The New Nation - Internet Edition

Sharing benefits of oil price cut

THE government has asked for bringing down bus fare following twelve-percent reduction of prices of diesel, kerosene, petrol and octane. This price adjustment of fuel oil has been done in the wake of fall of oil price in the international market. The government had raised oil prices by 36 percent at the beginning of the new fiscal year, when fuel oil prices skyrocketed internationally. Though the present price cut is just one-third of the previous increase, this is for the first time that prices of fuel oil have been reduced. The decision to review the price structure every three months to adjust with price fluctuations in the international market hopefully would be pursued by successive governments.

The Ministry of Communication has decided to reduce bus fare by Tk 0.12 to Tk 0.16 per kilometre and discuss the issue with bus owners. Transport owners however are reportedly reluctant to reduce fares on city routes on the plea that most of the buses here are fueled by compressed natural gas (CNG), the price of which has not been reduced. The authorities should now ensure implementation of its decision so that the benefits of price reduction go to the members of the public. The price cut of fuel oil should also be reflected in the adjustment of cargo transport fares for the benefit of consumers.

The city commuters do not get the benefit of reduced fare declared by the government. The drivers of taxicabs and CNG-run three-wheelers have gone back to the old practice of haggling. They demand exorbitant fares at will and cheat passengers by tempering with meters. They refuse to go to the desired destinations of passengers. Something needs to be done urgently to relieve commuters of such harassment.

People suffer for shortage of coins

DEARTH of coins and currency notes of small denominations has added to the cost of business of retail traders ultimately passing the same on to the poor consumers mainly because of lack of attention from those who are running the central bank and the finance ministry. Buyers often have to forego loose changes for almost every purchase of products and services of the day as retailers cite unavailability of small coins and notes rather acutely. Careful watch on the money situation by the officials concerned serving the central bank and the finance ministry is considered vital in the discharge of their responsibilities.

As revealed by the media recently, the issue was raised in a meeting at the

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) with retailers complaining of short supply of coins and small currency notes from the banks. They procure those from unauthorised currency traders and beggars at higher prices. Retailers need to buy small notes and coins from the grey market at higher rates than their face value. Margins between retail and wholesale prices also widened for the same shortage of coins and small notes.

A corrupt section of officials and employees of the central bank is reportedly doing brisk business with small currency notes and coins. Businessmen have to buy coins and notes of 1,2, 5, 10 and 20 Taka denominations by paying up to 25 per cent higher prices and 'adjust the incidental expenses' to the prices of goods they sell. The obvious question comes - if one retailer can procure coins and small notes of at best Taka 100 or 200 at a time from Bangladesh Bank spending a lot of time, how can fresh notes or coins go to the grey market in sufficient quantities? The corrupt practice must stop.

For an elected government on 01 January 2009

Dr. M. S. Haq

The army-supported government has decided to provide PM Khaleda and PM Hasina special security for three months starting from the day after the announcement of poll schedules by concerned authorities. The decision indicates - prima-facie and among other things - an effort by the army-supported government towards creating an initial condition for facilitating the participation of PM Hasina and PM Khaleda in upcoming election activities and activities that will presumably take place immediately following the election. But it is not clear at this point in time: on what election capacity or capacities PM Hasina and PM Khaleda will enjoy or will be able to enjoy or otherwise the security facilities afforded to them vide the above decision - if implemented as announced.

In other words, it cannot be said now with certain certainties: whether or not they will be able to participate in election activities both as election candidates and as respective party leaders? or whether they will be allowed to participate in those activities only as party leaders? or whether or not they will accept one or more than one of the above situations under say, circumstances and compulsions that might arise in pertinent areas in the coming days?

If outcomes of decisions of courts and other concerned organizations go in favor of their election candidacy and the election takes place as scheduled or behind the schedule, the meaningful use of security facilities could be supposedly high.

Further, if their candidacies fail for any reason and the election takes place as scheduled or behind the schedule with the blessings of PM Khaleda and PM Hasina, the meaningful use of security facilities could be supposedly high.

But if BNP and AL - either alone or in combination - fail to participate in the election for reasons within or beyond (or both) their control or the election is overtaken by emergencies created deliberately or otherwise by those responsible (to be) for that, the meaningful use of security facilities might or might not be as high as mentioned above.

