Persian Gulf Arab states may not keep dollar

In early July, the Central Bank of the United Arab Emirates announced that the country would drop its 30-year peg to the dollar by June 2009, linking instead the national currency, the dirham, to a basket of currencies which would include the dollar and the euro. Some experts claim that the move would lead to the fast appreciation of the dirham against the dollar.


The UAE is one of the world's main holders of dollar-denominated assets. However, the dollar has gone down by 33% against the euro since 2003, severely devaluing currencies of the six states of the Persian Gulf Cooperation Council (PGCC) -Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman- even as oil prices reach record levels. Inflation, meanwhile, has surged to double digits in all Persian Gulf Arab countries, except Bahrain.
Inflation in the UAE, the second-largest Arab economy, surged to 11.1% in 2007 from 9.3% because the weak dollar and high global food prices led to more expensive imports. With its monetary policy tied to the United States, the UAE has fixed price limits on basic foods and building materials in an attempt to control prices, Bloomberg has reported. The UAE's oil-rich economy expanded 16.5% to 190 billion dollars in 2007, which is equivalent to 1.3% of the size of the US economy, according to data compiled by Bloomberg.

The National newspaper, owned by the ruling family of Abu Dhabi, reported on July 6 that the UAE will call on all six Persian Gulf Cooperation Council member states to de-peg their currencies from the US dollar to curb inflation. However, the UAE will not be the only country to scrap its peg to the US currency. Kuwait put an end to its 5-year dollar peg in May 2007 in favor of a basket of currencies. Since then, the uwaiti dinar has appreciated more than 8%; the country's inflation is lower than that of other PGCC states, mainly because it can freely determine its own interest rate policy.


Qatar has reduced its exposure to the dollar by approximately 60%, distributing its reserves between the US dollar (40%), euro (40%) and a basket of other currencies such as the yen, the sterling pound etc (20%).
The problem at hand is also influenced by social factors. In recent months, many of the Persian Gulf Arab countries, which depend on Asian foreign labor to man their rapidly growing economies, have experienced strikes as foreigners are demanding higher wages due to the devaluation of local currency. PGCC governments fear that if they do not take rapid measures crises will evolve.


All Persian Gulf economies seek to reduce their exposure to the weak US dollar. PGCC central bank governors are expected to meet in September to finalize a draft of the Single Currency Agreement, a framework that would let them set up a monetary union by 2010. If an agreement is reached, PGCC economy ministers and eventually heads of state will need to deal with the issue in December.
China and Russia have also been gradually shifting their foreign currency reserves from the dollar to the euro. The Russian Central Bank expects that the US dollar portion of its reserves will fall to 45%. Iran has gone even further, conducting euro oil deals in response to US pressure on the country.


Given the poor performance of the US economy, and the weakness of the dollar against all major currencies, new measures to reduce the exposure to the dollar are widely expected.
The most likely scenario will be that Persian Gulf countries will switch to a currency basket, thus enabling their financial institutions to invest in assets denominated in other currencies. However, a significant reduction in US dollar exposure by these countries and also by China might prove to be devastating for the US economy.

Pakistan: Think about it.

we still have a chance in this country

What would your life be like in this country if you followed rules on the road, paid taxes and respected others? What if you charged your customers a just amount had price tags on all products and stopped ripping off a new customer? What if you didn’t have to fight each time with rickshaw driver for asking you 80 rupees for what you paid for 50 rupees yesterday?

What if you stopped procrastinating, overcame your fears, and began taking care of your neighborhoods, stopped littering on the ground? Would your life be different? I bet it would! What if you started taking responsibility for whatever happens to you? Certainly if you did take more responsibility, than there will be no government, no dictator, no system, and no other nation to blame.

To me it seems like we still have a chance in this country! We have a freedom of choice, we can exercise. A first step in any dramatic change is an obvious “dramatic personal change”. It has taken us 60+ years to be here today, and are you accepting to have that change you envision about Pakistan overnight? For those who think whole system is failed, than what are you doing to address it? Never doubt that a small group of committed people can change the world, indeed it is the only thing that ever has. We were a minority in India. Been there, we have done that!

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”-Charles Darwin. That is the law of universe, in order for us to survive as a nation; we will have to change at very local level. I, you and people out on street will have to change. No leader, No governments, No foreign policy will change anything for us, the sooner we realize the better off we will be.

