Wednesday, February 11, 2015
Saudi Arabia 'engineered' oil crisis
Saudi Arabia is largely responsible for the dramatic fall in oil and gas prices in recent months, a U.S. government official said.
Richard Fisher, the head of the Dallas Federal Reserve, said "the Saudis have engineered" the oil crisis. He was speaking Wednesday at the Economic Club of New York.
"We are a huge supplier of energy. The Saudis took a while to realize what was going on," Fisher said, referring to the massive growth of the U.S. oil industry in recent years.
Fisher is the most prominent U.S. official to pin the blame largely on Saudi Arabia.
As recently as July, oil traded at over $100 a barrel. By January, it had plunged below $50.
Saudi officials have repeatedly blamed supply and demand for the price meltdown. They say they were caught off guard by the price decline, and acknowledge this is putting a lot of pressure on U.S. shale.
"Although Saudi Arabia and OPEC countries did not engineer the reduction in the price of oil, there's a positive side effect, whereby at a certain price, we will see how many shale oil production companies run out of business," Prince Alwaleed bin Talal, a member of the Saudi royal family and prominent global investor, said in January.
The oil games: While the price of oil started falling at the end of the summer, it was exacerbated on Thanksgiving Day when OPEC, led by Saudi Arabia, voted not to scale back on production. That send oil prices diving.
Fisher also noted that the Saudis benefit not just economically, but politically from the oil price decline. Low oil prices especially hurt their biggest regional rival: Iran.
"I'm sure King Abdullah thought to himself, 'I've also done a favor vis-a-vis Iran,'" Fisher told reporters. Iran's economy needs oil to trade around $135. Saudi has far larger cash reserves and is thus able to withstand a downturn in prices for much longer.
What's ahead for oil prices? Given how motivated Saudi Arabia is to keep prices low right now, Fisher doesn't expect oil will shoot up to $100 a barrel again any time soon.
"From a budget stand point, [the Saudis] have reserves that can handle this," he said.
While many energy companies are laying off workers and slashing spending, Fisher said that cheap oil's overall impact on the U.S. economy will be positive. A typical American driver is expected to save $750 this year at the pump, according to government estimates.
Even in his home state of Texas, Fisher said the economy has diversified a lot more beyond oil, so it's unlikely to be nearly as bad of an effect as the last oil bust of the 1980s.
Obama Threads Needle in Military Request’s Wording
By
In formally asking Congress to authorize a three-year military campaign against the Islamic State, President Obama has carefully worded his request to soothe worried Democrats who do not want another big war. At the same time, he is assuring Republican hawks that the American military will do what it takes to defeat the Sunni militant group.
Hence the measure prohibits “enduring offensive ground combat operations.” So, no ground troops to fight the Islamic State in Iraq, Syria or anywhere else?
Maybe not.
“The 10th Mountain Division could get through that loophole,” joked Roger Zakheim, a former general counsel for the House Armed Services Committee’s Republican leadership. But, then, so too could certain parts of the 82nd Airborne.
A ban against “enduring offensive ground combat operations” is simply a ban on a large army of occupation for an extended period of time, like what happened in Iraq and Afghanistan. That is essentially the yardstick that President Obama is using. But there is no prohibition against Special Operations forces conducting counterterrorism strikes inside Iraq or Syria.
Nor is there a prohibition against Joint Terminal Attack Controllers, or JTAC teams, directing combat aircraft and other offensive operations from positions close to the fighting. Or Marines going in to rescue hostages. Or clear out buildings. Or even retaking a town.
In fact, a ban on enduring offensive combat operations does not even bar the Army’s Third Infantry Division from rolling into Iraq on the president’s order, as long as they do not stay long.
Very few people who know Mr. Obama believe that he has any intention of sending an infantry division into Iraq, Syria or anywhere else that the Islamic State may decide to declare a caliphate; the president has said at every opportunity that he will not send in ground combat troops. He agreed only reluctantly to begin airstrikes against the Islamic State in August and has since then said repeatedly that the people of Iraq, Syria and surrounding countries should supply ground forces for action against the militants.
