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Dhaka Diary
Interestingly, this is not the first time that the Indian authorities suddenly put on a brake on its export activities. In the mid-2007, the Indian government suddenly banned export of milk powder and a number of importers from Bangladesh who had opened L/Cs through different banks could not get their supplies and suffered a huge loss. We are used to our government’s taking many a knee-jerk decisions because successive governments in Dhaka kept ruling the country on a never-ending ad hoc decision-making process, writes Sayed Kamaluddin
The drama of Indian rice import
The Indian minister of foreign affairs, Pranab Mukherjee, was in Dhaka in December and had announced at that time that India will allow export of 500,000 tonnes of rice to Bangladesh. Bangladesh needed to import a lot of rice to meet the food gap caused by two successive floods and the devastating cyclone Sidr in November. Before Pranab Mukherjee’s firm commitment in Dhaka to export rice, the Indian government had decided to ban rice export to all countries; but it was subsequently clarified from New Delhi that the Indian minister’s commitment would be honoured as a special case. While the arrangement for the rice export by India was officially announced only yesterday (February 13), the rigmarole that the episode became embroiled in needs some elaboration.
Even when this is being written, a three-member Bangladesh team is in Kolkata to workout the details of the rice import from India with the relevant Indian government agencies and the final agreement is likely to be signed in a day or two. However, between the announcement made by the Indian foreign minister on December 1 and the Bangladesh food ministry team sent to India last week, inspired news stories appeared to have been leaked to the Indian media from time to time to the effect that ban on non-Basmati rice export has become effective. Such sporadic leaks were followed by painstaking analysis, concluding that Bangladesh is unlikely to receive the quantity of rice in question. Deliberate or not, such leaks prompted a series of speculative reports in the Bangladesh media which at once influenced hefty price rise of rice in open market sale on each occasion, making the lives of the common people more unbearable.
But what happened finally on February 7 (Thursday) appeared to be a knockout blow. All Dhaka newspapers on February 10 headlined that over 350 rice-laden trucks were not allowed by the Indian government to enter into Bangladesh because the Indian government again re-imposed the ban on rice exports to all countries. Saturdays and Sundays are holidays in India and nobody was available for a comment. There was total confusion as the Bangladesh team, which was in India to finalise the rice deal, also had no information. It took almost three days for the Indian High Commission in Dhaka to come out with a press release, which said: ‘The export restriction on non-Basmati rice announced on February 7 is applicable to all countries and not specific to Bangladesh… The restriction, however, will not affect the export of 5 lakh tonnes of rice to Bangladesh announced during the visit of Indian foreign minister to Bangladesh on December 1, 2007. The process of procurement of half-a-million tonnes of rice is underway.’ Perceived reason of ban
Local media quoting Indian press reported, the Indian government had asked all the rice millers (in West Bengal) to sell half their total production to the government at Indian Rs 1.30 per kilogram against the market price of over Rs 13 per kg. The rice millers in West Bengal’s Bardwan, Gangarampur, Gazal and Mehedipara in protest demonstrated against the lower procurement price and sold all their products to the exporters at a much higher price. The exporters had signed contracts with the Bangladeshi importers allowed by the Indian government under special consideration. However, the rice millers’ action to sell their rice to the exporters prompted the sudden announcement of the ban on February 7 on rice export.
What will happen to about 100,000 tonnes of Indian rice for which Bangladeshi private importers had already opened letters of credit? The L/Cs could not have been opened if the Indian exporters did not confirm their willingness to sell rice to Bangladesh. It was a normal business deal and supposedly was transacted with the consent of the Indian government. It can be presumed that no L/Cs if opened after the ban was formally announced would be honoured but what about those L/Cs opened before that cut-off date?
The food adviser, AMM Shawkat Ali, himself a former secretary to the government, said through the foreign ministry, the government is trying to ensure that restrictions on rice export do not affect the quantity of rice for which L/Cs were opened before that date. He added: ‘India has imposed restrictions on rice export through private sector. We have no scope for doing anything in this regards.’ However, the food adviser assured newsmen that the restrictions would not hamper the import of 5 lakh tonnes of rice from India as pledged earlier by the government of India.
