Showing posts with label Pakistan. Show all posts
Showing posts with label Pakistan. Show all posts

11.14.2011

Timely novel: a Pakistani jihadi turned American businessman

by David Lepeska
for The National

Salahuddin Khan seems an unlikely literary figure. A kindly, grey-bearded businessman raised in Pakistan and England, he had carved out an impressive career as a technology and marketing executive when, at the age of 57, the idea for a narrative struck him like a thunderbolt.

It was the day after Christmas 2009 and Khan fell into 14-hour days of research and writing. By mid-February he'd churned out an epic 550-page novel that offers complex, sympathetic main characters and a timely retelling of Pakistan's recent history.

"The story erupted from me in six weeks," says Khan, who had never written before. "It felt a little like going downhill on a slalom: there were posts in different places, I began to design a path through these posts and, as I got up to, like, 100 pages of this, the characters themselves began to design it for me. It's something of a blur. I was completely possessed."

Possession may be an unusual route to literary success, but in this case it worked. Since its release in July last year, the self-published Sikander has earned a handful of awards, the interest of a prominent publisher and praise from a former Pakistani ambassador.

Khan was born in 1952 in Burewala, Pakistan, to a middle-class Pashtun family forced to leave Delhi during Partition. A few years later the family relocated again, to Karachi, and from there to Doncaster, in the English county of Yorkshire, where Khan went on to study aeronautical engineering.

During a visit to Florida in April 1972, to witness the launch of Apollo 16, he fell in love with the US. He moved to Boston in 1998 and, a decade later, accepted a top marketing and strategy position in Chicago and settled with his wife and six children in the cushy suburb of Lake Forest.

That leafy, wealthy community may have reminded Khan of England, where, as the only non-white student in every one of his schools until university, he had been very aware of his outsider status, had heard the slurs and insinuations. The attacks of September 11, 2001, brought those experiences rushing back.

"9/11 raised the notion of branding," says Khan. "Everyone I think rationally understands that not every Muslim is a terrorist. The brand aspect that bothers me is the perception that Islam itself has a DNA of violence, which is a more insidious undercurrent that runs through the culture."

In the years that followed, Khan became more engaged with the Muslim community, hoping to undermine that perception. He joined the board of a local Islamic school system and the trustees of the Human Development Foundation, a non-profit group focused on development, health care and education in rural Pakistan. He became the publisher of Islamica magazine and began hosting Radio Islam, the lone US talk show focused on Muslim issues. He co-produced a short film called The Boundary, in which a Muslim man, played by the Sudan-born British actor Alexander Siddig, is stopped and interrogated by US immigration officials at New York's JFK airport.

Sikander could be seen as the culmination of those efforts. The story opens in 1986, when Sikander Khan runs away from his Peshawar home at 17 to join the mujaheddin fighting the Soviets in Afghanistan. He falls in with a group of insurgents working with the Haqqani militant network, the British military and Pakistan's intelligence agency, the ISI.

Having helped to defeat the Soviets, Sikander returns to Peshawar with his Afghan bride. After 9/11 he goes back to Afghanistan to rescue his wife's relatives and former mujahedden comrades, some of whom had become Taliban. He winds up in the hands of the Americans, who ship him to Guantanamo Bay, where he is tortured during long, intense interrogations. Finally, Sikander gains his release through a family connection to Pakistani President Pervez Musharraf and returns to Pakistan.

After finishing his novel, Khan sent the manuscript to Akbar Ahmed, a former Pakistani ambassador to the UK and the Ibn Khaldun Chair of Islamic Studies at American University, in Washington, DC. One of the world's leading authorities on Islam, Ahmed has advised the likes of CIA chief David Petraeus and written several dramas about Islam, the US and South Asia. He said Sikander was bold and ambitious, a "Muslim Gone with the Wind".

"Most Muslim writers and scholars have made a mistake by approaching this issue in a defensive and monochromatic matter, arguing we are a people of peace," says Ahmed. "Here we have a multidimensional, multicoloured, multi-generational, multinational picture of modern-day Muslims, with characters that have all the warts and mistakes of real people, and that excited me."

Self-published by Khan's Karakoram Publications, Sikander attracted little attention upon its release. But from March to July of this year it won top honours at book festivals in Los Angeles, Paris, Hollywood and New York, as well as the National Indie Excellence Award for Multi-Cultural Fiction. Khan has trimmed and tightened the novel considerably for the 420-page fourth edition, which has a foreword from Ahmed and is being sent out this month to top review publications and leading publishers, including Little, Brown and Company.

The attention "feels phenomenal", says Khan, who hopes to write another novel, about Partition. But first he hopes Sikander pushes people to think. "Not enough is being done to affect the perception of Muslims through entertainment, or literature in particular," he says. "It's a commentary on today's news, particularly America's news, that everything now has to be squeezed between two commercials."

One name in the US news of late is Jalaluddin Haqqani. The Pashtun mujahideen was a US ally and CIA asset during the Soviet days, which is how he comes into the orbit of Khan's protagonist. Today, Jalaluddin still leads the Haqqani network, a bloody-minded militant group based in Pakistan's tribal region and suspected in the bombing of an armoured Nato bus in Kabul last month that killed 17, including 12 Americans, in the deadliest attack on the US-led coalition in the Afghan capital since the war began. US drone strikes in Pakistan's tribal region in late October killed two Al Qaeda senior planners and a deputy in the Haqqani network.

Despite being an enemy of the US, the Haqqanis still work with Pakistan's ISI. "All that happened in Pakistan is that we became a victim of circumstances in the region," said Pervez Musharraf, Pakistan's former president, during a lecture at the Carnegie Endowment for International Peace last month.

US officials have begun meeting with Haqqani representatives, including Jalaluddin's brother, Ibrahim, in an effort to negotiate a resolution to the Afghan war. "We have to turn our attention here on the Pakistani Taliban, the Afghan Taliban, Haqqani and other terrorist groups and try to get them into a peace process," US Secretary of State Hillary Clinton said during a recent visit to Islamabad.

Because of its long-term relationship with the Haqqanis, the ISI is instrumental in organising the peace talks. But US-Pakistan relations have deteriorated considerably since American troops invaded Pakistan airspace to kill Osama bin Laden in Abbottabad in May. Observers worry that the ISI and Pakistani military leaders may see little advantage in bringing about legitimate negotiations.

Khan recently delivered a lecture on US relations with Pakistan and Afghanistan at the American Islamic College in Chicago. He accepts that the Pakistani military may still be working with the Haqqani network, as a hedge against future instability in Afghanistan - a real danger with the coming departure of US troops. Pakistani leaders, he says, do not feel the US is acting in their interests; in not pushing for a settlement with India regarding Kashmir, and in working towards a stable Afghanistan, the US is failing to ensure Pakistan's security.

"The American perspective is 'How do we got out of there?'," says Khan. "The strategy is an exit strategy, rather than a strategy strategy. You're really encouraging Pakistan to think independently about its strategic needs, and therefore you are not going to get a solution."

Towards the end of the book, Sikander moves to North Carolina with the help of a cousin and buys a local electrics company, where the head of security turns out to be his Guantanamo tormentor. Rather than succumbing to hate and firing him, Sikander keeps him on, becoming his friend.

"To us in the West, the Taliban and the Haqqani, they're villains and that's it, like comic-book characters," says Ahmed, who hopes to see Sikander made into a film. "But the novel gives you a much more accurate depiction, with all its complexities."

Khan intended the book as a study in the thin veneer of civilisation, an examination of the circumstances that push people towards inhumanity. When Sikander kills for the first time, shooting down a Soviet helicopter, he's shocked at how easy it is. When later faced with his Guantanamo tormentor, he is reminded of this.

"I think a willingness to be cruel and brutal is in me, in you, in us all, really," Sikander tells his torturer. "Once a system encourages operating beyond the reach of law, well then, as you so amply demonstrated, that brutality will only be limited by the forces at our disposal, no matter who we are."



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http://www.thenational.ae/arts-culture/books/sikander-a-pakistani-militant-turned-american-business-owner?pageCount=0

12.22.2008

India and the world need Kashmir resolved

SRINAGAR, India // Writing last week in a popular Indian newsweekly, Michael Scheuer, a former CIA counter-terrorism chief, warned India against “doing an America” following the Mumbai attack. He advised New Delhi to be firm with Pakistan, take responsibility and turn northwards.

“The Kashmir issue clearly incites Pakistani and Indian Islamists, as well as those associated with or inspired by al Qa’eda,” Mr Scheuer wrote. “Whether those Islamists are right or wrong is irrelevant. India’s positions on and actions in Kashmir motivates them.”