The Minar-e-Pakistan still stands, but, even more important, the goals, the guts, hard work and determination of the Pakistani people remain untouched. I, for one, have decided to get back to work; not just to a job, but to the work that I love, the kind of work that we all aspire to do. I just got up in the morning, and it felt terrific to reclaim my freedom to decide, to choose. I have all I need in this country, I have a heart, I have brain to decide what is good and what is bad, I have the willingness, determination and a burning desire. I’m going to invent things, start things, teach, and improve my Pakistan.

Why not start today living the way we want to see your nation? A year from now, we may wish we had started today. As long as we believe in the dream that is Pakistan, we win. Faith will be rewarded. You and people like me will have to insert the key ingredient PASSIONS.

Pakistan Zindabaad!

Pakistani nation not in danger, says Boucher

A lot of ‘very dangerous things’ are happening in Pakistan and some ‘very dangerous people are holed up in Federally Administered Tribal Areas (FATA),” but that does not mean Pakistan as a nation is in danger, Assistant Secretary of State for South and Central Asia Richard Boucher told a group of Pakistani correspondents at a special briefing on Thursday at the State Department.

He said Washington shares the new Pakistani government’s vision of a modern and progressive Islamic Pakistan, something the extremists reject, which is why they have to be fought and defeated.

Pakistan on its knees ?

Would India be ready to play Russia to Pakistan’s Iceland?


We have seen banks go bust. And it could be a matter of time before a few countries go bankrupt as well. The two most likely candidates right now are Iceland and Pakistan.

With some eerie timing, the International Monetary Fund has recently put out a research paper on the costs of such sovereign defaults. Though this research does not reflect IMF’s official view of the matter, it does tell us some important things.

There are three economic costs—to reputation, trade and the financial system of that country. And there is also a fourth cost: political. These can be “dire” for the incumbent government and its leaders. Their survival is at stake.

Political tremors can also be felt in the neighbourhood. Iceland has unsettled its European neighbours by asking Russia for a bailout, rather than the European Union or IMF.

It is worth speculating now what a Pakistan default might politically mean for India. There is already some reason to believe that Asif Ali Zardari is trying to win brownie points, as when he rightly called the fighters in Kashmir terrorists. So, here’s a hypothetical question: Would India be ready to play Russia to Pakistan’s Iceland?

‘Pakistan cannot afford sanctions’

Pakistan’s credit rating is nearing bankruptcy and its economy cannot afford sanctions by the world powers, Defence Secretary Kamran Rasool told the Senate standing committee on Defence in a briefing on Tuesday. Pakistan’s financial position was very week, he said, and the country could not talk about taking on the US. He said Pakistan could not succeed against terrorists without co-operation and intelligence-sharing with the United States and that if Pakistan pulled out of the alliance, it would have to bow down after international powers imposed sanctions on it and declared it a terrorist state.
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Anniversary of October 8 earthquake:
Three years on, nation remembers devastation



Third anniversary of deadly earthquake of October 8, 2005 is being observed today (Wednesday) to share grief of the victims. The day will dawn with special prayers for those killed in the quake as well as progress and prosperity of the country.



In Muzaffarabad, sirens will be sounded at 8.52am. All traffic will come to a standstill for one minute at this time to pay homage to the victims. Later, a collective prayer will be held at University Ground.It will be a state holiday throughout AJK. Sardar Attique Ahmed Khan, the AJK prime minister, his cabinet, members of both houses of the AJK Parliament, social and political workers, NGOs and general public will take part in the programmes to remember the tragedy.



International Day for Natural Disaster Reduction today: This year’s International Day for Disaster Reduction coincides with the third anniversary of the 2005 earthquake. Cyclone Nargis in Myanmar, earthquake in China’s Sichuan province, floods in the US and India, and a deadly drought in Africa show that more needs to be done worldwide to safeguard lives, livelihoods and economic development.

Indian politicians tog up in Pakistani designs

The chic clique that walks the corridors of power in India gets its wardrobe from Pakistan. The Indian politicians form the major part of the clientele of Pakistani designers, who eye the country as a prospective market.

In the past one year, many designers have made frequent trips to the metros of India, especially Delhi. Hina Anjum, who claimed that she was flooded with orders from politicians in Delhi, has made over four business trips to India in the past six months, focusing mainly on Delhi and Punjab.

