Category Archives: Economy

Reko Diq: Pakistan versus Gold Diggers

These narratives show how foreign investors are a double-edged sword for Pakistan. TCC was suspected of lending support to Baloch separatists. 

Pakistan has recently been garnering a lot of attention in international tribunals. A recent case is the Reko Diq case, which led to arbitration in the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). In Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan (ICSID Case No. ARB/12/1), ICSID has ruled that Pakistan has to pay a $5.8 billion penalty to a mining company, the Tethyan Copper Company (TCC). It is an oddity that the Pakistani public has been disabled from knowing the full details of the ICSID arbitration judgment. The condition for the publication of the award is that both parties must consent to its publication and apparently there is no consensus that it should be published, or alternatively there is consensus that it should not be published. Either way that is rather opaque and lacks transparency. Yet we do know the identities of the arbitrators and the costly law firms employed by the parties and all the procedural steps in the arbitration (which is rather pointless indeed without knowing the full and exact details of the final arbitration award). 

It is rather appalling that the award is not in the public domain and the people of Pakistan are being denied access to the full details of the decision. Reko Diq is a region in Balochistan that has large gold and copper reserves. TCC acquired an exploration license in 2006, buying it from the company BHP Minerals. Though this seems a very recent mining project, TCC itself is a joint venture by other foreign companies, and BHP had been granted licenses since 1993 by the Balochistan Development Authority (BDA) under the Chagai Hills Exploration Joint Venture Agreement (Chevja). Now that TCC was exploring Reko Diq’s reserves, it completed its feasibility study in 2010, and applied for a mining lease, but it was denied. Chevja had been challenged by petitioners before. In 2013, the Supreme Court decided that the agreement (Chevja) was void ab initio. In 2009, the provincial government had already terminated Chevja. Continue reading

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Filed under Accountability, Balochistan, Corruption, Courts, Discussion, Economy, Legislation, Mining, Pakistan, World Bank

India’s tit-for-tat policy in its trade war with the United States: A master stroke or miscalculation?

India has long had a field day putting tariffs on American products. No longer acceptable!

Because the G-20 failed to restore the international trade order, on 9 July 2019 American President Donald Trump fired off yet another Twitter attack. This tweet from the US President was posted after a few days of the G-20 Summit, when he met Indian Prime Minister Narendra Modi at the sidelines of the G-20 Summit late last month, where the two leaders agreed upon further meetings to resolve the escalating matter of trade disputes which included import quotas on agricultural goods and to put price caps on medical devices. The other hindering topics included:  outsourcing of intellectual property protections on generic drugs. Moreover, ever since taking office, President Trump has focused on reducing bilateral trade deficits to reduce national security impact of steel and aluminum imports, however, a deadlock was avoided up until the recent but significant change in Prime Minister Modi’s approach after getting elected for a second term.

The decision to revoke India’s status for special trade treatment and the slap back tariffs by India on US goods and services has quickly led Washington and New Delhi towards an impasse. The desire 0f the Modi  government to please domestic constituencies has further aggravated the situation to a tit-for-tat stand-off and India has escalated a trade battle by slapping new tariffs on American goods, a battle that was never worth fighting and may now indeed backfire. Furthermore, India had announced retaliatory tariffs back in June last year, but they were recently implemented. The 120% tariffs on US goods and services are limited in nature and largely symbolic but show a shift from restrain to a tit-for-tat policy by India. Modi government’s shift backward on market openness, with increasing tariffs on a few dozen goods, new regulations on e-commerce and a push for data localization in its growing digital economy is what has upset the Trump administration. Continue reading

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Filed under Discussion, Economy, India, Pakistan, Politics, Trump, United States

Qatar and the Global Energy Market: The Politics of Natural Gas

Pakistan’s position in this dilemma is unique; it enjoys ties with Qatar, as well as with Saudi Arabia and the United Arab Emirates.

