Pakistan Economy - News & Updates - Archive

[dr.umer]

Security fears as Pakistan veers towards bankruptcy​

October 8, 2008

PAKISTAN'S foreign exchange reserves are so low it can only afford one month of imports and faces bankruptcy.

Officially, the central bank holds $US8.1 billion ($10.9 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $US3 billion - enough to buy about 30 days' of imports such as oil and food.

Nine months ago, the nation had $16 billion in the coffers.

The Government is engulfed by crises left by Pervez Musharraf, the military ruler who quit the presidency in August. High oil prices have combined with corruption and mismanagement to damage the economy.

Given the country's standing as a front-line state in the US-led war on terrorism, the economic crisis has profound consequences. Pakistan faces worsening security as the army clashes with militants on Afghan border. The economic crisis has placed the future of the civilian Government in doubt.

The President, Asif Ali Zardari, has faced numerous but unproven allegations of corruption dating from the two governments led by Benazir Bhutto, his wife, who was assassinated last December. The Wall Street Journal said Pakistan's economic woes were "at least in part, a crisis of confidence in him".

While Shaukat Aziz, Mr Musharraf's prime minister, often likened Pakistan to a "tiger economy", the former government left it on the brink of ruin.

The Pakistan rupee has lost more than 21 per cent of its value this year and inflation is running at 25 per cent. The rise in world prices has driven up Pakistan's food and oil bill by a third in a year. Efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have yet to yield results, while the Government has failed to raise loans on favourable terms from "friendly countries".

Mr Zardari told The Wall Street Journal Pakistan needed a bail-out worth $US100 billion.

"If I can't pay my own oil bill, how am I going to increase my police?" he asked. "The oil companies are asking me to pay $US135 [a barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful."

Ratings agency Standard and Poor's, has given Pakistan's sovereign debt a grade of "CCC +", a few notches above default. It said Pakistan may be unable to cover $US3 billion in debt payments.

Mr Zardari is expected to ask for a international rescue package at a meeting in Abu Dhabi next month.

Telegraph, London

 

[Neo]

'Outlook negative': S&P lowers foreign currency rating​

HONG KONG (October 07 2008): Standard & Poor's Ratings Services said on Monday its lowered its long-term foreign currency sovereign credit rating on the Islamic Republic of Pakistan to 'CCC+' from 'B' and its long-term local currency rating to 'B-' from 'BB-'. At the same time, we lowered our short-term rating on the sovereign to 'C' from 'B'. The outlook on the long-term rating is negative.

The rating on Pakistan's senior unsecured local currency debt has also been lowered to 'B-' from 'BB-', while the foreign currency debt rating has been lowered to 'CCC+' from 'B'. The downgrade comes in the wake of continued steep erosion of Pakistan's external liquidity position, the extent and pace of which casts rising doubts about the sovereign's ability to meet approximately US $3 billion of external debt servicing commitments in the coming year.

"Pakistan's balance of payments is under significant and rising pressure, whereby existing structural trade imbalances are magnified by exogenous price shocks," said Standard & Poor's credit analyst Agost Benard. "At the same time, capital inflows, which had in the past covered much of the current account gap, are increasingly deterred by the prolonged political uncertainty and adverse security climate."

Net foreign reserves of the central bank have fallen 67 percent to just US $4.7 billion since October 2007, as the country recorded an overall balance of payments deficit of US $5.7 billion for fiscal year 2008 ended June. For the first two months of fiscal 2009, the overall balance of payment deficit expanded more than sixfold year on year to nearly US $2.5 billion, with the current account shortfall reaching 1.6 percent of GDP against a full-year target of 6.0 percent.

Standard & Poor's believes that stabilising Pakistan's external position, and thus avoiding near-term debt service stresses, will require substantial and timely multilateral and bilateral assistance, concurrent with fiscal and monetary policy measures aimed at paring aggregate demand to cut import growth.

