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CONTENTS ===================================================================
NATIONAL NEWS US seeks defusion of tension in S. Asia AG concludes arguments Businessmen, experts to attend: Govt to hold talks on GST IMF team in Islamabad: US seeks fresh talks on ESAF Petrol prices raised by 25pc 15 percent increase in gas charges planned Multi-metering: Subscribers seek back six-digit phone facility Dissidents not to mend ways with Mengal APHC for talks in presence of world observer Hearing in Asif's plea fixed for 27th Jewellers on strike for six days in row --------------------------------- BUSINESS & ECONOMY Banks reluctant to open special accounts Kuwait offers $250m CBR submits amendments in tax rates to get loan Pakistan sells 220,000 tons sugar to India Duty exemption Package to help boost exports New package announced: Dollar bonds against FCAs Direct taxes: Corporate Region achieves Rs37bn collection target Role of money changers to be minimized Exporters in a fix over absence of SROs Stocks gain 37.48 points --------------------------------------- EDITORIALS & FEATURES The meltdown Ardeshir Cowasjee Full circle Irfan Husain Talbott visit: NPT & CTBT Agha Shahi ----------- SPORTS Jansher to defend title; Amjad in main round Asian squash: Qamar satisfied with performance Davis Cup: Pakistan to meet Thailand in Asia Oceania G-II final

US seeks defusion of tension in S. Asia
M. Ziauddin 

ISLAMABAD, July 23: The high-level US delegation led by deputy 
secretary of state Strobe Talbott left here for home on Thursday 
after conducting three days of what is being described here as its 
third round of "quiet diplomacy" with Pakistan.
The success of the three rounds of talks between Mr Talbott and the 
Pakistani officials as well as that of between him and the Indian 
leaders since May 11, according to knowledgeable sources, are being 
measured here in terms of the success of the three governments in 
keeping the press in Washington, New Delhi and Islamabad from 
reaching the "core of what is going on."
The officials of the three countries are being seen to be striving 
very hard to keep the progress or otherwise of the talks under 
tight wraps, as in their view "premature transparency" would "screw 
up the diplomacy."
A fourth round of talks between Mr Talbott and Pakistan's foreign 
secretary Shamshad Ahmad Khan is scheduled in the second half of 
August, perhaps to evaluate the situation emerging out of the 
anticipated bilateral talks between Indian prime minister Vajpayee 
and Nawaz Sharif in Colombo during the SAARC summit scheduled on 
July 27 and 28.

There are indications that the US officials have made a lot of 
efforts to encourage the two countries to initiate substantive 
bilateral talks in Colombo on the entire range of their bilateral 
There are also indications that the US today is more worried about 
the possibility of deployment of nuclear devices in South Asia and 
the chances of export of nuclear technology to rogue countries 
rather than the impact of nuclear testing by India and Pakistan on 
the global nuclear non-proliferation process itself.
For the US the issue of getting the two countries to sign the NPT 
and CTBT after they had tested their respective devices appears to 
have become only academic.
Perhaps today the US is not that much interested in getting the two 
countries to sign the CTBT and NPT but in getting them to defuse 
the situation on Kashmir bilaterally so that they are not forced to 
consider the option of deployment. And also at the same time the US 
wants to obtain from the two countries a pledge that they would not 
export nuclear technology or share their capability with other 
countries, diplomatic circles maintained.
In this context, the meetings between Pakistani defence officials 
and the US delegation on Wednesday are being regarded as very 
At the moment the balance of conventional capability in South Asia 
is tilted excessively in favour of India leaving Pakistan nothing 
to fall back upon other than its nuclear capability in the event of 
a break out of hostilities.
In view of this, the diplomatic circles in Islamabad do not rule 
out the possibility of an offer from the Americans to restore the 
defence capability of Pakistan in conventional weapons. But these 
circles also do not minimise the uphill task which the US 
administration faces in convincing Congress to remove the 
roadblocks in the way of such an offer.
These circles seem to believe that the US is now prepared to live 
with what had happened in May in the subcontinent, but as a quid 
pro quo it wants both India and Pakistan to join the global nuclear 
non-proliferation efforts on their own without thinking in terms of 
rewards or compensations.
These circles believe that the US is perhaps looking for clear, 
demonstrable, unambiguous evidence that despite the lingering 
disagreements over the NPT and CTBT, Pakistan and India are 
prepared in their own self-interest to make themselves active 
partners in achieving global nuclear non-proliferation.
Seemingly, the three countries, the US, India and Pakistan, are not 
working with a deadline, but the proposed visit of President 
Clinton to South Asia which was earlier scheduled in November this 
year, is said to be in the minds of the officials conducting the 
AG concludes arguments
Shujaat Ali Khan

LAHORE, July 24: "No action has been taken and none is 
contemplated", Attorney-General Chaudhry Muhammad Farooq submitted 
before the Supreme Court on Friday.
He was replying to a question by Justice Saiduzzaman Siddiqui, a 
member of the bench hearing petitions against emergency. The judge 
wanted to know whether the government had taken any step in 
furtherance of the purpose for which emergency was declared on May 
The AG, however, said the Economic Reforms Act, 1992, was amended 
to provide for foreign currency controls and the Rangers had been 
restored some of their powers in Karachi. He concluded his 
submissions on Friday and said, in reply to a question, that 
Barrister Sharifuddin Pirzada would not take more than a day and a 
half to complete his arguments on behalf of the federation.
Friday's proceedings were also attended by petitioner Imran Khan of 
the Tehrik-i-Insaf. Petitioner Ajmal Khattak of ANP is probably not 
pressing his petition, the AG said, pointing to the absence of his 
counsel, Advocate Qazi Anwar of Peshawar.
Mr Farooq also read out Prime Minister Nawaz Sharif's June 6 speech 
in parliament and Justice Irshad Hasan Khan noted that it was not 
confined to the recovery of plundered national wealth. The PM, the 
judge remarked, has also cited some security reasons for imposition 
of emergency.
Justice Nasir Aslam Zahid wanted to know whether the government has 
been successful in recovering bad debts and whether the measures it 
has taken so far could not have been taken without a proclamation 
of emergency.
The AG agreed with Chief Justice Ajmal Mian that nuclear capability 
is an effective deterrent and that no war has ever occurred between 
two nuclear powers. Quantitative gap between two nuclear weapon 
states is of no significance. Numbers are relevant only in respect 
of conventional weapons, Mr Farooq said.
The AG also read out a report drawn up by the ministry of interior 
in June. It said organized crime had reached such proportions that 
it was beyond the government's control to curb it. The report gave 
a detailed resume of sectarian violence and bomb explosions, which 
could only have been carried out by subversive elements with 
foreign assistance. About the drug menace, the report said there 
were at least three million heroin addicts in Pakistan.
He drew the attention of the seven-member Supreme Court bench to 
the misuse of emergency provisions in the past. Provincial 
governments were then dismissed and political opponents victimised. 
The government has not even resorted to the defence of Pakistan 
Rules (DPR) under the current 'innocent' emergency, he said.
The AG began his Friday's submissions with extensive reading of 
Pakistani and world press comments to emphasize the magnitude of 
Indian threat. He said the whole nation was united in asking for 
nuclear explosions to restrain India from any adventure. He read 
out the statements of opposition leaders, including Mr Ajmal 
Khattak, in this regard.
Businessmen, experts to attend: Govt to hold talks on GST 

ISLAMABAD, July 23: The federal government has decided to hold a 
grand meeting under Punjab Chief Minister, Shahbaz Sharif, to hold 
a meeting of experts, top tax and finance bureaucracy, trade 
leaders, politicians and parliamentarians to work out a plan for 
the implementation of general sales tax.
Official sources said here on Thursday that the decision had been 
taken by the prime minister in view of the countrywide strike by 
industry and business sectors which is on the spread and threatens 
to end in a vast jamming of the production/marketing operations.
This strike is about a fortnight old in some sectors and a week old 
in others, and the protesting business circles are refusing to 
accept the GST in its present form.
The federal government's decision to hold a meeting in Lahore, has 
come in the wake of a number of pronounced and "secret" meetings 
with the business circles with the result that no headway seems 
possible, to secure an end to the spreading protests over the GST 
implementation across the board. This formula has been introduced, 
for the first time, in the federal budget 1998-99.
The meeting is to be headed by the Punjab chief minister, and to be 
attended by the Planning Division Deputy Chairman, Hafeez A Pasha, 
Chairman Central Board of Revenue, Moinuddin Khan, member sales tax 
CBR, leaders of trading circles, members of parliament, and other 
relevant people, said sources.
The one-point agenda of the talks is said to be exploring the 
possibilities of presenting the GST in a form partially different 
from the one it presently wears for extraction of tax money. The 
formula for inducting maximum changes in the implementation of the 
GST is the purpose of the meeting, said one official source, adding 
that the technical aspects of the tax would be taken up with the 
intention that the basic context of the GST does not alter beyond a 
certain limit.
The chairman CBR is said to have already completed his spadework on 
computation of the proposals for the change the business circles 
are demanding in the form of the GST, and he is expected to first 
present the CBR with its view of the extent to which the proposed 
changes would distort the GST.

