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Curfew imposed sine die
A minor campus incident sparked violence
Abdur Rahman Khan
It appears to have been a campus issue originating at the Dhaka University playground. But the way and the speed at which it spread out at different campuses of the country; the participation of some teachers and the extent of violence on the city streets was simply baffling and outrageous at the same time.
It was unfortunate that the violence had soon spread out of the campus even after the Government had withdrawn the army camp and initiated an inquiry into the unpleasant incident at the DU playground in fulfillment of their demand. Prior to that, a few students were manhandled by army personnel at the playground.
The Chief Adviser to the caretaker government Dr. Fakhruddin Ahmed in his address to the nation on Wednesday evening specified that certain evil forces were behind the incidents. He also sought cooperation from the people in discharging the duties of the interim government that came to power with full support of the members of the public.
Meanwhile, Ali Reaz, a former student leader of Dhaka University and currently teaching at an American University, also indicated that the sudden outburst on the campus and the rapid escalation of violence throughout the country was not a spontaneous one.
However, Abdul Gaffar Chowdhury, a journalist staying in London, told the BBC that the incident was an outburst of people's anger generated among the people over the last few months. He specifically mentioned that the price spiral of essential commodities was one of the causes that made the people dissatisfied.
With the enforcement of curfew and the government's request to the media to follow the rules under the emergency, local electronic media suspended live coverage of the violence while the print media also downplayed reports the violence on Wednesday. However, the world media, like BBC television gave a wider coverage with the news on Bangladesh.
The announcement of the imposition of curfew coincided with the closure of all public universities and other educational institutions at all divisional headquarters put many people in trouble. The order for vacating the student halls and hostels made a large number of students, specially the female students to take a safe journey home or to any safe shelter on emergency.
It was also reported that a good number of media persons were harassed on way home Wednesday night despite official announcement that movement of media people carrying proper identity or accreditation cards would be allowed.
Meanwhile, the authorities relaxed the curfew for three hours yesterday afternoon facilitating the movement of the citizens. The Chief Adviser said that the measures taken to contain the unruly activities and damage to property was a temporary one.
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Post-flood scenario
Agricultural rehabilitation must
go on at full blast
Special Correspondent
Waters have receded from most of the flood-affected areas of the country. But it has left a trail of destruction to standing crops, infrastructures, dwelling houses, cottage industry, poultry farms and fisheries.
The extent of damage - which is likely to run in billions of taka - is being assessed. The government upon a preliminary assessment has placed the requirement for post-flood rehabilitation and reconstruction at Tk 1,050 crore at a meeting with representatives of the donor countries for post-flood rehabilitation and reconstruction.
Sirajganj is the worst affected district by flooding of the Jamuna river. Crops on 44,000 acres of land have been damaged. About 2 lakh handlooms remained submerged in water. About 188km roads went under water disrupting communication; 3.5km roads and 39 bridges and culverts have been washed away by surging waters.
One will come across pathetic condition of flood-affected people living in makeshift huts in Monga-prone districts of Kurigram, Gaibandha and Rangpur. Narrating the woes of the people, Udiakhali UP chairman Mahbubur Rahman told a newsman that flood water has receded but its aftermath is no less painful. Many people are suffering from waterborne diseases.
What is more alarming is: there is no work to earn livelihood. The Government has not given the local bodies any relief materials for distribution to the affected people. "We are representatives of the people," said UP member Shahjahan. "We have not been given any relief material from the Government for distribution among the people."
Kalam, a sharecropper of Malibari, had borrowed Tk 3,000 from UP chairman and planted Aman seedlings in his field, which were washed away by the flood. He is now again trying for high interest bearing Dadan (loan) from moneylenders.
Rabeya Khatun, a widow with two girls, has procured some rice from an NGO. "It is no use asking for help from UP chairman, members or local politicians. They do not give any relief this time," she lamented.
Mozammel, a day labourer, received 4kg chira (flattened rice) and some molasses as relief. Finally, he sold his 13 ducks at Tk 700 to sustain the 5-member family.
In all the districts plantation of Aman seedlings is progressing. BADC has raised paddy seedlings at higher places of Sirajganj district. Seedlings are also available in Pabna, Bogra and all other districts where flood was of low intensity. Farmers of greater Rangpur districts are procuring seedlings from Bogra and Pabna.
Report from Nilphamari, Panchagarh and Dinajpur said the people did not experience flood. Siddique Kazal of Nilphamari said he could not plant Aman seedlings in more than 20 acres in the absence of water in the field. He is to irrigate the field with shallow pump if there is no rain in few days.
About three inches of water above the surface is required for plantation of seedlings. Kazal is hopeful of a good harvest but emphasised the need for supply of required fertiliser. Shortfall of fertiliser was reported from some areas on Tuesday including Jhenidah where farmers staged demonstration in front of the office of Sadar Upazila Nirbahi Officer.
