CONTENTS:

• Pakistan’s Economy is “Mostly Unfree”
• Beneifits of Free Market Economy
• Switzerland Without Coercion?
• Urdu Translation of “The Adventures of Jonathan Gullible: A Free-Market Odyssey”
• Letters
• FreePakistan News Briefs

PAKISTAN’S ECONOMY IS “MOSTLY UNFREE”

The 2003 Index of Economic Freedom, published jointly by The Heritage Foundation, Washington’s preeminent think tank, and The Wall Street Journal, the world’s leading international business daily, ranks Pakistan’s economy as “Mostly Unfree.” In fact, Pakistan’s overall score, 3.30, and category, Mostly Unfree, was the same last year; this year it improved only its rank from 101 to 99.

“Pakistan’s political, economic, and security situation is so complicated, volatile, and potentially dangerous that it defies easy description. General Pervez Musharraf, in his second self-appointed year as president, assisted the United States in invading neighboring Afghanistan and overthrowing a government that Pakistan’s own intelligence services had put in place. In addition, Pakistan’s security forces cracked down on the activities of Kashmir “freedom fighters” in an attempt to demonstrate Islamabad’s decision to eschew terrorist activities mounted from its soil. Then, because of incomplete or half-hearted efforts, the same freedom fighters – now branded terrorists by the international community – launched two attacks against India that brought India and Pakistan to the brink of nuclear war. In 2000, Pakistan’s Supreme Court ruled that collecting interest from a loan is un-Islamic and thus would be illegal in Pakistan after June 2001. The military supports itself through a number of foundations that operate business ventures. Competing against these military-sponsored businesses is difficult because the military also controls substantial resources and political influence. Pakistan’s regulation score is 1 point better this year; however, its trade policy is 1 point worse. As a result, Pakistan’s overall score is unchanged this year.” For details, please visit http://www.index.heritage.org/

BENEFITS OF FREE MARKET ECONOMY
By Syed Masroor Hussain Shah
[An article in a local English daily that declares ‘free market to be a light in darkness especially for the developing countries’ is an evidence of the growing awareness to the benefits of free market economy in Pakistan.]

The free market leads to run trade and economic affairs of a country without any un-necessary exogenous and endogenous regulatory as well as physical barriers. This phenomenon became popular during the decade of 1960s in the wake of World War-II. The pre-World War-II period saw a system of controlled economy where the stakes of government both in terms of policy-making and implementation were deep-rooted. The macro and micro-economic growth did not find a free flow thereby restricting the overall progress of country.

This sorry state of affairs was quite rampant in developing countries where, in addition to government controls, many other factors were also responsible. The foremost among them were illiteracy, ignorance, poverty, unemployment, mental backward, feudalism, centralization of wealth and so on. The public sector had a total control of economic policies, and there was either no involvement of private sector, or if any, it was too little to make any difference. This cynical and negative approach was continued by the political and military leaders in order to maintain their dominance. Actually, in every age and time, the prevalent policies are taken as the only remedy to make progress, and, no policy at any time is without pros and cons. The centralized and controlled economy had its own merits and demerit. Positively speaking, free market has proved to be a light in darkness, especially for the developing countries that were either ruled by colonial masters or the monster of ignorance.

The people in under-developed world have been greatly influenced by educational revolution. There is complete awareness amongst the middle, lower middle and poor segments of society, where investment on educating children is given first priority. As a result, the clouds of ignorance have somehow subsided.

The technology has taken forward stance and the overall scenario of economic activities has changed. The dependence on agricultural revenue has mainly shifted towards industrial income. Importantly, the technological progress has enabled transmission of knowledge across the global frontiers thereby making the world a global village.

The widespread of knowledge has enabled men of today to adapt themselves to new scientific and technological developments. Presently, they have become an asset not only for their own country, but also for the entire world. There is an increasing sense of self-aggrandizement among the people, and they are migrating from one country to another, thereby enhancing interdependence both at individual and country levels. Similarly, the barriers of rules and regulations have lost their value in the face of information renaissance. The human inventiveness is dominant and ruling the world without any difference of national identity.

One country has become a market for the products of another country and vice versa due to free market. The only thing that matters is market competitiveness. The trade barriers have been relaxed to greater extent and the countries are free to enter into import/export transactions with each other. The most important factor that contributed immediately towards free market is unhindered flow of communications across the global frontiers. The physical frontiers have disappeared in the face of the communication renaissance. Free market has got a real boost in this age of information technology.

Moreover, the free market economy has distributed the economic interests to the world in general irrespective of any small or big country. Every man in one way or the other has benefited from the free market. However, one factor is more domineering that is of growing competition. A country that is technologically advanced and is inhabited by hardworking and they are led by leadership can accrue more benefits that others.