IMF team in Islamabad: US seeks fresh talks on ESAF
Shaheen Sehbai

WASHINGTON, July 22: The United States disclosed on Tuesday the 
suspended IMF programme for Pakistan was "dead and history" and 
Islamabad will have to negotiate a new ESAF for which IMF officials 
are already in the Pakistani capital.
The US statement made it clear that no urgent tranche of funds was 
being released by the IMF for Pakistan until new terms under a new 
ESAF were agreed upon. "The starting point for the new agreement 
could be the previous programme," it said.

The news was broken by two senior State Department officials at a 
background briefing promised earlier by spokesman Jamie Rubin. 
These officials did not want their names or status to be mentioned. 
It was sort of strange that the US officials were anonymously 
making declarations which normally the IMF should be making.
They also disclosed that Deputy Secretary Talbott had "informed" 
the Indians in advance about the change in US policy towards 
Pakistan so that no misunderstandings were caused in New Delhi and 
the impression was not created that Washington was tilting towards 
They said the US would not vote against a new ESAF programme 
clarifying the impression given earlier by spokesman Rubin at his 
regular briefing that the US had withdrawn its objections to "the 
old suspended programme which it wanted to reinstate."
The officials said Pakistan's economy was in deep trouble and was 
fragile and the fear was that it could get worse. The root cause of 
this situation was not US sanctions but gross economic 
mismanagement by Pakistani rulers.
It was almost certain that the new conditionalities which would now 
be made part of the new ESAF would include the IPPs case and the 
recent sharp increase in oil prices, something which violated the 
IMF principles of keeping the oil price at par with the 
international market.
When asked whether the new ESAF would be more stringent than the 
old one, the officials declined to comment but said there were "new 
realities on the ground."
Rubin said: "Pakistan's treatment of foreign independent power 
producers has been a subject of strong US concern for some time, 
and we have raised it at the highest levels of the Pakistani 
government. The subject is on the agenda of the Deputy Secretary 
Talbott's delegation."
He then elaborated: "In its discussions with the Pakistani 
government, we will be pointing out how national security has an 
economic as well as a military component, and that Pakistan's 
current economic situation is dire and it would be a mistake to not 
treat foreign investors hospitably and honour their contracts. The 
delegation will raise it. I can't say for sure who will do it; but 
it will happen."
Asked whether the US government believed the allegations against 
the US companies were without foundation, Rubin said: "On the 
contrary - we are raising with the government that this decision or 
otherwise interfering with these contracts or US businessmen is not 
correct and wrong and should not happen. The fact that we raise it 
at the highest level of governments means we give credence to the 
He was asked that the Pakistani government had alleged that there 
was corruption in these contracts; that the US companies were 
involved somehow in corrupt activities with the Bhutto regime.
Petrol prices raised by 25pc
Bureau Report

ISLAMABAD, July 18: The government on Saturday announced 25 per 
cent increase in petrol prices which it claimed was necessary to 
offset the impact of sanctions.
Announcing the price-hike at a press conference here Deputy 
Chairman Planning Commission Dr Hafiz Pasha said the increase would 
fetch Rs10 billion ($217 million) in revenues to the national 
The prices of diesel fuel, furnace oil and kerosene oil have not 
been increased to save the common man from hardship, Dr Pasha said.
He said the government needed Rs20 billion to fill the financial 
gap resulting from international sanctions. Another Rs10 billion 
would be covered through cuts in government expenditure and other 
austerity measures, Dr Pasha added.
He said the cabinet had approved a "comprehensive" package to cope 
with the financial situation resulting from sanctions, which would 
be announced by the prime minister in a broadcast to the nation 
But the package will not contain any further tax or fiscal move to 
expand the revenue base, he said.
According to sources privy to the cabinet meeting, the increase in 
petrol prices was criticised by some of the ministers, including 
labour minister Sheikh Rashid Ahmad, who reportedly said that the 
price-hike was the result of failure of the economic team of the 
government. He suggested that the prime minister should choose a 
new team of experts to pull the country out of the economic 
The Planning Commission deputy chairman said that the increase had 
been effected on petrol prices only.
He said that regular oil which was being sold at Rs17.75 per litre 
had been increased to Rs22.19.
Super oil has been increased from Rs18.91 to Rs23.64 per litre. 
HOBS increased from Rs20.65 to Rs25.82, while MTB oil will now be 
sold at Rs30.73 against the previous price of Rs24.67 per litre.
Responding to a question, Dr Pasha defended the price-hike and said 
it was inevitable to fill the Rs20 billion resource gap. He said it 
was an extraordinary situation and therefore, people would have to 
swallow the bitter pill.
He, however, held out an assurance that there would be no mini-
15 percent increase in gas charges planned
Raja Zulfikar

ISLAMABAD, July 19: The federal government has decided to increase 
gas charges by 15 per cent in order to generate Rs7 billion. An 
announcement to this effect would be made shortly, informed sources 
told Dawn on Sunday.
They said the decision had been finalized at the cabinet meeting 
held here on Saturday but the announcement was deferred as the 
increase in the prices of petrol and gas simultaneously would have 
prompted widespread backlash.
A source privy to the cabinet meeting told Dawn the prime minister 
did not approve the increase in gas prices immediately and so the 
cabinet decided to formally effect the proposed increase some time 
later. He said the cabinet was briefed on the problems that would 
arise if gas prices were not increased simultaneously with petrol 
prices but the prime minister and some of his colleagues disagreed 
saying if the increase in gas prices was effected immediately, it 
would greatly burden the people. So the announcement of the gas 
price-hike was deferred for the time being.
Sources said Saturday's cabinet meeting also discussed a letter of 
US President Bill Clinton and the issue of Comprehensive Test Ban 
Treaty (CTBT) during its five-hour special session. Other issues 
would be discussed at Wednesday's cabinet meeting.
The prime minister reportedly told his cabinet colleagues that the 
decision to sign the CTBT would be taken keeping in view the 
national interest and "we will not sign it under any pressure."
Sources said the prime minister read out a letter by the US 
president at the cabinet meeting which had been dispatched after 
Pakistan carried out nuclear tests.
Multi-metering: Subscribers seek back six-digit phone facility

KARACHI, July 18: Telephone subscribers with digital phones in 10 
localities of Karachi are reverting back to the six-digit, analogue 
numbers to beat the Pakistan Telecommunication Company (PTCL)'s 
increase in local call charges after every five minutes.
The ten localities where PTCL exchanges still possess the capacity 
to revert to the analogue numbers and have been converting 
telephones to six digits, include, SITE (29), I.I. Chundrigar Road 
(21), Nazimabad (62), Liaquatabad (42), Malir (40), Gulshan-i-Iqbal 
(46, 47), North Karachi (60, 64, 65), Federal B area (67), Saddar 
(51) and Clifton (54).
Inquiries show that the applications have come from digital users 
who could foresee the effect that the multi-metering system would 
have on inflating their telephone bills for August. The flood of 
applications came in June after subscribers learnt that the old 
six-digit numbers, installed in 1975, would enable 106,000 
subscribers in Karachi to continue to pay for local calls at the 
old rate of Rs 2 per call.
The Karachi Telephone Subscribers Association's convener, Mohammed 
Saleem Farooqi, alleged that the PTCL was following a "dual policy" 
by doubling the Rs 2 local call charge rate every five minutes for 
the majority of digital subscribers, even while exempting 
subscribers with analogue numbers.
Dissidents not to mend ways with Mengal

QUETTA, July 23: Sardar Bahadur Khan Bangulzai, parliamentary 
leader of the BNP dissident group, has ruled out any rapprochement 
with Mengal group and said his party would form government with the 
support of other parties.
He said: "We have reached the point of no return", and added that 
Sardar Mengal had been informed of the decision of his group on 
Talking to newsmen after his arrival from Islamabad on Thursday 
evening, he said that a decision on the formation of new coalition 
government would be taken within a week. Former BNP minister Mir 
Israrullah Zehri, Mir Mohammad Ali Rind and Mir Asadullah Baloch 
were also present on the occasion.
Replying to a question Sardar Bangulzai said that during his stay 
in the federal capital he had several meetings with PML leaders 
including Gen (retd) Majeed Malik, Chaudhry Shujaat Hussain and 
Senate Chairman Wasim Sajjad.
He said that during the meetings with PML leaders, he and other BNP 
leaders discussed the political situation in the province after the 
split in the Balochistan National Party.
Sardar Bangulzai said that he informed the PML leadership that his 
group wanted good relations with the federal government.
He said he would be thankful if in view of relations between the 
BNP and the PML at the federal level, chief ministership was 
offered to his party.
APHC for talks in presence of world observer 
Bureau Report

