9:00PM BST 21 Jul 2012
Showing posts with label PPP. Show all posts
Showing posts with label PPP. Show all posts
Sunday, 11 February 2024
Tuesday, 19 December 2023
The world’s richest countries in 2023
From The Economist
Comparing the wealth of nations is harder than you might think. Countries with lots of people tend to have bigger economies, but that does not mean that individual incomes are high. Dollar income per person is the most common metric for sorting countries into rich and poor, but it does not account for international differences in prices. Nor does it account for how many hours people have to work to earn their wage. To provide a fuller picture, The Economist has created a global rich list using the latest available data on three measures: dollar income per person, adjusted income for local prices (known as purchasing-power parity, or ppp), and income per hour worked. See where each country ranks below.
The findings show how fickle economics can be. Take America. Its gdp is by far the largest at market exchange rates. But its income per person is only the seventh highest in the world, and eighth when adjusting for local prices. When accounting for the long workdays and limited holiday, it drops to 11th. China—the world’s second-largest economy in nominal terms—comes 65th by gdp per person and 96th by hours worked. Other countries with gruesome work cultures also see big shifts: South Korea ranks 31st on our first measure and 30th on our second, but 47th on our third.
In much of western Europe the trend goes in the opposite direction: places such as Belgium, Germany and Sweden fly up the rankings when their lower prices or enviable work-life balance are taken into account. Wages in Luxembourg go the furthest in local prices. And Norway has the world’s highest average income per hour worked. (See the top 20 countries in the chart above.)
These calculations will be imprecise. ppp conversions, for example, struggle to capture differences in the quality of goods and services. Methods for calculating hours worked may differ; it is especially hard to estimate them for poor countries with large informal sectors (read our full methodology here). And the data from some countries cannot be trusted. Some countries (notably China) have very high savings rates, so even their ppp-adjusted gdp per hour will not reflect their living standards. The ranking also captures people’s average incomes (what they earn), not their assets (what they already have). But the comparison offers a more complete assessment of the world’s richest countries than a focus on any single measure—it shows where your money goes furthest, and where long hours may not always pay off.
Tuesday, 25 July 2023
A Level Economics: Practice Questions on Economic Development
MCQs
Economic development refers to the sustained, long-term process of improving various aspects of an economy to enhance the standard of living, welfare, and overall well-being of the people within a country. What is one of the key factors involved in economic development?
- a) Increasing poverty and inequality b) Reducing the production of goods and services c) Improving access to education and healthcare d) Decreasing GDP growth
Solution: c) Improving access to education and healthcare
- Which of the following best describes national income? a) The total income earned by a country's residents from their economic activities abroad. b) The total income earned by all individuals and businesses within a country during a specific period. c) The income earned by foreign residents working within a country. d) The income earned by the government from taxes.
Solution: b) The total income earned by all individuals and businesses within a country during a specific period.
- Economic development goes beyond mere economic growth (increases in national income) and encompasses broader social and human development goals. Which of the following is NOT one of the interconnected factors involved in economic development? a) Growth of GDP b) Human Development c) Infrastructure and Technology d) Increasing poverty and inequality
Solution: d) Increasing poverty and inequality
- What is the main difference between Gross Domestic Product (GDP) and Gross National Product (GNP)? a) GDP includes foreign income earned by a country's residents, while GNP does not. b) GNP includes foreign income earned by a country's residents, while GDP does not. c) GDP focuses on economic activities within the country's borders, while GNP includes income earned by foreign residents within the country's borders. d) There is no difference between GDP and GNP; they are synonymous.
Solution: b) GNP includes foreign income earned by a country's residents, while GDP does not.
- Purchasing Power Parity (PPP) is a concept used in economics to compare the relative purchasing power of different countries' currencies. What does PPP take into account when making these comparisons? a) Exchange rates only b) The cost of living and price levels in each country c) Nominal GDP d) The level of government intervention in the economy
Solution: b) The cost of living and price levels in each country
- What does the Human Development Index (HDI) consider to measure development more comprehensively? a) GDP growth rate b) Life expectancy, education, and per capita income c) Access to natural resources d) Total national income
Solution: b) Life expectancy, education, and per capita income
- While changes in national income (measured by GDP) are important indicators of economic performance, they have limitations in capturing the overall level of development in a country. What is one of the limitations of GDP? a) It doesn't consider human development factors like education and healthcare. b) It reflects the overall well-being of the population accurately. c) It includes income earned by the country's residents from their economic activities abroad. d) It accounts for non-market activities like household work or volunteering.
Solution: a) It doesn't consider human development factors like education and healthcare.
- Which of the following is NOT a challenge faced by Less Economically Developed Countries (LEDCs) in their economic development? a) Limited access to technology and capital b) Inadequate infrastructure c) Low population growth d) High levels of public sector debt in comparison to More Economically Developed Countries (MEDCs)
Solution: c) Low population growth
- What approach involves reducing government intervention in the economy and promoting free markets to enhance economic development? a) International aid and debt relief b) Government intervention and industrial policies c) Liberalization and free-market reforms d) None of the above
Solution: c) Liberalization and free-market reforms
- The Human Development Index (HDI) is one of the measures used to assess a country's development. Which of the following factors does the HDI take into account? a) GDP per capita and income distribution b) Life expectancy, education, and per capita income c) Gross Domestic Product (GDP) and Gross National Product (GNP) d) Purchasing Power Parity (PPP) and exchange rates
Solution: b) Life expectancy, education, and per capita income
---
Long Answer Questions
What are the differences between economic growth and economic development, and why is the latter considered a more comprehensive measure of a country's progress?
