The Qatar Blockade: A Reflection

To all my friends and relatives: thank you for all your love, care, prayers and concerns.  We are all well, safe and enjoying food like always in Qatar. There are no empty shelves in the grocery stores and everything is on routine. We have food and lots of it!  

To everyone who is wondering what is going on: I am writing at a time when Qatar is facing a blockade from the neighboring GCC countries; Saudi Arabia, UAE, Bahrain and Egypt.  On June 5th, the 12th fasting day of Ramadan, the country woke up to the news that Saudi Arabia, UAE, Bahrain and Egypt are cutting ties with Qatar. Qatar stands accused of funding terrorism and meddling with the internal affairs of the four neighboring countries. Soon thereafter other countries followed suit: Yemen, Maldives, Mauritania, Eastern Libyan government, Senegal and Comoros. Others such as Jordan downgraded diplomatic relations with Qatar. Kuwait and Oman stayed neutral with Kuwait leading the mediation efforts to resolve the crisis.

At the time, everyone thought that like the rift in 2014, this conflict too will resolve itself. So the closure of land border, air space and sea will really not last that long.

But matters took a different turn.

The conflict evolved and saw announcement from Saudi Arabia, UAE and Bahrain calling their citizens to return from Qatar within 14 days and for Qataris to leave these countries and head back to Qatar.  On the other hand, there were reports that the grocery stores’ shelves are empty as people hurried and stocked up on necessities like water, milk, chicken and rice.

Since June 05th, the crisis hasn’t abated and the political and economic blockade continues. The 13 demands list issues by the four Arab states: including shutting down Al Jazeera, scaling down relations with Iran and shut down the Turkish army base, stands rejected by Qatar. The mediation efforts to resolve the crisis continues from US, Kuwait and Oman.

As the crisis continues and evolves, what have I learned from the current blockade?

A crisis in any form, in any area, whether personal or professional, not only brings changes in life, but also, changes one’s perception and thoughts on various matters.

Qatar is a country where I was born and live to this day. It is my home where I’ve had my beautiful childhood and teenage years. Whenever asked where I’m from, my answer is Qatar (followed by an explanation in a few seconds that I’m Pakistani, but was born and raised in Qatar).

The crisis when it began was a shock. The first thing coming to mind was the 1990 Gulf War scenario. The fear, the anxiety and the confusion all at once raced simultaneously in mind. We, the family, were here in Qatar then and now. We didn’t leave because there was no question at all leaving my dad behind alone. As mom says, “we stay together and  go through every single thing together”.

But in times of political and economic crisis, there are always human costs involved. Qatar was no different. According to Qatar’s National Human Rights Committee (NHRC) “at least 13,314 people were directly affected by anti-Qatar measures” with the violations including family separations, right to travel, education, work, freedom of opinion, residency and ownership. It sent shivers down my spine. I realized how we take family relations and friends for granted. We don’t even think what if , one day, they are all taken away from us. It made me highly grateful to be with my family and to have relations in my life.

The blockade via land, airspace and sea meant that many goods would no longer be available.  Products like Almarai milk, butter and other goods from Saudi, UAE and Bahrain would be unavailable during this crisis. The initial scenario where the stores faced empty racks was true because people panicked and ensured that basic necessities like rice, chicken and milk were available at least for children. Qatar government assured the residents that it had taken measures to ensure that normal life routine continues in the country and there is no need to panic. Turkey and Iran both countries sent food both via plane and sea.

What amazed me was how as consumers we are all highly adaptable to situations. We teach and study in economics that given the change in factors, consumers substitute from one good to another. In times of crisis, that holds to be absolutely true. We didn’t have Almarai milk, but, we bought Turkish milk (and are amazed how actually good it is!). I love Dandy yogurt (made in Qatar), but Turkish yogurt is good. We, the consumers, quickly shifted our preferences to other brands, which makes me wonder when this crisis is over would we ever return to Almarai milk and yogurt?

Prices did spike as expected. Now as goods arrive via sea, the prices will start to go down.