ISLAMABAD, July 21: All Parties Hurriyet Conference (APHC) and 
leaders from Azad Jammu and Kashmir (AJK), on Tuesday met foreign 
minister Gohar Ayub Khan and called for the presence of an 
international observer at the meeting between the prime ministers 
of Pakistan and India in Colombo next month.
They unanimously supported the idea that Prime Minister Nawaz 
Sharif should meet his Indian counter part either in the presence 
of UN Secretary General or Secretary General of the Organization of 
Islamic Conference, opposition leader in AJK Legislative Assembly, 
Sardar Abdul Qayyum Khan, told Dawn after the meeting.
Presence of an international observer would render credibility to 
the talks between Prime Minister Nawaz Sharif and Indian Prime 
Minister Attal Behari Vajpayee on the Kashmir issue, which has 
become international flash point in the wake of nuclear 
developments in the region, Mr Qayyum Khan said.
Foreign minister Gohar Ayub briefed the visiting leaders on the 
present policy of the government of Nawaz Sharif, said a press 
The foreign minister reaffirmed Pakistan's commitment to the 
Kashmir cause and assured them continued moral, diplomatic and 
political support in their just struggle against Indian occupation 
of their lands.

Hearing in Asif's plea fixed for 27th

KARACHI, July 22: An application for urgent hearing of the petition 
along with the stay application moved on behalf of Senator Asif Ali 
Zardari came up for hearing before a division bench of the High 

Court of Sindh comprising Justice Abdul Hameed Dogar and Justice 
Shaiq Usmani, on Wednesday.
In the petition, the petitioner has challenged through his counsel, 
K. M. Nadeem, the vires of the correspondence exchanged and actions 
taken by the attorney general and Senator Saif-ur-Rahman, chairman 
of Ehtesab Bureau, "seeking illegal prosecution of the petitioner 
in Switzerland and other countries".
In the petition, the attorney general and the chairman of the 
Ehtesab Bureau are respondents in their personal capacity against 
whom serious political malice has been alleged by the petitioner.
After obtaining the long adjournment, the interregnum time has been 
misused by the respondents to accelerate their illegal activities 
and unconstitutional behaviour by soliciting from Swiss court the 
incriminating documents and verdicts of indictment and arranged the 
same to be served upon the petitioner inside the jail and as such 
the matter requires urgent hearing and an interim order of 
prohibitory nature restraining the respondents from their illegal 
activities, the counsel said.
The court granted the urgent application and fixed July 27 for 
hearing and directed issuance of notices to the parties.

Jewellers on strike for six days in row

MIRPURKHAS, July 22: On the call of All Pakistan Jewellers 
Association, strike was observed here in full force which entered 
the sixth day on Wednesday. All the jewellery shops remained closed 
even on the sixth day at Sarafa Bazar to protest against the 
imposition of general sales tax.
A procession was taken out from Sarafa Bazar on Wednesday which was 
led by president all Sindh Sarafa Association Haji Haroon Chand. 
Jewellers belonging to Sanghar, Nawabshah, Khipro, Tando Adam, 
Shahdadpur, Tando Allahyar, Umerkot, Dhoro Naro, Kunri, Mithi, 
Jhuddo, Digri, Tando Ghulam Ali, Pithoro and other areas 
participated in the procession. Carrying banners and placards, the 
processionists wore black armed bands, marched through the main 
streets, reached the Press Club Mirpurkhas where they demonstrated 
and forcefully demanded withdrawal of GST. Addressing the 
protesters, president Sarafa Association Mirpurkhas Haji Muhammad 
Shafi Memon announced that this protest campaign would continue 
till the withdrawal of GST. President All Sindh Sarafa Association 
Haji Haroon Chand claimed that jewellers also loved Pakistan and 
they were paying different taxes and were ready to pay all 
legitimate taxes, but GST was an unjust tax and there was no 
question why it should be paid.

Banks reluctant to open special accounts
Mohiuddin Aazim

KARACHI, July 23: The opening of import letters of credit that came 
to a halt on Wednesday did not pick up on Thursday  the second day 
of enforcement of dual exchange rate system. Bankers said very few 
LCs were established at the banks as the importers adopted a wait 
and see position.
What has slowed the opening of import LCs is that under the new 
rules imports of only six broad essential food items can be 
imported at official exchange rates. For the rest of the items the 
importers would get 50 per cent of the required foreign exchange at 
official exchange rate and 50 per cent at composite rate  the mean 
of the official and inter-bank exchange rates.
Ostensibly this is going to increase the cost of imports the 
realization of which has made the majority of importers reluctant 
in opening new LCs.
The importers also could not get their Bills of Entry registered at 
the Customs House on Thursday as it was not clear what exchange 
rates should be acceptable for the calculating duties and taxes.
Sources close to the Customs appraisement collectorate said the 
Bills of Entry filed on Wednesday were registered at the exchange 
rates prevailing on Tuesday. They said it is allowed according to a 
1990 amendment in the Customs Act of 1969.
The sources said the piling up of Bills of Entry would create a lot 
of problems for the importers and incur them huge demurrage.
No senior official of the Customs appraisement collectorate was 
available to say anything on the subject. An official of some other 
collectorate who declined to be named said, however, that the 
Central Board of Revenue had so far not clarified the issue.
Sources close to CBR say CBR officials were busy interpreting the 
circulars issued by the State Bank regarding foreign exchange rates 
adding their interpretation might be conveyed to the customs 
collectorate on Friday or on Saturday.
Before the introduction of dual exchange rates, the customs house 
was using the exchange rates quoted by the state-run National Bank 
of Pakistan.
Dollar: The US dollar was traded in the inter-bank market at a 
maximum of Rs 50.50 and Rs 51.50 for buying and selling on 
Thursday. Bankers said the maximum rates quoted for bank customers 
ranged between Rs 48-Rs 48.25 for buying and Rs 48.50-Rs 49 for 
selling. The official buying and selling price of the dollar is Rs 
46/Rs 46.23 for the banks and Rs 45.95/Rs 46.28 for their clients.
They said forward trading of the dollar did not take place because 
both banks as well as their customers were still planning about how 
to go for forward deals to reap maximum benefit under the dual 
exchange rate system announced on Tuesday. They said the demand for 
the dollar in the ready market was up and the supply was low which 
kept its prices high.
In open market the dollar ended 75 paisa higher at Rs 57.50 and Rs 
57.75 for spot buying and selling against the Wednesday close of Rs 
56.75 and Rs 57.00. Money changers said the demand of the greenback 
was more than its supply as speculators were still holding large 
stocks of dollars anticipating further rise in its prices.

Exports: While local banks are finding it difficult to open and 
manage special accounts for exporters foreign banks operating in 
Pakistan are out to make it a lucrative business.
Senior bankers say many local private and state-run banks are 
persuading the exporters to accept the composite exchange rate for 
half their export proceeds instead of keeping it in special 
accounts. Composite rate is the mean of official exchange rate and 
inter-bank floating rate.
Under the recently-introduced rules exporters are supposed to sell 
at the official exchange rate 50 per cent of the export proceeds to 
the State Bank through their banks. They are allowed to sell the 
remaining 50 per cent within 14 days of realization of the export 
proceeds to any other bank at whatever rate it quotes. For this 
they need to open special accounts at the banks.
Bankers say most of local private banks and even state-run banks 
have so far not opened any special account for exporters to 
facilitate them to sell half their export proceeds at the market 
rates. They say leading exporters are interested in opening the 
special accounts but these banks have told them to wait for a few 
"We need to develop a system before we start opening special 
accounts...It is not that easy," said treasury manager of a local 
bank. His counterpart at a state-run bank said maintaining of 
special accounts for exporters required additional manpower and 
technological sophistication. "That is to say many a bank are not 
prepared now...but I hope they will start doing it within days."
On the other hand foreign banks have taken the lead in opening 
special accounts for exporters and their executives say it is quite 

Kuwait offers $250m
Bureau Report

ISLAMABAD, July 21: Kuwait has decided to offer 250 million dollars 
to Pakistan for two years to help the country cope with the 
situation arising out of a serious drop in the inflow of foreign 
remittances, disclosed the Finance Minister Sartaj Aziz here on 
"We will soon be getting 250 million dollars from Kuwait which will 
help to increase our foreign exchange reserves considerably," he 
further stated.
Speaking at a news conference, the finance minister said the 
international sanctions had certainly created problems for 
Pakistan, "but these problems are being addressed by our friends in 
the Muslim countries."
He also said that Islamic Development Bank (IDB) has convened a 
meeting of the Islamic financial institutions on July 27 in Jeddah 
for supporting Pakistan at this "crucial juncture of the our 
"We have been told that the IDB would ask these Islamic 
institutions to place their funds in the State Bank of Pakistan," 
the finance minister asserted.
Moreover, he pointed out, the IDB would look into the possibilities 
of rolling over its existing loans. "These are welcome signs for 

Pakistan and would help it meet the challenges arising out of the 
unjust sanctions against Pakistan," he added.
The finance minister pointed out that the IDB has already increased 
its annual credit ceiling from 150 million dollars to 400 million 
CBR submits amendments in tax rates to get loan

ISLAMABAD, July 23: The Central Board of Revenue has submitted to 
the Ministry of Finance a schedule of amendments to the tax rates 
and methods as laid down in the terms of reference agreed with the 
Asian Development Bank for the release of $500 million reforms 
The package was given the final shape after the Federal government 
agreed to the changes as proposed by the ADB consultants in the 
customs duty, sales tax, central excise duty, and the export rules.
The terms of reference spelt out the steps to liberalize trade and 
imports by Pakistan.