How does increasing GDP contribute to economic development, and what challenges exist in achieving sustainable growth and social inclusivity?
How can we address GDP's limitations in capturing income distribution, non-market activities, and overall population well-being when evaluating national income as a development indicator?
Does the Human Development Index (HDI) complement GDP as a measure of development; what dimensions does it consider for a more comprehensive evaluation?
What are the implications of using Purchasing Power Parity (PPP) adjustments when comparing economic indicators between countries, and how does it aid in understanding relative purchasing power and living standards across different economies?
Thursday, 27 April 2023
Saturday, 15 April 2023
Thursday, 18 January 2018
Four lessons the Carillion crisis can teach business, government and us
Larry Elliott in The Guardian
Carillion’s collapse was capitalism in action. Profits are the reward for taking risks, and sometimes the risks materialise. Carillion’s problem was not that its profits were too high, but that they were too low when things started to go wrong. In a free-market system, it’s that simple.
Except that it isn’t quite that simple in this case, because much of Carillion’s work was for the government: building roads and hospitals, running prisons, providing school meals. Whitehall didn’t want the company to go bust, so bunged it a few new contracts when it was already in trouble in the hope that something would turn up. Instead, Carillion staggered on for six months as a zombie company before the banks pulled the plug.
What’s more, the directors of the company took steps to shield themselves from financial risk. The Institute of Directors – which strongly believes in free markets and the profit motive – described a 2016 change to pay policy that made it harder to claw back bonuses as “highly inappropriate”, which of course it was. The company’s workforce, its subcontractors and its pensioners have not been so fortunate.
PFI has been an attempt to prove that it is possible to get world-class public services on the cheap. This is a delusion
Jeremy Corbyn says the demise of Carillion is a watershed moment, and he could well be right. The reputation of business is already at a low ebb and the Carillion saga has everything to get the public fired up: mismanagement, dividends for shareholders and boardroom fat-cattery leading to job losses, pension cuts and more expensive public services. Voter resistance to local councils taking previously outsourced services back in house is likely to be minimal.
The time has come to have a hard look at the private finance deals that have been the vehicle of political choice for delivering infrastructure projects – and, increasingly, public services – for the past quarter of a century. Public-private partnerships started as an accounting wheeze in John Major’s government when it needed a way to prevent spending on capital investment boosting high borrowing built up in the early 90s recession.
‘Gordon Brown (left), chancellor under Tony Blair (right), needed to find a way of building new schools and hospitals promised in opposition.’ Photograph: WPA Pool/Getty Images
But the Conservatives became less wedded to them when an improving economy led to an improvement in the public finances as the 90s wore on. It was Labour’s arrival in office in 1997 that gave private finance a new lease of life. Gordon Brown, Tony Blair’s chancellor, pledged to stick to the tough spending targets inherited from the Tories for two years, but still needed to find a way of building the new schools and hospitals promised in opposition. PFI (the private finance initiative ) – under which the private sector would pay for a new project up front and be paid back by the government over the coming decades – was the answer.
PFI, essentially a live-now pay-later approach, was always an expensive way to fund infrastructure, and the private sector did well out of them.
Life became a lot tougher after 2010, when the coalition government decided its first priority was to reduce a budget deficit at 10% of GDP. Spending on infrastructure was cut, and private sector contractors such as Carillion found Whitehall more miserly when negotiating contracts. Local government, which bore the brunt of government spending cuts, came under pressure to outsource services to save money.
Austerity and PFI was an unhappy marriage. To be sure, taxpayers saved money by getting the private sector to provide services more cheaply. But savings came at a price. Prisoners turned up late for court appearances; schools were built to a lower specification; PFI contractors cut corners to save money whenever they could because the bids put in to win contracts were barely enough to cover their costs. This was a race to the bottom, and Carillion won it.
George Osborne, who masterminded the coalition’s austerity strategy, says the problem was a failure to use more small- and medium-sized companies instead of relying on the big beasts. This is absurd: only large outfits could contemplate taking on large PFI contracts. And in many cases, multifaceted companies such as Carillion used profits from one sector to subsidise losses elsewhere in their portfolios.Q&A
How are you being affected by the Carillion liquidation crisis?Show
There are lessons to be learned from Carillion’s collapse, but the idea that SMEs should be building billion-pound hospitals is not one of them. Lesson one is that governments can have austerity or they can have PFI, but not both together. For the past eight years, it has been possible for the state to borrow for long periods at historically low interest rates. This would have been – and still is – a more cost-effective way of financing big infrastructure projects.
London libraries assess impact of Carillion collapse
Lesson two is that the state is not well equipped to manage big infrastructure projects. There are plenty of examples – the abandonment of the NHS IT project at a cost of £12bn, for example – of official incompetence. Whitehall’s handling of Carillion has left a lot to be desired. No matter what Labour says, the private sector will inevitably have a big role in the delivery of major projects. Even under a Corbyn-led government, there would inevitably be a role for it.
Given that, lesson three is the need to rethink company law. Trade unions felt the full force of the law when they were deemed to have acted badly in the late 70s and 80s; a similar approach for corporate wrongdoing is long overdue. It might simply mean enforcing existing laws more strongly, but the step that would send a shiver through boardrooms would be the end of limited liability for directors of limited companies. Limited liability is supposed to encourage entrepreneurship. In Carillion’s case it seems to have created moral hazard.