Interestingly, this is not the first time that the Indian authorities suddenly put on a brake on its export activities. In the mid-2007, the Indian government suddenly banned export of milk powder and a number of importers from Bangladesh who had opened L/Cs through different banks could not get their supplies and suffered a huge loss. We are used to our government’s taking many a knee-jerk decisions because successive governments in Dhaka kept ruling the country on a never-ending ad hoc decision-making process. New Delhi always boasted of the services of a well-trained and highly disciplined bureaucracy and a dedicated, farsighted political leadership and it was never heard of making any knee-jerk decisions because it believes in advance planning. Perhaps New Delhi’s newly acquired global role has been making things difficult for it to cope with, prompting it to go for such ad hoc decisions. As a growing regional economic powerhouse, New Delhi would do better to think of the possible impact such ‘thoughtless decision’ would have on neighbours like Bangladesh for mutual benefit.
Meeting the food gap
The food gap for the current fiscal year has been variously put at two to three million tonnes because of two successive floods and a devastating cyclone Sidr during the year. The Manila-based International Rice Research Institute, in its Jan-Mar 2008 quarterly publication ‘Rice Today’, suggested that Bangladesh will need to import an estimated 3.5 million tonnes of food grains during calendar year 2008 because of the damage to standing food grains caused by floods and cyclone. Normally, Bangladesh is almost self-sufficient in its food grains output and requires only small part of its consumption, around 10 per cent – 2.0 to 2.4 million tonnes to import. But the natural calamities that afflicted the country in a single fiscal year (July to June) caused a shortfall of over two million tonnes of food grains, pushing total food requirement higher. Under normal circumstances, import of 2.0 to 2.5 million tonnes food grains would not have been a big problem. But in this changed situation when huge quantity of grains are being diverted to produce bio-fuel as a substitute for petroleum products in the US, South America and South Africa This diversion of grains non-edible usage has pushed the prices of food and other grains not only much higher but also made almost unavailable.
Now to meet this increased food shortfall, the government had earlier requested the international community to provide 0.5 million tonnes of food assistance. They have so far committed 0.3 million tonnes. The government is claiming to have a food stock of 0.6 million tonnes and the government’s increased food import target has been set at 2.3 million tonnes. Out of this about 570,000 tonnes – both rice and wheat – have been imported while another 250,000 tonnes are in the pipeline. According to official figures, as of January 25, 2008, a total of 2.3 million tonnes of food grain has been imported by the private sector as against 2.4 million tonnes in FY2007. The government’s efforts to import 0.5 million tonnes of rice from India are part of its total 2.3 million tonnes import target.
India has now banned any export of non-Basmati rice in the private sector below $500 per tonne. Bangladeshi importers have ruled out the viability of rice import from India at that price and they are now scouring to import rice from Myanmar, Thailand and Vietnam at a cost between $350 and $400 per tonne.
Meanwhile, the government is making an all-out effort to recoup some of the food grain losses from boro rice production. This year’s boro rice production target has been raised by 17 per cent to 1.75 million tonnes from last year’s 1.5 million tonnes. For achieving this target, some 4.5 million hectares of land have been brought under boro cultivation. This includes 3.125 million hectares under HYV (high yielding variety), 1.25 million hectares under hybrid rice and 125,000 hectares under local boro. The food adviser has pointed out that ‘this is achievable provided all inputs are ensured for the farmers on time.’
At a recent discussion meeting on food situation, Shawkat Ali described the timely supply of inputs as the most important factor for achieving the production target. The agriculture adviser, CS Karim, said his ministry has moved to ensure the required fertiliser and electricity for the peak boro season. However, he added: ‘Besides inputs, nature’s support is important to achieve the target.’ Several independent experts felt that the target of a 17 per cent rise in boro production in a single season ‘is not possible.’