If the military proposal is approved, it would be the first time that Congress has authorized a president’s use of force since lawmakers voted in 2002 to permit President George W. Bush to invade Iraq.
Mr. Obama pulled troops out of Iraq in 2011 but has sent a limited number back as part of his efforts to stop the Islamic State’s advances. The proposed legislation would repeal the 2002 authorization while at the same time leaving in place separate legislation that passed in 2001 authorizing the use of force against Al Qaeda and its affiliates.
Within the Democratic Party, there is little appetite for another extended war.
But that is where the difference with the Republicans, and indeed, the Pentagon, comes in. Many Republican leaders in Congress say that the fight against the Islamic State should override any American squeamishness about ground troops. And at the Pentagon, some officials argue that American military forces can carry out any mission they are asked to do — if politicians do not tie their hands behind their backs.
Mr. Obama is trying to thread the needle. At the moment, military experts believe the current wording does so.
“I read what the president wrote in the authorization,” said Lt. Gen. David Barno, a former Afghanistan war commander who is now at American University’s School of International Service. “I think it’s very flexible. He’s not saying he’s going to send tens of thousands of troops in, but he’s reserving the right to use military forces in ground combat operations.”
Under the wording of the president’s request, General Barno said, the United States could respond to a number of combat situations that would require ground forces.
But the big gift to Democrats is Mr. Obama’s decision to limit the authorization to three years. “That is the truest constraint in this language,” Mr. Zakheim said. “If you’re a Democrat, that’s the money — the three-year sunset.”
That limit means the authorization will last only while Mr. Obama is in office, but the next commander in chief will have to negotiate new language with the next Congress.
Democrats who are annoyed about the legal loopholes in the language can also rest assured that in three years, the authorization will expire.
Analysts: A Simple Cease-Fire Won't Bring Lasting Peace to Ukraine
By Ivan Nechepurenko
With all eyes on Minsk as world leaders convened Wednesday night for key talks on the Ukraine crisis, analysts urged the imperative of a fundamental settlement to the conflict, saying that a simple cease-fire won't work.
Against the backdrop of increased violence in Ukraine's turbulent east and signals that Washington may be gearing up to send lethal aid to Kiev, President Vladimir Putin met with his Ukrainian, French and German counterparts as part of a last-ditch effort to find a diplomatic solution to a conflict that has already plunged East-West tensions to a low unparalleled in the post-Cold War era.
Despite the heavy handed role played by U.S. Secretary of State John Kerry in diplomatic efforts to resolve the conflict, American representatives were noticeably absent Wednesday, leaving Washington's hands clean of the outcome of the talks.
In the days leading up to the talks, international headlines were rife with speculation that the leaders would decide on a cease-fire.
Recent history suggests, however, that a mere cease-fire agreement would fail to bring an authoritative end to the conflict, which has claimed more than 5,300 lives since April by the United Nations' count. Similar talks held in September resulted in a shaky cease-fire, but failed to prevent further bloodshed.
Amid a surge in violence in recent weeks, the rebels have made significant advances. They are about as likely to willingly surrender their recent gains as Kiev is unlikely to accept the territorial loss.
Meanwhile, a U.S. decision to go through with plans currently being mulled to provide lethal assistance to Kiev could heighten the possibility of a proxy war in the heart of Europe.
"It is clear that in the current, emotionally charged situation, it will be impossible to discuss any type of fundamental consensus. That must involve a major change to Ukraine's internal structure," Fyodor Lukyanov, head of Russia's Council on Foreign Relations and Defense Policy told The Moscow Times on Wednesday.
The fact that German Chancellor Angela Merkel and French President Francois Hollande showed up in person to negotiate a deal with Putin and Ukrainian President Petro Poroshenko indicates the European leaders' understanding that the talks' failure would constitute a major hurdle to diplomatic efforts to end the crisis, Lukyanov said. "This meeting is being held at the highest level possible, and another failure would cause serious damage to everyone who has an interest in this."
Tense Atmosphere
Tensions were high as the leaders gathered in Minsk, with fighting between pro-Russian separatists and forces loyal to Kiev having claimed numerous civilian lives in recent days.
