------------------------------------------------------------------- DAWN WIRE SERVICE ------------------------------------------------------------------- Week Ending : 28 July 2001 Issue : 07/30 -------------------------------------------------------------------
Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS ===================================================================
NATIONAL NEWS + Musharraf formally invites Vajpayee + India denies subversion by hard-liners + Hardliners thwarted peace bid, says Musharraf + Declaration was not far away, says Vajpayee + Vajpayee blames Musharraf for talks breakdown + Indian editor reveals Pakistan draft + LoC firing: Pakistan to retaliate, says Qureshi + No concern over Washington-Delhi ties, says Sattar + Pakistan to plead for lifting of US sanctions: Rocca due today + Democracy-related US sanctions likely to stay intact + Altaf puts stress on dialogue with India + Musharraf wrong in criticizing Simla accord, says PPP + Body on judicial reforms to be set up + Sikandar Hayat sworn in AJK PM + Rs250bn development projects to be launched next month + President to seek funds for 18 projects + Death toll in twin cities rises to 58 + Floods wash away Mansehra village + PIA regrets Russian action: Forced landing + Production of 300 Al-Khalid tanks planned + Taliban to set up camps for returning DPs + Election for Nazims in 84 districts on Aug 2 + PAF plane crashes + PSO chief shot dead in Karachi --------------------------------- BUSINESS & ECONOMY + Rs8bn cut in export rebate planned + Three-year plan to stabilize economy + Deficit declining: Shaukat + Pakistan to get $700m this year + WB likely to offer $300m loan: Restructuring banking sector + Pakistan to enact freedom of information law: ADB loan + $70 million ADB loan expected + Saudi Arabia offers $250m aid + Japan to give $32m for Kohat tunnel project + 21 EoIs received for 26% govt shares: UBL privatization + US power firm may pack up + PR seeks joint venture for telecom network + More PTCL bandwidth for Internet service + Mineral development body to be set up soon + Pakistan economy faces four risks + PSO MD murder stirs panic-selling on KSE --------------------------------------- EDITORIALS & FEATURES + So far so good Ardeshir Cowasjee + To what uses this eloquence? Ayaz Amir + The view from Harding's Point Irfan Husain ----------- SPORTS + Pakistan Veterans team for India announced + Azam, Haider, in top four + Pakistan make one change for Azlan Shah tournament

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NATIONAL NEWS
20010728
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Musharraf formally invites Vajpayee
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By Nasir Malick

ISLAMABAD, July 27: President Gen Pervez Musharraf formally invited
Indian Prime Minister Atal Behari Vajpayee to visit Pakistan for
second round of summit talks, a senior government official said.

President Musharraf had extended verbal invitation to Mr Vajpayee
during his recent three-day visit to India, which was accepted by
the latter.

The official said that the formal invitation was extended to Mr
Vajpayee through a letter. "The letter was delivered by the
Pakistan High Commissioner in India to the prime minister at 8:00pm
India time," the official said. In reply to a question about the
contents of the letter, the official said that the president had
hoped that it would be possible for the Indian prime minister to
visit Pakistan "sooner (rather) than later".

The official said that in his letter President Musharraf had
referred to the issue of Kashmir, and emphasized for its early
solution. "The path to normalization of relations between India and
Pakistan leads through Kashmir," the official quoted from the
letter. He said Gen Musharraf thanked Mr Vajpayee for the
hospitality extended to him, his wife and members of his delegation
during their visit to New Delhi and Agra.

"The President also lauded the excellent arrangements that were
made by the Indian government during his visit," he said. Earlier,
Pakistan had extended an invitation to Indian Foreign Minister
Jaswant Singh to visit Pakistan.

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20010727
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India denies subversion by hard-liners
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By Jawed Naqvi

NEW DELHI, July 26: Prime Minister Atal Behari Vajpayee denied
claims by President Pervez Musharraf that hard-liners in the Indian
delegation had subverted a breakthrough in Agra.

"Efforts are being made to convey the impression that the Indian
delegation in Agra or my government was divided over the issue of
an agreement in Agra. This is not true," Vajpayee told.

"All the members of my delegation were completely united in our
discussions and in our approach in Agra. There is an attempt to
suggest that there were hard-liners who obstructed the course. The
question doesn't arise," Vajpyee said. His remarks came in obvious
response to General Musharraf's claim on Wednesday that hard-liners
torpedoed the talks in Agra.

"The Indian delegation was of one opinion and there was no
compromise on any vital issue. No one in my delegation could have
ever accepted the idea of equating terrorists with freedom
fighters. No one is there who would have ignored the question of
cross-border terrorism," he said. "This kind of propaganda is
undesirable. This will create problems in the future when we try to
steer our talks again in the right direction."

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20010726
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Hardliners thwarted peace bid, says Musharraf
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By Khaleeq Kiani

ISLAMABAD, July 25: President Gen Pervez Musharraf has held Indian
hard-liners responsible for thwarting peace process and non-signing
of the Agra Declaration. The Indian hard-liners were not ready to
give peace a chance and it was apparent that there was a split in
their ranks, President General Pervez Musharraf told a cabinet
meeting last week.

Authentic cabinet sources told Dawn that the president informed the
cabinet that Prime Minister Atal Behari Vajpaee and Foreign
Minister Jaswant Singh were flexible in their approach.

"Both sides had come close to signing the Agra Declaration but the
Indians, particularly the hard-liners, were not ready to give peace
a chance," the president was quoted as saying with the addition
that "it was apparent that there was a split in their ranks".

The prime minister of India definitely wanted the peace process to
go on but the hard-liners thwarted the signing of declaration
although eight items out of 9 had been agreed upon, he told the
joint meeting of national security council and the federal cabinet.

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20010725
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Declaration was not far away, says Vajpayee
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By Jawed Naqvi

NEW DELHI, July 24: Indian Prime Minister Atal Behari Vajpayee told
parliament that he was not too far away from signing a joint
declaration with President Pervez Musharraf in Agra, and said he
would strive vigorously to pursue peace and friendship with
Pakistan.

Mr Vajpayee's statement on the Agra Summit, made in both houses of
parliament, sought reciprocity from Islamabad in taming the freedom
struggle in Kashmir. Yet the remarks were seen in diplomatic
quarters as a snub to the hawks in his ruling alliance, whose
adventurist advice to him has ranged from threatening Pakistan with
war to engaging Mujahideen groups in hot pursuit across the Line of
Control.

"We sought to incorporate in the document the structure of a future
dialogue process on all issues, including meetings at official,
ministerial and summit levels," the premier said. "We made
proposals for addressing the issues of peace and security,
including nuclear and conventional CBMs (Confidence-Building
Measures), Jammu and Kashmir and terrorism, and all other issues
from the composite dialogue," Mr Vajpayee said.

"Eventually, however, we had to abandon the quest for a joint
document mainly because of Pakistan's insistence on the
'settlement' of the Jammu and Kashmir issue, as a precondition for
the normalization of relations.

"Pakistan was also reluctant to acknowledge and address cross-
border terrorism. My cabinet colleagues and I were unanimously of
the view that our basic principles cannot be sacrificed for the
sake of a joint document."

Text of Prime Minister Vajpayee's statement in parliament:

Following is the text of the statement made by Indian Prime
Minister Atal Behari Vajpayee in the Parliament on Tuesday:

"Hon'ble members would recall my invitation to President Pervez
Musharraf of Pakistan to visit India. In the days and weeks before
his visit, I had occasion to exchange views and perspectives -
individually and collectively - with leaders of political parties,
eminent personalities, media representatives and intellectuals on
the future prospects for India-Pakistan relations. They endorsed,
almost unanimously, our view that the visit should be used to seek
avenues for durable peace and cooperative friendship with Pakistan.

Building on the Simla Agreement and the Lahore Declaration, we
sought, through the invitation and the consequent visit, to
strengthen the broad-based framework of dialogue, so that progress
could be made on all outstanding bilateral issues, including Jammu
and Kashmir. We also identified the continuing cross-border
terrorism as an important subject to be addressed.

To promote a congenial environment and confidence-building in
advance of the visit, the government announced some significant
decisions relating to peace and security, nuclear and non-nuclear
CBM's, people-to-people contacts, humanitarian issues, education,
youth exchanges and trade. We believe these decisions have been
well received by the people of India and Pakistan. The government
remains committed to implementing them.

President Musharraf, accompanied by Begum Musharraf, was in New
Delhi on July 14. He was accorded full ceremonial honors. He called
on the President, who hosted a state banquet. The vice- president,
home minister, the external affairs and defence minister and the
Leader of the Opposition in the Lok Sabha called on him. I hosted a
lunch in his honor.

At the retreat in Agra on July 15 and 16, President Musharraf and I
had extensive one-to-one talks for over five hours. We also had
talks at the delegation level. During these discussions, I
emphasized the importance of creating an atmosphere of trust for
progress on all outstanding issues including J & K.

I took up other specific issues which would help the processes of
peace. These included the issue of 54 PoWs believed to be in
Pakistani jails, the extradition of known terrorists and criminals
who have been given sanctuary in Pakistan; the upkeep of Sikh
gurdwaras and Hindu temples in Pakistan, the treatment of Indian
pilgrims visiting shrines in Pakistan, and the enhancement of
mutually beneficial trade.

I focused on the terrorism being promoted in the state of J & K. I
conveyed in clear terms that India has the resolve, strength and
stamina to counter terrorism and violence until it is decisively
crushed. I want to reiterate this determination today on the floor
of this house.

In his presentations, President Musharraf focussed almost
exclusively on Jammu & Kashmir. Honorable members would be familiar
with all his views, since they were widely disseminated in both our
electronic and print media.

Despite the obvious differences in our perspectives, we made
progress towards bridging the two approaches in a draft joint
document. We sought to incorporate in the document the structure of
a future dialogue process on all issues, including meetings at
official, ministerial and summit levels.

We made proposals for addressing the issues of peace and security
including nuclear and conventional CBMs, Jammu and Kashmir and
terrorism; and all other issues from the composite dialogue.

Eventually, however, we had to abandon the quest for a joint
document mainly because of Pakistan's insistence on the
'settlement' of the Jammu and Kashmir issue, as a precondition for
the normalization of relations. Pakistan was also reluctant to
acknowledge and address cross-border terrorism. My Cabinet
colleagues and I were unanimously of the view that our basic
principles cannot be sacrificed for the sake of a joint document.

Honorable members, There are strong views both in India and in
Pakistan about Jammu and Kashmir. But it is our conviction that an
all-round development in the relationship between India and
Pakistan will have a beneficial impact on our dialogue on J&K. No
worthwhile purpose would be served by a debate on whether or not
J&K is a "core issue". But we cannot ignore the fact of terrorism
and violence in the state, which is exported from across the
borders. We cannot accept that the insurgency in Jammu & Kashmir
today, with its foreign mercenaries and generous assistance from
abroad, is anything but terrorism. The daily killing of innocent
men, women and children can simply not be glorified as "jihad" or
as any kind of political movement.

Please reflect that, soon after the Agra summit had concluded, our
pilgrims on their way to the holy shrine of Amarnath were killed.
And just two days ago another massacre of members of one community
occurred at the hands of the terrorists. That is why Pakistan's
refusal to end cross-border terrorism is the main hurdle in the
creation of a conducive atmosphere.

Pakistan has been seeking a solution to J and K in accordance with
the wishes of the Kashmiri people. I am certain that the primary
wish of every single Kashmiri, whether from the Kashmir valley or
Jammu, Ladakh, "Pakistan-occupied Kashmir", the northern areas or
the Shaksgan valley, is to live in peace, security and freedom, so
that he can make economic progress. We should constantly strive to
provide him with this fundamental right. Most of the Kashmiris have
their elected representatives, through whom they express their
legitimate aspirations. We are also willing to listen to all other
streams of Kashmiri opinion, however small the minority they
represent, as long as they abjure violence. It is in this spirit
that we had offered to talk to the representatives of the All-
Parties' Hurriyat Conference.

President Musharraf has extended an invitation to me to visit
Pakistan. I have accepted this invitation. The foreign minister of
Pakistan has similarly invited the external affairs minister. This,
too, has been accepted. Thus, our bilateral engagement with
Pakistan will continue. We will continue to seek dialogue and
reconciliation. We will persist with our efforts to convince
Pakistan that our bilateral cooperation should not be held hostage
to the resolution of any one issue.

Though we could not conclude a joint document in Agra, we did
achieve a degree of understanding. We will build on this to further
increase the areas of agreement. Obviously, India's concerns in
vital areas - such as cross-border terrorism - will have to find
place in any document that future negotiations endeavour to
conclude.

