed “regrettable, but not surprising” by OICCI president Ghias Khan, who
attributes it to “the highly challenging political and economic situation” in the months
between the two surveys. Mr Khan cited “high inflation, increased fuel prices and
significant currency devaluation” as well as the floods which inundated large parts of
the country following this year’s monsoon season as factors that have greatly disrupted
economic activity. Overall, more than half of all respondents expressed negative views
regarding the business environment over the past six months, and only 2pc had any
positive expectations for the next six. It appears from the survey results that it is only a
tiny fraction of business leaders in the manufacturing sector who still have hope for a
near-term improvement in the economy. On the other hand, the outlook presented by
those working in the services and retail and wholesale sectors is overwhelmingly
negative. Foreign investors sampled in the survey expressed a confidence level of only
6pc compared to 33pc when the previous survey was conducted. The three biggest
challenges identified were inflation, high taxation and currency devaluation. Other key
findings indicate that businesses may be considering shelving expansion and
investment plans and curbing new hiring.

Confidence surveys are usually reliable indicators of the direction business activity can be expected to
take in the near future. Based on the results of this survey, the outlook appears to be quite dire.
Unfortunately, the government has either already failed to address the three key concerns raised or is
out of policy options to provide relief. For example, after much struggle, it seems to have given up on
getting price fluctuations under control — a fact borne out by the persistence of high inflation in
recent weeks and months. It also cannot compromise on taxation, as its revenue options have been
sharply limited by a massive rejigging of the economy. Lastly, further currency devaluation also
seems inevitable considering the pressures building up on the external account, though policymakers
are resisting it for political reasons. Expect a rough ride ahead.

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Child trafficking

WHAT does it say about our child protection laws and other relevant legislation when a
14-year-old girl is abducted and sold thrice before being able to escape her captors and
return home? Her ordeal indicates — as the court correctly pointed out — that
kidnapping gangs are operating with total impunity. Further horrifying details
emerged in the victim’s statement to the Sindh High Court on Friday. She said she had
seen around 15 teenage girls at the house of one of those accused of her kidnapping.
The court, while hearing the bail plea of another suspect booked for allegedly
abducting the underage girl to force her into marriage, has directed the interior
ministry to form a JIT to thoroughly investigate the issue of child trafficking. It is
about time the criminal justice system came to grips with the terrible things happening
to our minors and took proactive steps to prevent these crimes and support the
victims. Therefore, it is encouraging that despite the girl in the case at hand not having
made an allegation of forced marriage or rape, the court has held that further
investigation is warranted.

It has been seen in far too many cases of alleged child abduction and forced marriage of minors that
courts do not probe deep enough to ascertain the truth, leaving the victims vulnerable to further
abuse and sexual exploitation. In the earlier stages of the Dua Zehra case, for instance, despite her
parents providing verifiable evidence of their daughter being underage, a magistrate in Lahore
accepted her statement that she was an adult and allowed her to go with her ‘husband’. An HRCP
report published this year describes Pakistan as a “source, transit and destination country for
trafficking”. This appears to be no exaggeration. Consider that in February 2022, Punjab police stated
that 151 girls and young women, all abducted from Sargodha, had been recovered from various parts
of the province since Jan 5 alone. It is not enough to legislate: implementation is key.

Published in Dawn, December 12th, 2022

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2023: a world of uncertainty

The writer is a former ambassador to the US, UK & UN.

THE world is in strategic flux and in the midst of an intensely unsettled period.
Looking ahead at key geopolitical trends and challenges in 2023, their overarching
aspect is uncertainty and unpredictability. This at a time of power shifts in an
increasingly fragmented international system with multilateralism under growing
stress. Rising geopolitical tensions and global economic volatility are keeping the
world in an unstable state.

The most significant strategic dynamic in the year ahead will be the course of relations between
global powers. The disruptive economic repercussions of war in Ukraine will blight prospects of

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global economic recovery and is already compounding a cost-of-living triggered by the coronavirus
pandemic.

Most annual assessments of key global trends in the year ahead by international think tanks,
investment firms and others see unpredictability as the ‘new normal’.

The Economist’s ‘The World Ahead 2023’ report succinctly describes the world today as being
“much more unstable, convulsed by the vicissitudes of great-power rivalry, the aftershocks of the
pandemic, economic upheaval, extreme weather, and rapid social and technological change”.