Since January, the rebels have celebrated several conquests, including the coveted — albeit totally demolished — international airport in Donetsk. They have also encircled the key railway junction of Debaltseve. Kiev-loyal forces launched a counter-offensive Tuesday in the strategically important Black Sea port of Mariupol.
A visibly anxious Poroshenko examined the scene of a rocket strike in Kramatorsk on Tuesday, which his administration said had killed 16 people and wounded 48. "We demand unconditional peace," Poroshenko said in a video statement released Wednesday. "We demand a cease-fire, a withdrawal of all foreign troops and closure of the border."
In an address to government ministers in Kiev later Tuesday, Poroshenko said the upcoming Minsk summit would be the most important meeting of his presidency thus far, which began in June.
And if the talks fail, the Ukrainian government is prepared to introduce martial law across the country, Poroshenko said in comments carried by Interfax.
Speaking with Lukashenko after arriving in Minsk Wednesday evening, Poroshenko said: "Either the situation goes down the road of de-escalation, cease-fire ... or the situation goes out of control," Reuters reported.
American Arms
U.S. President Barack Obama reiterated the threat to arm Kiev in a conversation with Putin on the eve of the talks.
The U.S. leader emphasized to Putin the imperative of "reaching and implementing a negotiated settlement," according to a statement released by the White House on Tuesday. "However, if Russia continues its aggressive actions in Ukraine, including by sending troops, weapons, and financing to support the separatists, the costs for Russia will rise."
The Kremlin's statement on the same conversation reflected a markedly different interpretation of the takeaway message. "The Presidents of Russia and the United States highlighted the importance of resolving the domestic Ukrainian crisis via political dialogue, with an immediate cessation of bloodshed, ensuring the lawful rights and interests of residents of all regions of Ukraine without exception, including the southeast," the Kremlin relayed.
Both Democrats and Republicans in the U.S. Congress have called for $1 billion in lethal defensive aid to Kiev to help secure Ukraine's "sovereign territory against foreign aggressors," AP reported on Wednesday.
According to Russian military analysts interviewed by The Moscow Times, such a massive military donation to Kiev would likely be viewed by Moscow as a declaration of war, and could spark a global escalation of Ukraine's separatist conflict. (see related story: Russia Would See U.S. Moves to Arm Ukraine as Declaration of War)
U.S. Army Europe Commander Ben Hodges told Reuters on Wednesday that Russia had amassed 10 battalions of soldiers along its border with Ukraine.
As the United States mulls providing lethal aid to Kiev, European leaders have objected vociferously to such a scenario. EU foreign ministers delayed imposing new sanctions on Russia by a week on Monday in hope that the peace talks in Minsk would bear fruit.
At the same time, prospects are slim that the summit will be the source of substantial relief. The most likely scenario is a freeze of the situation for the immediate future, according to Lukyanov.
"With conflicts such as this one, either a diplomatic resolution is established at an early stage, or they deteriorate into a full-scale confrontation," he said.
Russian political scientist Georgy Bovt said the most optimistic possible outcome would be a temporary cease-fire. "This crisis doesn't have a final solution, either in the Normandy or in the Minsk format," he said in comments carried by news site Gazeta.ru.
Leaders grapple over Ukraine deal behind closed doors in Minsk
Peace negotiations in Minsk are continuing into the early hours of Thursday. The German, French, Russian and Ukrainian leaders have moved their talks to a private session among themselves, away from diplomats.
The four leaders met in Belarus on Wednesday after an extensive diplomatic push by Angela Merkel and Francois Hollande, whose meeting last week with Ukraine's Petro Poroshenko and Russia's Vladimir Putin paved the way for these latest Minsk talks.
The leaders first met privately, before opening the format to include foreign ministers and other diplomats. After some time, they reverted to the smaller group again.
Russian Foreign Minister Sergei Lavrov is said to have described the talks so far as "better than super," according to Moscow's Interfax news agency.
In addition to a lasting ceasefire, one of the main issues being discussed is a new line of division - Ukraine wants the one agreed to in the previous Minsk accord last September, while Russia wants one that reflects territorial gains made by the separatists.