Let me add - we are not looking for propaganda advantage or seeking
to score debating points. We will engage in quiet, serious
diplomacy. Our endeavour for a relationship of peace, friendship
and cooperation will be pursued vigorously.-J.N

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20010723
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Vajpayee blames Musharraf for talks breakdown
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NEW DELHI, July 22: Indian Prime Minister Atal Behari Vajpayee said
that President Pervez Musharraf's inflexibility on Kashmir at the
recent summit broke down talks though they had agreed on some
points.

"The talks broke down because of Pakistan's adamant attitude
against making any reference to cross-border terrorism in the draft
document which they repeatedly termed as a freedom struggle,"
Vajpayee told reporters.

Another factor for the deadlock was Islamabad's insistence that
"until the Kashmir issue is resolved, there cannot be normalization
of relations between the two countries," Vajpayee said. Vajpayee
rejected Islamabad's claims that he and Musharraf came close to
signing a draft document at the summit, where the two leaders met
three times for talks.

"No draft came before us. It was discussed only at the delegation
level," he said but conceded the two sides did agree on "some
points" during the intense negotiations in Agra. Vajpayee did not
elaborate.

The Indian prime minister also said New Delhi would not accept the
involvement of a mediator in the Kashmir question. The comments
were the first by the Indian premier since the breakdown of the
July 14-16 summit.

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20010722
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LoC firing: Pakistan to retaliate, says Qureshi
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ISLAMABAD, July 21: Pakistan said it would retaliate if its troops
were fired upon by Indian soldiers along the Line of Control.

" There is not going to be any initiation of firing on Pakistan's
part. But if we are fired upon we will retaliate, which is self-
defence," Pakistan government spokesman Major-General Rashid
Qureshi told AFP.

His comments followed artillery duels between the two sides in
Kashmir's Kargil region on Friday and early on Saturday.

" The Indians fired 83 shells at the Kargil sector on Friday,"
Qureshi said, adding that Pakistan forces had responded with
restraint.

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20010725
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No concern over Washington-Delhi ties, says Sattar
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ISLAMABAD, July 24: Foreign Minister Abdul Sattar has said Pakistan
is not concerned over the growing ties between the United States
and India if they do not hurt Islamabad's interests.

"India and the US are welcome to have friendly relations. Our
concern arises only when the United States seeks to improve
relations with India at the expense of Pakistan's," he said in
response to a question in an interview with the CNN. "We don't
worry. In fact, we ourselves would like very much to have friendly
relations with India. How can we object to US having friendly
relations with India?"

Responding to a question about the Agra summit, Sattar said
President Gen Pervez Musharraf and Indian Prime Minister Atal
Behari Vajpayee had achieved a meeting of minds in their summit.
"They understand each other better than they might have in the
past."

He said President Musharraf had invited Premier Vajpayee to visit
Pakistan and the offer had been accepted. He expressed the hope
that during the proposed visit the two leaders would pick up the
threads of inconclusive meeting at Agra and reach an agreement so
that the process of addressing outstanding issues and improving
relations could begin.

He said that both the leaders were committed to a vision of better
relations between the two countries. "I personally hope that the
atmosphere will not be vitiated by statements that seem to point
fingers of accusation at each other. I think such an exercise will
be counter-productive and certainly will not achieve the objective
that the two leaders shared at Agra."

He said Gen Pervez Musharraf and Vajpayee were much more
constructive and positive in their discussions and they recognized
that there was a problem. There was an issue in Kashmir that needed
to be addressed, he said. "I think, the end-result that was in
sight in Agra is an agreement to begin a dialogue process. A
dialogue process that will address the Jammu and Kashmir issue."

Sattar said Pakistan's position on Kashmir was very clear that this
dispute had to be resolved in accordance with the will and wishes
of the Kashmiri people.

"Kashmir should not be seen as a territorial dispute," he said
adding, "it would be unrealistic to expect a durable settlement
that does not take into account the wishes of the Kashmiris."-APP

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20010722
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Musharraf wrong in criticizing Simla accord, says PPP
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Staff Reporter

ISLAMABAD, July 21: A spokesman of the Pakistan Peoples Party said
that President General Pervez Musharraf is wrong in asserting that
Simla Agreement did not recognize the centrality of Kashmir dispute
and that it had failed to carry Pakistan forward.

Responding to the remarks made by President Musharraf during his
news conference, the PPP spokesman said that Simla Agreement had
not only recognized the centrality of Kashmir dispute, it had also
ensured a long term peace between the two countries.

"Prior to the summit General Musharraf spoke of changing history.
Having returned by his own admission, 'empty-handed' he now speaks
as though history began with his journey to Agra. This is typical
language of unrepresentative rulers who stung by lack of mandate
seek to comfort themselves with the illusion of changing the course
of history," the spokesman said.

"The general was however right in urging the people of Pakistan,
India and Kashmir to strengthen the hands of moderates who are
yearning for peace for the sake of alleviating the miseries of the
people of the subcontinent".

"Moderates are hardly strengthened in an environment of one man
rule in which the dictator, believing himself to be the repository
of all wisdom and truth, relies on the extremists to keep himself
in power," the spokesman pointed out. "If the general really wishes
to strengthen the moderates he should immediately hold elections,
restore the constitution and rule of law in the country."

"The PPP believes that General Pervez Musharraf has used the summit
only for his personal benefit. He used the run up to the summit to
capture the presidency. He is now manipulating the fall out of the
failed summit to redraw domestic political picture to perpetuate
himself in power".

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20010728
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Pakistan to plead for lifting of US sanctions: Rocca due today
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By Jawaid Bokhari

KARACHI, July 27: Pakistan faces an uphill task in convincing the
United States for lifting the three layers of sanctions that are
holding up bilateral military and economic assistance.

Although the Bush Administration feels that sanctions have not
helped, American diplomats here say that the US Congress and Senate
have to be convinced. An independent task force set up by the then
Clinton Administration, too, had noted that "US sanctions are
particularly pertinent to Pakistan, which is far more dependent
than India on international assistance." The task force report
recorded the view that "sanctions can work against the US
interests, including the goal of regional stability."

Ambassador-designate Wendy Chamberlain told the Senate on June 27
that there was a need to redefine US relations with Pakistan in the
interest of regional stability.

US diplomats here, however, say that the multiple sanctions have
made the issue complicated. In 1990, Pakistan became ineligible for
new US assistance when the then US president failed to certify
under Pressler Amendment that Pakistan did not possess a nuclear
device. In May 1998, former US president imposed economic and
military sanctions as mandated under Arms Export Control Act. The
1999 military coup in Pakistan triggered sanctions under Section
508 of the Foreign Appropriation Act. US officials point out that
the three layers of sanctions have common items on which these are
applicable. Hence, there would be a gradual lifting of controls.

The issues relating to sanctions would be grappled in talks between
Pakistan officials and US Assistant Secretary of State Christina
Rocca in Islamabad next week. Ms Rocca is due in Pakistan on
Saturday. A Foreign Office spokesman has said that the US should
not adopt a different approach on lifting of sanctions imposed on
Pakistan and India after the May 1998 nuclear tests.

In October 1999, the US Congress authorized the president to waive
sanctions applied against India and Pakistan, affecting non-
military programs, foreign assistance, commercial financing and
Import-Export Bank financing. The president waived economic
sanctions on India. Because of the military coup, sanctions on
Pakistan were waived only to the extent of assistance for food and
other agricultural commodities and for US bank loans and credit. In
November 1998, then US president lifted restrictions on the
activities of US banks in India and Pakistan.

Similarly, the Foreign Operations Export Financing and Related
Agencies Appropriations Act, 2001, has provided an exception under
which Pakistan can be provided US assistance for basic education
programs.

A brief submitted by the Foreign Affairs, Defence and Trade
Division to Congress in March 2001 says: "Currently, US assistance
to Pakistan is limited mainly to refugee and counter- narcotics
assistance."

The US government has supported a resumption of multilateral
assistance by the IMF, World Bank and Asian Development Bank as
well as debt rescheduling by the Paris Club. No sanctions have been
applied on trade and investment. Trade has flourished to the
advantage of Pakistan. Exports in 1999-2000 amounted to $2.1
billion against imports of $646 million. In 1996-97, Pakistan
enjoyed a trade surplus of mere $50 million. The bilateral
assistance that boosts US exports to Pakistan has almost dried up.

USA is among the top private investors though the volume is not
very large. During the last fiscal year, the direct American
investments totaled some $60 million, down from the previous year's
$140 million. The decline reflected the general trend since there
was a sharp fall in direct foreign investment last year to just
over $300 million from a range of $500-600 million. Yet, the
largest investment came from the United States. Some Pakistan
officials believe that bilateral assistance may appear to be out of
question in the current scenario but some waivers could enable US
Import-Export Bank and Overseas Private Investment Corporation to
encourage and push up the level of American investment.

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20010728
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Democracy-related US sanctions likely to stay intact
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By Syed Talat Hussain

ISLAMABAD, July 27: While Pakistan is preparing to plead a strong
case for the removal of US sanctions during the visit by Assistant
Secretary of State for South Asian Affairs, Christina B. Rocca, it
might find it hard to convince the US official on democracy-related
sanctions which are likely to stay intact.

Background interviews and discussions with senior diplomatic and
official sources reveal that sanctions imposed under section 508 of
the Foreign Operations Appropriation Act, relating to the overthrow
of an elected government by means "of a military coup or decree",
are the hardest nut to crack in the overlapping sanctions against
Pakistan.

Officials say that Pakistan would take the opportunity of Ms
Rocca's visit to strongly suggest that sanctions are hindering the
effort to build a strong democratic base in the country, and should
therefore be lifted immediately. Pakistan will point to the
establishment of grassroots democracy (local bodies) and the
favorable response it has generated among voters in support of
sanctions removal imposed under section 508. However, the absence
of higher level democracy will dilute the impact of this case.

On the democracy front, sources say, three issues are of a
particularly thorny nature: no dates for the holding of provincial
and national assemblies elections, confusion about the changes the
generals may want to bring about in the political system as well as
in the constitution before restoring democracy, and the manner in
which Gen Musharraf elevated himself to the office of presidency.

Diplomatic sources say that while the US public reaction to Gen
Musharraf's self-selection as the president was not overly harsh,
in private Washington took strong exception to the development, and
to the fact that this happened during Foreign Minister Abdul
Sattar's visit to the USA, who was unaware of the timing of the
event.

Gen Musharraf did do some damage limitation by telephoning
Secretary of State Colin Powell detailing the circumstances that
had led to this decision. However, since then many in the State
Department have been casting doubts on the reliability of the
commitment of Gen Musharraf to restoring full democracy. Sources
say that the government of Gen Musharraf has to cover a lot of
ground before reaching the point to convince Washington to removing
Section-508 sanctions.

The section imposes restrictions on foreign military financing and
sales, IMET, a range of counter-narcotics, Trade and Development
Agency, Overseas Private Investment Corporation, and US Aid fund
programs. The State Department did invoke restrictions concerning a
health program operated by private organizations besides TDA and
OPIC investments.

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20010722
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Altaf puts stress on dialogue with India
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Staff Reporter

KARACHI, July 21: The chief of the Muttahida Qaumi Movement, Altaf
Hussain, has said that the old and complex issues between Pakistan
and India can be solved only through meaningful and positive
dialogues and not through wars.

Giving his views on the recently held negotiations between Pakistan
and India at the top level, Mr Altaf said that unlike other
politicians he had already said that he was not very much hopeful
about the meeting between President General Pervez Musharraf and
Indian Prime minister Atal Behari Vajpayee.

It must be realized that old disputes between the two countries
could not be resolved in one or two meetings, but there was a need
for adhering to a realistic and practical process, accepting the
facts in their due perspectives, and to look for any appropriate
and acceptable solution through continued dialogues and
negotiations, he elaborated.

He said that the Muttahida had welcomed the Pakistan-India
leadership meeting as it was the policy of the party that issues
with neighbouring countries, particularly India, should be settled
through meaningful dialogues.

"We want the resolution of the Kashmir issue and bilateral
relations with India so that problems of the people of the two
countries as well as Kashmiris could be solved," he pointed out,
adding that though any breakthrough could not be achieved in
dialogues between India and Pakistan, but the process of dialogues
should continue.

