by Prof. Engr. Zamir Ahmed Awan for The Saker Blog
The term “terroriste” in French, meaning “terrorist”, is first used in 1794 by the French philosopher François-Noël Babeuf, who denounces Maximilien Robespierre’s Jacobin regime as a dictatorship. Terrorism has many definitions but the well-recognized by the UN is “intended to cause death or serious bodily harm to civilians or non-combatants with the purpose of intimidating a population or compelling a government or an international organization to do or abstain from doing any act”.
Although the terms “terrorist” and “terrorism” originated during the French Revolution of the late 18th century but gained mainstream popularity in the 1970s in news reports and books covering the conflicts in Northern Ireland, the Basque Country, and Palestine. The increased use of suicide attacks from the 1980s onwards was typified by the September 11 attacks in New York City and Washington, D.C. in 2001.
Pakistan became the victim of Terrorism since the 1980s, the Afghan War. Traditionally, Pakistan was a very peaceful state and the people of Pakistan were known for its peace, hospitality, and tolerance. In the 1950s, 1960s, and 1970s, Pakistan was heaven for foreign tourists, especially from the Western World. Pakistan is blessed with natural beauty, high mountains, Glaciers, Rivers, Beaches, Pilatus, Jungles, Deserts, Archaeological & historical places, and religious places. Pakistani society was famous for the acceptance of Foreigners with all different backgrounds, religions, cultures, and ethnicities. In history, Pakistan has absorbed various cultures, especially the National Language of Pakistan “Urdu” is a mixture of Arabic, Persian and Turkish. The typical Pakistani cultures have roots from Central Asia, the Arabian Peninsula and Greek-Alexander the Great. During the one century-long British rule, has Westernized Pakistani Society and is a member of Commonwealth Country, English language and culture was dominating visibly. By nature, Pakistanis are peace-loving nature and a rather submissive society.
However, due to the former USSR invasion of Afghanistan in 1979, the US gathered Muslim youth from all over the world in Pakistan. Provided them training, weapons, and Dollars to fight against the Russians in Afghanistan. This all was possible by radicalizing them. The US used religion to charge these youth for “Jihad”. The Muslim scholars were paid to promote “Jihad” and textbooks taught in educational schools were modified to promote “Jihad”. The US has funded such scholars’ generously who preach “Jihad”.
Cash and religion were used to exploit Muslim youths for “Jihad” (Holy War). And Taliban, involved in Jihad were treated as heroes. White House was open for them and President Reagan hosted banquets in honor of the Taliban. Some of President Regan’s remakes about the Taliban are denied recently, but it was acknowledged that the Taliban enjoyed the highest degree of respect and honor in the US during the Afghan War during the 1980s.
However, with the help of the Taliban, the US won the war in Afghanistan and the former USSR was to withdraw its troops from Afghanistan in 1988-89, under an agreement. But unfortunately, the US also lost its interest in Afghanistan and left Pakistan alone to face the consequences of unstable Afghanistan.
Deliberately, Pakistani society was radicalized. Intolerance, extremism, religious divide, ethnicity, and factionists were promoted. The US-funded the individuals with an extremist ideology to promote a division in the society. Insurgency and separatist movements were supported and society was led toward chaos.
Furthermore, during the former USSR invasion of Afghanistan since 1979, Pakistan became the hub of international intelligence agencies. In the beginning, their operations were focused on Afghanistan only. But later on, it was spread and their scope also covers Pakistan is self too. It was not only the US, but many friendly countries also strengthen their Intelligence operation from Afghanistan. Later on, it was noticed that some of the unfriendly countries were also involved in similar operations. After the former USSR withdrawal, some of the international intelligence agencies were using Pakistan as a training ground and executing live operations, sometimes only for the experience.
