Clearing the backlog

AFTER remaining indifferent spectators for well over a year, the authorities of the country are trying to make up for the lost time and are clearing the backlog in a hurry. It was only a fortnight back that the government had announced a considerable increase in domestic oil prices as well as electricity tariff. On 15th March, it again revised the prices of petroleum products upward by about seven percent. According to an Oil and Gas Regulatory Authority (OGRA) notification, the price of petrol goes up to Rs 62.81 per litre from Rs 58.70, diesel from Rs 36.07 to Rs 38.59, kerosene oil from Rs 38.73 to Rs 41.44, and HOBC to Rs 74.77 from Rs 69.88 with effect from 16th March, 2008. The upward revision in prices, the government said, was inevitable to cut down subsidy on petroleum products which had amounted to Rs 80 billion during the first eight months of the current fiscal year. It was revealed that the cumulative differential for the fortnight would still be Rs 10.5 billion which the government would bear as subsidy. According to Ogra, even after the increase in prices, the government would have to provide a subsidy of Rs 18.05 per litre on kerosene oil and Rs 16.02 on diesel. The fact is abundantly clear that it was not possible for the government to keep the domestic prices of petroleum products stable when the international prices of oil were now hovering around $110 per barrel and the government had projected an average price of only $69 per barrel in its last budget. Any further delay in pushing up the domestic oil prices would have raised the level of subsidies to new heights, resulted in a much larger budget deficit than the target of four percent of GDP envisaged in the budget for 2007-08 and breached the provisions of FRDL Act, 2005. Of course, the increase in domestic prices of POL products would accentuate inflationary pressures in the economy and erode international competitiveness of our products, but the risks of a high budget deficit and fiscal mismanagement would also be equally horrendous. In fact, even the developed oil importing economies are not immune to the shocks of increasing international oil prices and have to adjust to the new situation by raising the domestic petroleum prices, which has pushed up their inflation rates and reduced their growth potential and export prospects. The plight of lower strata of society in some of the countries is particularly distressing because they have to face higher food inflation and, in certain cases, loss of employment.
However, while recognising the inevitability of such a move, a few observations would be in order. Authorities in Pakistan could have managed the crisis of soaring international oil prices in a better way if they had adhered to the policy of adjusting domestic oil prices with the international trends periodically and not allowed political expediency to prevail over economic imperatives. Both Shaukat Aziz and the Caretaker Governments were guilty of this opportunistic tendency. While the Shaukat Aziz government reneged on its promised policy altogether, the Caretaker Government took the unpopular action only in its last days in office when it did not have to bother about its political cost and inflationary consequences of the measure were to be felt after it had departed from the scene. In fact, the new government may be forced to raise the prices of POL further if the prices in the international market continue to increase at the present rate and it wants to stick to the original budget estimates or, at least, follow a prudent fiscal anagement. Also, every government talks about measures which could improve the overall fuel and energy situation by taking certain imaginative steps, but no real efforts are yet seen on the ground with the result that dependence on imported sources of fuel and energy continues to increase.




Back to violence

THERE is a grim familiarity about the violence on Monday in the Serbian half of Mitrovica. It smacks of the same low-level confrontations that preceded the conflict in Bosnia, not least in the town of Mostar where, as in Mitrovica, a bridge divided two rival ethnic communities, in that case Bosnians and Croats. As a result of Monday’s riots, a Ukrainian serving in the UN police force died yesterday of shrapnel wounds. NATO troops called in to support the beleaguered UN police oversaw their withdrawal from the northern part of Mitrovica, which is now entirely in Serb hands and reportedly patrolled by Serb policemen who have refused to accept orders from the Kosovar authorities. The UN says that its departure from the Serb part of the town is only temporary but no one is giving any idea of when the internationally mandated peacekeepers will return. It can be expected that in the meantime, the rebellious Serbs will quickly turn their canton into a fortress in the expectation that the UN will cry off the blood-letting that would be caused by any attempt to return. Thus, part of Kosovo will become a no-go area for the authorities and a de facto independent Serbian enclave, that will be supported, overtly or covertly from across the border in Serbia. Such a Serb territory might also serve as a base from which paramilitaries will sally forth to attack targets elsewhere in Kosovo, as part of a rising tide of rebellion. This in itself would be extremely dangerous and might well foster revenge attacks from Kosovar paramilitaries, thus starting a new Balkan range war. Yet, unless the international community is prepared to act in Mitrovica immediately to reassert its control and the control of the government in Pristina, whose interests it is there to protect, it seems certain that the town’s Serbs and the wider ethnic Serb Kosovar community will be emboldened by a significant victory.
The UN police administration, its NATO protectors and the EU peacekeepers who will shortly be replacing them are between a rock and a hard place. There is no use wondering why the UN police risked the showdown by re-taking a court house in the town seized by Serb militants last week. If it had not been this incident, it would have been something else that catalyzed Serbian violence. The only useful consequence of Monday’s rioting was that it was condemned, albeit mildly, by the Serbian government in Belgrade, which also pointed out that 70 demonstrators had also been injured along some 63 UN police and NATO peacekeepers. There is an argument that the Kosovar government should go gently here and not protest too vehemently the rebellion on its territory. That will very probably be the advice that Brussels is already giving privately as it prepares to take over responsibility for the new country’s peace and security. The EU’s main weapon is not force but prosperity. This said, its economic offer will need to be rapid, convincing and generous if it is to nip this new violence in the bud.

—Arab News