In this interview I discuss the significance of the Punjab iron ore deposit and way forward


What led to the iron ore discovery

In 2010, Moazzam Husain working with a small group of colleagues and stakeholders, helped stake out a roadmap to develop the abundant iron ore resources of the Punjab province.

His initiative led to a geological study that today has confirmed the presence of large scale reserves of the Punjab province.

His 2010 roadmap is available here:

The report about the discovery today is here:

Still, this is only a beginning he says, as going forward, the govt needs to develop a sensible/ workable policy to grant mining concessions. And it would require large rail/ road infrastructure development in the region.

Moazzam Husain who was Director General of the Punjab Board of Investment says the ore is deep under abundant alluvial overburden and the Chenab river flows nearby which could pose hydraulic challenges. It would need a proper technical mining solution to be developed

All told this would now need a couple of hundred million dollars in investment before large scale mining and ore production and transportation of a few million tons a year can commence.

In addition the government can benefit hugely from royalty payments, private led infrastructure development, employment creation and taxes paid by the concessionaire (s).

Russia’s overtures

THE endgame in Afghanistan appears to be trending towards a happy ending and Pak-Afghan-US relational harmony has never been better. At the same time we have seen an anxious Russia reach out to Pakistan in ways unprecedented.

How can we interpret the recent visit of the Russian Defence Minister, Sergei Shoigu and the sudden warming up in military ties?

Last month Shoigu led a 41-member delegation to Islamabad, at a time when the Pakistani army chief was himself visiting Washington. A defence cooperation agreement was also signed. A broader view of events seems to suggest that the Russians’ visit was not about supplying 20 helicopters nor indeed about discussing the post US withdrawal situation in Afghanistan. It was about more immediate Russian concerns.

A week earlier Vladimir Putin had been at the G20 summit in Brisbane. Here he had been confronted and rebuked by Western leaders over actions in Ukraine. The strongest one had come from the Canadian Prime Minister Stephen Harper telling Putin: “I guess I’ll shake your hand but I have only one thing to say to you, you need to get out of Ukraine.”

On its part Russia feels boxed in by three factors. One is its sense of ‘Western intrusion’ into the former Soviet territories; the Baltic states are now snugly in Nato’s embrace as also are two former Warsaw Pact countries. From Moscow’s perspective its ‘strategic depth’ is rapidly shrinking, which may have prompted desperate actions in Crimea.

Secondly, the pivot of world power is also shifting from Europe (which the USSR as a land power once dominated) to Asia — with a locus in the South China Sea. And while Russia is striving for an important Asian role to maintain great power status it is limited by access to the southern Eurasian rimland that stretches from the Gulf of Aden to the Taiwan straits. Unlike the US it does not have a navy that can project power over such a vast distance.

The third factor is the collapse of oil prices which has struck a deathly blow to the Russian economy and currency. Together the three have made for a perfect storm.

China — rattled by pro-democracy protests in Hong Kong — had to face similar admonitions from Obama at the G20 summit. These were over its naval posturing against other states around the South China Sea as well as accusations of manipulating its currency which, the US believes, slows down its own economic recovery.

Immediately after the G20 summit Shoigu arrived in Beijing. Russia and China are keen to keep the US out of Asia and the Pacific and have evolved common interests directed against the US and its Nato allies. China for instance is dependent on Russia’s aerospace technology which has developed high-speed and long-range aircraft needed to patrol Russia’s vast airspace that spans 11 time zones. China, which lacks aircraft carriers, could make use of latest generation aircraft because they can operate from land bases, to protect its territorial claims in the South China Sea.

Yet, even as it has sold weapons to China, Russia has hedged against China militarily by arming India and Vietnam with even more sophisticated weapons, intended for use against China. Now, a major shift may be in the making, with China urging Russia to resolve this paradox. At any rate, India has recently been turning to the US for its arms requirements. Strategically, it would make sense for China to form a common front with Russia to counter Western naval presence in the Indian Ocean and the Western Pacific. Russia’s news agency Tass quoted Shoigu in Beijing as saying that “strengthening and expanding ties with China remains Russia’s overriding priority”.

