The New Nation - Internet Edition

Bringing prices down

BRINGING down prices of essential commodities to tolerable level of the common consumers is one of the major expectations of the people. Volatility of the market had been a matter of great concern for about four years. People have suffered much under the unusual market trends. It is a healthy sign that prices of major essential items have started coming down in both the wholesale and retail markets. The price of fuel oil in the international market has come down to almost one-fourth of the highest level. Prices of rice and edible oil have also come down internationally. Good Aman harvest prospects have also influenced the rice price situation positively.

Prudent decisions in a number of areas and their implementation are essential to retain the current downward trend of prices. Availability of fertilisers and diesel at reduced rates and uninterrupted power supply for irrigation must be ensured for a bumper Boro crop. Though insignificant in proportion to the fall of prices internationally, the government has reduced diesel price and is reportedly going to cut prices of fertilisers soon. Proper distribution of these inputs should be ensured for a positive impact on price situation.

The supply chain of essential items should be kept steady. The government's reported plan to strengthen the Price Monitoring Cell to control prices is a right move. Experts want the involvement of more ministries to make PMC effective.

Involvement of the business community is of vital importance. The government must take them into confidence. While taking measures to prevent the creation of artificial crisis in the market the business community should be fully involved in price control efforts.

Water table and irrigation

AS appeared recently in the media, sharp fall in underground water level will make about three lakh shallow tubewells inoperative during the Boro season hampering cultivation on eight lakh hectares of land, which is 16 per cent of total arable land. BADC sources have reportedly said this problem would ultimately reduce Boro production by about 28 lakh tonnes. In the 1980s, every shallow tubewell covered about four hectares of land, which has come down to less than 2.5 hectares due to dipping groundwater levels. According to the BADC, situation is going to be 'alarming' in the upcoming Boro season.

The BADC experts held haphazard installation of deep tubewells in areas suitable for shallow ones and it is 'a combined result' of a number of other factors including diversion of water of common rivers, droughts and generally warmer temperatures round the year. Moreover, the absence of groundwater management tools, lack of research and need- based development programmes have intensified the problem. About 23,389 square kilometres covering 23.3 and 15.9 per cent of the gross irrigated area and total arable area respectively in 31 districts has been identified as critical shallow tubewell zone. Bangladesh has only 7,000 square kilometres suitable for deep tubewell driven irrigation.

Declining groundwater table already causes about three lakh shallow tubewells to remain inoperative during the March-April period. Deterioration of groundwater quality and increasing level of salinity due to rising sea levels - both through the rivers and aquifers - is becoming significant. The government may have to replace shallow tubewells with the deep tubewells by 2010 to overcome a possible critical situation in irrigation, experts say. Due to low availability of surface water during the dry season, groundwater is extensively used for irrigation.

Absorbing the shocks of credit crunch

Maswood Alam Khan

Two pieces of disturbing news I read last Saturday do not augur well for the future of the world! News one: a Pakistani businessman, who was the boss of several construction firms, could no more withstand the impact of credit crunch his company was facing due to global economic meltdown. At his home in Sharjah, UAE, he killed himself almost severing his head with an electric saw. News two: a jobless scientist with a doctorate in physics has applied for a street sweeper's job in Seoul, South Korea. These two events, we are afraid, are gloomy precursors to our dismal days ahead.

Our newly elected government has embarked upon a five-year long governance of Bangladesh at a time when the whole world seems to have been shrouded by ominously dark economic clouds. Days ahead are pretty challenging. A vision little frosted, a step little missed, or a decision little lax in public administration on the part of the new government may wreck havoc on our economy. It is time we all on a war footing should be bracing ourselves for a battle under the shadow of global economic downturn.

Measures of preparedness, before the impending recession pounds us, may save our nation from a precipitous fall into an economic depression. The economic storm now brewing up out in the Occident since December, 2007 is fast moving towards the Orient. The ferocity and the impacts of these economic storms on different spots of the globe will vary depending on the vulnerability and preparedness of the respective countries in facing those economic upheavals. The storm may be a tornado in USA, an earthquake in Japan, and a 'cyclone or no storm' in Bangladesh.

Thanks to strong political pressure for ensuring a transparent national election, our people have already been handed national identity cards. The caretaker government with the help of our armed forces has performed a huge mission that will go a long way in facilitating many welfare jobs for our people. Based on a robust database thus made in issuing national identity cards our government can now draw a variety of strategic plans for efficiently serving people both in emergency and peacetime.