The negative outlook reflects our expectation that multilateral and bilateral aid, including deferred oil payment schemes, may not be timely enough, or sufficient in magnitude to stem the loss of external liquidity. It also incorporates the view that the necessary policy measures, some of which are likely to be prerequisites for multilateral assistance, will face obstacles and delays in implementation, given the fractious and unstable domestic political scene, and rising social tension.

The rating on Pakistan could be lowered further if the foreign exchange reserve cushion continues to shrink and meaningful economic stabilisation measures remain wanting. Conversely, the rating could stabilise and eventually be raised if external assistance and domestic policy programs successfully stabilise Pakistan's balance of payments position and foreign reserves.

 

[Neo]

Foreign investors: 25.5 percent drop in repatriation of profit​

KARACHI (October 07 2008): The repatriation of profit by foreign investors after a consistent rise for the last few years, has registered a significant decline of 25.5 percent in the first two months of the current fiscal year due to the poor economic conditions.

The repatriation of profit and dividend witnessed continuous rise for the last few years and in the last fiscal year of 2008 it registered a growth of some 15 per cent to $921.4 million, as compared to $804.2 million in the corresponding year. The Shukat Aziz-led government had allowed 100 percent transfer of profit and dividend to the foreign investors with the aim to boost foreign investment in the country.

Although foreign investors are still enjoying government's investment friendly policies fully and consistently sending their earnings to the abroad.

However, the State Bank of Pakistan statistics on Monday revealed that the repatriation of profit by the foreign investors has registered a significant decline of 25.5 percent during the first two months of the current fiscal year 2009, mainly due to the negative economic indicators.

With the current decline, the overall repatriation remained $98.6 million during July-August of the current fiscal year, as against the $132.3 million in the same period of the last fiscal year, depicting a decline of $33.7 million.

Profit's repatriation from almost all major sectors comprising communication, financial business, food, tobacco, chemicals, pharmaceutical, transport equipment, construction and social services has depicted a downward trend.

However, the power sector still present a healthy growth in repatriation, as foreign investors have invested million of dollar in power sector during last few year due to increasing demand. Investors have taken back some $37.4 million profit from power sector up from 12 million dollar during July-August, depicting a surge of 213 percent during the first two months of current fiscal year.

While the oil and gas sector seconds with the repatriation of some $12.3 million profit during July-August as against $7.7 million dollar during the same period of last fiscal year. SBP latest statistics show that foreign investors have sent $2.9 million from food sector, $8.7 million from beverages, $5.3 million from tobacco & cigarettes, $2.4 million from chemical sector, $7.9 million from petroleum refining and some $12 million has been sent from oil and gas exploration sector during the first two months.

Besides, some $2.4 million have been sent from fertiliser sector, $0.1 million from transport, $1.8 million form storage facilities, $3.6 million from communication sector, $8.8 million from financial sector and some $3.9 million from other sectors has been repatriated during July-August.

 

[muse]

Fundamental economic changes must come now
Gulfnews: Fundamental economic changes must come now

10/07/2008 11:26 PM | By Farhan Bokhari, Special to Gulf News



Pakistan's economic crisis has deepened this week after the rupee declined to an all-time low against the US dollar while Standard & Poor's, the global rating agency, downgraded the country's rating on its sovereign debt to CCC-plus, just a few notches above default level.

These new pressures on the Pakistani economy underline mounting concerns over the deterioration in Pakistan's balance of payments situation in the midst of the global financial turmoil.

Added to these trends on Monday came rising pressure driven by a liquidity crunch as Pakistan's illiquid money markets saw volatile call money rates surge to a whopping 40 per cent before settling back to below 30 per cent.

In the meantime, an alarming increase in the government's borrowing from the central bank during the first eleven weeks of the financial year, which began in July, has further complicated what is a fast worsening picture.

All together, Pakistan's economic outlook is fast heading for a bad downswing. For many Pakistanis, the significant question is: Can Pakistan's economic fortunes recover from more than a year of downswing? The answer to that question must take account of some of the events which have taken place during this period.