The final lesson is for the public. PFI has been an attempt to prove that it is possible to get world-class public services on the cheap. This is a delusion. If we want world-class public services, one way or another they will have to be paid for.
Carillion’s collapse was capitalism in action. Profits are the reward for taking risks, and sometimes the risks materialise. Carillion’s problem was not that its profits were too high, but that they were too low when things started to go wrong. In a free-market system, it’s that simple.
Except that it isn’t quite that simple in this case, because much of Carillion’s work was for the government: building roads and hospitals, running prisons, providing school meals. Whitehall didn’t want the company to go bust, so bunged it a few new contracts when it was already in trouble in the hope that something would turn up. Instead, Carillion staggered on for six months as a zombie company before the banks pulled the plug.
What’s more, the directors of the company took steps to shield themselves from financial risk. The Institute of Directors – which strongly believes in free markets and the profit motive – described a 2016 change to pay policy that made it harder to claw back bonuses as “highly inappropriate”, which of course it was. The company’s workforce, its subcontractors and its pensioners have not been so fortunate.
PFI has been an attempt to prove that it is possible to get world-class public services on the cheap. This is a delusion
Jeremy Corbyn says the demise of Carillion is a watershed moment, and he could well be right. The reputation of business is already at a low ebb and the Carillion saga has everything to get the public fired up: mismanagement, dividends for shareholders and boardroom fat-cattery leading to job losses, pension cuts and more expensive public services. Voter resistance to local councils taking previously outsourced services back in house is likely to be minimal.
The time has come to have a hard look at the private finance deals that have been the vehicle of political choice for delivering infrastructure projects – and, increasingly, public services – for the past quarter of a century. Public-private partnerships started as an accounting wheeze in John Major’s government when it needed a way to prevent spending on capital investment boosting high borrowing built up in the early 90s recession.
‘Gordon Brown (left), chancellor under Tony Blair (right), needed to find a way of building new schools and hospitals promised in opposition.’ Photograph: WPA Pool/Getty Images
But the Conservatives became less wedded to them when an improving economy led to an improvement in the public finances as the 90s wore on. It was Labour’s arrival in office in 1997 that gave private finance a new lease of life. Gordon Brown, Tony Blair’s chancellor, pledged to stick to the tough spending targets inherited from the Tories for two years, but still needed to find a way of building the new schools and hospitals promised in opposition. PFI (the private finance initiative ) – under which the private sector would pay for a new project up front and be paid back by the government over the coming decades – was the answer.
PFI, essentially a live-now pay-later approach, was always an expensive way to fund infrastructure, and the private sector did well out of them.
Life became a lot tougher after 2010, when the coalition government decided its first priority was to reduce a budget deficit at 10% of GDP. Spending on infrastructure was cut, and private sector contractors such as Carillion found Whitehall more miserly when negotiating contracts. Local government, which bore the brunt of government spending cuts, came under pressure to outsource services to save money.
Austerity and PFI was an unhappy marriage. To be sure, taxpayers saved money by getting the private sector to provide services more cheaply. But savings came at a price. Prisoners turned up late for court appearances; schools were built to a lower specification; PFI contractors cut corners to save money whenever they could because the bids put in to win contracts were barely enough to cover their costs. This was a race to the bottom, and Carillion won it.
George Osborne, who masterminded the coalition’s austerity strategy, says the problem was a failure to use more small- and medium-sized companies instead of relying on the big beasts. This is absurd: only large outfits could contemplate taking on large PFI contracts. And in many cases, multifaceted companies such as Carillion used profits from one sector to subsidise losses elsewhere in their portfolios.Q&A
How are you being affected by the Carillion liquidation crisis?Show
There are lessons to be learned from Carillion’s collapse, but the idea that SMEs should be building billion-pound hospitals is not one of them. Lesson one is that governments can have austerity or they can have PFI, but not both together. For the past eight years, it has been possible for the state to borrow for long periods at historically low interest rates. This would have been – and still is – a more cost-effective way of financing big infrastructure projects.
London libraries assess impact of Carillion collapse
Lesson two is that the state is not well equipped to manage big infrastructure projects. There are plenty of examples – the abandonment of the NHS IT project at a cost of £12bn, for example – of official incompetence. Whitehall’s handling of Carillion has left a lot to be desired. No matter what Labour says, the private sector will inevitably have a big role in the delivery of major projects. Even under a Corbyn-led government, there would inevitably be a role for it.
Given that, lesson three is the need to rethink company law. Trade unions felt the full force of the law when they were deemed to have acted badly in the late 70s and 80s; a similar approach for corporate wrongdoing is long overdue. It might simply mean enforcing existing laws more strongly, but the step that would send a shiver through boardrooms would be the end of limited liability for directors of limited companies. Limited liability is supposed to encourage entrepreneurship. In Carillion’s case it seems to have created moral hazard.
The final lesson is for the public. PFI has been an attempt to prove that it is possible to get world-class public services on the cheap. This is a delusion. If we want world-class public services, one way or another they will have to be paid for.
Saturday, 22 April 2017
Pakistan's Panamagate - I told you so!
Irfan Husain in The Dawn
IN a nation of some 200 million, I doubt if a handful could pinpoint Panama’s location. And yet, this tiny Central American state has dominated Pakistan’s political discourse for the last year to the point of tedium.
Finally, after nearly two months of hearings before a Supreme Court bench, the verdict is here. And, as I had predicted to friends a few weeks ago, it is a cop-out that has both sides declaring victory.