During a war citizens are advised to adopt some safety measures to minimize their casualties and hardships. Devising shelters, evacuation of children to rural areas, distribution of basic and essential items through rationing, training people with first-aid lessons etc. are among the precautionary measures. Distribution of essential items through rationing is cardinal---a measure we saw very effective also during peacetime when a nation faces economic crises.

It was during World War II National Registration Identity Cards were issued to all the Britons with a view to enlisting young people for compulsory military service and distributing among British citizens basic foods and clothing efficiently to guard against shortages. Britain's inability to feed itself was a major problem in 1940, the first full year of the World War II. Every British citizen was then issued with a ration book of coupons. As well as foodstuffs other items were also rationed, including petrol, clothing, and even furniture.

While Americans suffered some rationing during World War II for items such as petrol, light bulbs and stockings, they have never had to limit consumption of their staple foods. But, in the early part of the last year food rationing had to be introduced in USA for the first time in their history to protect dwindling supplies of food as the global price skyrocketed with giant food producing countries like USA and Australia struggling to keep up with demand. Growing appetites in China and India, drought in Australia and pests in Vietnam also contributed to the food shortage and soaring prices.

Those who lived in USA in 2008 should remember that Sam's Club, Wal-Mart's wholesale wing which sells food to restaurants and other retailers, had limited each customer to four bags of white rice per visit.

We should not forget that India, our next door neighbor, last year stopped exportation of rice to our country in the backdrop of price hike of food grains all over the world and we had to face an uphill struggle in procuring rice for our consumption.

Probability of food shortage in the current year is very high with recession gripping the western world. At least to keep citizens from suffering food shortage all countries must have already made contingency plans to procure buffer stocks of basic food items.

We may not find sources wherefrom we may readily import food if our government now procrastinates in their food management decisions. We may also face overwhelming hurdles in conducting relief operations like 'feeding the hungry' in organized manners if we don't take some preventive measures beforehand.

Without a second thought our government should instruct our armed forces to do an emergency job, a job somewhat similar to the one they just performed in issuing national identity cards. Our armed forces may be entrusted with the responsibility of classifying our people according to their poverty levels, getting rationing cards registered and printed for issuance to all individual families in Bangladesh.

Readers may brand me as a pathological pessimist raising an unnecessary, false and premature alarm. But, I believe getting ready with rationing cards for our people would help the government not only in tackling the probable economic cyclone that we fear would engulf the whole nation, such cards may also help catering emergency relief to victims of natural calamities that quite frequently befall many regions of our country.

In case a recession hits the whole world at full throttle we may not be able to import even one ounce of food grains from any foreign country. So, it is high time the government should now prioritise their plans on how to attain autarky in food by boosting agricultural production, importing rice and stockpiling food grains as a buffer against future shortage. What is now urgently required is for the government to procure from farmers as much as possible staple grains like rice, wheat and pulses at a price well above the growers' production cost and store those grains in silos and warehouses, both public and private, in sufficient quantities with a view to selling the same to all categories of vulnerable people through rationing cards at a price people can afford to pay.

The gap between the buying and the selling prices of food grains should be the prime and, if possible, the only subsidy the government should offer to people in general irrespective of their status as growers or consumers, leaving market forces to play their laissez-faire roles according to normal demand and supply of other agricultural inputs. Government's total concentration on subsidization of only foods through rationing should keep both growers and consumers happy-as long as a grower gets a fair price and a consumer also spends a fair price---even if the farmers have to buy fertilizers, seeds, fuels etc. at unsubsidized prices.

Our sour past experiences suggest subsidizing any commodity doesn't always yield good results when the price of the subsidized commodity gets lower than the selling price of the same commodity in Indian or Burmese markets. We should rather design our tariffs and duties in such a manner that commodities that grow wings and legs to cross borders may only enter our country, not the other way round, when it is impossible on the part of our BDR personnel to make our long and porous borders impermeable to smugglers.

Selling food grains and other edibles at fixed prices under direct supervision of the government is very much possible as has been possible for fuels like petrol, octane, diesel, and compressed gas now being sold through hundreds of outlets throughout the country. Such rationing is also in place at army garrisons for a long time. The concept is same. The government buys a commodity at a higher price and sells the same at a lower price through appointed agents.

If necessary, BDR and armed forces personnel may be engaged in pivotal positions where there are possibilities of adopting unfair means to twist the market or to shortchange the consumers. If necessary the whole gamut of private food industries may be nationalized and handed over to a reliable body like TCB or Sena Kallyan Shangstha to run the industries and do the trading business.

