July 20, 2010


Filed under: Uncategorized — sharafs @ 5:23 am

Brigadier Samson Simon Sharaf

Though ordinary citizens may look at war as an end to politics and diplomacy, statesmen of realism paradigm know that it is ‘a continuation of the policy in concert with other means’ (Clausewitz). According to Julian Lider, the transition point to state sanctioned violence however, remains a challenge.

US President Truman faced a very difficult choice after having received the lengthy Kennan Telegram from Moscow. In the midst of electioneering, both Truman and his opponent Thomas Dewey did not want to appear spineless against Stalin. What followed was a Cold War built on containment. Ironically the issue then was not military expansionism, but resistance by Stalin to Breton Woods (IMF & World Bank).

Similarly, the Gulf of Tonkin incident in on Aug. 4, 1964 misled President Lyndon B. Johnson to persuade Congress to authorize broad military action in Vietnam (New York Times, July 15, 2010). Readers must recall that this decision was taken at the heels of resistance by President John F Kennedy regarding Bay of Pigs in Cuba, his plans to thin out from Vietnam and assassination. It is now proven that the Tonkin incident never happened and was sexed up by CIA and Pentagon. US senators chose to seal their conscience.

“If this country has been misled, if this committee, this Congress, has been misled by pretext into a war in which thousands of young men have died, and many more thousands have been crippled for life, and out of which their country has lost prestige, moral position in the world, the consequences are very great,”

Senator Albert Gore Sr. Member Foreign Relations committee March 1968

Pathetically, there were no consequences and no lessons learnt.

New York Times reports that the current chairman of the committee, Senator John Kerry, said that the transcripts were especially revealing to him. In February 1968, during some of the most intense debates, Mr. Kerry was on a ship headed for Vietnam along with thousand of servicemen who never made it back.

Very recently, the Invasion of Iraq was based on deliberately falsified information on the WMD threat from Iraq that never was.

So who is responsible for this huge suffering and massacre? Not only the Americans but also the people of Vietnam, Saigon, Iraq, Afghanistan and Pakistan need an explanation.

Having started a conflict, it is also important that the statesman makes a correct assessment of Friction and Culminating Point (Clausewitz), so as to seek peace at the right time. Clausewitz shunned the notion of the Totality of a Conflict and theorised that all wars must be limited to the attainment of political objectives.

However, Statesmen have repeatedly ignored both theories and fallen into a trap where an exit with pride becomes difficult. Statecraft for times immemorial is premised on the paradigm of Political Realism. Armies have fought themselves to physical and psychological exhaustion in face of pacifist values of morals, legality and conscience. In prolonged conflicts, this emotive factor driven by mixed feelings of hate, love, patriotism, ideologies and beliefs even manages to over power the best of armies and technology (Michel Howard in Forgotten Dimensions of Strategy). Wars are planned around a strategic logic and rationality. To the contrary, wars especially long ones cannot be premised around sexed up dossiers, hate and metaphysics.

It is also difficult for statesmen in possession of superior munitions of violence against an inferior foe, overshadowed by a praetorian mindset to bridle a bully within. During the entire Cold War, USA and USSR bullied inferior peripheral states without getting into a direct conflict; the true face of deterrence between equally destructive and ambitious foes.

The logic is also applicable to conflicts between bigger armies and rag tag people. It happened both to Napoleon and Hitler in the harsh winters of Russia. Great Britain retreated from Afghanistan and FATA with its entire expeditionary force mauled. USA had to make an unceremonious exit from Vietnam. USSR disintegrated after its withdrawal from Afghanistan. India tried it with the Tamil rebels in Sri Lanka but being the progeny of the world’s greatest strategist Kautilya, made a timely exit.

The Afghan conflict from 1974 till today is a classic case of shadow intelligence wars, policy mismanagement, corporate pressures within the ruling establishments, vested and competing interest. Iranian Revolution provided an additional twist; a threat both to Arab Kingdoms and US designs. Beyond Islam versus the godless communism, proliferation of anti-Shia militant groups became the hidden agenda of the West and Arab States. Military regimes in Pakistan seeking international legitimacy were quick to board this band wagon with no thought to possible havocs this policy could wreak.

Having witnessed the stagnant coalition operations in Afghanistan for the past eight years and their inability to neither control the Afghan resistance nor eliminate erstwhile ally turned enemy Al Qaeeda, I am forced to comment that expecting Mullah Omar to control Al Qaeeda was insanity of the highest order. Abundant intelligence chatter on the internet indicates frequent contacts of the principal actors like Khalid Sheikh Muhammad, Omar Saeed and the hijackers themselves with CIA training centres and safe houses in USA and world over. Surprisingly, none of the culprits identified by US intelligence were born Pakistani or Afghan citizens. More than anyone’s complicity, it was the biggest intelligence failure of CIA and FBI itself.