I also highly appreciate mom’s small vegetable garden here. While there was a shortage of mint and coriander leaves for some time, we were enjoying fresh mint, tomatoes and chillies from our Mama Khan’s little vegetable garden 🙂 (she even gave fresh mint leaves to her friends!) The idea of a farm-house really is not that bad 🙂 Maybe in future, I might go for a farm-house than a city life (just a thought).

The critical lesson learned in this crisis is: leadership,patience and tolerance.

The Qatar government continues to bear all the costs ensuring that normal life in Qatar continues for all the residents. And indeed, the normal life continues.

Bahrain and UAE banned people from publishing expressions of sympathy towards Qatar. Sympathizing with Qatar in UAE and Bahrain was a cyber crime, with the offenders facing fines of up to $136,000 and up to 15 years of jail term. While the boycotting countries’ media said a lot on social media, Qatar government requested all its residents to take the higher road by not insulting or saying anything negative about the boycotting countries and their leaders and to express their opinions in a peaceful manner on social media. This is tolerance and what we have seen here is a real life example.

This is true leadership!   Every one has the right to their opinion and there are always agreements and disagreement. Successful is the one who is patient, listens to others and presents arguments in a peaceful, constructive and respectable manner. The Qatari leadership is a prime example of this.

Despite the blockade from neighboring countries, Qatar did not expel their citizens and assured them that they are welcome to stay (even when it could have taken the same path).  Despite the tense environment, we see patience and the leadership continuous, non-stop effort to resolve the crisis through constructive dialogue. It has won the people’s hearts and support! The “Tamim Al Majd” (meaning “Tamim the glorious”) is viral. From car stickers to murals to posters on residences, the strong support and love is evident. Its’ in the air! It brought everyone together under one roof. It has strengthened the unity of a nation.

The crisis has taught me strong positive lessons. I always am grateful for things, but now, I’m highly grateful for the small things in life which we take for granted. I have many times thought the in today’s time values don’t matter. Wrong. Values, how you conduct yourself in life and how you treat others does matter for they form real human connections that are not broken easily. I have learned to be hopeful, even in tense times and remain optimistic.

I am thankful for everything in life.

Euro: The Clock Ticks

Will Euro Be History? - by alf.melin flickr

The clock is ticking. The fate of Euro now stands by a thread. Markets are shaking with the prospects of a possible Greece exit from the Euro zone. The next coming days (maybe even hours?!) are crucial. Noted economist Paul Krugman has  announced his predictions about the euro (which are seen as being too sensationalist). Yet, European central bank and governments are doing nothing to quell such prospects as this recent news shows. The situation requires an analysis of some aspects that could explain the situation Europe finds itself today in.

The Greece crisis, indeed, opened a Pandora’s box for Europe. A crisis that was thought to stay contained in one country, rapidly spilled over in other European countries such as Spain, Italy, Ireland and Portugal and other states. However, the crisis gained intensity when the cracks started appearing within the zone members . The cracks played out in public, but , did not receive much attention when they were indicative of the future.

Austerity – Too Soon, Too Fast, Too Harsh?

Perhaps, the most disliked word of  the year 2012 would be “Austerity” and every single negative connotation will be associated to it.

The Greek debt levels were unsustainable from the beginning. Further, Greece deals with Goldman Sachs coming under intense scrutiny damaged Greece’s creditability. Euro zone members, in particular Germany and France, asked Greece to sort out its house by embarking on the austerity program. The bailout to Greece came attached with condition, similar to World Bank and IMF conditions when they provide financial assistance to countries. The contagion soon spread to countries like Spain, Italy, Ireland and Portugal when their debt levels crossed the  Euro deficit limits.

But in the midst of all this, an important question is: did the austerity steps came in too soon and too fast?  In economics, theoretically, contractionary policies whether fiscal or monetary lead to certain effects in the economy. But in real life, policies always face a ‘time lag’ – it takes a certain period of time for a particular policy to gain objectives whether it is growth or price stability.  In the case of Euro zone, the fiscal austerity is fast leading to fast contraction of the economies as spending cuts and higher taxes eat away the disposable incomes of the people. The more spending cuts and increase in taxes come along, the lower the disposable incomes and the lower the aggregate demand.

