The New Nation - Internet Edition

THE major political parties, their leaders and workers, are showing a growing impatience about the holding of the national elections. They seem to have altogether forgotten the situation which they themselves had created a year ago when the holding of the elections became an impossibility. The elections, then, could be rammed through, of course, but at the cost of its rejection overwhelmingly by the people and the slide into worse unstable conditions. But now, the helmsmen of these same political parties are all for the fastest holding of elections completely overlooking the fact of their too great irresponsibility in hazarding the staging of such elections in the first place. The herculean efforts which have become the imperative to clean the very messy stables left behind by them also appear to be understood inadequately.

The interim government has carried out decisive reforms in the Election Commission (EC), the main machinery to conduct and oversee every aspect of holding dependable elections. The EC, on its part, is now seen to be fully engaged with what things would be required to accomplish its main task that includes the foolproof preparation of the voter list. It is also seeking to prepare national identity cards that would be of great value in all respects. Both from the highest level of the government and from the EC, a deadline for the holding of elections by the end of 2008 has been declared. The time-frame is reasonable and is likely to be needed to prepare for the sort of flawless elections that everybody should be aiming for so that its results do not become controversial again.

The hurry on the part of politicians and their parties is understandable. The activities of the interim administration are creating both the grounds and the compulsion for real positive changes in the political culture and political system so that a refreshing new start in political life and governance of the country becomes possible. But this approach is an antithesis to what the leaders of the main parties very probably want. They would want perpetuation of what caused this country, its people and the economy so much distress and allowed only a few to prosper at the expense of the country. But the legacy of their politics with no democracy within the political parties, utter lack of democratic tolerance, wielding of power more for individual material advancement, the sway of black money owners over the political and ruling system and poor and corrupt governance thereof are now being sought to be thoroughly and effectively addressed by the caretaker government so that the country can start off from a clean state. The people would realise the significance of not wasting the opportunity they are getting to put the country firmly on the right track on a lasting basis by not responding to cheap sentiments.

Dr. Abdul Ruff

There is no doubt that all summits, in some ways, are extremely important. Ordinarily, a summit implies the final effort to find a way out of a complex and tricky situation. Invariably, differences at the bureaucratic level are often sorted out at the summit level. The parties involved make concerted efforts to give their views sufficient weight for attracting the desired support. Some summits acquire increased importance because of the operative nature of a peculiar set of circumstances. The recent Caspian Summit has been held in an atmosphere of intense American hostility towards Iran. The Americans have been engaged in mustering international support to dissuade the Iranians from what they allege is Iran's drive to acquire nuclear weapons. Already twice the UN Security Council (UNSC) has imposed sanctions on Iran and the Americans are feverishly working to secure a third UN resolution seeking tougher sanctions.

The summit of the Caspian Sea nations in Tehran on 17-18 October, attended by Russia, Iran, Kazakhstan, Turkmenistan and Azerbaijan, had several issues at hand. Apart from attended the Caspian summit. The five nations that border the inland Caspian Sea converged for a serious talk as the presidents of the five Caspian countries' agreed tentatively and in general terms to create an institutional framework for regional cooperation on economic, legal, and some security issues. Security and sharing the water and other resources of the Caspian region were the prime focus of the summit.

Economic issues formed the base of the agenda of the summit. During the summit in Tehran, Presidents Nazarbayev, Gurbanguly Berdimukhamedov of Turkmenistan, and Ahmadinejad signed an agreement to build a north-south railway connection between their countries. The connection would enable Kazakhstan and Turkmenistan to gain commercial access via Iran to the Persian Gulf --- a longstanding goal of the Central Asian countries. Turkmenistan looks to become the hub of this north-south line. Putin had endorsed the project when meeting with the Turkmen and Kazakh presidents in Turkmenistan in May of this year and confirmed Russia's assent during the Tehran summit. Russia expects that the line, once constructed, would connect with the Russian railway system.

The legal status of the Caspian - believed to contain the world's third-largest energy reserves - has been in limbo since the 1991 Soviet collapse, leading to tension and conflicting claims to seabed oil deposits. Iran, which shared the Caspian's resources equally with the Soviet Union, insists that each coastal nation receive an equal portion of the seabed. Russia, Azerbaijan and Kazakhstan want the division based on the length of each nation's shoreline, which would give Iran a smaller share. Cognizant of the failure of the Ashkabad Summit over the thorny ownership question, this summit focused on areas of shared interests, trans-boundary issues and trade, etc., with the hope that the goodwill generated at the meeting would facilitate subsequent summits to concentrate on divisive issues. Besides, Iran realized that minor energy interests are at stake in Iran's sector of the Caspian Sea.