Both leaders pledged to improve relations that had sunk to a historic low, raising international
concerns about the advent of a new Cold War. But their meeting did not narrow differences between
them on the contentious issues that divide them — Taiwan, trade disputes, technology curbs and
military postures.

The outlook is uncertain, especially as Washington’s policy of containing China, reaffirmed in the
Biden administration’s national security strategy, and an assertive Chinese pushback, will keep
relations on a tense track. Tech de-coupling will accelerate, military competition will intensify and
Taiwan will remain a dangerous flashpoint in relations.

Control Risks, a global consulting firm, sees the US-China relationship as the greatest geopolitical
risk in 2023. Other assessments rule out conflict. But Southeast Asian countries worry about an
accidental clash in the fraught Asia-Pacific region — the strategic theatre of the US-China stand-off.

The course of the Ukraine war is another critical area to watch in the coming year. Russia’s invasion
of Ukraine marks a geopolitical fault line, which the annual Strategic Survey by the London-based
International Institute of Strategic Studies says has political and economic consequences that are
reshaping the global landscape.

The IISS survey argues the “war is redefining Western security, may change Russia profoundly, and
is influencing perceptions and calculations globally”. Although the conflict shifted the West’s
attention from its strategic priority in the Asia Pacific, it underlined that Europe’s security remained
the West’s ‘core interest’.

The Survey argues the two theatres — Euro-Atlantic and Indo-Pacific — are mutually dependent as
the first arena’s “fracture would make any more external security commitments unviable” while its
“successful defence would lend credibility to any Indo-Pacific tilt”. Whether or not one agrees with

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this, there is little doubt that if a negotiated end to the war is not achieved and continues to be
stalemated it will destabilise the world beyond Europe.

The year ahead will see rising geopolitical

tensions and nations struggle with economic
challenges.

Nothing illustrates this more starkly than the war’s economic fallout. Its disruptive impact has
thrown global supply chains and commodity and energy markets into chaos, with volatility
contributing to recessionary pressures in major economies and beyond.

The conflict has given rise to soaring food prices and intensified global inflation. Dealing with these
challenges will consume most nations’ energies in the coming year but will hit poorer, debt-burdened
economies especially hard. Food insecurity will be a key challenge in 2023, while the energy crisis
will test global financial stability.

Fitch rating company describes the present economic phase as “arguably the most economically
disruptive period since World War II” due to the outcome of three shocks — the global trade war, the
Covid-19 pandemic, and the Ukraine conflict. In October, the IMF warned the worst is yet to come for
the global economy and many countries will see a recession in 2023.

The US-China rivalry, Ukraine war and global power shifts have already led to new formal alignments
and reinvigorated previous alliances. Examples include Quad and AUKUS — part of America’s Indo-
Pacific strategy to counter China’s rising power.

China’s use of geo-economic strategies by its Belt and Road enterprise, that has enhanced its
influence across the world, is expected to accelerate. Newer alignments are also indicated by growing
China-Saudi Arabia ties.

In the prevailing geopolitical environment, nations will pursue hedging strategies to protect their
interests and buffet them from the headwinds of big power rivalries. Another emerging trend also
reflects how countries may respond to a more multipolar world — seeking issue-based ‘alignments’
with likeminded countries or joining ad hoc coalitions on specific issues.

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What kind of world order will emerge from all this remains an unresolved question because the
international system is at present so fractured. Ian Bremmer, head of the political risk firm EuroAsia
Group, makes a compelling argument that “Tomorrow’s geopolitics will be based not on a single
global order, but on multiple coexisting orders, with different actors providing leadership to manage
different kinds of challenges”.

In a speech about where the world is headed in 2023, he said the global security order would be US-
led, global economic order will depend on China’s trajectory, the global digital order would be driven
by giant tech companies while the global climate order is already “multipolar and multi-stakeholder”.

2023 will see continuing challenges to democracy. This has international implications. When
polarisation and searing divides make democracy dysfunctional, which is happening in many
countries, domestic weakness affects their foreign policy conduct and ability to act effectively in the
global arena.

Right-wing populist leaders who display intolerance and violate democratic norms at home also tend
to pursue disruptive policies abroad that undermine multilateralism.