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20010722
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Indian editor reveals Pakistan draft
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By Jawed Naqvi

NEW DELHI, July 21: An Indian editor who attended President Pervez
Musharraf's breakfast meeting in Agra on the last day of his visit
claimed to have secured the text of Pakistan's draft declaration
which India rejected at the summit talks.

India Today magazine editor Prabhu Chawla put the text of what he
says is the first Pakistani draft in Agra on the Internet newspaper
run by the same publishing house.

Chawla says the draft was made exclusively available to him but it
was not clear by which of the two sides, if there wasn't a third
one.

The text of the draft shows the Pakistani side fairly high up,
proposing the resolution of the Kashmir dispute according to the
wishes of the people of the region and it was to be discussed at
the foreign ministers' level.

The timing of the obviously leaked draft is interesting as it comes
two days before the Indian parliament opens for the monsoon
session. There has been considerable speculation in the Indian
media about an almost-agreed draft that apparently carries some
changes made in his own hand writing by Indian External Affairs
Minister Jaswant Singh.

If the Pakistani draft kicks up a row or tempts Islamabad to show
the Indian part of the document, including, if it exists, one with
Singh's jotted remarks, it could spell serious embarrassment for
Prime Minister Atal Behari Vajpayee.

Following is the purported text of the Pakistani document published
by Chawla:

* "First Pakistan Draft: 15th July, 2001, 18:30 hours, Agra. The
President of the Islamic Republic of Pakistan and the Prime
Minister of the Republic of India, Sharing a vision of peace,
progress and prosperity for their peoples in the twenty-first
century,

* Resolved to establish a just and lasting peace between the two
neighbours,

* Cognizant of the benefits of good-neighbourly cooperation between
their two countries,

* Committed to the principles and purposes of the United Nations
Charter in the conduct of their bilateral relations,

* Upholding the principles of respect for territorial integrity and
sovereignty, mutual non-aggression, non-interference in each
other's internal affairs, equality and mutual benefit, and peaceful
coexistence,

* Convinced that resolution of disputes and differences by peaceful
means in conformity with the principles of justice and
international law will provide an indispensable foundation for
rapid normalization of relations and herald a new era of mutually
beneficial cooperation between the two countries and in the South
Asian region,

* Determined to pursue a nuclear policy of restraint and
responsibility,

* Resolved to take steps to reduce the risk of accidental or
unauthorized use of nuclear weapons,

* Recognising that the Jammu and Kashmir dispute has bedevilled
relations between the two countries, generated mutual distrust and
impeded their economic and social development and that its earliest
possible settlement in accordance with the wishes of the people of
Jammu and Kashmir is indispensable for the promotion of the welfare
of the people of the two countries and the promotion of amity and
cooperation between them. Recognising further that the nuclear
dimension of the security environment of the two countries adds to
their responsibility for avoidance of conflict between them and the
resolution of (the Jammu and Kashmir dispute) (all outstanding
issues) have agreed to the following:

1. The two governments will make determined efforts to overcome the
legacy of mutual distrust and suspicion and to build amity and
good-neighbourliness.

2. The two governments will recommence negotiations to resolve the
Jammu and Kashmir dispute in accordance with the wishes of the
people of the state. To that end, their foreign ministers will hold
their first meeting in (August 2001).

3. The two governments will consult the Kashmiri people, as
appropriate, during the dialogue process. The Government of India
agrees to facilitate the travel of APHC to Pakistan for this
purpose.

4. The two sides will pursue a nuclear policy of restraint and
responsibility and will reinforce steps, individually or jointly,
to reduce the risk of accidental or unauthorized use of nuclear
weapons. They will also strengthen custodial controls. Talks on
these subjects will be initiated at the level of foreign
secretaries.

5. The integrated and composite dialogue will be resumed at an
early date during the current calendar year for a discussion of all
other bilateral issues.

6. The two sides will support reactivation of the Saarc process and
the holding of the Eleventh Summit at a date convenient to the host
country and other member states of the association.

7. They will hold regular summit meetings to review the progress on
bilateral relations and decide on additional measures to accelerate
the pace of normalization of relations.

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20010727
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Body on judicial reforms to be set up
-------------------------------------------------------------------
By Rafaqat Ali

ISLAMABAD, July 26: The government has decided to set up a
'National Policymaking Authority for Judicial Administration' for
making judicial reforms "more effective and meaningful".

The new authority will be responsible for all judicial activities
in the country. It would be raised after modifications in the setup
of the Pakistan Law Commission, a statutory body working under the
administrative control of the Chief Justice.

The new body would be responsible for leading the judicial system
through new initiatives, advocating improvements and speaking out
on behalf of the judiciary.

The authority would comprise the Chief Justice, Law Secretary,
appointees of provincial law ministers, chairman of the Islamic
Ideology Council, Chief Justice of the Federal Shariat Court, and
Chief Justices of the four high courts.

In presence of the new body, the existing Chief Justice's Committee
would become redundant. It would also remove the objection of the
legal fraternity that the CJC had no legal sanctity.

The executive offices of the new body would be housed in the
Supreme Court building in Islamabad. The authority would have six
departmental offices: the office of the executive director; the
legal affairs and public information office; the management and
information systems office; the analysis and planning office; the
budget and finance office; and the human resources.

The authority would work in a consultative fashion, representing
the interests of the judiciary in many areas. The executive
director of the authority will serve as the chief administrative
office for the judicial system.

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20010726
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Sikandar Hayat sworn in AJK PM
-------------------------------------------------------------------
By Tariq Naqash

MUZAFFARABAD, July 25: Sardar Sikandar Hayat Khan was sworn in as
prime minister of Azad Jammu and Kashmir for the second time. He
was administered oath by AJK president Sardar Mohammad Ibrahim
Khan.

Sixty-nine-year old Sardar Sikandar, who headed a special committee
of Muslim Conference ahead of elections, is the sixth premier of
Azad Kashmir since the parliamentary form of government was
introduced in the liberated territory in 1975.

The swearing-in ceremony was held at a green lawn of the state's
legislative assembly building and was attended by more than 3,000
people from different parts of Azad Kashmir. They included the
outgoing premier Sultan Mahmood Chaudhry, federal minister for
Kashmir affairs, Abbas Sarfraz Khan, Muslim Conference chief Sardar
Abdul Qayyum Khan, APHC convener Mohammad Siddique Ghanai,
opposition and ruling party MLAs and senior civil and military
officials.

"I will remain faithful to the ideology of the accession of the
state of Jammu Kashmir to Pakistan," pledged Sardar Sikandar among
other things in his oath, administered by the president, whose term
is to expire on Aug 1.

Later in his policy statement he said, "my priorities are to
deliver good governance, enforce financial discipline, bring an end
to sifarish and corruption culture and establish the rule of law,
justice and merit." He vowed that he would achieve this goal
through an honest, efficient and agile administration. He said
merit would not only be implemented in government services but also
in every other field of life.

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20010728
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Rs250bn development projects to be launched next month
-------------------------------------------------------------------
By Ihtasham ul Haque

ISLAMABAD, July 27: The government has decided to undertake 20 mega
development projects from this year at a huge cost of Rs250
billion. Official sources said here on Friday that the initiation
of these projects will be announced on August 14 by President Gen
Pervez Musharraf.  These development projects include dams and new
communication systems across the country.

The sources said all the 20 projects were accorded top priority for
which funds were being mobilised from China, Saudi Arabia, UAE, the
World Bank and the Asian Development Bank. By now, the sources say,
China has agreed to extend roughly $1.5 billion while Saudi Arabia
is expected to offer about $500 million. The latter had earlier
agreed to provide $250 million.

Of the 20 projects identified, "Gomal Zam Dam Multipurpose Project"
will be undertaken on August 14, 2001 and will be completed in
2005-2006. The proposed project aims at providing irrigation water
supplies to 163,086 acres of land, generating 17.4 MW of
electricity and mitigating flood dams in areas downstream of the
dam.

The project will raise agriculture productivity and hydel power
generation in a high-potential region and benefit over 40,000
farming households. It will also provide protection to Chashma
Right Bank Canal. The overall economic benefits in the long run
will be significant for the region considering the water situation
in the years ahead. "Hingol Dam Project" of WAPDA will cost Rs21
billion with a foreign exchange component (FEC) of Rs1.9 billion.
The commencement date of this project is also August 14, 2001, to
be commissioned in three years.

The multi-purpose project envisages uplift of the local economy by
providing irrigation and drinking water and generating electricity.
About 0.97 MAF will be gross storage capacity. The command area to
be irrigated will be 9,250 acres. About 5 mgd of water has been
planned for the use of Hingol Port and Industry in the area.
Moreover, power equivalent to 300 KW of installed capacity will be
generated for this power-deficient region. The possibility of
exporting about 115 mgd surplus water to the UAE or, alternatively,
its conveyance to Karachi for drinking purposes or for irrigation
of additional 41,000 acres of land lying on both sides of Liayari-
Ormara Road will be looked into.

The main dam will be earth-filled type having a maximum 130-ft
height and 1,300-ft length. The project is expected to benefit the
entire region in more ways than one. "The Right Bank Outfall
Drainage Project" of WAPDA is estimated to cost Rs14 billion and
its foreign aid requirement is yet to be finalized. The project is
to commence this year and is thought to complete in six years.

The main objective of RBOD project is to minimize drainable surplus
and to dispose of the drainage effluent into the sea, thus reducing
the overall salt concentration in agricultural land and improving
the agricultural productivity.

Major works to be undertaken include: construction of main drain
from Mancher Lake to the sea, New surface drainage projects
(Waharah, Saifullah Magsi, Dokri, Begari and Frontier);
rehabilitation of completed drainage projects (Larkana, Shikarpur,
Sukkar FGD SCARP and Sukkar SCARP transition); Canal remodelling
(Rato Dero and Shahdadkot Canals); and Manchar Lake rehabilitation.

The project is expected to conserve land assets on the right bank
of the River Indus and restore salt-ridden Manchar Lake. It will
make the agrarian system more productive and sustainable benefiting
over one million households directly and 5 times that number
indirectly by raising the quality of water. It will also have
inter-provincial benefits by providing a conduit for disposal of
effluent which otherwise damages land.

"Thal Reservoir Project" of WAPDA whose cost is still to be worked
out will be undertaken in 2002. The main objective of the project
is to provide useful storage of 1.6-2.3 MAF for irrigation desert
in Thal area besides providing opportunity for hydel generation up
to 50 MW. Physical works includes construction of reservoir
covering an area of 180,000 acres out of which 150,000 acres are
located in the command of Greater Thal Canal scheme. The project
benefits are multifarious covering the agriculture sector and power
sector. It will bring an arid region under more assured water
availability and allow horizontal expansion of agriculture in
future years.

"Kachhi Canal with Barrage at Mithon Kot project" of WAPDA has been
cleared by the Planning Commission at a cost of Rs44 billion.
"Raising of Mangla Dam by 40 FEET", again a WAPDA project, has been
approved by the Planning Commission. Nevertheless, no cost has been
firmed up nor its commencement and completion dates worked out. The
project envisages providing additional water storage to meet the
ever-increasing irrigation demands, enhance the existing power
generation capacity and control floods in the downstream irrigated
areas.

"Greater Karachi Water Supply Project for Additional 100 MGD Water
Phase-V" will be undertaken very shortly and will be completed by
March, 2003 at a cost of Rs6.1 billion. The scope includes:
construction of conduits and siphons at various locations (58km);
construction of tunnel bypass 7km, provision of 72 inches dia M.S.
Pipelines (21km); construction of pumping stations at Dhabeji and
NEK; and provision of pipeline for Hub Industrial Estate/Town
(35km).

"Quetta Water Supply Project" will cost 85 million dollar and the
main funding is likely to come from donors. It is to be taken up in
March, 2001 and completed by June 2002. "Makran Coastal Road", a
project of the National Highway Authority, will cost Rs15 billion.
It is due to begin in 2002 and completed by 2006. The project
provides for the construction of 653-km-long road from Liari, about
100km north of Karachi on the existing RCD Highway to the Pakistan-
Iran border near the town of Gabd.

"White Oil Pipeline Project" of Pak-Arab Refinery Company (PARCO)
will cost Rs25.9 billion with foreign exchange component of Rs10.3
billion. It will be completed by 2002.

The project has been conceived to replace the existing Parco
pipeline which will be converted to crude oil on commissioning of
PARCO Mid-Country Refinery Project. The Pipeline will be
constructed on Build, Operate and Own (BOO) basis on a competitive
tariff. The initial capacity of the pipeline will be 5 million tons
per annum which will be expanded to 12 million tons per annum by
2010.

