DAWN Editorials - 16th April 2025

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A positive start

FROM American threats of bombing Iran, things have taken a more positive turn as President Donald Trump’s emissary Steve Witkoff initiated indirect talks on the nuclear issue with Iranian Foreign Minister Abbas Araghchi in Muscat on Saturday. While the Omanis acted as intermediaries, Mr Witkoff and Mr Araghchi also met briefly, initiating diplomatic first contact after a lengthy pause. Both sides have cautiously welcomed the developments, and the next round will take place this coming weekend. While Mr Trump has not ruled out attacking Iran in case negotiations fail, the parleys signal a welcome shift from the earlier bombast coming out of Washington, which seemed to indicate that war was imminent.

While the developments are no doubt positive, no one should be under the illusion that the US-Iran stand-off has ended. One major reason for this is Mr Trump’s unpredictable nature, although it is also true that the Iranians are unlikely to meet America’s demands that they completely roll back their nuclear programme. Tehran’s support for its regional allies, and limits to its missile programme — the other major American demands — are also red lines. Beyond this, the Iranians seem willing to place limits on their atomic programme in exchange for sanctions relief. US-led sanctions have crippled the Islamic Republic’s economy, and together with internal mismanagement, the average Iranian is enduring considerable financial pain. It is also highly likely that the engagement in Muscat has not gone down well in Tel Aviv. The Israeli regime is keen to see an attack on Iran, but knows it cannot carry it out alone and thus is hopeful of dragging Washington into a new Middle Eastern quagmire. Therefore, Mr Trump needs to resist the Zionist and neocon ‘advice’ to attack Iran if the negotiations fail, and continue the parleys in good faith. An attack on Iran will not be child’s play, and the fire arising from such a misadventure will burn the entire Middle East.

Published in Dawn, April 16th, 2025


Water dispute

WITH a long, hot summer looming ahead, the last thing the country needs is two provinces fighting over water. Yet, that is precisely where things seem to be headed. Prompted into action by farmers’ protests, the PPP, the ruling party in Sindh, has been poking and prodding the PMLN-led federal government to shelve the now deeply controversial Cholistan canals project, part of this regime’s Green Pakistan Initiative. It has recently started threatening to withdraw its support for the coalition government if this ‘demand’ is not heard. This does not seem to have gone down well with the other PML-N government — the one ruling from Lahore — which last week accused the PPP of ‘doing politics’ on the issue. “It is documented, it is signed,” Punjab Information Minister Azma Bokhari had said in a rejoinder to PPP chairman Bilawal Bhutto-Zardari rejecting the project, referencing the claim that President Asif Ali Zardari had lent it his approval — although he had asserted in his speech to parliament last month that he could not support the canal proposal.

More recently, however, the Punjab government has outright accused Sindh of “eating into” its fair share of the water by cheating the system. In a recent letter to the Indus River System Authority, Punjab’s Irrigation Department accused Sindh of “underreporting discharge data”, especially at the Guddu and Sukkur barrages, as a result of which it received “additional water” while Punjab received less than its share. Clearly, this is a spat that has the potential of turning rather ugly and could also trigger a flaring up of ethno-nationalist tensions. It would be in the national interest, therefore, if the Council of Common Interests were to convene at the earliest and arbitrate the dispute fairly. The Sindh chief minister, who believes that his province has a strong case and evidence to back it up, should be given a fair hearing, as should the chief minister of Punjab, who seems to believe her province’s rightful share of water resources is not being given to it. It must be pointed out that petitions against several new water projects, including the Cholistan canal, have been pending before the CCI for quite some time, but the Council has failed to deliberate on them. Given that drought-like conditions are already threatening agricultural output in large parts of the country, this matter needs to be settled at the earliest so that no party can claim they were cheated out of their entitlement.

Published in Dawn, April 16th, 2025


Improved outlook

REMITTANCES hit an all-time high of nearly $4.1bn last month, breaking the streak of $3bn per month during the July-February period, to everyone’s surprise. The March remittances rose by 37pc from a year ago and were up by 30pc compared to the previous month’s tally of $3.1bn. Cumulatively, the flows from overseas Pakistanis have grown by 33pc in the first three quarters of FY25 to little over $28bn from just above $21bn the previous year. The State Bank now expects to receive $38bn in remittances, up from previous projections of $35bn this year. The growth in remittances this year is owed to a stable exchange rate, increase in the immigration of tech professionals to the Gulf, and the relative easing of import curbs. The spike in flows last month was further aided by Ramazan and Eid. Even though analysts believe that the latest tally is ‘a blip in the matrix’ due to seasonal factors, it shows the potential of significant boosts to flows in a short period with the right incentives offered to the Pakistani diaspora.

That the growth in remittances has far outpaced the trade deficit during the fiscal year underlines the critical support these flows are providing to the current account. Effectively, remittances have proved to be the most crucial lifeline for Pakistan in recent years, keeping its economy afloat and enabling it to pay its burgeoning import bills as foreign official and private capital flows dry up in spite of the IMF bailout. The share of remittances in GDP for Pakistan has increased from 1pc in 2000 to around 9pc, or more than the share of exports. Encouraged by the sustained growth in cash sent home by Pakistanis abroad, the State Bank hopes to raise its international reserves to $14bn by end-June, despite significant debt payments made this year.

That said, Pakistan also owes a lot to improvement in other economic fundamentals for the upgrade by Fitch Ratings in the long-term foreign currency issuer default rating by one notch to ‘B-’ from ‘CCC+’ with a stable outlook. It earlier had a B- rating with a stable outlook from December 2018 to July 2022. The rating upgrade is expected to bolster investor confidence — both domestic and foreign. The upgrade will make it easier for Pakistan to access international debt markets as the government plans to raise cash from Chinese and other bond markets later this year to meet its large funding needs that exist in spite of regular debt rollovers and safe deposits from friendly countries. Other global rating agencies are expected to follow suit and upgrade their ratings for Pakistan, deepening investor confidence in its debt. As the State Bank governor said, Pakistan has seen off a period of macroeconomic instability — characterised by high inflation, low reserves and fears of default. Now it is time to build on the gains.

Published in Dawn, April 16th, 2025[/size][/size]