Archives for November 2008

Terrorists Attacks in Mumbai


You have been listening, watching and reading for the last three days all about the horrendous attacks on four of the Mumbai locations. The effect is devastating. It is definitely some thing to condemn. You are getting all the latest news with pictures and videos from your TV channels so there is no need to go through that.

It is Friday morning in Mumbai. Indian TV channels and news websites are competing with each other to be the ‘first‘ to tell its viewers and readers something ‘new‘ irrespective of whether it is true or not. They have any evidence for that or not. All the Indian media is propagating that these terrorists came from Pakistan through two Pakistani merchant ships. Nobody gave the ship’s names so that it could be verified. Their primary aim is to create some sort of suspense and drama to keep the viewers glued to their TVs. Good for them.I think the most important thing is to find out who is behind these terrorists attacks. Who funded their operations. Unless and until we find that we can not successfully deal or eliminate with these terrorists whether they are Pakistanis or British as the Indian media is claiming. Whether they have came from Pakistan or where ever. It does not make any difference.

One of the techniques to deal with a situation when the truth is not known or there are too many variables then you use scenario planning technique.

You create possible scenarios of the situation. In this case, let us try to list some scenarios of possible supporters, origin of these attacks or simply who is behind these attacks.

1.   Pakistan’s President Zardari in an interview to Wall Street Journal of October 4, 2008 (for easy reference tenth paragraph from the top) made the following comments about Kashmiris.

He (Zardari) speaks of the militant Islamic groups operating in Kashmir as
“terrorists” — former President Musharraf would more likely have
called them “freedom fighters”.

This Mumbai attack may be sponsored by Kashmiri outfit(s) to teach a lesson to Mr. Zardari.

2.    This whole thing may have been planned by Pakistan to divert the attention of Pakistani people from domestic problems of rising food prices, energy crisis, law and order situation (terrorists in Pakistan can attack where ever they chose), economic problems, failing government with no writ in the NWFP etc.

3.    Pakistani Islamic extremists may have sponsored these attacks to show they have the power and resources to attack out side the boundaries of Pakistan and create problems for Pakistan.

4.    These attacks may have been supported by some Indian political or other entities who are fighting with the Indian government for different reasons.

5.    These attacks may have been supported by any rival political party in India to create problems for ruling Congress Party.

These are just few ideas. This is not to blame or accuse anyone. You can add your ideas to it.

The most important thing is to locate, identify and provide necessary evidence about the “sponsors”. Who provided the logistics and money. The terrorists, their nationality is not important here. It is important to the extent if they have used the territory of Pakistan then Pakistan is part of the problem and not the solution.

Indian Prime Minister is under immense pressure to explain how this attack happened. Why intelligence agencies failed. He has blamed Pakistan with out naming it. However, Indian Foreign Minister has categorically named Pakistan.

Pakistan is in the defensive position and very weak. President Zardari has nothing to show for he has done anything to curb extreme in his own country. So far government of Pakistan could not find and arrests the perpetrators of Marriott Hotel attackers in Islamabad. That is their total ability.

What you expect anything more from Pakistan?

IMF Announces Staff Level Agreement with Pakistan on US$7.6 Billion Loan


Press Release No. 08/285

November 15, 2008

Mr. Dominique Strauss-Kahn, Managing Director of the International
Monetary Fund (IMF), issued the following statement on Pakistan today:

“IMF staff and the Pakistani authorities have reached an agreement
in principle on the key elements of an economic program to be supported by an SDR 5.17 billion (about US$7.6 billion) 23-month Stand-By Arrangement, subject to the approval of the IMF Executive Board.

The Executive Board is expected to meet to discuss the program shortly under the Fund’s Emergency Financing Mechanism procedures.

“The Pakistani authorities have developed a policy package to help
the country meet its serious balance of payments difficulties. The
authorities’ program has two main objectives: (i) to restore the
confidence of domestic and external investors by addressing
macroeconomic imbalances through a tightening of fiscal and monetary policies; and (ii) to protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.
Both objectives are an integral part of Fund support for Pakistan.