"Sheep and Goat Production" project of the ministry of food and
agriculture will cost Rs115 million and will be completed within
2001. The project will aim at enhancing goat and sheep production
through better feeding and management practices in order to
increase the mutton production and reduce its prices.

"Manufacture/Procurement of 69 locomotives" project of Pakistan
Railways will cost Rs 121 billion. Its foreign exchange component
is Rs 64 billion. The project will procure and manufacture 2,000-
horse power and 3,000-horse power locomotives. The project will be
started in 2001-2002 and will be commissioned in 2004-2005.
"Procurement of 29 Electric Locomotives" project of Pakistan
Railways will cost Rs4.4 billion and will be undertaken in 2001-
2002 and completed in 2003-2004.

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20010722
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President to seek funds for 18 projects
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 21: President Pervez Musharraf will formally seek
foreign investment for the construction of 18 dams and hydropower
projects worth Rs230 billion. The 18 projects comprise seven mega-
water sector projects worth Rs229 billion and 11 hydropower
projects of around Rs1.5 billion.

Seven water sector projects now being offered to the investors are:
Rs53 billion Raising of Mangla Dam in Azad Kashmir, Rs44 billion
Kachhi Canal with new barrage at Mithankot, Rs12.8 billion Gomal
Zam Dam in NWFP, Rs8 billion Mirani Dam in Balochistan, Rs61
billion Greater Thal Canal/Thal Reservoir in Punjab, Rs51 billion
Rainee Canal in Sindh, and Satpara Dam in Skardu.

Priority hydropower projects under phase-1 include $162 million
Jinnah, $80 million Malakand-III, $110 million Allai Khwar, $104
million Golen Gol, $110 million New Bong, $86 million Khan Khawar,
and $109 million Duber Khwar. Mega hydropower projects like $1.5
billion Neelum-Jehlum, $1.4 billion Kohala and $110 million
Matiltan are also expected to be offered to investors.

>From Aug 14 to 16, the president would inaugurate work on Mirani
Dam, Gomal Zam Dam, Greater Thal Canal and Right Bank Outfall Drain
in Balochistan, NWFP, Punjab and Sindh, respectively.

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20010726
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Death toll in twin cities rises to 58
-------------------------------------------------------------------
By Mohammad Asghar

RAWALPINDI, July 25: The death toll in the twin cities of
Rawalpindi and Islamabad has climbed to 58 as the rescue operation
was still continuing, the authorities and eyewitnesses said.

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20010724
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Floods wash away Mansehra village
-------------------------------------------------------------------
By Musaddiq Ali

MANSEHRA, July 23: At least 150 people were killed, hundreds of
others injured and many more reported missing as a pre-dawn heavy
downpour, followed by flash floods, wreaked havoc on rural parts of
Mansehra, Swat and Buner districts.

Dadar Qadeem was the worst hit village in Mansehra where more than
70 bodies were recovered. About 200 houses in the village, were
washed away by violent waves from Seron River.

People in the village told Dawn that the rain had started at 2:30am
and the lightning and thunderstorm hit thrice Dadar Qadeem before
huge torrents, carrying big rocks and trees with them, hit the
village. A portion of Dadar sanatorium was also damaged.

Witnesses said that scores of people were trapped in the village as
rescuers were facing difficulties to carry out relief operation
after a bridge, about a kilometre from Dadar Qadeem, also
collapsed. Armymen and volunteers were busy cutting a hill to make
an alternative route to the village.

The other villages in Mansehra were Dodorban and Salbandi, 43km
from here, where 20 bodies were recovered from the debris of seven
collapsed houses. However, the police, officials of administration
and armymen managed to reach the area. Ambulances from all over the
district were sent to the calamity-hit area, and volunteers from
Edhi Welfare Trust and other organizations were busy recovering
bodies and injured from the debris.

The assistant commissioner of Mansehra, Haroonur Rafique, told Dawn
that 60 bodies had been recovered from Dadar Qadeem and 16 from
Bandodor and Salbandi villages. SSP Inam Ghani, in a press release,
said that only 52 people had been killed and 40 others injured. -
AFP

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20010724
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PIA regrets Russian action: Forced landing
-------------------------------------------------------------------
KARACHI, July 23: Pakistan International Airlines insisted it had
permission to fly through Russian airspace after one of its
Manchester-bound Boeing-747s was forced to land by a Russian
fighter jet.

PIA also expressed regret over Sunday's incident, in which a
Russian MiG-29 fighter intercepted the PIA jet and forced it to
land at Moscow's Sheremetyevo airport.

"The Pakistani Boeing-747 had permission to fly through Russian
airspace and we faxed this to the Russian aviation authorities
after the plane was forced to land," a PIA spokesman told AFP. "It
is unfortunate that despite the permission the plane was forced to
land which caused inconvenience to the passengers."

Russian aviation sources quoted by Interfax news agency earlier
said the Boeing, en route from Islamabad to Manchester, had strayed
into Russian airspace without permission and failed to respond to
air traffic controllers.

The plane was allowed to fly to Manchester on Sunday evening after
an investigation in Moscow. The PIA spokesman said it returned to
Islamabad via Georgia and Afghanistan to avoid further confusion
with Russia. "Pakistani aviation authorities will take up the issue
after a probe into the incident," he said.-AFP

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20010723
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Production of 300 Al-Khalid tanks planned
-------------------------------------------------------------------
ISLAMABAD, July 22: Pakistan will add another 300 indigenous Al-
Khalid tanks to its armoured corps by 2007, defence sources told
APP. According to sources, Pakistan has achieved the capability of
producing tanks of international standard, not only to meet its
domestic needs but also supply these to friendly countries.

The government established a tank repair workshop (504 Central
Workshop EME at Multan) with the assistance of Czechoslovakian
Government. After going through various phases, the modernization
of the first batch of 500 tanks T-59 with Chinese assistance
commenced in mid nineties. Tank manufacturing and gun manufacturing
factories were simultaneously set up with the technical assistance
of China and went into production in mid nineties.-APP

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20010726
-------------------------------------------------------------------
Taliban to set up camps for returning DPs
-------------------------------------------------------------------
ISLAMABAD, July 25: The Taliban vowed to establish camps for
returning refugees inside Afghanistan, and called for an end to UN
sanctions amid a humanitarian crisis.

Afghanistan Ambassador to Pakistan Mullah Abdul Salam Zaeef said
the Taliban would set up camps to help tens of thousands of
returnees from Iran and Pakistan, where they were facing
"increasing harassment".

"The council of ministers of the Islamic Emirate of Afghanistan has
taken a decision to set up camps inside the country on an emergency
basis and also to provide relief according to the government
capacity," he told a press briefing.

"We appreciate both Pakistan and Iran for accommodating Afghan
refugees, but we also condemn the recent harassment and
maltreatment of refugees in these countries."-AFP

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20010728
-------------------------------------------------------------------
Election for Nazims in 84 districts on Aug 2
-------------------------------------------------------------------
ISLAMABAD, July 27: About 115,000 councilors will cast their votes
in 84 districts of the country on Aug 2 to elect Nazims and Naib
Nazims of tehsil, town and district councils in the fourth phase of
the local bodies elections.

This was stated by a spokesman for the Election Commission of
Pakistan, Kanwar Muhammad Dilshad, while speaking at a PTV program.
He said they would elect Nazims, Naib Nazims of tehsil, town and
district councils besides electing councilors on special seats
reserved for women, labors, farmers and minorities.

Mr Kanwar said that the indirect election for this purpose would be
held in 300 tehsils of 84 districts. Elaborating the structure of
tehsil and district councils he said the Naib Nazims-elect of Union
Councils would automatically become the members of Tehsil Councils
while Nazims would turn to district councils as members.-APP

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20010727
-------------------------------------------------------------------
PAF plane crashes
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 26: A Pakistan Air Force fighter aircraft crashed
20 miles short of Masroor Air Base.

The PAF officials while confirming the crash said that the aircraft
was on a routine training mission when it crashed in Adam Khan area
of Balochistan while returning to its base.

The PAF officials said that the rescue operations are under way and
Sea King helicopters of Pakistan Navy and the Rescue Squadron of
Air Force were busy in searching for the pilot and the wreckage of
the aircraft. However, because of night, difficulties were being
faced in search operation, officials added.

The officials said that it is premature to say whether or not the
pilot ejected safely.

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20010727
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PSO chief shot dead in Karachi
-------------------------------------------------------------------
By S. Raza Hassan

KARACHI, July 26: The managing director of the Pakistan State Oil,
Shaukat Raza Mirza, and his driver were shot dead by two masked
assailants in Clifton locality at about 8:45am on Thursday.

Shaukat Mirza, was on his way to the PSO House when the attackers,
riding a motorcycle, intercepted the car at the Chaudhry
Khaliquzzaman Road-Chartered Accountant Avenue intersection and
opened fire on him.

Driver Sulaiman Mustafa Shah, tried to accelerate and in the effort
rammed into the rear of a minibus at the intersection. The
assailants chased and continued firing from the right side of the
car, killing Shaukat Mirza on the back seat and wounding the
driver.

The car rolled for about 70 metres before coming to a halt on the
Racecourse Road between Askari Apartment and Bedrock Apartment.

A witness said that the killers then escaped, firing into the air.

The two victims were shifted to the Jinnah Postgraduate Medical
Centre, where the driver was pronounced dead by the medico-legal
officer.

The medico-legal officer said that Shaukat Mirza had received two
fatal bullets: one in his ear which pierced through the head and
the other on his chest. However, according to the Frere police, the
PSO chief received six bullets in his head and chest, and the
driver received two bullets.

The SHO of the Frere police station, where an FIR was registered,
said the police had started investigation into the case and added
that it would be premature to term it a sectarian killing.

The police found two empty cartridges from the back seat of the
car.

Sources, close to the family, told Dawn that Shaukat Mirza had been
receiving threatening calls for the past many months.

Sources in the PSO told Dawn that the PSO managing director had
recently ordered reopening of some corruption cases of serious
nature.


BUSINESS & ECONOMY
20010728
-------------------------------------------------------------------
Rs8bn cut in export rebate planned
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 27: The government plans to cut down the tax-based
export rebate by Rs8 billion in the current financial year.
Presently, the exporters are paid more than Rs15 billion in rebate
annually, and the tax authorities now plan to pay them only the
duty they deposit while importing the raw materials used in export
products.

The new formula chalked out for this purpose, also do away with the
powers of customs authorities in determining customs rebate for
textile, leather, engineering and other major sectors.

The customs authorities have been paying more than 400 per cent in
excess the rebate payable from 1996 to the exporters, which has
caused more than Rs35 billion losses to the national exchequer,
said sources here on Friday. To implement the new system for the
payment of rationally calculated rebate, the Central Board of
Revenue has issued four notifications as part of the budget 2001-
2002 - SROs 412, 413, 414 and 415.

These notifications are for a quarter-wise reduction of 25 percent
rebate from the current calculations, which means that in the July-
September 2001 the rates would get reduced by 25 percent with a
gradual further reduction by end-June 2002, ultimately saving more
than Rs8 billion.

The items, rates and their periods on imported materials for the
purpose of rebate payment are as follows. The highest beneficiaries
of the rebate have been textile sector, which got about 10 times
more than the due amounts during the past 5-6 years. This practice
was based on irrational fixation of the rebate rates by the CBR,
and the laws governing payment left wide scope of manipulation as
the tax authorities extorted money from exporters applying for
rebate amounts.

The new formula, which provides for payments to be cut down on
quarterly basis, would reduce the chances of overpayments, as the
rates would be brought down gradually to the levels of actual
payment of duty by the export manufacturers importing raw materials
for their products.

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20010724
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Three-year plan to stabilize economy
-------------------------------------------------------------------
By Ihtashamul Haque

ISLAMABAD, July 23: The government has finalized a three-year
structural adjustment and economic stabilization program that
primarily aims at reducing overall fiscal deficit to 3 per cent of
the GDP by 2004.

One of the important elements of good governance is to enforce
fiscal discipline and strengthen country's fiscal position. For
such an improvement, the reduction of fiscal deficit to 3 per cent
of the GDP (Gross Domestic Products) by 2004 has been targeted as
one of the major objectives of the government.

The main objective of the three-year program (2001-2004), the
details of which were made available to Dawn, was also to increase
government revenue by 14.6 per cent or 16.5 per cent of the GDP.
Increasing tax revenues including surcharges by 15.5 per cent or
15.7 per cent of the GDP by 2004 was also included in the program.