Interesting though, in any of above events, it is likely the army-supported government will get credits - either direct or indirect, whether in part or in full - from Bangladeshis and others for demonstrating before them its apparent good intentions when it comes to for example, facilitating participation of the PMs in the election in a secure manner. But beyond the good intention, several things come into mind. For example:

1. Whether or not SSF facilities will be used as a lollipop for achieving something bigger than what is now apparent to the public, political parties and others in areas of election and the transfer of power - good or bad or otherwise for the country and the people at least for a certain period of time? One of the concerns here is: political parties, leaders, and concerned others in Bangladesh were found - in the past - to be vulnerable at times to lollipops of different nature and types that had lead them to sweet dreams of a full duration, among other things.

2. Whether or not the country's power and authority associated with governance and judiciary will be exercised in a fair, just, lawful and timely manner in pursuit of affording opportunities to all registered voters of Bangladesh to cast their votes according to their own free will and choices at the right time (time means cost though, per se) and place - in a meaningful and satisfactory fashion? Whether or not justice will be done in a timely manner when it comes to say, determination of election candidacies of PM Hasina and PM Khaleda at concerned levels of Bangladesh?

3. Whether or not factors such as and as appropriate - (a) time buying tactics in one form or another by all concerned, (b) election campaigns heavily constrained by existing or evolving or both time-process mechanics, (c) time lagging associated with relevant judicial decisions, and (d) a sudden change, whether deliberate or not, of hearts and minds of concerned and influential stakeholders of the election - would inter alia be instrumental in holding quality election (used in a wider sense) in the country as scheduled or delaying the election or reprogramming the election after a period of time or sealing the prospect of election for an indefinite period or otherwise? and

4. How best and quickest the army supported government, political parties, friends of Bangladesh (including inter alia the US), neighbors of Bangladesh (including inter alia India) and concerned others (including inter alia EU and WB) could assist people of Bangladesh in the effort towards inter alia a peaceful and meaningful transfer of the state's power - on the first day of new year (01 January 2009) at the latest - to the country's genuine and deserving people's representatives, to the satisfaction of all concerned?

In light of above, it now appears Bangladesh would be required to implement, among other things, several structural and non-structural measures aiming at enabling the people to start a people elected government in the country on or before 01 January 2009. In that respect, things, like: overconfidence; overdependence; naive realism; scheming; plotting; hypocrisy; deceiving; riotous, as well as disorderly behavior; promotion of self-interest over say, national interest; abuse, under use, over use and misuse of power and authority; corruption; and unfair election practices; that could affect, in a negative manner, the people's hope and expectation associated with a government - by the people, of the people and for the people - in the nearest future could, in effect, push the country to for example bankruptcies in terms of people's welfare, governance, economy, trade, investment and reputation in for example an upcoming period of global recession - unless something better is waiting for Bangladeshis in again the nearest future.

People-party (I mean, political parties, etc.) synergies are, at this point in time and inter alia, vital for fighting out challenges associated with a timely and successful transfer of power to a truly people represented government. No one should forget - history repeats itself - this time the repetition could occur with a fuller force and a higher tensile strength (used in an engineering sense) than that in the past. Let us not create - a make it or break it (used in a negative sense) - situation for Bangladesh, Bangladeshis (including inter alia the poor) and others to face that, both at present and in future.

The world needs an innovative financial management system

Imran Iqbal

We are currently in the midst of an extraordinary crisis in the history of the world. All the attention has diverted from wars and terrorist activities to economics and finance.

The newspapers are stirring emotions with headlines such as "meltdown", "economic crisis", "global recession" and "billions written-off". Political parties and governments are putting aside their differences and working together to come up with a joint approach to the problems. Established institutions such as the Lehman Brothers and AIG are falling before our eyes. Trust is at an all-time low with no one willing to lend.

As billions of cash is injected back into the global economies, politicians and economists are wondering what went wrong, what lessons can be learnt and how to change things so that such problems don't happen again. Gordon Brown, the British Prime Minister, suggested that he wanted world leaders to gather for a new Bretton Woods -- the conference held to decide how the post-war financial system should be run. He said there had to be "a new financial architecture for the years ahead". This is all well and good, but are these solutions going to be radically different from the current ones? Will this new proposal really help prevent the mini crises we have seen every decade or so? I think it is time that the world leaders and central bankers considered a fundamentally different system. One that is not based on debt or encourages people to live beyond their means. A system that pushes individuals to "save now, buy later" rather than "buy now, pay later". A system that moves away from wealth being concentrated amongst a select few whilst hundreds of millions go hungry. Now is the right time to look at an alternative solution. Something that ensures that money is invested with people that have good ideas and viable projects rather than being given to people who have the best credit which leads to the rich getting richer and the poor getting poorer.

But what is this alternative solution? Let us look at some of the causes of the current crisis and how this alternative solution would have dealt with it.