The life in general has become prosperous if taken positively. The men and women have been working hard and do not believe in wastage of time, because they have to compete with fellow beings in order to have success and achievement to their credit. This is how they will ensure better livelihood for them and their coming generations. The people generally say that today the world has become mechanical where there is no room for human sentiment.

The incredible distances have been narrowed and the loved ones can contact, speak and even see each other through advanced and state of the art communication tools. [Hasn’t this created greater room for human sentiment? KA] A product manufactured in one country is available in every nook and corner of the world. The trade and business have become easier and the people can run their business concerns throughout the globe and can form partnerships without any problem. The multinational corporations are one eminent example of this kind.

Another good aspect of the free market is emergence of multi-cultural and multi-ethnic global society, which has turned the people of different caste, color, creed, background and religion into a single entity. No doubt, there can not be hundred per cent harmony and peace, but to a larger extent, the universal fraternity has been developed due to free market and free intermingling of people. The concept of dual nationality is also a product of free market. The transmission of human talent from one country to another has gained momentum and it is the outcome of free market economy.

The success of East Asian Economies (prior to 1997-99 crisis) has proved that the benefits of the free market can be maximized by every country, whether big or small, provided there is a will commitment on the part of a nation a its leadership. The anti-free market trend in Eastern Europe, Russia, Latin America and South Asia is also before us, and from late 1980 onwards, the free market has been allowed to replace the controlled mechanisms of running an economy. The post-70s skyrocketing economic progress of China has proved free market as a symbol of prosperity. The overall mental outlook of the Chinese people has changed and more liberalization is taking its roots in all spheres of life. China is being dubbed as an emerging economic power.

The foregoing argument is sufficient to prove that the free market has brought about general prosperity in life. Everything has two facets, positive and negative, but it is up to a person how he takes a certain phenomenon. The free market has provided equal opportunity to all and sundry, and it now depends upon the countries and their individuals to perceive and adopt it. The nations like East Asian Countries and China which adopted liberalization in their regulatory systems and economic as well as social policies, emerged as a symbol of success on the global horizon. And, the contribution of both the people and leaders was equal in this onward march of progress. The time factor is really important because the nations who realized its value earlier and served their countries with sincerity and dedication, are registering rapid progress today. It is true that where there is a will, there is a way. The unfettered growth today is attributable to free market. A nation will only be prosperous if the behavior is positive and direct our total energies towards building the socio-economic fabric of our country. [Courtesy: The News International April 21, 2003]

SWITZERLAND WITHOUT COERCION?
By Jim Davidson
[Courtesy: The Libertarian Enterprise TLE Issue 225]

I was pleased by most of the essay on Switzerland except for the claim that it has been "entirely free of coercion, either from outside or within."

From outside:
Full scale invasion by French armies under Napoleon in 1798 would seem to be significant outside coercion. "On March 5, French forces entered Bern, marking the fall of the ancien régime in Switzerland....[Napoleon's] brave new Helvetic Republic, 'unitary and indivisible,' did away with cantons altogether and instead vested centralized power, French-style, nominally in the people but actually in a five-man executive." It lasted until 1802 when Bonaparte withdrew his troops. Then civil war broke out, which he mediated.

From inside:
Post-Restoration Switzerland again experienced civil war from 1830 to 1831, as a reaction to the reactionary restoration of old-style patrician systems. 1846 saw the attacks of the Soderbund and 1847 the military campaign of General Henri Dufour who killed dozens of Soderbund activists.

World War One saw the Swiss army openly supporting Germany, and a trench dug between French speaking portions of Switzerland and Germanic parts. Also, in November 1918 communist agitators, including Lenin, fomented a worker strike which was put downby the Swiss army.

The Swiss only saw fit to open residence, civic, and ethnic equality to Jews in 1866, and to this day their government bans ritual slaughter of animals. Russian pogroms created a large number of destitute Jewish refugees who were uniformly refused admission to Switzerland. At least 25,000 Jews were turned back into Germany during WW2 according to documentation, though many more were probably refused entry.

Also, the Swiss government in Autumn 1942 pressured the Red Cross not to reveal what it knew of the death camps in Nazi Germany. There is also considerable evidence of collusion between the German government under Hitler and various Swiss banks, which though private enterprises were licensed by the Swiss government. Details follow.

