The Politics of Politics: Afghanistan, BiBi, MMA and Inflation

Adil Najam

It is news galore today. As if news and newsmakers have awakened from the meat-induced slumber of Baqra Eid, and done so with a vengeance.

First I thought of doing a post on Benazir Bhutto saying that PPP was ready for elections under Musharraf but the opposition would resign if the President tried to get himself re-elected by the current Assemblies (see related, here). Then, I was the news about Qazi Hussain Ahmad thinking of quitting as MMA President (see related, here). But then I read the details of this amazingly undiplomatic press conference in Kabul where Hamid Karzai, the Afghan President, pretty much told Prime Minister Shaukat Aziz that these ceremonial summit visits were of no use (see distantly related, here). While still in shock from that reading I saw Dr. Shamshad Akhtar, the Governor of the State Bank, essentially confirming what we have been saying here for a while: inflation is real, and rising (also see here).

What should one write about. Each of these deserves a post. When in doubt, do all.

All of these are not just about politics; they are about the politics of politics. Each – except maybe the inflation – could change quickly. Each of these – including inflation – are being talked about the way it is being talked about precisely because it makes political sense to do so and do so now.

Let me start with the story about Afghanistan, which I think is the most disturbing and serious of the lot. The headline in Dawn reads, ‘Barbs Fly at Kabul Meet’; and indeed they did:

Negotiations between Islamabad and Kabul turned out to be unproductive when Afghan President Hamid Karzai said on Thursday that the help resurgent Taliban militants received on the Pakistani side of the border soured relations between the estranged neighbours. In what was seen by many as a disagreeable departure from diplomatic norms, President Karzai, beside himself with anger, told Prime Minister Shaukat Aziz at a joint press conference that top-level visits bore little fruit if Afghanistan remained bedevilled by what he described as cross-border terrorism.

“If our children continue to be killed, our teachers continue to get killed, and students get discouraged, there would be no use of such high-profile visits by the leaders,” he said… “And that, unfortunately, the gap in ties is increasing between Afghanistan and Pakistan…It is with a lot of regret that relations face a lack of trust,” President Karzai said at the joint press conference. Having received such a wintry welcome in the windswept capital of Afghanistan, Prime Minister Shaukat Aziz, who seemed to exercise considerable restraint, said Islamabad had increased financial aid to the strife-torn country by $50 million to $300 million. He said the two sides, which had a tense round of talks for three hours, agreed to start the stalled repatriation process of three million Afghan refugees.

The situation is indeed dire. Islamabad seems bent on building its border fence, and although ccomplaining about cross-border infiltration, Kabul is loathe to the idea, partly because it considers the border to be still disputed. The meeting last year between Presidents Bush, Musharraf and Karzai in Washington had been similarly unproductive. One wishes that in this case Washington – which considers both Kabul and Islamabad to be key allies – would step in and reconcile. But there are no signs that it will.

The second interesting news item was on the BiBi interview. According to the Daily Times:

Former prime minister Benazir Bhutto has said her Pakistan Peoples Party is ready to participate in general elections under President Gen Pervez Musharraf, but warned that all opposition parties would unite and quit parliament if Gen Musharraf tried to get re-elected president from the present assemblies… She said Nawaz Sharif had not yet decided whether to participate… She said her recent meeting with PML President Chaudhry Shujaat Hussain in Dubai was a coincidence and Imran Khan had witnessed this meeting. “There was nothing clandestine between me and Chaudhry Shujaat. We just had a social conversation and Imran Khan is a witness to this meeting,” she said.

My own sense is that a reconciliation of sorts is in the works. Why do I think so? Not just because she has just summoned Amin Fahim to Dubai to discuss developments with her, but also because everyone seems to be denying that there is any deal. The two parallel headlines in The News (5 January), for example, were: “Shujaat Rules Out Any Deal with PPP” and “PPP Also Denies.” Call me a cynic, but when politicians try to deny something this hard, by immediate instinct is to assume that there has to be some truth to it.

The third story of the day is about our friends in the MMA and whether Qazi Hussain Ahmad will resign the Presidency of the coalition. The News (5 January) reports:

Muttahida Majlis-e-Amal (MMA) President and Jamaat-i-Islami Amir Qazi Hussain Ahmad said on Thursday he wanted to quit the presidency of the alliance and be replaced by a new leader with consensus. Addressing a press conference here, Qazi said a meeting of the MMA supreme council has been convened on January 11 in which resignations from parliament and other important issues regarding forthcoming general elections would be taken up. He added that his stand on tendering resignations from parliament was intact, which, according to him, was endorsed by the alliance supreme council. “Maulana Fazlur Rehman is not agreeing with the unanimous decision of the supreme council,” he said. Qazi said that he would never expect elections under the present set-up. “We have a clear-cut stand; we will neither accept Gen Musharraf in military uniform nor without uniform as president.”

Given all the previous commotion on resignatitions I, for one, am going to wait on this one and see oont kiss qarwat baithta hai.

The last story is about inflation and for ordinary Pakistanis its impact may be the most profound. In an exclusive interview with Dawn (5 January), this is what Dr. Shamshad, the State Bank Governor, had to say:

The State Bank fears that inflation is likely to inch past – at least by one percentage point – the annual budgetary target set for the year 2006-07… State Bank Governor Dr Shamshad Akhtar told Dawn that higher-than-expected food inflation and the governments inability to pass on the benefits of declining international oil prices to domestic consumers would cause inflation to range between 6.8 per cent and 7.5 per cent. The government set the annual inflation target for the financial year at 6.5 per cent. Dr Akhtar, who became Pakistan’s first woman central bank governor in January, blamed food price hike on higher consumer price index – a type of inflation that hits domestic consumers most.

… Pakistan witnessed the highest ever current account deficit of $5 billion during financial year 2006 as compared to the deficit of $1.5 billion in the previous year. She hoped that continued shrinking of the debt to GDP ratio and high economic growth would stablise the country’s external current account. Responding to criticism that low national saving is a function of abysmally low rate of return to depositors in Pakistan, Dr Akhtar said a whole range of factors were responsible for the country’s low saving rates. “Pakistani society’s high propensity to consume, predominance of cash economy, people’s reluctance to declare money, lack of access to banking services and lack of resources and saving habits are some of factors responsible for low saving rate,” she said.

I am glad that Dr. Shamshad has acknowledged the issue. Acknowledgement is the first step towards action. I hope, however, that the politics of politics does not get in the way here. Inflation needs to be tackled head on, no matter what the politics of the day dictates.

As I look at the four stories above, I realize that each of them derives from key trends that we had identified for our ATP Poll on the key news trends of 2006. I have not yet had a chance to analyze the results but will do so soon. Meanwhile, here are the raw numbers as they stand currently; relate them to the four news items above; its an interesting exercise.