Iranian Naval Forces Go Dark

Iranian Chief of Staff Major General Mohammad Bagheri welcomes home Nedaja’s 86th Flotilla - Tasnim News Agency, May 21, 2023 (CC BY 4.0)

Published Sep 13, 2024 3:16 PM by The Maritime Executive

 

 

As befits a nation with pretensions to being a global power, Iran has two navies - whereas most other nations have just the one.

The regular Islamic Republic of Iran Navy (the Nedaja) relies on a fleet of surface ships and submarines mostly procured during the reign of the Shah. It also domestically produces copies of these vessels or of equally old Soviet-era designs. The Nedaja attempts to modernize its fleet by fitting upgraded missiles and electronic systems, but the platforms themselves are old and unreliable, and systems are poorly integrated. In consequence, the Nejada has a perhaps unrivaled record for losing ships: in recent years IRIS Sahand (F74) and IRIS Talayieh both keeled over while in dock, IRIS Deylaman (F78) hit a breakwater in the Caspian Sea and sank, IRIS Kharg (A431) caught fire off Jask and IRIS Konarak (A1403) was severely damaged by a missile fired from IRIS Jamaran (F76). The three Kilo Class submarines have suffered bad corrosion in the warm waters of the Gulf, with two currently out of the water under repair. But the Nedaja remains undaunted, being particularly proud of its eight-month circumnavigation of the globe completed by the 86th Flotilla (IRIS Dena (F75) and the tanker IRIS Makran (K441)) in May 2023. It also retains a potent fleet of small missile boats and submarines for use in coastal waters.

 

Bandar Abbas Naval Base (Google Earth, Jan 11, 2024), with IRIS Makran (K441) docked on the outer harbor jetty

 

The Islamic Revolutionary Guard Corps’ Navy (the Nedsa), has a reputation for deploying small and fast attack craft, using swarm tactics. It has also developed unconventional naval designs (of unproven utility), including twin-hull missile corvettes such as the Shahid Soleimani (FS313-01) and the Abu Mahdi al-Muhandis (PC313-01). It deploys intelligence-gathering ships (the MVs Saviz and Behshad), and two converted Panamax container ships, each capable of launching missiles and drones and able to provide logistic support to Iran’s Resistance of Axis allies abroad. While the Nedsa formerly kept itself to the waters of the Gulf, it is now cruising further afield, with the Shahid Mahdavi (110-3) having recently transited through the Straits of Malacca and the Chagos Archipelago on a 39-day deployment. Another such long-range deployment is believed to be imminent.

The Iranians gave some publicity to the Shahid Mahdavi Diego Garcia cruise, but this was the last such press release from official sources covering a naval deployment. The Nedaja used to announce the despatch of flotillas to the Red Sea and Gulf of Aden, and greeted the return of each flotilla via a port call in Salalah after what was normally a 90-day rotation. Since the 97th Flotilla sailed from Bandar Abbas for the Gulf of Aden in February, no further deployments have been advertised. Social media posts covering naval matters have also dried up. Perhaps in response to the presence of two US carrier strike groups in the region, naval movements have now gone dark - suggesting the Iranians no longer want to help out their adversaries by announcing what ships are where. Analysis of satellite imagery of the naval harbor in Bandar Abbas continues however to give interested observers a good idea of what vessels are in the harbor - and which may be out at sea.

Echoing the defensive - perhaps worried - the posture of Iran’s naval forces, both Brigadier Alireza Sabahi Fard, the Iranian Air Defence commander, and Air Force commander Brigadier Hamid Vahedi have recently made atypical statements saying their forces are "ready to repel encroachments."
 

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

 

Loose Cable Found During NTSB Dali Investigation Could Cause Blackouts

Details from the NTSB inspections showed a loose cable which in a simulation caused a brief blackout (USSG)

Published Sep 13, 2024 12:01 PM by The Maritime Executive

 

 

Without comment, the NTSB posted a 41-page document summarizing the findings of the Engineering Group formed to inspect the systems aboard the containership Dali which blacked out in March and destroyed Baltimore’s Francis Scott Key bridge. The report lists a few minor issues while also showing a loose cable found in the breaker system when tested in a simulation caused a brief blackout.