Since its disputed accession to India in 1947, India and Pakistan have fought three wars over this predominantly Muslim region of the former princely state of Jammu and Kashmir. A bloody insurgency against Indian rule began in 1989, leading to more than 60,000 dead yet little progress regarding the territorial tug-of-war.

After the Mumbai attacks, analysts and observers from Washington to Waziristan have suggested ways to cut the Gordian knot that both binds and repels India and Pakistan. Lashkar-i-Taiba, a Pakistan-based terrorist group and the prime suspect in the Mumbai attacks, sprung from the Kashmir dispute, along with about a dozen militant groups – a handful of which the Pakistani military and intelligence agencies have armed as part of a death-by-a-thousand-cuts policy against India.

Some advisers to US president-elect Barack Obama argue that solving Kashmir will help solve Pakistani terrorism. Others warn against such simplistic reasoning. But Mr Scheuer distills the point down to its essence: India’s stance in Kashmir incites Islamist terrorists. Their al Qa’eda-style insurrection threatens to rock the foundations of the Indian state, to topple Pakistan and Afghanistan and endanger western targets as well.

If the world’s terrorism nexus is Pakistan, its roots lie in this lush, war-torn Himalayan valley, which may be more ripe for resolution than at any moment in recent memory. Violence has plummeted, dropping steadily every year since 2001. Although still only a trickle, travel and trade between the two sides of Kashmir – Indian and Pakistani – have further reduced tensions. And last summer, mass pro-freedom marches outlined a new movement of Gandhian non-violence, less hard line and perhaps open to dialogue.

Finally, over the past month Kashmiris have turned out impressively for state assembly elections – double, even triple the 2002 turnout in some districts – suggesting that many have moved beyond their tired separatist leadership and are amenable to a lesser, more India-friendly form of freedom.

Further afield the outlook is also bright. Both houses of the US Congress passed resolutions urging Pakistan to root out extremist groups and prevent its territory from being used to launch attacks. The UN Security Council has banned the Lashkar front, Jamaat-ud-Dawa, and is applying strong pressure on Pakistan to crack down on terrorism. And the incoming Obama administration has hinted at a regional approach to Afghanistan that will include resolving Kashmir as a crucial element of ensuring Pakistani military support.

India could use this domestic and international consensus as leverage to pressure Pakistan – not only to root out terrorism, but to hack at the roots of regional terrorism by moving towards a resolution on Kashmir. Yet presented with this golden opportunity, India has buried its head in the sand.

“The attack on Mumbai has nothing to do with India-Pakistan relations or with Kashmir,” the Indian foreign minister, Pranab Mukherjee, said at a press conference in Srinagar last week.

As the dispute’s more powerful party, India has long been satisfied with the status quo and has therefore seen little reason to allow international intervention or to negotiate openly with Pakistan. But after the devastating attack on Mumbai, the Indian state must realize that the Kashmir dispute is no longer a stable, self-serving stalemate but a malignant tumor. Both parties now have an urgent interest in finding a resolution; India and its people will gain security, as will Pakistan and the world beyond.

Led by Asif Ali Zardari, the president, Pakistan’s democratic government has acknowledged that the greatest threat to its integrity is not India but locally based, state-supported terrorism outfits. The jailing of dozens of alleged terrorists and a ban on Jamaat-ud-Dawa is a good start. But the real test will be the Pakistani military, which has controlled the levers of power and wielded terrorism as a proxy for decades. Its leadership may be getting the message as well.

“The civilian and military leadership has to do some serious introspection about the cost-benefit ratio of these outdated and failed policies,” Talat Masood, a retired lieutenant-general in the Pakistan army, wrote in the Daily Times last week.

“Has Pakistan come any closer to achieving its objectives in Jammu and Kashmir by supporting militancy and proxies?” he asked. “The best option for Pakistan is to strictly confine its support to the Kashmir cause to the political and diplomatic domain.”

Kashmiris widely cheered the election of Mr Obama as the next US president, perhaps with good reason. At the urging of advisers like Mr Scheuer and a soon-to-be-published report from Gen David Petreaus, the architect of the Iraqi surge now overseeing the war in Afghanistan, the Obama administration is likely to prod India and Pakistan to come to the negotiating table on Kashmir – with or without international assistance. Considering the grave threat exposed by the Mumbai attack and the golden opportunity before it, New Delhi would be wise to heed the call.


-- published Dec 21 in The National, www.thenational.ae.

12.20.2008

Ideals collide in Kashmiri elections






Patelbagh, India
// Asadullah Bhat is no stranger to polls, but he is not sure why he keeps coming back.

“My wishes have not been met, change has not taken place,” the 45-year-old paddy farmer said while waiting to vote for the seventh time in 25 years, all in this village a few dozen kilometres south-west of Srinagar. “But we have to vote because the government will be formed either way – so I keep hoping.”

Voters in parts of Kashmir went to the polls amid heavy security on Saturday in the fifth phase of staggered elections to choose the Jammu and Kashmir state assembly. Protests and deadly violence flared and accusations of vote-rigging flew as the people of this war-torn Himalayan valley continued their conflicted duet with Indian democracy.

The predominantly Muslim region has been gripped by conflict since 1989 when separatists took up the gun against India. About 60,000 have died and although violence has slowed in recent years, separatists see elections as a show of fealty towards New Delhi.

Yet turnout in the early phases of polling had reached nearly 70 per cent in some districts. Though numbers have begun to droop as voting moves into less India-friendly regions, Saturday’s results – nearly 50 per cent turnout in two Kashmir districts – represent significant increases from the previous elections in 2002.

Observers see an emerging line of thinking that separates independence from day-to-day governance.

“Why not delink voting from azaadi?” said Shabir Hussain, editor and publisher of a local daily, Kashmir Newsline, using the Urdu word for independence. “Unless we make ourselves a party to these elections, India will continue to thrust jokers and tricksters upon us. We have to consider what kind of damage we are doing to ourselves.”

That damage has been visible throughout the elections — in beefed up security across the valley, in empty streets every Friday and every polling day as bands of Indian troops enforce daytime curfews and in violent flashes from police, who beat up a handful of journalists attempting to cover an anti-election rally on the previous day of polling, Dec 7.

Kashmir election days rarely pass without trouble. On Saturday an early morning protest in Koil village escalated to stone throwing, prodding security forces to open fire – killing a 21-year-old student and injuring two others.

Yet thousands of Kashmiris stood in slow moving lines under cloudy skies to make their mark. Their differing voices revealed the complexity of Kashmir.

Saba Settar, 18, was idealistic about her first vote. “I hope I can choose a candidate who will solve our problems,” said the Pampore resident.

Ms Settar placed education before independence, saying “of first importance is our future”.

Naseer Ahmad, 22, a university student, participated in the mass anti-India protests this year but saw no contradiction in voting.

“I support independence first, but I also vote,” he said, queuing up with friends in Pampore. “We can’t let Jammu get all the government attention.”

In Patelbagh village, Abdul Rahim Yattoo, 70, a farmer, seemed to contradict himself.

“I don’t want all our men that have been killed in the last 20 years to have died in vain, so I want azaadi,” he said. “But I’m happy with India, so I’m voting.”

In traditionally separatist Shopian and Tral, locals are less happy. Several dozen young men chant anti-India slogans outside a Shopian town polling place. Inside, a Congress party poll minder was roughly ejected after accusing an opponent of helping burqa-wearing women to vote twice.

In the village of Nikas, near Shopian, villagers said soldiers had come the previous night and urged them to visit the polls. By noon Saturday voting stood at 12 per cent.

“This is democracy, we have the right to boycott,” said Arshad Hussain, a Nikas resident who did not vote. The 28-year-old is unemployed despite a master’s degree in history from Kashmir University. “India is taking only our blood, not giving anything in return.”

Yesterday, Manmohan Singh, the Indian prime minister, spoke of giving back at a Congress party campaign rally near Shangas, in Anantnag district, which will vote on Wednesday. He announced a reconstruction programme of 26 billion Indian rupees (Dh1.97bn), along with planned power projects, roads and colleges.

“Autonomy and self-rule is also possible if the Congress is brought back to power,” he told a crowd of less than 1,000 supporters. Mr Singh congratulated Kashmir for its participation in the elections, saying “this proves that you have full faith in democracy”.

Mr Hussain, the Nikas resident, foresaw a dark future. “People are not joining together, taking one line,” he said. “Sometime they are with India, sometime azaadi.”

Mr Bhat, the Patelbagh paddy farmer, may have hit on why.