The easiest way was to identify disgruntles or destitute Pakistanis, brainwash them, fund them and exploit them, was a routine matter. Still, we are facing such incidents, that Pakistanis were used by foreign agents in sabotage, subversion, insurgencies, separatism, and terrorism. This practice is still in exercise, but with a lot reduction in size.
Although the terrorism phenomenon was started since the USSR invasion of Afghanistan in 1979, the intensity gained momentum from 200 to 2014, with a peak in 2009. Only in 2009, the worst of any year, 2,586 terrorist, insurgent, and sectarian-related incidents were reported that killed 3,021 people and injured 7,334, according to the “Pakistan Security Report 2009” published by PIPS. These casualties figure 48 percent higher as compared to 2008. On the other hand, the rate of suicide attacks surged by one third to 87 bombings that killed 1,300 people and injured 3,600.
Since, the 16 December 2014 attack on an army-run school in Peshawar, which killed 150, mainly children, claimed by the Tehreek-e-Taliban Pakistan (Taliban Movement of Pakistan-TTP), was ostensibly a game-changer. A week later the government unveiled a new counter-terrorism strategy, the twenty-point National Action Plan (NAP), with Prime Minister and Army Chief, vowing to target all terror groups without distinction.
A massive military action was taken along with the judicial reforms with the involvement of civil society. The death penalty was restored, military courts were established, through media and civic society educational reforms were implemented. Military action was supported by the educational reforms and rehabilitation of effect was implemented. As a re4sult some of the terrorists were killed, some were run into Afghanistan and remaining were changed by education. People were educated toward tolerance, and acceptance of diversity in this society.
While fighting against terrorism, we encountered many tough challenges. The terrorists were well trained and well equipped. Sometimes, they were using many advance tactics and weapons, even better than the Pakistan Army. They were using Satellite phones and Hummer Jeeps, while the Pakistan Army was using rather old communication systems and vehicles. Terrorists were supported by foreign powers and getting logistics and supplies against Pakistan. The terrain was very tough and the region was mountainous and difficult to accessibility. Pakistan blames India and Afghanistan for supporting Terrorists officially. However, India kept on denying and Afghanistan has confirmed. In fact, there were many other foreign powers supporting these terrorists. We suspect many countries like the US, Russia, Israel, Iran, etc. But with no confirmed evidence.
Pakistan Army, Civilian Government, and General public was committed to rooting out the menace of terrorism, once for all. Devotion and firm commitment made us possible to overcome this serious issue. Pakistan is the only country with the highest success in its war against terrorism. Today the number of terrorist attacks has been reduced to around 200 from 2500 at the peak in 2009. Pakistan is still engaged in a war footing against terrorism.
The Irony is that Pakistan was radicalized by some of the friendly nations to achieve their goals. Once they achieved their goals, they left, Pakistan alone to suffer. In fact, those friends played a dirty role to isolate Pakistan and made propaganda against Pakistan as a hub of terrorism. While in fact, Pakistan was the victim of terrorism and suffered huge losses. Pakistan’s sacrifices were not acknowledged or recognized. Pakistan is not seeking any reward for its sacrifices but deserves compensation from those friends who caused this terrorism in Pakistan. Hilary Clinton has committed publically that the US has created the Taliban. It is obvious that Islamophobia is the root cause of terrorism. It is a moral obligation that those who are responsible for the creation of terrorism should assist Pakistan to overcome it. Pakistan expects from the international community to acknowledge and recognition of its sacrifices. I believe, it is the moral duty of the Western World to extend cooperation toward Pakistan to defeat terrorism.
However, Pakistan is a resilient nation and after a lot of effort has succeeded to eliminate terrorism in Pakistan. Pakistanis are genetically peace-loving people and very much accommodative. Our society is open and integrate all immigrants or foreigners in this country. Pakistan accommodated many immigrants from many different countries. These immigrants are well integrated into our society and face no discrimination. There were around 5 million Afghanis in Pakistan at the peak time of war and around 3 million are settled in Pakistan since the 1980s. Their third and fourth generations are living in Pakistan now. There also exists a huge number of Bengalis, Indians, Burmese, Iranian, Iraqis, Syrians, Palestinians, African, Chinese, etc., in Pakistan and enjoying a complete harmony.