Other sticking points are the withdrawal of Russian troops and equipment from eastern Ukraine - the existence of which Moscow has always denied - as well as securing the mutual border of Ukraine and Russia. Ukraine has also said it may give the separatists broader legal rights, but Russia wants guarantees of greater autonomy.
Another push
Under last September's agreement, both sides agreed to a ceasefire and the withdrawal of "illegal armed groups, military hardware, and all fighters and mercenaries" from Ukraine. The agreement, however, failed to stop the conflict.
Ukraine and the West have accused Moscow of furthering the conflict in eastern Ukraine by supplying the separatists with troops and weapons - charges the Kremlin has denied.
These latest talks come as dozens of people were reported killed in eastern Ukraine on Wednesday, largely due to shelling of residential areas in the city of Donetsk. There were also rocket attacks reported in the city of Kramatorsk on Tuesday.
News agency dpa reported that two top leaders among the Ukrainian separatists, Alexander Zakharchenko and Igor Plotnitsky, also arrived in Minsk on Wednesday.
The UN estimates that almost 5,400 people have been killed since the fighting in the eastern Ukrainian regions of Donetsk and Luhansk broke out in April, following Russia's annexation of Ukraine's Crimean Peninsula.
American troops poised to stay in Afghanistan in far greater numbers
By DAVID MARTOSKO
President Barack Obama is considering a request from Afghan President Ashraf Ghani to slow the pace of the withdrawal of U.S. troops in Afghanistan, a senior administration official told Reuters on Wednesday.
'President Ghani has requested some flexibility in the troop drawdown timeline and base closure sequencing over the next two years, and we are actively considering that request,' the official said, speaking on background.
Ghani will travel to Washington next month to meet with Obama. Last month, the Afghan president spoke publicly about the U.S. plan to halve the number of troops in Afghanistan in 2015 and cut them further in 2016.
He made clear he would prefer a longer timeline and said: 'deadlines should not be dogmas.'
White House Press Secretary Josh Earnest said during his Wednesday press briefing that while Obama has always favored 'a phased withdrawal' of U.S troops from Afghanistan, he 'has preserved for himself the flexibility to respond to the security situation on the ground.'
'The president's vision for this strategy has been consistent,' Earnest insisted to reporters.
Ashton Carter, Obama's pick to lead the Pentagon, told Congress last week that he was open to adjusting the drawdownplan.
The U.S.-led coalition in Afghanistan officially ended its combat mission after 13 years of war at the end of 2014. About 13,000 foreign troops, mostly Americans, remain to train Afghan forces.
Afghan troops continue to fight Taliban militants.
The International Committee of the Red Cross has said it had seen twice as many fatalities on the battlefield in 2014 than in the previous year as fighting intensified.
American officials are looking for ways to support Afghanistan.
U.S. General John Campbell, the commander of international forces in Afghanistan, has developed recommendations on ways to train, advise and assist Afghan forces and maintain counterterrorism capabilities, the official said.
The White House has already twice adjusted its plans to cut U.S. troops to about 5,000 by the end of this year and draw down to a 'normal' U.S. embassy presence in Kabul at the end of 2016.
Read more: http://www.dailymail.co.uk/news/article-2949582/Obama-administration-weighs-Afghan-request-slow-withdrawal-U-S-troops.html#ixzz3RU8jrEUH
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Pakistan - PTI vs MQM
While it is true that this paper published a report which revealed that call girls were visiting the dharna site to find customers, the report never claimed that all female participants of the sit-in were sex workers and all males were enjoying their services; the impression Altaf Hussain gave during his speech inviting cheers and applause from listeners, which is extremely disappointing considering the party’s claim of being a representative of the ‘educated’ middle-class. The fact is that Mr Hussain’s remarks were uncalled for, totally inaccurate and utterly disgraceful. Nothing short of an unconditional apology to PTI and particularly Ms Mazari would suffice.