A government banking concern, the Swiss National Bank "Right up until the fall of Berlin in 1945... accepted gold from Germany in exchange for Swiss francs, in the full and certain knowledge that Berlin would then use the money to keep the Axis war machine supplied, and that the ingots being shipped into Switzerland by the ton had been looted from the banks of invaded countries and/or melted down from the possessions and even the teeth of dead Jews (Ibid)." In 1995, researchers "uncovered records showing that the Swiss banks were not just sitting on the assets of dead Jews, but that they had also accepted vast quantities of obviously looted gold as part of a hitherto only guessed-at secret, semi-official network of economic collusion with the Third Reich (Ibid)." In 1997, "a local newspaper revealed that Credit Suisse – another major Swiss bank - had opened an account for the Nazi SS during the war and that the Bank for International Settlements in Basel had acted as a safe conduit for much of the Reich’s looted gold (Ibid)." "[D]amaging revelations continued to emerge, most notably in February 1999, when the Red Cross was forced to acknowledge deep regret over the fact that in 1949 it issued Josef Mengele, the infamous doctor at the Auschwitz death camp, with a permit to travel through Switzerland (Ibid)."

Swiss industry supplied ammunition, guns, and heavy artillery to the German military during WW2. As well, Swiss roads connecting the German and Italian theaters of operations were used by the German military. Thus, claims of Swiss neutrality during the war were not very complete.

"[In 1989] it emerged that the Swiss secret police had been keeping hundreds of thousands of files on individuals under the guise of monitoring anti-patriotic activity. In 1999, an accountant in the defence department under investigation in a multimillion-franc fraud case - the largest in Swiss history - turned out to be an intelligence agent, and claimed he had withdrawn the money on the orders of his boss to fund the secret training of a shady battalion of highly armed agents for purposes unknown (Ibid.)" Not exactly the sortof squeaky clean internal non-oppression one might expect from a country which is "entirely free of coercion" from within.

Switzerland is like a lot of other countries. It has conservative socialists, liberal socialists, fascists of various stripes, and all kinds of government agencies. It isn't the worst of all nationalist socialist countries, nor is it the best. Swiss individuals are quite competent at devising means to protect private property and should be commended for their work in this area. I'm sure the Swiss can make Switzerland a better place in the future.

At the same time, I think if we are to contemplate new countries or "free state" projects we should look at Switzerland objectively. Some of what we see there isn't very pretty. We can do better.

If we want truly free countries, or even a free "state" within the United States, it is clear to me that those of us who care about freedom are going to have to build such countries. Since 1993, that's what I've been doing.

For my own part, I don't think any kind of government, whether confederation or "free state" is needed. There is only one form of government which I favor, and that form is self-government. When you are ready for it, you can claim the sovereignty and autonomy which come with governing yourself.

URDU TRANSLATION OF “THE ADVENTURES OF JONATHAN GULLIBLE: A FREE-MARKET ODYSSEY”

Ken Schoolland's award-winning libertarian fable "The Adventures of Jonathan Gullible: A Free Market Odyssey" has become the outstanding tool for free-market youth education - winning rave reviews from readers, and have been published in a remarkable 26 languages! Urdu translation of JG has recently been completed by Khalil Ahmad and we are awaiting some sponsors to publish it. If you are interested in sponsoring its publication, please visit www.jonathangullible.com or contact FreePakistan Newsletter.

LETTERS

Thanks, Doctor Ahmad! I especially enjoyed the article on Switzerland. However, while reading it, and reflecting on what has become of liberty here in the Land of the Free(loader) and the Home of the Knave, I was reminded of the old saying, that, "Every nation gets the government it deserves." Sad, but true. "A nation of (ignorant) sheep begets a government of wolves".
CAB

Thank you for your letter # 2. I must say that I am surprised or I do not really understand it. Chapters 1 and 2 are in my opinion only pleading for MORE GOVERNMENT RULES AND POWER!! I think that is not libertarian, it is the wrong solution and makes consumers only more dependant of the government. Let me know if I see this correctly.
Best,
In LIBERTY
Hubert Jongen

FREEPAKISTAN NEWS-BRIEFS

DISTRICT GOVERNMENT’S 13 NEW TAXES
The local government of Toba Tek Singh, a district of Punjab province, has decided to levy 13 new taxes and license fee on various items. The proposed taxes include ice-cream factory, surgical, cotton, firework, and gas cylinder agency Rs 2000 per year, wheat straw business and factory Rs 3000 per year, straw seller Rs 1000 per year, ammunition, marble factory, brick kiln and shelter Rs 5000 per year, dyeing clothes Rs 1200 per year, permit of petrol and oil agency Rs 1000 per year and license fee for only once for the issuance of NOC of petrol filling station Rs 25000 per year. [These are in addition to other taxes imposed by provincial and federal governments.]