Pakistan sells 220,000 tons sugar to India

ISLAMABAD, July 23: The steady outflow of sugar to India pushed by 
a huge subsidy may result in its scarcity in the domestic market 
after a couple of months, knowledgeable quarters in the Federal 
Cabinet told Dawn here on Thursday.
The government is paying subsidy at the unprecedented rate of Rs6.5 
per kilogramme out of the already cash-strapped exchequer to help 
them clear their stocks. Intriguingly, included in this subsidy is 
duty drawback which, at least in theory, is paid to exporters in 
lieu of import duties paid by them on import of raw materials, 
these sources pointed out. Fact, however, is that sugar is produced 
entirely from locally produced sugarcane and beet.
By the end of June, an official source said, Pakistan had exported 
about 220,000 tons of sugar to India at the rate of around $295 per 
ton. Thus the subsidy being paid to the industry is equivalent to 
50 per cent of the price charged from Indian buyers. An official 
source said he expected that by the advent of the next crushing 
season (October or November), the quantity of sugar that may cross 
the border might be in the range of 0.5 million tons.
The sugar industry is one of the most powerful lobbies in Pakistan 
today, the source pointed out. Much smaller than the textile 
industry though, it has the unparalleled ability to pull the 
strings because it is well-knit and organized along modern lines. 
So when the industry wants the government to believe, for example, 
that its output exceeded 3.5 million tons and that its cost of 
production was as high as Rs19 per ton, the bureaucrats have no 
option but to follow unquestioningly the dotted line.
Duty exemption

ISLAMABAD, July 23: The Central Board of Revenue has announced 
exemption from customs duty, sales tax, import/Iqra surcharge on 
temporarily imported polypropylene woven and jute bags, if they are 
meant for subsequent export.
A notification issued here on Thursday by CBR says that the item 
would be enjoying exemption under the SRO 818 (I)/89 of August 9, 
1989, which has been duly amended for this purpose, through SRO 11 
(62) Rebate/96, of July 21, 1998.
This SRO says that polypropylene woven and jute bags subject to the 
conditions that such bags bear the particulars of the Pakistani 
exporters in permanent print on each bag, shall be exempt as per 
the conditions laid down in SRO 818 (I)/89.
These conditions are: The Collector of Customs concerned would be 
the authority to apply for availing of the facility, with a bank 
guarantee, indemnity bond equivalent to the amount of customs duty, 
sales tax, import/iqra surcharge. 
The bank guarantee would be enforced provided that the insurance 
guarantee is furnished by such insurance companies as are managed 
by the government of Pakistan, or are approved by the CBR, and 
indemnity bond is duly supported by such collateral security as is 
accepted by commercial banks extending credit facility.
Package to help boost exports

KARACHI, July 21: Business leaders in general and exporters in 
particular welcomed economic package announced by Finance Minister 
Sartaj Aziz on Tuesday, and were of strong opinion that if strictly 
followed it will definitely help boost country's exports and reduce 
However, they were fearing that if these measures were not 
implemented in letter and spirit they will also end up like all 
other good economic steps which failed to produce required results.
President FPCCI, Senator Ilyas Ahmed Bilour said, "no doubt these 
measures are good, but I would like to put on record that the 
government has wasted a lot of time in taking these measures and it 
would have been appropriate if they were included in the budget 
even if its announcement was delayed for a couple of weeks."
He further said that FPCCI never doubted about the capacity and 
ability of any government functionary, but it would have been 
better that before announcing these measures the business community 
should have been consulted and taken into confidence.
The FPCCI chief expressed his fears that if the government does not 
reduce import duties under new arrangement where importers will 
have to foot their imports by 50 per cent on purchase of dollar 
from open market and the remaining 50 per cent from official 
sources i.e. State Bank of Pakistan, it will induce smuggling as 
imports through official channels will become costlier after 
including duties and other taxes.
It would have been better if the ratio of financing imports from 
open market was not more than 25 or 30 per cent because this would 
have helped to maintain a balance and did not allow imports through 
official channels to become costlier after adding all sort of 
government levies, including customs duty, he added.
The Chairman of Pakistan Bedwears Exporters Association (PBEA), 
Shabir Ahmed welcoming the new economic package said that the 
government has once again failed to differentiate between value-
added textile goods and raw material by giving equal treatment to 
yarn and textile made-ups.
He suggested that some margin should have been given to value-added 
textile goods over the yarn but by allowing all category of 
exporters to retain and selling 50 per cent of their export earning 
in the open market did not give any extra incentive to those who 
involve themselves in value addition process.
APTMA Chairman Humayun Ellaahi Shaikh has termed the economic 
package as export-oriented and in the larger national interest. He 
was highly appreciative of 'credit vouchers' scheme announced by 
the Finance Minister on Tuesday. This will help the industry, he 
said, to adjust its outstanding dues against various government 
departments, including customs, income tax etc.
Humayun praised government stand over the issue of General Sales 
Tax (GST) and said there was no need to call strikes and agitate 
because all segment of trade and industry has to pay tax without 
any favour and distinction.
APTMA chief also welcomed bonds scheme for foreign currency 
accounts and said such move should have been taken on the very 
first day as this would not have disturbed the confidence of the 
people. Giving of mark-up on these bonds over LIBOR rate, he said, 
is a step towards right direction. 
APP adds: The President Chamber of Commerce and Industry, Karachi 
(KCCI), Muhammad Hanif Janoo appreciating the package hoped that 
this would help improve the economic situation in the country.
New package announced: Dollar bonds against FCAs
Ihtasham ul Haque

ISLAMABAD, July 21: The government here on Tuesday unveiled a much 
awaited economic package and offered a new foreign exchange regime, 
a dollar bond scheme, restrictions on imports, measures for 
increasing exports, concessions for those who had converted their 
foreign currency deposits into rupees and imposed curbs on import 
of luxury cars.
Finance Minister Sartaj Aziz told a news conference that the 
package had been approved by the cabinet. It was prepared with the 
help of industrialists, bankers, experts and intellectuals.
Giving details of the package, he said those who preferred 
converting their foreign currency deposits into rupees at the 
prevailing official exchange rate, had been extended all the 
immunities of no wealth tax and no questions asked about sources of 
In addition, if they kept the converted rupee amount in bank 
deposits, they would be exempted from payment of withholding tax.
All foreign currency account holders will now also have the option 
of converting their deposits into dollar bonds, with the following 
The maturity period of the bonds will be five, seven or ten years. 
They will be issued in denominations of 100 dollars, 500 dollars, 
1,000 dollars, 10,000 dollars and 100,000 dollars.
"These bonds will carry attractive interest rates, equal to LIBOR 
(London inter-bank rate) for five-year bonds, LIBOR plus one per 
cent for seven-year bonds and LIBOR plus two per cent for ten-year 
bonds", he said.
Interest on these bonds will be tax-free and paid after every six 
months. The payment will be in rupees at the prevailing official 
exchange rate for resident bond holders and in foreign exchange for 
These bonds can be encashed on maturity in foreign exchange. If 
encashed prior to maturity they would be redeemed in rupees at the 
prevailing exchange rate. They will be tradable and will also act 
as a collateral against loans.
The holders of these bonds will enjoy exemption from payment of 
wealth tax and they would be asked no questions about sources of 
funds. They can be used for the purchase of plots by overseas 
Pakistanis in various schemes offered by the government.
Mr Sartaj Aziz said there was a complete freedom to open accounts 
under the new system announced on June 22, under which neither 
foreign exchange was required to be surrendered to the State Bank 
nor would the SBP provide any forward cover.
"I hope that holders of foreign currency accounts will appreciate 
the difficulties of the government and make their contribution to 
the national cause by willingly choosing any of the bond scheme. My 
government takes its obligations very seriously. As soon as 
conditions improve, we propose to put a certain percentage of our 
foreign exchange earnings into a special fund in the State Bank to 
ensure that we have enough foreign exchange resources to honour the 
payment in dollars for bonds when they mature", he said.
He admitted that the freezing of the FCAs had shattered the 
confidence of the people. "But what had been done was inevitable."
Talking about the new foreign exchange regime, he said in the 
aftermath of sanctions, it was absolutely vital that the government 
had access to foreign exchange reserves to finance all its 
essential imports.
To achieve this objective, he announced following changes in the 
exchange regime:
a) Exporters, persons receiving remittances and invisible receipts 
(other than interest income from abroad) will be allowed to retain 
50 per cent of proceeds for two weeks.
b) Remaining 50 per cent of the amount to be surrendered at the 
official exchange rate to the State Bank.
c) Imports of the following essential items - wheat, pulses, edible 
oil, POL, fertilizer, pesticides and pharmaceuticals - will be 
allowed at the official exchange rate. This will prevent rise in 
prices of essential commodities.
d) No new items will subsequently be added to the list of essential 
e) All inflows and outflows, except for foreign private investment 
and portfolio investment, on the capital account and interest 
payments will continue at the official exchange rate.
f) Other imports and services, including travel and education, will 
be provided for at the "mixed" rate, that is, 50 per cent from 
exports at the market rate through the inter-bank mechanism and the 
remaining at the official rate.
The State Bank is finalizing institutional arrangements and 
procedures to operate the new exchange system in cooperation with 
commercial banks.
"This exchange regime has been developed after a great deal of 
thought by experts. It avoids a general devaluation of the 
currency, while providing incentives to exports and remittances, 
discouraging non-essential imports and simultaneously preventing 
any increase in prices of essential commodities", the finance 
minister said.
Direct taxes: Corporate Region achieves Rs37bn collection target

