Eye on Pakistan

MCB’s purchase of Royal Bank of Scotland’s Pakistani assets collapses

Posted in Political Economy by onpakistan on January 6, 2010

MCB’s ongoing disagreements with the State Bank of Pakistan, regarding the State Bank’s request for a deposit of MCB shares, has scuppered the agreed sale of RBS’s Pakistani branches to MCB. Other buyers are thin on the ground.  Foreign investors appeared to have learned their lessons following a string of disastrous acquisitions – not least ABN Amro’s 2007 acquisition of Prime Bank and RBS’s acquisition of ABN Amro’s Pakistani operations (also in 2007). Consequently RBS now has little choice but to remain in Pakistan (a market to which, following the recent banking crisis, it now has no commitment) for the foreseeable future. RBS is likely to keep its Pakistani subsidiary largely as it is for the time being, with an attempt at some light (and so relatively low risk) cost cutting. Deep cost cuts (such as merging the erstwhile ABN Amro and Prime Bank operations) are risky and may damage the future sale value of its Pakistani assets.

For more information see:

RBS’s stock exchange announcment.
The two most informative press articles are: an article in Pakistani Daily Times, and an article in London’s Financial Times.

I reproduce the Financial Times article below:

RBS fails to conclude sale of Pakistan arm
By Adam Jones in London and Farhan Bokhari in Islamabad
Published: January 4 2010 08:58 | Last updated: January 4 2010 16:44
Royal Bank of Scotland’s withdrawal from retail and commercial banking in Asia has suffered a setback after a plan to sell its Pakistani arm unravelled.
RBS announced in August that it was selling a 99.4 per cent stake in its RBS Pakistan subsidiary to MCB Bank, a Pakistani rival, for PKR7.2bn (£53m).
However, in a brief stock exchange statement on Monday it said that the deal had lapsed because it had not received the necessary regulatory approval by the end of 2009.
Pakistan’s central bank in Karachi said it had refused to clear the deal because of a dispute over MCB depositing its shares as security.
RBS indicated that a fresh buyer was now being sought for the unit, which has more than 300,000 customers.
An official said: “The Pakistan business remains part of the non-core businesses and the process of identifying a suitable buyer is under way.”
However, bankers in Karachi said RBS would face a difficult challenge in finding another buyer soon, in view of concerns over Pakistan’s internal security conditions and its moribund economy.
The president of a private Pakistani bank said “MCB is out of the race. But finding another buyer may not be that easy at a time when investors looking at Pakistan see the country surrounded by many issues, mainly security and the economy”.
A Pakistani central bank official who did not want to be named said RBS would have to consider continuing to function in Pakistan for the foreseeable future.
The official said: “Unless the RBS managers have something up their sleeves, I don’t see the likelihood of another deal coming together anytime soon. RBS will have to consider functioning as it is”.
RBS, which is majority-owned by the British government, said in February that it was withdrawing from retail and commercial banking in Asia, arguing that its presence in the region was too small and too thinly spread.
In August, RBS announced the sale of assets in Taiwan, Singapore, Indonesia, Hong Kong, the Philippines and Vietnam to ANZ, the Australian lender.
Shares in RBS closed 9.5 per cent higher at 31.98p after reports that Brazil’s largest bank, Itau Unibanco, was considering taking stakes in a number of UK banks.

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In America’s Sights: First Nigeria…Now Jordan

Posted in Foreign Affairs by onpakistan on January 5, 2010

The capture of a Nigerian would-be bomber by the Americans led to the inclusion of Nigerian travelers to the US into the recently instituted ‘extended security’ list. Well, in my previous blog entry, on this very issue, I mentioned as an aside that Jordan may well end up on this list too. Now that we have learnt that the recent bombing of a CIA base in Afghanistan was carried out by a Jordanian (the Jordanians and the CIA thought he was their double agent, it turned out he was a triple agent), I am sure that Jordan will be added to the list. Perhaps, like Microsoft, they’ll roll-out monthly security updates until all countries have been added…

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PIA the First to Submit to America

Posted in Domestic Affairs, Foreign Affairs, Political Economy by onpakistan on January 4, 2010

Foreign nationals (and American ethnic minorities, no doubt!) flying in from 14 “predominantly Muslim” countries are to undergo “enhanced screening” at American airports. (Official TSA announcement here).