The political turmoil unleashed in the wake of the situation which emerged when former president Pervez Musharraf dismissed Iftikhar Mohammad Chaudhary, former chief justice of the supreme court of Pakistan, has indeed taken its toll. In this period since March 2007, Pakistan has remained a restless country, with mounting protests and demonstrations.

The culmination of such protest movements took place with a landslide defeat for Musharraf's loyalists in parliamentary elections in February of this year. A new government led by the Pakistan People's Party (PPP) has taken charge of the country with promises of giving a new direction to Pakistan.

Luxury of time

But that new direction has not arrived despite Musharraf being forced to resign in August in the face of threatened impeachment. What has come to the fore is a regime which is yet to demonstrate a workable plan to take Pakistan forward, both politically and economically.

The luxury of time is not on Pakistan's side. With global markets in turmoil and the international economy slowing down, it is not possible to imagine Pakistan being able to continue on its present course.

Furthermore, Pakistan's own leaders such as president Asif Ali Zardari are buoyed by unrealistic expectations. The Pakistani president has recently urged the global community to consider giving up to $100 billion (Dh367 billion) in assistance to Pakistan, to help the south Asian country overcome its economic challenges. It is clear that in the midst of the global economic turmoil, this kind of money for a one-country programme is far from feasible.

The immediate focus of the government must essentially be to place its own house in order, dealing with long overdue reforms and hugely pressing issues. Across the country, there is much evidence of a breakdown of government caused by years of neglect of key institutions.

The economic challenges faced by Pakistan today are in no way recent. Their roots lie in the way the country has been governed over time. One such neglect lies in the failure of successive governments to overcome the challenge of dealing with a large black market economy. The fact that less than 1.5 per cent of Pakistan's population compose the country's tax paying community, speaks infinitely louder than words on areas in need of a reform process to begin in the near future.

The writer is a journalist based in Pakistan.

 

[Neo]

Pak suffered over $5billion losses in Oct 8 earthquake ​

Wednesday, October 08, 2008

ISLAMABAD: Prime Minister Syed Yosuf Raza Gilani said on Wednesday that the October 8 earthquake was a national tragedy which affected the economic growth of country.

He was speaking at the National Disaster Management Conference in Islamabad on the occasion of third anniversary of October 8 quake.

Prime Minister Gilani said the country had suffered losses worth $5 billions due to the 8 October earthquake.

The prime minister said that proper planning was required to deal with natural calamities, adding there was also need to enhance the technical capabilities of organizations formed to tackle such disasters. He added that we would have to build a strong warning system of flood and other catastrophes.

Premier Gilani reiterated its government’s resolve for rehabilitation and re-construction of quake-devastated areas. “Women and children are affected directly by such disaster,” he said, adding countries have to face economic and social issues.

He called upon the media to play its part in creating awareness among the people on natural calamities.

 

[Neo]

Pakistan to apprise donors of efforts to improve economy ​

Wednesday, October 08, 2008

ISLAMABAD: A high-powered delegation, headed by upcoming Adviser to Prime Minister on Finance Shaukat Tareen, will leave for Washington on Thursday morning for attending an annual meeting of Bretton Wood Institutions (BWI), the International Monetary Fund and World Bank, from October 10 to 12, The News has learnt.

Pakistan’s struggling economy is experiencing a nosedive on major macroeconomic indicators, especially the foreign currency reserves, which has resulted in a massive fall of the rupee against the dollar, touching Rs79.60. The annual moot of the IMF/WB is going to take place at a time when Standard & Poor’s downgraded Pakistan’s rating by two notches in one go, which was never done before in the country’s history.

Tareen, who is likely to take oath as Adviser to PM on Finance on Wednesday, will lead the delegation consisting of Finance Secretary Dr Waqar Masood, EAD Secretary Farrukh Qayyum, State Bank Governor Dr Shamshad Akhtar and Debt Office DG Dr Ashfaque Hassan Khan.

Although, Prime Minister Syed Yousuf Raza Gilani has not yet approved a summary allowing members of the delegation to leave for Washington but official sources say that the summary would be approved on Wednesday.