The NTSB notes that initial troubleshooting led to the Engineering Group narrowing its focus on the vessel’s electrical switchgear. The tests detailed in the report took place during April in four separate examination sessions. 

The check of the wiring on the transformer and a relay found a “cable was loosely connected,” a condition which representatives from Hyundai informed could create an open circuit and interrupt the 110VDC power on the HV side of the board. According to the report, the engineers said it would trigger an under voltage release trip which would result in a 440V blackout.

After explaining the situation to the NTSB and the other participants, Hyundai conducted a simulation. When the engineers disconnected the cable, all the equipment powered by the Low Voltage (440V) Switchboard blacked out. These included lights throughout the vessel. The report says the system recovered making an automatic transfer and regained power after approximately 10 seconds.

 

Diagram on the position of the cable from NTSB report

 

The other items listed in the report (download link) were judged to be non-consequential. Most of the systems are listed to be operating correctly.

The inspection and testing were conducted by a team of experts including representatives from the vessel’s owners Grace Ocean and operators Synergy Marine. HD Hyundai which built the vessel in 2015 participated in the four examinations in April along with ClassNK as the vessel’s class society and the Maritime & Port Authority of Singapore as the flag state.

No further analysis was provided on the results of the tests and the NTSB declined comment. Its teams are continuing their analysis. They are not expected to release a report until up to a year after the incident.  

The posting of this data came as the Department of Justice had informed the court involved in the claims that it was also conducting investigations aboard the vessel. No further updates have been provided to the court on the status of the inspections, but they were expected to be completed this week.

Tentatively, the Dali was expected to depart Norfolk, Virginia on or about September 17 bound for China. The offloading of containers was completed last month, and the vessel is expected to proceed to a shipyard for repairs.

 

Damaged and Out of Food, Philippine Cutter Returns From Sabina Shoal

Chinese cutter rams BRP Teresa Magbanua, August 31 (PCG)

Published Sep 15, 2024 10:20 PM by The Maritime Executive

 

 

The Philippine Coast Guard has withdrawn the patrol vessel BRP Teresa Magbanua from the lagoon at Sabina Shoal after five months on station, citing the impact of a Chinese blockade and the deteriorating health of several crewmembers on board. 

"While committed to her mission at [Sabina] Shoal, BRP Teresa Magbanua was compelled to return to port due to unfavorable weather conditions, depleted supplies of daily necessities, and the need to evacuate personnel requiring medical care," said PCG spokesman Jay Tarriela. "This has been further complicated by the structural damage to the vessel resulting from the deliberate ramming by the China Coast Guard on August 31, 2024."

The PCG attempted to resupply the Magbanua in August, but the effort was thwarted by a blockade carried out by more than three dozen Chinese vessels. Without regular supply runs, the stores aboard the cutter began to run low. According to GMA News, the crew had only had rice porridge to eat since late August and had run out of food altogether by September 13. They were also out of fresh water and the crew was beginning to experience dehydration. 

Four crewmembers needed to be hospitalized upon return to port, including two who were removed from the ship on stretchers. They were in stable condition but were placed under medical observation for acute gastroenteritis, gout, electrolyte imbalance and heat exhaustion, according to the PCG.  

The PCG deployed the Magbanua to Sabina Shoal in May after detecting possible signs of small-scale land reclamation on the reef. China has created multiple artificial islands in the Spratly archipelago, using dredging to turn giant coral reefs into sprawling military airfields, harbors and naval stations, and Chinese activity at Sabina Shoal raised concerns in Manila. 

Sabina Shoal is within the Philippine exclusive economic zone, but China claims the area as part of its own sovereign territory, even though the reef is 650 nautical miles from the nearest Chinese shores. The Chinese government protested the presence of BRP Teresa Magbanua within the Philippine EEZ as a violation of Chinese sovereignty, and the China Coast Guard deployed the world's largest cutter to anchor and stand guard within visual range of the Magbanua's crew.