According to press reports, and a statement from the airline itself, PIA was the first airline to submit to these procedures, and had done so from the 2nd of January: “Sultan Hasan said the passengers are subjected to special screening, including full body searches, in a designated area of the departure lounge. He said the airline had run advertisements in newspapers to warn prospective passengers of the increased safety measures.” How kind of PIA to offer itself as an advance guinea pig for the new procedures!

This is part of a wider trend towards increased American jurisdiction and control over Pakistani nationals. This is occurring through both legal treaty, and unofficially. The case of Aafia Siddiqui is already well known ( and quite rightly called the “tip of the iceberg”), but there are other recent insidious trends in the same direction. I have already blogged about how Pakistani government attempts to channel money flows in and out of Pakistan through the institutionalized and regulated banking sector will allow for greater U.S. control of Pakistani money transactions. Now this: the Pakistani government has conveniently discovered that it can actually legally deport Pakistanis to America: “We have an extradition treaty with the US,” Foreign Office spokesman Abdul Basit said at a recent media briefing. The basis is, rather flimsily, a US-UK accord dating back to 1932!! Zardari et al clearly want to protect themselves from torture and human rights-based litigation once they retire to their palatial mansions in the UK or Switzerland.

But why bother with formal extradition, when the Pakistani government has allowed American security forces and mercenaries to harass Pakistani citizens in their own homes…in Pakistan? (At least this ‘fortunate’ woman was not dragged off to Bagram, or reditioned to be tortured in Syria – like this unfortunate, and almost randomly chosen, Canadian citizen).

Talk of tortue, ofcourse, takes one back to the countries chosen for additional screening (strip searches anyone?) by the US authorities. They are:

Saudi Arabia

What an assorted bunch they are. They include strong allies of the US (Pakistan, Saudi Arabia), sworn enemies (Iran, Cuba, Syria), client-states (Yemen, Iraq, Afghanistan, Lebanon) and, interesting, governments which happily torture on behalf of the US: Saudi Arabia, Pakistan, Algeria, Afghanistan, Syria, Libya. I would not be surprised if Jordan is eventually added: it is both a client-state and lead-torturer.

A final note on PIA. It is in under imminent threat of bankruptcy. It cannot even now pay for the government’s five (yes, five!!) private VVIP jets.  Responsibility for their financial upkeep has now been transferred to the military. (see this report) This may be in preparation for an eventual privatization of PIA. Once the Arabs purchase PIA (and the Arabs are the only politically viable purchasors), the airline will no doubt further fall prey to American security demands. Whilst Bilawal and his buddies will continue to fly in VVIP comfort, Pakistan’s flying masses will have to get used to used to KESC-style service (KESC having been rather disastr0usly sold to Dubai-based Abraaj Capital a while back).

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US-Nato Forces Execute 10 Afghan Civilians, including 8 Children

Posted in Foreign Affairs by onpakistan on January 1, 2010

With news reports such as this, can anyone now doubt that the American-led occupation of Afghanistan will end soon? When they leave, Karzai’s government will fall faster than Najibullah’s following the Soviet withdrawal….

(Even the US-supporting London The Times concedes the execution of these children, see this).

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Why and How Balochs Joined the Union of Pakistan

Posted in Domestic Affairs by onpakistan on December 25, 2009

Looking around for some background on the incorporation of the Balochs into Pakistan in 1947, I came across this succinct account. I am sure that some of it can be questioned, but it is digestible and accessible.


Mehtab Ali Shah, The Foreign Policy Of Pakistan: Ethnic Impacts On Diplomacy, 1971-1994 (1997), pp. 93-95.

