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World

Economic crisis threatens Pakistan's leader

Saeed Shah - McClatchy Newspapers

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January 23, 2008 03:42 PM

RAWALPINDI, Pakistan — Pakistani President Pervez Musharraf has survived constitutional crises and three assassination attempts, but the more prosaic challenge of supplying flour to his people could be his government's undoing.

As an election scheduled for Feb. 18 approaches, the voters' main grievance appears to be a severe shortage of wheat flour, which is used to make roti, the round flatbread that's a staple food for Pakistanis.

The prices of goods ranging from tomatoes to milk also have soared; a sudden shortage of electricity and gas has forced factories to cut their hours and households to endure several hours a day without power; and the combination of higher prices, shortages and political unrest are fueling a sense of crisis in a country that's on the front line of the Bush administration's war on terrorism.

The Musharraf regime's proudest boast used to be its economic record, delivering annual growth rates of around 7 percent for the last five years. Now inflation and shortages may have made the economy the biggest handicap for the pro-Musharraf PML-Q political party and underscored other grievances about Musharraf's eight-year rule.

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Earlier this month, Pakistan's central bank cuts its growth estimate for the fiscal year from 7.2 percent to between 6.6 and 7 percent, but almost a year of political turmoil could take a further toll on foreign and domestic investment.

"There has been a disconnect between the headline growth numbers and the welfare of the average Pakistani," said Sakib Sherani, the chief economist at the ABN Amro bank in Islamabad. "Growth has bypassed a lot of Pakistanis."

The touchiest issue is the rising cost of flour, aggravated by hoarding and illicit exports. The price of a 44-pound bag nearly doubled over the last few months, from around 250 rupees ($4) to some 450 rupees. Pakistan's average per-capita income is $720 annually, or $2 a day, according to a 2006 World Bank estimate.

"No one thinks about terrorism. It is inflation that worries us," said Shabbir Hassan, who runs a small laundry in Rawalpindi. "There are no (price) controls."

"The poor have been squashed," said Mohammed Ashraf, a roadside fruit vendor in Rawalpindi's Raja market who has five children. "People will just start to loot if they get can't food. Any government must make sure that the people can at least eat roti."

"A poor man could buy two rotis for each meal," said Waqas Sheikh, another street vendor. "Now you can maybe buy one. Musharraf's government is not doing anything, just lining their pockets."

Abida Khalil, a housewife who was shopping in the Raja market, which is just down the road from the city park where opposition leader Benazir Bhutto was assassinated last month, said that even if she could find flour, it was of such poor quality that it wasn't worth eating. Her family is eating rice instead, usually a more expensive option.

"Our whole country is misbalanced right now. From every direction," she said.

The government has deployed more than 5,000 paramilitary soldiers to monitor and improve the supply chain. They're manning wheat warehouses, flour mills and retail outlets to try to ensure that the product reaches markets. There've been long lines of angry consumers at the government-owned Utility Stores chain for weeks, queuing up in often-futile attempts to buy flour at a regulated price.

"It is completely government mismanagement," said Asad Sayeed, an economist at the Collective for Social Science Research in Karachi. "We've never had this sort of food crisis before."

Pakistan is usually self-sufficient in wheat. Sayeed said the government had drastically overestimated the wheat crop and allowed exports, only to have to import wheat at a much higher price at a time when there's a worldwide shortage.

Tariq Azeem, a minister in Musharraf's government, said the government's economic record was good. "Even the worst critics of the government acknowledge that there was a turnaround . . . ," he said. "People who were going on bicycles have gone on to motorcycles, and the motorcyclists have gone on to cars."

Azeem conceded that electricity generation has failed to keep up with demand, but he said this was because of a lack of political consensus on building new dams to generate hydropower.

(Shah is a McClatchy special correspondent.)

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