Kazakh President Nursultan Nazarbayev proposed a method: dividing the water area into sovereign territorial sectors at least 12 nautical miles wide for each country, fishing zones 12-30 nautical miles beyond the sovereign zones, and an open zone in the center of the sea, with freedom for shipping and negotiated national quotas for fishing. Nazarbayev called for revising the existing quota system for sturgeon fishing, which is largely a legacy of pre-1991 allocations between the Soviet Union and Iran. Under the existing system, Iran is entitled to 45% and Russia to 27%, with the remaining 28% distributed among Kazakhstan, Azerbaijan, and Turkmenistan. On the vexed issue of the naval balance in the Caspian Sea, Nazarbayev called for demilitarization as the optimal solution. As the next best option, Nazarbayev called for control of naval and coastal armaments and limiting all naval activities to coastal and border guard missions.

The presidents agreed that all shipping, fishing, and transportation in the Caspian Sea would be carried out exclusively under the flags of riparian countries. This decision formalizes the existing situation without changing it. The summit declaration calls for all legal issues to be resolved peacefully by the riparian states themselves --- a formulation apparently designed to forestall official assistance from other parties. However, the presidents avoided discussing the differences among riparian countries over the method of dividing the seabed and waters.

Russian leader warned the US and other nations against trying to coerce Iran into reining in its nuclear program and insists peaceful dialogue is the only way to deal with Tehran's defiance of a UN Security Council demand that it suspend uranium enrichment. "Threatening someone, in this case the Iranian leadership and Iranian people will lead nowhere," Putin said Monday during his trip to Germany. "They are not afraid, believe me." While the Kremlin has shielded Tehran from a US push for a third round of UN sanctions, Iran has voiced annoyance about Moscow's foot-dragging in building a nuclear power plant in the southern port of Bushehr under a $1 billion contract.

Russia has in unambiguous terms warned US against attacking Iran. Russian leader Vladimir Putin met his Iranian counterpart and implicitly warned the US not to use a former Soviet republic to stage an attack on Iran. He also said nations shouldn't pursue oil pipeline projects in the area if they weren't backed by regional powers. Putin said none of the nations' territory should be used by any outside countries for use of military force against any nation in the region. It was a clear reference to long-standing rumors that the US was planning to use Azerbaijan, a former Soviet republic, as a staging ground for any possible military action against Iran. "We are saying that no Caspian nation should offer its territory to third powers for use of force or military aggression against any Caspian state," Putin said.

Putin warned that energy pipeline projects crossing the Caspian could only be implemented if all five nations that border the Caspian support them. Putin did not name any specific country, but his statement underlined Moscow's strong opposition to US-backed efforts to build pipelines to deliver hydrocarbons to the West bypassing Russia. "Projects that may inflict serious environmental damage to the region cannot be implemented without prior discussion by all five Caspian nations," he said.

The Western nations seem to firmly believe that Tehran is dead set on making nuclear weapons, which the Iranians deny and stress their right to build nuclear establishments for peaceful purposes. Vladimir Putin's statements were in line with his past position in which he has been consistently cautioning against military actions against Iran, despite the fact Russia has supported the earlier two UNSC resolutions imposing sanctions on Iran. Most of the Western nations are deeply engaged in their efforts to secure a third UN resolution, but Russia has blocked the third set of sanctions against Iran.

The summit's concluding declaration stipulates that the Caspian countries would "never use their armed forces for attacking one another" and, moreover, "under no circumstances would they allow their territories to be used for launching attacks or other military operations against other riparian countries." This proviso seems designed with the possibility of U.S. strikes on Iran in mind. All members of the summit, including Iran overwhelmingly supported the concerns of Putin.

The Russian president underlined his disagreements with Washington last week, saying he saw no "objective data" to prove Western claims that Iran is trying to construct nuclear weapons. Putin emphasized Monday that he would negotiate in Tehran on behalf of the five permanent UN Security Council members - United States, Russia, China, Britain and France - and Germany, a group that has led efforts to resolve the stalemate with Tehran.