For me, the abiding image is of the Sharif brothers, Nawaz and Shahbaz, embracing and beaming at each other. In the PTI camp, we watched Imran Khan and senior party members pass sweetmeats around.
For the SC, the verdict gave the impression of balance and fairness, with something for both sides to cheer about. Imran Khan had a lot of praise for the two dissenting judges who declared the prime minister ineligible to rule because he didn’t meet the criteria of honesty and integrity laid down in the Constitution.
The ruling PML-N is gloating over a verdict that, for the time being, has let their leader off the hook. As far as the party is concerned, it has every chance of hanging on to power until the 2018 election. Here, according to opinion polls, it is most likely to win a majority. So who’s the real winner in the verdict?
When the Panama brouhaha began a year ago, I had suggested that the Sharif brothers were masters of kicking the can down the road, and would drag matters out indefinitely. Now, with a joint investigative team (JIT) being set up, expect more of the same.
Even though the SC has required the JIT to submit fortnightly progress reports, the fact remains that members of this committee will all be serving members of the civil and military bureaucracy. To expect them all to perform their tasks independently is a rather big ask.
Then there is the problem of the team having to obtain and verify information in different jurisdictions. Will they be able to force banks and government departments in Dubai and Qatar to hand over documents? And all this in two months? Forgive my scepticism, but having first-hand knowledge of the pace at which our bureaucracy works, I have some doubts.
No wonder that Imran Khan is demanding the PM’s resignation. He knows how difficult it will be to get a group of civil servants to report against a sitting PM. But he’s right in underlining Nawaz Sharif’s loss of moral authority to rule.
Irrespective of the legal rights and wrongs of the case, it is clear that the daily drip-drip-drip of corrosive evidence against Sharif and his family has done much to strip away the aura of decency he had tried to project. And his disqualification by the two dissenting judges on the bench has reinforced the impression of corrupt practices at the heart of the Sharif empire.
With supreme irony, Asif Zardari has also demanded Nawaz Sharif’s resignation, and asked if he would be taken to the local police station for questioning, or would the JIT go the PM House? The reference here was to his own vicious treatment over a decade of incarceration.
Indeed, the PPP has good reason to be aggrieved at what has often appeared to be its targeting by the judiciary, starting with Zulfikar Ali Bhutto’s judicial murder to the sacking of another elected PM, Yousuf Raza Gilani. In many other cases, the judiciary has displayed an apparent animus against the PPP.
And yet, despite demands for his resignation from the opposition, Nawaz Sharif isn’t going anywhere. He didn’t get to where he is by being sensitive to corruption charges. Throughout his political career, he has shown himself to be tough and opportunistic.
Imran Khan has given examples from other countries where leaders tainted by the Panama Papers have either provided full disclosure (David Cameron), or resigned (Iceland’s Sigmundur Gunnlaugsson). However, members of Putin’s and Bashar al-Assad’s inner circle have not even bothered denying the allegations against them contained in the leaks.
As we know, there is no tradition of resignations in Pakistan. Even in Israel, Bibi Netanyahu is mired in corruption charges, but is refusing to step down. But in Israel, the police are far more independent than they are in Pakistan, and have investigated similar charges against presidents and prime ministers before.
Whatever happens next, Panama is a name that will continue to resound on our TV chat shows for some time to come. But will the verdict reduce corruption? I doubt it. But it will force crooked politicians to be more careful about their bookkeeping.
A final factoid: the verdict triggered our stock exchange’s biggest bull run, with the index shooting up by 1,800 points in a single session. Do investors know something we don’t?
----The background of the case to those who don't know by Husain Haqqani
Pakistan’s Supreme Court is an arena for politics, not an avenue for resolution of legal disputes. Unlike other countries where the apex court serves as the court of last appeal, Pakistan’s Supreme Court often entertains direct applications from political actors and generates high-profile media noise. In that tradition its judgment in the so-called Panama Papers case is a classic political balancing act. It raises questions about Prime Minister Nawaz Sharif’s property in London, but does not remove him from office.
Opposition politician Imran Khan, currently a favourite of Pakistan’s establishment, initiated the case after Mr. Sharif’s name appeared in leaked documents about owners of offshore companies worldwide. The documents indicated that the Sharif family had borrowed money against four flats they own in London’s posh Mayfair district.
Show them the money
Having an offshore account is not in itself a violation of Pakistani law, but transferring money from Pakistan illegally is. Hence the case decided on Thursday revolved around the provenance of the money with which the Sharifs became owners of the property in London. In hearings that began in January, the petitioners insisted that the Sharif family’s ownership of this particular property could not have been possible without their possession of undeclared wealth or illegal transfers of money from Pakistan.
Instead of insisting on the time-honoured principle that accusers must prove their allegation beyond a shadow of a doubt and that investigations must precede judicial hearings, the Supreme Court acted politically. It asked the Sharifs to explain the source of money used to buy property abroad, forcing the Sharif family’s lawyers to offer various (sometimes contradictory) explanations at sensational hearings.
One of these explanations comprised a letter from a member of the Qatari royal family who said that he had transferred $8 million to the Sharif family as return on investments made in cash by the Prime Minister’s deceased father, Mian Muhammad Sharif, in the Qatari family’s real estate business in 1980.
The Qatar letter did not settle the matter because the Sharif family members had, at different times, given different explanations for the source of their funds. Moreover, the timelines of the acquisition of the London properties, the formation of the offshore company that was used to buy them and the apparent cash dealings in Qatar did not always align. In any case, a Qatari royal might be willing to send a letter for his friends, the Sharifs, but could not be expected to testify in person in Pakistan and submit himself to cross-examination, something that would be needed if the case ever went to proper trial.