KARACHI, July 22: The Corporate Region of Income Tax, Karachi has 
achieved the target of Rs37 billion, set for the collection of all 
category of direct taxes, for the out-going fiscal year 1997-98.
Official figures made available on Wednesday, disclose that with 
the exception of Capital Value Tax (CVT) which fell short by Rs400 
million, the targets for all other categories of direct taxes have 
been achieved by the region.
There had been a remarkable achievement in collection of income tax 
which stood at Rs35.373 billion or 31 per cent higher than that of 
last year's (1996-97) collection of Rs26.880 billion.
The region has yet to firm up its June collection figures, but the 
provisional data with regard to recovery from arrears stood quite 
satisfactory at Rs1.99 billion, showing 30 per cent higher recovery 
than last year's of Rs1.524 billion.
The Corporate Region is expected to collect over 50 per cent out of 
the total arrears if the figures of recovery for the month of June 
are also included.
According to world standard recovery of arrears up to 50 per cent 
is taken to be quite satisfactory and according to tax officials 
some zone of the corporate region have achieved 97 per cent 
recovery rate.
Similarly, the region has achieved a very high recovery rate of 97 
per cent against the current demand at Rs9.34 billion, as against 
Rs 4.7 billion during a corresponding period of last year.
As a result of this performance the Corporate Region, Karachi, with 
regard to current demand and recovery from outstanding arrears has 
contributed nearly 73 per cent towards total national collection of 
Rs17 billion.
The region has recovered Rs10.6 billion against advance tax, 
showing an improvement of 120 per cent over last year's collection 
of Rs4.8 billion made during the same period.

A growth of 26 per cent was noted in wealth tax collection at Rs600 
million as against Rs474 million of a corresponding period of last 
Role of money changers to be minimized

LAHORE, July 23: The president of the Federation of Pakistan 
Chambers of Commerce and Industry, Senator Ilyas Ahmed Bilour, said 
on Thursday that the introduction of a two-tiered exchange rate 
will minimize the "role of money changers" and limit the effect of 
the kerb market on the value of the rupee.
In a press statement, the FPCCI chief welcomed the economic package 
announced by the government saying it would help stabilize the 
exchange rate and boost exports.
The FPCCI chief said that this time it seemed as if the government 
had thought out and planned things as opposed to the ad hoc and 
knee-jerk reactions of the past.
He said that the government could have, if it wanted, delayed the 
presentation of the budget by two weeks to take in to account 
unforeseen factors following the May 28 blasts.
Bilour said that it would be even better now that the government 
implemented these policies, especially the one relating to 
exporters' refunds which he said were never given within the one-
week stipulated period in the past.

The FPCCI chief said that asking importers to get 50 per cent of 
their foreign exchange requirement from the market was "rather 
harsh" and that they should have been at least consulted over this. 
He said this measure would encourage smuggling.

Exporters in a fix over absence of SROs
Sabihuddin Ghausi

KARACHI, July 20: Given a task to earn more than $10 billion in 
foreign exchange earnings to finance total import bill for 1998-99, 
exporters look confused and indecisive for want of necessary 
decisions from the government and do not mince words to express 
their helplessness in meeting the target given to them.
"It is now past three weeks of July and government has not issued 
any SRO for the implementation of export promotion measures 
announced by the Commerce Minister, Ishaq Dar in 1998-99 Trade 
Policy", complained Shabbir Sheikh of Pakistan Bedwear Exporters 
The commerce minister in his Trade Policy speech last month 
promised duty-free import of all inputs and accessories needed by 
the exporters. He also promised exemption from sales tax on 
exporters' local purchases, setting up of common bonding warehouse, 
Rs5 billion fund for upgradation of export products, facility of 
commodity exchange for traders and quick refund of pending rebate 
"Claims pending since November and December still await payments", 
retorted Shabbir Sheikh who complained that Export Cell set up in 
State Bank of Pakistan to hold quarterly meeting and hear exporters 
pleas on various issues has not met for the last six months.
"No mechanism for providing Rs5 billion financial help to exporters 
to facilitate them in upgradation of export products has been 
worked out as yet", a senior official of Export Promotion Bureau 
informed Dawn on Monday by telephone.
On further querries the EPB official indicated that officials in 
commerce ministry in Islamabad might be working out some guidelines 
for disbursement of promised Rs5 billion fund.
Wajid Jawwad, a local textile products exporter hinted that these 
much awaited SROs may be issued in next few days.
Jawwad who attended two days meetings with the commerce ministry 
officials with other exporters in Islamabad disclosed that they 
were called to identify the problems and snags that could crop up 
after implementation of these SROs.
He disclosed that draft of the SRO to facilitate exporters duty-
free import, exemption from sales tax in local purchases, setting 
up of common bonding warehouse, incentives on incremental exports 
and other allied issues have been finalized. He was hopeful "these 
SROs should be issued in next few days".
None among the exporters and senior officials of the EPB have any 
idea of any framework for commodity exchange being prepared. 
Commodity exchange was practised before dismantling of the 
socialist countries and was done through state controlled Trading 
Corporation of Pakistan in which private sector was issued licences 
to provide specified items.

Stocks gain 37.48 points

KARACHI, July 24: Stocks maintained their winning streak for the 
third session in a row on Friday as investors continued to build-up 
long positions in Hub-Power and PTCL at the current attractive 
lower levels.
The post-package performance of the market reflects that investors 
have correctly received the message sent to them by the finance 
minister and supplemented by the central bank's half a dozen 
circulars and those who could peep into the future or a little 
farther were not inclined to miss the rising market.
"The market is ripe for a grand technical rebound and what it wants 
is official support and that came in the form of the economic 
package," said a leading stock analyst.
Perceptions about the IMF soft credit line differ from broker to 
broker but most of them believe the worst is over and the sailing 
could be smooth despite the current turmoil on the currency 
markets, he added.
The KSE 100-share index recovered another 37.48 points or 4.7 per 
cent at 958.94 points as compared to 922.46 points a day earlier, 
adding Rs 9 billion to the market capitalization at Rs 280 billion.
Although the Talbott visit failed to give the much-needed boost to 
the market as there was no agreement on the vital security concerns 
or the signing of the CTBT as was widely speculated, they seemed to 
have relied on its own technical fundamentals and finished with an 
extended gain.
The market did derive its strength from the news that the G-8 has 
given its approval to the IMF to release the third tranche of $226 
million to save Pakistan's economy from a possible collapse, some 
dealers said.
They said news about the release of IMF tranche appears to be 
conflicting as it may have its political price including the 
signing of the CTBT and some nuclear related conditions.
However, the economic package announced by the finance minister 
will continue to inspire a good bit of anticipatory and speculative 
buying in the sessions to come and it will keep the market in a 
good health alone on technical grounds.
"The lower levels of most of the pivotals are an attractive bait 
and there is no harm to buy them now for quick capital 
appreciation," most analysts believe.
Bulk of the support was again confined to Hub-Power and PTCL, which 
accounted for 88 million shares, out of the total volume of 97 
million shares, signalling investors to buy them at the current 
Shell Pakistan came in for strong support at the lower levels on 
prediction of higher sales after 25 per cent increase in POL prices 
and rose Rs 25 to Rs 200 followed by Lever Brothers, which posted a 
fresh gain of Rs 9 at Rs 724.
Other good gainers were led by Adamjee Insurance, PSO, Colgate 
Pakistan, Reckitt and Colman, Fauji Fertilizer and Engro Chemicals, 
which posted gains ranging from Rs 2.75 to Rs 8. 
There were several other good gainers too including Paramount 
Leasing, Gulf Bank, EFU, National and Pakistan Refinery and PTCL, 
rising by one rupee to Rs 2.
Losses were mostly fractional barring Packages and Ebrahim Energy, 
which suffered fall to the extent of one rupee to Rs 1.50.
Trading volume showed a modest increase at 97 million shares from 
the previous 93 million shares, bulk of which again went to the 
credit of PTCL, sharply higher by Rs 1.20 at Rs 20.55 on 49 million 
shares, followed by Hub-Power, up five paisa at Rs 13.45 on 40 
million shares.
Other actively traded shares were led by ICI Pakistan, easy 10 
paisa at Rs 12.75 on 2.900 million shares, FFC-Jordan Fertilizer, 
firm five paisa at Rs 14 on 0.661 million shares, and Sui Northern 
Gas, higher 60 paisa at Rs 101.10 on 0.604 million shares.
Fauji Fertilizer also came in for strong support and ended higher 
by Rs 3.40 on 0.569 million shares, followed by Dhan Fibre, steady 
five paisa on 0.493 million shares, KESC, unchanged on 0.273 
million shares, PSO, higher by Rs 5.75 on 0.390 million shares, and 
Engro Chemicals, up Rs 8 on 0.227 million shares.
On the company news front, the directors of Cyanamid Pakistan did 
not declare any interim dividend for the year ended May 31, 1998, 
owing to post-tax loss of Rs 14.124 million.
BOARD MEETINGS: Platinum Insurance July 25, Paramount Leasing July 
31, Pakistan Tobacco August 3.