“Yes, the summary has not yet been approved,” a senior official at the Finance Ministry told The News on Tuesday afternoon but added in the same breath that Shaukat Tareen would take oath on Wednesday and the delegation would depart for Washington by Wednesday night or early Thursday morning.

Sources said the delegation would hold crucial meetings with finance ministers of major donor countries on the sidelines of the annual moot of the IMF and WB during the three-day stay in Washington. The moot will take place at a critical juncture for Pakistan when it is making all-out efforts to keep itself at bay from getting a bailout package from the IMF.

“The danger of default will be hovering over the country’s economy if Islamabad remains unable to inject much-needed dollar inflows into the rapidly depleting national kitty,” said an official source.

Top heads of International Financial Institutions (IFIs) and donor countries would be informed about the future economic roadmap of the country as economic managers have recently prepared a macro-economic framework to bring the derailed economy back on track.

Pakistan will apprise them that it will not let fiscal deficit cross the envisaged target of 4.7 per cent of the GDP during the current fiscal year compared to over 7 per cent last year. In this regard, all major subsidies such as on POL and power sector will be done away with. The government would also cut down on development and non-development spending in order to control growing expenditure side.

The donors will also be informed that the government would launch various schemes to generate financing under which more tools will be introduced in National Savings Schemes (NSS), Government Commercial Papers (GCPs) and Pakistan Investment Bonds (PIBs).

The financing to bridge fiscal deficit would also be arranged through mobilization of domestic and external resources.

The government has also taken stringent steps to reduce the imports in the country which are exerting the pressure on balance of payment. The government had slapped 15 to 25 per cent duty on import of non-essential items and increased Letter of Credit margin by 100 per cent.

 

[Neo]

Pakistan, China may enter deals for more nuclear power plants ​

Zardari’s visit to Beijing may see accords for car manufacturing, hybrid seeds,cement factories and steel mills​

Wednesday, October 08, 2008
By Khalid Mustafa

ISLAMABAD: Pakistan will seek help from China in installing two more nuclear power plants at Chashma, materialising the Diamer-Bhasha Dam project, and joint ventures in manufacturing and assembling cars during the visit of President Asif Ali Zaradri to Beijing that is to start from October 14.

According to a senior government official at Finance Ministry, Pakistan and China may also strike deal in manufacturing and assembling of trucks. “This is basically the proposal of Heavy Mechanical Complex.”

Islamabad and Beijing may also enter into agreements for setting up steel mills and cement plants and for developing the agriculture industry.

China would be invited to invest in pesticide production and hybrid seed industry. During the visit, Pakistan would also seek cooperation in developing the electronics industry and home appliances.

When contacted Deputy Chairman Planning Commission Salman Faruqui confirmed that the cooperation on the said economic sectors would be sought from the top authorities of Beijing.

According to the official, Pakistan has only 29 cement plants having annual production capacity of 39 million tonnes. Pakistan wants more investment in this sector.

“Likewise, we need more steel mills keeping in view the increasing needs in the country particularly for developing the earthquake hit areas,” the official said.

Pakistan will seek financing from China to install more nuclear power plants at Chashma and satellite communication system during the upcoming visit.

“Pakistan is going to install two more nuclear power plants at Chashma which are to be known as C-3 and C-4. These power plants will cost over Rs139 billion including foreign exchange component of Rs99.538 billion,” he said.

The two projects would generate 600 MW of electricity. Each plant will comprise of Nuclear Steam Supply System (NSSS), a turbine generator set and the associated auxiliary equipment and installations. The NSSS consists of a reactor and coolant loops connected in parallel to the reactor vessel. Each loop comprises a reactor coolant pump and steam generator.

Chashma Nuclear Power Plant (C-1) is already providing 300 MW of electricity and the Chashma-2 with the same capacity to generate nuclear power is under implementation phase. The design of the C-3 and C-4 is essentially the same as that of under construction C-2. The C-2 design is an improved version of C-1.