PTI Chairman Imran Khan responded by calling Mr Hussain a “psychopath” and his party a terrorist organisation. Mr Khan’s anger is understandable, but there are serious doubts over his sincerity. The PTI has never had qualms with disrespecting women when its the party doing it to others. The treatment extended to female reporters belonging to Geo News at PTI shows never prompted the party to do anything more than issue empty words of condemnation. Its behavior on social media is by far the worst compared to any mainstream party. The PTI Chief himself is no role model to be followed when it comes to etiquette and use of appropriate language. Mr Khan’s many speeches containing derogatory remarks, unverified accusations and direct threats are a matter of record.
The PTI prefers to remain in conflict. In Altaf Hussain, the PTI Chief has rediscovered a cornered old foe, a villian, fighting whom would make it look like a hero. The sit-ins ended with PML-N emerging victorious. Now, the PTI could have shifted its focus to Khyber-Pakhtunkhwa but revolutionaries don’t govern, they beat the war drum and jump in to fight monsters. Mr Khan has said that he is going to take on the MQM and sort out Altaf Hussain once and for all. We’ve heard all this before. Mr Khan tried before and failed. During his jalsas in Karachi, Mr Khan chose not to utter a single word against the MQM. The MQM has accused the PTI of attacking it on behest of those with the mighty, elusive finger. The PTI doesn’t mind taking instructions, that much is well-known. But whether this is the case here cannot be confirmed at this point. It is important to remember that all this inconsequential, unnecessary bickering is taking attention away from the issue of terrorism and implementation of the National Action Plan.
Pakistan - Blasphemy cases
OVER the years, as self-anointed ‘defenders of the faith’ have multiplied in a rightward-drifting Pakistan, the number of people accused of ‘offences against religion’ has gone up exponentially. As reported in this paper, the Punjab prosecution department, in collaboration with the home and police departments, has shortlisted 50 undertrial blasphemy cases to be fast-tracked in which the state itself will defend the accused. According to the government, the selected cases — chosen from 262 being tried in different courts in Punjab from 2010 to date — are of those who have been languishing behind bars due to lack of, or weak, evidence and non-availability of counsel. Further, it has been said, the accused in these cases are ones who have been ‘victimised’ and that some of them may also be medically examined to gauge their mental health.
It is encouraging that Punjab is making efforts to expedite matters for those who appear to have either been unjustly charged with blasphemy, or deprived of their right to due process in such cases. However, the criteria for their selection say much about the radicalisation of this society, in which vigilante justice in matters of faith is often feted rather than vilified. Why are there such few lawyers available to defend blasphemy accused? Because lawyers defending such individuals are deemed guilty by association, sometimes by those who themselves have sworn to uphold the law. Advocate Rashid Rehman, shortly before his murder in May last year, received death threats from fellow lawyers for defending a blasphemy accused. Then there is the blasphemy law itself, and the procedural requirements according to which someone can be charged under it. While no one should have to fear being charged with a crime — any crime — in the absence of the requisite prima facie evidence, a charge of blasphemy instantly stigmatises the individual and invites the risk of violence against him. Several such accused have been murdered behind bars, some even after being acquitted. A revisiting of the blasphemy law, at the very least, to prevent false allegations based on vendetta or even pure mischief, is thus urgently required. Finally, it would have been appropriate if some of the cases selected for speedy trials involved accused that belong to minority faiths. For while allegations of blasphemy menace Muslims and non-Muslims alike, minorities are especially vulnerable, with entire communities driven out of their homes in paroxysms of faith-based violence.