Greece Riots - by Jack Zalium Flickr

On the other hand, ‘Germany’s refusal to allow ECB to create a new money in order to buy government bonds from at risk countries, fearing rampant inflation’  is fueling the crisis. A contractionary monetary policy along with fiscal austerity will only lead to a deeper recession. The riots in Greece, Spain and Italy are testament to the fact that austerity is hurting people, and that a particular part of population is getting more hurt than the others.

The euro zone embarked on austerity way too fast and in the process, it has only become harsh.  In times of crisis, austerity is not always the best answer and if it is to be pursued, has to be done cautiously and slowly. Austerity, contractionary monetary policy and structural reforms all at once is a recipe for disaster. Not everything can be done at once and fast, especially, if a different set of reasons is causing the crisis. In Spain, the problem of unemployment, especially that of youth, and the housing bubble burst  along with the need to recapitalize the banking sector are the top reasons for their crisis. Italy faces a similar scenario. Greece was another case altogether as the economy was thoroughly mismanaged. France’s President Hollande and ECB President Mario Draghi  both realize only now that growth and fiscal austerity must go hand in hand together.  Yet, both didn’t pan out exactly how a growth policy would be composed alongside of fiscal austerity and no where is growth policy is in sight. Further, I believe that President Francoise Hollande will actually take the path of austerity, which, will not sit well with French voters.

A Division in Political Realms 

When political divisions begin to arise and do not abate, that is a subtle sign that issues lingering from the very day of inception will make a BIG comeback.  From the start, Germany was reluctant to help out Greece on a massive platform. “53% of Germany population believes that Euro zone will be better off without debt crippled Greece and that Greece should return to its currency drachma”. The sentiment on the political reflect this thought. In addition to this. Germany’s record of price stability and controlling inflation provides it a superior (and perhaps a dominant) position in the management of a credible monetary policy. And that has created problems.

There is a refusal (or outright denial) on Germany’s part to acknowledge that economic circumstances for each country can be different. Germany’s economy minister Philip Roesler ‘called Athens to surrender control of its budget policy to outside institutions if it cannot carry out the reforms required under the euro zone rescue package” reflects the thinking that Germany considers itself  superior in the policy making arena.

Greece had countered back angrily stating that they will not allow any interference in their country’s economic policy decision. The statements made is a subtle indicator that despite known as the ‘Euro zone’, with each member country the concept of national sovereignty still exists and is strong. This notion plays a strong role in political outlook as not many Euro members share the same policy sentiment as that of Chancellor Angela Merkel or Nicolas Sarkozy.   This is in contrast to the time when one of the  main motive behind EU was ‘the desire for ever greater prosperity”. That prosperity could only be attained through economic integration as the ‘economy was the most promising domain for cooperation’ (and perhaps now is the biggest domain for breakup?). But now the deep and fast austerity measures, in places where it is not required for the time being, ‘entrenches a bizarre halfway integration that’s ultimately doomed to fail’. The collapse of Romanian and Dutch government on failing to agree on cuts and with failure of Greece recent election is a strong evidence that the divide is only getting deeper.

Merkel and Sarkozy - by Chesi - Fotos CC Flickr

In the times of crisis, when political visions becomes divided in addition to economic issues, it becomes a bomb which upon explosion only brings destruction.  Delors – one of the main architects behind the EU has openly blamed Germany as ‘the biggest stumbling block in finding a swift solution to the crisis”. If euro zone members do not unite on the political front, euro’s survival is in questions.

What Now?

The biggest damage to the union is the admission by Delors that the ‘euro zone was flawed from the very beginning as the political figures at the time were unwilling to recognize such possible scenarios’. The political leaders of the time, perhaps forgot that some scenarios no matter how undesirable or unrealistic maybe, one fine day, would come back to haunt their economies and will the test the union in unimaginable ways.