The Supreme Court’s final verdict was split 3-2 among the five-judge bench, with two ruling that Prime Minister Sharif should be disqualified from holding office for failing to explain the source of money for his property. The majority said there was insufficient evidence for such a drastic step and instead announced the formation of a Joint Investigation Team (JIT) comprising five members.
These would include appointees from the Federal Investigation Agency, the National Accountability Bureau, the State Bank of Pakistan, the Securities & Exchange Commission of Pakistan and one representative each from the Inter-Services Intelligence (ISI) and Military Intelligence (MI).
The fallout
The Prime Minister’s side breathed a sigh of relief that the court did not disqualify him from holding office, a decision it has given in the past for the removal of elected civilian Prime Ministers. Imran Khan, who wanted disqualification, declared victory even with the JIT’s creation. He and other opponents of the government are hoping that Nawaz Sharif will now bleed politically from the thousand cuts that are likely to be inflicted on him through reports emanating from the JIT.
Mr. Sharif has won elections before notwithstanding allegations of personal financial wrongdoing, but a new wave of charges could make things difficult for him in Punjab’s urban centres when Pakistan goes to the polls in 2018.
Ironically, the Supreme Court’s nearly 549-page judgment begins not by invoking some eminent jurist, but with a reference to Mario Puzo’s novel The Godfather, citing Balzac’s well-known words, “Behind every great fortune there is a crime.” But then most Pakistanis, including judges and military officers, have known for years that the fortunes of Pakistan’s uber-wealthy families come from bending or breaking laws or using political connections for private advantage. Why go looking into the origins of wealth now?
The creation of the JIT, and including two military intelligence service members who are not trained in matters relating to business and finance, says more about Pakistan’s judicial and political system than it says about the merits of this particular case. The issue in Pakistan is never corruption or failing to explain the source of funds for property. It is where someone fits into the permanent state’s scheme of things.
Nawaz Sharif was fine when he was picked up by General Zia-ul-Haq as leader of a military-backed Punjabi political elite after the coup of 1977. Courts and investigators seldom found anything wrong with the phenomenal expansion of his family’s wealth until he decided to start questioning Pakistan’s military establishment and, in recent years, even assert himself in core policy areas. Politicians can make money as long as they do not seek a role in policymaking. When Benazir Bhutto stood for a different paradigm for Pakistan, she and her husband were subjected to long-drawn legal proceedings over corruption. Asif Ali Zardari might have fewer problems on that score now after he is content to parrot the establishment’s views on national security and foreign policy. Nawaz Sharif is being put through the wringer to become more like Mr. Zardari and less like Bhutto.
As for the Pakistani Supreme Court, it intervenes to swing politics one way or another by favouring the country’s establishment against politicians or vice versa, to justify patently unconstitutional military takeovers and occasionally to embarrass one party against another. Unlike elsewhere in the world, its function is not just to determine the constitutionality and legality of judgments already given by lower courts.
As a victim of one such Commission (ironically, created on Mr. Sharif’s petition) in the so-called Memogate Case, I know that the principal damage inflicted by its proceedings is to public image. The Memogate Commission’s findings never led to criminal charges, not even an FIR, against me for any crime as none was actually committed. But its proceedings and comments created sufficient political noise for some Pakistanis to still think I am a fugitive from Pakistani law.
Signal from the deep state?
Generating smoke without fire against persons deemed difficult or uncontrollable by Pakistan’s permanent state establishment, the deep state, is often the greatest accomplishment of inquiries created by the Supreme Court on direct petitions like the one over the Panama Papers.
The JIT might still find nothing definitive for prosecution but Mr. Sharif is on notice. And that is how Pakistan’s system is designed to work.
IN a nation of some 200 million, I doubt if a handful could pinpoint Panama’s location. And yet, this tiny Central American state has dominated Pakistan’s political discourse for the last year to the point of tedium.
Finally, after nearly two months of hearings before a Supreme Court bench, the verdict is here. And, as I had predicted to friends a few weeks ago, it is a cop-out that has both sides declaring victory.
For me, the abiding image is of the Sharif brothers, Nawaz and Shahbaz, embracing and beaming at each other. In the PTI camp, we watched Imran Khan and senior party members pass sweetmeats around.
For the SC, the verdict gave the impression of balance and fairness, with something for both sides to cheer about. Imran Khan had a lot of praise for the two dissenting judges who declared the prime minister ineligible to rule because he didn’t meet the criteria of honesty and integrity laid down in the Constitution.
The ruling PML-N is gloating over a verdict that, for the time being, has let their leader off the hook. As far as the party is concerned, it has every chance of hanging on to power until the 2018 election. Here, according to opinion polls, it is most likely to win a majority. So who’s the real winner in the verdict?
When the Panama brouhaha began a year ago, I had suggested that the Sharif brothers were masters of kicking the can down the road, and would drag matters out indefinitely. Now, with a joint investigative team (JIT) being set up, expect more of the same.
Even though the SC has required the JIT to submit fortnightly progress reports, the fact remains that members of this committee will all be serving members of the civil and military bureaucracy. To expect them all to perform their tasks independently is a rather big ask.
Then there is the problem of the team having to obtain and verify information in different jurisdictions. Will they be able to force banks and government departments in Dubai and Qatar to hand over documents? And all this in two months? Forgive my scepticism, but having first-hand knowledge of the pace at which our bureaucracy works, I have some doubts.