The C-3 and C-4 will be completed in 8 years and they would provide electricity to NTDC (National Transmission and Dispatch Company) at the rate of Rs6.06 per unit. The annual power generation of the project will be of 4467.6 million kilowatt hours.

According to the official, the country has also planned to establish a Nuclear Power Fuel Complex (NPFC) at the cost of Rs51.298 billion to locally fabricate fuel that will b used for the future nuclear power plants in country. Nuclear Power Fuel Complex is under implementation that consists of five components that include Chemical Processing Plants, Enrichment Plant, Seamless Tube Plant -1; Fuel Fabrication Plant; and Nuclear Fuel Testing Plant.

“To materialize this very important project of NPFC, the country needs nuclear fuel technology from China to fabricate local fuel for the future nuclear power plants.

“With four similar power plants at Chashma site, it will be possible to reduce maintenance and physical security costs,” the official said.

The existing power generation capacity is not sufficient. The power demand projection based on growth rate shows that power demand will increase from 15,183 MW in 2007-08 to about 20,000 MW in 2010 in the WAPDA system and severe shortage of power is expected in next two years.

To meet this demand an additional capacity of about 8000 MW would be needed by 2010. At present, about 65 percent of the total electricity generated is based on fossil fuel plants (gas 36 per cent, oil 29 per cent). The fossil fuels are depleting fast besides their price in international market is very volatile.

Therefore it is imperative to diversify the fuel mix in power generation. Under the Energy Security Action Plan, Pakistan will increase the share of nuclear power from 1 per cent to 5.4 per cent by installing 8,800 MW nuclear power plants by 2030.

 

[Neo]

PPAF disburses Rs15bn for reconstruction ​

Wednesday, October 08, 2008

ISLAMABAD: Pakistan Poverty Alleviation Fund (PPAF) has so far disbursed over Rs15 billion for reconstruction of seismically-safe housing units, health & education facilities and capacity building and infrastructure schemes in 34 union councils of NWFP & AJK which were badly damaged in the October 8, 2005 earthquake.

Till the third anniversary of the tragedy falling on October 8, 2008, the PPAF has disbursed this amount through its six partner organisations for reconstruction of 121,448 seismically-safe housing units out of a total of 122,332 completely/partially damaged, 19 health & education facilities, and capacity building and infrastructure schemes in the Earthquake Reconstruction and Rehabilitation Authority (ERRA)-assigned 34 union councils of AJK & NWFP. The housing reconstruction strategy followed by PPAF remains focused on training a maximum number of craftsmen and house-owners.

 

[Neo]

‘Exports to US can decrease by 30%’​

LAHORE: The exports to United Stated of America (USA) can plunge by 30 percent, says National Bank of Pakistan (NBP) President, Ali Raza.

He was addressing a seminar arranged by the branch managers of the bank. He said that the US economy is a consumer-based economy and the recent mayhem caused by the financial markets will take its toll on the purchasing power of world’s biggest economy. Therefore the export of Pakistan could suffer as a result. Raza said that food crisis is emerging due to use of food products for bio-fuels. He was of the view that there is great potential in agri-sector of Pakistan, which can cash in on the paradigm shift observed in the terms of trade due to the food price hike. “We should enhance the food production by giving special attention to the agriculture sector,” Raza said.

He said that NBP is making all-out efforts to please its customers through better quality and good banking. He emphasised the branch managers of the bank to take extra care of the customers. “Better customer service would bring good name to the bank.”

 

[Neo]

Pakistan’s banking sector is resilient: SBP​

KARACHI: Governor, State Bank of Pakistan, Dr Shamshad Akhtar has said that Pakistan’s banking sector is quite resilient and has been and will be able to withstand market shocks and adverse macro economic conditions.

This capability has been achieved through continuous financial reform process distinctively pursued during the past few years. There should not be any cause for concern about the stability of the banking system in the coming days, she said in a statement issued to the press on Tuesday evening.

