Controlling smuggling

EDITORIAL: Prime Minister Shehbaz Sharif seems very serious about “eliminating smuggling” during this term, at least as far as holding high-level meetings in the prime minister’s secretariat is concerned. It turns out that despite a “considerable decrease in the total smuggling of essential goods”, Rs106 billion worth of smuggled goods were still captured in FY24, which resulted in a drop in hoarding practices as well.

Yet there’s still no significant decrease in the smuggling of petroleum products from Iran. This is a deeply rooted problem that’s proved impossible to solve so far. Its main reason is acute poverty and lack of work opportunities on the Pakistani side of the border region, leaving the proceeds from the oil smuggling racket as the only real source of income for the youth. And the few times that efforts to clamp down on smuggling have succeeded, there’s been a visible spike in social unrest and crime all over the area.

That is why two steps that the prime minister ordered at the meeting, though hardly novel, are very important. One, he charged the foreign secretary to raise the issue of border markets with Iranian officials. The idea, many years old, is to set up markets on both sides to encourage commerce to replace smuggling. And after an impressive start it seems to have fizzled out. Right now there Iranians are very deeply involved in the fallout of the Gaza war and bracing for a possible wider conflict, but it’ll do no harm for the foreign ministry to get the ball rolling once again. The 15-day deadline given to the foreign secretary to “complete the work”, however, might be a little unrealistic.

And two, he also ordered the chief secretary and inspector general of police in Balochistan to “implement effective measures” to stop the transport of smuggled oil out of the province. This is a very serious problem indeed, and one that owes not to the backward demographics of a particular region but rather the ineffective nature of the country’s security machinery. Racketeers have been conniving with officials, right under the nose of the government, to flood the local market with smuggled oil up and down the country; wreaking havoc on the national economy to the tune of billions of rupees every year.

Everybody knows that this sort of movement of smuggled goods is not possible without aid from the inside, yet there’s been no major crackdown on this sort of corruption. So, if this time the smuggled oil can be kept from leaving Balochistan, it would be a major achievement. It should also enable authorities to identify bad guys within the system, so they can begin a thorough cleansing operation; one that will see heads roll and punishments meted out in accordance with the law. Yet, once again, the one-month deadline set for this might be a bit too optimistic.

The PM was also informed that more than 200 commodities were added to the negative list of the transit trade agreement with Afghanistan, making them ineligible for import under the agreement. It’s already brought down transit-prone smuggling “significantly”, though the exact percentage hasn’t been reported. But cargo from this trade will now require bank guarantees instead of just insurance guarantees. How this works out will not take too long to determine, so the next such meeting is expected to reveal some important statistics as well.

The PM is right to make smuggling a very high priority. It’s his job to fix the economy, at the end of the day, and the harm such leakages do to a collapsing economy are an entire academic discipline on their own. Still, the proof of the pudding lies in the eating. We’ve seen such meetings and headlines before, and we’re still waiting to see the kinds of results that are needed.

Copyright Business Recorder, 2024