Primary school teacher Sajjadur Rahman said the Government should stop giving relief. Relief makes people dependant on others. Instead, the Government and NGOs should create employment opportunities so that they can earn their bread.
This nation has sad experience of widespread corruption in distribution of relief materials to the people affected by natural calamities in the past. That is why the Government avoided local bodies represented by political activists in relief distribution. All relief materials, though inadequate, were distributed under supervision of army personnel.
This is probably the first time that politicians and political parties were not engaged in relief activities except on the last couple of days. The Government says that it is confident enough of successfully tackling the post-flood situation.
Import policy for rice and all other essentials has been liberalised by withdrawing duty. More than 400 truckloads of rice and other commodities are imported from India everyday through the land ports. About 3 lakh tons of rice came in truckload from across the border during the last eleven weeks.
The Government will sell rice at subsidised price of Tk 19 per kg from September 10 through OMS across the country. Besides, rice will be distributed to the poor through VGF card.
Government institutions, trade bodies and individuals came forward in aid of flood victims. About Tk 49 crore plus $50,000 US dollars have been received as donation to the Chief Adviser's relief fund in a fortnight. Foreign donors are expected to come up with pledges of assistance for post-flood rehabilitation activities.
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Post-flood economy: BB must fend off impending 'dollar drought'
M. Shahidul Islam
One of the most intractable challenges of the interim government seems related to the economy. The exorbitant prices of the essentials aside, damages of the flood will multiply the nation's economic woes and the massive layoffs in various industrial sectors and the fear of reduced import earnings amid a much feared recession in the global economy could spell disaster for the economy in coming days.
As things stand now, massive unemployment and high inflation seem to be the economy's Achilles' heel. At least 300,000 workers lost jobs over the last six months due to the closure of 48 jute and over 250 garment industries. Export is falling and remittances, too, is likely to follow suit as the global economy is heading for what many say a protracted recession.
The government may be well aware of the domestic challenges it's faced with, but the external challenges are what may decide the fate of the nation's economy in coming months and years.
Unlike war, economics is not a zero-sum game; especially in an era of interdependence where economic interactions between nations result in some gains for everyone. Poor economies like Bangladesh are likely to suffer most from the fall out of a global economic crisis that is getting worse by the day.
Last week, the global economy plunged itself into a roller coaster ride amid fear of an impending financial meltdown, wrecking nerves of investors and central bankers alike. Central banks from Frankfurt to Sydney injected extra cash into banking systems to calm panicky credit markets. While the rich nations have ways and means to hedge their economies from adverse global impacts, poor economies like Bangladesh must think carefully about the timely utilization of its US$ reserve, the only nest egg in its basket.
The US$ is in serious crisis and may lose its value suddenly due to the US 'sub-prime loan crisis' having triggered a slow down in the U.S. and the global economy. Many astute economists are expecting a 'dollar drought' as nations around the world move to sell off their US dollar reserve.
Like Bangladesh, entire Asian economy is export-driven and some Asian exporters have already begun to reel from the crisis's impact. The mainstay of our export, RMG, is already witnessing a slowdown in orders. The crisis has seriously affected the Japanese exporters like Honda, Canon and Toyota, which saw their company shares drop sharply on August 17. Adding to Japan's woes, the yen reached a 14-month high against the dollar, making Japanese exports more expensive. Other currencies of the region are also gaining values against US dollars.
If Bangladesh's comparatively large forex reserve (to the tune of US$ 5 billion) is meant to finance import, service debt and for use as collateral, the Bangladesh Bank (BB) will be wise to convert some of it into other equities and invest in handsome manner in projects that create employment. Such a policy will act as a cushion against a global recession that seems unavoidable. The government should also inject a good portion of the reserve as credit to private importers to increase supply of goods in the market and thus bring prices of essentials down.
Why? If US dollar depreciates too precipitously overnight, nation like Bangladesh will become simply bankrupt. There is no time to waste as the most visible aspect of the crisis has already emerged in global stock market volatility in the past two weeks. One of the most powerful Asian economies, China, has already taken measures to shield its reserve wealth which are in US dollars.
With two digit growth rates, China has become an economic competitor to the U.S. over the years not only in terms of huge exports and trade surpluses, Beijing also accumulated over $500 billion worth of U.S. Treasury bonds and a massive amount of U.S. currency reserves. In reality, those Treasury bonds represent U.S. government debt and much of it was being used to fund the wars in Iraq and Afghanistan without causing tax hikes.
Now that the US economy staggers toward a recessionary swamp, the dollars in the Chinese hands have become a powerful leverage in determining the sustenance of the US's economic wellbeing. A Chinese sell-off of US dollars could result into a sudden crash of U.S. dollars; make other dollar- holding nations and their central banks poorer overnight and, plunge the global economy into a pandemonium due to US's inability to borrow further. It will also terminate the US's desire to print more money to avert an economic disaster; albeit for other reasons.