Even worse than Pearl Harbour, a homeland attack like 9/11 was too much for US Republican administration to absorb patiently; after all the only super power with the capability to bomb hostile countries to Stone Age. With abundant faulty intelligence and a historical precedence of trigger happiness, Bush Junior took the decision to employ full military might against a people who had once won USA’s war against USSR. It also gave a window to the doomsday prophets and theological detectives searching for the anti Christ to put their full weight behind the killing of the innocent.

The invasion was deliberately planned from the North to push the conflict deep into a nuclear Pakistan. Eight years on, none of the declared objectives have been achieved. Hate of US Policies has grown from thousands to hundreds of millions.

Back in 2002, I had commented that this was a war of hate and USA would ultimately loose it. If pursued further, the world will become a very dangerous place for all humanity. Millions of lambs will turn to werewolves with killing fields spreading world over.

George Bush committed the cardinal sin of transiting to conflict at the wrong time against the wrong people, with wrong reasons. It is up to another Democrat Barak Obama to go down in history like Kennedy or choose the elastic conscience of Johnson. The lesson of history must not repeat itself.

It is a Shakespearian irony that Senator John Kerry chairs the same Foreign Relations committee in 2010, that put its conscience to sleep in 1964 when Kerry, US servicemen and people suffered on the false premise of TONKIN.


July 5, 2010


Filed under: Uncategorized — sharafs @ 6:03 am

We as Pakistanis should be in awe of the fact that US defence contracts have already floated a bid for increased jet fuel in Afghanistan till 2013, with the condition that it must not come through Pakistan. Does this imply that Pakistan may be under US attack from Bagram in 2012-13? Or does it mean that Pakistan would have plummeted to anarchy by that time

Brigadier (R) Samson Simon Sharaf

Much before General Stanley McChrystal had resigned, ‘Obama’s Third Surge’ had already petered into nothingness. The operations failed to create intended effects in a highly destabilized, charged and violent region. McChrystal, the highly decorated specialist in covert operations and assassination squads of the secretive Joint Special Operations Command (JSOC) may have been brilliant and brutal tactical hit man, but a strategic failure nonetheless.

His resignation has come as no surprise to analysts following the tug of war between the US Defence and Political Establishment and how the third surge was identically conducted at the heels of the failed second surge. In both failed operations, CENTCOM conspicuously avoided Kandhar but why?

In my article, ‘The Wilting Obama Surge’ in the Nation, I had identified the fault lines within the US establishment. Even the UN envoy in Afghanistan had called it too military driven and doomed to failure. Nothing had worked as per the plan; neither the carrot, nor the stick nor stacks of cash for the breakaway Taliban. The contradictory statements of Gates, Halbrooke and the local military command spelled it all. The foreign press corps in Kabul, obscure from reality was making big news. Media was bubbling with optimism while efforts were at hand to find a scapegoat if the good news turned sour. This scapegoat is now General Stanley McChrystal.

It was indeed at the heels of this failure that USA decided to co-opt Pakistan in the Strategic Dialogue diplomacy. In a typical US media hype, much was made of the prowess of General Kayani as a brilliant military commander with an equally sharp eye on the long term vision. A leading Indian newspaper took the lead in portraying him as the man who was in charge. Guns and Roses were offered to win over Pakistan’s military establishment towards a US driven operation in the region.  The entire political establishment of Pakistan was eclipsed. There may have been some tactical compromises, but as events proved, Pakistan resisted the trap. US could not have its way and a new strategy became inevitable. Time for a new plan had come.

This change of heart also caused a furore amongst the ‘Shock and Awe’ rightist who singled out Pakistan as part of the problem (Lisa and Nicholas). This same right saw McChyrstal as an upholder of US Absolutism and a Bush Strategy downgraded by the Democrats. It also set the template of the future US election debate between the Democrats and the Republicans.

Writing on Obama’s Third Surge, I had cautioned,

“The new AF-PAK strategy is a compromise with enough blank space for narratives to be filled later. It is these blank narratives that cause concern… What lies undisclosed is high intensity sting and covert intelligence operations conducted by CIA and the dreaded JSOC. The message is unambiguous. Pakistan will have to face a surge of expanded drone attacks (settled urban areas) by both JSOC and CIA, and a cruel spate of covertly sanctioned illegal assassinations, sting operations and anarchy generated by contractors with leaks capable of breaking hell in Pakistan”.