The PCG pledged that they will deploy other vessels to take the Magbanua's place in protecting Sabina Shoal. 

"Rest assured that your Coast Guard will remain calm. We will be professional in pursuing the very clear directive of the president that we should keep what is ours – peacefully," PCG Commandant Adm. Ronnie Gil Gavan said.

 

EU and Turkish Shipping Company in Standoff Over Weapons Inspections

Arkus has repeated rejected EUNAVFOR IRINI requests for inspections of its containerships (Arkas)

Published Sep 12, 2024 4:36 PM by The Maritime Executive

 

 

The EUNAVFOR went public with its concerns regarding a Turkish shipping company as it remains at odds with Arkas Line over requests for vessel inspections. One of the line’s Turkish-registered containerships refused a request from EUNAVFOR IRINI for an inspection on September 8 continuing a standoff between the company and the EU.

Turkey is not a member of the European Union and has repeatedly accused the EUNAVFOR operation of meddling and being intrusive and unnecessary. IRINI was launched in 2020 by the EU to enforce UN Security Council resolutions to stop the shipment of arms into Libya. IRNI reports in the past four years it has contacted more than 1,000 ships and received permission more than 500 times to inspect ships. Ships that are found to be in violation of the resolutions are sent to EU ports. The operation also monitors flights into Libya.

Arkas’ vessel Matilde A (17,000 dwt) departed Gemlik, Turkey bound for Misurata, Libya on September 7. The ship which is 510 feet (155.6 meters) in length has a capacity for approximately 1,200 TEU. According to EUNAVFOR IRINI, they contacted the vessel on September 8 asking for permission to board and conduct an inspection. Turkey they said rejected the request despite the Security Council resolutions.

The Turkish shipping company, which on its website reports it has operated since 1996 and as Arkas since 2010, has a long history of rejecting these requests. Arkas lists an operating fleet of 24 vessels with a combined capacity of 126,500 TEUs providing regular service between ports in the Mediterranean, West Africa, and the Black Sea. Reports from IRINI indicate Arkas denied six requests in 2021, three in 2022, two in 2023, and now one in 2024.

The lack of cooperation with the EU and UN Security Council resolutions comes as Arkas posts a message on its website saying it is “excited” to announce as of 2023 it joined the UN Global Compact. They point out it is “a voluntary platform for the development, implementation, and disclosure of responsible business practices.”

Turkey has been at odds with the EU and UN over Libya where it maintains a military presence which it argues is “legitimate” and should not be viewed as a foreign force. The reports say they are there to support stability in Libya.

Recently, Turkey signed a new alliance with the Libyan government to provide additional training, weapons, and attack drones, which would violate the Security Council resolutions. Turkey reports it has also provided a more modern air defense system and other capabilities to Libya.

The Matilde A continued its voyage. The vessel arrived in Libya on September 11.

Italian army will guard a hospital after attacks on medical workers

Italy’s army is set to begin guarding medical staff in Calabria starting Monday

ByGIADA ZAMPANO 

Associated Press
September 15, 2024




ROME -- Italy's army will guard medical staff at a hospital in the southern Calabria region starting Monday, after a string of violent attacks on doctors and nurses by enraged patients and relatives across Italy, local media reported.

Prefect Paolo Giovanni Grieco approved a plan to reinforce the surveillance services already operated by soldiers on sensitive targets in the Calabrian town of Vibo Valentia, including the hospital, the reports said.

Recent attacks on health care workers have been particularly frequent in southern Italy, prompting the doctors’ national guild to request that the army be deployed to ensure medical staff safety.

The turning point was an assault at the Policlinico hospital in the southern city of Foggia in early September. A group of about 50 relatives and friends of a 23-year-old woman — who died during emergency surgery — turned their grief and rage into violence, attacking the hospital staff.

Video footage, widely circulated on social media, showed doctors and nurses barricading in a room to escape the attack. Some of them were punched and injured. The director of the hospital threatened to close its emergency room after denouncing three similar attacks in less than a week.