The program also seeks to increase non-tax revenues by 9.9 per cent
or 2.8 per cent of the GDP. It further promises to containing total
expenditure by 10.2 per cent or 22 per cent of the GDP. Similarly,
the program also calls for containing current expenditure by 17.7
of the GDP and increasing development expenditure by 12 per cent or
4.2 per cent of the GDP by 2004.

The three-year program will provide a basis for the revival of
economic growth. Increased development expenditure will be directed
towards those products which create physical assets.

To achieve its main objectives, the government has also worked out
a strategy to be adopted during the program period. This strategy
includes broadening the tax base through documentation of the
economy, reducing multiplicity of taxes, application of general
sales tax (GST) throughout the country, stepping up the resource
mobilization efforts of the provincial governments including tax on
agriculture income, generating of resources by the district level
administration, improving elasticity of federal, provincial and
local government taxes, periodic revenue of taxation laws and make
them compatible with the requirements of the economy, rationalizing
government expenditure i.e. bringing current expenditure to a bare
minimum level and adequate flow of funds for the poverty-oriented
development projects which could create physical assets, adequate
system of user charges for public services, constant monitoring of
public sector enterprises so that they become self-sustaining
units, and ensuring adequate allocation of other incentives to
support R&D activities for industrial development.

The three-year program is aware of the need for steps required to
minimize the discretionary upwards adjustments in the prices of the
government-controlled items which serve as key inputs in the
production process. The steps are aimed at documentation of the
economy leading to broadening the tax base and promoting tax
culture, administration of General Sales Tax (GST), strengthening
of tax management and cleansing the taxation machinery from
corruption and inefficiency. The fiscal policy aims at reducing
fiscal deficit substantially and increasing government revenues.

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20010722
-------------------------------------------------------------------
Deficit declining: Shaukat
-------------------------------------------------------------------
Staff Reporter

KARACHI, July 21: Finance Minister Shaukat Aziz expressed
confidence that the country would be able to say goodbye to the
International Monetary Fund in the next three years after taking up
the last medium-term plan with the Fund in near future.

The country would continue to borrow from the "friendly donors" to
take up gigantic and economically productive programs like
construction of Gwadar port after bidding farewell to the IMF. This
is normal borrowing, he explained.

"We have achieved stabilization of the national economy and are now
on a path of acceleration in growth," the minister claimed before
an audience of traders and businessmen of the Karachi Chamber of
Commerce and Industry (KCCI), who had assembled to sort out their
problems arising from the budget-related anomalies.

Quoting figures to claim that budget deficit has been narrowed down
considerably, current account has been contained, revenue
collection has improved appreciably in last two years, exports have
gone up, inflation has been contained to less than 5 per cent,
industrial production has picked up tempo to touch 8 per cent
growth, Shaukat Aziz said the government fully understood the pain
and sufferings of the people because of the 'structural reforms'.
But these reforms are inevitable, he stressed while pointing out
the importance of government's efforts to contain budget deficit,
which has come down to 5.3 to 5.5 per cent tentatively as against
6.5 per cent last year. Countries where these budget deficits were
not addressed, he said, suffered a lot and mentioned Turkey and
Argentina where national currencies had lost their values resulting
in a mass restlessness.

The minister said the government was making public a medium-term
roadmap towards economic recovery on August 14. He announced the
government was determined to achieve a four per cent plus growth
next year which may go up to 5 per cent in 2002-03.

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20010726
-------------------------------------------------------------------
Pakistan to get $700m this year
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 25: The World Bank will offer $700 million to
Pakistan for various projects, including $300 million banking
sector loan and $130 million for mitigating the effects of drought.
"We will be taking a number of projects worth $500 million to our
board within this financial year for final approval," said John
Wall, the country director of World Bank for Pakistan and
Afghanistan.

The remaining funding, he pointed out, had been committed for some
other projects and it was likely to be disbursed before the end of
this calendar year. The bulk of $130 million for drought would be
made available to Pakistan within a few weeks, he said.

Mr Wall told a news conference that at the request of the
government of Pakistan the World Bank had reallocated $130 million
for drought assistance from the restructured Second Social Action
Program Projects and the National Drainage Project.

He said the country strategy for Pakistan included the approval of
a number of large lending operations between April and June: a $3
million trade and transport project, a $21 million on-farm
management projects in the NWFP and $350 million Structural
Adjustment Credit (SAC). For this period, the WB had also announced
the implementation of $10 million global environment facility-
funded protected areas management project. He did not rule out the
possibility of another relatively smaller SAC for Pakistan within
this year.

"This boost in lending reflects our confidence in the reform agenda
developed by the new government," Mr Wall said. He said the Bank's
planned assistance till the end of 2001 for proposed projects
included a $300 million banking restructuring and privatization
project, a $30 million community infrastructure project and a $10
million HIV/AIDS project. These projects were now to be approved by
the Bank's board of directors.

He said the new Pakistan Country Assistance Strategy (CAS), which
would be completed in the first quarter of 2001-02, outlined a
three-year plan to help Pakistan improve basic social services,
strengthen economic growth, generate employment and reduce poverty.

About the drought package, the Bank official said that there would
be rural water sector rehabilitation in the severely affected areas
with focus on water conservation and enhanced water management. The
package also ensured the availability of essential drought-related
imports, including animal vaccines, agriculture and water sector
equipment and inputs, petroleum and fuel products and essential
medicines.

In reply to a question, Mr Wall said there was no clarity how the
government would transfer funds to district governments.
"Municipalities and districts are not worthy of government loans,"
he pointed out. He said the proposed Poverty Reduction and Growth
Facility was basically the IMF instrument of support which would be
jointly supported by the World Bank and the Asian Development Bank.
There could be a possibility of $500 million each by the IMF, WB
and ADB for the PRGF, he added.

Answering another question, Mr Wall said it was difficult to say
that the government would achieve the 4.5 per cent GDP growth
target during the current fiscal. The WB Country Assistance
Strategy has forecast 3.2pc, 5.9pc and 6pc GDP growth for 2001-02,
2002-03 and 2003-04, respectively.

He said investment climate needed to be improved and that there
should be export-led growth in Pakistan. Mr Wall did not agree with
a report that Pakistan should seek waiver of loans as it would harm
the economy. He said SAP had been improved compared to a few years
ago and added that the WB would continue to support SAP, especially
to improve education and health sectors.

He said the government of Pakistan was implementing an agenda which
included specific steps for stabilization of economy, deregulation,
governance reforms, devolution, accelerating growth and for
improved social services. This homegrown agenda, he said, had
become the foundation of the government's poverty reduction
strategy.

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20010725
-------------------------------------------------------------------
WB likely to offer $300m loan: Restructuring banking sector
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 24: The World Bank is likely to offer $300 million
banking sector loan this year to help undertake large-scale
restructuring of the Nationalised Commercial Banks (NCBs) and the
Development Financial Institutions (DFIs).

Official sources said here on Tuesday that a three-member
delegation headed by Secretary General Finance Mr Moeen Afzal was
currently visiting Washington and had held detailed talks with the
World Bank authorities to secure $300 million banking sector loan.

The delegation provided all the details to the WB officials about
the "rightsizing and downsizing" of the NCBs and the DFIs.

The sources said the World Bank had indicated to extend $300
million as a banking sector loan once its executive board gave the
green light. Initially, the government planned to close down about
1,100 insolvent and loss-making branches of the NCBs and has
reportedly informed about it to the World Bank. The WB authorities
have also been told that the purpose of undertaking restructuring
of the banking sector was to prepare NCBs for privatization. In
this regard, the WB was told that Habib Bank and United Bank will
be privatized within this year while the remaining government
shares in the MCB and ABL will also be offloaded.

The sources said the Pakistani delegation told the WB authorities
that professional managementís in the three NCBs (NBP, HBL and UBL)
were effecting a turnaround in their performance and getting them
ready for privatization.

The members of the delegation said that a new recovery law will
soon be promulgated which would greatly improve the existing
framework for recovery of the defaulted loans which now amount to
Rs200 billion.

The WB officials were told that the government was developing a
bankruptcy law to facilitate the process of business closure.

Pakistan has conveyed to the WB authorities that those who had been
provided jobs in the banks and DFIs on political considerations
both by the PPP and PML governments had either been removed or were
in the process of being removed. Also, the services of those staff
members were also being dispensed with whose performance was not
satisfactory and who were considered deadwood.

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20010726
-------------------------------------------------------------------
Pakistan to enact freedom of information law: ADB loan
-------------------------------------------------------------------
By Rafaqat Ali

ISLAMABAD, July 25: Pakistan has agreed to enact Freedom of
Information Act for obtaining loan of US $130 million from the
Asian Development Bank, under which record of all financial deals
(procurement, loan etc) of the government would be open to public
scrutiny.

Official sources told Dawn that enactment of Freedom of Information
Act, and Broadcasting Media Act is one of the seventeen conditions
for soft ADB loan for administrative, judicial and police reforms.

The loan offer has come from the ADB and the federal government has
asked the provinces to give their views by July 28. The federal
government, however, has no objection to the conditionalities set
for the loan. Under Access to Justice Program, the government would
get US$130 million if it implemented the report, prepared by
consultants.

The report, on the basis of which loan offer has come, wants the
following concerns to be addressed while passing the permanent law.

* Clear rules and restricted standards on classification of
government documents be spelled out. The tendency to "over-
classify" must be curbed.

* The law should apply to both federal and provincial governments.
Jurisdiction of the earlier ordinance, which was allowed to be
lapsed, was limited to federal government.

* A pragmatic and incremental approach should be taken to the
classification of documents for purposes of information requests.

* Consultation should be held with civic groups to negotiate an
acceptable appeal procedure when a government agency decides to
withhold information and the applicant seeks to challenge it.
Appeals procedure before the Ombudsman's office may not be
effective.

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20010724
-------------------------------------------------------------------
$70 million ADB loan expected
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 23: The Asian Development Bank is expected to
include three fresh projects of $70 million in its 2001-lending
program to Pakistan, provided provincial governments removed policy
objections quickly.

These include $43m Punjab non-formal education for rural women
project, $21m NWFP urban development project and $5.75m engineering
loan for Quetta Water Supply & Sanitation. The ADB and Economic
Affairs Division are expected to formally start loan negotiations
very shortly, EAD sources told Dawn .

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20010725
-------------------------------------------------------------------
Saudi Arabia offers $250m aid
-------------------------------------------------------------------
By Ihtasham ul Haque

ISLAMABAD, July 24: Saudi Arabia has agreed to finance various
development projects worth $250 million in Pakistan on the fast
track basis. A delegation of Saudi Fund for Development headed by
Engineer Yousef I. Al-Bassam met Finance Minister Shaukat Aziz here
on Tuesday
 and informed him that his country had agreed to extend $250
million to Pakistan for development projects.

The finance minister urged the delegation to help the Pakistan
government in its resolve to improve the economy. Welcoming the
Fund's continued support, the minister underlined the need for fast
disbursement of funds for economic development and prosperity.

"Although our bilateral ties are very deep and well established,
the degree of economic cooperation between the two countries needs
a boost," said the minister. He expressed the hope that such visits
and exchange of ideas would give the economic ties the required
fillip. The minister briefed the delegation on structural reforms
initiated by the government. "Our credibility with donors was poor
but now we have set about putting the economy on the right track.
We are trying to help our country grow and prosper."

To achieve this goal, he said, the government had initiated the
stabilization program and as a result of these measures the country
was now moving from stabilization to growth. He further added that
the tax and documentation drive launched by the government had
accrued positive results.

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20010726
-------------------------------------------------------------------
Japan to give $32m for Kohat tunnel project
-------------------------------------------------------------------
Staff Correspondent

ISLAMABAD, July 25: The Japanese government will provide $32
million to Pakistan under its Official Development Assistance (ODA)
program. The purpose of providing this loan is to meet a part of
the funding requirements for the second phase of the ongoing Kohat
tunnel project. An amount of $55.7 million was provided in 1994 for
the first phase of this project.

The loan will be extended on concessionary terms with an interest
rate of 1.8% per annum, repayable over a period of 30 years
including a grace period of 10 years. The Japan Bank for
International Cooperation (JBIC), the Japanese implementing agency
for overseas economic cooperation (ODA) and international financial
(non-ODA) operations, will finance the project.

The Kohat tunnel constitutes an integral part of the Indus Highway
(N-55), which is one of the vital trunk roads in the country. The
tunnel is 1.9 kilometre-long, the longest roadway tunnel. It will
be equipped with latest facilities like ventilation system,
lighting, safety system, main power supply and control plus
operation system. When this project is completed and the tunnel is
commissioned, transportation between Peshawar and Kohat will become
safe and efficient.