It is universally agreed that the economic crisis we are in now, started with the sub-prime mortgages. This is where banks and other financial institutions lent money to individuals in the United States, often at more than the value of the properties they intended to purchase.

The loans were offered at attractive fixed rates that would revert to the market-floating rate after a couple of years. As rates rose and property prices fell, most of these individuals were not able to pay back their loans resulting in many defaults and re-possessions. The alternative solution I propose does not believe in lending to buy property but instead the financial institution will either buy the property by itself or in partnership with the individual and then allow them to pay rent for the part they don't own. Since the financing is based on the value of the property it does not allow it to exceed the asset cost.

Furthermore, when people are unable to pay, this system encourages the wealthy financial institutions to give them time to reorganise their finances rather than kicking them out onto the street. The risk from these sub-prime loans did not stay with the institutions that provided them to individuals. Instead the loans were aggregated, split into different components (e.g. interest only, principal etc) and sold to third parties. The institutions buying these loans created further instruments with different risk characteristics and sold them on to other parties willing to take them on. This continued until the risk from these sub-prime loans were spread to institutions far removed from the original borrower. This led to a couple of problems, firstly those buying these instruments didn't often understand fully the risks involved and hence were not able to manage them appropriately. Secondly, it was difficult for regulators and central banks to determine the extent of this distribution, hence when something went wrong, the impact would be impossible to assess. So, how would this alternative system have handled this situation? Firstly, the sale of debt is not allowed. This is because money is not considered to be a commodity, which has a price of its own -- instead it is only a medium of exchange and a measure of value. A loan or debt to be repaid in cash is considered as "money" hence this system does not allow it to be sold for anything other than its par value. Secondly, the concept of risk management is different. In the current system, risk is transferred i.e. split and sold. In the alternative system, risk is shared, almost like a collective insurance scheme.

This means that instead of the sub-prime loan risk being sold and sold until it reaches a bank in the Middle East or Asia, it will be concentrated and managed by the institutions that can assess and react to any changes in circumstances. Another advantage of this alternative system is that when two parties transact with each other, for the trade to be valid both parties must have full knowledge of the potential risks and rewards.

In other words, those individuals taking out the mortgages would be fully aware of what they were getting into if market conditions turned. Also, those institutions buying complex instruments such as CDOs would not consider it as another 'black-box' transaction priced for its credit, but understand the parameters involved in the valuation, including understanding the assumptions being made.

This alternative system also discourages speculation. It insists that transactions are linked to the real-world economy rather than being paper being pushed around.

Ongoing ethnic war in Sri Lanka

Asif Haroon Raja

Sri Lanka is suffering the pangs of civil war for a long time and there are no prospects of a peace process resuming soon. On 2 January 2008, the government announced its withdrawal from a ceasefire agreement with the LTTE. This formalised a return to conflict that has been underway since 2006 but has also presaged worse to come. The humanitarian crisis is deepening, abuses of human rights by both sides are increasing, and those calling for peace are being silenced. There is no present chance of a new ceasefire or negotiations since the government, despite pro forma statements in favour of a political solution, is dependent on hardliners and appears intent on a military decision.

In addition to heavy fighting in the north, the dawn of 2008 saw the assassinations of a government minister and a Tamil opposition member of parliament, multiple bombings in Colombo, a wave of deadly attacks on civilians in the majority Sinhalese south, and widespread disappearances and killings of non-combatants in the north and east. More than 5,000 combatants and civilians are estimated to have been killed over the past two years. At least 140,000 have fled intensified fighting in the north, and more are likely to be forced out if the military continues its push into Tiger controlled territory. If the government's military approach in the east is a precedent for its conduct of the northern campaign, civilians and their property are at grave risk.

Much of the blame for the resumption in violence lies with the LTTE; its ceasefire violations and abuses of the population under its control pushed the government towards war. The Tiger strategy to shore up internal support by provoking a Sinhala nationalist reaction worked but the insurgents may come to regret their approach. President Mahinda Rajapaksa has also overplayed his hand. Relying on support from Sinhalese extremists, he has let them set an agenda that allows only for a military approach.

The military and much of the government leadership believe they can defeat or permanently weaken the Tigers by the end of 2008. The LTTE has been badly hurt over the past 18 months; it has lost the areas it controlled in the Eastern Province; its arms routes have been disrupted; hundreds, perhaps thousands of its fighters have been killed and senior commanders are now vulnerable to targeted elimination, either from air force bombs or Special Forces. But the Tigers remain a formidable fighting force. While the army has been inching forward in the north, they are fighting back from well defended positions. Even assuming the Tigers can be defeated militarily, it remains unclear how he government would pacify and control the large Tamil-speaking areas in the north that have been under LTTE domination for a decade or more.