With over 16,000 reported cases of physical and verbal assaults nationwide in 2023 alone, Italian doctors and nurses have called for drastic measures.

“We have never seen such levels of aggression in the past decade,” said Antonio De Palma, president of the Nursing Up union, stressing the urgent need for action.

“We are now at a point where considering military protection in hospitals is no longer a far-fetched idea. We cannot wait any longer,” he said.

The Italian Federation of Medical-Scientific Societies has also proposed more severe measures for offenders, such as suspending access to free medical care for three years for anyone who assaults healthcare workers or damages hospital facilities.

Understaffing and long waiting lists are the main reasons behind patients' frustration with health workers.

According to Italy’s largest union for doctors, nearly half of emergency medicine positions remained unfilled as of 2022. Doctors lament that Italy’s legislation has kept wages low, leading to overworked and burned out staff at hospitals.

These problems have been further aggravated by the COVID-19 pandemic, which has pushed many health workers to leave Italy in search of better opportunities abroad.

In 2023, Italy was short of about 30,000 doctors, and between 2010 and 2020, the country saw the closure of 111 hospitals and 113 emergency rooms, data from a specialized forum showed.

6.5-magnitude earthquake hits off the northern coast of British Columbia


By Associated Press11:48am Sep 15, 2024

A 6.5-magnitude earthquake struck off the northern Pacific Coast of the Canadian province of British Columbia yesterday afternoon, according to the US Geological Survey.

The USGS said the quake was located off the tip of Haida Gwaii, an archipelago located about 1720 kilometres north of Vancouver.

It occurred at a depth of 33 kilometres beneath the surface.

A 6.5-magnitude earthquake struck off the northern Pacific Coast of the Canadian province of British Columbia. (Nine)

The US Tsunami Warning Centre reported that there was no threat of a tsunami from this earthquake.

There were no immediate reports of major damage.

Deal with pilots averts strike at Air Canada


By AFP
September 15, 2024

Flagship carrier Air Canada said Sunday it has reached a last-minute tentative deal with its pilots, averting a crippling strike that would have grounded flights and risked devastating the economy.

The agreement was announced just minutes after a key overnight deadline lapsed that would have seen hundreds of flights started to be cancelled over the coming days.

“Air Canada has reached a tentative, four-year collective agreement with the Air Line Pilots Association (ALPA), representing more than 5,200 pilots at Air Canada and Air Canada Rouge,” the airline said in a statement.

The two sides had been in talks for 15 months.

This past week, groups representing more than 200,000 businesses across Canada urged the government to intervene, but Prime Minister Justin Trudeau refused, while impressing on both sides that “millions of Canadians (were) counting on everyone to get this resolved.”

Both sides would have been in a position at midnight Sunday (0400 GMT) to issue a 72-hour notice of a worker strike or lockout by the airline, which was expected to trigger a phased shutdown of Air Canada’s operations and a full stoppage as early as Wednesday.

Air Canada said the new agreement “recognizes the contributions and professionalism” of its pilots, but did not provide any details on the terms, pending its ratification by union members.

The union, which had been pushing for a significant wage bump to close a pay gap with the pilots’ American counterparts, said the deal provides “an additional Can$1.9 billion ($1.4 billion) of value for Air Canada pilots over the course of the agreement.”

Also, “progress was made on several key issues including compensation, retirement, and work rule,” it said.

Air Canada flies to 47 countries and carries an average of 110,000 passengers a day on its 670 flights.

Outsourcing matters

Parvez Rahim 

Published September 14, 2024 

AN entrepreneur investing in establishing a manufacturing unit or setting up a business will aspire to get maximum returns in terms of profit from his initiative. Depending upon the magnitude of investment, he will have no control over the cost of plant equipment and raw materials, which will depend upon market rates.

However, he will make every effort to keep his administrative or fixed costs as low as possible. This includes the payment of monthly salary and benefits to employees. Here, he would explore all options to curtail the cost without compromising on the quality of his product or business interests.