“The IMF is prepared to help Pakistan by providing a high level of
financial support on the order of 500 percent of the country’s quota in the Fund. This support is part of a broader package that includes financing from other multilateral institutions and regional development banks. I would like to call on the donor community to work together and act quickly to support Pakistan’s program in order to mitigate the impact of the current economic difficulties on the poor and ensure an adequate level of spending on development programs,” Mr. Strauss-Kahn added.

Reuters has reported today quoting Shaukat Tarin, economic advisor to the Prime Minister that the agreement will be finalized within a week.
Tarin said the interest rate would be between 3.51 and 4.51 percent,
and payments would be due between the fiscal years 2011-2012 and
2015-2016. As part of the deal, the Pakistani government agreed to
reduce excessive borrowing from the central bank and boost its tax
base, but no cuts in defense is demanded by IMF.

Earlier there were rumors that IMF wants Pakistan to decrease the defense spending besides increasing the interest rates and eliminate the subsidies on fuel and power. Government of Pakistan has already complied with increased interest rates from 13 percent to 15 percent and removed the subsidies from fuel and power. That has already created an up roar against the Zardari government in Pakistan. Zaradri came to power to provide roti, kapra and makaan, (food, clothings and shelter). The problem is government is spending very lavishly on non-productive expenses and they are borrowing heavily from the Central Bank. Dr. Shamshad Akhtar stated that in her recent press conference that governemnt has to reduce their expenses. I don’t think Zardari and Gilani will listen to her but they will be forced by IMF.

Pakistan got this loan from IMF because of the blessings of the US government. Amercia had a big say in this deal. Zardari’s position is extremely weak in the country and outside the Pakistan. Nobody trusted Pakistan government becuase they did not have any action plan to show for circumventing the current financial crises in the country. Therefore, as a result Saudi Arabia, China and so-called Friends of Pakistan did not extend any financial help (loan in the form of cash) to Pakistan.

To establish some credibility at the behests of US government, Dominique Strauss-Kahn, Managing Director of the International
Monetary Fund has mentioned in his statement that other donors should also come forward and help Pakistan. This is for encouragement to other donors that IMF will keep an eye on Zardari’s spending of loan money which other wise nobody trust him.

Are things going to get better in the country. Not really. All this IMF thing is done to avoid bankruptcy.

India Signed a Defence Agreement with Qatar


Indian Prime Minister Manmohan Singh is visiting Qatar now a days. He met with Amir of Qatar Shaikh Hamad bin Khanlifa Al Thani in Doha today. They discussed bilateral relations and ways to enhance cooperation among the two countires.

During this visit Indian and Qatari defense ministers signed a defence cooperation deal which an Indian official stated as “just short of stationing troops”. The agreement includes joint training excercises, cooperation on counter terrorism intelligence and maritime security.

Gulf states have realised that India is the new name of power in South East Asia and they started developing relations with India. They already had very close economic and defense relations with India for many many years. As far as Pakistan is concerned it is a dead horse.

The only thing Pakistan is known now in the world is religious hatred, Islamic extremism and terrorism.

Pakistan’s Current Reserve of Foreign Exchange


Pakistan’s foreign exchange reserves are dwindling by the day while Pakistan is struggling to get some cash from outside lenders. So far has not been able to get any cash.
Saudi Arabia has offered some help in the form of deferred payment for oil imports. In the mean time foreign exchange reserves are depleting very fast.

As of November 1, 2008 the total foreign
exchange reserves in the country were US $6.758 billion said State Bank of Pakistan on Thursday. In this amount State Bank holds US $3.529 billion and rest of the amount US$ 3.228 is with the banks other than State Bank.

Foreign exchange reserves has gone down to more than half during the last one year.
Since beginning of the year State Bank has been intervening in the foreign exchange markets by pouring in dollars to protect the extreme volatility and dwindling exchange rate of rupees against US dollar.

This support given to rupee resulted in sharp depletion of
foreign exchange reserves. It did not succeed in stopping the rupee’s slide anyway.

Since January 2008 rupee has lost about 32 percent of its value against US dollar.

Political and economic uncertainty in the country has been another factor which effected rupee very badly. Government still don’t have any action plan to get the country out of economic turmoil other a loan under approval process from IMF.

At present one US dollar is around 80 rupees. It may go further down.