An alliance for democracy

THE coming together of Pakistan’s two most dominant political parties that emerged first and second from the recent general election is a much needed, and much appreciated, show of political maturity. In essence, slain former premier Benazir Bhutto’s PPP and former prime minister Nawaz Sharif’s PML-N’s meeting half way in terms of political interests is the essence of democracy, signifying much has been learned by both sides during their long years in the wilderness while the Musharraf-group effectively ran Pakistan. The most pressing matters of Musharraf-deposed-judges and PML-N’s representation in cabinet have been handled rather amicably, much to the relief of stakeholders. Sharif had based his entire campaign on the promise of restoring ousted elements of the judiciary, a stance on which the Zardari-headed group had been somewhat lukewarm. The PPP’s concerns, on the other hand, had mostly revolved around weakening of the newfound friendship between formerly bitter foes owing to Sharif party’s reluctance in hopping into a cabinet sworn in by Musharraf, a president they refuse to recognise as legitimate. However, by the time the two leaders shook hands in the Murree hill resort on Sunday, they had agreed to let parliament decide on the judges’ fate within its first 30 days, in return for Sharif’s commitment to join the cabinet, making for yet another minus for Musharraf and his boys hoping for the split to deepen instead.
All is still not smooth, though. The winning party continues to struggle with the prime minister’s nomination, adding to public and media concerns about a bickering within, something that, if true, hawks in the recently ousted party will be quick to pounce on. It is advised that party elements answerable to the leadership exercise restraint in venting frustration via popular media because their personal opinion finds none better than themselves for the chief executive’s position. Such exceptions have already brought an undesirable feel to the post vote exercise, and threaten to discredit the victorious party, the people’s judgment and the national image before the most important decisions are taken. Pakistan stands at perhaps the most important crossroads in its history. It is difficult to rebut critics who claim the federation’s very unity is at stake as terrorist elements continue to expand their operations beyond the untamed frontier bordering Afghanistan, eating into Pakistan’s social and political fabric. Sharif and Zardari have exhibited sensibility and political ripeness by building on strengths as opposed to the all too familiar trend of exploiting weaknesses. Already, their approach has beckoned bullish sentiment on Pakistan’s stock in the international socio-political market. Their alliance is long-term, something that will force them to revolve around the bond and hammer out mutually agreeable solutions to whatever problems will come their way, since acting in personal interest would amount to breaking the coalition and the government, the proverbial shooting oneself in the foot. Pakistan has already begun progressing.




Oil and speculation

OIL hit $107 a barrel. Analysts and assorted crystal ball gazers have their own ideas about the reasons for the record highs. Rocketing demand in China and India, the limited capacity of US refineries or fears about production in Nigeria — or Angola — or Iraq — or some other oil-producing state. The most tenuous of arguments is used to justify and explain the seemingly inexorable rise. Last week, it was tension between Venezuela and Colombia and the US Labor Department’s report that 63,000 American jobs were lost in February. The former, it was construed, might affect Venezuela’s exports while the latter would add pressure for more US interest rate cuts which would then further weaken the dollar and result in investors turning even more to oil as a safe haven. It is all speculation — based on yet more speculation. No one, for example, knows what the medium- to long-term Chinese demand is. In fact, not even the Chinese know. They are quite candid about it — although they have also said that in the short-term, demand is well within the producers’ capacity to supply. It is not the market that is forcing prices up; it is dealers and speculators. No one can be left in any doubt about that after last week’s OPEC meeting. Despite international pressure to increase production (so as to bring down prices), the organization refused on the grounds that there is no demand for extra oil. The market continues to be well supplied, it says. Indeed OPEC thinks that demand will decline because of the economic slowdown in the US and a global decrease in requirements. The speculators were not listening. Within a day of the OPEC meeting, the price rose to the new high of $106.
Oil at this price is not good for producers. It makes investment into less accessible oil deposits more viable, thus increasing global supply, while at the same time it encourages consumers to cut consumption. That is already happening. Faced with rising pump prices, Americans now pool cars going to work, question whether a particular journey is necessary, or are spurred to buy hybrid cars. And it is not just Americans who are going to buy hybrid: Anyone who thinks the Chinese and the Indians are going to stick with expensive all-petrol vehicles needs to have their heads examined. Put everything together and what we see is supply outstripping demand. Whether it is the Saudi stock market, the US media adoration of Barack Obama, or property prices in the US, bubbles eventually burst. The same is bound to happen to oil prices at some point. Based as they are at present on nothing more substantial than speculation, it is inevitable that they will fall when reality hits home. Oil at $70 to $80 a barrel is a more realistic scenario (but still excellent news for the Saudi economy with this year’s massive budget based on an assumed price of $50 a barrel). Sooner or later, market forces will return to center stage. When they do — and from what OPEC is saying about current demand it could be sooner rather than later — it will surely mean burned fingers for investors who bet on present sky-high prices.

—Arab News