Pakistan is a multi-cultural, multi-ethnic, multi-religious society and diversity is our strength. We won against terrorism by promoting tolerance, education, and traditional culture. I believe Pakistan’s soft power is our best tool to win against all challenges. Today, Pakistan has emerged as a Peace-Loving nation, a mature and responsible state. Prime Minister Imran Khan is a visionary leader and a messenger for Peace. He believes in Peace and wanted to resolve all regional and global issues through peaceful dialogue. He has demonstrated to avert a War with Indian in February 2019 and still insists on his stand of Peaceful resolution of all issues between India and Pakistan, as well as all international disputes.
The rest of the world may avail Pakistan’s experience to counter-terrorism and utilize Pakistan’s expertise in fighting against terrorism globally. We wish to eliminate the menace of terrorism completely.
Author: Prof. Engr. Zamir Ahmed Awan, Sinologist (ex-Diplomat), Non-Resident Fellow of CCG (Center for China and Globalization), National University of Sciences and Technology (NUST), Islamabad, Pakistan.
i have never heard anyone calling bin ladens/US/saudi/Afghan jihadists Taliban before, i was a child in the 80`s but i cannot remember that Taliban was used in our media and a 2min quick search about the war in Afghanistan in Norwegian media and international it did not bring up the name Taliban in this context.
( https://www.britannica.com/topic/Taliban / https://no.wikipedia.org/wiki/Taliban / https://snl.no/.search?query=taliban / https://www.cfr.org/backgrounder/taliban-afghanistan + there is a ton of other links i did not paste)
NONE of these links say Taliban was founded in the 70`s or 80`s, the year they use is 1994.
Is your use of the name Taliban “local” or am i misunderstanding something?
In the Norwegian lexicon they use the word ” mujahedin/mujahedins” ( https://snl.no/Afghanistans_historie ) and so did the Norwegian media.
I was working in Peshawar, Swat, Quetta and Lahore at the time with Afghan traders and Pakistani businessmen.
The first any of them heard of Taliban was around the period Rabani and Massoud controlled Kabul and Hekmatyar was raining bombs supplied by Pakistan on Kabul.
the 90`s iow..
i just remembered bc the mujahedins were portrayed as brave freedom fighters in the media and i read a murcan “spy book” in third grade.. afaik Taliban was created in the 90`s so his use of that name confuse me tbh..
I will repeat a suggestion from a few months ago.
If you are interested in one mans weekly reports at the time,
read the works of Syed Saleem Shahzad
He died shortly before publishing a collection of essays going back to 2001 up to his torture and death by the Pakistani ISI in 2011.
I bought the book for $5 last year from Better World Books.
Salim Shezad was a traitor in the guise of Journalist. No country allows sedition, you may sing his praise but no one laments him in Pakistan. The Pakistanis are extremely patriotic nation and do not tolerate enemies in-its midst
Or the most brain washed… You could have jailed him for sedition but preferred to torture, kill him and throw his body by the roadside. Is that patriotism?
So much for that… And this one “escapes”
Article reads like a tourist brochure. I normally take tourist brochures with a grain of salt.
A nation’s peace and harmony is tied to prosperity. The latter is tied to the economy and income distribution level. A country with steep depreciation in currency, plus a borrowed USD 6 billion from the IMF (under Imran) – does not exactly boost a person’s confidence (after reading the tourist brochure).
At the end of the day, a full stomach stops riots from happening.
Thus, many would be more interested in Imran’s economic plans (in detail) than his political discourse.
Masha Allah, very well and in depth written article.
