News & Current Affairs

September 5, 2008

Pakistan ‘needs help’ on economy

Pakistan ‘needs help’ on economy

Asif Ali Zardari, head of the ruling Pakistan People's Party

Asif Ali Zardari faces huge challenges if he becomes president

Pakistan needs a “substantial” injection of external funds if it is to improve its worsening economic situation, an IMF official has said.

Mohsin Khan said Pakistan had not yet requested help from the IMF, which some economists have called for, to address a growing balance of payment crisis.

A falling rupee, soaring inflation and dwindling currency reserves are among Pakistan’s mounting economic problems.

Mr Khan said ministers planned to cut borrowing and tap donors for support.

Economic distress

Stabilizing Pakistan’s faltering economy will be one of the main priorities for Asif Ali Zardari, who is widely expected to be elected president following elections this weekend.

Pakistan’s public finances have deteriorated in the past 18 months amid political instability and violence which culminated in the resignation of former President Musharraf last month.

It seems the government is not getting its act together
Yang-Myung Hang, Lehman Brothers

The rupee has fallen to a record low against the dollar while currency reserves have shrunk from $16.5bn ten months ago to $9.38bn.

The soaring cost of oil imports has eaten into the country’s reserves while the spiraling rate of inflation, which has risen to 25%, has sparked public anger.

Growth in the economy, which performed strongly in the early years of the Musharraf era, is expected to fall to a six-year low this year.

Pakistan’s fragile coalition government is pursuing a range of options to bolster confidence in the economy, including seeking $1bn in loans from the World Bank and the Asian Development Bank.

It is also in talks with Saudi Arabia to defer payment on an estimated $5.9bn of oil it has purchased.

Policeman in Lahore

Security concerns have put off some investors

Some economists believe it is inevitable Pakistan will have to turn to the IMF for help should it find itself struggling to pay its creditors.

Such a move could prove unpopular as any IMF funding would likely require undertakings to slash government borrowing and spending.

On the other hand, such a scenario is unlikely to materialise given the level of US financial and logistical support for Pakistan, a key ally.

Seeking stability

The IMF said it was encouraged that the government was committed to measures to improve its financial position, including privatizing assets and raising funds from the international markets.

“If measures outlined are implemented and sufficient financing is secured quickly,” Mr Khan – director of the IMF’s Middle East and Central Asia Department said, “the authorities could stabilize the economy this year and start to build up reserves.”

Despite attempts by the country’s central bank to reassure foreign investors, concerns remain about the new government’s ability to tackle multiple security and economic challenges.

“It seems the government is not getting its act together, making it difficult to actively address the decline in forex reserves,” said Yang-Myung Hang, a sovereign rating analyst at Lehman Brothers.

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August 23, 2008

Protest boats sail for Gaza Strip

Protest boats sail for Gaza Strip

Gaza protest boat

The boats are carrying 40 activists, 200 hearing aids and 5,000 balloons

Two boats carrying members of a US-based pro-Palestinian group have left Cyprus in an attempt to break Israel’s blockade of the Gaza Strip.

The boats left the Cypriot port of Larnaca on Friday morning. The journey is expected to take about 30 hours.

The Free Gaza protest group said about 40 activists from 14 countries were on board the boats.

Israel imposed a blockade on Gaza in June 2007 when the militant group Hamas took control of the territory by force.

Since then, Israel has allowed in little more than basic humanitarian aid as a means of isolating Hamas and persuading militant groups to stop firing rockets into Israel.

The closure of Gaza’s borders by the Israeli and Egyptian authorities has also meant that very few Gazans have been able to leave.

‘Supporting Hamas’

Before Free Gaza’s boats set sail on Friday, the Israeli foreign ministry warned them to steer clear of the Gazan coastline, which it said was “the subject of an [Israeli Navy] advisory notice” that warns off foreign vessels from the “designated maritime zone”.

Gaza/Cyprus map

“We assume that your intentions are good but, in fact, the result of your action is that you are supporting the regime of a terrorist organization in Gaza,” the ministry wrote in an open letter.

The two vessels – named Liberty and Free Gaza – are carrying 200 hearing aids for children and 5,000 balloons.

“No matter what happens we have already achieved our goal by proving that ordinary citizens with ordinary means can mobilize a defense of human rights for Palestinians,” organizer Paul Larudee told the AFP news agency.

“We want people to see the Palestinian problem as one of human rights, not feeding them rice,” he added.

The activists include Lauren Booth, sister-in-law of former British PM Tony Blair, who is now an international Middle East peace envoy. Also on board is left-wing Greek MP Tasos Kourakis.

Israel withdrew its settlers from Gaza in 2005, but it still controls its coast, airspace and borders, and, until a ceasefire with Hamas was agreed in June, carried out regular military operations in the territory.

However, correspondents say the truce has not improved the situation for Gaza’s population, except to reduce the number of Israeli incursions and the number of rockets fired by Palestinian militants.

August 20, 2008

US and Poland sign defence deal

US and Poland sign defence deal

The US and Poland have signed a deal to locate part of the US’s controversial missile defence system on Polish soil.

US Secretary of State Condoleezza Rice travel led to Warsaw for the ceremony, after 18 months of negotiations.