Pakistan - Opposition’s boycott
The government’s lack of interest in parliamentary affairs has forced opposition parties to boycott the National Assembly proceedings till the acceptance of their demands. A few treasury members present in the lower house on Tuesday last were embarrassed by the opposition leader for giving no importance to parliament. The government has levied an unprecedented 27 percent tax on Petrol, Oil and Lubricant (POL) products without the approval of parliament. The step was taken to meet the conditionalities of the International Monetary Fund (IMF) for the release of the sixth tranche of the Extended Fund Facility worth $ 518 million. In addition, the government wanted to offset a shortfall in revenue due to a massive decline in oil prices, which normally yield Rs 30-35 billion every year. Earlier, the government increased regulatory duty on more than 285 items without consulting the opposition. Being ambitious for its revenue generation targets, the government is repeatedly bypassing parliament and taking short-term budgetary measures in clear violation of the constitution. The government is busy ignoring the concerns of the opposition that had supported it in its time of crisis. It seems that the PML-N government is taking decisions on the advice of only a few favoured ones and handpicked bureaucrats. This irresponsible attitude is leading to political cleavages. Prime Minister Nawaz Sharif himself has set a bad precedent by absenting himself from sessions of the Senate during the whole year. Following in the footsteps of the Leader of the House, the members of the National Assembly and Senators from the PML-N do not bother to attend the sessions of the lower and upper houses respectively. One of the essential constituents of a parliamentary democracy is its committee system, which has also become a victim of the government’s apathy. In a democratic set-up, the whole country looks towards parliament for the resolution of all problems, but currently this institution is persistently being ignored.
An inherently non-democratic attitude has been adopted by the government. It is critical that the government should revisit its attitude towards irreducible democratic norms. Without strengthening parliament, the system cannot deliver. The elected government must be conscious that only winning elections is not enough, rather it should adopt a serious approach in meeting the other norms of a democratic set-up. In the present highly centralised governance, the credit for all good deeds goes to the prime minister but at the same time he is held responsible for anything that goes wrong. The government must take the opposition into confidence over the issue of an increase in GST. It should bring back the angry opposition parties into the house and redress their grievances. Unless the government changes its approach towards parliament, a durable democratic system cannot be established.
Pakistan - Punjab Lawmakers getting ‘FAKE’ medical bills reimbursed
http://www.dailytimes.com.pk/
A scam regarding reimbursement of some fake medical bills of huge amounts from the legislators of the Punjab Assembly was exposed by a treasury member demanding constitution of a probe committee in Wednesday’s session of the House.
The scam was revealed by Sheikh Allauddin, a treasury member, on a point of order in the House saying that some of the legislators of the Punjab Assembly were receiving huge amounts of Rs 100,000 each through some fake medical bills from the Assembly Secretariat.
Taking the attention of the chair on the issue, Sheikh Allauddin revealed that some legislators were involved in making money through fake medical bills while the people of their constituencies had been deprived of the facility of free medical care. He also raised a question that when the voters of such lawmakers were deprived of free medical facilities, how their representatives in the House could enjoy such a facility from the assembly platform.
He also disclosed that initially some fake medical bills of a huge amount were prepared from medical stores and then cleared from the PA Secretariat, ‘paying’ a sum of Rs 15,000 to Rs 25,000 (to clear the bills).
He also disclosed that a medical store located on Jail Road was involved in making those fake medical bills.
Sheikh Allauddin demanded the chair that he should constitute an inquiry committee to check the assembly record and also to expose the people who were involved in such a matter. He also told the House that embezzlement of millions of rupees was also being done in the head of LP (local purchase).
The treasury member also said that the inquiry report of the committee could be remained secret but it should be made for maintaining a check and balance in the matter. He also urged that the people who received money through fake medical bills must be checked.
On this, Sher Ali Gorchani called Sheikh Allauddin, the Punjab Assembly secretary and the medical officer to his chambers in the PA Secretariat.
http://www.dailytimes.com.pk/punjab/12-Feb-2015/lawmakers-getting-fake-medical-bills-reimbursed-mpa
COULD PAKISTAN’S ENERGY CRISIS BRING DOWN THE GOVERNMENT?
Sometime around midnight on January 25, separatist fighters in the insurgency-riven Pakistani province of Baluchistan attacked a power transmission line.
They probably didn’t anticipate the immense ripple effects this single strike would have across the country.
The assault, which blew up two key towers near a major power station, tripped the national grid. Eighty percent of the country—including most major cities—plunged into darkness. Many in Pakistan described the outage as the worst in the nation’s history. In some cities, hours went by before power was restored.