On 22 June 2019, Emir of Qatar Sheikh Tamim bin Hamad Al-Thani arrived in Pakistan on the invitation of Prime Minister Imran Khan for a two-day state visit. The state visit was specifically aimed at strengthening bilateral ties and improving cooperation in diverse fields between Qatar and Pakistan. In addition to the one-on-one talks between the Emir, Prime Minister Imran Khan and President Arif Alvi respectively, delegation-level meetings were also conducted between representatives of both countries. Notably, one of the most important results of this visit was the subsequent pledge for mutual cooperation with regard to gas exploration and the energy sector. The sheer competitiveness of the energy market is a stark reality. In a bid to secure a pivotal multi-billion-dollar supply contract, the Qataris reduced prices of liquefied natural gas (LNG) for Pakistan in May 2019.

With Saudi Arabia and the United Arab Emirates both offering enticing offers concerning deferred oil and LNG payments for Pakistan, Qatar sought to modify LNG prices in order to successfully secure the deal. It is reported that presently, Qatar exports ‘500 mmcfd [million cubic feet per day] to Pakistan under a 15-year agreement struck at 13.37% of Brent crude price.’[i] Pakistan has been negotiating with a number of countries including Russia, Turkey, Malaysia, Azerbaijan and Italy with regard to attaining long-term gas deals. Saudi Arabia (and state-owned petroleum and natural gas company Aramco) has also shown interest in securing a gas deal with Pakistan. Continue reading

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Filed under Discussion, Economy, Energy, Pakistan, Pakistan Horizon, Politics, Russia, The Middle East

Is Venezuela No More?

One should not be wonderstruck if many Venezuelans crave to live elsewhere because the economic, political, and overall human rights situation in Venezuela is nothing short of a disaster. What used to be a robust economy not more than a decade ago, has slipped into grave peril inasmuch food has become a source of conflict among the poor families, and women are selling their ‘hairs’ in order to satisfy their families’ appetite. Indeed, the basic provisions, such as toothpaste, milk, or bread, which we all take for granted are what Venezuelans yearn for and beg for. Many people are spending hours just to try to find something to eat from the ‘food waste’. In its heyday, given the colossal oil reserves, Venezuela had reaped a lot of benefits and was able to export 100,000 barrels of oil, per day to Cuba only. Due to relying specifically and excessively on oil, the latter accounted for 95 per cent of the Venezuela’s export.

Hugo Chavez, the former president, with a desire to make the most out of the country’s oil production, sweepingly nationalized the private companies which as an attempt went into a tailspin after the oil prices started to tumble. Hence, the corruption and mismanagement became rampant and the hyperinflation inevitably followed. Worst, all the money was spent, and no money for further production was left. Now the situation at its best is chaotic, and some say, at its worst, worse than the great depression of the United Sates. However, the experience of this economic downfall in practice is more frightening. A cup of tea costs 7000,000 bolivars in Venezuela and people prefer to exchange goods instead of paying or receiving cash. Since this crippling economy and the grave humanitarian crisis are the upshot of political dysfunction and mismanagement of the institutions, many experts believe it is ‘socialism’ at its end in Venezuela. Continue reading

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Filed under Accountability, Corruption, Discussion, Economy, Human Rights, Politics, Refugees, United States, Venezuela

Why Brexit is a vicious cycle

According to Ken Clarke, the Father of the House of Commons, “The ordinary rules of conventional politics cannot be applied to the last two-and-a-half, three years of Brexit politics.”

Winston Churchill, the legendary prime minister of the UK, took the view that every time we have to decide between Europe and open sea, it is always the open sea. The repercussions of such thoughts never dawned upon him but now it seems that the chickens have finally come home to roost with only 20 days remaining until Brexit day. The clock is ticking. The idea of Brexit, which is in fact driven by a hatred of foreigners and a false sense of superiority among the racist natives of England, is a vicious cycle. Be it a deal or no-deal, to compensate for the losses will be Gordian knot for the UK government but Theresa May is adamant that the UK can walk the walk without a deal despite the fact that Parliament is opposed to the UK crashing out of the EU. One should have an idea of the events in the decades which led to Brexit. Prior to its entry to the European Community in 1972, in the 1960s majority of the people in Britain had manual jobs and not more than one-tenth of the voters took university education.