Chancellor Angela Merkel clearly stated that ‘future of euro is indivisibly linked to unification of Europe”. But so far the signals on the other end have been the opposite.  The continuous warnings to Greece, the continuous statement that Greek can default along with the claims that Greece will remain the Euro zone have only strengthened the believe that Greek will default. Greece is under pressure as a recent statement by Christine Lagarde – IMF Managing Director indicates. And the pressure is dictating only one  picture: do or die.   With tensions at the domestic front along with a political and economic dire situation and that ECB and IMF are preparing for the Grexit scenario, the odds are higher that Greece will exit the eurozone despite it best attempts to remain in it. And there will be consequences for the euro zone. According to Soros, the break up of Euro zone will be catastrophic. The exit of Greece has the potential to bring under pressure (or even spread the contagion) the other weaker economies such as Spain, Ireland and Portugal and could have implication for the euro zone, not only as a region, but also in terms of single monetary union.

The 2 questions at this time:  will euro zone break and will euro survive –  remain unpredictable. Tables could actually turn if political and economic thinkers come together to avoid the split.

For now, I can only say that the future of Euro zone and Euro is bleak.

Sources

AlJazeera (Dec 2011) “Euro Flawed from Start says Main Creator”

Reuters (Jan 2012) “Greek PM Seeks backing for reforms, debt deal near”

Spiegel Online (Feb 2012) “Germany Power ‘Is Causing Fear’ in Europe

Nouriel Roubini (April 2012) “Europe’s Short Vacation” http://www.project-syndicate.com

Economist (May 2012) “The Euro crisis: The Unwinding”

Kemal Davis (May 2012) “Rebalancing the Euro Zone” http://www.project-syndicate.com

Reuters (May 2012) “Greece must stick out to bail out terms: Lagarde”

Pakistan – A Fractured State?

‘ It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness…’

A Tale of Two Cities – Charles Dickens

The description fits Pakistan perfectly.

The catastrophic floods have left 15 million people displaced and have claimed 1,600 lives. The devastation is of epic proportions for agricultural lands have been wiped out, livestocks lost, infrastructure swept away and diseases ready to hit a vulnerable population.

The future is at stake.

The flood has not only swept away livelihoods of people, but also, has exposed the faults in political, developmental, environmental and institutional structure that would turn the course of the nation.

The current crisis makes one wonder if Pakistan is nothing but a dearth of tragedies. It is imperative to understand because in its existence of 63 years, the country’s politics, economic development and institutions are all in a dire state. If anything, Pakistan has become a state with no direction – or rather is seen as a ‘fractured state’ –  simply because various factors continue to dominate, becoming  a major impediment in the way of progress.

Today, the fate of the country and its people is hanging by a thread. If the thread breaks, the consequences are unimaginable.

The Political Mess

Pakistan political history is littered with military dictatorships and failed civilian governments. In its entirety, the country has never witnessed a stable, progressive democracy. For one reason or another, the civilian governments were either dismissed or thrown out due to incapacity of governing a nation.

The country has had no leadership that would direct its people towards a progressive future. Hostile relations with neighbouring country India and an unstable Afghanistan, Pakistan lies in a critically sensitive geographical area where political stability is pivotal for regional stability. But with an unstable democracy come the corrupt politicians worsening the scenario in total sphere. For it’s all about political dynasties such as Bhuttos and Sharifs with one dynasty taking over another in turn in Pakistan.

Much was written in the international and domestic media about President Zardari’s European tour. ‘The image of the President’s helicopter leaving the elegantly manicured lawns of his French villa (Chateau)’ at a time when the people were suffering immensely is one example of what the politicians actually think about the state and its people.  The state is nothing, but,  a ‘money-making machine’ with access to all the aid received from the developed world, a chance to fill their coffers. Despite heavy pour of criticisms, the President continued the tour in the wake of a humanitarian crisis in home.

