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Archive for June, 1993

Budget and Revenues

Fundamental structural changes in the revenue generating and collection mechanism must be carried out before we can attempt to balance the Federal Budget. If we lack the courage to face upto the worsening realities now, we are going to continue down a slippery debt-ridden slope to ultimate financial apocalypse. At the moment too few are bearing the burden for too many, we have to adopt a philosophy that evens out the sharing of the burden while making the assessment and collection process less prone to corruption.


A Budget with Substance

The knowledgeable are usually convinced by substance, form is for public consumption. The Federal Budget can only be eulogized when considered in the light of circumstances prevailing that caused the GDP to register a lowly 3% growth rate, in the sense that it comes out better than anticipated by the public at large and the intelligentsia in particular. A complete package of direct and indirect taxes was predicted but the relief on being spared draconian measures makes the proposals look comparatively rosy. While the Budget contains much of substance in keeping with the existing economic realities, on few crucial issues it was terribly short on form, that which influences public perception. One cannot defend the indefensible but showing flexibility and dexterity on these issues, the Finance Minister moved quickly to defuse such anomalies before they became politically volatile and contentious much out of proportion to the main thrust of the Budgetary proposals.

The unenviable task before the Finance Minister was to restore the momentum of the government’s liberalisation programme as well as the confidence of free enterprise because these form the main fuel for the IJI’s economic strategy. In order to do this, he had to continue with emphasis on development while reducing tariffs across the board, a veritable Catch-22. By giving further incentives to industry, he signals his commitment to generate employment, he also had to shuffle with alacrity to keep his indirect taxation proposals from adding to the inflationary pressures. The Opposition in the National Assembly was quick to level the accusation that the Finance Minister had fudged the statistics, particularly covering up the deficit, which they claimed was more in the region of Rs 110 billion in comparison to the stated Rs 85 billion. We may be in an imperfect world and if the Honourable Senator has under-estimated the actual deficit, we believe that the Honourable Opposition has rather exaggerated it. In either case, the deficit is too large by half and the Administration would do well to keep it within reasonable limits or we may have to use wheelbarrows to carry the volume of cash required to bring back a loaf of bread a la Germany circa 1928. There are certainly severe inflationary pressures, some due to circumstances beyond the Government’s control but some that could have been avoided by correct prioritization after a deliberate analysis.


Dissolution Again?

Towards the end of the Supreme Court hearings that led to the historic verdict of May 26, the Empire showed its hand regarding future course of action by coordinating a media offensive by the CMs of the Provinces against the PM. The Provinces followed this up by requesting the Honourable Supreme Court that they be allowed to become party to the petition being heard by the Provinces. At the fag end of the arguments, the Supreme Court allowed them to make their brief submissions against giving the Petitioner any relief but were obviously not impressed enough to affect its verdict. Having lost the Courtroom battle, the Empire shifted its battle lines to the Provinces, as events are unfolding, with consequences far more dangerous. If one were to do serious war gaming, the scenario would unfold like this, the dissolution of the PAs (and the on/off restoration process thereof) would be followed by the NA Budget Session. Forced to impose certain direct taxes in the Budget to meet the officially projected Rs 85 billion deficit (more in the region of Rs 110 billion) the Federal Government would face stiff opposition within the Assembly and this would flow into the streets. The Provincial Governments would stand back and let anarchy take hold. If the Federal Government used Rangers they would yell blue murder and civil war conditions would be created. The Army would have to be called in to restore order, the situation would then be ripe where the President would be satisfied that conditions are such that the Federal Government could no longer perform its duties and an Emergency would be declared, the jurisdiction of the judiciary with respect to fundamental rights would be suspended. The NA having passed the Budget, it would have done the same job a Queen does for any Empire, having produced a male heir it would have no further use for the Empire and would be dissolved again. All this may sound far fetched but given the legal and political footwork witnessed in the last two weeks, particularly in the Punjab, this is very much within the realm of a distinct possibility, desperate men never fear any consequences for society at large and nations in particular.

As much as the PM is to be commended for extending an olive branch to the Leader of the Opposition in the National Assembly, he failed in a crucial test of political sagacity, he should have also made moves to pacify the President. Given that Ghulam Ishaq Khan may not have reciprocated to any of his overtures, why work on the assumption that he would not? Whatever may be the political differences of the PM with the President, as long as he is the President he represents the unity of the Federation and he must be given due deference as becomes his position. One may not like him, that is no reason to show disrespect by eliminating the crucial and necessary dialogue between State and Government that is the essence of smooth governance. Political requirements may require that the Constitution be suitably amended to balance the powers equitably, that does not obviate respect for the Office that is the highest in the land according to the Constitution. Politics enjoins the art of compromise, the PM has far less differences with the President than Ms Bhutto has, even given their present cosy relationship. By not opening up communication channels to the old man on the hill, the PM has closed down an option that is very much available to the Leader of the Opposition to exploit to the PM’s detriment. It also gives an opportunity for self-seekers around the President to evolve a hard stance against the PM. These people will not allow this old man to rest in his twilight years. In defeat, Nawaz Sharif showed admirable defiance, in victory he must show extraordinary magnanimity. At the moment the President is in a corner fighting for his political life and he is fighting back in the ways he knows how to, unfortunately the no-holds barred stance on either side is seriously damaging the political and economic fabric of the Federation. Muslim tradition dictates that if an enemy lands up at your doorstep you cannot deny him succour or hospitality, for the sake of this country Nawaz Sharif must swallow his pride and land up at the Presidential doorstep. How can we know whether the old man on the hill really believes that forgiveness is divine unless this precept is really tested. The PM has people like Elahi Baksh Soomro, Sartaj Aziz, Malik Majid, etc with access to the President, to act as initiators and moderators of any dialogue. Why does he not use them?