It is interesting to probe the question of why the Balochs joined the union of Pakistan in 1947. At the time of Pakistan’s creation, Balochistan was an overwhelmingly Muslim area. Though it was not a formal province of the British Empire in India, under the 1876 treaty the Khan of Kalat had a special relationship with Whitehall in London. Balochs claim that, under the terms of this treaty. Britain recognized Balochistan as a sovereign state (Wilcox, 1963: 76—7). However, for all practical purposes, the viceroy of India controlled it through the chief commissioner based at Quetta.

Before the creation of Pakistan, a patchwork of loose administrative structures held Balochistan together. British or tribal administrators controlled the Pashto-speaking areas of British Balochistan such as the Zhob, Lora Lai and Chaman districts ordering Afghanistan. Tribal chiefs or sardars ruled the Baloch areas in another part of British Balochistan. In 1877, the British introduced a joint type of rule into British Balochistan, named the ‘Sandeman system’ after its initiator Captain Robert Sandeman. The Baloch sardars formally gave their allegiance to the Raj, but for all practical purposes they were free and even ran their own private gaols. The Khanate of Kalat, ruled by the Khan of Kalat, was yet another part of Balochistan. As mentioned earlier, the Khan claimed to be an ally of Britain rather than its subordinate (Baloch, 1987: 173—6) and the princely states of Makran, Kharan and Las Bella were nominally his fiefdoms. The British political agent-general (A-G) was responsible for the overall administration of this conglomeration of territories.

The sparsely populated Baloch territory had no centralized administration and no substantial bureaucracy. People from neighbouring Punjab with a knowledge of Urdu ran both the bureaucracy and the educational system. Unlike Sindh and the Punjab, the Hindu population in Balochistan, which engaged mainly in trade, was very small and held no political or administrative power in the Baloch areas. These Hindus of Balochistan generally adopted the local way of life and there was no communal tension between them and the Balochs.

When nationalist movements proliferated all over India in the 1930s with a view to gaining independence from Britain, the Baloch nationalists organized their own party, the Kalat State Party. Its aim was the unification of all Baloch-speaking areas into a single state and to achieve independence from British rule (Baloch, 1987: 172).

Although Balochistan was a mainly Muslim area, neither the Khan of Kalat, his legal adviser Mr Jinnah, who later became the founder of the Pakistani state, nor the Baloch nationalists apparently had any intention at first of joining the Pakistani state (Baloch, 1987: 172). However, with the transfer of power in 1947, as the ultimate authority in Balochistan, the British decided to hold a referendum to allow the people to choose whether to join India or Pakistan — it offered them no other options. The Pashtun-dominated areas chose Pakistan, as did the Quetta municipality’s Shahi Jirga, a British- nominated consultative body composed mainly of Pashtuns. Most of the Baloch sardars decided to join Pakistan. The nawab of Las Bella, an ethnically Sindhi tribal chief whose principality was adjacent to Karachi, also opted for Pakistan. He was followed by the chiefs of Kharan and Makran.

The Khan of Kalat himself wanted a higher price for acceding to Pakistan. He wanted to retain his special status in Pakistan (Wilcox, 1963: 77) and the Kalat Assembly under the leadership of Mir Ghous Bux Bizenjo passed a resolution calling for independence instead of yielding to Pakistan. In 1947, the Khan’s younger brother, Prince Abdul Karim Khan, declared independence and challenged the authority of the Pakistani state over Balochistan. He flew to Afghanistan to wage guerrilla warfare and the Afghan authorities gave him every assistance. In retaliation, the Pakistani authorities attacked the Khan of Kalat’s palaces at Quetta and Khuzdar. They arrested the Khan and took over the state of Kalat by force. By tradition, the House of Kalat is the nucleus of Baloch society and its forcible take over by the Pakistani authorities in 1947 inflicted a deep wound on the Baloch psyche. Thereafter, Baloch nationalists began to regard Pakistan as an occupying power (Wilcox, 1963: 149).