“The mainstream politicians cheat people and among the separatists there are no good leaders,” he said. “[Politicians’] children are studying in another country, in the US, but look at ours — they have no education, no future. What kind of leadership is that?”


-- published in The National, www.thenational.ae, on Dec 15.

12.03.2008

'It's an Attack on Everything'

As the most audacious terrorist attack in Indian history wound down, David Lepeska, Foreign Correspondent, met with Ajai Sahni, executive director of the Institute for Conflict Management, a New Delhi-based think tank that studies regional terrorism and insurgency. Mr Sahni is also the executive editor of Faultlines, an Indian quarterly, and writes frequently about South Asian conflict and Indian security dilemmas. In his offices not far from the seat of Indian power, Mr Sahni spoke about the implications of the Mumbai assault, the suspected involvement of Pakistan and the outlook for counter-terrorism in India.

Q: Many are calling this India’s September 11. Your thoughts?

A: The entire approach to terrorism in India is sensationalist and tragically transient. Somebody called Mumbai the “soul of India”. Then I would like to say that the soul of India has been attacked again and again and again. What’s the big deal? We did nothing last time. The attacks in 1993 and 2006 both had greater numbers killed. Why does this become September 11? I don’t see that.

This was a meticulously planned operation involving dozens of operatives and lengthy planning – and it came two months after a known terrorist group warned authorities of an attack on Mumbai. Yet Indian intelligence found no clues, no warning signs?

This is not at all surprising. We have no intelligence capacity. Everybody believes the Intelligence Bureau is some million-armed octopus with a presence everywhere in this country. The reality of IB is that it has 3,500 intelligence gatherers across the country. The force dedicated to counter-terrorism is about 200 personnel – this in a country of 1.2 billion. Considering that, I am amazed we are not blown up more often.

Rate the security response to this attack.

I see exemplary courage, exemplary leadership and exemplary dedication to duty, in everybody who responded from the security forces. I see people who are given virtually nothing to fight with and putting everything they have into the fight, with many losing their lives.

And yet finally seven hours after the beginning of the incident the so-called elite counter-terrorism force arrives. That is an absolute structural failure. A terrorism operation can only be contained, in terms of its potential, in the first few minutes, which means the first respondents have to be equipped, trained and capable of if not neutralising than at least containing the terrorists. If the first batch of police had come and immediately engaged with the terrorist they probably would have been able in both of these hotels to isolate the terrorists in small corners of the hotel and minimise the damage.

Many are blaming the police for the extent of the damage and the protraction of the assault.

Look, we are among the most under-policed countries in the world. We have a primitive police force, an early 20th century force trying to tackle a 21st century scourge. They’re just not trained, they’re not equipped. I could be lugging a weapon of whatever efficacy, for 10 years, without having the opportunity to use it. And then suddenly I am confronted with terrorists, well-trained, well-equipped, capable of blowing the crap out of me – and I barely know how to hold my gun straight. That is the state of Indian policing.

The reality is that nobody in India, no political party, wants a professional police force.

What do you mean by that?

During the ongoing investigations into the Malegaon blasts [in which Hindu nationalists have been arrested and charged], all the parties related to the Hindu right have been consistently attacking the very people who have laid down their lives in this Mumbai encounter. They have vilified them, they have denigrated them, they have abused them, they have accused them of torture, with the fabrication of case.


Why? Because they are trying to protect certain accused.


Every political party in this country wants to make sure the police investigates only what it wants them to investigate. They do not want an efficient, independent, professional police force. They want to use the police as their partisan thugs. Just a tool, and not a tool for the management of law and order, its declared purpose, but a tool for my political party.

So what will it take to change the mindset?

We have a problem in this country. We have an electorate that is more or less illiterate and ignorant. We have fed the world nonsense about the natural and instinctive wisdom of the people, but the people have no wisdom. They are a rabble and they are more easily led by caste or communal mobilisation than on issues. Unless we are able through public action and the media to generate so much pressure on politicians that they begin to address these issues, the politician himself has shorter routes to power, he will take those.

Early signs point to Pakistan-based Lashkar-i-Taiba, do you agree?

Absolutely. And if there is an Indian role it will be the Students Islamic Movement of India, in a secondary role. I do not see Simi having achieved the capacities to execute an operation of this nature independently.

What is their intent, their goal with this audacious attack?

It’s an attack on everything. It’s an attack to weaken India where you can. And if we can’t weaken India, never mind, just kill as many people as you can. It’s part of a larger campaign that is pan-Islamist. And the second, underlying motivation is Pakistan’s strategic interests. And these have been married into an ideological mobilisation that instrumentalises Islamism.

Is the targeting of foreigners in India a new twist?

As long as local Indian cadres with comparatively local objectives were involved, they were hitting local targets. As they become part, more and more, of the pan-Islamist movement, and their exposure to al Qa’eda ideology becomes deeper and deeper – they start looking for the wider target.

So if it is traced back to Lashkar, how will this affect Indo-Pak relations?

Not at all.

Same old, same old?

Same old, same old. What’s new?

Lashkar’s 2001 attack on the Indian parliament certainly changed Indo-Pak relations [India and Pakistan went to the brink of war].

No country has ever argued that a strong and stable enemy is in its interests. India has now argued that. The entire leadership – the military leadership of this country – is convinced that a strong and stable Pakistan is in our interests, even if Pakistan remains hostile. I have never come across greater and more entrenched stupidity.
You believe the leadership of Pakistan is at the very least aware of these attacks?

Absolutely, without question.

President (Asif Ali) Zardari, Prime Minister (Yusaf Raza) Gilani?

As far as I’m concerned there is only one leadership in Pakistan, that’s the military leadership. I don’t care who’s in government. Democracy makes no difference, elections make no difference, the people in charge are the people with the guns.

Might those people start attacking this problem?


I don’t see the necessary ideological or strategic shift. Everyone in the Pakistan army still believes that India is its principle enemy. And the only instrument they have for India’s containment is terrorism. And the only instrument they have for terrorist mobilisation against India is extremist Islam. So the sheer logic of their belief systems and their strategic calculations means they cannot abandon terrorism, either against India or against Afghanistan.

What about input from foreign sources – Scotland Yard, for instance, the FBI?

No one can come and fight India’s wars. I’m not saying we have nothing to learn, but I have found the ignorance of western experts to be terrifying. They come here and say: ‘Why don’t you do this?’ I say: ‘Have you seen our police stations in India?’ I know that I cannot have a Scotland Yard or Federal Bureau of Investigation here. I would have a parody of the FBI here.

We need to learn from western experience, but western expertise cannot solve our problems.

So India must deal with terrorist attacks for some time to come?

Even if the leadership changes tomorrow, in its intent and orientation, if we begin to fight this within the existing apparatus of government it will take decades. If we have a leadership that starts to fight this on a war footing it will still take years. You don’t understand how complex it is, we see it from the inside and it frightens us.


-- ran in The National, www.thenational.ae, on Dec 1.

Mumbai Assault Offers Second Chance To Go After Pak Terror

On a hazy December morning seven years ago, a boxy white Ambassador crashed through the outer gates of New Delhi’s Parliament House and slammed into the car of India’s vice president, fortuitously parked to block the building entrance. Five gunmen emerged and began spraying bullets towards the interior, where some of India’s highest-ranking elected leaders were assembled. After half an hour, the attackers had been shot dead by security men, but not before they had killed five policemen, a security guard and a gardener.

The next day, India demanded Pakistan clamp down on Lashkar-I-Taiba (Lit) and Jaish-I-Mohammed (JiM), two terrorist groups suspected in the attack. New Delhi demanded raids on safe houses, leaders captured and financing cut off. Pakistan stood firm, prodding India to deploy troops to its Kashmir and Punjab borders and inciting a tense nuclear stand-off. Fortunately, the parliament attack occurred shortly after September 11, enabling New Delhi to join forces with the United States, which was at the time also strong-arming Pakistan to address its internal terrorism problem.

Responding to the pressure, Pervez Musharraf, the Pakistani president at the time, banned Lit and JIM in Jan 2002 and vowed that Pakistani territory would not be used to launch cross-border terrorism. About 2,000 members of banned militant groups were rounded up, including Masood Azhar, the head of JIM. In March, US agents, aided by Pakistani intelligence, tracked down and captured an al Qa’eda commander, Abu Zubaydah. Several more raids in the ensuing days corralled more than 60 al Qa’eda suspects, nearly half of whom were foreign-born.

