Thursday, August 19, 2010

Pakistan swaps rise to 5-week high on concern flood to worsen debt load

KARACHI: The cost of insuring the government debt of Pakistan from default rose to its highest in five weeks on concern the nation’s worst-ever floods will increase its debt burden. Credit-default swaps on Pakistan government debt rose 129 basis points to 700 basis points as of 12:50 p.m. in Singapore, the highest since July 8, Royal Bank of Scotland Group Plc. and CMA DataVision prices show. The contracts spiked to 51.06 percentage points in October 2008, in the aftermath of the credit crisis and the collapse of Lehman Brothers Holdings Inc. A basis point is 0.01 percentage point.

“There will be a tolerance for a higher fiscal deficit because the floods have caused a lot of damage,” Sanjay Mathur, chief Asia emerging markets economist at Royal Bank of Scotland, said in a phone interview from Singapore. “The more worrying aspect is the impact as far as social instability is concerned, as that’s an explicit part of a country’s credit rating.”

The World Bank Monday pledged $900 million in financial support for Pakistan as the government warned of a new flood wave making its way south and continued monsoon rains. Crop damage is estimated at $1 billion, according to the World Bank, while the United Nations has said as many as 3.5 million children are at risk of water-borne diseases including dysentery.

Pakistan is rated B3, the sixth-highest non-investment grade by Moody’s Investors Service, on par with Belize and Argentina, and six levels below India.

The one-off impact of natural disasters, such as damage to property, typically doesn’t unduly impact a country’s economic output, Mathur said. “But afterwards, there is a loss of income and shortages of goods, and those shocks can have an inflationary effect,” he said.

Looting of flood victims

Dawn Editorial
Exchange Rates for Currency Notes
Countries Selling Buying
Rs. Rs.
U.S.A 86.61 84.51
S.Arabia 23.09 22.52
U.K 135.66 131.38
Japan 1.0146 0.9895
Euro 111.24 108.54
U.A.E 23.36 21.4
Source: -APP

Attacks on food convoys, such as those seen in Muzaffargarh on Friday, obviously cannot be condoned but it is possible to understand why they take place.
Desperate times sometimes result in desperate measures, and starving people who have been badly let down by the state can turn unruly if little or no relief is forthcoming. But that is entirely different from what is happening in parts of Sindh where bandits are reportedly looting flood affectees as they try to make it to safer ground. The meagre belongings of an already ravaged people have been snatched at gunpoint while livestock too has been stolen. The key difference here is that the bandits who are robbing the poor are doing so not so much out of desperation but because they are criminals by profession. Unlike the hungry who looted food on Friday, these armed robbers in district Sukkur are looking to profit from the misery of the poor.

Our moral compass clearly went askew at some point. Instead of lending a helping hand in a time of crisis, some of us instead turn into predators. Imagine this if you can. A family’s house has been inundated by floodwater and standing crops as well as farm animals have been washed away. The victims try to grab whatever they can before the dash for safety but are robbed on the way. This is not to say that such despicable acts of violence are the norm in Pakistani society. Far from it, for there are also reports of ordinary citizens who have gone the extra mile to help their neighbours and even complete strangers. But the state too must play its part. Flood victims must not only be housed, fed and given medical care, their protection from criminal elements should also be ensured.

Afghanistan and African nations at greatest risk from world food shortages

Soaring commodity prices and natural disasters in Russia and Pakistan have combined to put African nations and conflict-ridden countries such as Afghanistan most at risk from food shortages, according to a report released today.

Sharp price rises for wheat and other grains will hit the world's neediest countries hardest, mainly in sub-Saharan Africa, as they grapple with their own poor harvests and failing transport networks, according to a food security index by risk management consultancy Maplecroft.

It also says conflict is a key factor behind food insecurity and Afghanistan tops the index of threatened countries. The other nine nations categorised as "extreme risk" are all in Africa, led by Democratic Republic of the Congo, Burundi, Eritrea, Sudan and Ethiopia. African nations make up 36 of the 50 countries most at risk in the index.

The report highlights climate change as having a "profound effect on global food security", with a heatwave in Russia coinciding with devastating floods in Pakistan – ranked 30th and "high risk" in the index.

"Russian brakes on exports, plus a reduction in Canada's harvest by almost a quarter due to flooding in June, are provoking fluctuations in the commodity markets," said Fiona Place, environmental analyst at Maplecroft. "This will further affect the food security of the most vulnerable countries."