Disgusting as it may-be, yet, the main purpose of the President was to launch the career of his son, Bilawal Bhutto, the heir to the throne of Bhutto legacy. Bilawal a graduate of Oxford University with a degree in history, his own history of colorful stints in the university would shock the nation. Moreover Bilawal’s knowledge with regards to Pakistan’s history on political, economical fronts and its problems is highly questionable.

However, the President is not alone in carrying out such events for Pakistan’s politicians are known to make merry of every hostile situation.

Nawaz Sharif and President Zardari – Newzblaze

The state of corruption has not stunned the people at all for the President alone is not a culprit of ‘ accumulating assets of as much as 1 billion pounds around the world’. Former Prime minister Nawaz Sharif’s government was also corrupt. In one of his tenure, the scheme of Karz Utaro, Mulk Sunwaro (Repay the debt, Save the Country) has never been investigated on embezzlement charges nor corruption.  Mr Sartaj Aziz – Finance Minister at the time – stated that the fund was direct under the control of Mr Sharif.

And like the President, in such catastrophic times, Mr Sharif is seizing the opportunity by  portraying himself as the leader who knows his priorities. If one gives the benefit of doubt, then it is critical to ask; why hasn’t Mr Sharif brought his millions back to Pakistan to aid the people? Why rely on foreign aid when the politicians’ are super-rich?

On the other hand, military is another matter altogether. Dubbed as ‘ a state within a state’, the  reputation of Pakistan’s military deteriorated with the antics of former General and President Pervaiz Musharaf. No one has forgotten the Lal Masjid incident and the scars remain deep.  Currently, General Kiyani is basking in the glow of public for coming to the aid of people while the  President was enjoying his expensive trip.

The flood has created an immense political vacuum.  The government through its inefficiency and incapacity of handling the relief work as well as having no creditability, has handed ‘the golden platter’ to the military and to religious groups with regards to political future. The religious groups are helping out people and providing relief where the governments have failed. In part, the reason ‘that fundamentalism exists is because the religious societies provide security and assistance which the state has failed in providing’. The country again is standing at a sensitive political stage where military is being highly favored compare to a democratic setup.

A Soldier Evacuating People - Khalid Tanveer A P Photos
A Soldier Evacuating People – Khalid Tanveer A P Photos

Economy at Standstill

Pakistan’s economy has always remained on the back burner.  The hostile relations with neighboring countries led the diversion of the funds to bureaucracy and military development. Feudalism continues to be a major part of the society, especially in the agriculture sector. In the past, land reforms failed to provide equitable land distribution in farmers. Health and education have never received much attention from the governments. The result is major part of the population, residing in rural areas, have no access to proper health care and educational facilities. The development focus remains on urban areas which has aggravated the rural-urban migration pattern.

Further, the ‘twin-deficit’ crisis of the 1990s put a dent on the growth as it implemented IMF’s Structural Adjustment Package. The current government has also negotiated an IMF bailout package for the economy and is on the table again in the wake of the disaster. The government has added to the debt woes further by taking a loan of  USD 900 million from the World Bank.

The electricity shortages have aggravated the weak economic scenario for it is fueling the shut-down of businesses throughout the country. The terrorist attacks and violence in the commercial hub Karachi is leading to a loss of millions everyday. The current catastrophe has driven the prices of food across the country. It is believed that the inflation will reach 12% in the next six months. Further, with millions of cotton and wheat destroyed, exports are hit and there is a threat of food shortage that could engulf the whole nation.

Agricultural Lands Flooded – MSNBC

In simple terms, the economy is battered and at the brink of a collapse.

Is there No Hope?

Indeed, these are dark times. No light is seen beyond the dark tunnel.

But as Dickens said, these dark times might turn out to be the best times, for amidst them is hope.

Hope is re-kindled by the young generation of Pakistan as they are defying all odds to reach out to people in such dark times. With them lies the future of the country.

All one needs is opportunity. And when it appears and unleashes the young, the politicians will not be spared. The wave will sweep away the elements that have made Pakistan a fractured state, only, to re-build it for prosperity.