But India was soon distracted by domestic religious violence and the United States by Iraq, allowing Pakistan and the terrorist outfits to return to business as usual. Mr Azhar was released a few months after his capture. Lit and JiM shifted military operations to Pakistani-controlled Kashmir, where an ambiguous legal status means minimal governmental oversight. Within Pakistan proper, Lit continued to operate under its political wing, Jamaat-ud Dawa – whose Nov 2002 conclave attracted more than 100,000 people. Al Qa’eda regrouped in Pakistan’s remote, lawless tribal areas, gaining operational confidence along with the Taliban and the newly formed Pakistani Taliban.

The result? A rash of monstrous terrorist attacks within Pakistan, including the Dec 2007 assassination of Benazir Bhutto and the recent bombing of the Islamabad Marriott; a growing Taliban insurgency that threatens to topple Afghanistan’s toddler democracy; and, finally, a series of bombings across urban India that culminated in last week’s assault in Mumbai.

The Mumbai investigation is ongoing, but as in Dec 2001, early signs point to Lit and JiM. Both have a recent history of fedayeen attacks within India. Much like Mumbai, these are gun-spraying, kamikaze raids on government sites, police stations or other high-profile targets in which the attackers do not expect to survive.

Both, furthermore, have ties to the Pakistani establishment. Although direct links are hard to pin down, Pakistan’s military has for decades been training and supporting jihadi outfits – which its intelligence service, the ISI, then wields as proxies in Kashmir and Afghanistan. The Pakistani government may not have had any knowledge of the Mumbai assault, but its links to terrorism mean it shoulders some responsibility.

So seven years on, here is a second chance to hack at the roots of international terrorism. Although unpopular at home, where enraged citizens are calling for action, India’s muted response is wise. Any act of aggression would play into the hands of terrorists, who seek to destabilise the region.

Refraining from brinkmanship will also increase international sympathy for India and support for its ensuing antiterrorism efforts – including the support and co-operation of terrorism’s greatest victim, Pakistan, whose president, Asif Ali Zardari, has sworn to act on good evidence. Finally, quick strikes are not the answer; rooting out terrorists in Pakistan will take years, not weeks or months.

Condeleezza Rice, the US secretary of state, arrives in New Delhi today. With Pakistan warning it would shift up to 100,000 troops away from its unstable western border to address a possible Indian threat to the east, the United States is worried about Afghanistan. New Delhi can use this leverage to its advantage and agree not to attack Pakistan or threaten to do so as long as Washington does the following:

a) Pushes for complete transparency from Pakistan, including zero tolerance of terrorist outfits from the Pakistani military and the handing over of terrorist bigwigs, such as JiT chief Hafiz Saeed, the JiM leader Azhar and Dawood Ibrahim, a mafia don who masterminded the 1993 Mumbai bombings that killed more than 250. With Ms Rice already urging Pakistan to follow wherever the investigation leads, this is little more than an extension of current US policy.

b) Embraces Indo-US counter-terrorism co-operation, involving sharing of all intelligence on Bangladesh, Pakistan and Afghanistan-based terrorist outfits. Terrorism is a global problem based in the South Asian region – only such co-operation will snuff it out.

In return, India should offer to open negotiations with Pakistan on Kashmir. This may seem like rewarding an alleged tormentor, yet neither Pakistan’s new government nor the majority of its people have any blood on their hands. Further, the broader regional vision of the US president-elect, Barack Obama, which sees a resolution on Kashmir as a key to regional peace, is looking prescient.

Apart from religious differences, Kashmir is the wellspring of Indo-Pak tension and distrust. Both Lit and JIM base their Indian antagonism in Kashmir. And in his 2007 book, Frontline Pakistan: The Struggle with Militant Islam, Zahid Hussain, a veteran Pakistan journalist, had this to say about Pakistan’s broader internal terrorism problem: “As long as the Kashmiri issue remains unresolved, the government seems prepared to embrace it.”

While the sting of recent failure remains fresh, India, Pakistan and the United States must ensure this golden opportunity does not slip away.

-- ran in The National, www.thenational.ae, Dec 3.

7.21.2008

It Takes (A Little More Than) A Village








In a cramped shop in Orangi, a sprawling squatter settlement in Karachi, a weaver adds sequin designs to a shawl. Photo: David Lepeska

By David Lepeska

KARACHI, Pakistan – Akhtar Hameed Khan arrived in Orangi, Karachi's sprawling squatter settlement, with no expectations. The year was 1980 and, after working with farmers in Bangladesh, he had come at the request of his friend, a bank president, who wanted Khan to build a charitable school or hospital. Unconvinced that was the best way to improve lives, Khan asked for more time.

He strolled the lanes of Asia's largest slum for six months, observing the lives of its one million residents up close.

"The crucial problem was sewage disposal," recounted Perween Rahman, who worked with Khan for 16 years until his death in 1999. "The entire place was full of filth and excreta, people's houses were being damaged, the children's health affected, property values going down."

Khan suggested the residents do something about the sewage problem but many refused, claiming it was the government's responsibility.

Then Khan had an epiphany.

"He noticed that in some lanes people were doing the sewage disposal for themselves," said Rahman. "He saw that a house owner, if given proper guidance - his house and his neighborhood will improve."

Thus was born the Orangi Pilot Project, which started with sewage and sanitation and nearly three decades later oversees a miniature empire of empowerment and urban planning. First OPP helped over half a million Orangi residents clean up their lives. In the years since the organization has loaned tens of thousands of dollars, helped institute low-cost housing and assisted with the maintenance of 650 schools and the creation of hundreds of small businesses and dozens of clinics.

OPP's ascendance is timely. Pakistan's population recently became more urban than rural, and about a third of those city dwellers live in katchi abadis, or squatter housing, and lack basic infrastructure such as drinking water and sewage disposal.

Despite the urgent need, it took Khan six months to motivate 20 families to connect their homes to his new sewage system.

"Within that same week five more lanes got mobilized," recalled Rahman, Khan's successor as director of OPP. "That's the power of demonstration."

The organization began working outside Karachi in 1990, and now disburses microloans across the country and designs sewage systems, nurtures sanitation and drinking water initiatives and provides city planning in 15 Pakistani metros.

A model approach

Self-help is a term heard often in the halls of the OPP's small warren of offices, and it's not an empty catch phrase. An afternoon stroll through Orangi in mid-April found a man digging sewage trenches with his sons - he was connecting his home to the township drainage system. A couple dozen youths gathered in a sweltering living room to learn math. Up and down the lanes were small businesses and residents working on new home construction.

Many of these projects were initially funded or have been supported by OPP. Yet nowhere could a visitor find a logo or stamp, or any sign of the group's helping hand.

"OPP is only a facilitator of the people's agenda," said Rahman, explaining that the initiative should come from the people and OPP's work should remain invisible.

"It's the people's work," he explained. "We are only a little actor in between who provides a little social and technical guidance."

OPP aims to support community initiatives with social and technical guidance and encourage partnerships between people and governments. To be sustainable, projects must involve local resources and funds.

"We say the government, instead of partnering with the World Bank and ADB [the Asian Development Bank], should partner with the people because that is where it's sustainable," said Rahman. "The people's work provides a model of decentralized privation."

Development theorists and practitioners from across the world come to Orangi to study that model. A recent glance at the visitor's book found the signatures of representatives from the ADB and doctoral candidates in development from the Frankfurt School of Economics.

"The OPP is seen widely to be a success," said development analyst Syed Mohammed Ali, a former fellow at the Open Society Institute, a think tank based in New York City. "The component sharing approach of the OPP has been supported by the World Bank and the Lodhran Pilot Project, also funded by the World Bank, has subsequently adapted the OPP model of providing sewage in dense urban settings to the rural areas of southern Punjab."


The fruits of their labor

Education has been one of the Orangi residents' more impressive initiatives. Fed up with Karachi's useless public schools and too poor to pay for private schools or tutors, hundreds of Orangi youths set up small schools in their cramped living rooms throughout the late 1980s and early ‘90s. Without funding from the government, or even from their parents, most barely stayed afloat.

Starting in 1996 OPP distributed Rs 3,000 (US$45) grants to extend verandas, purchase books or provide a cooler and fan. OPP initially supported 350 schools. Some 50 failed, but the rest survive to this day, with many more coming on board. In early 2008, OPP helped several schools create joint savings accounts. After only a few months one of the accounts had a balance of Rs 180,000 (US$2,800).

"Now many of the schools are self-sustaining or dig into their savings whenever they need funds," said Rahman.

Those savings accounts will soon be linked to OPP's microfinance program, which is run by the Orangi Charitable Trust. Begun in 1986, the program has handed out 21,000 loans to some 68,000 clients. Loans support ongoing businesses and average around Rs 12,000 (US$190).