The enhanced unilateral actions of USA have brought Russia close to Iran and other countries of Caspian region. Since Stalin's visit in 1943 when he traveled to Iran to attend the wartime summit with Churchill and Roosevelt, no main Kremlin leader like President Putin came to Tehran. Since World War II Iran has been with the USA during the most of the Cold War and Russia preferred to ignore Tehran and now USA is hinting at WW-III.

As economic and strategic ties between Russia and Iran keep moving upward at US cost, the strategists in Washington advise the Bush administration to open negotiations with the Iranians directly. Many in Iran appear to believe that the main US objective is to change the regime in Iran on similar patterns as it has done in Iraq and Afghanistan. The threatening gestures would soon fade away once the Iranian rulers begin to believe the Americans and for this it is imperative to have direct talks between the US and Iran.

Iran was a former ally of the USA during the Cold War and it fought a 10-year long war with Iraq with US weapons. In Washington, meanwhile, State Department spokesman Tom Casey said the US government expected Putin to "convey the concerns shared by all of us about the failure of Iran to comply with the international community's requirements concerning its nuclear program." Both Russia and China that support Iran are veto members of the UNSC-5 and they could derail the Bush ambitions in Middle East if they come determined. This situation puzzles Washington.

In many ways not only do the Caspian Summit and its results represent a serious setback to the US's Iran policy, they also highlight the hollowness of its Russian policy. Already many regional states, including Pakistan, have opposed the use of force and had suggested the dialogue route, but the open Russian support for Iran and its commitment to carry out its obligations to the Iranian nuclear power plant is certainly influencing other nations to review their outlook towards Iranian policy pursuits.

USA has been pinning hopes on the fear psychics of the Arab nations to threaten Iran. The main target of a nuclear Iran would naturally be Israel, according to USA, which considers Israel a part of US Empire in Middle East and hence has to safeguard the Israeli interests, including its security. But Bush administration reiterates that Iran could attack USA and Europe and therefore it wants missile shield in Europe. That is an American lie. After successfully branding the Muslims as terrorists the US-led West has also terrorize the Arab and other Islamic countries.

Iranian President Mahmoud Ahmedinejad also underlined the need to keep outsiders away from the Caspian. "All Caspian nations agree on the main issue - that all aspects related to this sea must be settled exclusively by littoral nations," he said. "The Caspian Sea is an inland sea and it only belongs to the Caspian states, therefore only they are entitled to have their ships and military forces here."

Undoubtedly, the Caspian Summit along with its outcome and President Putin's Tehran visit has provided not only the much-needed respite, but has also given a boost to the Iranian assertion that it is only engaged in peaceful pursuits of nuclear energy. The US policy of pressurization and coercion does not seem to be settling down in terms of gathering sufficient regional support for its intended strike against Iran.

The increased Russian influence over Iran could be employed to gain more and more concessions, which the IAEA considers somewhat essential. The hasty imposition of another set of sanctions would not be useful. On the contrary, it could further harden the attitude of Iran. It would be a wiser action for the Americans to pay heed to Russian warnings against an intended military action. But neither the neo-cons nor President Bush is in a mood to accept any defeat in US drive for a new Middle East and democratization of the region.

Nuclear cooperation and the future strategic role of Russia and Iran may harm the NATO Alliance and their war on terror in Iraq and Afghanistan. The US policy towards Pakistan and Pakistan's inclination towards the Russia and China alliance may be another rising threat for the US war in Afghanistan.

(To be continued)

Xian Zhu, World Bank Country, Director and Sandeep Mahajan

The recently published World Bank report, Bangladesh: Strategy for Sustained Growth, raises an important and consequential question - how can Bangladesh become a middle-income country (MIC) in the shortest amount of time? The answer to that, of course, lies in how fast the country manages to grow. For example, if GDP growth picks up to a sustained rate of 7.5% - something only a select few countries have achieved in recent history - Bangladesh can become an MIC by 2016. If average growth falls to the 3 percent rate seen in the 1980s, the MIC aspiration will have to wait for another five decades!

This report argues that Bangladesh is well poised to become an MIC within a decade or soon thereafter. Thanks to a combination of sound economic policies and the tremendous grassroots energy for which Bangladesh is globally renowned, GDP growth has averaged over 5% since 1990. The average income in the country today is more that 75% higher than in 1990. Remarkably, despite its vulnerability to natural calamities, Bangladesh has not allowed its per-capita income to fall in a single year since 1990, even in years in which there were severe floods. There are few countries in the world - developed or developing - that can match this record.