Such rationing, no matter we are attacked by a recession or not, may also help the government fulfill a commitment to ensure food for people at affordable price the party-in-power promised before the election.

Rationing cards may be printed in seven colors for seven types of vulnerable groups: the poorest, the hapless (uncared children and very old people), the lower middle class, the middle class, and all the active and retired public officials including officials of the armed forces and the police. As our armed forces are experienced in dealing with rationing food for their personnel they may be advised to make an elaborate design on how to make a national rationing program efficacious.

Some quarters, at the behest of some unscrupulous businessmen, may oppose the idea of introducing food rationing cards on the pretext that such rationing will spawn a new breed of corrupt functionaries and there would be huge drainage of government fund. My reply to those naysayers: "If controlled sale of fuels all over the country by authorized agents through hundreds of stations is possible, if rationing in army garrisons is feasible, and if a private business organization like BATA can sell shoes at fixed prices through their countrywide network of outlets, why the government likewise should fail to employ authorized agents who through their standardized kiosks all over the country will be selling only food products at subsidized prices?"

Terrorising through the war on terror

Farish A. Noor

That the discourse of the 'War on Terror' is a terribly useful one for governments that wish to exteriorise, dehumanise and brutalise an enemy is a foregone conclusion for many of us by now.

Since the day when the term was first coined by the administration of President Bush Junior, it has made its rounds all over the planet and has been seized upon with gusto and delight by many an authoritarian regime seeking a pretext to detain and eliminate their enemies. Till today we do not have a tally of the figures of those who have been summarily arrested, detained without trial, tortured and 'disappeared' as a result of this War on Terror which, as any linguist will tell you, doesn't even signify anything meaningful in the first place.

The current onslaught on Gaza is proof of the utility of such a discourse when it falls into the hands of those currying favour with the Washington administration - and here it doesn't really matter if the man sitting in the Oval office is Bush Junior or Obama. Israel's relentless attacks on the Palestinians has been couched and justified as part of the global war effort against terrorism, and as a result the Palestinians have in to been summarily labelled as terrorists who, by extension, deserve neither mercy nor understanding.

Even more worrying still is the manner in which the meta-narrative of the war on terror has been appropriated by other countries and governments - that are likewise in a bellicose mood and warlike demeanour. The mainstream media in India, for instance, have likewise hopped on to the anti-terror bandwagon and have taken to it like a duck to water. In the wake of the Mumbai attacks - which were indeed an instance of terrorism at work - the right-wing parties and political demagogues of India's hard-right have upped the ante even further calling on the Indian government and armed forces to 'do a Gaza' on Pakistan next-door.

Calling on the Indian armed forces to 'do a Gaza' on Pakistan is what the world needs the least at the moment, with the global recession spiralling out of control and the economic fortunes of many a developing countries laid low. Worse still would be the political fall-out for both India and Pakistan, two countries that enjoy the dubious distinction of having nuclear parity and the potential of wiping each other out for good. The hawks of India find their kindred spirits next-door, among the hawks of Pakistan who likewise feel that the peace and dialogue process has gotten both countries nowhere, and that a final settlement has to be reached through force of arms.

But in both cases, we see once again how the discourse of the 'War on Terror' has been used to demonise and dehumanise the other across the border. And sadder still is the fact that today all acts of terrorism are immediately and casually equated with the Arabs, and with Palestinians in particular.

So has Gaza become the leitmotif and metaphor for the year 2009? If the 'War on Terror' is based on zero-sum logic of eliminating one's enemies without mercy, then 'doing a Gaza' on one's opponents seems to be the standard operational tactic to be employed at the moment. Having dehumanised the Palestinians and robbed them of their identity, history and the very same historical basis of their existence and justification for their acts, the world community now sits passively by as Israel 'does a Gaza' on the people of Palestine who have been rendered inhuman and reduced to statistics.

It is, therefore, painfully and pitifully ironic to see how the victims of Israeli aggression and expansionism have been doubly dealt a low blow thanks to the adept utilisation of the 'War on Terror' discourse on the part of the Zionists. Israel's constant demand to have groups like Hamas and Hezbollah labelled as terrorist organisations is simply part of a bigger process of discrediting the Palestinian struggle and the demands of the Palestinian people as a whole; rendering them a people without a past, a land, an identity and bereft of justifiable demands and aims.