"We work not just in Orangi, but across Pakistan," said Nylah Ghias, the program's co-director. "We've supported a wide variety of businesses and created hundreds of jobs."

Nearly every other Orangi home hosts a small business: A mother of eight may string together fake flowers into garlands to sell in the market. Boys as young as 10 embroider silk shawls with sequins and intricate designs. Young men pound and stitch faux leather into wallets.

As it grew and succeeded - with a 97.5 percent recovery rate - the microlending program attracted considerable attention. The Sindh Microfinance Bank and the Pakistan Poverty Elevation Fund have become contributors.

Still, OPP manages a slim budget of PRs 6 million (about US$92,000). Initially funded wholly by the Bank of Credit and Commerce International - the very bank run by the friend who brought Khan to Orangi - OPP's financial backing now comes mainly from two European charity organizations.

The government lends an ear

From the beginning, OPP's relations with Islamabad were hardly cozy.

"At first they thought we were real fools, working here," Rahman recalled. "We'd come and visit and they'd offer respect to Dr. Khan and give us tea and feed us but they would never listen to us; they thought this was the work of great consultants."

The World Bank and the ADB designed and managed the majority of major development projects across Pakistan throughout the 1980s and ‘90s. Then, the Islamabad government appeared to believe developers and planners had to be born and educated abroad. Times have changed.

"Now it's a case that they need us," Rahman said.

The Pakistan government recently adopted OPP's S3 sewage plan for all of Karachi, a bustling Arabian Sea port of some 15 million. In a first, the entire project cost of $1.2 million will be provided by the government - no donor funds will be needed.

Further, the government is implementing OPP sewage and urban planning ideas in cities across the country, and regularly turns to OPP engineers for advice and input.

Pushing the people's agenda further

Rahman is already looking ahead to a new challenge.

"We are seeking expansion, but our strategy is different," she said. Rahman wants to strengthen non-governmental organizations and build stronger relationships between the people, NGOs and government. "In the future we'd like to be less us-oriented, more partner-oriented," she said.

The director was asked if OPP represented a replicable model.

"Our work in itself is based on what people are doing," Rahman said. "You have to respect it, learn from it; the work tells us where to go, and we're always talking and listening."

She recently visited Namibia to observe a project modelled on OPP. The major difference was that the Namibian government controlled the design and the cost estimates.

"Who funds and who designs the work is the make or break factor," Rahman explained, shaking her head. "People do it better, all the time."




-- posted on devex.com on 18 July 2008

World Bank Water Project Imperils Pakistan Fisherfolk

Mallah fisherman desperate for a good catch at Zero Point, a popular Badin district fishing spot. Photo: David Lepeska

By David Lepeska


HAJI HAJAM, Pakistan: John Wall has warned about poverty in Pakistan for years. "Poverty is an ethical concept, not a statistical one," the World Bank country director for Pakistan wrote in a 2006 editorial. "This clustering of Pakistan's population just above and just below the poverty line implies that families are quite vulnerable to falling into poverty with the slightest run of bad luck."

Wall cited drought and illness as examples of that luck, but the fisherfolk of southern Pakistan's Badin district ran into a more destructive and unnatural type of misfortune: a faulty World Bank project.

A vast alluvial plain unmarked by hills or rivers, Badin is one of Sindh province's poorer districts by most socio-economic measures - health care, education, infant mortality, income. Within Badin, no area is worse off than the coastal dhands, or shallow estuary lakes. The average family size is six, and many of them live on less than 200 rupees (about US$3) per day. Electricity coverage is minimal. Unemployment is rampant, eight out of 10 locals are illiterate and the nearest clinic is 40 kilometers away. Yet for centuries thousands of Mallah, or fisherman, families have called this soggy, desolate land home.

Those days may be numbered.

In 1984 the World Bank initiated the Left Bank Outfall Drain (LBOD) program to "reverse the deterioration of the land resource base caused by waterlogging and salinity." The key component was the construction of a 300 km outfall drain, or tidal link, from eastern Sindh into the Arabian Sea. Seen as the first stage of major regional drainage overhaul, the project received more than $1 billion from the World Bank, Asian Development Bank, Saudi Fund for Development and others.

By 1997, when the World Bank closed the project and replaced it with the National Drainage Program (NDP), agricultural production had perked up along the north end of the drain. Some farmers had returned after seeking work in urban areas because of waterlogged, saline farmland.

But in the summer of 1999, heavy rains burst through the drain and destroyed thousands of acres of farmland. In 2003, widespread flooding wrought even more havoc, killing at least 50 villagers, inundating 75 villages and displacing about 50,000 locals. Damage to 1.5 million acres of farmland in Thatta and Badin districts - near the southern end of the drain - resulted in dislocation and extensive economic losses. Because of high salinity in the ground water, drinking water became scarce across the region.

In 2005, the World Bank began to investigate the program failures at the request of local leaders. Its inspection panel concluded in a July 2006 report that the bank violated six safeguard policies and in the process caused heavy damage in the coastal areas.

"Throughout design, construction and operation of LBOD and NDP," the investigators wrote, "social and environmental aspects were largely overlooked or downplayed. In particular, the Panel found that the Project paid inadequate attention to the people and environment downstream of the irrigation and drainage system in southern Sindh."

Perhaps most damning was the finding that "significant technical mistakes were made during the design of the Tidal Link." To avoid crossing into Indian territory, the designers routed the tidal link in a southwesterly direction, towards the Indus Delta and the Arabian Sea. In doing so they went against the natural slope of the land - south-southeast to the Rann of Kutch - and routed the drain across the dhands and into the powerful monsoon winds. Devised by Mott MacDonald, a British engineering consultancy contracted by the World Bank, and implemented by the government of Pakistan, this directional shift is at the root of the trouble caused by the LBOD.

The dhands have lost some 40 percent of their water in the past decade, according to Action Aid Pakistan. Salinity has increased because of the constant sea linkage. And with 54 breaches in the tidal link, floods are a constant worry.

"If you spend $1 billion it should result in a substantive change in people's lives for the better," said Badin native Mustafa Talpur of Water Aid Pakistan. "It's not just the people, the whole environment and ecology is worse."

World Bank management responded to the panel's findings with a three-pronged action plan: a livelihoods component called the Sindh Coastal Areas Development Program; an ecological component to improve and maintain the integrity and bio-diversity of the dhands; and an irrigation component, the Sindh Water Sector Improvement Project.

"At the time the project was designed, the emphasis was on getting the biggest benefit for farmers by reducing salinity and water logging to expand irrigated areas," Wall said at the 2006 release of the action plan. "The very poorest people outside the irrigation and drainage system were neglected."

Nearly two years later, locals said they were still being neglected.

"We asked them to address the root cause of the disaster and change the direction of the drain - they refused," said Talpur. "We asked them to consult with locals - they did not. We asked that the livelihoods program target all the affected villages - it does not."

Talpur spoke about the district's troubles at last year's World Bank meetings in Washington, D.C., but said he came away with little more than empty promises.

On an April afternoon at Zero Point, a popular dhands fishing spot, dozens of haggard and rail-thin Mallah complained about a steady decline of fish. In the nearby village of Haji Hajam, one fisherman cited a 60 percent drop in his catch.

"My family fishing here for five generations," said Moula Bux Mallah, 46, speaking in Sindhi.

He was sitting on a charpoy, or raised cot, surrounded by a couple dozen village children - eight of whom were his own.

"Now it is hard to catch enough to feed my family, and I have thought about leaving," he said.

Nurri Lagoon, which used to be 20,000 acres of shallow water, full of fish and home to a bird sanctuary, has shrunk to a quarter of its former size. Fishing has dropped between 70 percent and 80 percent. In Ahmed Rajo, a village along the northern edge of the dhands, a farmer named Assim said with output for rice down 40 percent, he switched some of his fields to sunflowers.

Badin native Abdul Salam Memon, secretary of the Pakistan Fisherfolk Forum, said farmers have shifted thousands of acres of rice and sugarcane fields to sunflowers because they require less water.

"It makes about the same profit," Memon said. "But the problem is that there is less food to eat."

The World Bank's latest progress report reveals high salinity, increasingly irrevocable ecological damage, and dhands threatened by storm surges and high tides.

"The drainage system is grossly inadequate and poorly maintained," said the report, released in early 2008. "The system does not have the capacity to carry even a nominal increase in precipitation."

This in a land where rainfall is highly unpredictable and monsoon rains dominate from July to September.

The plight of coastal area villagers has worsened.

"The abject and pervasive poverty and limited livelihood opportunities of the people living and depending on the Badin dhands needs to be addressed," the researchers wrote.