The coming year will see a world of geopolitical tensions, economic insecurity and multiple other
challenges including climate change that will test the resilience of nations as well as the international
community’s ability to take collective action on shared problems.

The writer is a former ambassador to the US, UK & UN.

Published in Dawn, December 12th, 2022

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Evasion politics

The writer teaches politics and sociology at Lums.

AMONG a litany of economic woes in Pakistan, the narrowness of the tax base and
excessive burden placed on citizens through consumption and withholding taxes is
well established. The fact that income tax collection is overly reliant on a few sectors
and the salaried class, and that sales tax is largely collected from imports and domestic
manufacturing, rather than the rest of the value chain, is well established.

What is truly staggering, though, is the extent to which large sections of the economy remain
undocumented in terms of income accumulation, ie they fall in the informal economy. One such
section that is repeatedly mentioned is the retail-wholesale sector. In the following paragraphs, I

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want to identify some key aspects of this particular type of informality, especially from the
perspective of constrained resources available for development.

Wholesale and retail trade (henceforth, WRT), contributes 32 per cent within the services sector and
18pc to overall GDP. A key defining feature of WRT is that it consists largely of small and medium-
sized enterprises operating in both the formal and informal economy. Using past data of WRT
enterprises as a proportion of commercial electricity connections (around 60pc), it is estimated that
the total number of wholesale and retail establishments in the country is 2.39 million. Of these,
currently around 2m are retail trade establishments, roughly 262,000 establishments involved in the
sale, maintenance/repair of motor vehicles, and 96,000 wholesalers. The sector is almost entirely
dominated by informal employment relations. Labour force estimates show that 97.7pc of all persons
(ie 9.77m individuals) working in the WRT sector are informally employed.

Informality in the WRT sector has significant fiscal implications, especially when compared to the
more formalised manufacturing sector. The share of the manufacturing sector in direct taxes
amounts to 34.5pc, a full 22pc greater than its share in GDP. On the other hand, wholesale and retail
trade contributes a paltry 2.9pc towards direct taxes, 15pc less than its share in GDP. Using FBR data
from 2018-19, in rupee terms, a proportionate revenue obligation on the wholesale and retail sector
would amount to a minimum of Rs277 billion, or at least Rs234bn greater than its current
contribution.

Countries that have reduced tax informality

in wholesale and retail trade have done so
through incentive- and punitive-based
interventions.

These problems have been well identified by all domestic and international policy actors working on
revenue mobilisation in Pakistan. But the key issue remains that since the 1990s, associations
representing the WRT have thwarted a number of reform efforts to expand documentation of the
economy through protests and lobbying, and specifically prevented any capture of the true extent of
economic activity in the sector.

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In June 1998, for example, the PML-N government at the centre attempted to extend the general
sales tax net onto the retail sector through a clause in the annual budget legislation. This was pushed
back by a wave of protests. Similarly, in 2000 and 2001, the military government of Gen Musharraf
launched a documentation drive, through a Documentation of Economy ordinance, aimed at
assessing the actual turnover value of the retail sector. Despite the regime’s insulated, authoritarian
character, it too was unsuccessful in the face of successive shutter-down strikes in Punjab and Sindh,
including one that lasted for 11 successive days.

In 2011, there was once again significant mobilisation against a reformed general sales tax/VAT
extension to the retail stage. In 2014, traders successfully mobilised against consumptions audits of
self-assessed income tax returns, in 2015 against the imposition of 0.6pc withholding tax on banking
transactions, and in 2016 against the extension of the sales tax net to non-tiered retailers.

In 2019, tax authorities attempted a significant reform by making mandatory the submission of the
computerised national identity card copies for all transactions above Rs50,000 at the B2B (business-
to-business) and B2C (business-to-consumer) level. However, this again was suspended after
significant collective action by traders across the country, coupled with backdoor lobbying against the
then FBR chairperson. It was finally entirely rolled back in the 2022 budget. The most recent incident
of collective action was against the imposition of a fixed tax on non-tier 1 retailers in the 2022 budget,
proposed to be collected through the electricity bills. Here too, after public lobbying by associational
representatives of the WRT sector, the move was taken back after a change in leadership at the
finance ministry.