Back to the top
The meltdown
By Ardeshir Cowasjee

WHEN that intrepid dictator, President General Zia-ul- Haq, fell 
from the skies in 1988, he had reigned and ruled over this country 
for longer than any other man or woman. On his disintegration, 
Ghulam Ishaq Khan, then Chairman of the Senate, constitutionally 
took over with the avowed intent of restoring democracy
With army approval, he selected for the task Benazir Bhutto, 
daughter of his erstwhile president and prime minister, the 
martyred Zulfikar Ali Bhutto, and handed to her on a platter her 
first job  prime minister of the Republic of Pakistan. In twenty 
months, excessive greed, an insatiable appetite for power and pelf, 
her husband, her inexperience and immaturity brought about her 
downfall, leaving her and her family far richer and the country far 
To replace her, another young budding politician was selected by 
the selection committee, a rising star who since 1981 had developed 
a taste for the political game. In stepped avaricious ambitious 
Mian Nawaz Sharif.
To sum up Nawaz Sharif's background, I quote (using the obligatory 
adjective) an 'eminent' columnist, who on December 15, 1990, wrote 
in The Nation: "If the President, the Prime Minister and the top 
army brass [crafty General Aslam Beg with his claim that Pakistan 
then had 15 bombs] are all smiling at each other and are thus 
encouraging the bureaucracy to abide by the rules of the game, 
should we not all applaud? Might it not be better for the 
belaboured 'larger national interest' if Nawaz Sharif resists for 
as long as possible the natural tendency of an ambitious politician 
to test his clout and power?
"....... Nawaz Sharif's father, Mian Mohammed Sharif, was one of 
seven brothers, the eldest and the only one educated to matric 
standard. The seven started off in 1940, after pooling their 
resources, with a modest cast-iron parts business in Lahore 
city........By the end of the decade they were well on their way to 
success and all seven moved into Ittefaq Manzil on Brandreth Road. 
Somewhere in the 1950s they bought their first car, a Chevrolet, 
into which the seven piled each morning and drove off together to 
"They progressed and prospered during Ayub's rising '60s. Then came 
the PPP government [ZAB] and with it a total change of attitude and 
of Ittefaq's fortunes. The foundry was nationalized.
".......... The family moved to Dubai where they installed a steel 
plant which never really took off. There Zia met the brothers in 
1979 and asked them to return to Lahore, take back their battered 
and bruised family industry which he would denationalize and, in 
return for various concessions and administrative support, restore 
it to its former glory."
The martial law authorities were duly befriended, and in 1981 Nawaz 
Sharif was appointed finance minister in their Punjab cabinet.
Business flourished, expanded and diversified. In 1985, Nawaz 
Sharif won seats in both provincial and national assemblies  and 

that was that. From chief minister of his home province (re-elected 
in1988) onwards to prime minister of the Federation in 1990.
He chose not to tread the straight and narrow. He and his 
government made no serious effort to bring back what had been 
robbed by Benazir Bhutto and her cronies to convict the guilty of 
their crimes. And for good reason. He and his men went on the 
rampage, consolidating power, giving away what was not theirs to 
give, using their clout to bankrupt the cooperative banks and 
societies, and to borrow money from the nation's banks and DFIs 
without adequate security.
Finally, not because Nawaz Sharif had robbed and plundered, but 
simply because he had dared to challenge his authority and his 
Pathan honour, Ghulam Ishaq Khan removed him. Nawaz went to the 
Supreme Court. The then Chief Justice, Dr Naseem Hasan Shah, and 
his brother judges, wrote a 'historic' judgment judicially 
restoring Nawaz Sharif to power. The Doctor still retains the sense 
of humour for which he was famous when on the Bench. When I asked 
him how he now feels about his 'historic' judgment, he sighed and 
answered, "Well, we could have done worse."
Ghulam Ishaq and Nawaz Sharif were shot out two months later by The 
Man who came to Dinner, COAS General Wahid Kakar. Moeen Qureshi, 
Benazir Bhutto and Farooq Leghari followed in turn and compounded 
the rot.
Both Benazir Bhutto and Nawaz Sharif, their cronies and henchmen, 
have robbed. The former lot had a straight forward approach. They 
took kickbacks, they stashed money abroad. Some say they have 
robbed up to $2.5 billion. Nawaz Sharif is believed to have also 
whisked money abroad, but being a failed businessman, his 
concentration has been on borrowing beyond his means at home and 
extending his industrial empire. As of now, he and his family are 
owners of 26 large industrial units. According to the CIB State 
Bank figure, they are in default to the tune of some Rs.5 billion 
(500 crores).
This most influential of defaulters has resorted to a unique method 
of repaying a portion of the amount owed. Before me lies a copy of 
an agreement dated June 30, 1998, on Ittefaq Foundries letterhead, 
drawn up by the debtors' lawyers, headed "The terms of the 
arrangements under Section 284 of the Companies Ordinance 1984 
between the Ittefaq Foundries (Pvt) Ltd ...... and the creditor 
banks namely, (1) the National Bank of Pakistan, (2) Habib Bank 
Ltd, (3) United Bank Ltd, (4) Agricultural Development Bank of 
Pakistan, (5) Muslim Commercial Bank Ltd, (6) Pakistan Industrial 
Credit and Investment Corporation, (7) Bank of Punjab, (8) First 
Punjab Modaraba."
It has been signed by the Company, and sent to the eight banking 
concerns, which have also signed it, without making any reference 
to the principal creditors involved, i.e. the sovereign Government 
of Pakistan, the ministry of finance, the State Bank of Pakistan, 
or the directors on the boards of the creditors.
Normally, neither creditor nor debtor rushes to the court unless 
one or the other is aggrieved. In this case, the agreement makes it 
mandatory "that the creditor banks shall move the Lahore High 
Court, Lahore", to sanctify the agreement, failing which "the 
Company will also be at liberty to apply to the High Court in this 
The agreement was sanctified on July 8, 1998, by Justice Malik 
Muhammad Qayyum, the experienced High Court banking and company 
judge. It envisages, inter alia, the appointment of "a Board 
comprising a representative of the Banks and a nominee of the 
Court. The Board, shall be empowered to manage the property during 
the interregnum, if need be to develop the same through a 
development scheme, or otherwise, and take all necessary steps, as 
deemed fit by it, to secure the maximum sale price. The Board shall 
have the authority to dispose of the property in such manner as 
considered proper by it. The Board may seek guidance from the Court 
on any issue. Any difference of opinion between the members of the 
Board shall be resolved by the Court. All sales shall be subject to 
confirmation by the Court."
The agreement is loaded in favour of the debtors. Ironically, the 
creditors, the sovereign people of Pakistan, having relinquished 
voluntarily most of their rights, according to the agreement, agree 
"that this arrangement is without prejudice to the rights of the 
creditor Banks and the Company under the law."
The agreement does not mention the fact that the debtor company, 
Ittefaq Foundries, is claiming Rs.5 billion from the Government of 
Pakistan, i.e. UBL and the other banks. This newspaper of record, 
in its issue of July 9 has rightly front-paged and reproduced the 
full text of the agreement made by "the insolvent concerns."
Although the prime minister promised the nation, in one of his 
televised addresses, that he and his family would hand over their 
assets in repayment of their defaulted loans, none of the assets of 
the lucrative units have been handed back. Referring to the 
philanthropic activities of the family recently fanfared at 
Raiwind, an independent citizen remarked, "Who does the PM think he 
is, the Robin Hood of Raiwind? He does not pay back to the people 
what he owes, he doles out charity at their expense."
To stay in power and out of fear of being bankrupted by a 
succeeding government, the ruling party will do what is right by 
it, not what is right by the people. To quote from the front-page 
of Dawn of July 18: "The government has given up its plans to 
arrest defaulters and utility bills defaulters as it is meeting 
growing opposition to the plan from within its own constituencies. 
The imposition of General Sales Tax as defined by the IMF is also 
said to have been deferred indefinitely because of pressure from 
within the PML."
Likewise, the ruling party will continue to give in to the 
unjustifiable demands of its coalition partners, disregarding the 
safety of life and property of the people of Karachi. The meltdown 
has begun.