Thus far, the bank's action plan has focused on building community action groups, helping develop local livelihoods and extending credit to poor villagers. According to the World Bank report, "The problem is that the dhand area communities are too weak to benefit from such a program; the program strategy needs to be re-thought to reach these poorest of the poor."

As the World Bank prepares to spend an additional $9 billion on new water projects in Pakistan, perhaps it should first repair the damage done in Badin. Talpur called it a "moral disaster." John Wall might call it an ethical one.

For the fisherfolk of the dhands it's just reality.



-- posted on devex.com on 01 July 2008

The Maturation of Microfinance

By David Lepeska

Sudden, awkward growth spurts, new and unpredictable forms of self-expression, and acts of rebellion against authority figures? It can only mean one thing: microfinance has hit puberty.

Under attack from analysts, academics and policymakers who argue that microloans rarely help alleviate poverty, the industry is redefining itself in myriad ways - going corporate, moving upmarket and broadening the very meaning of the term.

"Ten years from now the sector will be considerably less recognizable," said Jonathan Morduch, professor of public policy and economics at New York University's Wagner School of Graduate Studies.

A Poverty Killer Is Born

Modern-day microcredit began in 1976 when Muhammad Yunus - then an economics professor at Bangladesh's Chittagong University - left academia, went to the village of Jobra and lent $27 to a group of 42 villagers. They used the money to start soap-making and basket-weaving businesses and repaid their loans without default. Yunus then founded Grameen Bank, which grew exponentially and, as of April 2008, had lent over $6.5 billion to more than 5 million borrowers, with a loan repayment rate of 98 percent.

Then came the deluge. The United Nations declared 2005 the "International Year of Microfinance." Yunus won the Nobel Peace Prize the following year for his work with Grameen. Philanthropic moguls like Bill Gates and Pierre Omidyar, of Microsoft and eBay, respectively, pledged hundreds of millions of dollars and celebrity supporters appeared as if out of thin air. The global microfinance market doubled between 2004 and 2006, when more than 3,100 microfinance institutions lent nearly $4.5 billion to over 130 million borrowers.

But what do microloans accomplish? Within academic and economics circles, an anti-microfinance movement, building for years, came to the fore in early 2008.

"Microcredit is making people's lives better around the world," George Mason University Economics Professor Tyler Cowen argued in the Winter 2008 Wilson Quarterly, in an essay written with Karol Boudreaux, a senior research fellow at George Mason University's Mercatus Center. "But for the most part, it is not pulling them out of poverty."

What Microloans Can Do

Microloans typically range from $50 to $500 in developing countries, with no collateral. Relying instead on peer pressure to ensure weekly repayment, microfinance institutions lend to groups of borrowers. Women make up over three-fourths of microcredit customers worldwide, the United Nations estimates, because most MFIs see them as more reliable and more focused on responsible family financing. And 70 percent of microlending is in Asia, although the share of Africa and Latin America is on the rise.

Several studies from the past decade have concluded that microloans improve lives: Barbara MkNelly and Chris Dunford report that two in three Bolivian borrowers saw their incomes increase after joining the lending program. An Indonesian study found microloan borrowers' incomes increased more than four times those of a control group that received no loan. Three-fourths of the clients of SHARE, a major Indian microfinancer, reported significant improvements in well-being and half graduated out of poverty.

Yet the exact impact of microloans on the lives of borrowers is extremely hard to determine. External factors such as a country's overall economic growth, an alteration in national policies, and the impact of other development projects in that region as well as shifts in a group or family's income-generating abilities are nearly impossible to quantify.

The problems with microfinance don't end there. Most MFIs charge monthly interest rates of 5-8 percent (or 60-100 percent annually) on loans that are paid off within weeks or months. This interest rate cuts into the profits an entrepreneur might re-invest. But even if they were to reinvest, several studies, including that of Cowen and Boudreaux, have found that the businesses microloans fund are almost always owner-run and unlikely to expand beyond the family.

"From a tiny, owner-run business to having and paying employees, that's a big jump," said Morduch.

Further, many MFI's will only fund an existing business, as opposed to a start-up, which suggests the business may have been sustainable without a microloan, and undercuts Yunus' argument that microloans create entrepreneurs.

Microloans are often used to finance consumption and domestic expenses. Cowen and Boudreaux found that many borrowers use the money on personal expenses - fixing their roof, sending kids to school, purchasing a mobile phone - rather than on a small business. A Tanzanian microlender told them that 60 percent of his loans were used to send kids to school and a study of microcredit in Indonesia found that 30 percent of loans were spent on food and other consumer goods.

"For better or worse, microborrowing often entails a kind of bait and switch," Cowen and Boudreaux wrote. "The borrower claims that the money is for a business, but uses it for other purposes."

The duo called it "a sad reality that many microcredit loans help borrowers to survive or tread water more than they help them get ahead."

Survival is better than the alternative. Most of the developing world's poor have for decades borrowed from unlicensed moneylenders. These profiteers charge annual interest rates of up to 300 percent. Many demand collateral and, if repayment is not made on time, reputedly resort to intimidation and violence. Monstrous moneylender debt has played a key role in thousands of farmer suicides across India. In comparison, microcredit seems a pot a gold.

But when it comes to creating jobs and broader economic growth, microloans fall short.

"If it's employment generation you're after, microfinance isn't going to give you a big kick," said Morduch, the New York University professor. He remains a supporter of micronfinance, but acknowledged, "these businesses really aren't growing."

An Upmarket Shift

In developing countries, large corporations receive investment funding from major banks while poorer borrowers have access to microcredit. Long left out of the action are the small and medium enterprises (SMEs) that create more than 60 percent of all jobs in the developed world, according to James Suroweicki, who writes the New Yorker's financial page. Analysts are increasingly pointing to this "missing middle" to jumpstart growth and many donors and banking institutions have started to move upmarket.

"Businesses that can generate jobs for others are the best hope of any country trying to put a serious dent in its poverty rate," Suroweicki wrote in a March column. "Sustained economic growth requires companies that can make big investments - building a factory, say - and that can exploit the economies of scale that make workers more productive and, ultimately, richer."

Aliya Khawari, a researcher at Germany's Hamburg Institute of International Economics, reviewed several microloan impact studies in 2004 and found that higher-income borrowers experience a greater income boost from the loans.

"This is because clients above the poverty line are more willing to take risks and invest in technology for the efficiency or advancement of their activities that would in turn most probably increase income flows," she reasoned.

Many have concluded that as loan size increases reinvestment and company growth will do the same.

"A good question is how far upmarket do you need to go to have business that are creating a lot of jobs," Morduch said. "I think you have to go pretty far upmarket."

The U.S. Agency for International Development, one of the first to lend to SMEs, didn't go very far. The agency established an SME program in Pakistan in 2003 and added a second a couple years later. Called Widening Harmonized Access to Microfinance (WHAM), the latter initiative provided consulting, training, and technology to commercial banks and MFIs and helped disburse nearly 40,000 loans and $16 million in three years. The loans ranged from PRs 40,000 to 1.8 million (approximately US$650 to US$32,000), with annual interest around 17 percent.

Shorebank International, which implemented the USAID program, vetted, selected, and then helped nine Pakistani lenders identify borrower businesses with the best potential.

"Do each of these small enterprises grow and start to build factories and become multinationals?" Gregory Chen, director of Shorebank International's Pakistan operations, asked during an interview with Devex. "Definitely not - most small businesses stay small businesses."

The loans are not necessarily intended to help the businesses build factories or create jobs by the hundreds.

"The goal is to make them more profitable, more efficient, it's sort of an intermediate goal, and that might lead to the next stage," said Chen, who has been studying the impact of microcredit for more than a decade.

The idea is that every borrower has an optimal loan size, which would improve operations and possibly lead to job creation.

"The goal of Shorebank and USAID at the end of the day is to help build sustainable economies and a big part of that is poverty alleviation and improving people's standard of living," he said. "Finding the right loan size is just a means to an end."

One group argues the right loan size is rather large, and is in fact not a loan at all. The Omidyar Network has teamed with the Soros Economic Development Fund and Google.org to create a $17 million firm that will invest in small and medium enterprises. The company, to be based in Hyderabad, India, will invest between $500,000 and $3.5 million in SMEs and work closely with the Base of the Pyramid Lab at the Indian School of Business, which has considerable experience with SMEs.

"We want to show that SMEs can be profitable investments," says the firm's Web site. "We will do this by focusing on lowering transaction costs, deepening capital markets to increase liquidity, and catalyzing capital for investment."