What Pakistan went thru a decade or two ago is what stupid ass turks will undergo now. Playing second fiddle to the imperialists at your own expense is quite a lesson to be learnt……lol. One would have to be a foolish sunni muslim to realize the beauty of it. Lets hope Russia, China and Iran have mercy on these gullible turks and let them keep their rag tag country intact and not redraw their borders.
Hmmm.. This article is a bit propaganda I think. ” It is obvious that Islamophobia is the root cause of terrorism. It is a moral obligation that those who are responsible for the creation of terrorism should assist Pakistan to overcome it.”… So what were the Imrans teaching these youths?? What sources in the Koran,Sura etc did they find there
“The easiest way was to identify disgruntles or destitute Pakistanis, brainwash them, fund them and exploit them, was a routine matter. ” Oh so easy the author claims…how come.?
We all know that foreign intelligence agencies have been funding jihadis, taliban etc…. but you know it takes 2 to tango. I think that the islamic community also has to do some soul searching.. Author doesn’t mention anything about this of course. Also Imran Khans speech at UN was very tricky … talking about suicide bombers that they don’t exist. At least this author admitted to it. Also famous pop singer Rabi Pirzada posts picture of herself in a suicide vest threatening PM Modi in India. Was she also influenced by intelligence agencies…? Oh yeah of course she was. No meantioning of ISI in this article either… hhhmm
I know some Pakistanis at work. They are nice, but of course there are some subjects you can’t discuss with them. They are very sensitive and don’t really agree with freedom of speech. Now Imran Khan is asking for special status for Muslims in the west, since they are so sensitive, just like the Jews. Isn’t interesting how politics and gladiators (todays sports stars) work together. Sports stars are to be trusted because they did miraculous things with a ball!
Lets not overcomplicate this. The West is allowed to go around killing people in the East with impunity and steal everything they have and if anyone from the East retaliates, they are called terrorists.
The author is being quite honest but Westerners are indoctrinated with a racist view of the world. A world also in which no Muslim has any rights to any land they currently “occupy” because Islam just “appeared” out of nowhere and “displaced” Christians, jews, zorostrians and hindus who lived in those places for centuries.
People in Pakistan respect diversity and generously accept the refugees from other countries. I like the way you explained the root cause of terrorism in Pakistan, and exposed the hypocrisy of international establishment. Very well written article, backed by solid evidence and statistics. keep up this great work.
To be fair one must go back to the partition of India and the formation of Pakistan to define it’s nature and the foundations on which it was built. That Hindus and Muslims could not agree on a unified coalition and representation of faiths to form a single Nation State upon expulsion of British rule shows something of the difficulties of the region. The riots, killings and mass migrations that followed are indicative of something that is not well represented here, yet is a conflict which still continues today. If the article proposed these religious beliefs were exploited by US intelligence services, that would be a shade or two closer to a head-screwed-on-forwards thinking view.
Knit pick… Muslims wanted a separate state and Mahatma Gandhi was assasinated for it. Please do not bend history, who ever you are.
No. It was th BRits who had the effrontery to declare in 1941 in “House of Commons” that “his Majesty’s Govt cannot agree to any propsal for self-governance in India which is resisted by a significant section of India’s population”. In other words, these imperial scum sitting 5000 miles away, will decide what is “significant section” and block self-governance with this ruse. Nehru wrote to Brit Politician Stafford Scrips as late as Jan 1946 that “if the Brits stop supporting it, the Pakistan movement will collapse”. Unfortunately, the Brits, also unofficially twisted arms of Jinnah forcing him to make extreme demands and the rest was history.
Creation of Pakistan was the greatest gift to the Muslim world, Today it is a singular Islamic nuclear power holding all its enemies at bay, Specially the madness of Hindutva India. The oppression of Kashmiri muslims will result in disaster for India, which will be further fragmented into several states. as it is there are 13 officially recognised and acknowledged resistance movements within India.