One of those reasons is systemic policy blunder of the Bush administration. The 'sub-prime' mortgages that are at the centre of the current crisis are the relatively expensive loans used by homebuyers with fake income or bad credit histories. Over the preceding years, these faulty loans have accounted for a fifth of all home loans in the USA. The affluence of the US economy stems mostly from the revolving asset creation by the housing industries. That is in trouble now.
Jolted by the intensity of the crisis, China last week hinted about the possibility of selling its US dollar reserves, should Beijing be forced to raise the value of its currency which the US has doggedly insisted for nearly a decade, according to the London Telegraph. As well, to fend of what seems like a gathering storm in the horizon, central banks around the world began to inject massive liquidity into markets to stem the rot.
The style of the intervention conveys tell-tale signs that the global economy is in much deeper trouble than what meet the eyes. The intensity of the crisis prompted an orchestrated move by all leading central bankers. The US Federal Reserve added US$24 billion into the banking system instantly, its biggest single-day cash injection in nearly four months. The intervention came on top of another $24 billion injection only a day before, which was its biggest open-market action since the aftermath of the Sept. 11, 2001 terrorist attacks.
At the same time, European Central Bank (ECB) pumped 94.8 billion euros (US$130.6 billion) in a one-day tender, the largest amount ever. Not contended, another 61.05 billion euros (US$83.61-billion) were injected in a three-day tender on August 17. The ECB's totals were well above the amounts it flooded into markets immediately after the Sept 11, 2001 attacks on the USA. At that time, 69.3 billion euro was allocated overnight (on Sept. 12, 2001) followed by 40.5 billion euro the next day.
Among other central banks, the Bank of Canada injected $1.64-billion; Bank of Japan 1.0 trillion yen (US$8.45 billion); the Reserve Bank of Australia A$4.95 billion (US$4.19 billion) and the Central Bank of Norway 45 billion crowns (US$7.80 billion).
The Swiss National Bank (SNB) went few steps further and offered banks money at a below-market rate of 2.6% for the second day in a row. Traders estimated that 2-3 billion Swiss francs (US$1.68-2.51billion) was probably injected the day before, when the market rate was at 3%.
In Asia, Central banks of Malaysia, Indonesia and the Philippines intervened in foreign exchange markets to support their currencies by selling U.S. dollars. South Korea's central bank said it was ready to add funds to markets, if needed. All of the above proves that our central bank has no reason to shy away from injecting funds into the economy's vulnerable sectors, especially at this critical moment of post-flood reconstruction period.
Central banks can hardly wait to be taken by surprise. Despite those crisis management exercises by leading central bankers, the crisis still festers. The Japanese stock market reeled from an incessant flow of selling on August 17, the Nikkei 225 index having plunged 5.4 per cent to close at 15,273 - its lowest level in a year. And, there was no let-up in other parts of Asia. South Korea's KOSPI fell three per cent to 1,638; Hong Kong's Hang Seng fell as much as five per cent before recovering some lost ground and closing down almost 1.4 per cent. China's Shanghai Composite index ended 2.28 per cent lower at 4,656.
The crisis unfolds at a time when most of the Asian economies were doing much better than the OECD nations in terms of growth and, the economies of the region were ill prepared to allow another financial crisis to unfold which will destroy the upward momentum of their economies gained since the recovery from the 1997 Asian financial crisis. The 1997 crisis drove up demand for safe U.S. Treasury securities, allowing the U.S. government to offer its long-term bonds for low interest rates. That option is no more available as the US itself is mired in deeper crisis and stands at the centre of the storm.
Root of crisis
Analysts say, the US foreign and defense policies have much to do with the ongoing crisis. The wars in Iraq and Afghanistan have turned utterly counterproductive, sending trillions of dollars up in the smoke and increasing human miseries all over the world. They also say the Bush administration's war time economic policies were more flawed than the failed strategies that made defeat inevitable.
They could hardly be wrong. The Afghan invasion took place on the heels of serious plunges in short-term rates after the Sept. 11, 2001 terror attacks. A jittered Federal Reserve Board then was more worried about a quick recovery of the US economy and decided instantly to slash short-term rates to encourage borrowing. The rates thus fell precipitously until reaching 1 per cent in mid-2003.
That rate was the most ridiculous one and carried inbuilt flaws of immense proportions. It also resulted in millions of people refinancing their homes or taking out home-equity loans. Less affluent people bought houses before prices rose further. The fraud-laden new mortgages helped create some 12 million new homeowners. The entire enterprise now turned into a sham and recoiled with a bang.
The low-interest frenzy also made the Wall Street crazy, prompting private equity firms to borrow massive amounts to buy companies. When the Fed finally felt that the scheme has backfired and the economy was overheating, it steadily began to push up short term interest rates, finally reaching 5.25 per cent in mid-2006 and making borrowers unable to pay their debts at a time when the war-centric economy was spending more for nothing and investing too less to create wealth and employment opportunities. This particular spectacle shows why not to raise interest rates when increased growth is not a certainty.