This description omits two traditional goals of microfinance: poverty reduction and job creation. Omidyar has long advocated microfinance as a profit-making commercial sector, butting heads with idealistic first movers like Yunus as a result. In 2006 he donated $100 million in eBay stock to Tufts University, his alma mater, for efforts to promote the commercialization of microfinance.

At least one observer questions the planned SME fund.

"I think they're ahead of the evidence on this one," Morduch said. "I'm happy to see the money coming in to the market, but we don't have the evidence to make an informed choice regarding loans of that size."

Microfinance Changes Its Stripes

With the impact of SME loans uncertain, many are working to making microfinance better.

"Microcredit is not a miracle cure that can eliminate poverty in one fell swoop," Yunus wrote in "Banker to the Poor," his bestselling 2003 book. "Combined with other innovative programs that unleash people's potential, microcredit is an essential tool in our search for a poverty-free world."

Some lenders have broadened the microfinance umbrella to include health care, education and other social services while financial services firms invested an estimated $4 billion in 2007, tilting the microfinance field towards commercialization.

Hussain Tejany, the president of Pakistan's First Microfinance Bank, the country's first bank geared towards microlending, applauds this development.

"Poverty alleviation involves a series of tools - microfinance is just one," he said. "Education and health are others; we try to get involved in all."

First Microfinance was one of the nine lending institutions in USAID's WHAM program. Yet despite moving temporarily upmarket, the company continues to grant mostly smaller loans: The firm's average loan size remains around PRs 16,000 (about US$250), according to Tejany.

"Yes, it is good to build businesses and create jobs," he said, explaining that First Microfinance subsidizes health care offers financial education to poorer borrowers. "But our goal is to strengthen those people involved in small businesses, so they become capable of taking care of their family first, then we look on to the wider community."

Tejany is particularly pleased with one recent statistic: the percentage of women in micro-borrower families that are involved in some sort of business has increased fivefold in the past two years.

"There's no doubt about it," he said. "The smaller loans are better."

Reducing poverty is not only about money; it is also about, as Nobel Prize-winning economist Amartya Sen put it, "expanding the real freedoms that people enjoy." Social and political freedoms, certainly, but more importantly the things many in the developed world take for granted - public safety, basic education, public health and infrastructure. Dubbed "microfinance plus," these more holistic initiatives are making considerable headway with South Asia MFI's.

One pioneer is Vijay Mahajan, who in 1996 founded Basix India to improve livelihoods of the rural poor.

"Mahajan started with something very simple," Morduch said. "Creating this holding company that has a microfinance element alongside a livelihood strategy, drinking water linkages, technical services - it's seeing microfinance much more broadly."

Mahajan and Basix are now held up as models of industry innovation.

A program in Orangi, Karachi's sprawling squatter settlement, has been setting an example for much longer. Begun in 1986, the Orangi Pilot Project's microfinance program has handed out 21,000 loans, averaging around PRs 12,000 (about US$90, at PRs 65 to the dollar) each.

"We've supported a wide variety of businesses and created hundreds of jobs," said Nylah Ghias, the program's co-director.

Today, the dirt lanes of Orangi - Asia's largest slum in terms of population and geographic size - are filled with wallet-making, flower-stringing, and embroidery businesses. Women and young men spend long days sewing sequins and bold designs into silk shawls. Twelve-year-old boys work four to five hours after school to supplement their family income. And the microfinance program is just a small part of the Orangi Pilot Project's broader mission, which includes sanitation, sewage disposal, education, and housing construction.

Ujjivan, another "microfinance plus" lender, is indicative of the booming and innovative microfinance market in India. The firm, which was launched with seed funding from the Michael & Susan Dell Foundation and Bellwether Microfinance Fund and lends to small groups of women in poor urban areas, opened its first branch office in Bangalore in September 2005. Less than three years on Ujjivan has 47 branches and 67,000 clients across the Bangalore, Calcutta and Delhi metropolitan areas.

"We realize that their needs can be unpredictable, so we offer alternatives," said Manoj Dwivedi, chief operating officer of Ujjivan's Delhi offices.

Ujjivan offers loans for businesses, emergencies, and A combination of business and family expenses. The firm also educates women on financial services and, with backing from Viacom, the entertainment conglomerate, has opened dispensaries and clinics in borrowers' neighborhoods. Further, Ujjivan is adding technical and vocational education programs across its markets.

"We insist our customers go to these dispensaries, where for prescriptions and check-ups doctors will not charge any fee," Dwivedi said.

Tip of the Iceberg

Many financial services and venture capital firms have stayed out of microfinance, primarily because it takes thousands of $75 loans to make the sort of profit a single $40 million investment might provide. But an unexpected nugget of data has emerged in recent years to change that dynamic: Small loans to the poor are generally more profitable for lenders than larger loans to businesses and wealthier clients.

"The return on investment for [investing in] smaller firms tends to be considerably higher," Chen said.

Higher interest rates and fewer defaults are partly responsible for profits nearly double those of loans to large businesses.

Chen added another reason: "Because they're poor these borrowers don't have an office - they're in their living rooms."

Commercial investment has come to the fore in recent years, as donors such as the World Bank and USAID are replaced by the likes of Citigroup, Deutsche Bank, and Morgan Stanley. And for good reason: Consulting firm McKinsey & Co. estimates that half of the world's 3 billion poor people still lack access to institutional lending and credit. Financial ratings firm Standard & Poor's says the market could expand 10-fold, to $150 billion in microloans.

Already, nearly 100 investment funds are buying equity in microfinance institutions, according to the World Bank-managed Consultative Group to Assist the Poor, a microfinance industry association. CGAP estimates that these firms invested $4 billion in the sector in 2007. Morduch has been told this number may be as high as $7 billion. Either way, the corporate dollars bode well for the industry's future.

"I think successful microfinance has to be commercial," Cowen said in an e-mail. "There just aren't enough charitable dollars to go around; there will always be hard cases but overall commercialization is the way to go."

Critics worry about the hefty profits some MFIs take from the poor. Mexico's Banco Compartamos, for instance, charges interest rates of up to 100 percent annually. A June 2007 report from CGAP faulted the bank's rates as well as profits of more than 50 percent.

Meanwhile, other initiatives have found ways to lower interest rates. India's Women's Initiative for Self-Employment is a social business that strives to break even by offering microloans at the shockingly low rate of one percent monthly interest. It has no office and maintains no automatic teller machines. Still, since Kiran Rawat founded the firm in September 2006, loans of IRs 4,000 to IRs 5,000 (US$100-125) have helped dozens of rural women run bakeries, dairies, and toy-making businesses.

"There's so much money going into microfinance," said Morduch. "The sector just doesn't have the absorbent capacity, so there's pressure to move the money somewhere."

Thus the rise of SME loans, social businesses and various versions of "microfinance plus," not to mention insurance and savings programs, technology initiatives that provide access to smart cards and banking via mobile phone. Morduch said much of the flood of cash was a result of Yunus' Nobel Prize.

"Ironically, it was meant to go into microfinance initiatives, but now it's going far beyond that," Morduch said.

With microfinance now backed by the deep pockets of corporate finance, such innovations and permutations will continue for the foreseeable future. Chen is all for such diversification.

"All these market segments are equally important in different kinds of ways," he said.

Chen remains focused on the boom in Pakistani microfinance. With the number of loans expected to double in the next two years, the sector is going to need qualified staff, and quick.

"We have 5,000 employees in the microfinance sector," he said, noting that Shorebank International is helping to establish training centers and assisting Pakistani institutions with recruitment. "We need 20,000 three years from now."

Who says microfinance doesn't create jobs?

-- posted on devex.com on 16 July 2008

As Decision Makers Dither, Pakistan Water Crisis Deepens




A woman with her children in Badin district, an area of Sindh province facing acute water troubles. Photo: David Lepeska



By David Lepeska

ISLAMABAD, Pakistan: Water taps choke and spit. Irrigation canals dry up, shrinking farm output and making food scarce. Suddenly fallow regions are depopulated as villagers migrate to urban areas. Blackouts and drinking water shortages hit Karachi and Lahore. Hungry, thirsty, desperate peoples jostle - violence surges, the country falls apart.

As water becomes increasingly scarce across Pakistan, this apocalyptic scenario is not far from what experts envision.

"The very sustainability of Pakistan as an independent nation may be at stake, as shortages could lead to increased social discontent and disharmony amongst the federation and the provinces," a May 2008 World Bank report on Pakistani infrastructure warned.