No wonder that Imran Khan is demanding the PM’s resignation. He knows how difficult it will be to get a group of civil servants to report against a sitting PM. But he’s right in underlining Nawaz Sharif’s loss of moral authority to rule.
Irrespective of the legal rights and wrongs of the case, it is clear that the daily drip-drip-drip of corrosive evidence against Sharif and his family has done much to strip away the aura of decency he had tried to project. And his disqualification by the two dissenting judges on the bench has reinforced the impression of corrupt practices at the heart of the Sharif empire.
With supreme irony, Asif Zardari has also demanded Nawaz Sharif’s resignation, and asked if he would be taken to the local police station for questioning, or would the JIT go the PM House? The reference here was to his own vicious treatment over a decade of incarceration.
Indeed, the PPP has good reason to be aggrieved at what has often appeared to be its targeting by the judiciary, starting with Zulfikar Ali Bhutto’s judicial murder to the sacking of another elected PM, Yousuf Raza Gilani. In many other cases, the judiciary has displayed an apparent animus against the PPP.
And yet, despite demands for his resignation from the opposition, Nawaz Sharif isn’t going anywhere. He didn’t get to where he is by being sensitive to corruption charges. Throughout his political career, he has shown himself to be tough and opportunistic.
Imran Khan has given examples from other countries where leaders tainted by the Panama Papers have either provided full disclosure (David Cameron), or resigned (Iceland’s Sigmundur Gunnlaugsson). However, members of Putin’s and Bashar al-Assad’s inner circle have not even bothered denying the allegations against them contained in the leaks.
As we know, there is no tradition of resignations in Pakistan. Even in Israel, Bibi Netanyahu is mired in corruption charges, but is refusing to step down. But in Israel, the police are far more independent than they are in Pakistan, and have investigated similar charges against presidents and prime ministers before.
Whatever happens next, Panama is a name that will continue to resound on our TV chat shows for some time to come. But will the verdict reduce corruption? I doubt it. But it will force crooked politicians to be more careful about their bookkeeping.
A final factoid: the verdict triggered our stock exchange’s biggest bull run, with the index shooting up by 1,800 points in a single session. Do investors know something we don’t?
----The background of the case to those who don't know by Husain Haqqani
Pakistan’s Supreme Court is an arena for politics, not an avenue for resolution of legal disputes. Unlike other countries where the apex court serves as the court of last appeal, Pakistan’s Supreme Court often entertains direct applications from political actors and generates high-profile media noise. In that tradition its judgment in the so-called Panama Papers case is a classic political balancing act. It raises questions about Prime Minister Nawaz Sharif’s property in London, but does not remove him from office.
Opposition politician Imran Khan, currently a favourite of Pakistan’s establishment, initiated the case after Mr. Sharif’s name appeared in leaked documents about owners of offshore companies worldwide. The documents indicated that the Sharif family had borrowed money against four flats they own in London’s posh Mayfair district.
Show them the money
Having an offshore account is not in itself a violation of Pakistani law, but transferring money from Pakistan illegally is. Hence the case decided on Thursday revolved around the provenance of the money with which the Sharifs became owners of the property in London. In hearings that began in January, the petitioners insisted that the Sharif family’s ownership of this particular property could not have been possible without their possession of undeclared wealth or illegal transfers of money from Pakistan.
Instead of insisting on the time-honoured principle that accusers must prove their allegation beyond a shadow of a doubt and that investigations must precede judicial hearings, the Supreme Court acted politically. It asked the Sharifs to explain the source of money used to buy property abroad, forcing the Sharif family’s lawyers to offer various (sometimes contradictory) explanations at sensational hearings.
One of these explanations comprised a letter from a member of the Qatari royal family who said that he had transferred $8 million to the Sharif family as return on investments made in cash by the Prime Minister’s deceased father, Mian Muhammad Sharif, in the Qatari family’s real estate business in 1980.
The Qatar letter did not settle the matter because the Sharif family members had, at different times, given different explanations for the source of their funds. Moreover, the timelines of the acquisition of the London properties, the formation of the offshore company that was used to buy them and the apparent cash dealings in Qatar did not always align. In any case, a Qatari royal might be willing to send a letter for his friends, the Sharifs, but could not be expected to testify in person in Pakistan and submit himself to cross-examination, something that would be needed if the case ever went to proper trial.
The Supreme Court’s final verdict was split 3-2 among the five-judge bench, with two ruling that Prime Minister Sharif should be disqualified from holding office for failing to explain the source of money for his property. The majority said there was insufficient evidence for such a drastic step and instead announced the formation of a Joint Investigation Team (JIT) comprising five members.
These would include appointees from the Federal Investigation Agency, the National Accountability Bureau, the State Bank of Pakistan, the Securities & Exchange Commission of Pakistan and one representative each from the Inter-Services Intelligence (ISI) and Military Intelligence (MI).
The fallout
The Prime Minister’s side breathed a sigh of relief that the court did not disqualify him from holding office, a decision it has given in the past for the removal of elected civilian Prime Ministers. Imran Khan, who wanted disqualification, declared victory even with the JIT’s creation. He and other opponents of the government are hoping that Nawaz Sharif will now bleed politically from the thousand cuts that are likely to be inflicted on him through reports emanating from the JIT.
Mr. Sharif has won elections before notwithstanding allegations of personal financial wrongdoing, but a new wave of charges could make things difficult for him in Punjab’s urban centres when Pakistan goes to the polls in 2018.