Bangladesh has a lesson to learn from the US mistakes and must focus to create employment opportunities by reviving moribund (and closed down) industries and encouraging to set up new industries of the kinds that could substitute imports, increase exports and meet foreseeable domestic needs. Now is the time to think locally and act globally.
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NSC: How will it shape up and function?
Mishu Chowdhury
Under President Truman's administration, the National Security Council (NSC) was created by Public Law 80-253, approved on July 26, 1947, as part of a general reorganisation of the US national security apparatus. The function of the NSC, as outlined in the 1947 Act, was to advise the President on integration of domestic, foreign, and military policies relating to national security and to facilitate inter-agency cooperation. At the President's direction, the NSC could also assess and appraise risks to US national security, consider policies, and then report or make recommendations to the President.
Bangladesh: Heroism and terrorism
60 years later, Bangladesh stands on the brink of being engulfed by destructive politics, potential terrorist threats, and the possibility of a civil war. The August 16 bombings in 2005 made this country to the rest of the world as a possibly violent terrain, where the value and sanctity of life somehow gets trivialised by race, religion, and opposing viewpoints.
These notions may have been formed due to one day's series of blasts, but decades of the Bangladesh's history tell heroic sagas of a far superior nation which challenged to confront tyranny and fought for truth and justice.
Following the unrest in January 2007, the country has taken a U-turn as far as politics is concerned. Politics is still banned, and an interim government headed by Chief Adviser Fakruddin Ahmed is now at the helm of affairs. Reforms in almost every sector have been devised; some are more successful than others and most are still at formative stage. Debate over NSC.
Following a period of anticipation, finally word is heard that even though the formation of the National Security Council (NSC) has been delayed, it shall be established nonetheless, during the tenure of this interim government. The primary issue which seems to have delayed the already lengthy procedure of formation appears to be a newly surfaced debate centering around who shall head the proposed NSC.
President Iajuddin Ahmad received a proposal pertaining to this matter last month, which he is yet to sign. The proposal suggests that the NSC should be headed by either the President, or the Prime Minister, so long as he/she is the head of the Government. Logically, therefore, the Chief Adviser, who is now heading the Government, could hold the debated position. However, the future remains uncertain.
Considering that a shift in the powers from the current President to the next Prime Minister is imminent, this policy is still in question. Conversely, according to reports, corrections are already being made to the proposal, after which it will be re-sent to the President for approval.
Army chief's role
In view of this development it appears that to avoid any future complications the President will be vested with this imperative responsibility. The rest is all smoke and mirrors. Informed sources suggest a good deal of discussions took place on who would retain which positions in the propose NSC, and it was apparently agreed that the Chief of the Army Staff (CAS) would retain his position and also be given the post of the Joint-Chief. Principal Staff Officer of the same shall become the Secretary of the NSC. Before this, a string of proposals were learnt to have been put forwarded by the participants suggesting that the Chief-of-Staff be designated as Joint-Chief.
Organogram
Last month, informed sources say, the original proposal was sent to the Law Ministry. Following approval, it was forwarded to the Chief Adviser who approved it. The sources claim that the President was reluctant to sign. They also indicated that there should be an additional Staff Committee, 3 Sub-Committees; with a further five-tiered Committee system, in addition to the main Committee which would consist of an estimated 9 to13 members.
Besides, there would also be 10 additional members in the main committee consisting of the Leader of the Opposition, the Finance Minister, Home Minister, Foreign Minister, and the Defence Minister. However, until the next parliamentary session begins, some of these positions will remain vacant, while others will be replaced by the relevant members of the relevant ministries of the current interim Government. As the Defense and Home ministries fall within the responsibilities of the Chief Adviser, he shall perform the necessary functions of these ministries as required by the NSC.
The functions
The main committee retains the right to discuss and advice on any matter it deems fit. The Staff Committee, headed by the Adviser for National Security, shall consist of the Chiefs-of-Staff of the Air Force, the Navy respectively, and Secretaries from various ministries.
During discussions, if it is felt that the opinion of the secretary of a particular ministry is essential to reaching a sound decision, that secretary shall be invited to the Council to converse on the matter.
Other members include the Director of the Directorate General of Forces Intelligence (DGFI), the Inspector General of Police, the Director of National Security Intelligence (NSI), as well as the respective Chiefs of Rapid Action Battalion (RAB), and the Bangladesh Rifles (BDR).
The Adviser for NSC would be given the status equivalent to that of a cabinet minister and would be held by an unbiased individual with no political or bureaucratic ties. The President shall personally appoint him. The NSC Adviser may participate in discussions pertaining to all issues, ranging from army studies, home and international politics, to well-devised strategic plans.