He will decide about the areas where people with higher education will be required and those who will provide support services. In the former case, he will try to get the best people available and offer them an attractive salary and benefits. He may outsource the support services at competitive rates. This practice is prevalent the world over.

In Pakistan, the practice of engaging third-party contractors has been common since the inception of industry. The motive has been to cut costs and increase efficiency. Initially, there was a huge difference in cost for the same work done by the company’s own employees or those of contractors. The salary and benefits of own employees of lower cadres keep increasing due to the collective labour agreements reached with the union.

The contractors would not ensure compliance with the laws and make their workers available to interested employers at a low cost. This difference in cost has narrowed down over the years as now progressive employers force contractors to ensure compliance with all laws, especially relating to the welfar

Progressive employers force contractors to ensure compliance with all laws.

In addition to contracting out of services to a service provider, there are two other types of outsourcing carried out by companies: toll manufacturing and offshoring.

Toll manufacturing or tolling is outsourcing all the production or part of it to a third-party where the principal company provides all the raw materials or semi-finished products to the former. The work of the third-party company is to process the products or raw materials to the required specification.

Offshoring is a practice of relocating business processes or work functions to another country to save on costs and increase efficiency. A company may choose to outsource certain tasks or entire processes to low-cost countries, where labour may be cheaper or more skilled.

To facilitate its booming industry to compete in the international market, India promulgated the Contract Labour (Regulation) Act, 1970. Under this Act, the contractors must get themselves registered with the government. Besides, they must also ensure compliance with the labour statutes to secure the welfare and health of workers and avoid legal issues.

In Pakistan, half-hearted attempts were made in the 1990s to introduce a similar law, but the effort did not materialise. However, in the beginning of the current century, the federal government and Punjab and Sindh, respectively, have promulgated ordinances regulating the outsourcing of security services by security companies.

These ordinances require the security companies to get themselves registered with the government. Unfortunately, there are no provisions in the three ordinances guaranteeing the payment of minimum wages to the security guards and compliance with laws on daily working hours and the weekly rest days. As a result, most of the companies to whom their services are let out violate the laws to the detriment of security guards.

The Punjab Priv­a­­te Security Com­p­a­nies (Regulation and Control) Ordinance, 2002, is the only statute which provides for the group life insurance of guards for a paltry amount of Rs200,000 and mandatory registration with the social security institution. The responsibility to ensure compliance with the laws rests both with the service providers as well as the companies to whom those services are provided.

Besides, the core jobs in which workers employed through contractors work under the direct supervision and control of the principal employer and along with the latter’s own workers, cannot be outsourced. In this context, there are two landmark judgments of the Supreme Court dated May 16, 2013, and Dec 8, 2017, respectively.

In 2013, the management of Fauji Fertiliser plant at Mirpur Mathelo was directed by then chief justice Iftikhar Chaudhry to regularise the services of 112 workers. In 2017, the management of Pakistan State Oil had to regularise the services of 210 workers on the direction of then chief justice Saqib Nisar, at its head office in Karachi.

The writer is a consultant in human resources at the Aga Khan University Hospital and Vital Pakistan Trust.

Published in Dawn, September 14th, 2024

Negotiating with AI

Farid Panjwani 

Published September 14, 2024

LAST December, I observed a child watching a fire made by watchmen in our street to keep warm. The dance of the flames fascinated her but the heat she felt stopped her from going too close, which was a safe response.

Mysterium tremendum et fascinans (mysteries that we simultaneously admire and fear); theologian-philosopher Rudolf Otto coined this phrase to describe the human response to the incomprehensibility of extraordinary phenomena that people encounter. This triggered the thought of artificial intelligence, an invention unlike anything humans have created. From carrying out complex medical diagnoses to engaging in poetic conversations, AI is fascinating. But there is another side to it as well, a power that can have hugely undesirable consequences for people and the environment.