The government of Japan has also contributed to the improvement of
the Indus Highway itself by providing $475m loans since 1989. The
assistance to ongoing projects has been kept out of the purview of
the economic measures that were taken in the wake of nuclear tests
conducted by Pakistan in May, 1998.

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20010725
-------------------------------------------------------------------
21 EoIs received for 26% govt shares: UBL privatization
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 24: The Privatization Commission has received 21
expressions of interest (EoIs) from world's strategic investors for
pre-qualification to participate in the privatization of United
Bank Limited (UBL), an official announcement said.

The government plans to sell a minimum stake of 26 per cent of the
government share-holding to a quality strategic investor and
transfer management control. UBL is one of Pakistan's three leading
commercial banks, having a countrywide and international branch
network. UBL has a full service licence covering commercial, retail
banking, consumer and investment banking activities in Pakistan and
most of the other countries where it is present.

UBL has an extensive domestic network consisting of around 1,400
branches with a market share of nine per cent. UBL operates a
focused international network of branches in UK, US and UAE, Yemen,
Bahrain, Qatar and export processing zone of Karachi, operating a
joint venture- Oman United Exchange Co, Oman Muscat and a
subsidiary - United Bank A.G. Zurich, Switzerland and has
representatives office in Cairo, Egypt and Tehran. Iran UBL has
over 11,000 employees.

The parties who have submitted their EoIs include seven from Middle
East, four from UK, two from US and eight from Pakistan. The
parties are: Aqeel Karim Dhedhi Securities (Pvt) Ltd, Central
Insurance Company Limited (a Dawood Group company), Fauji
Foundation, Pakistan and Amsterdam Trust Corporation (ATC)
(Netherlands), M. Abdullah & Associates, Instituted of Overseas
Pakistanis, Invest Capital Securities (Pvt) Limited, Muslim
Commercial Bank, Union Bank Limited, A.R.Y Traders (UAE), Abu Dhabi
Group (UAE), Bank Dhofar Al-Omani Al- Fransi (Oman), Ban Muscat
(Oman), Dalik International (Bahrain) Jawed Textile Mills Companies
(E.C)(Bahrain), Naseer Abdullah Hussain Lootah Group of Companies
(UAE), Ahmed & Nabi McMullen (Accountants and Tax
Consultants)(London), Akhter Group PLC (London), Bestway (holdings)
Limited (London), M.M.Sharif & Associates (London), IFS INC. (USA)
and SB Technologies LLC.

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20010723
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US power firm may pack up
-------------------------------------------------------------------
By Khaleeq Kiani

ISLAMABAD, July 22: A Washington-based power company, pursuing two
projects involving $1.5 billion investment, may wind up its
operations here following discouraging signals from WAPDA about its
future, Board of Investment (BOI) sources told Dawn.

In a last-ditch effort to save its initial investment and future
operations, the company has brought the whole issue to the
knowledge of President Pervez Musharraf, the finance minister, and
secretaries of water and power and BOI, they said. Documents made
available to Dawn revealed that Synergics Energy Development, a
subsidiary of Voith Siemens Hydro Group, had taken in hand $110
million Matiltan Hydropower Project in NWFP and $1.38 billion
Kohala Hydropower Project in Azad Kashmir.

The federal government had issued letter of support (LoS) for the
construction of 84mw Matiltan project and Letter of Intent (LoI)
for conducting feasibility study of 740mw Kohala project, that now
stands completed. Both the letters are still valid and intact.

Under the president's initiative to attract foreign investment in
water storage and hydropower projects, WAPDA wrote a letter to Dr
Hermut Kormani, the Germany-based chairman of Voith Siemens Group,
to undertake Matiltan project at a tariff offer of 4.3 cents per
unit besides Kohala project and a list of 16 other major projects
for further investment.

When the company approached WAPDA in Lahore for Matiltan project it
was told that a tariff of more than 3 cents per unit (1.3 cents per
unit lower than earlier offered by WAPDA itself) would not be
acceptable. The BOI sources said perhaps WAPDA was unaware that
Voith Siemens was the parent company of Synerigcs that already had
an LoS for the same project.

The company also complained that it spent about $6 million on the
completion of detailed engineering study of the Kohala power
project but its contents were being given to other power companies
by WAPDA.

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20010722
-------------------------------------------------------------------
PR seeks joint venture for telecom network
-------------------------------------------------------------------
Staff Reporter

LAHORE, July 21: Pakistan Railways has sought a joint venture with
foreign telecommunication companies for developing a private sector
telecom network to compete with the Pakistan Telecommunication
Corporation Limited after its privatization.

This was stated by the Federal Railways and Communications
Minister, Javed Ashraf Qazi, while talking to reporters at the PR
headquarters on Saturday.

Under the proposed arrangement, he said, the foreign telecom firm
would contribute in the form of capital investment and technical
know-how while the railways' equity would be in the form of right
of way for laying optical fibre cable along the rail track.

He said the proposed network would replace railways decades old
micro-wave telecommunication network apart from competing with the
PTCL in the private sector. He said the railways ministry had
already published an advertisement to invite proposals from the
multi-national companies.

Replying to a question, he said negotiations were under way between
the technical experts of Pakistan Railways with a Chinese firm to
finalize an agreement in the railway sector. He said two PR teams
had already visited China to ascertain details of the equipment
being offered in the package. He said the package also included 59
new locomotives along with the transfer of technology.

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20010726
-------------------------------------------------------------------
More PTCL bandwidth for Internet service
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 25: Pakistan Telecommunication Company (PTCL) has
leased STM-1 (155Mbits/s) IP bandwidth from Karachi to USA through
Singapore Telecom to meet the Internet bandwidth requirement in
Pakistan.

A press release issued here on Monday said that the connectivity
had been established using the SEA-ME-3 optic fibre cable system
from Pakistan to UK with onward trans-Atlantic extension crossing
No.1 System.

The step has been taken on the direction of Federal Science and
Technology Minister Prof Attaur Rahman, who has instructed the PTCL
to take steps to rule out service break and ensure 100 per cent
restoration and backup service.

To ensure continuity of services and availability of bandwidth in
case of submarine cable faults, the PTCL management has decided to
convert the existing SEA_ME-We-3 STM-1 capacity to a fully
restorable capacity.

This will involve an additional investment of $4 million per year.
The arrangement will reduce the down time to hours instead of days
which are required to repair the submarine cable system faults.
According to Singapore Telecom the restoration shall be arranged by
them for PTCL within six weeks. Prof Rahman has also instructed
that arrangements should be planned to add 34Mbits/s of IP
bandwidth via satellite links.

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20010724
-------------------------------------------------------------------
Mineral development body to be set up soon
-------------------------------------------------------------------
By Intikhab Amir

PESHAWAR, July 23: The NWFP government will shortly set up a
Mineral Investment Facilitation Authority (MIFA) in line with
Islamabad's instructions to boost mineral sector, official sources
told Dawn.

Preliminary work for the establishment of the Authority had already
been completed and the same would be notified after approval by the
provincial governor, sources said. In accordance with the federal
government's June 4 decision all the four provinces, Azad Jammu and
Kashmir, Federally Administered Tribal Areas (Fata) and Northern
Areas of the country would set up MIFA to encourage investment in
the mineral sector, according to official sources.

The 11-member MIFA would comprise two members from the private
sector and nine from the public sector including a representative
of the environment protection agency, chairperson of the provincial
mineral development corporation, secretaries of forest department,
finance department, mineral development department, the additional
chief secretary or his representative, minister for mineral
development. The provincial governor would head it.

"Four names from among the private sector's stake-holders have
recently been forwarded to the governor of which two would be taken
on the MIFA," a senior official of the provincial government said.
After the approval by the provincial governor, the sources said,
the proposed MIFA would be notified.

The Authority, would improve mineral and mining related regulations
besides doing regular monitoring of the mining activities. A four-
member executive committee would also be established to facilitate
the MIFA by making ground work for taking decisions for the
promotion of mineral sector and mineral programs of the government
and public sector in the province.

The executive committee would be headed by the provincial minister
for mineral development and the other three members, to be take
from the MIFA would comprise secretary of mineral development
department and two representatives of the private sector. The
committee, sources said, would do the spade work for the MIFA.

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20010726
-------------------------------------------------------------------
Pakistan economy faces four risks
-------------------------------------------------------------------
Staff Reporter

ISLAMABAD, July 25: Pakistan's economy faces serious challenges
chief among them are four major risks emanating from a variety of
internal and external sources, according to World Bank's latest
progress report: "Pakistan Country Assistance Strategy" (CAS).

First, to restore business confidence and build a sound basis for
economic growth and poverty reduction, effective economic reforms
are needed across a wide range of sectors.

Since these reforms challenge existing economic interests, a major
risk is the commitment to the required pace and sequencing of
macroeconomic and structural reforms. There are differing views in
Pakistan on the need to deregulate and privatize all public
enterprises, such as the utilities, due to a slowly changing
conviction that privatization is the solution to these enterprises'
problems.

The risk of some reversal - particularly of the far-reaching
governance reforms and proposed devolution plans - remains since
this government's term in office ends in eighteen months, and there
is no clear indication of who will be the standard bearer of these
fundamental institutional reforms. This risk may be mitigated by
the government's intentions to communicate more actively its reform
plans and actions to date with the population at large, in order to
sustain the reforms beyond its mandate.

"There is also a risk that the devolution plan - if hastily
implemented and if captured by the powerful interest groups - might
lead to more problems," the report said.

A second risk is social discontent, arising from the difficult
economic situation, and tough adjustment measures needed to address
the balance of payments crisis. A third major risk relates to
Pakistan's ability to finance its balance of payments in the face
of its very weak, vulnerable starting point (extremely low
reserves, a large debt burden, and poor export performance), as
well as uncertainties about the balance of payments financing plan
beyond 2000-01.

"Investment climate and adherence to the reform program is
nonetheless crucial to restoring private sector flows." Slippage in
reform implementation or inadequate macroeconomic policies, weaker
foreign demand for key Pakistani exports, domestic agricultural
supply shocks, or other developments could lead to a situation
where Pakistan may find it difficult to service its debt with all
creditors. The military itself may balk at lower defence
expenditure. Continuous dialogue with the government and close
scrutiny of Pakistan's public expenditure will mitigate this risk.

"Lastly, an added risk is the implication of the December 1999
Supreme Court decision regarding the implementation of the Shariah
code to all financial transactions. "World Bank Group officials
have raised with the authorities the possible consequences for both
domestic and international contracts. A task force with the
Ministry of Finance and a "transformation commission" with the
State Bank of Pakistan are working on the policy guidelines and
technical measures - with IMF technical assistance - to ensure a
smooth transition. Meanwhile, the government has given assurances
to the Bank Group and all its development partners that adopting
such a code would not undermine business confidence, detrimentally
affect business contracts, or deter foreign private investment.

While the risks involved in supporting Pakistan's poverty reduction
strategy are significant, it is the management view of that they
are less than the risks of not supporting such a program in view of
Pakistan's high incidence of poverty and the political risks of
sustained high poverty incidence for the country. A social
discontent like that experienced by some countries during the East
Asian crisis would have disastrous economic, social, and possibly
political consequences for Pakistan given its much weaker economic
and social foundation. Several factors (including approaches taken
by the Bank) mitigate the risks. Perhaps most important, reform
program that has underpinned the Poverty Reduction Strategy for
Pakistan (PRSP) is both comprehensive and "home-grown" in nature,
and the plans for implementing it have been worked out by the
government with due attention to political realities and
implementation capacity.

To manage risks, and in a radical departure from the past, the
government has carried out extensive consultations during the
preparation of its reform agenda to ensure legitimacy and widen
support. "A second mitigating factor is our intensive monitoring of
reform implementation along with maintenance of an active policy
dialogue led from the field by the country director to encourage
effective, sustained implementation of reforms and keeping to
financial discipline". A third mitigating factor is the
comprehensive response strategy adopted by the Bank in coordination
with the IMF and ADB in the 1999 CAS progress Report.

The key feature of third response is a series of one-tranche
adjustment operations with all required actions taken upfront,
starting with the Structural Adjustment Loan (Approved by the Board
on January 21, 1999) aimed at securing governance improvements in
the key areas of banking, taxation, power sector, and public
spending. This response strategy remains valid and will help build
a track record of implementation in an overall consistent framework
of reforms.