Full circle 
Irfan Husain

BARELY a year-and-a-half into his second tenure, serious questions 
are being raised about Nawaz Sharif's ability to complete his term.
If the economy has been our nuclear programme's first casualty, 
this government has not escaped massive collateral damage. 
Suddenly, thoughtful columnists are discussing endgame scenarios, 
and talk of imminent political changes is dominating dinner-table 
conversation across the country. A few days ago, this newspaper's 
Lahore and Islamabad bureaus filed reports about such rumours and 
possibilities. Indeed, a well-informed and extremely well connected 
friend has placed a bet with me that Nawaz Sharif won't last 
through August.
Far too often, this kind of gossip and forecasts become self-
fulfilling prophecies that generate their own pressures and 
activate lobbies: at such times, there is a strong feeling of deja 
vu as discarded politicians crawl out of the woodwork and retired 
generals and civil servants wait for that crucial phone call.
Normally, I would denounce such talk of adventurism and appeal to 
all concerned to stick to the constitutional path. But as I survey 
the wreckage of the economy, and gauge the palpable depression that 
prevails all around, I must confess  for probably the first time 
in my life  that there is a growing divergence between the 
requirements of democracy and the needs of the country. I, and many 
others in Pakistan, have been driven to despair by the antics of 
our politicians.
When Zia died and full democracy was restored ten years ago, the 
received wisdom was that the quality of our legislators and leaders 
would improve with each successive election as voters weeded out 
dishonest and incompetent candidates. A decade and four general 
elections later, we see the same crooks and charlatans packing the 
assemblies as Benazir Bhutto and Nawaz Sharif take turns at milking 
the nation and driving it closer to complete financial and moral 
Clearly, something is seriously wrong with the system; but since it 
works well for both the PML and the PPP, neither has any incentive 
to reform it. And since the present dispensation is skewed in 
favour of the two mainstream parties, they will continue to ruin 
the country turn by turn until there is nothing left for them to 
loot. Already, we are at the brink of financial and institutional 
meltdown, and since both major political parties are part of the 
problem, there is no way they can also be part of the solution.
So where do we go from here? Forgetting the modalities for a 
moment, if there is to be a change, we cannot simply repeat the 
familiar cycle of a short-term caretaker arrangement followed by an 
election that returns either Benazir Bhutto or Nawaz Sharif to 
power. We've been there and done that once too often. Putting 
constitutional niceties aside, we clearly need a period of sanity 
and stability in which politics can be placed on the back burner 
while we sort out more pressing matters.
Easier said than done, I know. But we should remember that 
democracy is the means to an end, and not an end in itself. The 
purpose of any political system is to work towards the wellbeing of 
the population, and by this yardstick, democracy in Pakistan is not 
working. The strength of democracy as opposed to any other 
dispensation is that after a fixed tenure, the voters can turf out 
an incompetent and corrupt government and vote in another. But as 
things stand today, installing another party in power in Pakistan 
is like jumping from the frying pan into the fire.
If the system is perilously near collapse today, it is the 
politicians who are to blame. But they are so thick-skinned and 
shameless that they will go on squabbling over petty matters and 
raking in the loot while the ship of state sails perilously into 
the eye of the raging storm. The point here is whether we can 
afford to have such an irresponsible set of poltroons at the helm?
But if not them, then who? In case of an in-house change that is 
being much discussed these days, I just cannot see anybody of 
stature in the Parliament who would be acceptable to the major 
political parties, the army and international community. The latter 
is important because we will need the support and understanding of 
the donor community to gain some breathing space for the economy to 
revive. Also a sitting representative would be subject to the usual 
partisan pulls and pressures.

Given the royal mess politicians have made and the situation where 
the country finds itself today, I doubt if a soul would venture out 
into the streets to protest against the sacking of this government 
and the temporary suspension of political activity. By freezing 
foreign exchange accounts and mismanaging the economy, the 
government has lost much of the support it enjoyed among the 
business community. Internationally, too, there would be scant 
sympathy for our discredited leaders who are perceived abroad as 
self-centred crooks.
None of this is easy for me to say as I have supported democracy 
from the day I started thinking seriously about politics. In this 
and other columns elsewhere, I have consistently opposed extra-
constitutional intervention and reposed my faith in the people as 
final arbiters of our national destiny. But over the years as I 
have witnessed our politicians squander opportunity after 
opportunity to establish the writ of civil society, I have 
despaired of their ability to learn from their mistakes. A friend 
recently suggested the presidential form of government as a 
solution. Been there, too, and done that.
The point is that irrespective of constitutional arrangements, if 
our leaders are determined to be irresponsible and corrupt, no 
system can prevent them. To return to the question of who could 
preside over a three- or five-year interregnum, the name of Farooq 
Leghari comes to mind. Despite the lingering stigma of Mehrangate, 
he is relatively clean and behaved with honour and dignity by 
resigning during the constitutional crisis last year. In 
retrospect, one almost wishes he had chosen the other path open to 

But looking at the other actors on the national stage, I can't 
think of anybody else who has Leghari's qualities and support. One 
reason I wish he plays a role in the country's future is that his 
soon-to-be-launched Millat Party advocates joint electorates as 
well as equal rights for minorities and women. We have moved so far 
back in time that such perfectly ordinary recommendations seem 
positively revolutionary.
Anyway, whoever is to take charge had better do so quickly and 
decisively, as we don't have much time left.