By its very nature India is not a unified state, it is just a question of time when the Muslims of India will pick up arms in mass to fight off hindutva hatred and Pakistan will be there to support them fully. One thing is clear; in the Indian subcontinent muslims cannot live under hindus. Specially, when muslims have ruled India for the past 1000 years.
Pakistan is a miracle from God. Allama Iqbal, from a hindu brahmin family from Kashmir who converted to Islam had an idea for the northern states to form a separate Muslim country. The idea was passed to Jinnah who had all but given up hope for muslims in India and the Hindu reaction to split Punjab and Bengal…. all these things had to take place to make Pakistan what it is today….. a miracle. If the Hindus had not insisted on the split of Punjab and Bengal, Bangladesh and Pakistan today would not have been possible.
The ambassador for Muslim-Hindu unity actually accepted the Cabinet Mission plan of 1946 of a ‘United India’ albeit with three autonomous regions which would be allowed to have a referendum ten years post ‘Brexit’ as whether to stay part of a ‘United India’ or then become independent. It was Pandit Nehru who refused, hence the ambassador for Muslim-Hindu unity then was forced to go for outright independence effective immediate post ”Brexit’. It was Pandit Nehru who also did ‘arm-twisting’.
Apologies if this sounds harsh….but this is a load of crock ! As a Pakistani I can categorically state that we encouraged radicalism and fundamentalism in our society . Pak army was richly rewarded for training the mujhadeen etc and the army has never looked back. They learnt that to keep the flow of money coming in they needed to ensure that there was always a threat…..so operations agst terrorist were undertaken but never with the goal of eliminating them….just enough to keep the Americans happy and the flow of money intact.
Look at pak society….blasphemy laws, constitutionally delegitimisation of a Muslim minority so they can no longer call themselves Muslims under penalty of imprisonment or death. See how the Christian minorities are treated….
The ISI still supports the taliban…..And continues funding their operations.
Well renown Islamist walk freely in Pakistan…usually under state protection. Just see the recent terrorist who ‘escaped’ from army control this week. He was responsible for the massacre of children and yet managed to escape and turn up in Turkey…..not a word in our media. No one dares to question the army…..
I can go on and on but clearly the army and the pak government are complicit in the rise and spread of Islamic fundamentalist. They share the same beliefs and protect these terrorists when possible.
Polls after pollls show that pak society is tolerant of these fundamentalist . Look at our cricket team….bearded fundos playing sports …..our Prime minister wanting to bring back old Islamic traditions dating from the time of the prophet …..and the writer is talking about our society being tolerant and forward looking ? Not sure if it is mere propaganda or delusion or worse…..outright lies !
Pakistan is a failed state and religiosity has spread chaos and violence unchecked. The only reason the country is espousing a neutral stance towards regional conflicts is that the army is too busy in business enterprises. They control banks, mining operations, oil business, largest residential holdings in the country…..they are building cinemas, golf courses, wedding hallls etc so they are not interested in conflict but rather in making money. They are likely to betray all causes and security considerations to protect their pot of honey…..see how ‘neutral’ we are towards – the Kashmiri cause, the Uighur, the rohingya , the Yemeni , the Palestinians…….complete silence !
Not sure what your point is. Pakistan is a muslim state inhabited by Muslims. The Muslims inhabiting Pakistani lands are quite different to the elites of the country and the Indian Muslims who arrived as a minority in the partition and insist on seeing anything but complete mimicry in Pakistan of the capitalist western imperialists as failure.
We have been funded by the U.S (and by extension the Saudis) and in return allowed an extreme wahabi (ahle hadith) version of islam to take hold via all the saudi masjids. But this happened under the watch of the elites. The army is the only thing that holds the country together because while people like yourself would rather live in any Western nation, the Pak army has no such option.