She pointed out that the investors maintained their confidence in the banking system and have injected additional capital of around $500 million since 2006 which, coupled with retained earnings, improved the capital base of the banks. Dr Akhtar said that the banking sector’s capital adequacy was well above the minimum requirement. The capital adequacy ratio of the system is 12.1 percent as of June 2008, which is well above the international benchmark. The non-performing loans ratio and the ratio of non-performing loans to capital are also quite low and within acceptable ranges, she said.

“The infection ratio (net) in June 2008 has improved to 1.1 percent from 1.6 percent in Dec-2006, signifying that the banks set aside more reserves out of their earnings to cover the increase in non-performing loans. Accordingly, the NPL coverage and capital impairment ratios have also improved,” the SBP Governor added.

She said that Pakistani banks largely focus on conventional lending and are not exposed to subprime credit instruments in the international market. The lending and investments of the banks are subject to stringent prudential regulations of SBP, which prohibit the banks from clean lending and investment in low quality assets. Further, the banks are required to recognize the loan losses and provide for these losses in line with the established best practices. State Bank of Pakistan through its on-site inspection and off-site supervision wings keeps a close watch on the state of each bank as well as the banking system in entirety for any risk to the stability of the banking system.

In 2007, SBP made loan provisioning requirements more stringent in order to create adequate cushions to withstand any potential credit adversity. Stress testing analysis of the system suggests that the system is capable of withstanding variety of plausible shocks in major risk factors without losing its solvency, Dr Akhtar added.

 

[Neo]

2nd CDWP meeting’s agenda: 58 development projects worth Rs 203bn to be approved​

ISLAMABAD: The second meeting of the Central Development Working Party (CDWP) in the current financial year 2008-09 to be held on Oct 11 is likely to recommend and take up 58 developmental projects worth Rs 203.114 billion with foreign exchange component (FEC) worth Rs 101.537 billion.

Planning Commission Deputy Chairman M Salman Faruqui will preside over the meeting that will take up projects for 12 sectors including water resources, energy, transport and communication, physical planning and housing (PP&H), agriculture and food, Higher Education Commission (HEC), education, environment, forestry and wildlife, governance, information technology sector, industry and commerce.

The CDWP can only approve projects costing up to Rs 500 million and projects costing above this limit would be recommended to the Executive Committee of the National Economic Council (ECNEC) for approval.

The CDWP agenda, obtained by Daily Times here on Monday, shows that the Water Resources sector has five projects worth Rs 8.809 billion with foreign exchange component (FEC) worth Rs 779.50 million.

The energy sector consists of two projects namely, Chashma Nuclear Power Project Units 3 and 4 worth Rs 139.011 billion including Rs 99.538 billion as FEC.

The second important energy project is ‘Media advertising campaign of energy conservation and institutional strengthening/capacity building of ENERCON’ worth Rs 200 million. The transport and communication sector has 19 projects worth Rs 22.031 billion.

The PP&H has seven projects with a total cost of Rs 15.241 billion. Agriculture and food sector consists of three projects worth Rs 10.289 billion. The HEC has four development projects with a total cost of Rs 863.11 million including Rs 205.717 million FEC. The education sector has nine projects worth Rs 3.860 billion.

The agenda further reveled that the environment sector consists of three development projects worth Rs 1.495 billion with Rs 1.2 million FEC. The forestry and wildlife sector has a single project namely, ‘Rehabilitation of denuded forest areas through sowing and planning and development of farm/social forestry with community participation in northern areas’ with a cost of Rs 185 million and Rs 1.200 million FEC.

The governance sector has a single project namely, ‘Construction of 50-rooms hostel at SCA Walton Lahore’ worth Rs 55.700 million. The agenda further showed that the information technology sector has a single project namely, ‘IT training for the elected lady representatives Phase-II’ worth Rs 97.288 million.

The industry and commerce sector consist of three projects worth Rs 974.50 million with Rs 40 million as FEC.

Some of the projects of national importance to be taken up by the CDWP are: Construction of Ghabir Project District Chakwal with a cost of Rs 2.164 billion, detailed engineering design and tender documents of Munda Dam Project (revised PC-II) worth Rs 651.862 million with Rs 224.820 million FEC, Satpara dam project (revised) worth Rs 4.805 billion.