Though she talks excitedly about the offers, she prefers not to disclose the identities of the clients. “It is a professional secret. But I have to admit that I have got maximum response from politicians,” she said.

She said the orders that she had received during her recent exhibition in Delhi outnumbered what she received in two months. “I have been flooded with offers of designer suits, especially those that can be given away as gifts,” she said, adding that Pakistani fabric was not only attractive, but also durable.

Zardari U-turn on Kashmir terrorism

PAKISTAN President Asif Ali Zardari was at the centre of a political storm yesterday after turning decades-old policy over disputed Kashmir on its head and declaring its Islamic "freedom fighters" to be "terrorists".

The statement by Mr Zardari has sent shockwaves through Pakistan's political elite and is believed to be causing consternation among senior ranks in the 600,000-strong army, which maintains freedom for Indian-administered Kashmir as one of its most hallowed aims.
Indian authorities in Kashmir at the weekend imposed an indefinite curfew ahead of expected mass demonstrations demanding India's expulsion from the territory. In the past two months, Kashmir has seen some of the biggest pro-separatist demonstrations since the uprising against New Delhi's rule began in 1989.

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It's a bombshell dropped by the Pakistani President, one that has been welcomed in India, shocked many in Pakistan, and been condemned in kashmir.
In an interview to the Wall Street Journal President Asif Ali Zardari called the militant groups operating in Kashmir "terrorists".
He also said, "India has never been a threat to Pakistan. I, for one, and our democratic government is not scared of Indian influence abroad."
Zardari's statement certainly is a departure from Pakistani policy that calls Kashmir the core issue with India and which calls the insurgency backed by the Pakistan's ISI, rightful jehad. It's a departure many in his country lashed out at.

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The two nuclear-armed South Asian neighbours have fought three wars over Kashmir, a territory once described by former US president Bill Clinton as "the most dangerous place in the world" because of its potential to cause a nuclear conflagration. About 50,000 people are believed to have been killed in fighting in Kashmir since 1989.

India has welcomed Mr Zardari's tough stand on Kashmir.

Pakistan: Book Review

Afghan war’s hidden blunders

The book brings clarity to the Indo-Pak war number four (or five?) relocated to Afghanistan with India firmly entrenched with the Northern Alliance and the Karzai government, and Pakistan with its proxies embedded in Al QaedaJournalist .

Gutman has certainly produced the most comprehensive and revealing account to-date of the post-Soviet invasion Afghan war. He has moved from the written sources available to all to interviews that he was able to conduct with such key personalities as were involved in the internecine jihad of the triumphant mujahideen after the defeat of the Soviet Union. Everyone who went into the savage cauldron of Afghanistan today finds himself defeated, including the two states that most preened themselves over the victory: the United States and Pakistan.

The story begins in 1988 with Pakistan in the driving seat, putting together a government in exile — Interim Islamic Afghan Government of the mujahideen — in Rawalpindi near the Pakistan Army headquarters. The 519-member shura that was to choose the government was nominated by the seven jihad militias located in Peshawar and was plied with $26 million from Saudi Arabia. Mujaddadi was chosen president but he travelled to Iran and promised the Shia leaders one hundred seats in the shura. Back in the councils of the Sunni seven, the view was different: one hundred was cut down to sixty after which the Shias boycotted.Bravery comes only with myopia and that was what was practised by the mujahideen. The government represented only 30 percent of the population of Afghanistan. Saudi money ensured that Abdul Rasul Sayyaf, the Wahhabi warlord the Arabs liked, was nominated prime minister, and Pakistan was able to get its favoured warlord Hekmatyar nominated defence minister with Saudi help although the rest of the militia leaders despised him for his tactics. The 1989 plan to attack the Najibullah regime in Jalalabad and establish the jihadi government there was set afoot with ISI chief Hamid Gul promising Prime Minister Benazir Bhutto that the Afghan government would fall in one week (p.28).The Jalalabad offensive was a fiasco. The great mujahideen suffered their first defeat after defeating the Soviets, one third of the 12,000 killed being theirs. Soon afterwards, the Massoud-Hekmatyar vendetta made its imprint, the latter’s commanders killing 30 of Massoud’s in an ambush. Mujaddidi denounced Hekmatyar as a criminal and Hekmatyar left the government as defence minister. Jamiat commander Massoud caught four of Hekmatyar’s guilty commanders and executed them. Defeats and killings were to have no moral impact on anything in Afghanistan after that.

