A widening gap
Pakistan’s trade deficit — gap between exports and imports — widened to $15.1 billion in the July-February period of the ongoing fiscal year, worsening from $14.49 billion in the comparative period of the previous year, signaling that the country’s deteriorating trade performance has outpaced the benefit it has received in the shape of falling oil prices. Provisional figures indicated that exports during the eight-month period stood at $13.87 billion, a 13.3 per cent fall from the previous year, while the import bill only went down 4.95 per cent. The trade performance in two-thirds of the fiscal year indicates that Pakistan’s exports will hit a new low during 2015-16, contrary to the government’s claims that it intends to increase foreign exchange revenue through a growth-led model.
There is no doubt that there has been an economic slowdown in Pakistan’s favoured markets and has led to them curtailing spending. But Pakistan, too, has been reaping the benefit of falling oil prices that has benefited every net importer of oil. During this time, however, the country’s trade gap has gradually worsened, leading many to believe that the benefit received has been overshadowed by the economy’s structural shortcomings. Pakistan’s exports have been falling for some time and a poor business environment is one of the reasons. High costs of production — due to high rates of taxes and power tariffs — and energy woes are reasons that just scratch the surface of the issue. Overdependence on the textile sector to help rally exports and lack of focus on manufacturing finished goods have made matters worse for a country that is saved by workers’ remittances and lenders’ largesse. The trade policy, which was meant to provide a road map for improving the trade deficit, has been pending for a while. LNG has only recently been imported for the industrial sector and preference is being given to textile mills in Punjab. Will this sector alone be enough to help an ailing trade deficit? There has been no clear strategy to improve exports and it won’t be a surprise if the trade deficit keeps worsening in the years to come.
Terror in Turkey
Turkey has been struck by a wave of terrorist attacks that are likely to have come from multiple sources. There had been a warning from the Americans that an attack was imminent and likely, but it was to no avail and at least 34 people died and another 125 were injured when a car bomb was detonated in Ankara. The attack was on the evening of March 13 at a time when the city was crowded with shoppers and tourists. It killed dozens of military personnel and probably both of the bombers. The attack was mere blocks away from a similar attack in February.
Although it would be easy to blame the Turkish security forces for an ‘intelligence failure’ given the fact that there was forewarning, that would considerably underplay the complexity of the onslaught that Turkey currently faces. President Recep Erdogan, as he is required to do, has vowed to defeat the terrorists that currently have the country by the throat but that is going to be a lot easier said than done. There are at least three armed groups bent on the downfall of the Turkish government and one of them, Kurdish in origin, has been fighting the state for generations in search of autonomy. The Islamic State is a newcomer to the stage and has motives entirely different from those of the Kurds. One of the pro-Kurdish groups, the Kurdish Democratic People’s Party, has denounced the attack, whilst another, the Kurdistan Freedom Hawks, has reiterated its desire to bring down the state and to target the airlines that fly tourists into the country, which is sure to raise the concerns of tour operators. The tourist industry has already been hard hit and will only decline further as tourists globally opt out of destinations where terrorists target them. The country is struggling to cope with the refugee flow that is the fallout from the Syrian civil war and the never-easy relationship with Greece is further strained as the refugees seek to leave Turkey and enter the European Union by whatever means. Turkey is fighting terrorism on several fronts and thus far is not winning on any of them.
The Karachi shuffle
Events in Karachi are moving at almost breakneck speed both politically and in terms of law-and-order, with the two being intertwined. On the political front, there is the re-emergence of Mustafa Kamal who has directly challenged the hegemony of the MQM in the city. The response of the MQM to the challenge has been measured in Karachi, almost dismissive, and there is a curious silence from the London end of the party machine. Quite how many will attend the rally announced by Mr Kamal is unknown but it will be a useful indicator as to what extent his yet-unnamed political party is viable. A number of present and past members of the MQM, including Raza Haroon who flew into the city on March 14, have already gravitated in the direction of Mr Kamal.
Whether this is a truly epiphanic moment for the MQM or just another blip is impossible to say, but the forces of law-and-order are taking a close interest in developments. The Federal Investigation Agency (FIA) has secured a pledge from Mr Kamal that he will assist with inquiries into money laundering and contacts with the Indian RAW intelligence agency by the MQM, allegations going back many years and never substantiated.
As these events unfold, there has been a change at the top of policing in Sindh on the back of an admission by IG Ghulam Haider Jamali to the Supreme Court that illegal appointments had been made to the Sindh police force. The government had no choice but to sack him. His replacement is Allah Dino Khawaja who has a formidable job in front of him. The Sindh police force is corrupt from top to bottom, part of the problem rather than part of the solution for Karachi. Deeply politicised, it is highly resistant to change but changes in the political environment may provide an opportunity to at least begin to chip away at the darkness within. Karachi needs to change if its potential is to ever be fulfilled and the city of blights is to once again become the city of lights. To say that we watch with interest understates reality by several orders of magnitude.