Constant engagement with political and bureaucratic actors for the purposes of financing elections,
exchanging rents, and safeguarding their economic interests gives wholesale and retail traders an
extremely high degree of political influence. The same influence is used in a wide variety of
circumstances, including for their own political ambitions, which is why so many politicians in the
urban areas tend to belong to business occupations.

Countries that have successfully reduced tax informality in wholesale and retail trade have done so
through a number of incentive- and punitive-based interventions. These include heightening state
capacity for market intelligence, enforcing business registration and forced-adoption of value-chain
documenting technologies (such as the point of sale system that FBR is trying to implement). Greater
incentives such as easier access to formal-sector finance, reduced tax rates and higher input-tax
adjustments are also offered to improve compliance.

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The issue of politicians being able to withstand opposition from influential actors is central to any
reform initiative. Entrenched opposition and collective action towards combating documentation
efforts are unlikely to dissipate anytime soon. But with each passing year that’s spent relying on a
narrowing tax base, it becomes clear that the status quo is unsustainable.

The writer teaches politics and sociology at Lums.

Twitter: @umairjav

Published in Dawn, December 12th, 2022

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Obstructing action

The writer is a political and integrity risk analyst.

WHY should we talk about corruption when we talk about climate change? This
question dominated many discussions at the International Anti-Corruption
Conference in Washington, D.C. last week. The answer is straightforward: corruption
undermines attempts to tackle the climate crisis.

It is a welcome development then to see two powerful movements — anti-corruption and climate
action — engage and highlight where their agendas overlap. Our challenges are complex and cross-
cutting, and it’s only by recognising this that we can tackle them. After this year’s floods, Pakistan

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should pay particular attention to how corruption threatens climate mitigation and adaption efforts
and exacerbates climate injustice.

Corruption and climate change intersect in numerous ways. At the highest level, any corruption that
reduces the public coffers hampers a state’s ability to respond to the climate challenge by reducing
the funding available to deploy in areas such as renewable energy or climate-resilient urban
development.

Another link is the inappropriate divergence of funds needed to tackle climate change-related
disasters, both pre-emptively and after the fact. The image of illegally built hotels on riverbanks being
washed away during this summer’s floods will stay with Pakistanis for many years, but insufficient
attention has been paid to the corruption that likely enabled those developments in the first place.

Climate change and corruption intersect in

many ways.

Pakistan saw warning signs of this in October when the US rang alarm bells about potential
corruption in the disbursement of $160 million it had provided for flood relief, less than a quarter of
which was dedicated to on-the-ground relief efforts.

A key concern is how corruption can skew how climate policies are developed — vested interests with
little commitment to climate action use illicit means to stifle progressive climate policies and
legislation to protect the status quo. This is a greater challenge when it takes the form of legalised
corruption, such as industry lobbying to reject carbon tax proposals.

Another area of concern is the exploitation of incentives for climate mitigation or adaptation. A
growing number of states offer tax incentives or subsidies for those participating in renewable energy
or other green transition projects, and these are vulnerable to fraud, eroding meaningful efforts to
address the climate crisis.

Most climate mitigation and adaptation efforts require the development of new projects, related land
acquisition, deployment of new technologies, all following the receipt of relevant permits or licences.
These are activities prone to bribery and corruption; it is only by proactively managing these risks
that climate-related projects can avoid delays and other disruptions.

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There are various other areas where corruption threatens climate action. For example, corruption
enables environmental crimes that may in turn have climate change implications — think of rampant
illegal logging that fuels deforestation, which in turn leads to less greenhouse gas absorption thereby
fuelling climate change.

Much attention has already been paid to the lack of transparency on reporting on climate goals,
ranging from states’ manipulation of climate change-related data collection to corporate
greenwashing. And warning signs are already flashing around complex market mechanisms,
including carbon credits, that will inhere rampant fraud without adequate oversight.

Speaking at the conference, Stephen Gardiner, professor of Human Dimensions of the Environment
at the University of Washington eloquently argued that climate change is creating a perfect moral
storm. He pointed out that various inequalities — the fact that high-emitting nations cause damage in
low-emitting countries, or that elites insulated from climate shocks drive policymaking that most
affects the poor and marginalised — undermine people’s abilities to be ethical actors in the context of
climate change.

He also emphasised the inter-generational injustice that defines climate inaction (what he termed the
“tyranny of the contemporary” against future generations, which entails privileging present demands
over future suffering).