So to be honest, apart from showing a complete lack of understanding of Pakistan and a total subservience to the West, I’m not sure what your post is trying to get across. You claim the author is wrong in claiming Pakistani society is tolerant? Explain how Pakistan has had leaders from every ethnic group in Pakistan? A population that is dominated in numbers by Punjabis just voted a pathan into government. Before the Russians invaded, the hippy trail included Peshawar and parts of Pakistan…. what are you talking about.
People like you should really think about going to India. It would make a lot of sense for you
Every year around one thousand miner Christian and Hindu girls are kidnapped and forcefully converted to islam in peaceful and tolerant Pakistan. At time of Pakistan creation (1947) Pakistan had a population of 20% as Hindus which has now come down to under 2%; so much for multi-religious society. After losing in direct confrontation with India in 1948, 1965 and 1971, Pakistan had resorted to terrorist activities to disturb India under their policy of “thousand cuts”; so much for claiming victimhood of terrorism.
Truth only wins eventually. This article is full of lies and Amir has clearly pointed the hipocracy in this propaganda piece. If you don’t want to see it it’s not his problem.
Seems like the definition of tolerance Pakistan subscribes is extreme adherence to only one POV.
Nonsense. Instead of pointing fingers go and defend the rights of Hindu girls suffering a rape epidemic at the hands of their own “higher caste” Hindu countrymen.
We are not perfect but that does not mean our legitimate acts of violence against India in solidarity with Kashmiris to reject Indian occupation reflect badly on us as a nation. We will support Kashmiris always.
A “Madrassah” is a school, typically understood to be religious. These days anyway.
A “Talib” is a student. Singular. “Taliban” is the plural.
All these talibs growing up in NW pakistan – learning in schools funded by the Saudis – during the 80s, ended up being the Taliban.
Pakistanis are peaceful nation?
Tell that to the dead bengalis of East Pakistan who were maimed raped and killed for any years starting in late 60s culminating in Bengladesh war of 1971.
“with the help of the Taliban, the US won the war in Afghanistan and the former USSR was to withdraw its troops from Afghanistan in 1988-89, under an agreement.”
Incorrect. US did that with the help of Gulbudin Hekmatyar and other Mujaheddin like Burhanuddin Rabbani.. Taliban came into being later , by early 90s , well after Soviet exit from Afghanistan.
With regard to the rest of Prof Awan’s piece , it must be realised that US/UK/Israel/Saudi Arabia are the four countries who are the source of global .terrorism. And pak army has prolonged association with 3 of these countries and even with the last-named, Israel there have been secret links through US and Saudi and UK. Pak sovereignty has been eroded by these associations.US has twice sponsored military coups (1958: Ayub , 1978:Zia),. Even Khamenei, Iranian leader had remarked on Pak’s loss of sovereignty in recent years. Pak remains trapped in US hegemony. You need a revolt like the 1968-1970 revolt that happened then in Pakistan , to throw off this US yoke. Until then, Pak’s involvement in terrorism will remain. In fact, one liberal Pak journalist has referred to the self-disgust felt by Pak Generals who know that US uses Pak as merely a condom for penetrating other countries. Such self-disgust itself drives the victim-generals to look for targets for asymmetric warfare .
“the National Language of Pakistan “Urdu” is a mixture of Arabic, Persian and Turkish. “.
Prof Awan seems very well-meaning but the above statement is somewhat odd. No pakistani should be shy of acknowledging that Urdu is a language of undivided India. I am an Indian , and we watch Pak serials almost every day on Netflix. We have no difficulty in following them because Urdu and Hindi are merely different dialects of the same source-language. No Iranian , much less a Turk would be able to do that.
That said, all of us, Pakistanis and Indians face similar problems and it its high time that we join forces instead of the deadly confrontation in which we are now trapped. There is a ferment in India which is for equality and fraternity, which is spontaneous , and led by women and youth. I pray that it grows and a kindred movement arises in Pakistan to take all of us to a state of peace and freedom.