Ironically, the Supreme Court’s nearly 549-page judgment begins not by invoking some eminent jurist, but with a reference to Mario Puzo’s novel The Godfather, citing Balzac’s well-known words, “Behind every great fortune there is a crime.” But then most Pakistanis, including judges and military officers, have known for years that the fortunes of Pakistan’s uber-wealthy families come from bending or breaking laws or using political connections for private advantage. Why go looking into the origins of wealth now?
The creation of the JIT, and including two military intelligence service members who are not trained in matters relating to business and finance, says more about Pakistan’s judicial and political system than it says about the merits of this particular case. The issue in Pakistan is never corruption or failing to explain the source of funds for property. It is where someone fits into the permanent state’s scheme of things.
Nawaz Sharif was fine when he was picked up by General Zia-ul-Haq as leader of a military-backed Punjabi political elite after the coup of 1977. Courts and investigators seldom found anything wrong with the phenomenal expansion of his family’s wealth until he decided to start questioning Pakistan’s military establishment and, in recent years, even assert himself in core policy areas. Politicians can make money as long as they do not seek a role in policymaking. When Benazir Bhutto stood for a different paradigm for Pakistan, she and her husband were subjected to long-drawn legal proceedings over corruption. Asif Ali Zardari might have fewer problems on that score now after he is content to parrot the establishment’s views on national security and foreign policy. Nawaz Sharif is being put through the wringer to become more like Mr. Zardari and less like Bhutto.
As for the Pakistani Supreme Court, it intervenes to swing politics one way or another by favouring the country’s establishment against politicians or vice versa, to justify patently unconstitutional military takeovers and occasionally to embarrass one party against another. Unlike elsewhere in the world, its function is not just to determine the constitutionality and legality of judgments already given by lower courts.
As a victim of one such Commission (ironically, created on Mr. Sharif’s petition) in the so-called Memogate Case, I know that the principal damage inflicted by its proceedings is to public image. The Memogate Commission’s findings never led to criminal charges, not even an FIR, against me for any crime as none was actually committed. But its proceedings and comments created sufficient political noise for some Pakistanis to still think I am a fugitive from Pakistani law.
Signal from the deep state?
Generating smoke without fire against persons deemed difficult or uncontrollable by Pakistan’s permanent state establishment, the deep state, is often the greatest accomplishment of inquiries created by the Supreme Court on direct petitions like the one over the Panama Papers.
The JIT might still find nothing definitive for prosecution but Mr. Sharif is on notice. And that is how Pakistan’s system is designed to work.
Monday, 22 December 2014
Saturday, 14 June 2014
Pricing Public Transport - India
Editorial in The Hindu
The launch of the metro railway service in Mumbai, which has enhanced public transport options in the teeming city, would have normally called for unqualified appreciation. However, the row over fares between the State government and Reliance Infrastructure, the latter holding the majority share in this public-private partnership project, has dampened the enthusiasm and in fact raised serious concerns. The outcome of this dispute, which the courts will determine, could affect the future functioning of the project and have a significant bearing on other metro rail schemes that seek private funding and participation. The 11.4-km elevated Mumbai Metro line has improved connectivity and reduced travel time for thousands of passengers. Just before the service was launched, Reliance Infrastructure steeply revised the fares and increased the range of fares, originally fixed at Rs.9 to Rs.13, to Rs.10 to Rs.40. The government has opposed this since it is higher than the pre-agreed fare and decided without any consultation. Reliance Infrastructure has defended the action, stating that under the Metro Railways Act it has the authority to fix fares. The increase in the project cost from Rs.2,356 crore to Rs.4,321 crore and higher operational costs had warranted the change, it asserted.
The launch of the metro railway service in Mumbai, which has enhanced public transport options in the teeming city, would have normally called for unqualified appreciation. However, the row over fares between the State government and Reliance Infrastructure, the latter holding the majority share in this public-private partnership project, has dampened the enthusiasm and in fact raised serious concerns. The outcome of this dispute, which the courts will determine, could affect the future functioning of the project and have a significant bearing on other metro rail schemes that seek private funding and participation. The 11.4-km elevated Mumbai Metro line has improved connectivity and reduced travel time for thousands of passengers. Just before the service was launched, Reliance Infrastructure steeply revised the fares and increased the range of fares, originally fixed at Rs.9 to Rs.13, to Rs.10 to Rs.40. The government has opposed this since it is higher than the pre-agreed fare and decided without any consultation. Reliance Infrastructure has defended the action, stating that under the Metro Railways Act it has the authority to fix fares. The increase in the project cost from Rs.2,356 crore to Rs.4,321 crore and higher operational costs had warranted the change, it asserted.
Almost every metro rail project in the country has overshot the projected cost. Companies often tend to underestimate the cost and inflate user-figures to convince funding agencies that travel by metro rail would be relatively inexpensive. Later, they complain of cost overruns and demand higher allocations. Ticket prices are then raised and the travelling public bears the burden of such poor planning. Fares should be affordable, particularly to the large number of lower-income group users, and should factor in the less visible benefits that accrue from the service. Increasing the use of public transport relieves road congestion, reduces pollution and cuts fuel consumption. Realising this, cities such as Tallinn, the capital of Estonia, have made public travel free for its citizens. Even if Mumbai and other Indian cities do not want to take such a radical route, and decide periodically to review fares, the process should be transparent and fair — more so when the private sector operates public transport. Striving to balance subsidy and revenue is understandable, but high prices should not affect transport choices. Alternative financing options must be explored. Many countries have mobilised funds by imposing additional charges for using private cars, which pollute more and occupy road space disproportionately. The urban future lies in promoting good public transport, and its success depends on fair pricing and quality service.