Using 12 criteria developed with the World Food Programme, including GDP per head and cereal production and imports, Maplecroft's index evaluated risks to the supply of basic food staples for 163 countries. Finland was least at risk, while the UK was ranked 146th.

The latest official inflation data for Britain this week suggested that recent disruptions in the wheat market have yet to feed through to consumers. Economists are warning households in Britain and around the world to prepare for more price rises in staples such as bread following Russia's ban on wheat exports after drought has cost the country much of its latest crop. Wheat prices have risen by about 70% since June and other crop prices have also climbed.
1 Afghanistan

2 Democratic Republic of Congo

3 Burundi

4 Eritrea

5 Sudan

6 Ethiopia

7 Angola

8 Liberia

9 Chad

10 Zimbabwe

International Community Slow to Help Pakistan

Afghan women, children turn to drugs

By Jill Dougherty, CNN

The 18 women sit cross-legged on metal beds, wearing long, loose dresses and nightgowns, their heads completely covered with shawls. They do not want us to see them. Some of them are holding babies in their laps.

They are addicted to heroin and opium, products of Afghanistan's richest and cruelest crop, poppies. Some of their infants are addicted too.

We are in a treatment center hidden away in a back street of Kabul. It is administered by the Afghan government and funded by the U.S. State Department, through the Bureau for International Narcotics and Law Enforcement Affairs. The U.S. is the primary and largest donor for drug treatment programs in Afghanistan.

The physician in charge, Dr. Latifa Hamidi, tells me that most of these women got hooked because their husbands smoked heroin. Injecting heroin is not as common here in Afghanistan as it is in the West.
Video: Afghan women, kids battle drug addiction

The children, the staff tells us, became addicted when their mothers blew heroin smoke at them to calm them down when they cried. "Because all their family members are addicted, their child also gets addicted," the doctor says. "When their child is in pain the family doesn't give them medicine, they use the narcotics."Children as young as two are hooked. It's the youngest drug-addicted group ever identified worldwide, according to the U.S. State Department. There are no established protocols for treating children this young.

I talk with 22-year-old Zainab. She nervously shifts her scarf so I can barely see her eyes. She tells me she got hooked when she and her husband were refugees in Iran. "My husband got me addicted," she says, "When I was feeling pain or had a cough I would smoke."

It's a story counselors are hearing more and more. The U.S. State Department calls the prevalence of drug use in Afghanistan "alarming." It quotes tribal chiefs who, in some cases, report that half the population of their villages consumes opiates.

Heroin and opium are cheap and readily available in Afghanistan, a country that produces 94 percent of the world's opiates. The United Nations estimates there are close to a million drug addicts in the country, more than seven percent of the population. Yet there are only 40 residential drug treatment centers in the entire country, helping a little more than 10,000 users per year.

The women in this center go through a 45-day program which the physicians are considering increasing to 90 days. It's voluntary; counselors and social workers go into the community, promoting an awareness campaign about the dangers of narcotics.

They encourage women who are addicted to enter the treatment program. Some must go through detox; the doctors say they do not use Methadone, only drugs that might be needed to help someone suffering from the pains of physical withdrawal such as vomiting.

Detox lasts for 10 days and then the patient moves on to Rehab. Children who are addicted are treated in an adjoining child care center.

Prior to U.S.-funded treatment centers, the relapse rate was close to 100 percent, the State Department says. The doctors say the rate at this center is relatively low. The goal of U.S.-funded programs is to cut relapse rates in half over the next two years so that 50 percent of all clients will be drug-free.

Zainab peeks out through a slit in her scarf. She tells me she is feeling better, that the doctors are helping her. I ask her what she is hoping for, what will happen to her when she finishes treatment and goes home?

"I won't go back to smoking heroin," she tells me. "I want to start a new and better life."

Afghanistan marks independence day

Afghanistan marked independence day Thursday as the Taliban-led insurgency drags on, with foreign troop deaths at record highs and the government under pressure to honour pledges on corruption and security.

August 19 commemorates the signing of the Treaty of Rawalpindi in 1919, which granted Afghanistan full independence from Britain -- though the country was never part of the British empire -- after three bloody wars.