Urdu (old Hindi) is like English, a ‘original’ core and syntax with a hefty ‘non original’ vocabulary. Can you imagine if an Englishman today wanted to remove all French and Latin influences and re-introduce germanic replacements? Well that is what happened with Old Hindi and out came Modern Hindi, a de-Persianized and re-Sanskritized vocabulary, albeit not 100% to the dislike of many extremist ‘Hindu’ nationalists. Even the word Hindi itself is Persian origin.
Old Hindi, poetically known as Urdu was the vernacular language of Uttar Pradesh which was the heartland of the erstwhile Persian administered Dehli Sultunate and Mughal Empire. It was British India which spread this vernacular language along with English into other parts of a ‘United India’ in order to replace Persian.
Old Hindi, poetically known as Urdu was a vernacular language of the people of Uttar Pradesh irrespective of religion. It was during British rule where some extreme elements from the Hindu side wanted to de-Persianize Hindi and introduce Sanskrit based replacements, this desire then ‘communalized’ and polarized this issue into Muslims’ Urdu vs Hindus’ Hindi.
Lo and behold. The man just “arrested” few days ago to fix the FATF problem goes “missing” with family.
Pakistan is not a sovereign country. This is the heart of the matter. Same drama with Turkey. At the end of the day because of not being sovereign, both these countries are subject to manipulation and browbeating. Both turkey and pakistan are a joke in front of Iran. Any sign of dissent and the West threatens their annihilation with just their economic threats…….both fall in line very quickly. Same story for the last 80 years……nothing new.
Thanks to all of you. I enjoy your feedback and value. Criticism, to differ, or disagree is your freedom. I will never be offended. Welcome to furnish your point of view.
Imran Khan is facing a sugar crisis in his nation
Risk in the sugar business ?
Y is “Sugar Daddy Jehangir Tareen (SDJT)”, in the Sugar business ?
It is no risk business.The CEO of the mill can see his raw material in the fields,from his glass windows.The owner of the raw material is waiting to sell ,he has to sell – as there is no storage and storage is not possible, and he has to sell to the nearest mill (to save on freight and moisture)- at the quality and other specs of the mills,and then await payments for months. Can there be a better business ? dindooohindoo
The users of the end product are in the billions.The user in Pakistan WILL NOT PAY beyond a certain price – and they voted in the govtt.If some sugar mills close down – by strategy – the govtt will fall and there will be a Tahrir,as sugar stock draw down from Govtt warehouses takes time – and in riots – no logistics is possible. Even imports will take months,and then it has to be evacuated from the ports.
Tbe user price can’t fall below a certain floor,as then the mills will close down,and there will no cane purchases,and also no cane payments for old bills.This also ensures no large scale imports.The cane growers,are also in the millions,and are another vote bank.So there is a cap-collar option on sugar prices – for the mill owner.If prices fall,the state has to offset the losses for the mill,and also waive interest and warehouse charges and offer compensation equal to the opportunity cost of capital employed in the operations.Hence,the cost of the cap-collar options is borne by the state.There is no other business like this in the world.
Any business which relies on the state,for policies – dooms the industry.As a result, the Pakistani state has no clue of the actual operations of the sugar and cane supply chain and value chain – from costing to manufacturing to stock.That is also to the advantage of the businessmen – as the perception of unviable sugar units,ensures that the sugar units can inflate costs and hide stocks.This ensures that they keep getting subsidies.drawbacks,capital subsidies,soft loans,trade swaps, power export and wheeling incentives etc., and also,they can create shortages and price spikes, at will, in any part of Pakistan.
A doomed sugar industry,also,is in the interest of the sugar tycoon – as they can close down the operations of any marginally viable or loss making or vulnerable unit,at will, by choking off working capital,or a truckers strike or diverting the raw material supplies of the unit.This is enough to cause panic and doom,in the sugar wholesale market.