Two days after leaving Beijing, Shoigu and his delegation arrived in Islamabad. The visit was only announced a day before his arrival. It is likely that the Chinese may have helped facilitate the visit. Ideally Russia would like its warships to be able to draw logistic support from Pakistani ports. Russian warships have visited Karachi this year, something not seen in recent decades.

So where are we to go with all this? Russia is looking to sell arms. For Pakistan, new-generation Russian aircraft and submarines would be attractive offerings, if money can be found. Warships of friendly navies drawing logistic support at our ports during peacetime may also not be problematic.

Nevertheless, a major foreign policy shift — from our traditional orientation towards the West and Saudi Arabia — is neither possible nor desirable any time soon. While Russia can have ambitions of great power status, the Cold War is long over and in the globalised world of today it is economic interests rather than military rivalries that ought to shape our foreign policy.

2014 – Dawn Media Group

The last chance

SOUTH Indian-style prawns cooked in spices and coconut milk next to a Lucknavi specialty, galouti kebabs and an array of mouth-watering dishes, signified a celebration of the cuisines of South Asia. And bringing the leadership of the Saarc countries together for his swearing-in was a skilful manoeuvre from Indian Prime Minister Narendra Modi. It signified a celebration of South Asian democracy; all eight Saarc leaders are democratically elected.

The last time India and Europe stood at similar stages of historical development was in the 16th century. As Mughal Emperor Akbar expanded his empire across North India, Europe was experiencing plague deaths as well as terrible massacres and conquests. But at another level, a renaissance of learning and ideas was spreading fast across the continent. Thus began the rise of the Western civilisation. Thereafter, their paths diverged.

Today, South Asia faces the monumental challenge of meeting the basic need of its inhabitants for food, water, energy, healthcare, education and access to justice. In its essence the agenda facing all Saarc countries is the twin challenge of human development and economic betterment of its people: How to get incomes to rise, how to raise revenues for the state, how to build quality institutions and government capacity that can address this agenda.

In 1980, China’s per capita income stood at $300, in line with Saarc countries. Deng Xiaoping’s reforms had only just begun, premised as they were on de-collectivisation of agriculture, opening up to foreign direct investment and enforcement of a one-child policy.

These measures were followed up by privatisation and allowing private enterprise. Today China’s demographic dividend may be running out, but the average Chinese enjoys a per capita income nearly five times that of their South Asian counterpart.

So where next for South Asia? Demographers and development specialists may differ whether South Asia’s demographic dividend would last another two decades or four. At any rate, without jobs this dividend becomes a liability. But these decades may represent South Asia’s last chance.

Modi’s challenges are domestic — slowing growth, rising inflation, an economy that is not creating enough jobs and where government finances are a mess. The expectations from him are huge, as is his burden of responsibility. The fact that India is riddled with corruption and crony capitalism further complicates matters. Economic engagement with Pakistan is probably peripheral, if at all visible on his radar at this stage.

Can Modi deliver? After all, what he did in Gujarat, can it not be scaled up, replicated in the rest of India? Some regard this sceptically; a ‘provincial’ solution to a national problem. True, Modi made Gujarat India’s most favoured investment destination and in 2013 Gujarat bagged nearly a quarter of the country’s industrial investment proposals.

Most of that success can be put down to the favourable incentives Modi’s Gujarat would offer to cut itself a larger slice of India’s cake — and this is not the same thing as India getting a bigger cake.

A case in point would be Tata’s decision to move the location of its automobile assembly plant for the Nano from West Bengal to Gujarat. From the left pocket to the right pocket. Similarly for FDI, once the decision to invest in India had been made in Tokyo, Seoul, London or Rotterdam the next step would be to select the site location. And Gujarat was where land acquisition was the fastest.

Granted, this may be a rather harsh evaluation of Modi’s performance in Gujarat; still the question is, can the South Asian governments in power today (and their successors) deliver in the next couple of decades what has eluded their predecessors in the last six? After all Deng Xiaoping did it in China. But unlike the Communist Party whose party structure was organised from the ground up, from the village commune to the politburo, South Asian governments have to depend on decaying colonial-era state structures for implementation, on bureaucracies and ‘babus’, who themselves represent a force of the status quo.

Beyond this organisational and institutional incapability it is the politics, prejudice, mistrust and territorial issues among states that keep things gridlocked.