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What Israel Thinks of Pakistan

Posted in Worldwide by onpakistan on December 25, 2009

To understand how Israel sees Pakistan, look at the way Pakistan is referred to in Israeli press articles on Palestinians. In this Israeli’s eyes, the current military offensive in the NWFP, and extremist bombings, are reduced to a war between “Muslim secularists and religious extremists, in which the latter seem to be winning”. “Democracy” versus “jihadism”. He warns:

Without an institutional structure and cultural environment that condemns terrorism, violence and incitement a Palestinian state will become the new Pakistan, and just as dangerous… One Pakistan is enough; the world hardly needs another in Palestine.

This Israeli view of Pakistan is probably close too (yet different I am sure) from the dominant American view of Pakistan. The irony is that many Indian Muslims struggled for a nation-state of their own, independent of India. I think Palestinians would be overjoyed to achieve a similar independence from Israel (though without the bloodshed of partition and subsequent military dictatorships etc.).

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Baloch Liberation Army on Anti-Drug Offensive

Posted in Domestic Affairs by onpakistan on December 22, 2009

The Baloch Liberation Army appears to be taking advantage of pressure on the drug trade business across the Afghan-Pakistan border to neutralise drug sellers in Khuzdar and other Baloch areas. See report of BLA press release (and also this), and very recent news of grenade attack. Accusations that the BLA itself is involved in drug smuggling are long-standing, and I note that this recent BLA initiative does not appear to be aimed at smuggling through Balochistan, rather at local sellers and smuggling for local consumption. The BLA may, ofcourse, ultimately become interested (if it is not so already) in regulating and taxing, but not eliminating, local sales of heroin.

On Quetta’s heroin dens, see this Guardian article. Also, a recent Guardian article on the American turn to Balochistan, and an article in Vice magazine by (Basque?) journalist Karlos Zurutuza on his time with with some Balochi militants. Karlos Zurutuza is one of the few European journalists actively highlighting Balochi nationalist activism – he was awarded the ‘Nawab Bugti Award’ by Hyrbyair Marri in London in October 2009.

Pakistani Government Denies Visa to Leading Indian Kashmiri Politician

Posted in Foreign Affairs by onpakistan on December 21, 2009

You wouldn’t hear about this in the Pakistani press or from Pakistani bloggers. So here it is:

Mehbooba Mufti, leader of the People’s Democratic Party, has had to cancel her participation in a conference here after she was unable to obtain a visa to travel to Pakistan. The organisers of the “South Asia 2060” conference, the Islamabad-based Sustainable Development Policy Initiatives, said Ms. Mehbooba had applied for the visa only four days ago and her papers could not be processed in time for her departure. However, the Pakistan High Commission in New Delhi was able to process a visa for the former Jammu University Vice-Chancellor Amitabh Mattoo, another participant at the same conference. He applied at the same time as the Kashmiri leader. A group of 20 other Indians is also participating in the two-day conference.

She, supposidly, is a Pakistani-favoured politician. So why the rejection? Some speculation in the rest of the article, here.

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Newspaper Readership in Pakistan

Posted in media by onpakistan on December 21, 2009

A private market research company, MEMRB, estimates that, in 2007, approximately 14.6 million Pakistanis read a newspaper at least once a week. Within this group, the following  newspapers were the most popular. The % indicates those from the estimated 14.6 million reading the newspaper at least once in the past month:

Jang – 46%

Nawa-e-Waqt – 23%

Express – 20%

Khabrain – 15%

Awaz – 10%

Dawn – 7%

Kawish – 5%

Qaumi Akhbar – 5%

Din – 4%

Mashriq – 4%

Naya Akhbar – 4%

Pakistan – 4%

Ummat – 4%

Aaj – 3%

Ausaf – 3%

Awam – 3%

The News – 3%

Inqilab – 2%

Jinnah – 2%

Jurrat – 2%

The complete survey is available here. Aftab Associates also produce a National Readership Survey, though, to my knowledge, this is not available online.

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The West *hearts* Begum Nawazish

Posted in Culture by onpakistan on December 19, 2009

“Run a story on the Begum” cry the editors. “She subverts the stereotypical picture of Pakistan!”

The Begum says: “I have read the Koran, and Islam is the most liberating, most human of religions.” And The Independent loves it.

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