Archive for November, 2009

Kerry Lugar bill

November 23, 2009

Do we really need money? It is the question of a common man. After having the opinion of several people the result is in negative for the above stated question and many people stated that there is no use for $ 1.5 bln every year. Then why to go for Kerry Lugar bill? The bill which is under process since 3 years when John kerry was in govt of the George W Bush is now about to be signed by the new presidency of the United states.
 The bill contains many aspects which are against the soviegnty and dignity of our country, though , it is stated by the high officials of the Pakistani govt that the bill wont be accepted if it is against the soveignty of our country. Will it really be happen? Our finance minister stated that “ if the kerry lugar bill is rejected we have to go to IMF again for another aid”. But the thing to remember is that IMF wont give us any aid ,they will give us loan on interest which will also be the burden on our shattered economy. This might be a threat so that people might stop the protest against the K-L bill.

Mian Mansha stated that “If the govt. asked me  I can bring $ 2 bln every year as an investment in the country -Sources” then why not the govt is asking from Mian Mansha to bring investment instead of going through the bill.

The main cons of the bill are relating

a)      to the access to the armed forces and

b)      to the nuclear power sector.

Are our army and nuclear power so cheap that we are giving these sectors on RENT  to the foreigners in just $1.5bln every year which is approx $125mln per month. The very intresting thing to be noticed in this bill that the promotion of armed forces will also rest in the hands of US govt.  

The bill also include the sections relating

a)      war against terrorism

but we are already the alleged of Americans in the war against terrorism and we are already getting a handsome amount for this war.

Media only focusing on the negative aspects of Kerry Lugar bill and not focusing on the positive aspects of the bill. The positive aspects can only be covered if there are any positive thing for our country. The only benefit Pakistan is getting from accepting this bill is money that they will get as a rent of their important national assets. If we get an amount of $ 1.5 bln every year which is around 120 bln PKR.

The break-up off this aid will be

1)      60 bln PKR will be used as administrative expense and

2)      the rest 60bln PKR will be injected in certain sectors.

If we convert it into monthly then it can clearly be seen that the country can only increase their revenue by 5 bln PKR per month.

A suggestion from a common man came for increasing the revenue by 5 bln pkr per month is that if we increase only 3.5 rupees on every recharge of RS.100 on our cell fones we can easily achieve target of the desired revenue. In my opinion, if we go to the privatization process of the educational institution we can get 550 bln PKR which is approx $4.75 bln* and it is equivalent to the aid of almost 3 years that we get from K-L bill . This is not enough but we can also raise the tax by Rs.50-60 bln every year in form of tax from those privatized institute.

The another option we can avail is to get aid from China as they are ready to invest a huge amount every year as an investment in our country. But the conflict that will arise by this step is that we already have lot of interference of US in our country so China and US both wont be agree to be together and help Pakistan. The thing that must be noted here that we cant leave US because it is the present super power off the world and we have to face many restriction on our foreign policy if we mess up with US.

From my view point the only useful thing we can do from this money is to repay our IMF loan because sooner or later we have to pay the amount to IMF or we can make agreement in K-L bill that all the conditions are accepted and they use their money to repay our IMF loan. It might be a better option. It is also been said that the bill might be accepted with certain amendments but whatever the amendments be made it will for sure be in favour of US because they are providing us with their money.. Mr.John Kerry in the press conference  on 13th oct 2009 clearly stated that “there will be no amendments in the bill”  

There are only three options through which the bill can be rejected:

1)      Mr.Barack obama himself refuse to sign and send it back to the house of representatives.

2)      The house of representative rejects the bill

3)      A new bill

But the question is Can Pakistan govt. reject this bill. Because if they Rejected the bill they have to face certain consequences . Some of the intresting and most important consequences are

·The cancellation of this bill can affect our resources.

·Pakistan will have to go to IMF for more assistance.

·Pakistan likely to face a budget deficit of $800 million, if bill not approved

·Affect the negotiations for market access to the EU and US markets                            (Both are major trading partners and nearly 70% of our trade is with these two players.)

·Bilateral and multilateral assistance would be hampered

·(US is the major shareholder in all these multi-donor agencies), The assistance    policies of the multilateral-donors are largely influenced by the US.

·Pakistan’s ongoing economic diplomacy efforts, if further negative political, media & public stance on the Kerry-Lugar continue

And Pakistan cannot afford to have certain restriction at this stage. So can we say that we are bound to accept the bill with its unfair conditions? 

All in all the Pakistan govt. is planning to sign the tenancy agreement (rental agreement) with US govt to access their armed forces and nuclear power.


Research Department



Mian Mansha Statement—CNBC on the live show on Wednesday 7th oct 2009.

* Privitization commission report 2006-2009 (20% devaluation in money is added in the figures)