Yet there are successful examples of ‘bottom up’ development initiatives in South Asia which include India’s Amul dairy farmers’ cooperative model, Pakistan’s Orangi Pilot Project and Bangladesh’s Grameen Bank and these ought to be replicated across South Asia.

The coming decades cannot afford to be squandered. The consequence of that would be catastrophic and would condemn too much of humanity to permanent backwardness and misery.

2014 – Dawn Media Group

The energy challenge

IT was a freezing winter night in 2010 and I had just checked into the government rest house at the Lal Sohanra national park when the lights had gone out. The caretaker at the premises had lit a bonfire in the sprawling backyard which extended on one side to the edge of a lake.

“This is Nawaz Sharif’s favourite spot sahib, right where you are sitting. Been here several times, and we would chat late into the night sometimes” he told me as we warmed our hands in the bonfire heat. “The younger one is more reserved … he’s a grouch. But the elder one’s very relaxed. Oh, and he loves to listen to the flute” he went on to disclose.

Recently, Prime Minister Nawaz Sharif returned here to inaugurate the Quaid-i-Azam solar park. Situated on the edge of the Cholistan desert near Bahawalpur, the region which is famous for its peacock, gazelle and black buck is now set to become the world’s largest solar park. Investment commitments totalling nearly 1,000 megawatts have already been received from local and Chinese business groups.

Energy requirement and economic growth are strongly correlated. Pakistan’s per capita energy demand is one fifth of the world average. Electric power is a factor of production presently in short supply. And it is holding back economic growth.

The present peak electricity demand is estimated at 25,000MW while studies indicate that to cater to the projected electricity demand, an additional 100,000MW of capacity would need to be installed over the medium term.

One limitation of renewable energy is its fluctuating availability. Solar power is only available during daytime, wind power when there is breeze and hydropower is dependent on the ebb and flow of the water. This keeps renewable energy from becoming the mainstay in the overall energy mix. For this reason the base load in most grid systems is carried by thermal (and nuclear) power stations which can provide a steady supply all day and all year.

One would imagine urban solid waste to be a steadier source of fuel. But scavenging at various stages of the waste management process and inelegant waste disposal and handling mechanisms make it hard to work with. The end result is high cost-per-ton of fuel.

Similarly biomass generated in the agriculture and livestock sector fulfils about a third of Pakistan’s total primary energy requirement. This, like so much else in this country, takes place in the non-commercial sector and remains undocumented. Nevertheless, projects can be conceived and commercialised where crop residues and animal dung is purchased from the farmers for conversion to higher forms of energy while simultaneously creating markets for this energy.

A successful commercial model will be one that can extract more energy from the same quantity of fuel, creating enough value to recompense farmers for the forgone fuel; with which they can buy their energy requirements from the market and still have money left over.

Such a model will bring parts of the rural subsistence economy into the commercial, documented economy. This way, much of the future growth can be based on indigenous fuel.

Contrary to what many believe, all renewable energy is not cheap. The present wind and solar power tariffs are close to what is being paid to oil-based Independent Power Producers and twice as high as the 8.5 US cents that was offered to private hydropower producer, Laraib Energy, a couple of years ago.

Dams at Bunji, Diamer-Bhasha, Dasu and Kalabagh (if consensus can be built) can potentially contribute 20pc of the projected requirement of 100,000MW. Other smaller dams, biomass, wind and solar potential should be tapped to the maximum extent possible. The base load will, however, need to be carried by thermal (including coal) and nuclear.

Assuming a benchmark price of $1.3 million per installed megawatt, the country would need an investment of $130 billion in the next 15 to 20 years. To put this figure in perspective, the total foreign direct investment, or FDI, in Pakistan in the last 50 years in all business sectors is in the region of $20bn.

However, lately, perhaps because of our failure to carry through reforms in the power sector, sensing a lack of seriousness to fix the structural issues, players like Xenel, National Power and AES have left Pakistan after selling off their stakes.

The key to overcoming the energy challenge, then, lies in the governance of the energy sector.

The writer has served the Punjab Board of Investment & Trade as its director general and is assisting the Planning Commission and its working groups in developing Pakistan Vision 2025 and the 11th Five-Year Plan.