The government argues its military campaign will clear the way for a political solution. Vowing to eradicate terrorism, it says it aims to destroy the Tigers or force them to disarm and enter democratic politics and negotiations along side other Tamil and Muslim parties. But after promising for more than a year to undertake substantial constitutional reforms once the All Parties Representative Committee (APRC) recommended them, it now proposes only to 'fully implement' the constitution long-existing 13th Amendment. The limited devolved powers for the north and east that this would represent are unlikely even in the best case to be sufficient to win over many Tamils or Muslims, though they could be a useful start if implemented sincerely. Since President Rajapaksa has chosen to depend strongly on Sinhala nationalist parties for his government's survival, however, this seems unlikely.

Meanwhile, ethnic divisions are deepening. The humanitarian costs of the war are concentrated in Tamil speaking areas. In Colombo, security forces have conducted large, often indiscriminate arrests of Tamils under emergency regulations. But Muslims are under pressure from both the Tamil Makkal Viduthalai Puligal (TNVP)), a parliamentary group which broke from the Tigers and operates with the government blessing, and government-sponsored land and administrative changes. The much touted 'liberation' of the Eastern Province has failed to bring development or democracy; instead it has been characterised by military rule and rising ethnic tensions. The TNVP will have to be reined in if the government intends to ensure the success of its democratic experiment in the east ahead of the series of elections scheduled in next March.

The human rights and governance crisis continues unabated, with paralysis of the institutions empowered to investigate and prosecute, and consequent impunity for abusers. The many ad hoc commissions of inquiry of the past two years have accomplished nothing. Disappearances and political killings continue unabated, especially in Jaffna and other parts of the troubled north. Both the Tigers and the TMVP continue to recruit and make use of child soldiers, despite repeated pledges to UN agencies and others not to.

The current conflict is worse than what preceded the 2002 ceasefire. The government counter insurgency campaign is more brutal and indiscriminate. Likewise, the terror and criminal activities of its Tamil proxy forces more extensive and blatant and the role of chauvinistic Sinhala ideologues in government more pronounced. The suspected involvement of pro-government forces in assassinations of Tamil politicians is particularly disturbing. The Tigers have fully militarised life in areas under their control and returned to brutal attacks on Sinhalese civilians, intent on provoking even worse retaliations.

Eelam war is now in its final phase. The Sri Lankan army chief Sarath Fonseka declared that his forces had wiped out the conventional military capability of LTTE and that the rebels were left with no other option but to resort to low intensity hit and run tactics. Sri Lankan Defence Secretary Gotabhya Rajapakse stated that the last two bastions of LTTE at Mullativi and Kilinochchi would be liberated by end December. He was also optimistic that the rebel controlled Wanni would be seized soon. Lankan troops are now about 15 km southwest of LTTE political capital of Kilinochchi. Heavy fighting is taking place at Akkarayankulam and Iranamadu areas.

In the wake of continued reversals in Jaffna, all-party leaders meeting was convened by the Tamil Nadu chief minister Karunanidi in Chennai on 14 October. The meeting urged the government of India to take immediate steps to stop the war and restore peace and normalcy in Jaffna and to stop arms assistance immediately.

They threatened that all the parliamentarians from Tamil Nadu would resign enmasse if India refused to cede to their demands. They sought assistance from international organisations such as Red Cross to intercede and provide relief on humanitarian grounds.

On 22 October, LTTE struck back against a major government offensive by ramming three explosives-laden boats against two merchant ships off the northern coast which were supplying food to the besieged Jaffna peninsula. The ships were duly escorted by navy troops. One ship was crippled while the other was damaged. The ethnic guerrillas also fought a sea battle with naval units defending the port of Kankesanthurai on the peninsula.

It was in context with expediting the delivery of much needed munitions from Pakistan that Gotabhya had scheduled his four-day visit to Islamabad from 21-24 October. His visit however was abruptly cancelled at the eleventh hour because of unscheduled visit of Indian Foreign Minster to Colombo starting 21 October. India exerted diplomatic pressure to put off the visit of the Defence Secretary to Pakistan emphasising that important matters related to defence and foreign affairs were required to be discussed. It indicates acute sensitivity of New Delhi about hobnobbing among neighbours particularly with Pakistan. India continues with its bullying tactics to keep its neighbours intimidated. However, irrespective of India's harassment, Pakistan-India relations remain on firm grounds and both are committed to protect each others interests..