Three separate cells
Alternatively, the NSC will also contain three separate cells, namely, the Strategy Policy Cell, the Security Advisory Cell, and the Joint-Intelligence Cell. The first of these will consist of the respective Chiefs of the Army, Navy, and Air forces; with heads of all law-enforcement agencies. The second cell, although largely driven by trained analysts, shall also utilise the expertise of the economists, scholars, and various professions, and individuals thought to be of importance by the NSC.
Members of the Armed Forces, intelligence officers from all agencies, including RAB, Police, NSI, SB, and DB shall form the Joint-Intelligence Cell.
Further details are still being formulated, but apparently one thing is to be taken for certain: the NSC of 2007 will take note of the apparent failings of the US Council, and not fall pray to covert operations, or any form of illegality whatsoever.
The success of the Council will largely depend on its members and their integrity and of course, unity. However, to a casual observer it would be an interesting phenomenon to see what happens from here on, but Bangladeshis will simply take a deep breath, and hope for the best.
Looking back to US
Much changes and developments have occurred in the USA as well as the world after President Truman's NSC) set up as part of a general reorganisation of the US national security apparatus in 1947.The function of the NSC, as outlined in the 1947 Act, was to advise the President on integration of domestic, foreign, and military policies relating to national security and to facilitate inter-agency cooperation. At the President's direction, the NSC could also assess and appraise risks to US national security, consider policies, and then report or make recommendations to the President.
Upon his retirement President Truman denied any responsibility for "cloak and dagger operations" but it was during his presidency that covert intelligence operations in support of foreign policy objectives was undertaken on an ever-broadening scale. The NSC's first action authorised covert action in the Italian elections.
The formal institutionalisation of covert actions was established as NSC 4 in December 1947, and NSC 10/2 of June 1948.
In 1949, events reinforced the need for better coordination of national security policy: NATO was formed, military assistance for Europe was begun, the Soviet Union detonated an atomic bomb, and the Communists gained control in China.
The Department of State seized the opportunity to review US strategic policy and military programmes.
The State Dept. won approval for an ad hoc interdepartmental committee under its Policy Planning head, Paul Nitze. Their report, NSC 68, was submitted directly to Truman in February 1950. An NSC committee authorised to consider costs, and broader implications of NSC 68 began its work, but before it could be completed the Korean War broke out.
During Truman's last year, the Council and the Senior Staff met less frequently and NSC activity abated. Much interdepartmental planning on the NSC books was never completed by the end of the Truman administration. During this period, the NSC reflected Truman's sense of frustration as a lame duck President caught in a stalemated war.
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GLIMPSES OF THE GREAT
Sir Stafford Cripps
K.Z. Islam
Sir Stafford Cripps (1889-1952), a demagogue possessing extraordinary intellect and capability, played a critical role in the British Cabinet both in the Churchill and Attlee governments spanning 1942 to 1950. Within a month of his returning from Russia in 1942 as Ambassador, Churchill brought him into the War Cabinet as Lord Privy Seal and Leader of House of Commons. In fact, as Britain was facing serious setbacks both in the Western and the Eastern fronts, Cripps was being considered as a replacement for Churchill. Churchill shrewdly eliminated this possibility by sending him to India to find an interim solution (known as Cripps's Mission) and from the background ensured the Mission's failure.
Always in the center of events there is an interesting incident when he almost dislodged Prime Minister Clement Attlee.
In September 1947 when things were generally going wrong in the Labor Cabinet with Attlee's unimpressive handling of the convertibility crisis, combined with Morrison's continuing inadequacies prompted Cripps into a new proposal: to replace Attlee with Bevin, on the understanding that the new Prime Minister would in turn replace Morrison with Cripps as planning supremo. The plan was that the gang of four, Cripps, Bevin, Dalton, and Morrison would confront Prime Minister Attlee and force him to resign. Apart from Cripps the others backed out, so he decided to go it alone.
The crucial meeting between Sir Stafford Cripps and 'the little man' took place the same evening. What it proved, once again, was the shrewdness of the prosaic, unprepossessing Prime Minister, surrounded by prima donnas. When Cripps declared that he thought Bevin should be premier and Minister of Production, that Dalton should go to the Foreign Office, and that Attlee should go to the Treasury, the Prime Minister took no offence and was 'most reasonable.' Calmly, Attlee replied that he could not himself do the Treasury because he had no head for financial questions, that Bevin did not want to leave the Foreign Office, that the Party would not have Bevin as Leader and (an old point) that Bevin and Morrison would never get on in close proximity in the same Cabinet. The Prime Minister then trumped. Cripps had been pressing for a strong planning machine, presenting himself as the man to look after it, under Bevin's suzerainty. Now Attlee, with no appearance of defeat or concession, gave Cripps most of what he wanted. He offered him the job of Minister of Production.