Other projects include: Acquisition of land and resettlement to provide the right of way (Row) to the Hasanabad Havellian-Mansehra Expressway worth Rs 2.997 billion, Extension of the motorway M-4 from Shamkot to Multan (Kot Rab Nawaz (39 km) worth Rs 9.860 billion, Construction of low-income housing scheme at Multan worth Rs 3.539.619 billion and Agriculture sector development loan, project Phase-II worth Rs 10.029 billion.

 

[Neo]

Pakistan, Iran to boost co-operation in various sectors​

ISLAMABAD: Mashallah Shakiri, Iranian Ambassador and Salman Faruqui, Deputy Chairman Planning Commission on Monday agreed that bilateral cooperation in various sectors of the economy like energy, railways, roads and trade would be enhanced. The Iranian ambassador stated that his country was ready to export electricity to Pakistan and they had adequate capacity to carry out such projects. He also apprised that Iran was already working on Sahara hydel power project on the river Chenab and had raised its capacity from initially proposed 65 mega watts to 130 mega watts through IPP. The ambassador said that the present volume of trade between the two countries showed that the bilateral trade potential was untapped.

 

[Neo]

‘Pakistan cannot afford sanctions’​

* Defence secy tells Senate panel success in terror war impossible without US help
* Drones guard border with Pakistan’s consent​

ISLAMABAD: Pakistan’s credit rating is nearing bankruptcy and its economy cannot afford sanctions by the world powers, Defence Secretary Kamran Rasool told the Senate standing committee on Defence in a briefing on Tuesday.

Pakistan’s financial position was very week, he said, and the country could not talk about taking on the US. He said Pakistan could not succeed against terrorists without co-operation and intelligence-sharing with the United States and that if Pakistan pulled out of the alliance, it would have to bow down after international powers imposed sanctions on it and declared it a terrorist state.

He said unmanned drones of NATO and the International Security Assistance Force in Afghanistan used Pakistani airspace with the consent of the Pakistani government. But he added that Pakistan had repeatedly denied permission to coalition forces to attack targets inside Pakistan.

“Border violations of any kind will not be tolerated and we have made this thing crystal-clear to them.”

Rasool contradicted speculations by certain defence analysts that the US had ‘designs’ in the region, saying there was no evidence to support such claims. He also said success was not possible in Pakistan’s fight against terrorists without a consensus. The military alone could not win the war, he said. The defence secretary condemned civilian killings in Afghanistan.

Senator Professor Khurshid Ahmad from the Jamaat-e-Islami said the United States had its own agenda in the region and that the leaders of Pakistan and other Muslim states had failed to identify ‘the real source of threat’.

He said the tribal system had been destroyed but there were no alternatives, and that had created a vacuum in the Tribal Areas.

He suggested the involvement of Russia in the region, saying it had decided to ‘pay back’ the US by supporting insurgents in Afghanistan through money and armaments. “Russia wants to take revenge from the US by supporting anti-US elements in Afghanistan,” he said. He also accused India and said he could not rule out Israel’s interference in Afghanistan to create insurgency. He said things needed to be handled with great sensitivity and sense.

Senator Kamil Ali Agha protested President Asif Ali Zardari’s reported statement that Pakistan had consented to US attacks inside Pakistan. The government has already denied the president said that.

Dr Rifaat Hussain said that the US must keep in mind the ‘spillover effect’ of the war on terror, and insisted that it could not be won without winning the hearts and minds of the local people.

He called the Taliban a ‘divergent force’, which needed to be tackled ‘while keeping in mind all kinds of realities’. He suggested the development of ‘soft power’ in tandem with ‘hard power’ while dealing with terrorism.

He said the fight against terrorism was a test of the maturity and political acumen of the elected leadership. The meeting was presided over by Committee Chairman Nisar A Memon.

An Online report said Memon underscored the need for enhanced intelligence and dialogue with tribal elders.