The quiet revolution: energy futures
in Iran, Gulf and Israel
A transformation in energy policy will reshape the Middle East’s profile as a region defined by oil. Don’t be surprised if the region pioneers the switch from oil and gas to renewable energies,
writes James Howarth
FROM the outside, the Middle East is often seen as an undifferentiated collection of greedy, unrepresentative governments conspiring to exploit powerless consumers with their lucrative energy reserves. The stereotype has had another boost in January 2008, when oil finally hit the symbolic $100-per-barrel mark. Even if the price has retreated since then, the strong and rising demand (particularly across Asia) means that the region’s energy leverage is only going to get stronger.
Whatever the reasons for oil-price inflation – demand outpacing supply, refining capacity shortages, speculative investors and concerns over Gulf security being just some – the arrival of three-figure oil in 2008 may prove a watershed not only for global consumption but also for the Middle East’s role in solving humanity’s addiction to fossil-fuels.
The region is certainly not about to abandon its hydrocarbon cash-cow anytime soon. But a split is emerging between traditionalist and progressive visions, pitting cautious resource nationalism against creative investments in futuristic technologies.
The governments of such countries as Algeria, Libya and Saudi Arabia can easily afford to rely on high oil and gas revenues to insulate themselves from political opposition, upgrade their infrastructure, further enrich domestic elites and keep business healthy for Western defence companies.
But these countries also remember when oil was nearer $10 than $100. They still fear that the current boom, while a safe short-term bet, won’t last forever – that a global recession or breakthrough in alternative energy could greatly diminish bring oil demand. The answer is to diversify their economies. But entrenched interests, uncompetitive business environments and lack of immediate incentives stand in the way.
Tehran’s telescope
A similarly profligate under-use of resources is occurring in the home of the world’s second largest conventional oil and gas reserves, Iran, which also has enviable solar- and wind-power potential. The Islamic republic is dedicating enormous political capital to nuclear energy to defiantly affirm its rights, rather than focusing on its actual interests. The short-sighted economic policies of a fractious government are squandering all those plentiful petro-euros, with minimal planning for the impending demographic bubble.
Iran’s energy policy is determined disproportionately by political concerns. Its invitation to Russia’s Gazprom to invest is a case in point. The logic is clear: to avoid the embarrassment of gas-supply cuts in such a resource-rich country, to reduce import dependence on fickle neighbours like Turkmenistan, and to drive a harder bargain for investment by European energy majors. But Tehran’s broader purpose is arguably to pave the way for an international gas cartel involving the Gas Exporting Countries Forum countries (primarily Russia, Iran, Qatar and Algeria). A ‘gas OPEC’– the GECF’s associates command over 70 per cent of global gas reserves and 40 per cent of output – would further highlight the faltering strategic power of the United States and European Union, already demonstrated by Russia and China’s effective siding with Iran over the nuclear issue.
The long-term contract models already in place mean that such an organisation couldn’t regulate gas prices as OPEC does for oil. But Iran still sees the potential for a ‘gas OPEC’ that would give it considerable strategic leverage over Europe. Moreover, the development of a liquefied natural gas market in the next few years, whereby gas becomes a tradable commodity transported in tankers, will be more amenable to OPEC-style price manipulation.
But Iran is here – as in other respects – something of an exception in the region. For the Middle East’s energy have-nots and its more progressive oil states, the time has come to think creatively and diversify energy sources. Four motives underlie this shift of direction:
* economic booms in countries like the United Arab Emirates, involving resource-intensive industries and greater car usage, mean energy consumption is rising exponentially
* energy independence removes the political risks of being at the mercy of supplier countries
* an unforeseen technological or even climatic change could slash fossil-fuel demand, hitting Gulf oil exporters particularly hard
* Iran’s nuclear programme is making nuclear power an essential accessory for middle-east states. This is an issue of economic sense as well as regional rivalry and prestige, as it is more profitable to export energy resources than to sell them domestically at subsidised prices.
The pioneers of this brave new world of alternative energy in the Middle East will be the UAE and Israel. This pairing is perhaps surprising, given the UAE’s huge oil reserves and terrible environmental track record, and Israel’s prior insignificance in global energy markets. But both have strong incentives to embrace renewable energy, and are rolling out ambitious plans to do so.