When Cripps saw Dalton after the interview, he was sheepish. Instead of emerging with either Attlee's resignation or his own, the original alternatives, he had left the Prime Minister's office with a promotion. In fact, after a couple of weeks Dalton resigned as the Chancellor Exchequer and Cripps ended up with his job. Combining the posts of Chancellor of the Exchequer and Minister of Economic Affairs, Cripps occupied a position of unique dominance over virtually all aspects of British economic policy.
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A formula to revive jute industry
Kamran T. Rahman
Lest we forget, the jute industry was the life blood of our economy for several decades and continues to be one of the mainstays of our rural economy even today. About 15 million farmers are involved in growing this cash crop and several million more, perhaps an equal number, are involved with its processing, transportation, conversion, etc. Be that as it may, the industry has gone off track due to undue interference and discriminatory policies made by the policy makers from time to time and also for reasons beyond the control of the industrial operators. In order to understand the current state of affairs in the industry one must look into the background of the jute industry and the events that took place over the last several decades.
While this part of the country was considered a hinterland in the 1940s where we produced only raw jute, all processing of the fibre was done in the jute mills in present India. The then Government of Pakistan realied that it would be better to add value to the fibre and export jute goods to earn foreign exchange for the nation instead of exporting only the fibre. As such, the Government began to promote setting up of jute mills as far back as in 1951 in this part of the country.
At a time when Pakistan was going through a period of rapid industrialisation, the Govt. of India decided to devalue her currency. Some economists of that period felt that if Pakistani Rupee too was devalued following Indian example, the country's rapid industrialisation of the country would be retarded. The Government came then introduced in 1959 a unique method of compensating the industry for overvaluation of Pakistani Rupee in the form of bonus vouchers, a carefully crafted scheme for the consumers to pay for the over valuation of the currency and the national exchequer was spared from the burden.
By end of 1960s and early 1970s about 30 million people were already involved directly or indirectly in the jute sector. In 1972-73, the industry was producing about 450,000 metric tons of jute goods earning approximately US$ 195 million.
As so as Bangladesh came into being, the new government under a Presidential Order, nationalised all major industries including the viable, vibrant and financially healthy jute industry without taking into consideration, whether the mills were owned by Bangladeshi nationals or otherwise.
After about 11 years of operation under the state-owned Bangladesh Jute Mills Corporation (BJMC), incurring huge losses and crippling the industry, the Government decided to privatise and over one third of the loss making jute industry was privatised during FY1982-83. Most of these mills were originally owned by Bangladeshi nationals. While doing so, the Government forced the present owners to shoulder the entire liability that they had created during the nationalised period.
Let me reiterate that when the mills were nationalised in 1972 they were a viable, vibrant and a financial healthy jute industry. However, despite all difficulties and against all odds the original owners came forward and took over the mills in the hope of reviving the sector.
In 1982-83 the industry produced about 550,000 metric tons of hessian, sacking, CBC, carpet and yarn and earned about US$300 million. Although the industry was divided between public and private sector, the norms of credit to the industry were directed by the Bangladesh Bank to the commercial banks and other facilities given to the industry were also given in a fair and equitable manner, irrespective of whether the mills were run in the public or private sector.
The cost of the huge debt burden that the private sector jute mills had to shoulder resulted in continued losses for the industry. A number of studies were undertaken and finally the World Bank came forward with a $250 million Jute Sector Adjustment Credit (JSAC) to support the Jute Sector Reform Programme (JSRP) in 1992-93. The objective of the programme was to transform the existing loss-making jute industry into a viable one predominantly in the Private sector. In order to achieve this goal the World Bank and the Government decided to address i) capacity rationalisation, ii) un-sustainability of past debts, iii) interim loss finance and iv) privatisation.
Under the project the Government was obliged to:
Close nine Public sector mills
Down size 2 large Public sector mills
Write off one third of all past bank loans as on 30th June 1992.
Have in place an interim financing mechanism since the Government and the World Bank realised that the industry would continue to incur certain amount of losses during the currency of the project.
Privatize 18 Public sector mills
The Jute Sector Reform Programme of US$ 250 million was the single largest World Bank assisted project in Bangladesh at that time. Bangladesh was able to draw only the first tranche of US$ 50 million. The government was unable to draw the balance US$ 200 million because it did not fulfill its obligations in the project. While the project may have failed due to several factors, we feel very strongly about the unfair treatment the private sector received from the World Bank Project in the form of interim loss financing.
When the project was being designed, World Bank economists informed us that there would be a predetermined loss based on the average losses of the best five private and best five public mills. He further said that the public mills will get 100 per cent of this predetermined loss as interim loss finance but the private sector will get two thirds of this predetermined loss since they are considered to be more efficient. The World Bank calculated this average loss figure to be 24 per cent of sales based on the figures of 1991-92 without taking into consideration depreciation, gratuity etc.