Talbott visit: NPT & CTBT
Agha Shahi

US Deputy Secretary of State Strobe Talbott is visiting New Delhi 
and Islamabad from July 20 to 22 for talks with the prime ministers 
of India and Pakistan on their willingness to comply with the non-
proliferation goals as set forth in P-5 joint communique of June 4; 
Security Council resolution 1172 of June 6 and the G-8 declaration 
of June 12 of this year.
The State Department warns that unless President Clinton 
determines, on the basis of the outcome of the talks, that the two 
nations have made "substantial progress' towards compliance, the US 
sanctions imposed for having conducted nuclear test explosions will 
not be eased or lifted "in part or the whole". Legislation to 
empower the US president for a limited period of one year to remove 
the sanctions is currently under Congress consideration.
Assistant Secretary of State Karl Inderfurth, in his testimony to 
the Senate Foreign Relations Panel on July 15 spelled out the 
conditions that India and Pakistan must fulfil if the punitive 
measures are to be revoked. There are said to be 13 conditions 
which must be fulfilled. Signing the NPT is not one of the 
conditions. Having become a nuclear state, Pakistan cannot be 
expected to renounce its nuclear capability, terminate its nuclear 
programme and submit itself to the international inspection of its 
uranium enrichment facilities which accession to NPT would demand.
India is reported to be willing to sign the NPT, but only as a 
nuclear weapon state. It would then enjoy the same prerogatives as 
the five declared nuclear weapon states  legitimization of 
possession of nuclear weapons, entitlement to receive unrestricted 
transfers of nuclear or dual-purpose technology and exemption from 
international inspection of military nuclear plants.
Negotiations between Jaswant Singh and Strobe Talbott are taking 
place. India aims to strike this kind of bargain in return for 
signing the NPT and CTBT. At this juncture, the P-5 may reject 
India's importunate overtures. But they face a dilemma. Can India, 
after its five nuclear weapon tests last May, accept to continue to 
be treated as a threshold nuclear state? If not, what kind of new 
status is to be conferred on it? The NPT cannot provide an answer: 
it only defines a nuclear and a non-nuclear state, excluding any 
third category.
India's bid for a formal nuclear weapon status comes as no surprise 
to those who have followed its track record in arms control and 
nuclear disarmament negotiations over the last thirty years, 
particularly since the 1960s. Around 1963 its Canadian-donated 
CIRUS 40 MW reactor went critical and several years later, the 
French-supplied chemical reprocessing plant became operational, 
providing separated weapons-grade plutonium for the manufacture of 
nuclear weapons.
In 1968, the UN General Assembly adopted the text of the NPT as 
drafted by the United States, the Soviet Union and Great Britain 
dividing the world between five nuclear weapon states on the one 
side and on the other discriminating against all the rest of the 
states which were non-nuclear. It did not require much foresight on 
my part as Pakistan's Permanent Representative to the UN to 
visualize that India would acquire nuclear weapons with the next 
few years.
Pakistan had denied itself the possibility of acquiring a potential 
nuclear capability by refusing to pursue the offer of France to 
supply a reprocessing plant, despite the repeated recommendations 
of the Foreign Office not to forgo the opportunity. In the 
circumstances, the best that could be done to protect Pakistan's 
interests was to enter the reservation, before the General 
Assembly's approval of the NPT, that Pakistan would become a party 
only if the "near-nuclear states" (Argentina, Brazil, South Africa, 
Israel and India) also became party to the NPT.
That linkage with India on the NPT has well served Pakistan's 
interests for thirty years. And now after the two have carried out 
nuclear tests, Pakistan has delinked its signature to the CTBT from 
India's signature.
Delinking has taken place under situation of duress and prophecies 
of doom, should the IMF, because of sanctions, refuse to release 
$225 million within the next two months to Pakistan. Hence the 
readiness to sign the NPT but subject to conditions before India 
In my critique of Security Council Resolution 1172 (Dawn, June 13, 
'98), I had commented on what the Security Council expected of 
Pakistan by way compliance with its conditions. For instance, non-
weaponization of missile systems and their non-deployment should be 
acceptable but on a reciprocal basis with India.
Both India and Pakistan have severally declared unilateral 
moratoria on nuclear testing. But India refuses to translate these 
declarations into a joint commitment. Should Pakistan sign the CTBT 
before India does, it would at once forgo nuclear tests for all 
time. India would retain the testing option which it may well 
exercise any time.
India cannot gain nuclear weapon state status in accordance with 
NPT. It could opt for conditional accession to CTBT although 
Security Council and P-5 insist on unconditional accession. 
Nevertheless, India could hold out for transfer of nuclear 
technology and exemption from international inspection of military 
nuclear facilities. Such concessions would of course conflict with 
the relevant obligations under the Non-Proliferation Treaty, but if 
accommodated, despite the latter's non-transfer provisions, it 
would imply acknowledgement as a de facto nuclear weapon state.
Pakistan, having severed the nexus with India's behaviour, could 
make its own adherence to CTBT conditional on being accorded the 
same concessions that may come to be extended to India for the 
latter's eventual accession to CTBT if the P-5 and other 
signatories pledge their acceptance in advance. If not, they could 
choose to object. Pakistan having already entered into the treaty, 
would then not be in a position to challenge them under the rules 
of international law relating to reservations to multilateral 
treaties. It would have to remain a threshold non-nuclear state, 
forced to acquiesce in the discrimination meted out by the P-5 and 
other CTBT signatories.
Delinking Pakistan from the nexus with India may be good public 
relations and ease temporarily our present predicament. Whether it 
would serve the national interest is another matter.
On the Fissile Materials Cut-Off Convention, negotiations in the 
Conference on Disarmament have yet to take off. Pakistan will, of 
course, be participating in them even though the "agreed mandate" 
for these negotiations, as pointed out in my critique of SC 
resolution 1172, is seriously flawed. Hence it would be highly 
premature for Pakistan to commit itself before how the text of the 
Convention turns out to be, particularly its provisions for 
verification of fissile materials production. Also, India may well 
become less enthusiastic about submitting its present inspection-
free reactors producing plutonium, its reprocessing plants and 
other plutonium-related facilities to international inspection. 
FMCT, is likely to take several years from now to enter into force. 
Delinking from India at this stage is not called for.
Pakistan's pledge not to export its uranium enrichment technology 
is a long-standing one and is not linked to India's policy relating 
to export of weapons of mass destruction. Islamabad is now called 
upon to formalize its existing policy and extend the commitment to 
non-transfer of missile technology and equipment. What precise form 
this formalization is to take is not clear.
Bilateral talks on Kashmir, the root cause of fifty years of 
tension between Pakistan and India, and the cause of two wars are 
to be resumed following the meeting between their prime ministers 
on the fringes of the SAARC summit in Colombo later this month. It 
needs to be made clear, however, that any territorial settlement 
based on a division of the State of Jammu and Kashmir along the 
Line of Control would flout the wishes of the Kashmiris and would 
as such be unacceptable.

This stand needs reiteration in view of any incipient tendency on 
the part of the international community to pressure Pakistan into 
succumbing to India's obduracy in order to get rid of the dispute. 
Pakistan has been striving for a right settlement, not just any 
The Security Council's offer to assist in the bilateral dialogue is 
subject to a request by both sides. As India declines this 
assistance, will the Security Council's role be that of a 
The attraction of India as a future strategic partner and building block in
the architecture of the new global order should not be 
allowed to prevail over the consideration of principles of justice 
and international law in the peaceful resolution of the Kashmir 

Jansher to defend title; Amjad in main round
A. Majid Khan

KARACHI, July 22: All the top world ranking stars, including 
Pakistan's world no two defending chammpion Jansher Khan and Amjad 
Khan, ranked 27, have entered into the Hong Kong Open squash, 
scheduled to begin from Aug 24.
Amjad Khan, the rising Squash star of the country, is the only 
other Pakistani after Jansher Khan to be in the main round of the 
The 74,000 Us dollars Hong Kong Open,the second supeseries event 
after the British Open marks the resumption of Super series . The 
seven-day contest has attracted all the leading players of the 
Professional Squash Association circuit. Several other PSA ranking 
players would also compete in the qualifying round for filling the 
eight places reserved in the 32-player main draw to be announced 
Jansher Khan, who had lost his world number one ranking at the 
beginnig of the year to Scotland's Peter Nicol, had undergone 
surgery of his both knees at Lahore in April after losing the 
British Open title to Peter Nicol.
Last week he flew into Karachi to have practice games against 
former world champion Jahangir. Jansher Khan appears to be getting 
into rhythem but needing more aglity on court and with a month more 
for the coming battle he is well poised to face the challenge in 
Hong Kong.

Asian squash: Qamar satisfied with performance
KARACHI, July 20: Team manager Qamar Zaman, a former British Open 
champion, said here today that Pakistan gave highly satisfactory 
performance by winning both the individual and team titles of the 
Asian Squash Championship which concluded at Kuala Lumpur, on 
Talking to Dawn after the victorious team's return here on Monday 
afternoon from Kuala Lumpur, Qamar Zaman said the four-member 
team,captained by seasoned Zarak Jahan, maintained its domination 
in the championship but we faced a stiff challenge from hosts 
Malaysia led by Kenneth Low.
The manager stated after winning the Asian individual title against 
Kenneth Low, Zarak Jahan Khan complained about miscule problem 
before the start of the team championship that followed the 
individual event.

Defending the team title turned out to be more challenging and 
demanding particularly against Malaysia in the final. He and coach 
Mohibullah Khan then decided to field Humayun Khan (No 4) instead 
of Shamsul Islam Khan, who was at number three.
This strategy worked well. Asian junior champion Mansoor Zaman at 
number two, outplayed Malaysian number two Yap Kok Four in straight 
three games but number one Zarak lost to Malaysian no one Kenneth 
Low by 1-3 before Humayun Khan eliminated Michael Soo in the title-
winning encounter in straight three games, and Pakistan retained 
the team title, said the manager.
Davis Cup: Pakistan to meet Thailand in Asia Oceania G-II final

ISLAMABAD, July 21: Pakistan would host the final of  Davis Cup 
Asia Oceania Group-II against Thailand, this was  officially 
learnt  here on Tuesday.
The venue has not been decided as yet. "We would be holding a 
meeting  in a couple of days to decide about the  venue,"  Ali 
Akbar, Secretary, Pakistan Tennis Federation (PTF) said, here 
The last date for communicating the venue to the International 
Tennis Federation (ITF) is July 29.
The  PTF Secretary  hailed  Pakistan's  4-1  triumph   against 
neighbours Iran in Tehran which placed Pakistan in the final of 
the group-II after 1989. "This itself is big achievement and our 
top players have done a fine job."
Talking to Dawn, manager of Pakistan team Mohammad Taufeeq, Sports 
Officer POF, Wah, said Pakistan displayed  great determination and 
commitment for the crucial tie. "It was a  good decision to land in 
Tehran five days prior to the event, because the boys had a good 
chance of practising on the red clay  courts.
The organisers also allowed us to practice on the championship 
courts as well at the Inkilab Sports Complex".

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