Finally, to mitigate social and poverty-related risks, the Bank
will be taking a multi-pronged approach, focused on improving the
quality of and access to basic service delivery and promoting
community-based anti-poverty initiatives.

Furthermore, the Bank- supported Pakistan Poverty Alleviation Fund
(PPAF) has been supporting successful NGOs to expand their mirco
credit and small scale community infrastructure programs, targeted
to the poor, especially women.

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20010727
-------------------------------------------------------------------
PSO MD murder stirs panic-selling on KSE
-------------------------------------------------------------------
Staff Reporter

KARACHI, July 26: After early panic selling triggered by reports of
murder of the Pakistan State Oil managing director, Karachi stocks
managed to finish with clipped losses.

The KSE 100-share index early was off over 12 points, the afternoon
session saw some improvement thanks to stray institutional support
at the dips, which allowed it to finish with clipped losses at
1,252.22. The fact that it did not breach the support level of
1,250.00 shows presence of support at the lows. It ended the day
with a net fall of 6.54 points.

The share value of PSO, which early dropped to the day's lowest bid
of Rs.121.65 immediately after the report of its managing director,
Shaukat Reza Mirza's murder reached the market, finally finished
with rise of 65 paisa at Rs.124.20.

However, Engro Chemical, where late Shaukat Mirza spent a major
portion of his life attaining the superannuation as the chief of an
expanding corporate house, remained under pressure and ended lower
by 20 paisa at Rs.52.10, moving at one stage as low as Rs.51.65 on
early selling.

Price changes were mostly fractional barring Pakistan Telephone,
which rose by Rs.5.60 on the winning side followed by Mitchell's
Fruits, Clariant Pakistan and Lever Brothers, rising by Rs.1.40 to
6.

Losers were led by Exide Pakistan, Noon Sugar, MFMY Industries,
Orix Leasing and Javed Omer, which suffered fall ranging from on
rupee to Rs.1.70.

Trading volume rose to 61m shares from the previous 43m shares as
losers maintained a fair lead over the gainers at 93 to 48, with 55
shares holding on to the last levels.

Hubco again topped the list of actives, off 50 paisa at Rs.16.45 on
22m shares, PTCL, lower 10 paisa at Rs.15.45 also on 22m shares,
PSO, up 65 paisa at Rs.124.20 on 6m shares, ICI Pakistan, lower 10
paisa at Rs.7.95 on 2m shares and Engro Chemical, off 20 paisa at
Rs. 52.10 on 1.680m shares.

Other actives were led by Adamjee Insurance, lower 25 paisa on
1.349m shares, MCB, firm by five paisa on 0.869m shares, Fauji
Fertilizer, lower 30 paisa on 0.841m shares, and Sui Northern, easy
five paisa on 0.505m shares.

FORWARD COUNTER: Bulk of the activity remained confined to Hubco
share, which finally ended lower by five paisa at Rs.16.90 on
1.126m shares followed by PTCL, lower 15 paisa at Rs.15.50 on
0.550m shares and PSO, up 60 paisa at Rs.124.70 on 0.199m shares.

The largest fall of 50 paisa was noted in Engro Chemical, off 50
paisa at Rs.52 on 13,000 shares. Other contracts were modestly
traded.

DEFAULTER COMPANIES: Activity on this counter was maintained on the
higher where Kohinoor Gujar Khan Mills and Colony Mills came in for
actives, finishing higher by 15 paisa and unchanged at Rs.3.75 and
8.50 respectively on 5,000 and 5,500 shares respectively.

For second session in a row, S.N.Kawasaki attracted selling and was
marked down by 15 paisa at Rs.0.40 on 2,000 shares.

BOARD MEETINGS: Knoll Pharmaceuticals July 30, Arif Habib
Securities also on July 30, Century Paper and Dawood Hercules
Chemicals both on July 31 and Al-Faysal Investment Bank on Aug 10.

Back to the top
EDITORIALS & FEATURES
20010722
-------------------------------------------------------------------
So far so good
-------------------------------------------------------------------
By Ardeshir Cowasjee

Message from Delhi : One side wants an 'integrated' dialogue. The
other side wants a 'composite' dialogue. The one wants to discuss
Kashmir as an 'issue', if not a 'dispute'. The other does not ; it
wants to talk about 'cross-border terrorism'. Which border ?

The one wishes to talk of the damage to life and property inflicted
by the 'jihadis'. The other says the conflict is indigenous. Point:
what moral authority can be exercised over 'freedom fighters'?

Atal Behari Vajpayee, prime minister of India, and his men were
lavish in the hospitality they extended as hosts. Their guests
gracefully reciprocated. Our man, General Pervez Musharraf,
president and chief executive and chief of army staff of Pakistan,
is liked by modern India.

These Indians say he dresses correctly, wearing his shirt-tails
tucked into his trousers, not appearing as if he has just leapt out
of his bed. Our side, they say, exhibits its national spirit by
letting its shirt-tails hang loose.

Musharraf is blunt but luckily not blank. He addressed the media on
Friday evening and his message was well received in Delhi. The
press is full of quotes from his press conference. To read the
Indian newspapers is a treat. We, on our side, are able to read
about the happenings on Wall Street, or on the main roads of
Timbuctoo, but our antiquated laws do not let us read what is said
on Motilal Nehru Marg, on Akbar and Aurangzeb Roads.

These latter names remain unchanged, for the Indians appear to have
no qualms about the fact that they were ruled by the Great Moghuls.
The Taj Mahal at Agra remains the Taj Mahal ; it has not been
renamed Vallahbai Patel Mahal.

The good thing is that we, the two countries, have started talking
to each other and that our two present leaders do not behave like
petulant spoilt kindergarten schoolgirls, There is no shouting
about 'Jill has stolen my pencil so I'm going to steal her rubber.'

Now, what has the Indian press said? Last Sunday's 'Statesman'
(July 15), considered to be an anti-establishment paper, carried a
front-page column by its editor, Cushrow Rustom Irani. His closing
sentences read: "Prime Minister Vajpayee is doing what he can to
help. And at least this newspaper will stand and applaud." It wants
peace.

In yesterday morning's 'Indian Express' came a column from editor
Shehkar Gupta, which opened up: "Now you know why commandos rarely
rise to the top in most armies. Relentless training makes them
instinctive, decisive and aggressive but at the expense of the
ability to calculate and look far ahead. Just the next objective,
small even if vital, but not the big picture. Nobody knows if our
leaders also came away with the same impression from the summit.
But certainly General Pervez Musharraf gave some of the editors a
rare insight into the working of his mind at his now infamous
breakfast in Agra."

He continued: "Our politicians were shocked as he held forth
because they are used to seeing their own soldiers being
deferential, sometimes servile. So long have Pakistanis been held
hostage by military power that they love it, at least initially.
That's why it is wrong to see the Pak Army and the people as two
different things."

Seema Mustafa in the 'Asian Age' yesterday in her front-page report
from Delhi had this to say about the general's Friday evening
session with the press of the two countries: "It was a masterly
performance. Pakistan President General Pervez Musharraf, at his
press conference, refused to indulge in recriminations, said the
Agra summit was a 'good beginning,' praised, praised Prime Minister
Atal Behari Vajpayee sky-high, ridiculed protocol, described cross-
border terrorism as a struggle for freedom, and urged the people of
India, Pakistan 'and Kashmir' to strengthen the hands of the
moderates and isolate the extremists by supporting a resolution of
Kashmir and bringing peace to the 'poverty-stricken and deprived
people of our two nations.'

He praised the media, defended his breakfast meeting with the
editors in Agra, wondered why it had led to a major controversy,
offered to hold a similar press meet for Mr Vajpayee on his visit
to Islamabad, and strengthened his reputation for being a free,
frank general committed to peace despite being a man in uniform. 'I
told Mr Vajpayee that I accept there are problems for you,' he
said, 'but you must accept that there are problems for me as
well'."

On the contentious issue of the missing salute, the same newspaper
reported from Udhagamandalam, Tamil Nadu: " 'If I were in uniform,
I would have saluted General Pervez Musharraf," Field Marshal Sam
Manekshaw said, reacting to the controversy over Air Chief Marshal
A.Y. Tipnis not saluting the Pakistan president during his recent
visit." And from Islamabad: "Pakistan president General Pervez
Musharraf on Friday night said he was the first to salute Prime
Minister Atal Behari Vajpayee when he arrived at the Punjab
governor's house in Lahore in March 1999."

Yesterday's banner headline in the 'Hindustan Times': 'Pervez plays
both statesman and hawk'.

On Friday evening, whilst Musharraf was speaking at his Islamabad
press event, I was dining in the company of Fali Sam Narriman,
India's top-notch lawyer; the erudite Khushwant Singh, a man who
needs no introduction, a man who is still laughing though well into
his eighties; Lt-General Ardeshir Meherji Sethna, a former vice-
chief of the Indian army staff; Admiral Ram Tahiliani, a former
chief of naval staff. The admiral told me how at one point in time
the three service chiefs of secular India were army General
Melhotra, naval Admiral Ronald Pereira, and Air Chief Marshal
Latif. We all drank a toast to 'peace in India and Pakistan and
Kashmir, and goodwill to all men.'

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20010727
-------------------------------------------------------------------
To what uses this eloquence?
-------------------------------------------------------------------
By Ayaz Amir

After the confusion which marked the early stages of his rule,
Pakistan's soldier-president has finally discovered his forte: the
extended press conference.

It is a sign of the confidence he has acquired, and the awkwardness
he has shed, that he prefers his press conference live. And he
prefers it long, cooking over a slow fire. If commando training
emphasizes endurance, it takes little imagination to see from where
comes this tendency.

Who would have thought he would be a natural with this? But he is:
speaking easily and handling questions, even difficult ones, with
aplomb. Nor is he a boring speaker. The tedium comes when he stops
looking at his watch. In many things, as men and women of the world
would acknowledge, length is a virtue, in others a heavy cross to
carry.

Even so, in his chosen medium of the press conference, Musharraf is
the best speaker Pakistan has had since Zulfikar Ali Bhutto. He is
also a more down-to-earth speaker than the Pride of Asia (one of
the many titles bestowed on Bhutto by a grateful populace) who was
inclined to rely on generous amounts of fiction to embellish his
public utterances.

Not that General Musharraf is a Quaker who speaks always on oath.
He would be a poor ruler to do this. But he gives the fiction
treatment only to a few chosen subjects, those the closest to his
heart: his government's achievements and the wonderful things
likely to accrue from devolution. Make-believe in such small doses
is pardonable in a leader.

The larger question is altogether different. Backward countries
like Pakistan face problems of development, not eloquence. When
they get leaders who start liking the sound of their own voices,
the danger is real of the medium becoming the message, of words
filling in for action. The circus function of government then
becomes more important than the prosaic and harder task of solving
everyday problems.

Who in the post-colonial era have been the great exponents of Third
World righteousness? To name a random few: Nkrumah, Sukarno,
Nasser, Ben Bella, Nehru and, a bit later, our own Bhutto. All of
them dashing and romantic figures abroad, failures at home. While
each had his achievements, in the scales failure would perhaps
outweigh success. Eloquent leaders who have also been men of action
constitute a thinner list. Castro comes to mind and, at an
altogether different level, Lee Kuan Yew and Mahathir Muhammad.

In what category to place General Musharraf? His foremost
achievement so far is the consolidation of his rule - not too
difficult a task given the army's backing and the opposition of
such fearsome luminaries as the Sharifs, Benazir Bhutto and the
unshaven monks of the Alliance for the Restoration of Democracy.
Given these factors, Musharraf would have had to be spectacularly
inept to get the business of consolidation wrong.

For the rest what has he to show for himself? Alas, very little.
Army monitoring - of the country, the economy, the districts - may
not have been a disaster but it's been a pretty limp affair. While
being quick at taking up different initiatives like ending
smuggling, recovering bad loans, documenting the economy, etc, the
military government has been equally quick in abandoning them in
the face of resistance or after realizing that things simple on
paper were more complicated on the ground.

Regarding the economy, the statistics spun out by Shaukat Aziz may
be music to the IMF's ears but they leave most Pakistanis cold. And
who is to blame them when the cost of living is constantly on the
rise, investment has all but dried up and no jobs are available?

Sure, a stagnant economy is not susceptible to instant or magical
cures. But then army rule at a minimum should have meant an
improvement in public services - better administration, less
corruption, less police highhandedness. Can anyone honestly say
this has happened?