The Task Ahead

Despite his worst inclinations (not to talk about designs), the President has continued to heap favours on Nawaz Sharif that add to his political mileage. After delivering his speech of April 17, the PM badly needed something like the ham-handed overkill of the April 18 Presidential Dissolution (along with Dismissal of the PM and his Cabinet for good effect) in order to be confirmed in the eyes of the masses as a genuine political leader of national stature. In a space of 24 hours (give or take a little) the President transformed Nawaz Sharif from what his worst detractors held him to be, as a slightly rebellious Establishment front man, to the status of an underdog in full fledged revolt. As the world knows, everyone loves an underdog especially one who has the courage to take on Goliath. April 18 made Nawaz Sharif independent of all the IOUs that had shackled him to the geriatric epitome of bureaucracy personified in the person of Ghulam Ishaq Khan and all that was wrong in this country because of it. If April 18 was not enough, the continued Ishaq-sponsored machinations post the May 26 Supreme Court verdict continued to shower blessings on Nawaz Sharif’s political career, it also rapidly evaporated the euphoria of victory and brought the Nawaz Sharif camp back to Mother Earth and political reality, survival in the quicksand of Pakistani politics was still around the corner. The President’s action set in motion a series of events that can only culminate in further benefits to the PM in the matter of governance of the country as it serves to clear the decks. The Dissolution of the Punjab and NWFP Assemblies could have been written by a Nawaz Sharif loyalist Script-writer, both events will further drive nails into the coffin of future Presidential interference. The best side-effect of all this were the public moves of rapprochement between the PM and Ms Bhutto on the floor of the House, a process that may still fall apart for any number of reasons, but given the groundswell of public goodwill and expectation it generated, will have repercussions for whoever is the recalcitrant party.

With the possibility that the Punjab Assembly will most likely be restored, the Wattoo-ising of Wattoo should take another three days or so. With his power base thus re-solidified, the PM should be able to negotiate with (and not take dictation from) the Opposition. It is always important for any genuine negotiations to be held without fear of coercion on either party, the results arrived at are much more sincere and lasting. Some of the more salient points of difference and possible compromise need to be evaluated in depth before discussions as they would effect the wide spectrum of the masses throughout Pakistan, the public good rather than the vested interest of any one political grouping must prevail.


Damage Control

Rip Van Winkle woke to a new world after sleeping for twenty years, this nation had to wait for 40 years since the Tamizuddin case to wake up from its extended slumber. The immediate feeling is that of euphoria, of complete freedom, the casting away of bureaucratic shackles that have suffocated this country for almost all its life-span. For the foreseeable future the rule of law seems to have been restored but the subsequent dissolution of the Punjab Provincial Assembly has shown that the potential of the Evil Empire for mayhem remains alive though somewhat diminished. For the first time in four decades, the actual rulers of this country, bureaucracy and its “Republican” political allies (mainly from among the landed class) are under pressure from real democracy, not their stunted, guided version of it. The main prop in the persistence of their bluff has been the support of a usually gullible military, in the absence of that support they have been badly exposed as paper tigers at best, at worst as connivers and manipulators. The Nawaz Sharif regime does not have time to gloat over the return of fortune, they have to shift into high gear to rescue the nation from the flat spin that we are now in economically, politically and in the realm of foreign affairs. Mention must be made of the memorable photograph of the Honourable Justices walking out of the Supreme Court Chamber after delivering their historic verdict, the shortest man by far, Chief Justice Mr. Nasim Hassan Shah, seemed to be tallest among a group of men who had good reason to be walking tall. In the individual context, the stoic forbearance of Justice Shafiur Rahman in the face of a profound personal tragedy will remain a shining example in the putting of duty before self.

The humiliated and angry President was persuaded by those he called into the Presidential Palace in the immediate aftermath of the verdict that discretion rather than drastic, desperate means was called for. The short terse release from the Presidential Palace accepting the Supreme Court verdict left unsaid the fact that a trial balloon to gauge the reaction of the men in uniform had been shot down by the Army. In the first instance by a rather vehement (toned down later) disassociation from a seemingly innocent Press release of the Ministry of Defence blatantly intended to influence the Supreme Court and reinforce perception among the masses that the Army was less than neutral in the President’s favour. When this bluff was corrected, the resultant backlash virtually demolished the psychological perception about the President’s source of strength. On the evening of Judgement Day the military hierarchy indicated that it was no longer ready to be a Praetorian Guard, with that the President’s gamble cashing in on his most recent IOUs had failed.