At the same time, a rapid transition to MIC status would demand an even deeper level of political commitment. With many of the first-generation reforms soundly in place, a new set of challenges is likely to emerge, requiring far more complex policy innovations. Any of the emerging structural issues - critically weak governance, urban congestion and mismanagement, overburdened port, power, and transportation facilities, and acute skills shortages - can easily become a binding constraint to growth. Slippages in macroeconomic discipline or inability to judiciously harness the vast potential from globalization can derail this transition by several years. Neither would continued lackluster performance of agriculture be conducive to the MIC aspirations.

It is a fair question to ask why we care so much about growth. Shouldn't the focus be on tackling poverty instead? The answer is straightforward. We care about growth because across the world it has proven to be the most effective instrument in the fight against poverty. Benefiting from strong growth, China and other dynamic East Asian economies have successfully lifted millions of their citizens from the clutches of poverty. At the same time, the fate of the poor in many Sub-Saharan countries has worsened in recent decades simply because of their very weak growth records. Let's just consider Bangladesh, where the most success in lowering the poverty rate came during periods of strong growth. Most notably, the poverty rate fell by a remarkable 9 percentage points over 2000-2005, a period over which GDP grew at just under 6% a year.

An important channel through which growth impacts poverty is employment creation. And for that, solid growth of labor-intensive manufacturing activity is particularly important. This sector is the most likely source of employment generation at a scale that can absorb a large number of unskilled workers, many of whom would come from poor backgrounds and rural areas. It is instructive to consider the remarkable impact of the rapidly growing garment sector in Bangladesh. Starting from an insignificant employment base, the sector today employs close to 2 million workers, mostly women from under-privileged backgrounds. The money these garment employees send back to their villages further lifts several others from abject conditions. Imagine for a moment if there were several other such dynamic sectors in the Bangladeshi economy!

How to ensure rapid growth of manufacturing? It is clear from the example of the garment sector, as well as from many of the successful East Asian countries, that deepening the integration with global goods and capital markets will be essential. Many have argued that Bangladesh should first respond to the demand of its own domestic market, before thinking about opening up and relying on exports. The benefits of having a large domestic market are clear, but that should not detract from the tremendous opportunities that access to global markets offers. What if the garments sector had only relied on the domestic market? Moreover, the transfer of technology and managerial skills that accompany foreign direct investment (FDI) are vital to efficiency improvements and to being competitive in global markets. Again, the example of the garments sector is instructive.

Finally, even if we accept the importance of export-led manufacturing growth, can we reconcile that with the state of urban management in Bangladesh? After all, such activities mostly thrive in urban environments which offer them important agglomeration benefits. In Bangladesh, Dhaka has been the engine of growth. But the growing congestion pressures in Dhaka and overstretched state of its service provision clearly indicate the current urbanization model will not support the kind of strong employment-generating growth Bangladesh seeks.

Dhaka, surely, will have the major role for future growth, and, for that, far-reaching improvements in its management and infrastructure are essential. However, in a country of Bangladesh's size, it alone cannot carry the burden. Creation of dynamic and diverse urban centers is essential. To summarize, successful management of three transitions would be key to achievement of Bangladesh's MIC aspirations. (1) A shift in the economic structure from agriculture to labor-intensive manufacturing. (2) Deepening of integration with global markets wherein internationally competitive Bangladeshi firms would be plugged into global supply chains. (3) Unleashing the growth potential of the major urban centers, Dhaka especially. Reform measures essential to these objectives include continuing macroeconomic stability; deepening financial sector and external trade reforms; and rebalancing the policy focus toward hitherto neglected structural areas - economic governance, urban management, infrastructure (especially power sector, ports, and transportation), and labor skills. The next part of the OpED discusses these challenges in more detail.

The World Bank's report does not offer any silver bullets for sustained high growth. It only presents a framework underpinned by solid analysis that can potentially help the country set its longer-term development vision. For the Bank, success of the report will be measured by its contribution to a stimulating national debate and, eventually, some sort of consensus on the set of priority reforms needed to ensure Bangladesh's place amongst MICs in 10 years. If a broad consensus is reached, authorities and the people of Bangladesh would need to be mindful that some of the associated reforms will not be painless. Complexities and short-term costs notwithstanding, it would be useful to keep in mind that the longer-term goal itself is worth striving for.

('Bangladesh: Strategy for Sustained Growth', and Senior Economist, South Asia Region, Wolrd Bank)