But, in the 21st century a large number of people in the working class plummeted by becoming financially better off and majority of those people became a part of middle class citizens. Notably, overtime more than 30 percent of the electorates possessed university degrees from the middle class. Overall, this changed the demography of the Conservative and Labour party. The Labour Party always won elections in the past due to constant support of working class. Since 1997 Tony Blair had a centre approach (a third way) and he did not take seriously the fact that working class was responsible for always bringing his party into power. Those people had issues which could have been sorted out by either Tony Blair or David Cameron. But the working class was stranded by both and divisive liars like Nigel Farage took the opportunity to divide the UK and stir up mass racism against immigrants from Europe who can enter the UK without limits because of the magical law of free movement in Europe. Continue reading

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Filed under Brexit, Discussion, Economy, Europe, Immigration, Pakistan Horizon, Politics

Climate Refugees: A Looming Threat

It is imperative that there should be a context-specific approach to the looming threat and uncertainty created by the legal lacuna regarding climate refugees.

Despite the nonsensical denials of the Trump presidency, climate change is a factual consequence of  industrialization and technological advancement. Apart from Trump, denials on this issue that prevail among some states, especially the ones who are most responsible for releasing greenhouse gases (GHGs). Millions of people are displaced from their homes as a consequence. Rising temperatures, droughts, floods, desertification, tropical cyclones, glacial lake outburst flood (GLOF) and other natural disasters have disrupted the livelihood of many communities. Such events testify to the effects of changing climate. The climate displacement projected by World Bank (143 million by 2050) and other institutions varies in numbers but it is significant. The non-applicability of the Refugee Convention 1951 to climate refugees (or environmental refugees) has kept these persons outside the scope of the assistance provided by the United Nations High Commissioner for Refugees (UNHCR) or the International Organization for Migration (IOM) and other relevant organizations; and it has placed them at higher risk when faced with such disasters.

What is more worrying is that, some countries facing this problem have not even developed a migration policy. The Refugee Convention 1951 was drafted after the Second World War and only covers refugees fleeing persecution on the basis of the five convention reasons, i.e. race, religion, nationality, membership of a political ground and/or political opinion. Overall a threat is looming on the international plane and the situation presents a threat to existing order and it has a complicated history. Climate refugees (also called ‘environmental migrants’) mostly migrate inside the country and travel at short distances from their areas seeking a chance of rehabilitation. However, their decision to migrate depends on the scale and nature of the disaster. Continue reading

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Filed under Climate Change, Discussion, Economy, Ethnic cleansing, Immigration, Pakistan Horizon, Politics, Refugees, Rohingya

On Brazil’s Choice of Extreme Right

The success of Brazilian populist leader Bolsonaro is termed as a classic case of ‘protest vote’ by the disillusioned middle classes with the leader ‘playing grievance politics’ … 

Brazil’s evangelical Christians have emerged as an increasingly powerful political force, as confirmed in the highly polarised presidential and congressional elections held on 28 October. Jair Bolsonaro, a far-right member of the Social Liberal Party (PSL) and former army captain, is Brazil’s next president, with 55.7 percent of votes. Fernando Haddad, Bolsonaro’s closest opponent and the large leftist Workers’ Party’s (PT) replacement for Luiz Inacio ‘Lula’ da Silva, failed to secure majority. Although Haddad promised to restore the economy to its former state of health under Lula’s presidency from 2003 to 2010, most of the Brazilians have little faith left in the country’s political class after numerous high-level corruption scandals surfaced since 2014 as part of the Lava Jato, or Car Wash, anti-graft probe and other interlocking investigations, which also involved Lula who is now serving 12 years in jail and was barred from running in this election.

While Bolsonaro’s victory has been referred to as a political earthquake, a disaster for the Amazon and global climate change and a blow to antifascist activists, the Brazilians have clearly made their choice for the extreme right. Significantly, about 147 million Brazilians headed to polls against a backdrop of widespread dissatisfaction prompted by a stuttering economy, worsening violent crime rates and several recent high-profile corruption scandals. While it is South America’s largest economy, a regional powerhouse and is part of the so-called five-member ‘BRICS’ group of major emerging economies alongside Russia, India, China and South Africa, Brazil is nevertheless battling several threatening challenges amidst increased unrest and widening polarisation among the country’s citizens. Beginning in mid-2014, a more than two-year deep recession rocked the country and stagnated growth. Continue reading

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Filed under Accountability, Brazil, Corruption, Discussion, Economy, Human Rights, Immigration, Pakistan Horizon, Police, United States