What are we left with then? Merely the echo of the hackneyed phrase
that General Musharraf has become increasingly "media-savvy" of
late. Good for him that he has. But of what consolation to the
people of Pakistan is his increasingly effective handling of the
media? How does it affect their cost of living? How does it improve
the functioning of the local police station?

Or take Agra. The General argued Pakistan's case on Kashmir
effectively, perhaps better than most leaders before him. With the
media he was a hit. Despite the lack of a declaration, Kashmir was
placed firmly on the center table, which is exactly what Pakistan
wanted. However, statesmanship is not only about mounting the
rooftops and beating one's drum. Ultimately, it is about realizable
solutions.

After Agra, is Pakistan any nearer getting India to accept its
stand on Kashmir? Can the hope be entertained that next time round
India would be more amenable to its point of view? If not, what
purpose is served by further steps along the road of reiteration?
Rhetoric has its dangers as much as its uses. As an end in itself
it becomes an exercise in self-deception.

Let us also remember that foreign policy is the last, and quite
often the first, refuge of Third World despots, demagogues or
military figures. When domestic problems - debt, crumbling infra-
structure, corruption, mal-administration - are found to be
intractable, the lure of playing international statesman proves
irresistible.

There is no shortage of monarchs and presidents in the Arab and
Muslim world who play this role to the full, none more so than the
most ineffectual of them all, Yasser Arafat, who, in Edward Said's
words, flits from capital to capital on one pointless state visit
after another to prove his supposed standing as Palestinian
president.

Pakistani leaders have also been assiduous globe-trotters, the more
keen on foreign travel the more ineffectual they have proved at
home. Benazir Bhutto made a record number of trips abroad. So did
Nawaz Sharif. In the short time he has been around General
Musharraf has also done his fair share of foreign sight-seeing. But
his India visit, under whose cover he made himself president, has
been his most important and most fruitful. It was a visit during
which the general was not patronized by his hosts nor read lectures
by them in democracy or stability as was the case with some of his
earlier forays on to the international stage.

He went to India as an equal and in pursuit of a worthwhile
objective: getting Indo-Pak relations moving again. His reception
in India, the way his visit became a media event and how he put
across the Kashmir case has reinforced his standing as a leader.
For providing him this opportunity he has reason to be thankful to
Mr Vajpayee.

But what does General Musharraf's new-found confidence and "media-
savviness" mean for Pakistan? It means the obvious: an extended
presidential term and a new system whose foundations - in the form
of local elections and election of army-approved nazims and naib
nazims - are already being laid. These are not signs of an early
exit. On the contrary, they hold the promise of a long haul.

Take your pick out of what is on offer. Musharraf is a liberal
which, for those of the same persuasion or for those who think that
Pakistan can do without more of mindlessness and bigotry, is the
good thing about him. But as his record thus far proves, he is no
radical reformer, his socio-political instincts being those of the
institution which is the source of his power. Furthermore, the
political system whose scaffolding he is erecting is a throwback,
minus the suppression of the press, to the Ayubian model.

Pakistan could have done without this regression. The Ayub model
did no good to Pakistan and in fact sowed the seeds of future
disasters, including the secession of East Pakistan. There is no
iron law which says that history repeats itself in all particulars
but it is disquieting enough to realize that we are again treading
a path we have traveled before.

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20010726
-------------------------------------------------------------------
The view from Harding's Point
-------------------------------------------------------------------
By Irfan Husain

>From where I sit writing this, I can see the American state of
Maine across Passamaquoddy Bay in St Andrews, New Brunswick. There
are pine-covered islands dotting the bay,and occasional boats
cruise past where we are staying at Harding's Point.

But even this remote and utterly lovely Canadian resort town of
1,500 people (2,500 in the summer) has not escaped the echoes of
the failure of the Agra summit. The media here usually does not
cover much more than the local gala or the story about a pet cat
being stranded in a tree, but even they gave the odd column to the
Indo-Pak talks and their background. And after they collapsed,
neighbours commiserated as though I had suffered a personal loss.

And in a sense I suppose I have. While many of my more cynical
colleagues had predicted that the summit would not yield any
results, I had allowed my optimism - normally kept under a tight
leash - to run away with me, and suggested that while there would
be no immediate breakthrough over Kashmir, there would be
agreements over a range of peripheral issues like trade and travel.
In the event, only the hawks on both sides have emerged happy with
the outcome. Unfortunately, their triumph is South Asia's
collective setback.

However, going through different accounts of the talks on the
Internet, I was struck by their uniform sense of disappointment and
sorrow over the wasted opportunity. The western media expressed
relief that the summit had taken place at all, and expressed the
hope that this would be the first in a series of top-level
meetings. Indian journalists were more concerned with the details
of how and why the talks failed without automatically blaming the
Pakistani side. And the fact that the foreign ministers of both
nations have chosen to remain upbeat about future prospects
indicates that the recent failure in Agra could well translate into
a more positive outcome later on.

With the benefit of hindsight, I suppose it is easy to say that
given the magnitude of the gulf between India and Pakistan,
peaceniks like me were naive in assuming that either side would
show much flexibility in the beginning. The hardliners in both
camps are too well-entrenched, and their vested interests too
deeply embedded in state policy to permit the kind of concessions
needed for a breakthrough.

An allied factor on the Pakistani side has been the role of the
jihadi organizations. By escalating the fighting in the days
leading up to the summit as well as during the talks themselves,
the lashkars not only flexed their muscles, but also indicated
their complete rejection of the peace process. The problem is that
if India and Pakistan do reach a negotiated settlement, these
outfits will be the biggest losers as they will not only be
deprived of funds and arms, but will be rejected by the Kashmiris
themselves.

So, despite their rhetoric, they have a vested interest in
continuing the fighting. The unaudited secret funds and public
donations currently keeping them afloat are financing a lifestyle
among top jihadi leadership that they would be loath to give up if
and when the bloody uprising stops in the wake of an Indo-Pak
agreement. So they will continue insisting on an all-or-nothing
solution while sabotaging any compromise formula.

If it is elements like these that Musharraf has to contend with,
Vajpayee is not without his extremist detractors. Already there are
calls from within his BJP coalition advising him not to accept the
Pakistani invitation to visit Islamabad later this year. The
Pakistani take on why there was no agreement on a joint declaration
is that elements in the Indian delegation prevented a draft
approved by Musharraf and Vajpayee from being signed. Whatever the
real reasons underlying the failure of the two sides to agree even
upon an anodyne joint declaration, it seems clear that there are
deep divisions and fissures on the Kashmir issue at the policy-
making level in both countries.

Again in retrospect, it is easy to see why the gulf between the two
is wider than ever: Pakistan wants nothing less than to change the
status quo through negotiations while India seeks to maintain it at
all costs. And the costs are escalating as the recent casualty
figures show. Pakistani analysts at GHQ probably calculate that by
supporting the jihadi lashkars, they will keep things on the boil
without inviting retaliation. This will force India to the
negotiating table, apart from keeping the Kashmir issue alive in
international forums. But this strategy has given these outfits
growing clout within Pakistan, and more and more, the tail is
wagging the dog.

The view from New Delhi is more global, given India's regional and
international ambitions. Indian analysts recognize that it will not
be accepted as a major player until the volatility on its borders
subsides. Given the two countries' nuclear capabilities and the
region's perennial no-peace, no-war status, significant foreign
investment will remain wary. Pakistani planners have a more
immediate concern; how to avoid fiscal meltdown, given the
economy's poor performance combined with the massive debt servicing
bill as well as the unending drain on our resources imposed by
defence. If we are to kick-start the economy, settlement of the
Kashmir issue is an unavoidable first step. So the good news is
that both countries are under different compulsions to normalize
relations. These factors need to be kept in the forefront when Mr
Vajpayee and General Musharraf next meet in New York at the UN
General Assembly session in September. As they have already spent
over ten hours in one-on-one talks in Agra, they will have a broad
consensus as well as good personal chemistry to build on. In this
sense, the recent summit can be seen as a positive first step
since, hopefully, the two leaders will not need to go over the
ground they have already traversed.

These are difficult times for both countries. They are both having
to confront deeply held prejudices and question decades-old
policies. In a sense, their maturity and self-confidence is being
tested as never before. Against this background, the temporary
setback in Agra should not have surprised us. Having thought about
the recent events in the subcontinent away from the media hype and
the general disappointment, one can come out of one's immediate
gloom and be more optimistic about future contacts and talks.

A couple of days ago I got an e-mail from my son Shakir in Karachi,
saying that I should have been in Agra these last few days. "What?"
I asked him, "And missed the lobster boil at the beach this
evening, and the whale-watching expedition tomorrow?" The
subcontinent's problems are so intricate that I can easily take a
few weeks off and not miss anything.


SPORTS
20010725
-------------------------------------------------------------------
Pakistan Veterans team for India announced
-------------------------------------------------------------------
KARACHI, July 24: Former Test captain Majid Khan will lead a 15-
member Pakistan veterans cricket squad on the tour of India in
October, Pakistan Veterans Cricket Association announced. The squad
includes 12 ex-Test players, including former Test skippers Zaheer
Abbas and Javed Miandad. According to the program, Pakistan
veterans will play five one-day internationals and an exhibition
match during their visit to India from Oct 17 to 29.

Squad: Majid Khan (captain), Zaheer Abbas (vice-captain), Javed
Miandad, Abdul Qadir, Saleem Yousuf, Ashraf Ali (wicket-keepers),
Sikander Bakht, Ijaz Faqih, Azhar Khan, Mansoor Akhtar, Jalaluddin,
Ali Zia, Raees Ahmed, Rashid Khan and Ashraf Pakhali. If Javed
Miandad and Abdul Qadir are not available for the tour their places
will be taken by Mian Pervez and off-spinner Tauseef Ahmed. Former
Test wicket-keeper Shahid Israr will be the team manager.-APP

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20010727
-------------------------------------------------------------------
Azam, Haider, in top four
-------------------------------------------------------------------
KARACHI, July 26: Azam Khan, Haider Ali, Osama Khan and
Karamatullah made the top four league after winning their matches
in the preliminary squash trials for SAF Games/ World Championship
at PIA's Jahangir Khan Squash Complex.

Sindh Squash Association is conducting these preliminary trials to
pick two Sindh players to appear in the final trials for the
selection of SAF Games being held in Islamabad and World Team
Squash Championship in Melbourne (Australia) later this year.

The second phase of pre-qualification trials under auspices of
Pakistan Squash Federation will be held at the same venue from
August 1-7. Eight players picked after first phase of trials from
four provinces will appear in the second stage.

The final trials will be held in September after which four- member
Pakistan squad for SAF Games and World team championship will be
formed.

In the league of four, Azam Khan beat Haider 11-15, 15-9, 15-10,
15-9 and Osama Khan don Karamatullah 9-15, 15-11, 15-6, 6-15, 15-9.

Third round results: Azam Khan bt Jahangir Khan Jr 17-16, 15-11,
15-3, Osama Khan bt Shahroze Khan 17-14, 15-12, 15-12, Haider Ali
bt Tayyab Habib 17-15, 15-12, 15-12 and Karamatullah bt Tahir Khan
15-10, 11-15, 12-15, 15-10, 15-7.-APP

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20010726
-------------------------------------------------------------------
Pakistan make one change for Azlan Shah tournament
-------------------------------------------------------------------
By Shazad Ali

KARACHI, July 25: Mohammad Khalid Jr staged a comeback into the
Pakistan squad for next month's Azlan Shah hockey tournament, while
few deserving youngsters still await for the selectors nod.

Lightly-built left-winger, Khalid, who has replaced Naveed Iqbal,
was the only change when the Pakistan Hockey Federation (PHF)
announced an 18-member squad for the seven-nation Aug 2-12 contest
in Kuala Lumpur. Although selectors took a belated step towards the
right direction by axing Naveed, light-footed right-winger, Sameer
Hussain, once again failed to catch selectors eye.

Axed from the squad after the Sydney Olympics, Sameer had proved
his mettle and performed outstandingly during the President's Gold
Cup staged in Karachi in May. He was replaced by mediocre right-out
Mohammad Irfan when the team was named for the May-June-July tours
to China and Europe. Justice would have been done had Sameer been
preferred over Irfan.

Another talented striker Haider Hussain could not make into the
squad, while experienced brothers, Yousuf and Imran, were
overlooked and rookies Dilawar Hussain and Ghazanfar Ali were
retained. President of the PHF, Lt-Gen Aziz Khan, said the
selection was made on the recent performance of the players in the
various domestic tournaments and the tours abroad.

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