The private sector complained to the Inspection Panel of the World Bank that they have been materially and adversely affected by this project and as such it needs to be looked into urgently. The Inspection Panel took up the matter seriously and visited the World Bank, the Government of Bangladesh, BJMC and Bangladesh Jute Mills Association (BJMA) and confirmed that there were design flaws in the programme and the private sector mills were materially and adversely affected. As such, the Inspection Panel advised the World Bank that the credit should not be extended until and unless the project is revisited and the flaws in the programme are removed.
It appears to be fashionable to go World Bank bashing for everything that goes wrong in this country where the World Bank is involved. It is perhaps high time to take a hard look at the JSRP and the role that our policy makers took in coming up with a program full of flaws which eventually created distortions in our raw jute market, our labour market, our financial market as well as the international jute goods market.
In 1997 an inter-ministerial committee was formed under the Ministry of Jute to recommend a 'Revised Jute Sector Reform Programme'. Unfortunately, the recommendation that was made in 1997 only reached the ERD and the World Bank in the middle of June 2006 after a period of about nine years. I urge upon our people to ask who were the policy makers who decided to sit on it for nine long years and for what purpose or for whose benefit. We hope the Government and the World Bank would seriously revisit the project, rectify the design flaws and develop a new project in a fair manner. We feel, given the right support and creation of a level playing field between Public & Private sector, the industry can be revived to its full potential.
After the interim loss financing period for the public sector i.e., BJMC, was over they were suddenly in tremendous liquidity crisis. Under the circumstances, the Government had arranged for BJMC to obtain loans amounting to more than Tk 2,500 crores under different heads, in addition to any subsidy that was provided for export of jute goods, to keep them afloat. When the Government knows that these loans are never going to be repaid, for all practical purposes these are grants. Because of these "loans" the BJMC is causing distortions in the raw jute market, the financial market, the labour market, as well as the international jute goods market.
We would like to see that every single jute mill in the country, irrespective of ownership, should be in operation. However, we do not think that the public sector mills can continue to operate without large amounts of funds being made available to the BJMC directly by the Government indefinitely. We therefore, feel that the Government should address the problems of conventional jute industry and take the following steps as the way to revive the industry.
Revival formula
The Government of Bangladesh owes the private sector jute mills an amount of Tk.53.19 crores under the heads of JSRP/JSAC and subsidy against the export of jute yarn. The Government of Bangladesh should immediately release these funds to the private sector jute mills which they owe against specific MOF circulars.
Subsidy against export of jute goods are yet to be paid to the private sector jute industry for part of FY 2005-2006, the whole of FY 2006-2007 and the current FY 2007-2008. The Government should immediately release these funds to enable the private sector jute industry to function properly.
The Government of Bangladesh should urge the World Bank to urgently revisit the JSRP, remove the flaws and develop a fresh program in a fair manner and create a level playing field between the public and the private sector jute industry.
Increase export subsidy from 7.5 per cent to 15 per cent for hessian, sacking, CBC and yarn and 20 per cent for diversified or value-added jute products as per recommendation of the Advisory Committee of the Ministry of Textiles & Jute.
Allow duty free and VAT free import of spare parts of jute mill machinery by the jute mills.
The Govt. should immediately make it mandatory to pack food grains, sugar, fertilizer, and cement in jute bags. This will not only create a supportive and protected internal market for environment friendly and natural jute bags which are 100 per cent indigenous products of Bangladesh, employing millions of people but also save the nation millions of dollars used in importing polypropylene compounds to manufacture p.p. bags.
The Govt. should also consider total privatisation, public-private partnership and leasing of the public sector mills to continue production in the public mills in a sustainable manner.
Due to the energy crisis prevailing in the country a number of jute mills have installed gas-powered generators. The price at which the mills have to pay for the gas that they consume is substantially higher than the price for gas paid for by the Power Development Board. We urge upon the Govt. to reduce the price of gas for captive power generation to the same level as paid for by the PDB and to make gas available to the jute mills which are willing to install captive gas-powered generators.
However, there is a brighter side of the industry, which is only spinning jute yarns. This sub-sector of the jute industry, fortunately, does not have any public sector involvement or debt overhang or any artificial distortions and as such has emerged to be a promising operation. The production of jute yarns in the jute spinning sector has increased from around 27,000 million tons in 1982-83 to around 300,000 million tons in 2005-2006.
The writer is the Chairman of Bangladesh Jute Mills Association.
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NEWS NOTES FROM NEW YORK
Fazle Rashid
Stop witch hunting
Even conceding the unpalatable truth that Bangladesh is a vulnerable democracy but the overwhelming tide of opinion among the Bangladeshi Diasporas here is that the government in Dhaka should stop putting its fingers in all government policies. The doctors, lawyers, engineers, bankers and teachers, this scribe had occasions to talk over the past several days, expressed the view that the government should stop its anti-graft drive which has destabilised the economy and should concentrate on the twin objectives of meeting the post-flood complexities and holding a free and fair elections.