With a population expected to shoot from today's 170 million to 220 million by 2015, the country's already weak water storage capacity will become woefully inadequate in the very near future. The problem is particularly acute in a developing nation that relies on water not only for drinking and agricultural production, but also for energy. Pakistan is already facing a 4,000 MW power shortage and will likely require several hydro-electric plants to satisfy demand.

Speaking in late April at a conference on the water crisis in Lahore, Sindh Water Council Chairman Hafiz Zahoor ul Hassan Dahir said a lack of water could devastate the country.

"Pakistan could become Somalia or Ethiopia," he said.

In 2007, the World Bank listed Pakistan among 17 nations facing acute water shortages and noted that the country had used up nearly all of its surface and groundwater. Indeed, nearly half the population has no local access to safe drinking water. One quarter of irrigated farmland suffers from acute salinity.

"Unless plans are put in place urgently," the World Bank report concluded, "these critical shortages will continue to undermine the efforts to improve socio-economic indicators and to reduce poverty."

But which plans, or more accurately, whose? The bank has put forth several ideas and the government is discussing at least two mega dams. Various independent experts and non-governmental organizations have countered with smaller, community-based water storage and usage schemes. But as Pakistan works to achieve a bright, democratic future, none has received widespread approval. The hesitation may be warranted.

If At First You Don't Succeed…

Pakistan's recent history of World Bank water projects is less than stellar. After $1 billion and 13 years of construction between 1984 and 1997, the Left Bank Outfall Drain collapsed under storm surges in 1999 and again in 2003. The LBOD project was financed by the World Bank, Asian Development Bank, Saudi Fund and U.K.'s Department for International Development, among others, and implemented by the Pakistani government. It preceded the World Bank's National Drainage Program, which mostly failed to undo the damage. Progress reports and a bank-led investigation found that the poorly designed canal had irrevocably damaged the fragile ecosystem of the coastal estuaries, failed to benefit most local groups, and made life more difficult for the poorest of the poor.

More recently, a $130 million emergency rehabilitation project for an aging reservoir called the Taunsa Barrage, also backed by the World Bank and executed by Islamabad, led to forced displacements without adequate compensation, severe river erosion, and a wall breach that killed several villagers. Locals are pushing for an independent commission to examine the failures and provide reparations.

Even the Tarbela dam, widely touted as a success, has its faults. Completed in 1976 some 50 kilometers up the Indus River from Islamabad, the dam has effectively stored water for agricultural use for some 30 years.

It has reduced seasonal flooding, but also severely curtailed downstream water supply: The flow of the mighty Indus River, which supplies 90 percent of Pakistan's water, fell to one-fifteenth of what it was in 1947, according to the Water and Power Development Authority of Pakistan (WAPDA). Further, the waters of the Indus carry a great deal of silt. Bank and government experts agree that within three years, the Tarbela dam will become useless because its reservoir will have filled completely with sediment.

Other water projects have faced problems from the start, including the plan, approved in 1953, to create a new dam in northwest Punjab's Kalabagh District. Design and paperwork were completed in 1984 and construction was set to begin with U.N. Development Program assistance, World Bank supervision, and WAPDA execution.

Then the real trouble began. Sindh legislators worried that construction of the dam, occurring far upstream in Punjab Province - which contains more than half of Pakistan's population and is considered its bread basket - would curtail their water supply. Two other provinces, Baluchistan and Northwest Frontier Province, soon joined the chorus with the former alleging rule by Punjab fiat and the latter downplaying the project's anticipated benefit. In 2005, President Pervez Musharraf overruled the objections and declared the government would go ahead with the project. But construction had not begun when a new government was voted into office this February. Some 55 years after it was conceived the Kalabagh dam exists only on paper as Pakistan's water crisis deepens.

Despite these hiccups, in late April the World Bank announced it would spend $8 billion on the construction of the Daimer-Bhasha dam, as well as two related Indus River projects at $500 million each. The offering represents one of the bank's largest single country loans - to a nation with a poor track record for mega-development projects.

Bigger May Not Be Better

Why have these large projects repeatedly disappointed? There's enough blame to go around.

"The state is culpable, the multilaterals are culpable of reproducing the failure time and again," said Assim Sajjad Akhtar, history professor at the Lahore University of Management Sciences and a leader of the People's Rights Movement, a left-wing political group. "You have a very deeply entrenched bureaucracy, and their planning conception is very colonial, paternalistic, top-down; if you try to give advice, you're not helping, you're committing sedition."

Projects are designed in a very short-sighted manner, as illustrated by the impending Tarbela dam failure, Akhtar said. The government rarely makes design plans public or explains how funds are being spent, he added, and the resulting constructions are often faulty and spur discontent among locals.

"The World Bank, Asian Development Bank, all the donors refuse to accept that they are somewhat responsible for what happens," Akhtar said. "They are the ones who describe this whole development and liberalization paradigm as interconnected, but whenever they fail they say it's not their responsibility."

Development analyst Syed Mohammad Ali, a fellow at the Open Society Institute, put it this way: "When you go for mega-projects you have mega-squandering."

The World Bank offered a laundry list of Pakistani shortcomings in a May 2008 report: a lack of adequate education and skills training; a lack of government commitment, vision, planning, and budgeting ability; corrupt contracting procedures; no protection against adverse physical conditions or external processes; delays in payment and absence of credit; and unfair competition from government-linked contractors and consultants.

Ayesha Siddiqa, visiting professor at the University of Pennsylvania, argued that the real machinations occur behind the scenes and that Pakistani farmers have been completely removed from shaping policy. According to Siddiqa, politicians and bureaucrats do not much care whether projects succeed.

"The whole thing is political," Siddiqa said, citing the example of Shah Mahmood Qureshi, Pakistan's foreign minister and a former Farmer's Association of Pakistan leader.

"Instead of putting him in charge of agriculture, they put him in charge of foreign policy," she noted. "There's a great gap between growers and policy, between rural and urban populations, and those gaps will only be narrowed once the government realizes there is a problem."

Stemming the Crisis

To Akhtar, the solution is obvious.

"Don't do big projects, do small projects," he said.

Small, community-led projects are more cost-effective, he argued, as well as more ecologically sustainable and less divisive.

The water minister of neighboring India has expressed similar views.

"The era of big dams is over," Saifuddin Soz told the Indian Express in late May. "We should have small dams and try and do something on rainwater harvesting and recharging ground water."

Pakistan faces a more severe water crisis than India, but the minister's views are relevant.

If the mega-projects were to continue, program managers should take into greater consideration the needs of affected residents, Akhtar suggested.

"Large projects can only work if the state actually does it [sic] in a manner where people are not looked at simply as objects to be transformed," he said. "They have to be the end, not the means."

Siddiqa takes more of a macro approach to improving water management.

"The problem with this government: It doesn't have a clear-cut agenda," she said. "To begin with, they have to define their plan to develop the rural areas, one that appreciates the gaps in the Pakistan economy and seeks to bridge them."

Projects should include lining all canals to prevent water seepage and switching from flood irrigation to the drip-sprinkle approach Israel uses, Siddiqa said. To break the industrialists' monopoly, farmers should shift away from cash crops. Siddiqa acknowledged such efforts would be costly, but said that returns would validate the expense.

Ali, the development researcher, recommended a more holistic approach that takes into account local needs and seasonal river flows, government capabilities, and donors efforts.

The panel that investigated the failure of the World Bank's LBOD and National Drainage Program seems to agree.

Its report "highlights the need to take a holistic view of water and drainage systems to ensure risks are identified and assessed and harm to people and the natural environment minimized," panel chair Edith Brown Weiss said upon the report's release in 2006. "We trust that the Bank's Action Plan will be implemented in close consultation with affected people."

But the bank appears to have other ideas. Despite identifying a long list of inadequacies with Pakistan's capacity to build and sustain its infrastructure, the bank suggested in a recent report that Pakistan "needs to establish frameworks under which it will deliver say Bhasha, Kalabagh, Karachi Mass Transit, or other large infrastructure projects and procure teams based on ‘framework' agreements."

Thus, the World Bank, which employs some of the most well-educated and skilled development experts, is counting on a series of working agreements between designers, builders, and suppliers to curb the failures that have destroyed thousands of livelihoods and bedeviled $1 billion in projects, including the LBOD.

Whether it's small, community-led projects, integrated, holistic approaches or mega-project partnerships, Pakistan needs to act soon.

"The ethnic divide is huge in Pakistan to begin with, and water is increasingly a source of that conflict," Akhtar said.

In newly settled regions and along provincial borders and shared irrigation canals, the tensions are particularly high.

"These areas are waiting to explode," he explained. "It's a time bomb."

--- posted on devex.com on 01 July 2008