Those who backed the savages sustained all the damage and warded off punishment in Pakistan by the simple device of taking over power.The second lethal defeat for Pakistan was the Jalalabad-like offensive of Mazar-e-Sharif in 1997, organised by the ISI once again, based on the defection of a Rashid Dostam second-in-command, Malik Pehlawan, in favour of the Taliban. This was the offensive from the west of Afghanistan; another offensive from the south was mounted after buying the defection of a Massoud commander (p.102). Seeing Pakistan involved, Iran weighed in on the other side, training the troops of Jamiat’s other commander Ismail Khan and airlifting munitions and Hezbe Wahdat Shia warriors to them. Uzbekistan sought to make its own chess-move against Pakistan, conscripting Uzbeks to help despatch supplies to Dostam. Uzbek-dominated Tajikistan came down on the side of Massoud.Another ally of Dostam, General Abdul Majid Rozi changed loyalty in Badghis province and arrested Ismail Khan whom he handed over to Mullah Razzaq who proceeded to Mazar-e-Sharif to take charge of the city abandoned by Malik. Jamiat chief Rabbani fled to Tajikistan and Dostam sent his family away and made himself scarce too.

The promise to Malik was that he would be made governor of Mazar, but soon Mullah Razzaq began to enforce the Sharia, beating up unveiled women and destroying shops selling ‘prohibited things’. He entered Malik’s room and tore down a painting of Omar Khayyam with a goblet of wine because that was ‘against Islam’ (p.104). All TV sets were smashed in the city and Malik was told to go to Kabul as a deputy foreign minister while his transport and other assets were simply taken over.At this point Pakistan recognised the government of the Taliban, but Prime Minister Nawaz Sharif didn’t know who had okayed the recognition because he hadn’t. Foreign Minister Gauhar Ayub followed orders that came from a source other than the prime minister but that was more or less routine in Pakistan by then (p.105). Then the defeat started. Mullah Razzaq went to the Hazara quarters in the city and asked them to disarm. They refused, and already scared by the ‘enforcement’ of Taliban sharia, began hunting for the Taliban under Malik’s command. They killed 350 of them including Mullah Razzaq. They ended up bagging 3,000 as prisoners.

What followed was a massive war crime. The prisoners taken in war were all executed.The book says Pakistan was the dominant power behind the scenes, the ISI putting Malik in touch with Mullah Ghaus the foreign minister, telling the latter the Taliban could capture Mazar without a fight. But uncannily it also sent in Pakistani Kashmiri militants as military assistance. Hamid Gul told the author, ‘ISI brokered a deal but it was the wrong one’ (p.108). Col Imam, the ISI officer called Ruler of Herat, later denied that the Mazar defeat was a big fiasco and funnily also claimed that the Taliban who invaded Mazar were unarmed and were mostly traders! He also put the blame on Iran for asking the Hazara Shias to resist and start the massacre (p.109).Col Imam was really the American-trained Amir Sultan Tarar, the commando officer who trained the mujahideen in camps run by Pakistan and the US. He was sent into Kandahar in 1994 to keep the Taliban going in the right direction but he soon moved to the more ‘strategic’ location of Herat, which was to put Pakistan and Iran face to face when the Taliban finally got hold of Mazar in 1998 with a massacre to shame all massacres, including the killing of the Iranian diplomats in the Mazar consulate at the hands of the Sipah Sahaba boys sent in from Pakistan. The book says they arrested the officers but, after taking their cash, handed them over to the Taliban for the killing (p.137).

This book is an epitaph for the doctrine of ‘strategic depth’, but the policy of playing proxies in Afghanistan was never abandoned after 9/11; so the war against India goes on while Washington thinks it is against NATO-ISAF. The book brings clarity to the Indo-Pak war number four (or five?) relocated to Afghanistan with India firmly entrenched with the Northern Alliance and the Karzai government, and Pakistan with its proxies embedded in Al Qaeda. The real epitaph will come later and it will be for a much bigger demise than just the fading of the doctrine of strategic depth. *