One teacher who had served in Dhaka said that government should stop the anti-graft drive and instead devise means that would make accepting illegal gratification a dreadful proposition. It needs no pundit to say that the economic growth will disappoint if confidence is not restored in the business and trading sectors. Government should mull its options. Vaulting ambitions do bring disaster.
Harsh measures are recipes for trouble and strife as was reflected in the widespread student agitation. It is good to see the Election Commission is asserting itself. It wants to see indoor politics commencing from September. The current uncertainty over the polls schedules is a hassle for candidates who would like to plan their strategies in advance. The government is pinning its hope on the reformists of two major political parties.
The reformists are working under the pain of imprisonment.
The government must realise that only inspirational words will not work. It must forthwith begin the journey in the bumpy path to democratization. The post-flood troubles will be biting. Don't wait for multilateral donors to help you out. Seek loan from China which has a bigger loan portfolio than the WB.
The big fishes have been netted. Forfeit their unaccounted for wealth and property. Stop them from holding any elective office. Free them from incarceration. They have suffered enough ignominy. This is one way how corrupt people are dealt here in US.
Corruption in holy place
Man is by nature selfish and brutish said one British political philosopher and thinker. And here is an example of that. Anton Zgoznik a former assistant treasurer and a consultant to a Roman Catholic Church in Cleveland, Ohio and Joseph Smith, Chief Financial officer of the Church are facing a total of 27 criminal charges. Both in collusion defrauded the church $785,000 (How much will that be in Bangladesh currency?).
A small spare parts supplier fraudulently collected $20.5 million from Pentagon. He had made good use of a flaw in an automated defence department purchasing system. Comptroller of New York singly manages the state pension fund which runs to a whopping $155 billion. It defies common sense to allow one person to have complete control over such a crucial public asset, The New York Times in an editorial said. The FBI is investigating whether Senator Ted Stevens had a role in arranging a government contract worth as much as $70 million for a company that oversaw renovations of his house
India: Looking for alternatives?
India's nuclear deal with US has run into rough weather. Both left and rightwing parties are deadly opposed to the deal. Ranen Sen, India's ambassador to Washington, has added fuel to fire by making fun of the legislators. Indian parliament witnessed another noisy day. Not sure where the Indo-US nuclear deal will end, New Delhi is looking for alternative options.
India and Australia have agreed to negotiate a uranium trade pact. All of Australia's present buyers are signatories to nuclear non-proliferation treaty and ensured that radioactive materials will not be used for military purposes or passed on to a third country. India will not agree to any such conditions.
India cannot become a nation of high growth and vast areas untouched by development, where the benefits of growth accrue only to a few, Prime Minister Manmohon Signh said in a public rally celebrating the 60th anniversary of India's independence. India and Japan, who are not in the best of terms, have agreed to cooperate to contain the growing economic and military might of China. Shinzo Abe, the prime minister of Japan who suffered a huge political setback losing control of the upper house of the Diet (Japanese parliament), will be in India in the coming week and is expected to sign several agreements.
Top most in the agenda will be $100 billion infrastructure project to create a high tech freight corridor between Delhi and Mumbai. One third of the project cost will be borne by Japan Japan's trade with India is $6.5 billion a mere four percent of its trade with China.
CARE refuses Federal fund
CARE one of the world's biggest charities has turned its face away from a $45 million in federal funding saying American food aid is not only plagued with inefficiencies but also hurts people it aims to help. CARE is against US selling heavily subsidized farm products in poor countries thus harming them.
US worry about UAE, China
United Arab Emirates and China hold dollar denominated assets of $500 billion and $66 billion respectively. US once said these debts give no unfair leverage to foreign governments. Thinking has changed. With global financial instability looming perilously US has started to worry that foreign governments will increasingly convert their dollar holdings into investment fund to acquire companies, real estates, banks and other assets in US. Alarmed, the US has asked WB and IMF to examine the behaviour of these funds which controls up to $2.5 trillion in investment and develop code of conduct for them, The New York Times reported.
Rate of suicide
Ninety Nine US soldiers committed suicide last year, the highest suicide rate in the army in the past 26 years. A third of them committed suicide while on duty in Iraq or Afghanistan. The Chairman of the Senate Armed Forces Committee after a two-day tour of Iraq said that the government of Nuri Kamal al-Maliki should be voted out of office because it has proved incapable of reaching a political compromise required to end violence there. Two other Congressmen one each from Republican and Democratic Party have said time has run out to forge unity in Iraq.
Tail-Piece
Here are few gems worth emulating.
(1) Knowledge soars on the wings of education. (2) If education is expensive try ignorance. (3) Jawaharlal Nehru announcing the death Gandhi on the floor of Indian Parliament: the light is out, Bapujee is dead.
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