 

[Neo]

Pakistan wants greater market access to EU: Prime Minister​

ISLAMABAD (October 07 2008): Welcoming the French statements that every country has the right to use nuclear energy for peaceful civilian purposes, Prime Minister Syed Yousuf Raza Gilani has expressed hope that France will help Pakistan to use nuclear technology to meet its energy requirements.

Pakistan attaches high importance to its relations with France which is among its leading trading and development partners in the European Union (EU), the Prime Minister said while talking to Admiral Edouard Guillaud, Military Joint Chiefs of Staff to President of France, who called on him at the Prime Minister House on Monday.

He stressed the need of resumption of the strategic consultations between the two countries to take this relationship at new heights. The bilateral defence co-operation between Pakistan and France has progressed satisfactorily and Pakistan now has the largest world-wide fleet of Mirage III and V aircraft, he maintained.

He appreciated the French assistance for assembling the AGOSTA submarine to Pakistan and expressed hope that this co-operation will be expanded further in the future.

Pakistan wants greater market access to the EU, preferably in the form of Free Trade Agreements (FTAs), especially since the EU has started FTA negotiations with India and all other countries in South Asia, Gilani said, adding that leaving out Pakistan in trade talks is discriminatory.

Referring President Asif Ali Zardari's meeting with President Sarkozi on sidelines of the UN General Assembly meeting, Gilani said that initiatives of President Sarkozi to broaden the scope of engagement with Pakistan and further expanding the multifaceted ties are source of satisfaction and welcomed largely.

He expressed hope that Sarkozi would undertake the visit to Pakistan by the end of this year. PM also briefed the French delegation in detail about Pakistan's efforts on war against terrorism and welcomed Sarkozi's stance that incursion of US and Nato forces in Pakistan's territory will be counter productive.

While conveying his gratitude to the Prime Minister for receiving his delegation, Admiral Edouard Guillaud reiterated his government's policy of respecting the territorial integrity and sovereignty. He said France wanted its relations with Pakistan to be back on track.

French troops were in Afghanistan to help Pakistan and not as substitute to Pakistan's forces fighting against terror on their soil, he said. He agreed that a stable and peaceful Afghanistan was in Pakistan's interest and stated that France wanted a strong democratic dispensation in Afghanistan to defeat the menace of extremism and terrorism in the region.

 

[Neo]

Uplift projects: Qureshi holds meeting with Chinese companies executives​

ISLAMABAD (October 07 2008): Foreign Minister Makhdoom Shah Mahmood Qureshi held a meeting with the heads of Chinese companies executing development projects and doing business in Pakistan here at the Foreign Office on Monday. The focus of the meeting was on attracting and undertaking more investment projects in Pakistan and re-visit preparations for President Asif Ali Zardari's forthcoming visit to China.

Launching the Economic Diplomacy Initiative the Foreign Minister, acknowledged the important role played by Chinese in development of Pakistan and highlighted the value of corporate sector in further enhancing the economic and commercial relations of Pakistan with China.

Both the countries are co-operating in various fields and have developed a broad strategy for further improving co-operation in trade, power-generation, financial and banking sector, and exploration of natural resources.

Qureshi emphasised the need to translating this strategy into reality by implementing the project in the pipeline on fast-track basis. He described government's vision to broaden economic co-operation with China to bring it at par with the excellent political and security relations that exist between the two countries.

He said that during his forthcoming visit to China, the President will hold meetings with the heads of Chinese companies and financial institutions.

He also assured the Chinese companies of the fullest co-operation and facilitation by the Government to promote their businesses in Pakistan.

Sources said that Pakistan will specially seek further assistance in nuclear power generation as a nuclear power project with the capacity of 300MW has already been completed by China in Chashma and is setting up another there. There is also an understanding that Beijing will build six nuclear power plants with an installed capacity of 300MW each, sources added.

Pakistan's growing nuclear energy needs are becoming an important incentive for China to act as a global player in the nuclear power industry, sources concluded.