machete | the blog

At yesterday’s OPEN DC event Shaukat Aziz (former PM and FM of Pakistan) answered an audience question by talking about how IMF funding causes nations to give up economic sovereignty - this was a great point, and a very timely one given today’s economic ‘crisis.’  Aid from international financial institutions comes with rules, and currently, those rules are largely based on the ‘Washington Consensus‘ guidelines for economic growth.  Unfortunately, as economist Dani Rodrik presented in his recent book (’One Economics, Many Recipes’), these western-built guidelines for growth may be obsolete, and at best, can use a few edits.

Some nations have received so much aid from international financial institutions that their debts have had to be pardoned…more than $40 billion in foreign debt was totally written off in 2005 for 18 nations (14 of them African).  When countries are spending most of their money on repaying debts - and forgoing critical domestic improvements - they’re terminally screwed.  It’s called foreign ‘aid’ - loans granted to spur growth by organizations like the World Bank and African Development Bank - but aid turns into a burden as it instantly becomes debt.  This is where the head scratching starts… Read the rest of this entry »

Global Handwashing Day, October 15, 2008. A brilliant idea being implemented by the right organization, the United Nations. With diseases flourishing and spreading at a rampant pace throughout the developing world this initiative comes at a most critical moment.

In the U.S. and other ‘developed’ nations diarrhea is something we treat with over the counter (OTC) medications and very rarely seek medical attention - the problem just goes away and one returns to ‘regularity.’ Well, this is not the case in the third-world, where diarrhea is a real threat - it’s a fatal disease; in fact, it is the second most common cause of death for children under the age of five. Globally, about 2 million child deaths (children under five) occur every year. (UNICEF)
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There is no doubt that the US has been earning itself a poor international reputation…and this most recent decade of bad PR has definitely helped to negate just about everything ‘good’ the US has sponsored throughout the world. For example, USAID is one of the main reasons behind the success of two of Pakistan’s most elite business schools, including the Lahore University of Management Sciences (LUMS). It is also the source of funding for efforts to improve maternal health and water quality - just two of the terrible ailments that keep the bulk of Pakistanis at the very bottom of the pyramid.

There are many potential reasons for the current dilapidated state of the nation, in fact, the left, right, conservative and liberal populations often have overlapping theories. Each political party selects facts that appreciate their respective agendas, whether it’s the sixty years of overwhelmingly out of touch rule, a consistently increasing percentage of poverty (currently at least 25%), or the shameful 50% adult literacy rate - all ideas seem to point to a consistently increasing divide between the upper class (ruling class) and lower class (majority).
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An interesting change in the Failed States Index (published by The Fund for Peace) is #9 Pakistan. Pakistan was at #13 in 2007, from a quick analysis of the index it is clear that a huge economic downturn is the main reason for Pakistan’s move to a premier position amongst the Top 10 failed states. There are no surprises in the top 10 for 2008 as they are the usual suspects…as a matter of fact the top 10 have remained pretty much the same since 2006…Haiti left the Top 10 in 2007 and Guinea got pushed out simply because of Pakistan’s horrible year.

Here’s the Top 10 (No surprises here!):

1. Somalia
2. Sudan
3. Zimbabwe
4. Chad
5. Iraq
6. D.R. Congo
7. Afghanistan
8. Cote d’Ivoire
9. Pakistan
10. Central African Republic

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A Natural Gas Pipeline that will connect these three critical nations.
Iran, Pakistan, and India, collectively known as the IPI, are very close to finalizing the ‘Peace Pipeline’ plan that would drop a critical natural gas supply line that would run through the three neighboring countries. As always, there is a catch (or several) - and India is weary of signing on because of the Price Revision Clause being imposed by Iran that would base the price of the natural gas on a formula that utilizes Japan’s gas market as a benchmark. Nevertheless, India’s participation in the ‘Peace Pipeline’ doesn’t seem to matter as much to Iran and Pakistan as they continue bilateral talks that suggest India’s role as merely an added bonus that would sweeten the deal. Pakistan’s ambassador to Iran, Shafkat Saeed, insists that if India rejects the terms of the deal, the oil will be routed through China instead.

�We have informed Iran that we are prepared to transfer Iran�s gas to China through this pipeline should India decide not to join the gas project.� [ Associated Press of Pakistan, Oct 2007 ]

Though India has assured that it will take part in the TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline - it is clear that the TAPI pipeline is not a replacement for the Iran-Pakistan-India pipeline, and their lack of an absolute decision in light of U.S. pressure is proof that the IPI pipeline stands to bring benefit to the Indian economy. Read the rest of this entry »