Dawn Editorial with topic background, Vocabulary (April 27, 2021)
IT has now been confirmed that officials from the Pakistani and Indian governments are engaged in quiet talks aimed at reducing tension in the region and resolving outstanding conflicts, including the core issue of Jammu and Kashmir. According to a report in this newspaper, officials have confirmed that the two adversaries have been holding a backchannel dialogue since 2017.
However, in December last year, the talks went into higher gear when the Indian side approached the Pakistani government for a deeper engagement. The Pakistani leadership responded favourably, and as a result, a number of confidence-building measures have come to the fore, including a ceasefire agreement at the Line of Control. Pakistani officials say there is a genuine desire to move towards a peaceful resolution of disputes in order for Pakistan to achieve internal and external stability. So far the talks are being held between senior intelligence officials from both sides. It is said that relevant experts may join these talks once the agenda moves on to specific items. For now, these are talks about talks.
But they should be welcomed. Pakistan and India cannot afford to go to war and the lesson of 2019 is that both are closer to a conflict than they might want to admit. The only way to ensure a conflagration does not break out is to make a genuine and sincere attempt at resolving disputes that can potentially trigger a conflict. However, both Islamabad and New Delhi have been down this path numerous times before, with very little to show for it. The lessons learnt, if any, are that the two sides should move gradually and not rush into solutions. There are strong and influential lobbies on both sides that can act as spoilers. It is therefore reasonable for these talks to remain quiet and discreet till there is enough confluence of positions that can be brought into the glare of the public. In Pakistan, past attempts have floundered because of differences of approach between the civil and military leaderships. If the current talks have to be meaningful, it might be important to ensure not just that Rawalpindi and Islamabad are in lockstep, but also that other political parties are brought into the loop. There should be a broad consensus across the political spectrum on this strategic initiative so that it does not fall victim to petty politicking.
In addition, past lessons also tell us that such major policies should not be confined to individual decision-makers but should have a buy-in from all relevant institutions so that they do not remain dependent on personal priorities. The present leadership that is piloting this new, bold and timely move to give peace a chance should invest time and effort in forging a broad consensus around this policy. South Asia deserves a better future.
THE government is in a state of euphoria and is citing the current account surplus as a successful attempt at stabilising the economy and plugging the erosion of forex reserves. Certainly, the surplus of $959m in the first three quarters of the present fiscal year is a significant improvement over the deficit of $4.147bn a year ago. But we need to pause here and consider the factors that have contributed majorly to the current account surplus and analyse the recent emerging trends that may reverse the situation going forward. The surplus achieved so far can largely be credited to the increased inflow of dollars in the shape of remittances and exports of IT services through formal banking channels in recent months, mainly because of international travel restrictions related to Covid-19 and improved compliance with FATF conditions. Likewise, the restrictions are also attributed to decreased dollar outflows with fewer Pakistanis travelling abroad for leisure, business or pilgrimage. The question is whether these inflows will be sustained once the world returns to normal.
We also need to take into account the returning trend of the current account deficit since December. Even though the cumulative deficit during the last two months has shrunk to just $78m from $854m in December and January — again because of rising remittances and IT exports — it depicts an emerging trend on the back of augmented imports of oil, machinery, steel products and raw material as the economy picks up. Moreover, the food import bill is also spiking owing to domestic wheat and sugar shortages. On the other hand, the country’s exports are slow to grow and unlikely to cover the rise in the import bill anytime soon. That is not all. The financial account of the balance of payments, which had been in surplus since July, has again turned into a deficit of more than $1.4bn in the last three months as foreign direct investment plummets by 35pc, equity investors pull out their money from stocks, foreign debt payments jack up and outflows of amortisation and other transactions grow. Thus the overall balance-of-payments position, though improved, remains delicate. The government needs to look at the whole picture rather than focusing on just one aspect. A stable external sector demands that the government take urgent action to fix agriculture, loosen the noose around the economy to help growth, and develop industrial infrastructure to attract foreign investors and boost exports.