As an analyst, my biggest concern is to identify the blank spaces in the narratives that need to be filled in after the change of command in Afghanistan and what USA terms AF-PAK. This is a moot to be contended between the Pentagon and the White House in the coming months. In the interim, all ongoing operations in Afghanistan will lose their momentum and the operational pause give a much needed respite to the Afghan resistance to recoup and reorganise. The pause is also a blessing for Pakistan to put its house in order. However, given the ground realities, Pakistan’s politicians will continue to display their insensitivity to national sensibilities and allow the country to drift with only the military calling shots and determining the course of future events.

Much is also being made of the COIN Strategy cited as success in Iraq. Apparently this strategy had a socio economic pincer at the leading edge with dollars being used to buy off Sunni Muslims against hardcore militants linked to Al Qaida. Total economic destruction of Iraq had led to extreme poverty that was later exploited to trade loyalties for bread. This was a controversial US counter insurgency doctrine called COIN devised and implemented by U.S. Central Command Chief David Petraeus in Iraq.

Premised on ‘money talks’ all future operations in AF- PAK will witness a surge of monetary kickbacks as a corner stone to other factors related to combat, overt and covert violence, expanded role of drones (settled urban areas) and terrorising tactics in urban areas. A failing Pakistani economy is mandatory to the success of this strategy.

It is with this reason that my last ten articles on these pages have primarily focussed on the intrinsic link between the war in Afghanistan and Pakistan’s political economy. The focus of the primary threat to Pakistan shifted long ago from India to bad policy making and bad governance from within. In the worst case scenario, by the time US stabilises in Afghanistan, Pakistan would be a state vulnerable to a COIN Strategy.

Though the modality and command may have changed, we Pakistanis must realise that the American long, mid and short term designs and objectives in the region have not. This should also dispel any illusions that some Pakistanis may have on the benefits of the Pakistan-US Equation as a saviour.

We should rather be in awe of the fact that US defence contracts have already floated a bid for increased jet fuel in Afghanistan till 2013, with the condition that it must not come through Pakistan. Does this imply that Pakistan may be under US attack from Bagram in 2012-13? Or does it mean that Pakistan would have plummeted to anarchy by that time. Supply of jet fuel would start in 2011 about the time when new US operations would be peaking in the region.

Afghanistan is a country whose economy thrives in times of conflict. Already USA is indirectly funding the war against itself through its local contractors and efforts to buy off revolutionaries. The COIN may buy off the war lords but never the romantic revolutionaries. To the contrary, money is endemic to Pakistani Politics. It works wonders especially when it will be funnelled through methods that promote corruption and a black economy.

Under the new command, the next phase of US operations is not likely to commence before September 2010. This also coincides with the time when Pakistan army will be looking forward to a new military chief. Speculative options on the continuity of General Kayani as COAS are rife and so is the rumour and manipulation mill. Hence all rumours must be put to rest so that the military and country can concentrate on the US operations in the Kandhar region and its backwash on Balochistan in particular.

As an appropriate measure, the nation must agree to eat grass, least for the survival of its crowned jewels rather for its own national honour and pride.

If this preparation does not take place before the new surge, Pakistanis will have no option left but to look for a new social contract. I pray it comes peacefully and not through violence.


Filed under: Uncategorized — sharafs @ 5:44 am

Brigadier (R) Samson Simon Sharaf

The progress of a country’s revenue generation directly depends on the growth of its economy and the fairness of its tax collectors to deliver. However, at the broadest and lowest level of this enforcement lie a mass of people with different ideas, idiosyncrasies, historical traditions and daily experiences. This diversity is intertwined at the very top with governance manifested by its politicians, establishment, enforcement and intellectuals. Consequently, the tax culture of a country will always take the colour of its top tier.

South Asia in which Pakistan is no exception has a very healthy and proud tradition of philanthropy and charity.  The people are not averse to the concept of giving and donating as long as they know it goes to the right hands. In a modelling we carried out along with local tax officials of Gujranwala, the charity paid by small business owners was thrice the taxes paid to the government. Herein emerges a paradox. Pakistan is one of the world’s highest charities paying country per capita income, yet it has one of the lowest taxes to GDP ratios. According to Dr. Birger Nerre of University of Hamburg, the topic of Tax Culture appears precisely at the intersection of the disciplines of economics, sociology and history and this is precisely where the disconnect in Pakistan lies.

Consumer based taxes depend on the ability of the majority at the bottom of the barrel to consume. If they consume, the supply chain automatically delivers more revenue. In order to boost production and its consumption, the most viable alternative is to make others consume through exports. If both domestic economy and exports do not propel consumption, first because of a prohibitive consumer price index and second due to inability, the revenue shrinks.

In circumstances such as these, a bulwark approach in recession is surely a recipe for hyperinflation, poverty and a black hole in economy. Therefore, once an establishment that lacks good governance, accountability, impeccable character and an even handed approach in enforcement enforces more and higher taxes at the consumer end, it is another disaster in making.

