Archive for 2012

Last week, in a dramatic display of strength, about 150 Taliban militants armed with automatic weapons, hand grenades and rockets stormed a prison in Bannu district of Pakistan’s Khyber Pakhtunkhwa province. It was the start of the spring offensive. The subsequent escape of about 400 prisoners points to the growing strength and rapid reorganisation of Taliban and Al Qaeda-linked militants in the lawless border areas.

Tehrik-e-Taliban Pakistan claimed responsibility, and a TTP commander later claimed that about 150 prisoners reached Mir Ali, a town in North Waziristan, while local authorities claimed to have recaptured 34. The escaped militants include Adnan Rasheed, the mastermind of an assassination attempt on former president Pervez Musharraf, who will rejoin the TTP and enhance its operational capacity.

Formed in 2007, the TTP has a close association with the Afghan Taliban. The hard-core militants who escaped from Bannu jail could be instrumental in launching the Taliban’s spring initiative in Afghanistan; the same day as the jailbreak, heavily armed Taliban attacked the diplomatic enclave in Kabul and tried to storm parliament in a rare coordinated attack spanning cities across eastern Afghanistan.

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THE US and China, which are currently in a state not unlike the Cold War, may end up in a confrontation over the energy resources of the Caspian Sea area and Central Asia.

Worryingly for some, this confrontation could take place in the land of the Baloch comprised of the Pakistani province of Balochistan, Iran’s Sistan-Baluchistan and some of Afghanistan’s southern provinces.

This factor enhances the strategic importance of Baloch land. The resolution tabled in the US Congress by Dana Rohrabacher in February this year said that the Baloch that are “currently divided between Pakistan, Iran and Afghanistan have the right to self-determination and to their own sovereign country”. The resolution has floated the idea of a ‘greater Balochistan’. The US has been raising the issue of human rights violations in the restive provinces of Pakistan, Iran and China. And those involved in separatist movements in these geo-strategically important ‘energy nodes’ would be the key players in a power struggle for the control of the region’s vast oil and gas reserves.

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KARACHI – President Asif Ali Zardari at the weekend approved the State Bank of Pakistan (Amendment) Bill, 2012, which empowers the central bank to control government borrowing. The bill has strengthened the central bank’s ability to formulate and implement monetary policy with a degree of autonomy.

Under the bill, government borrowing will be brought to zero at the end of each quarter barring the ways and means limit should be determined by the central bank from time to time.

Local analysts argue that the central bank will not be able to control government borrowing from the banking system, particularly from commercial banks. The government has in the past few months curtailed its borrowing from the central bank but it continues to borrow heavily from commercial banks, supported by liquidity injections by the central bank.
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KARACHI – Borrowing by the Pakistan government from the country’s banking system this fiscal year has been so heavy that it broke the full fiscal year record, set in June last year, in only seven and half months.

The government borrowed 674 billion rupees (US$7.4 billion) from domestic banks in the period from last July 1 to mid-February this year, exceeding the 616 billion rupees it borrowed in the 12 months to June 2011, according to the central bank.

Pakistan’s total domestic borrowing exceeds its total foreign debt, while total domestic and foreign debt is more than $130 billion.
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KARACHI – Iran has agreed to provide US$250 million to help Pakistan build its end of a gas pipeline between the two countries after Pakistani institutions, including Oil and Gas Development Co Ltd (OGDCL) and National Bank of Pakistan (NBP), refused to provide funds for the project because of US sanctions imposed against Iran at the beginning of this year.

Domestic funding for the project is crucial because the US and international sanctions against Iran are likely to block Western and multilateral funding. Deeply indebted Pakistan had earlier planned to borrow $300 million from local banks and $210 million in equity from state-owned companies.

State-owned OGDCL, Pakistan’s largest petroleum company, fears that financing an Iranian project could prompt the withdrawal of foreign shareholders, while NBP is concerned that involvement would lead to closure of its foreign branches due to US sanctions.
The United States has warned Islamabad that the gas pipeline project could violate US restrictions on major financial deals with Tehran, imposed as part of efforts to have Iran abandon its nuclear program, which the US says will lead to nuclear weapons.
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