The deal has angered Russia, which has warned the base could become a target for a nuclear strike.

says the system will protect the US and much of Europe against missile attacks from “rogue elements” in the Middle East such as Iran.

The agreement, which has yet to be ratified by the Polish parliament, was signed by Ms Rice and Poland’s Foreign Minister Radek Sikorski.

Polish Prime Minister Donald Tusk said the negotiations had been “tough, but friendly”, adding that the deal would make both Poland and the US more secure.

Ms Rice said the signing of the document was an extraordinary occasion, adding that the agreement would help NATO, Poland and the US respond to “the threats of the 21st Century”.

Speaking during the signing ceremony at the presidential palace in Warsaw, she emphasized that the missile system was “defensive and aimed at no-one”.

‘Exacerbating tensions’

While Washington believes placing 10 interceptor missiles on a disused military base near Poland’s Baltic Sea coast will protect much of NATO against possible long-range attacks, Warsaw sees threats much closer to home.

That is why it demanded – in exchange for hosting the base – short-range Patriot missiles for its own air defences and a guarantee that the US will come to its assistance in the event of an attack, our correspondent adds.

INTERCEPTOR MISSILES
Missile Defense Agency)
Look like ordinary missiles, but warheads are not loaded
Intended to destroy target with kinetic energy
Closing speed at interception is 24,000km/h (15,000mph)

The demands had delayed the deal’s completion, but the conflict in Georgia gave the negotiations more impetus.

Both the US and Poland say the system is not aimed against Russia.

But the agreement has infuriated Moscow, our correspondent adds.

Russia’s deputy chief of general staff, Gen Anatoly Nogovitsyn, said last week the plans for a missile base in Poland “could not go unpunished”.

“It is a cause for regret that at a time when we are already in a difficult situation, the American side further exacerbates the situation in relations between the United States and Russia,” he said.

Moscow has argued the project will upset the military balance in Europe and has warned it will be forced to redirect its missiles at Poland.

But Polish President Lech Kaczynski stressed the missile defence shield was purely a defensive system and not a threat.

“For that reason, no-one who has good intentions towards us and towards the Western world should be afraid of it,” he said on Wednesday.

Before the conflict in Georgia there was a reasonable amount of popular opposition in Poland to the missile defence deal.

But new surveys show that for the first time a majority of Poles support it, with 65% expressing fear of Russia.

Hitting a bullet

The interceptors look like ordinary missiles, stored in silos, with highly automated warheads that are not loaded with any explosives.

If fired, the missile is intended to home in on and destroy its target, above the atmosphere, due to the kinetic energy of the collision.

But the closing speed of interceptor and target will be 24,000km/h (15,000mph), making the task more difficult than hitting a bullet with another bullet.

The US has spent more than $100bn (£54bn) in the last two decades on its controversial project to develop defences against ballistic missiles.

Critics say that, despite all that money, the Pentagon still has not proved the system can work in realistic conditions.

Last month, the US signed an agreement with the Czech Republic to base tracking radars there as part of the defence system.

Washington wants the sites to be in operation by about 2012.

US missile defences

August 15, 2008

US-Libya compensation deal sealed

US-Libya compensation deal sealed

David Welch and Ahmed al-Fatroui sign the agreement

The signing comes after a long process of negotiation

The US and Libya are set to renew diplomatic relations after signing a deal to compensate all victims of bombings involving the two countries.

The agreement will fully compensate victims of the 1988 Lockerbie bombing, and of the bombing of a Berlin disco two years earlier.

It will also address Libyan claims arising from US attacks on the Libyan capital, Tripoli, and Benghazi in 1986.

The deal was signed in Tripoli by US and Libyan officials.

David Welch, US assistant secretary of state and Washington’s top Middle East diplomat, met Ahmed al-Fatroui, head of America affairs, in Libya’s foreign ministry to seal the agreement.

When fulfilled, the agreement will permit Libya and the US to develop their relations
David Welch
US assistant secretary of state

Mr Fatroui told reporters it was “the crowning of a long process of exhausting negotiations”.

Mr Welch said it was a very important agreement that “turns a new page in our relationship”.

“Under this agreement each country’s citizens can receive fair compensation for past incidents. When fulfilled, the agreement will permit Libya and the US to develop their relations,” he said.

Libyan state media said US President George W Bush had sent a message to the Libyan leader, Muammar Gaddafi, saying he hoped relations between the two countries would continue to improve.

The agreement does not constitute an admission of fault by either party.

An international Humanitarian Settlement Fund will be set up in Libya to compensate all American and Libyan claimants.

Foreign companies and international institutions operating in Libya, which include some American companies, will contribute to the fund.

The deal also paves the way for a full restoration of relations, including the opening of a US embassy in Tripoli and direct US aid.

In all, there were 26 lawsuits filed by American citizens against Libya and three by Libyan citizens against the US.

The 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, killed 270 people and the 1986 bombing of a Berlin disco killed three people and wounded more than 200.

Libya says at least 40 people died in the US air strikes.

Relations between Libya and the US have improved dramatically since 2003, when Libya accepted responsibility for the Lockerbie bombing.

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