Technologies require negotiation. A well-negotiated car — serviced and well-driven — serves superbly for years. Mishandled, it gives trouble and becomes a burden. When technologies have a collective social use and impact, this negotiation involves wider material, legal and social factors for the realisation of its full potential. Continuing with the example of the car, these broader factors include, among other things, suitable roads, traffic regulations, an effective licensing system and considerate behaviour by drivers. In short, a technology’s potential — will it serve the few or the majority? — is fated in an ecosystem.

As it happens, the world today, the ecosystem in which AI is born, is not enviable. It is rather hugely worrisome: a closely interconnected world yet one where many people display a propensity to hate those defined as the ‘other’ through polarising ideologies; an unprecedented scientific knowledge of the physical world, yet a fragile relationship with nature; and, an unparalleled technological promise with serious threat to freedom and privacy. Hope and despair, like shadow and sunshine, are interlocked by these paradoxes.

At the heart of these conditions is the escalating concentration of wealth in fewer and fewer hands. In 2022, 1.2 per cent of the richest people controlled 47.8pc of global wealth. This skewed distribution of wealth, an outcome of the neoliberal mode of economics, has political, social and psychological consequences as it creates inequities in access to resources and opportunities. In such an ecosystem, the power of AI is likely to exacerbate inequities and their consequences.


The world today — the ecosystem in which artificial intelligence is born — is not enviable.

What harm can this do? Sometimes AI is compared to the Industrial Revolution. The association goes only so far. That revolution, though catastrophic for unskilled physical labour, still left, in fact increased, the need for skilled manual work as well as intellectual labour. But now, the combination of AI and robotics can displace these forms of work and labour. The allure of profit makes this possibility attractive. This makes the threat of a completely unemployed life for hundreds of millions a real possibility. With humanoid teachers and nurses, even the belief that jobs that require a soft, human touch are safe seems untenable.


AI’s advocates often respond by foreseeing an age of leisure with universal income and unlimited time for swimming, playing, singing, fishing etc. This pious hope, or a false promise to justify the march of AI, forgets that barring a few, most of us enjoy leisure only after spending time on what is called work. The sweetest tooth will be repelled if forced to eat sweets as a staple meal.

Moreover, given what we now know of the neural plasticity, without the challenges of work and our growing dependency on AI for answers, how would the mind change? Would it become less agile, curious and intelligent whilst AI, on the other hand, with greater training becomes more intelligent? Finally, there is the question of its effect on the democratic model of governance. We work, pay taxes, and get a share in the government. We become citizens. Money received through largesse would mean no taxes and hence may result in no say in governance.

Even if we set aside the danger of mass unemployment, without rebalancing the power structures, the biggest uses of AI are likely to be in warfare, surveillance and marketing, with crumbs falling to education, health and other social goods. It is not a surprise that some of those who pioneered this technology, for example Geoffrey Hinton, formerly at Google, are now worried about the impact of AI.

Enter the importance of negotiation with AI. Without it, the path forward is slippery. How do we negotiate with AI? Critical education, at the individual level, and sound global and national regulations, at the collective levels, are the best negotiating tools we have.

Critical here means developing capacities to understand the structures of power and knowledge that lie beneath the surface and that shape life chances and access to opportunities and resources. The humanities are considered best suited for such capacities. They need to be an integral part of higher education with an aim to develop and sustain an interest in inner life, fellow beings, social organisation and the moral consequences of actions.

Such an education can help us realise that technologies do not stand outside of a society, from where they can be called upon to rescue it. Rather, they are embedded within a society whose contours must be reimagined if the technology is to become a force for good for the majority.

Equally important is to bring a range of global and national regulations that create a fine balance between creativity and social responsibility. These would include: an AI governance framework; accountability and safety protocols; data protection and privacy policies; equitable learning access; proscription on certain uses of AI, such as in warfare and for clandestine surveillance; public democratic oversight; transparency of algorithms; job protection, environmental impact regulations; and monitoring and enforcement mechanisms. This is far easier said than done. Hardly any of this exists currently.

Negotiations are possible under certain conditions and within a certain period. After that, it can be too late. Now is the time to negotiate.