Holding stocks of cane,bagasse and sugar for 8-9 months and delays in payment of power exports – has a number to it – in terms of working capital cost.It is not a risk,and is part of the Business Model of a sugar unit,and the cost of working capital,can also be waived off – as interest subsidy or CDR/OTS,as the State has an interest in keeping the polity in power.The fact that,at the time of making the procurement of material,the price of the end product 9 months ahead,is nor known – is also,not a risk,and is,instead an opportunity,as all costs are, in effect, a pass-through to the state.
Since cane is no brain business,there will always be excess cane production and excess sugar stocks,and since the state has to fix the purchase prices of cane and sale prices,in the open market – and also, the terms of loans and incentives to units – the state will always goof it up.
When they goof – prices will spike – and that is when the mill owners sell the unaccounted sugar stocks.When there is a reverse goof,id.est,large stocks and working capital shortage – the mill owners push the state to export.At that time,the inflated cost sheets and perceptions of poor manufacturing operations and yields and storage losses,ensures the highest inflated cost.Highest inflated cost ensures maximum subsidy and also maximum ad valorem drawback.
Drawback is refund of non vatable taxes acros the supply and value chain,and subsidy is the export price differential (on landed cost basis in a target market).
Hence,the state is a PE co-investor in the sugar mill,with a sweat equity stake,and no voting rights and no dividend.What is better than that ? The cane growers are bankers to the mill who give clean credit for 8-9 months and accept all the deductions made by the mill.The Politicians are the “reverse fee clients”to the Consultants (mill owners), WHO PAY THE MILL (IN TERMS OF SOPS AND SUBSIDIES),FOR THE CONSULTING advice, given by the mill owners.
In essence,the sugar mill is used by the polity,to make transfer payments to voters in agri areas – as an NGO – except that the NGO makes a CERTAIN INFINTE PROFIT % ON CAPITAL EMPLOUED
Sugar mills get project loans at a 4:1 Debt.Equity Ratio,with capital and interest subsidies.If the project cost is inflated by 30% by using a mix of new and used machines, and 5% is paid to bankers and netas – then the equity is nil or negative.
The mill owner has 2 income streams – Profit and Bonus.Bonus is selling unaccounted stocks,in price spikes,and earnings on export subsidies and drawbacks (on inflated costs and hawala exports and bogus exports).Profit is the cash profit earned,as the book profit is all bogus,as costs are inflated.A Sugar mill profit has not to be assessed quarterly or yearly,but when the entire supply and value chain of a crushing season,is conclusively liquidated and realised – net of all working capital costs.
This makes the ROE,financially incalculable.
WW3 or N-War or Covid – U need sugar.A human cannot eat palm oil or wheat or rice – as such – but can live on just sugar for some time.There is no business like sugar..Which is Y “Sugar Daddy Jehangir Tareen (SDJT)”,is in the Sugar business. He has found sugar buyers in the Taliban ? Sugar and Nuts = Ideal food for the mujahid.
Bumper cane crop = good news for neta,as farmers happy and cane rates not hiked much for mill owner,and the netas are sure that retail rates are low.Disaster is for the state treasury,as large stock pile will be eaten by rats,or dumped in Kabul,with huge subsidy payments.Neta is happiest
Bad Cane Crop = doom for neta and retail and economy.Imports will take time and the state will goof up,and retail will price in hike,3-4 months before import orders are placed.Marginal cane mills are also doomed – farmers will just die.But mill owners who have plantations (as all karge units have – on principles of Strategic sourcing and backward integration into plantations) will thrive,as they will have captive supply,and will engineer farm riots and suicides,to rig up cane prices – which is a pass-through to the state – on marginal and imputed costs.Then SDJT will tell media – “How do I gain by increased sugarcane prices” with a non=plussed expression – only for the cameras.
A sugar mill is a power plant,which also,incidentally makes sugar,and the price of the raw material,is a pass-through (to the state – on a loaded marginal and opportunity cost) and the by-product (sugar) supply chain,can be choked at any time,by the mill owners.