Archive for August, 1991
In the dramatic development in the world geo-political scenario, President Gorbachev of the Soviet Union was briefly removed from power for 60 hours by communist conservatives, being kept under house arrest in his vacation dacha in the Crimea. Initially not much was known about the coup except that Gorbachev’s Vice President Gennaidy Yanayev, a known hardliner, took over as Acting President and as head of an Emergency Eight-Member Committee. Basically a nobody, he was reportedly the front man for the Defence Minister Yazov, the KGB Chief Vladimir Kryuchkov and others of (and outside) the Committee. CNN news flashes LIVE from Moscow showed troops in large numbers in armoured vehicles taking up positions around the city but a lack of direction was apparent very early on. The Republics favoured the return of Gorbachev from the beginning and in Moscow itself, Boris Yeltsin, President of Russia and normally opposed to Gorbachev, holed out in the Russian Parliament as a symbol of defiance, asking for a general strike in Russia as a show of support to restore Gorbachev to the Presidency. The Soviet Union is a vast country and speculation was rife, the possibility of a bloody civil war loomed large over the future of this Superpower. With nuclear missiles in the Soviet armoury spread over the country, a Doomsday scenario was more than likely. The world stock markets showed their lack of confidence in the situation by taking a plunge downwards while investors headed for the safety of the US Dollar which rose steadily against all other world currencies, even the strong German Mark.
Post-1965 war and the stoppage of US military aid, the Pakistan Armed Forces went into a diversification programme out of sheer necessity, the immediate priority being to fill deficiencies in the enhanced security requirement from any available source. In terms of standardisation of equipment it became a logistical nightmare. This crisis deepened after the 1971 war, particularly in the transportation sector. In armoured tracked vehicles, US origin M series (M47s and M48s) had been supplemented by Chinese T-59 tanks. In the post-1971 period, the paucity of funds limited our objectives to rebuilding and/or retrofitting our existing tank fleet. The Heavy Rebuild Factory (HRF) was established in Taxila with Chinese assistance to rebuild the Chinese T-59 tank and the first (and only) squadrons of M-48s were sent to Iran for retrofitting as M48A5s (the equivalent of the US M-60). The beginning of the 80s saw our Armoured Forces relatively vulnerable when compared to the Indian Army in terms of numbers and armour plating while being out-gunned at the same time. The limited money available with the re-opening of US military aid in the 80s was utilised mainly for replacement of our obsolete fighter aircraft, modernisation of our tank forces was held in abeyance. Measures were taken for enhancing our all-round anti-tank capability but in the ultimate analysis the best tank killer is always another tank.
In the face of known Indian armour capability, the 80s lack of initiative in the armoured forces sector was essentially a calculated risk, the bankruptcy of this policy being woefully exposed in 1986-87 during the Indian war games (a la Sunderji) culminating in the security scare perpetuated by Exercise Brass Tacks. The Russian T-72 in the Indian armour inventory meant that our armour was vulnerable to the penetrative power of their tank guns while the effectiveness of our own main tank guns (105 and 100mm) became doubtful against the T-72’s enhanced armour plating.
The Government of Pakistan (GoP) has taken a landmark economic decision in transferring the ownership of Allied Bank Limited (ABL) into the hands of its employees. Management and Labour of ABL had banded together to make the Allied Management Group (AMG), GoP accepting their bid at a debatable Rs 70 a share in contrast to the sale of the much more profitable MCB at a bargain price of Rs 56 a share to a Consortium of private entrepreneurs. Over 700 employees of ABL have thus become shareholders in a unique arrangement which has all the elements of succeeding. This represents one of Nawaz Sharif’s finest economic initiatives. Following the 180 days of economic history, there had been a 60-day hiatus leading observers to conclude that the Government had run out of ideas (and steam). The Nawaz Sharif Regime is firmly back on track in the area of its great strength, economic affairs. Sound economic policies strengthen the political base, the priorities of the present regime are, therefore, correct. Economic reforms take some time before their results become apparent, two-pronged initiative is recommended for longevity of the government.
Pakistan has seen widely fluctuating economic policies within two decades. Before Zulfikar Ali Bhutto embarked on his odyssey of sweeping nationalisation, the economy was bedevilled by strikes and lockouts in industrial enterprises, a backlash reaction to the “robber baron” syndrome in vogue during the heady industrialisation of the Ayubian 60s. Instead of ownership to the workers, enterprises ended up in the hands of an elite handful within the bureaucracy. With a built-in penchant for corruption, nepotism and favouritism, inefficiency and basic indolence turned once profitable industries into a loss-making albatross around the neck of Pakistan’s economy. While one must commend some private entrepreneurs for their vision and competence, most had come into clover by bribing politicians and bureaucrats for permits and licences for establishing industries, large loans and credits obtained by them siphoned off systematically as kickbacks for machinery and equipment. This situation was not similar in the Services industry, yet the monopoly of the few gave the owners of the financial institutions overwhelming power to channel funds at their discretion to their relations, friends and associates to the exclusion of merit-based aspirants. With the inception of United Bank Limited (UBL) by Agha Hassan Abedi at the behest of the Saigol Group (who felt they were being discriminated against by the family owned-Habib Bank and Muslim Commercial Banks), the situation started to get better. Before the resultant competition could force the privately owned banks to be more responsive to the needs of the general public, nationalisation took the whole process into a different direction.
The Nawaz Sharif Government is committed to privatisation, on that issue there is no doubt or ambiguity. Confusion is manifest, however, on the pace and course of privatisation, evoking severe doubts as to the primary intent of the exercise. A perception has been built of insincerity and favouritism guiding an unholy rush in the doling out of largesse, damaging the whole concept and putting the entire process of privatisation into disrepute.
Privatisation is the need of the hour, the pell mell methods for achieving it must be terminated forthwith. Before attempting denationalisation and disinvestment, the Government of Pakistan (GoP) very rightly went in for a step by step approach in first going in for deregulation so that a conducive economic environment could be created that could absorb the many changes. We had a golden 180 days of economic history, with the NFC award and the Water Accord thrown in as a bonus. However, we had already faltered with the sale of MCB, the first bank to be denationalised. The nationalisation of banks was Zulfikar Ali Bhutto’s most grievous mistake in the sweeping nationalisation of the early 70s, denationalisation two decades later in a different socio-economic scenario only compounds it as a bigger blunder.