The day was traditionally marked by a military parade and other public events, but these were scaled down after a Taliban attack in 2008 that was seen as an assassination attempt on President Hamid Karzai.

Karzai on Thursday attended a low-profile event in Kabul, placing a floral wreath at the base of the marble independence memorial near his palace.

The ceremony was attended by Western dignitaries including the commander of foreign forces, US General David Petraeus, who watched Karzai inspect a guard of honour.

The Taliban, who were ousted in a 2001 US-led invasion and are the main militant group behind a growing insurgency, also marked the day, vowing to defeat the NATO force and calling them "invaders".

"Indeed, the invasion by the British was not the only one, Afghanistan has suffered many attacks and invasions prior to the British invasion and afterwards," a statement by the Taliban "leadership council" said.

"The Afghan nation has never tolerated the occupation of their country before and will never tolerate it in the future at all."

Karzai returned to the capital late on Wednesday after attending a rare summit with his Pakistani and Russian counterparts, at which they agreed to pursue joint economic projects to help bring stability to the volatile region.

The summit, which also involved Tajikistan, adopted a joint declaration supporting the intentions by business leaders from Russia, Pakistan and Tajikistan to help Afghanistan rebuild its war-battered infrastructure, including in the energy and transportation sectors.

Russian President Dmitry Medvedev hosted Karzai, Asif Ali Zardari of Pakistan and Tajikistan's Emomaly Rahmon in the Black Sea resort of Sochi.

Afghanistan's current war cycle, which has lasted 30 years, began with a Soviet invasion in December 1979 that sparked a decade-long war that spilled into civil war and was followed by the Taliban's brutal 1996-2001 regime.

Karzai has been increasingly turning to his neighbours -- which also include Iran and China -- as pressure intensifies from his Western backers to make progress on pledges to improve governance.

Led by the United States, Karzai's allies are concerned that his government is not honouring commitments on touchstone issues such as corruption and security, potentially threatening their plans to begin troop withdrawals.

The United States and NATO have 141,000 troops in Afghanistan fighting a Taliban-led insurgency that has so far this year claimed 437 foreign soldiers.

On beginning his second five-year term last year -- after an election tainted by massive fraud, mostly in his favour -- Karzai promised to deal with rampant graft and take on greater responsibility for national security.

US Senator John Kerry, whose presence this week in Afghanistan is coming to signal the depth of Washington's concern, described corruption as "one of the most significant challenges facing Afghanistan".

"I think in the next days the government of Afghanistan's response to anti-corruption efforts are a key test of its ability to regain the confidence of the people and provide the kind of governance that the American people are prepared to support with hard-earned tax dollars and most importantly with the treasure of our country, the lives of young men and women," Kerry said.

"I believe President Karzai wants to do that but my belief that he wants to do it is not going to be enough. It's going to have to be done."

Benchmarks would be set but he declined to go into detail.

Kerry also visited US troops in the south, where the Taliban-led insurgency is concentrated.

NATO said that one of its soldiers was killed Wednesday in the south after at attack with an improvised bomb, the hallmark of the Taliban.

In a separate statement, NATO's International Security Assistance Force (ISAF) said planes Wednesday pounded insurgent strongholds near Kabul, killing two dozen rebels.

US announces aid boost to Pakistan after flooding

GHAZI AIR BASE, Pakistan – The United States will increase its aid to flood-ravaged Pakistan to $150 million, U.S. Sen. John Kerry said Thursday, stressing that Washington did not want Islamist extremism to increase on the back of the crisis.

The floods have affected 20 million people and about one-fifth of Pakistan's territory, straining its civilian government as it struggles against al-Qaida and Taliban violence. Aid groups and the United Nations have complained foreign donors have not been quick or generous enough given the scale of the disaster.

The United States has deployed army helicopters to hard hit areas as part of a package worth $90 million.

U.S. Sen. John Kerry, who is visiting Pakistan to see the flood damage, said that would increase to $150 million. The figure is expected to be announced at a U.N. general assembly meeting in New York on Thursday.

Saudi Arabia said it would donate $80 million to Pakistan, the official Saudi Press Agency reported, making it one of the largest donors. The country has for years sought to project its influence in Pakistan and has funded the spread of hardline Islamic theology there.

Pakistan is vital for America's strategic goals of defeating militancy and stabilizing neighboring Afghanistan so its troops can one day withdraw. Washington has already committed to spending $7.5 billion over the next five years in Pakistan.