This wasn’t the first time militants attacked Pakistan’s electricity infrastructure. Baluch separatists targeted more than 100 gas lines over the last four years, including a February 1 assault that reduced gas supplies to Punjab and Khyber-Pakthunkhwa provinces by 25 million cubic feet. In April 2013, the Pakistani Taliban blew up the largest power station in Khyber-Pakhtunkhwa province. Half of Peshawar, the provincial capital with a population nearly as large as that of Los Angeles, lost power.
The fact that one isolated attack can inflict such widespread damage underscores the severity of Pakistan’s national energy crisis. Even in an era of cheap oil, Pakistan is experiencing a power shortfall of roughly 5,000 megawatts (in recent years, energy deficits have soared to 8,500 megawatts—more than 40 percent of national demand). In parts of rural Pakistan, residents are lucky to have four hours of electricity a day. The crisis’s economic costs are stark; shortages have cost the country 4 percent of gross domestic product. Some Western companies, citing electricity deficits, are suspending operations in Pakistan. On January 26, the Moody’s ratings group warned that energy shortages will damage Pakistan’s credit worthiness.
More of a Menace Than Militancy
In Pakistan, energy is arguably a bigger public policy challenge than militancy because it directly affects so many more people. Shortages prevent people from cooking, working (hundreds of factory closures—including 500 in the industrial hub of Faisalabad—have left scores unemployed), and receiving proper medical care (in some hospitals,services have been curtailed). Not surprisingly, public opinion polls in Pakistan identify electricity shortages as one of the country’s top problems. Pakistani officials are not exaggerating when they claim that energy woes are a “bigger menace…to our existence” than the war on terror. Pakistan’s energy insecurity is deeply destabilizing—and not just because militants prey on fragile infrastructure. Streets often swell with angry protestors railing against power outages. They have blocked roads, and attacked the homes and offices of members of Pakistan’s major political parties.
No Quick Fixes
The causes of Pakistan’s energy crisis go well beyond supply shortages. They are rooted in chronic, structural problems such as widespread inefficiencies (including transmission and distribution losses approaching 30 percent) and sectoral debt approaching $3 billion. The losses occur for a variety of reasons. These include bad equipment, inadequate maintenance, theft (when people hook or cut electricity wires), and attacks on transmission lines. The debt is a consequence of huge cash flow problems: energy generators, distributors, and transmitters all lack funds. Compounding the problem is that the government charges a pittance for energy and few customers pay their bills. As a result, the sector can literally not afford to provide energy. Another core problem is policy incoherence. In the absence of an overarching energy ministry, multiple government entities jockey for control over policy, resulting in a dysfunctional policymaking process.
Pakistan’s government has long focused on increasing generation capacity and ramping up supply. Given the deep, structural nature of the problem, however, there are no quick fixes. Islamabad’s latest plan is to tap into unexploited coal reserves in the desert region of Thar. This plan does little to address the crisis’s underlying causes, and it ignores the fact that Pakistan lacks both the technical capacity and funds to undertake such large-scale exploitation—not to mention the advanced infrastructure required to transport this coal around the country. Neither do modest cash infusions from external donors address the roots of the energy crisis (last year, Saudi Arabia gifted Islamabad a $1.5 billion loan to fund new energy projects). And nor do much-mocked government conservation measuresthat ban neon signs and all-night wedding parties. More promising initiatives, such as efforts to bring cheaper renewables into the energy mix on a larger scale, are years from completion.
A Weakened Government
Pakistan’s 2013 elections swept Nawaz Sharif into power in a landslide. Blessed with a huge mandate from the masses, he was (according to his supporters) determined to learn from the past—when spats with Pakistan’s powerful military got him booted from power during two previous terms as prime minister—and to rule responsibly and effectively.
Unfortunately for Sharif, things haven’t worked out as planned. Bruising battles with the military over militancy, India, and the legal fate of former military leader Pervez Musharraf, coupled with anti-government protests last year, have weakened Sharif tremendously. Today’s government is a brittle shell of its former self. The armed forces have effectively taken full control of the foreign affairs and defense portfolios, and instituted new military courts to prosecute terrorists. To be sure, the Pakistani military has always held a veto on issues of foreign affairs and defense, and wielded immense clout over these portfolios. Yet for the first year of his current term, Sharif—as he did during previous terms as premier—sought to exert more civilian control over these areas, and may have enjoyed some limited success. Sharif, however, has now been cut down to size, and the civil-military power balance has reverted to the status quo ante.