Yet have we grown so cynical and jaded today that we do not see a repeat of history taking place before our very eyes? In the bad old days when we grew up watching John Wayne movies we were taught that the nasty native Americans were the 'bad injuns' whose only purpose in life was to slaughter and scalp poor innocent white people. In time, however, we grew up and came to learn that the native Americans were in the fact the real victims of a massive genocide, which led to the extinction of five hundred tribal nations and the creation of the United States of America on what is basically a massive graveyard of native Americans.

Today we are witnessing the aggressive onslaught on the Palestinians that is likewise justified and rationalised on the basis of a war on terror and terrorists; and where the Palestinian people -- who have been robbed of their land, rights and self-respect -- have been discursively reconfigured as irrational, fanatical terrorists instead. A return to the genocidal politics of John Wayne via the route of the 'War on Terror'? It doesn't take much intelligence to see how the discourse of the war on terror has terrorised others on both the physical and epistemic level.

Gold standard does not always bring credibility

Laurent Belsie

Adopting a new gold standard, or some other hard currency peg, is often touted as a good way for poor, developing nations to attract foreign investors. But if the last era of globalization is any guide, the benefits of doing so are nil. Rather than a "good housekeeping seal of approval," adoption of a gold standard by the poorest developing countries a century ago served as a "thin film" of credibility-and foreign investors often saw through such maneuvers, according to Niall Ferguson and Moritz Schularick writing in The "Thin Film of Gold": Monetary Rules and Policy Credibility in Developing Countries.

This study challenges research over the past decade that has suggested that, prior to World War I, the gold standard helped nations who adopted it because they could borrow money at lower interest rates than countries that didn't use the standard. By examining interest rates and economic control variables for 57 countries from 1880 through 1913 (more than twice the number of countries examined in previous studies), the authors found that while developed nations did see a benefit from adopting the gold standard, developing nations did not. "History shows that monetary policy rules are no short-cut to credibility in situations where vulnerability to economic and political shocks, not time-inconsistency, are overarching concerns for investors," they conclude.

In the late nineteenth and early twentieth centuries, the world saw a spate of globalization that in some ways rivals today's global capital flows. By 1913, foreign investments in Argentina, Chile, and South Africa stood at around 200 percent of those nations' gross domestic product (and at 100 percent or more for the GDPs of Brazil, Mexico, Egypt, and Malaysia), roughly twice the levels of today. Some 40 percent of Britain's capital flows between 1880 and 1913 went to countries other than the comparatively rich settler economies. Today, only 10 to 15 percent of global capital market flows go to less developed nations.

Some researchers have looked at that period and concluded that adhering to such a strict monetary rule as the gold standard allowed nations to lower their risk premiums by up to 40 basis points. Other studies found that fiscal policy and economic fundamentals played the key role, not the gold standard. Looking at a wider dataset -- 34 independent countries and 23 British colonies-and using a wide variety of assumptions and regressions, Ferguson and Schularick found a more nuanced answer. The colonies received lower interest rates based on their links to Britain, not their fiscal condition or adherence to the gold standard. The remaining 16 relatively developed countries saw a reduction in risk premiums of up to 50 basis points when they had a gold standard. But the 22 less developed countries from Eastern Europe, Latin America, and Asia saw no such benefit, no matter which of the several regression measures the authors used.

It's even questionable that adherence to the gold standard was really the key to lower interest rates for the developed nations, the authors write. Instead, other factors were at work, they suggest. For example, these nations "were twice as open, they traded about twice as much with other gold standard countries, their exports were less dominated by primary products, and they were better integrated into world markets as measured by their considerably smaller shipping distances from London.

Their income levels, in other words, can be seen as a proxy for a number of other characteristics that were likely to bolster market confidence in their long-run commitments to gold."

By contrast, poor developing countries could make the commitment to gold but didn't necessarily have the credibility to convince lenders that they would stick with it. Investors of that time focused instead on the nations' vulnerability to the ups and downs in world agricultural markets, global trade, and world economic growth.

Another reason poor countries didn't get better lending terms was the political risk involved. "[T]he credibility gains through gold standard adoption may have been low in poor countries simply because political instability was high," the authors write. "[W]here the political and social fabric of a country is still crisis-prone, its monetary regime is likely to be a second-order concern for the market."

They conclude: "In the last era of globalization, as today, investors priced country risk on the basis of a complex mixture of economic fundamentals and political factors such as colonial status. The key historical lesson from the 'natural experiment' of the gold standard era is that in the poor periphery - where policy credibility is a particularly acute problem - rule-bound monetary policy did not result in credibility gains."