Sunday, 22 July 2012
You can’t blame capitalism for this 'shambles’
Real free markets require genuine competition if they are to offer the constantly improving quality of service that is the redeeming virtue of private enterprise
What a feast the past week has been for the last adherents of the old socialist religion. There was yet another banking scandal and this one actually involved (wow!) laundering of drug money, and possible terrorist connections. And then there was a whopperoo of a public relations catastrophe, when a private firm’s commitment to providing security for the Olympics fell apart. So here we go again. From the planet where state power and government provision is an eternal fount of benevolence, come the voices of reproach. They always knew it would end like this: the forces of rabid capitalism have been allowed to pillage and destroy the moral fabric of the nation with their rapacious lust for profit, laying waste to the great public service ethos which once ruled our communal life.
Thank heaven for Mark Serwotka. Just as this outpouring of egregious moral hokum was reaching its ululating zenith, along came the Public and Commercial Services Union to remind us what the “public service ethos” is all about. Mr Serwotka’s comrades, who hold the security of the entire country in their grip, were to pull the plug at Britain’s ports of entry on the day before the Olympic Games opened. Ah, yes. There is the spirit of the untrammelled, invincible public sector at its purest: self-serving, politically ruthless, and indifferent to any needs or concerns outside its own vested interest. This was the mindset that once prevailed in the government-owned public services, with their hugely powerful national unions, which dominated our day-to-day existence within living memory.
Those of us old enough to recall what it was actually like to be persecuted by the North Thames Gas Board, to be put on a six-month waiting list for a telephone by the General Post Office, and to be at the mercy of dustmen who went on strike whenever their feelings were hurt, are not likely to be taken in by meretricious rhetoric about the glories of state ownership. It was the blinding rage against all of that – and the determination that it should never return – that kept the Conservatives in power for 18 years.
But I worry about the youngsters. Could a whole new generation of useful idiots be recruited to the cause of collectivism and state ownership, bamboozled by deliberately muddled assertions which do not stand up to examination? Will they be inclined, for example, to accept the hysterical claims that HSBC’s alleged money-laundering activity is a revelation about the nature of capitalism itself: that it encapsulates the essential immorality of the free market? Perhaps it would be pertinent for someone (David Cameron?) to point out that laundering drug money is not capitalism. It is not even “rampant capitalism”: it is a crime.
Freedom – as in “free market” – is not the same as lawlessness. If bankers are criminals, they should go to prison. It is the careless enforcement of the law – or a lack of the transparency which makes such enforcement possible – which should be in the dock here, not free-market economics. To consign capitalism to the devil because criminal activity went on within it is absurd. We may as well ban the ownership of goods because it creates the possibility of theft. Criminality is a danger under any system, because it is a function of human frailty. The point is to pursue and eradicate a particular crime, not to smash the freedoms under which it was conceivable. What is needed now is diligence and discipline in the running of markets – which brings us to that other great embarrassment for the private sector.
The word that has been uttered more than any other throughout the week (with much self-important pomposity in some cases) has been “shambles”. Yes, the failure of G4S to provide the security staff which they were contracted to recruit was indeed a four-star mega-shambles. But so was the Government’s failure to monitor the slipshod way that its contractor was managing such a vital programme. And for that matter, so was George Osborne’s last Budget, and the Coalition’s catastrophic attempt to hammer Lords reform through Parliament, and the BBC’s coverage of the Diamond Jubilee. Yes sir, “shambles” is the word of the moment – and it applies as much to amateurish, incompetent, self-indulgent government or national institutions as it does to hapless private companies that make very public messes.
This is the real British disease: unseriousness, lack of rigour, ill-discipline, failure to attend to detail and inadequate follow-through. Certainly it is true that what is now called “outsourcing” of public services – the disgraced Public Finance Initiative or public-private partnership – has taken a lot of hits. It has sometimes (but not always, as the neo-nationalisers would have you believe) ended up costing more and delivering less than it should. But that is almost wholly the fault of government agencies (both central and local) that are hopeless at commissioning and monitoring contractors. Getting value for money and insisting on efficiency are so alien to the mentality of public bureaucrats that they are far more inclined simply to hand over responsibility to outside firms and wait for them to perform miracles. Labour did this with the clear intention of fudging Whitehall spending limits so that it could pour even more money into its benefit entitlement programmes. The Tories do it in better faith but with less excuse for sloppy management: they are the people whose backgrounds ought to have taught them that private contractors need to be chased, harried and held to the mark.
But then the Tory record on privatisation has not been covered in glory. It will not do, for example, to dismantle a state monopoly in telecommunications only to hand it to a private monopoly. BT may not make you wait six months for a telephone, but they will rip you off with the joyous alacrity of a company that knows it has no effective competitors. Nor should the old gas and electricity boards have been stripped of their power only for energy supply to be run by a cartel of price-fixing giants. Real free markets require genuine competition if they are to offer the constantly improving quality of service that is the redeeming virtue of private enterprise. Otherwise private provision will seem like a profit-obsessed conspiracy against the public – hardly an improvement on the old nationalised industries, which had become comical in their failure to serve the consumer by the time the country threw them out. There is no time left for inept, half-hearted, inadequate administration. The argument against state power could be lost – and then another generation will have to learn the lesson all over again.
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