Consequently, civilian officials have once again been reduced to parroting the line of the security establishment—and in recent months, they have been doing so incessantly and vociferously. Consider how Islamabad has been calling for international intervention to resolve the Kashmir dispute—Sharif himself made such an appeal in a UN General Assembly address last fall. Or how it has been loudly accusing India of undertaking “subversive” activities in Pakistan. Or how Sartaj Aziz, the prime minister’s chief foreign affairs advisor, recently warned that a U.S.-India civil nuclear deal—which has yet to be implemented—could destabilize South Asia. According to some whisperings in Pakistan, Aziz is the military’s new de facto spokesman).
As with previous prime ministers, Sharif’s policy space is now fully restricted to domestic affairs, including energy policy. Energy was a priority issue during Sharif’s electoral campaign (energy took up more pages than any other issue in his political party’s election manifesto), and he was elected with a large mandate to resolve the crisis. Unfortunately, he has little to show for it. Sharif’s government has said the right things—pledging lower energy subsidies and higher tax revenue in order to bring relief to a debt-ridden energy sector—but little of substance has come from these promises. One bright spot has been renewables; last month, the government announced measures to facilitate the use of solar power on a greater scale. These include the approval of grid-connected solar energy and the elimination of high taxes imposed on imported solar equipment. Still, such efforts, while encouraging, will not resolve the energy crisis.
In effect, Sharif is simply in no position to resolve the energy crisis, absent major policy shifts that he lacks the clout to carry out. Even the most popular and powerful Pakistani civilian leader would struggle to muster the political will needed to implement tough but necessary energy policy correctives—from pricing reforms and crackdowns on theft to sectoral restructuring and expansions of the tax base. The enfeebled Sharif has practically no chance.
Sharif Backed into a Corner
In the coming months, Sharif could find himself being backed into an even smaller corner. As Pakistan’s scorching summer heat arrives and continued outages keep people from cooling down, tempers could flare and touch off intense street protests. Imran Khan, the cricket-star-turned-populist politician with close connections to the security establishment, could exploit such public anger and (perhaps following a nod from the Pakistani deep state) mobilize large-scale protests against energy shortages—while renewing calls for Sharif’s resignation that he was issuing last summer.
Meanwhile, the Pakistani military might sense an opportunity to pounce. It is eager to minimize public unrest amid a stepped-up counterterrorism campaign announced after the Pakistani Taliban’s December assault on an army-run school in Peshawar. In Pakistan, where the military has held power for about half the country’s history, coups are always a possibility. Today, however, an outright putsch is unlikely. The military already wields ample power behind the scenes, and likely doesn’t want to be directly saddled with Pakistan’s overwhelming challenges. Tellingly, last summer, when anti-government demonstrations briefly became violent, and stone-throwing protestors converged on Parliament, the army refused to intervene directly. Some Pakistani commentators believe Pakistan’s new army chief, Raheel Sharif, is simply not interested in a takeover. (This does not rule out the possibility, however, that the military might intervene—even if just briefly—should energy protests turn very violent, expand, and last for a long time.)
A more likely possibility is that the army—concluding that Nawaz Sharif lacks the credibility to manage, much less resolve, one of the country’s most far-reaching and destabilizing challenges—pressures the premier to call early elections (his term ends in 2018). If the prime minister’s body language in recent weeks—which signaled fatigue and discomfort—is any indication, then he might well oblige. However, if his defiant side resurfaces he may reject early elections. This side was on full display during the anti-government campaign last summer, when he repeatedly refused Khan’s demands.
In a country as volatile as Pakistan, standoffs between civilians and the armed forces are nothing to sneeze at. And judging by Pakistan’s history, they rarely end well for the civilians.
Pakistan’s government, much like its general population, caught in the crosshairs of an energy crisis that Islamabad cannot control, could be in for some dark days.
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