PUNJAB GOVERNMENT INVITES PRIVATE SECTOR
Punjab Communication and works Department has invited private sector to participate in the construction of new roads in the province. The proposed roads will be constructed on Build Operate Transfer (BOT) basis, and if a private company undertake a project, but delays its completion, the government will complete it.

HOW A LOCAL CARTEL GETS A CONTRACT?
The WAPDA [Water and Power Development Authority, a government monopoly] has finally awarded the controversial tender for the purchase of Single Phase Energy Meters to the local cartel, due to which the Authority will have to pay around Rs 108 million extra to the suppliers. The Chairman Wapda said that the tender was actually of 1.5 million meters and Authority finally decided to purchase 1.2 million meters from the local cartel. He said before the arrival of Army in Wapda [it may be noted that Army came to manage the affairs of Wapda long before it came to do the same for the country], the Authority was purchasing meters at the rate of Rs 1300 per unit. The present management has reduced the rate to Rs 1100 per meter and now at Rs 820. The ultimate benefit of the reduction in meter’s prices would go to the consumers. Some days back, the Chairman himself admitted that the Authority would suffer a loss of around Rs 207 million, if it awarded tender to the local cartel. The Wapda invited this International tender for the purchase of 1.5 million single-phase meters in August 2002 and a Chinses company offered the meters at Rs 768 per unit, while the cartel of local manufacturers offered the same at Rs 1050. The Wapda evaluated the offers according to the tender guidelines and also inspected the Chinese company’s factory. Meanwhile, the Ministry of Water and Power jumped in and asked the Authority to renegotiate the price with local manufacturers and request them to reduce their price by Rs11.50 per meter after incorporating 15 % price preference admissible under Ministry of Commerce’s import of engineering goods (control) order 2001 notified under SRO. No. 627(1)/ 2001 dated 3.12.2001 so as to come at par with the Chinese bid. Following the Ministry’s orders, Wapda asked both the local cartel and the Chinese company to quote their final prices so that a decision could be made. The Chinese company refused to lower the rate any further and urged Wapda to award the tender to them. The Chinese government also expressed deep concern over the delay in finalization of the contract and demanded the Government of Pakistan to settle the issue in a “fair, reasonable and friendly way.” Ministry of Foreign Trade & Economic Cooperation, China and the Embassy of People’s Republic of China in Pakistan wrote separate letters to the Government of Pakistan asking for finalization of the contract. The Chinese Ministry also lodged protest on January 30, 2003 over the issue. It stated that Wapda had not signed the contract with the Chinese due to the “opposition of local manufacturers and pressure from relevant quarters.”

RESTRICTING THE JURISDICTION OF TAX OMBUDSMAN
The employees of the Central Board of Revenue are happy with President General Pervez Musharraf ‘s observation restricting the jurisdiction of the federal tax ombudsman to only identifying maladministration of tax officials or the Revenue Division. Now the federal tax ombudsman could not entertain an application on merit against a decision of the Revenue Division or any of tax officials, the President observed while rejecting an appeal of a tax payee. His observation has set parameters under which the FTO would operate.

OPENING THE TELECOM SECTOR TO COMPETITION
Advisor to Prime Minister on Investment and Privatization directed the senior officials of Ministry of Information Technology for opening up of the telecom sector of Pakistan for competition in order to transfer the modern technology through the world’s renowned operators, improve the quality of service and benefit the consumers through appropriate tariff regime. The Pakistan Telecommunication Company Limited [PTCL] is the exclusive provider of basic telephony in Pakistan with over 3.2 million telephone lines in service. Besides providing fixed line value-added and other ancillary services, PTCL own subsidiaries that provide cellular and Internet services. As the PTCL’s exclusivity expired on December 31, 2002, eleven firms around the world have submitted their Expression of Interests (EOIs) which include Align Technologies, USA; Commercial Network Limited, Pakistan; Crescent Investment Management LLC, USA; Fintur Holding BV Ltd., Turkey; Khanjee Holding Incorporated, USA; Nahayan Mabarak Al-Nahayan Abu Dhabi Group, UAE; Orascom Telecom, Egypt; Pakbell-Paceetel (pvt) Limited, Pakistan; Queste Communications, Australia; Saudi Oger Limited, Saudi Arabia; and Yusif SF Al-Sabah, Kuwait.

MORE OBSCENE WEBSITES BLOCKED
The Pakistan Telecommunication Company Limites has banned six more websites which offer pornographic content bringing the total number of such websites banned so far to 110, but experts term it hjust an eyewash arguing that hundreds of thousands of indecent sites are still within the net browsers access.