Against this backdrop, he expanded the notion of corruption to include moral corruption, which he
argued manifests in the way we talk about climate change and how we build norms and institutions
to manage the crisis. Recognising that our very approach to the climate crisis is distorted is a
powerful lever to effect meaningful change. Sadly, moral corruption is even more challenging to root
out than endemic venality.

The writer is a political and integrity risk analyst.

Twitter: @humayusuf

Published in Dawn, December 12th, 2022

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Virality & vileness

The writer is currently researching newsroom culture in Pakistan.

IN a chapter from his 2005 book The World is Flat, Thomas Friedman outlined “10
flatteners” which contributed to the flattening out of global economies. The fall of the
Berlin Wall, for example, he says led to the demise of communism and the beginning of
free-market economies. Workflow software allowed people to share work in real-time
making remote work a possibility — and how, during the pandemic! Netscape’s web
browser made access to knowledge accessible to cultures worldwide.

I’m no fan of Friedman, certainly not of his pro-US, pro-Israel warmongering rhetoric, but I was
reminded how this book made me aware of the impact technological transformations were having on

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the world. He wrote how China and India were taking advantage of the “flatness” (outsourcing of
work, for example) while countries in sub-Saharan Africa and the Middle East were falling behind.

I was reminded about Friedman’s definition of globalisation while watching the conversations around
the viral video of a young TikToker, Ayesha, dancing at a friend’s wedding to a remix of Lata
Mangeshkar’s Mera Dil Ye Pukare Aaja. I thought the discussions on social media illustrate both
society’s progress and regression.

Since it went viral a fortnight or so ago, there are reports that Ayesha has been offered endorsement
deals worth crores of rupees but I was not able to independently verify this information. I believe
them to be true because ‘pawri girl’ Dananeer Mobeen successfully converted her social media fame
to ‘girl boss’, earning endorsement deals and a career in acting. We’ve all seen people recreate videos
to ‘yeh meri pawri ho rahi hai’ across the world.

Not everything on TikTok is vulgar or

threatening security.

This is globalisation in action. Of course, it will cause anger and disdain because it upsets power
structures, which are almost always set up to protect and preserve patriarchal norms.

Unsurprisingly, the usual moral brigade was furious. The voices amplified with calls to boycott Nida
Yasir for inviting the “obscene” TikToker to her morning show. Ostensibly, they were angry about
Yasir’s normalisation of Ayesha’s dance, as if her dancing could be turned into a call for others to rise
and dance.

Ayesha’s overnight rise to fame also upsets elite institutes no longer in charge of deciding who gets to
be famous; no longer able to profit off people the way it used to. It’s only natural that people are
rubbishing social media influencers and calling for more merit-based systems. Except the system has
been broken for a long time. As my colleagues reminded me, Justin Bieber was discovered on
YouTube where he was posting his songs before his discovery in 2008. Beyoncé released her fifth
album, without warning, directly on iTunes in 2013, disrupting the supply chain in the music
industry.

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The modelling world, once known for discovering young women in everyday places like the grocers,
the streets, has been disrupted by social media influencers who create their own following on
platforms. They’re not waiting for their discovery moment, they are creating it. They are working
towards that virality and earning accolades, pushing boundaries, living their dreams and enjoying
themselves.

They will not be browbeaten back into anyone’s definition of puritanism and patriotism. They will not
wait to earn certifications or skills to qualify for jobs in industries that refuse to recognise the changes
taking place in the media landscape.

TikTok remains the most downloaded app in Pakistan with at least 18.26 million users reported in
the beginning of this year. Companies, especially news organisations, have to understand how
audiences are consuming content and need to cater to new demographics accordingly. Not everything
on TikTok is vulgar, or threatening peace and security.

When institutes are no longer the gatekeepers of their field, they will push back until they are forced
to adapt, often to their disadvantage. While Pakistani talent will be celebrated around the world, it
will be muzzled here out of some misguided sense to preserve some great culture. But, what if the
‘great culture’ is stifling growth?

Friedman encountered this kind of resistance to change during his travels for The World is Flat. He
asked nations to reflect on what they were driven by. “Does your society have more memories than
dreams or more dreams than memories?”

The writer is currently researching newsroom culture in Pakistan.

Twitter: @LedeingLady

Published in Dawn, December 12th, 2022

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