2014 – Dawn Media Group

Playing with fire

TO diagnose Saudi Arabia’s fear instincts, one would have to travel back to 1979. That year saw the Iranian revolution, and Ayatollah Khomeini’s subsequent talk of ‘exporting’ the revolution which has left Saudi Arabia with an exaggerated fear of Shia expansionism.

That same year, hundreds of armed extremists seized the Grand Mosque at Makkah. Shortly afterwards, two brigades, roughly 10,000 Pakistani troops, were deployed to Saudi Arabia under a bilateral joint military agreement aimed at protecting the Saudi monarchy.

One part of Saudi Arabia’s anxiety stems from its perception of a growing Shia footprint which now includes the Bashar al Assad regime in Syria, the Hezbollah militia’s strength in Lebanon, the Maliki government in Iraq, and the three years of Shia led pro-democracy protests in Bahrain.

Saudi Arabia is also suspicious of its own Shia population in the Eastern Province, where it fears the radical Hezbollah al-Hejaz is active.

At the same time, it is nervous about any domestic unrest that may be inspired by the Arab Spring uprisings. This nervousness was apparent when it announced a generous financial support package for its own population in 2011.

It is particularly wary of the mobilising capacity of the Muslim Brotherhood, whose political Islamism and grassroots activism are anathema to the House of Saud, whose grip on power comes from keeping religion under its own tight control and patronage.

And even as Egypt’s military junta has ousted the Brotherhood’s government (and received billions of dollars in Saudi largesse), it has stoked much Islamist resentment in the Arab world.

In the clearest sign of this fear, Saudi Arabia has recently declared the Brotherhood as a terrorist organisation and passed new anti-terror laws that Amnesty International regards as a tool to crush peaceful expression.

Saudi Arabia also faces a radical Islamist threat from Al Qaeda in the Arabian Peninsula which is now lodged in Yemen. It is entirely plausible that AQAP has been making every effort to penetrate Saudi Arabia’s state institutions and security forces.

Saudi Arabia promoted the Syrian rebellion against Bashar al Assad. That proxy war has reached a stalemate. The rebellion has been hijacked by jihadist groups who have turned on each other.

The fighting is out of anybody’s control and now Riyadh fears the fire may spread. Many Saudi fighters who had joined the rebellion could become the link between underground Saudi Islamist groups and jihadist groups fighting in Syria. In a royal decree announced last month, Saudi Arabia has banned its citizens from participating in the Syrian civil war.

A prolonged conflict in Syria could also spill over into Egypt where an Islamist movement against the military junta is in early stages. That would further complicate the Kingdom’s threat matrix.

The recent quiet sidelining of Prince Bandar bin Sultan, head of Saudi intelligence (and the mastermind of the campaign to overthrow Assad), is the clearest sign of this reordering of threat priorities. He is no longer to be in charge of Saudi policy on Syria which will now be handled by Interior Minister Prince Mohamad bin Nayef. Nayef’s skill set? Counterterrorism work against Al Qaeda.

Saudi Arabia may yearn for an early end to the war and the establishment of a transitional government in Syria, but is this objective realistic? Would Assad’s ouster necessarily end this war? Are the Russians going to stand by and watch the demise of their only ally in the Arab world? How will they likely respond to anti-Assad rebels receiving shoulder-fired anti-tank and anti-aircraft (and possibly even heavier) weapons, that Pakistan has been showcasing at its IDEAS defence exhibitions?

How will Iran respond as these weapons arrive in Jordan for subsequent issuance to selected rebel groups? There may well be an end user agreement; but do we really intend to monitor and enforce it? Are our trainers and other mercenaries also expected to arrive in Syria? And as the situation further complicates, will our friends in the Gulf expect other quid pro quo?

Some reports indicate that the Saudis are considering a standby force ready to put down Islamist and Shia uprisings whenever and wherever they may appear in the Gulf.

Such questions need to be pondered by our policymakers before further entangling us in this crisis. The parliament is the forum for such debates and policy appraisals.

Our representatives may also want to revisit the reasons why recently the US had hesitated to arm the rebels. They may similarly want to evaluate other risks and repercussions of this engagement. It’s time to open the windows and let in that fresh air.

2014 – Dawn Media Group