Recovering from the floods is likely to dominate the agenda of Pakistan's army and government in coming months.

The state has been criticized for failing to respond quickly enough, and Islamist charities — at least one of which has alleged links to terrorism — have been active in the flood-hit areas. There are also concerns the extent of the suffering could stoke social unrest and lead to political instability that may impact Pakistan's fight against the Taliban.

Kerry told reporters "we don't want additional jihadists, extremists coming out of a crisis."

He was speaking after meeting U.S. military personnel taking part in helicopter relief missions.

The floods began in the northwest of the country after exceptionally heavy monsoon rains and have since swamped thousands of towns and villages in Punjab and Sindh provinces. While rainfalls have lessened, flooding is continuing in parts of Sindh province as water from the north courses down the Indus and other rivers.

Local aid groups, the Pakistani army and international aid agencies have helped hundreds of thousands of people with food, shelter, water and medical care, but the distribution has been chaotic and has not come close to reaching everyone.

Officials said that the ancient ruined city and world heritage site Mohenjo Daro in the Larkana district was now at risk. "Our experts are also present at Mohenjo Daro to monitor the flood situation," said government archeologists Qasim Ali.

Mohenjo Daro's structures are mostly made of unbaked brick and are vulnerable to flood damage.

Water-borne Disease Epidemic Feared For Pakistan Flood Survivors

Disease is the latest risk for survivors of Pakistan's worst floods in decades.

The United Nations says that water-borne diseases are becoming a grave concern.

There have been 36,000 suspected cases of potentially fatal acute water diarrhea reported so far, and there could be many more cases in the coming weeks.

The U.N. also warns that up to 3.5 million children could be in danger of contracting deadly diseases.

The list of diseases is growing every day - from endemic water diarrhea to endemic cholera and upper respiratory infections.

A doctor running a Sindh province hospital said 80 percent of the patients are children.

[Dr Zulfiqar Sheikh, Medical Superintendent]:
"They are suffering from Gastroenteritis because they don't have clean drinking water. They are suffering from the disease because of contaminated water. Secondly, the flies, the dirt, rotten fruit which they are eating, are the reason. It is spreading and getting epidemic."

Many flood victims have been relegated to living in cramped, un-hygienic conditions.

One mother brought her son to the hospital from a flood-hit area.

[Mother Of Sick Child, Riyad]:
"We have come here from a flood area. The child is vomiting continuously. He has grown weak. We don't know how many days will be required for his recovery."

Estimates put the current flood death toll around 2,000, but this number is expected to rise as people succumb to disease.

After an urgent international appeal, the U.N. says it has secured nearly half of the $459 million needed to fund initial relief efforts.

Russia hopes to boost economic ties with Pakistan: Medvedev

Russia hopes to develop economic cooperation with Pakistan, Russian President Dmitry Medvedev told his Pakistani counterpart Asif Ali Zardari here on Wednesday.

"We would like to continue cooperating in fighting terrorism, drug trafficking and international crimes. That's why everything we discussed earlier could be continued, even though [we have] good political dialogue, it is very important to develop economic ties," the Ria Novosti news agency quoted Medvedev as telling Zardari.

The Russian leader noted that no progress in bilateral economic cooperation has so far been reached.

"The last time we discussed with you this prospect of cooperation. I hope that we will be able to continue discussing this issue now in terms of bilateral economic cooperation and four-party cooperation in a number of projects," Medvedev said.

The Russian and Pakistani leaders held an individual meeting in the southern Russian city on Wednesday on the sidelines of the quadrilateral summit, which also gathers the presidents of Tajikistan and Afghanistan.

The four leaders arrived in Sochi to discuss Afghanistan settlement, the fight against terrorism and drug trafficking as well as regional trade and economic cooperation.

Medvedev also expressed condolences to the Pakistani leader following the deadly floods in the north of the country in which at least 1,600 people have died and some 20 million were affected by the disaster.

The floods, caused by the heavy monsoon rains, were the most severe in 80 years. Thousands of houses were destroyed in the country and entire villages were washed out.

"This is a severe disaster which caused many deaths and unfortunately brought great damage. We mourn with you and are ready to provide assistance to the Pakistani people," Medvedev said.