Dubai’s diversification
The Emirates will be a magnet for economic opportunists, traders and investors for years to come. The attraction is increased by the virtual absence of local politics; those residents that do have a voice (and even the many thousands of exploited Asians that don’t) have little incentive to rock the boat. While other Arab governments still view economics through the prism of the need to retain power, Sheikh Khalifa of Abu Dhabi and Sheikh Mohammed of Dubai can push ahead without worrying that emergent wealth will bring political instability. As a result, the Emirates’ profound cultural conservatism belies an energetic openness to economic opportunity, reinforced by waves of fortune-seeking migrants.
The UAE produces 2.8 million barrels of oil every day, most of which go to Japan. But domestic consumption has been skyrocketing as Dubai and Abu Dhabi vie with each other to become the global finance and tourism hub of the 21st century, lying at the epicentre of Middle Eastern, Asian, European and African markets. A planning and construction boom of epic scale – building the world’s tallest tower (Burj Dubai), new business districts, indoor ski slopes, seven-star hotels, multi-storey malls, reclaimed archipelagos – is guzzling resources like never before. The Emirates’ considerable reserves notwithstanding, finite production capacity means a choice between greater dependence on neighbours and developing new energy sources. It’s no surprise, then, that gas-import deals have been signed with neighbouring Qatar and Iran, which share the world’s largest gas field. But these countries too are facing consumption crunches, and Iran’s creaking gas sector makes it a particularly unreliable partner for future supplies.
In 2008, the value of Gulf countries’ total reserves is set to top $2 trillion, and will – on current trends – reach a monumental $9 trillion by 2022. Such enormous sums, combined with abundant supplies of low-paid foreign workers, allow the UAE to spread risk by investing in energy across the board, from hydrocarbons to nuclear to renewables. In fact, it has the luxury of investing enough oil wealth in energy technologies that aren’t yet economically viable to ensure they ultimately become competitive.
That’s why so much oil wealth is being poured into futuristic projects in solar, photovoltaic, waste-to-fuel and other renewables, from initial research to commercial development. Abu Dhabi’s $15-billion Future Energy Co (or Masdar), which will create the world’s first carbon-neutral city in the harsh Arabian desert of all places, is a sign of things to come.
The Masdar master plan includes the world’s biggest hydrogen energy plant, to be developed with BP. Although commercial use of hydrogen energy still faces tough obstacles, this project has potential for huge environmental as well as commercial advantages. In theory, the plant’s carbon dioxide by-product could replace the natural gas used to enhance oil recovery, thereby creating a simultaneous fourfold benefit: capturing and storing the greenhouse gas, reducing wasteful flaring, freeing up more gas reserves, and making the whole process more economically and environmentally sustainable.
But the biggest impact of the UAE’s energy revolution may be in solar power. It plans to capitalise on the natural advantage of year-round sunshine by integrating technical development and production facilities for solar panels and associated technologies that are increasingly competitive against hydrocarbons in the global electricity market. This could make it a major exporter of both old and new forms of energy sooner than almost anyone expects.
Meanwhile, it is also politically unthinkable for the UAE to lag behind in the new era of nuclear power. Its investment in this area, albeit in the absence of an indigenous enrichment capability, will no doubt help it to meet the domestic energy-demand crunch while these other ambitious projects arrive to join the energy mix.
The UAE’s powerhouse neighbour, Saudi Arabia, faces similar energy challenges (and, in the security field, far greater ones), but has different priorities. Demographic realities (a rapidly increasing population in which 65 per cent of Saudis are under 25) make job-creation a political, economic and security priority for the al-Saud ruling family. This in turn reinforces the urge to diversify from oil. Hence the creation of six entire new cities throughout the kingdom, from Haïl in the north to Jizan in the south, which use abundant energy feedstock to promote underdeveloped sectors like finance, petrochemicals, aluminium, mining and tourism. But in comparison with the UAE, Saudi Arabia will struggle to reduce dependence on its vast oil reserves, leaving the real innovation to come from elsewhere.
