The provinces have not been able to agree on how to split revenue - with many provinces complaining of a raw deal where the federal government does not adequately compensate them for the natural resources it extracts from them. The National Finance Commission (NFC) negotiations have been inconclusive.
Pakistan is now in the midst of an artificial wheat crisis. Commodities traders started hoarding grain supplies when it emerged that Pakistan could face a supply crunch after it rejected a shipment of Australian wheat on the suspicion that it was affected with the Karnal bunt virus. That action sparked a diplomatic row with Australia, which was further exacerbated when other countries had no reservations in allowing the import of the same shipment. With supplies restricted and government procurement of foodgrain falling short of target, the price of wheat - a Pakistani staple - began to skyrocket, leading to widespread discontent. Traders are also capitalising on arbitrage opportunities where wheat producers can sell their produce at higher prices in neighbouring Afghanistan rather than to the provincial governments at regulated prices.
The wheat-producing Punjab and Sindh provinces banned the ‘export’ of wheat, prompting some in Balochistan to threaten to cut off the power and gas supplies to the Punjab. The Sui gas fields in Balochistan provide of much of Pakistan’s energy requirements. Both the gas fields and pipelines pass through tribal areas where a fragile stability is maintained by the federal government paying off the local tribes in return for security. That stability is frequently tested, and there have been attacks on the gas pipelines in retaliation for the wheat embargo.
Similarly, there is local Baloch resentment with respect to the Gwadar port project that Pakistan is building with Chinese assistance. This port not only connects the China’s western provinces to the Arabian sea but is also a strategic for Pakistan as it mitigates the dependency on Karachi. But the Baloch locals see it as yet another example of federal (ie Punjabi) exploitation; the recent bomb attack killing three Chinese engineers is more likely a result of Pakistan’s internal rifts than an act of al Qaeda related terrorism.
The NWFP and adjoining tribal areas are deeply resentful of the Pakistani army and federal government after the recent fiasco in South Waziristan. The wheat crisis has had a direct impact on the daily life of people in Balochistan and Sindh. Sectarian clashes have worsened in Gilgit and Baltistan. The stirrings could worsen in the coming months, as the harsh summer exerts pressure on food and energy supplies. Past military dictators have handled protests by restive provinces with brute force. Musharraf may be compelled to do the same. Placating restive provinces will also require Musharraf to harden his stand on Kashmir.
Related Links: ParaPundit writes that the provincial governments are trying to wrestle with pesky market forces. In his book Development as Freedom, Amartya Sen proves that artificial famines are often caused by an absence of democracy.
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