The writer is a professor and dean, Institute for Educational Development, Aga Khan University.

Published in Dawn, September 14th, 2024

PAKISTAN

Reforms & the IMF

Rashid Amjad 

Published September 14, 2024

STRUCTURAL reform is a prerequisite for Pakistan’s sustained economic growth. To put it bluntly, given our population and labour force growth rates, we need to grow at six per cent at a minimum to reduce poverty, unemployment and regional disparities. Yet, whenever we try to do so, the economy runs into a balance-of-payments crisis and faces the threat of a default. To overcome this binding constraint, we need to undertake painful structural economic reforms.

Unfortunately, most people believe that we are forced to carry out stringent economic reforms only because we borrow from the International Monetary Fund, and, had it not been for the IMF, we could have carried on our economic lives as before — paying little to no taxes, using cheap, subsidised electricity, running high fiscal deficits, and letting our domestic and foreign debt from donors and foreign commercial banks pile up. This is not true. We need reforms because we are not prepared to face the fact that we must change the irresponsible way we currently live and run the economy, with the result that we are forced to go to the IMF again and again or risk defaulting and being declared bankrupt.

If we were to accept this fact and start implementing the needed reforms — which, it must be said, even an undergraduate student of economics could draw up — we could say goodbye to the IMF even now. If our finance minister had the confidence and the people’s backing to assert that Pakistan was on its way to implementing tenable, durable reforms, he would not have felt the need to call our ambassador in Washington frequently to ask when the IMF Board was due to meet and approve our requested loan of $7 billion. After all, the IMF is a bank — even if of last resort — and if no country were to borrow from it, the IMF would simply close.

To return to the fundamental question: why are we incapable of carrying out the economic reforms that we desperately need? The standard answer is that the ruling elite — which owns and controls the means of production and thus benefits from the rents of an inefficient and exploitative system — does not allow this to happen.


Why are we incapable of carrying out economic reforms?

To put it another way, as Oxford economist Stefan Dercon argues, the ruling elite has to see the writing on the wall and build a strong coalition to actively support reforms and accept them. Otherwise, they will not survive long. Sadly, Prof Dercon met his Waterloo in Islamabad, where he recently presented a report along these lines at the request of the government of Pakistan, which duly chose to ignore it.

It is a fallacy that the ruling elite and, more importantly, the people of this country, are against undertaking reforms. As history bears witness, we are by nature a pragmatic people and can adjust to change when needed. These traits are what have given us the resilience to survive repeated periods of adversity and prosper over time. The traders who oppose reforms and taxes, primarily because any attempt to do so will require them to document their actual incomes, or the middle class, which cannot pay their mounting utility bills, are certainly not part of the ruling elite.

Who, then, stands in the way?

The first are the political elite, many of whom unfortunately do not have the required democratic credentials to be considered legitimate representatives of the public and now want to earn them by ‘easing’ the hardships that such reforms will impose on the already hard-pressed middle and working classes. The second is indeed the IMF itself, which forces a pace and sequencing of reforms that aggravate public hardship. Its philosophy of providing safety nets to the poorest of the poor makes economic sense, but these nets do not provide sufficient coverage to those in need.

The third, of course, are the global markets and our selected friends — China, the UAE and Saudi Arabia, for example — which have, over time, lost their confidence in our ability to carry out the economic reforms we promise while signing an agreement to do so.

Therefore, let us accept the reality as we face it and form a strong coalition that has the political will to execute the reforms we need, drawing on a political elite with sound credentials, which the people accept and support. This will also bring with it greater confidence on the part of global financial markets as well as among our nervous friends who are reluctant to roll over our debt, leave aside lending us more.

We can then show our disdain to the IMF. Till then, let us not shoot ourselves in the foot — indeed, both feet — by threatening them, as our current political elite is doing. At the moment, we really have no leg to stand on.

The writer is a professor at the Lahore School of Economics and former vice-chancellor at the Pakistan Institute of Development Economics.

Published in Dawn, September 14th, 2024