Tel Aviv’s road
Beyond the Gulf, the other place to watch is Israel. The country’s ever-present security concerns, its serial government instability, the abortive 2006 war in Lebanon, and the crisis over Gaza in January 2008 suggest that regional peace seems as distant as ever. Yet even these troubles have failed to dent Israel’s economic growth, and foresight in the economic field seems in greater supply than in the political or security.
Israel is investing in solar-power on a revolutionary scale. It also plans to exploit its high-tech pre-eminence and small geographical area to become the world’s laboratory for electric-car networks. So far, high battery costs, limited mileage capacity, and lack of infrastructure have made the electric-car dream unworkable. But that could change as a nationwide network of recharging stations creates economies of scale, with motorists subscribing to network access like mobile phones or topping up as they go.
The success of the Project Better Place initiative in making the electric car a marketable commodity would bring both political and economic rewards. This and its solar-power plans reflect Israel’s intention to become self-sufficient in energy and (providing renewable energy is the primary source for car batteries) no longer reliant on oil imports within as little as a decade. As transport currently guzzles a quarter of global energy output, an electric car that eventually competes with petrol-fuelled cars worldwide could make the biggest difference of all.
Amid the drum and thunder surrounding energy politics elsewhere, the echo of these lesser noticed developments in Dubai and Tel Aviv – and elsewhere in the Middle East – is sure to grow louder.
openDemocracy/UK, February 7, 2008. James Howarth is co-director of the Middle East and North Africa division of the political risk consultancy Exclusive Analysis. He has worked as an adviser and as a translator, including of Messages to the World: The Statements of Osama bin-Laden (Verso, 2005). He appears frequently in the broadcast media as a regional analyst
HC verdict on Hasina
The High Court in a landmark judgement quashed all trial proceedings of the Tk 3 crore extortion case. In the judgement, the HC bench observed that the sections of EPR curtailing the court jurisdiction to grant bail to the accused persons in the cases were ultra vires of the constitution.
The High Court has delivered what the general public would consider an obvious judgment. The court has indeed upheld a simple legal point that no law covers any offence committed before its enactment.
The wide-ranging implications of the HC judgment are not hard to see. They could have been tried under the existing laws of the country without creating any controversy. We cannot but question the wisdom of the government’s legal advisers who clearly failed to see in advance the weaknesses and limitations of applying the EPR, when the existing laws could have taken care of the corruption cases.
The lesson to be learnt from it is that any short-sighted attempt to take a shortcut in a legal matter might backfire and undermine the whole edifice of the justice system.
Gopal Sengupta
Canada
Going back before 1/11
It will be difficult to find a single pledge the army-led care taker government has been able to fulfil after one year of suppressing the basic rights of citizens. Do the people want to go back the situation before the so-called 1/11? Death by a stray bullet from political armed cadre and death from starvation do not necessarily make much difference.
Saif
Dhaka
On Dhaka University
I would like to thank Ejazur Rahaman for his comment (February 6) on Dhaka University. Actually, students usually play a major role in protesting political and social injustice. None can forget their supreme sacrifice in the Language Movement in 1952, their spontaneous participation in the Mass Uprising in 1969 and their role in the War of Independence in 1971.
Although, before 1971, students were highly praised for the role they played in standing up to Pakistani government at different times, they are now bitterly criticised for their protests against the unjust activities committed by our own governments.
Ariful Islam Mithu
Govt. Edward College, Pabna
Free Arifur Rahman
It is not the unfortunate cartoonist Arifur Rahman who is languishing in jail; it is the entire nation’s integrity that has been shut off by the present administration to pamper a handful of religious bigots.
Islam survived many challenges in its 1500-year-old history but the so-called Islam lovers have made Islam to be frightened by an innocent carton. It’s a shame that a nation who fought and made supreme sacrifices for freedom and justice is behaving otherwise now.
Akbar Hussain
Canada
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