Earlier, the Afghanistan settlement, the fight against terrorism and drug trafficking became the main topics on the agenda of a quadrilateral summit in Sochi on Wednesday.his is the second meeting of the presidents of Russia, Tajikistan, Afghanistan and Pakistan.

The first quadrilateral summit was held in Tajik capital Dushanbe on July 30, 2009.

Medvedev said Russia is ready to help Kabul in restoring peace in the war-torn country and fighting terrorism.

Afghan President Hamid Karzai invited Medvedev to visit Afghanistan.

"I hope this will happen as quickly as possible and when your busy schedule allows," he told Medvedev, adding that the visit would boost bilateral economic and cultural ties.

Aid for Pakistan Lags, U.N. Warns

As monsoon rains continued to fall in Pakistan and water-borne diseases reported spreading, international relief officials said the pace of aid donations was still not sufficient to deal with what might be the nation’s worst disaster.

“The scale of the response is still not commensurate with the scale of the disaster of almost unprecedented magnitude,” said Martin Nesirky, the spokesman for the United Nations secretary general, Ban Ki-moon, reading a statement from the humanitarian affairs office. “This is a catastrophe that continues to unfold.”

The United Nations, which had been saying that as many as six million people needed some manner of emergency assistance — shelter, food, drinking water or medical care — estimated that figure could reach eight million.

The Asian Development Bank on Thursday said it expected to offer Pakistan a $2 billion emergency loan for help repairing roads, bridges and other infrastructure damaged by the record flooding in the country.

“The recovery will require a huge financial commitment from all development partners,” the bank said on its Web site.

Citing the loss of life, livestock, homes and the damages to the country’s power and transportation grids, the bank said it was continuing to evaluate the toll of the flooding. The ADB’s announcement preceded a scheduled news conference later Thursday by the U.N. and Pakistan to give the latest assessment of the flooding.

Since the weekend the pace of pledges to the United Nations’ $460 million appeal has accelerated, Mr. Nesirky said on Wednesday, but it remains short of its target.

“The funding response to the floods is improving, but much more is needed,” he said. “The effort must be sustained in the days and weeks ahead in order to have the resources to reach the people who desperately need help.”

Shortages of the most basic supplies have presented the biggest challenge for aid workers in Pakistan, along with the logistics of how to deliver them across a vast part of the country lacking infrastructure.

The World Health Organization said Wednesday that of the more than 15 million people the floods are estimated to have affected, only about 1.2 million had access to safe water supplies. In the most inundated areas, 200 of 1,167 health facilities — including several hospitals — were damaged. Reports of respiratory tract infections and fatal diarrhea were growing.

The United Nations began an appeal on Aug. 11 for $460 million to provide immediate aid to flood victims. By Wednesday, nations, organizations and individuals had sent $231 million, and had pledged an additional $40 million.

The United States was by far the largest single donor, with $82 million, according to United Nations figures, with Australia the next largest donor at $26.6 million. The United States said its total contributions amounted to $90 million, including helicopters, boats and temporary bridges, according to the State Department.

Not all the aid was flowing through the United Nations. Britain, for example, has sent more than $40 million, and the European Union said it would double its aid to more than $90 million.

Although the disaster has fallen in the Muslim holy month of Ramadan, when charity is considered a duty, Muslim states have donated virtually nothing via the United Nations and relatively small sums on their own. Turkey was the largest such donor, with more than $11 million, and Kuwait donated $5 million, United Nations figures show. Saudi Arabia has pledged more than $80 million, but United Nations records indicate none of it has been delivered.

To illustrate the size of the need, Maurizio Giuliano, a spokesman for the United Nations relief effort in Pakistan, said aid agencies had received 935,000 tents, but more than double that number were needed.

The United Nations and the aid agencies through which it works have thus far delivered food to nearly 800,000 people, have helped get clean water to at least 1.4 million and have provided shelter to nearly one million. Medical stocks covering the potential health needs of 1.8 million people have also been provided.

“Unfortunately, this is only a fraction of what we need to do,” said Martin Mogwanja, the United Nations humanitarian coordinator for Pakistan.

The floods are not over.

“The Indus River is at 40 times its normal volume,” said Karen Allen, a Unicef official in Islamabad, the capital, in a statement from the humanitarian coordinator. “Whole cities, of up to 250,000 people, have been evacuated, and people have lost everything.” Official estimates put the number of destroyed houses at one million.