Sales Tax is the oldest tax of human civilisation. It basic premise was and remains to collect a levy at every stage of transaction. Ultimately the entire burden passes on to the last buyer. This consumption forces private cash holding into circulation triggering reflation (a healthy inflation) of economy, raising Consumer Price Index (CPI) and expanding the Gross Domestic Product (GDP). In most countries of the world, this paradigm of consumerism as an end-means relationship has not changed. It also allows the effective tax rates to be much higher than the declared rate: an aspect hidden from taxpayers.

However in growing and robust economies like USA, this indirect form of taxation apart from mortgaging is the mainstay of revenue. Being domestically competitive and productive with a consumer society based on the ethos of its founding fathers, it has so far precluded the need to shift to a form of Value Addition. US paradigm remains consumption led growth. USA must produce so that rest of the world consumes.

However in countries that depend less on domestic consumption and more on exports to keep the consumption cycle positive, the Sales Tax has been reformed to a more scientific method of value addition. The purpose is not to levy additional consumption taxes on citizens but rather to determine incomes for direct taxation.  France began the experimentation and was followed by EU, Singapore and the rest. The most noticeable commonality in all these countries is the prohibitive CPI in terms of Pakistani exchange rates.

In tight economies plagued by an endemically corrupt political culture and fiscal manipulation, this form of taxation becomes regressive and a precursor to hyperinflation. As the CPI becomes prohibitive, broad steep pockets of poverty appear. This is exactly the havoc being played in Pakistan through borrowed; least understood; and awfully implemented consumer based taxation systems.

The exercise to convert the General Sales Tax to a productive and acceptable social tool began in full earnest in 1999 under General (R)Pervez Musharraf. The Economics Affair Division was extremely zealous to fulfil its obligations to IMF sponsored Structural Adjustment Programme (SAP) and bring a vast sector of the undocumented, informal, comprador and black economy still going strong into the tax net (Pakistan was into its 10th Year of Nuclear Sanctions). VAT was projected as a modern methodology to document the additional transactional taxes at every stage with GST Identification. Theoretically, once the total VAT paid by any single entity in a year is determined, the ascertainment of profits is a simple calculation. So if an entity paid Rs15 in a year, its profits are Rs.85. This is the point where the Income Tax Department was to step in and tally the IT Returns of that entity with the income reflected in GST. Both Tax evaders and cheats were to be netted and income tax broadened.

During lengthy deliberations in CBR, Ministry of Finance and GHQ, we repeatedly emphasised that if the purpose of VAT was indeed broadening the tax base, then even a levy of 1% rather than 15% was sufficient to broaden the tax base through the Income Tax Department and use of computers and sale machines. Any VAT remitted as 1% meant 99% profit. During my repeated interactions with the Ministry of Finance, CBR and traders, I asserted that the purpose of VAT should not be to raise taxes but to broaden the tax net manifold through the Income Tax Department.

Perhaps this is where departmental corporatism set in. Sales Tax Department of late had become the domain of custom officials who had also absorbed some officials of the Excise Department. Moreover, Customs, Sales Tax and Income Tax zones had different geographical boundaries meaning organisational reforms within CBR. It was also a slur for the GST Department to act as a feeder to the Income Tax Department. Even if all this was accomplished, technical expertise was imperative to ensure success.

Just to prove this point, Pakistan Revenue Automation Limited (PRAL) was asked to set up a Model CBR office in Westridge and document information coming through the unimaginative Tax Survey. We set up a simple EXCEL programme to determine the profit levels of GST Returns/Invoices. The simulation gave surprising feedbacks on the tax evasion of known entities. This simulation was run by me during a cabinet meeting held in August 2000 in GHQ, showing the Income Tax rising threefold. There were valuable contributions made by Member Income Tax Mr. Mansoor and Dr. Ashfaq Ahmad the Economic Advisor both working many extra hours with us to streamline an effective methodology. But then something happened. All our efforts came to nothing at all….

The decision makers decided to revert to a consumptive Tax of 15-18% raising it to 28% in some cases. PRAL was never allowed to display its expertise. What we finally got was a regressive consumptive levy least amenable to documentation or economic growth. One of the most destructive effects of this levy was that either the small businesses particularly in the manufacturing sector closed or they in quest to avoid multiple taxations surrendered to larger businesses. The age of Cartels had arrived.

As for rest of the world, it still looks for a perfect VAT Model. Had Pakistan been so good at it, tax experts from world over would have swarmed here.

Now the history is being repeated once again. The inputs of our intellectuals are conspicuously lacking. Once again the progeny of the old guard will sit down to reinvent a wheel and once again the people of Pakistan will suffer. Dr. Farrukh Saleem was prophetic when he coined the term in 2000, “Sucking Blood from Stones”.

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