INSTITUTE FOR PARLIAMENTARY SERVICES DEDICATED TO PARLIAMENTARY EXCELLENCE

ISSN # 2414-8040 Parliamentary Research Digest

VOLUME 5,ISSUE 10 OCTOBER,2018

INSIDE THIS ISSUE: Editorial The International Democracy Day is celebrated on September 15 every year; PIPS held its 4th OPINION annual Seminar to commemorate the event with this year’s Inter Parliamentary Union (IPU) Pakistan under Grey List of Theme – What if Parliamentary Oversight did not Exist along with Inter University Quiz competition Financial Action Task Force on Know Your Parliament, pro-actively participated by 115 faculty and students lead by parliamen- (FATF) tary panel comprising Senator Faisal Javed and MNA Ms Shahida Akhter Ali. The Institute held Page 01 three orientation programmes and a budget round table in September for Members of the Parlia- ment. Honourable Chairman of Pakistan Senate took charge as the new

President Board of Governors.

This October 2018 Issue of PIPS Parliamentary Research Digest includes invaluable articles on ANALYSIS Pakistan and the FATF grey list; Turkey-US Relations at cross roads and an analysis of the Fi- Supplementary Finance Bill 2018: nance (Supplementary) Bill 2018-19 recently presented in the National Parliament. Like the last Summary and Salient Features couple of issue, we also present a run-down of History of Provincial Assembly of Punjab. Page 07 PIPS team continues to serve over 1254 individual MPs and committees at the Senate of Paki- stan, National Assembly, four provincial assemblies as well as legislative assemblies of Azad Jam- mu and Kashmir and Gilgit Baltistan with legislative, research, capacity building and outreach services.

ANALYSIS Please feel free to contact PIPS for any research or briefing papers at [email protected]. Turkey US Relations at Cross- roads Muhammad Rashid Mafzool Zaka Page 13 D.G (Research and Legislation)

PARLIAMENTARY HISTORY History of Provincial Assembly of Punjab Page 20

Editorial Board

Editor: Muhammad Rashid Mafzool Zaka

Sub Editor: Tehseen Khalid

Members: Fakiha Mahmoo PIPS organizes New Members Orientation for the newly elected Members of National Assembly of Pakistan, September 26-28, 2018 Muhammad Rizwan Manzoor Provincial Assembly of Punjab (Pakistan)

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OPINION

Pakistan under Grey List of Financial Action Task Force (FATF)

Maria Irfan PIPS Associate

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. It was formed at G 7 summit meeting in Paris. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. 1 FATF issues series of recommendations that, when followed, may help curb terror financing through money laundering.

The FATF monitors financial transactions of countries worldwide, reviewing if they have taken the required steps against curtailing the flow of funds to blacklisted organizations i.e. mafias, terrorist outfits, banned groups who face economic sanctions from UN-member countries. Based on these facts, FATF releases a list of countries after its review and sorts them according to their performance against activities they have deemed illegal.2 The FATF’s decision making body, the FATF plenary body, meets three times a year.

History of Financial Action Task Force (FATF)

Recognizing the threat posed to the banking system and to financial institutions in Paris (1989), the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries. 3 The FATF currently comprises 35 member jurisdictions and 2 regional organizations including China, India, United States, United Kingdom, and Japan.4 The FATF grey list is a short description of the Financial Action Task Force list of Non-Cooperative Countries and Territories (NCCTs).5 This blacklist has been issued by Financial Action Task Force FATF since 2000 and it lists countries which it finds to be non-cooperative in the global fight against money laundering and terrorist financing, calling them non- cooperative countries or territories. FATF and other organizations take an indirect route to evaluate the sensitivity of a country to terror financing by tracking and evaluating their laws and their implementations. Some countries included in this list are; Ethiopia, Iraq, Yemen, Serbia, Syria, Srilanka, Trinidad and Tobago, Tunisia and Vanuatu.6 Pakistan is placed again in this list on 27 June, 2018.

1 http://www.fatf-gafi.org/countries/#FATF browsed Sept 25, 2018 2 Aitzaz,Hassan. “What is FATF and What Does Pakistan’s Inclusion in Its Grey List Mean.” ProPakistani. Accessed July23,2018 https://propakistani.pk/2018/02/26/fatf-pakistans-inclusion-grey-list-list-mean/ 3 “History of the FATF”. Fatf-gafi. Accessed July24,2018 http://www.fatf-gafi.org/about/historyofthefatf/ 4“FATF Members and Observers”. Fatf-gafi. Accessed July23,2018 http://www.fatf- gafi.org/about/membersandobservers/ 5 “About FATF”. Faf-gafi Accessed July24,2018 http://www.fatf-gafi.org/about/ 6 Usman, Hayat. “Pakistan on FATF’s Grey List-What, Why and Why Now”. Dawn Accessed July24, 2018 https://www.dawn.com/news/1418143 PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 1

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Pakistan as Member of Asia/Pacific Group on Money Laundering (APG)

The purpose of the Asia/Pacific Group on Money Laundering (APG) is to ensure the adoption, implementation and enforcement of internationally accepted anti-money laundering and counter-terrorist financing standards as set out in the FATF Forty Recommendations and FATF Eight Special Recommendations. 7The effort includes assisting countries and territories of the region in enacting laws to deal with the proceeds of crime, mutual legal assistance, confiscation, forfeiture and extradition; providing guidance in setting up systems for reporting and investigating suspicious transactions and helping in the establishment of financial intelligence units. The APG also enables regional factors to be taken into account in the implementation of anti-money laundering measures.

Origins of the APG go back to "awareness raising" activities by the FATF in early 1990s as part of its strategy to encourage adoption of money laundering counter-measures throughout the world. In order to achieve more concrete results, Australia agreed to set up a Secretariat for the purpose of obtaining regional commitment and establishing a regional FATF-style body with practical objectives. Subsequently, an agreement was reached in Bangkok in 1997 which created the APG. The first meeting was held in Tokyo in 1998 and then annually thereafter. Following the events of 11 September 2001, the APG expanded its scope to include the countering of terrorist financing. The APG conducts mutual evaluations of its members and holds a periodic workshop on money laundering methods and trends. The APG is supported by a Secretariat, which serves as the focal point for its activities. The APG became an Associate Member of the FATF in 2006. Pakistan is one of the over 41 member countries and 8 observer nations in the APG.

Pakistan and FATF Grey List, the History:

Pakistan was on grey list previously in 2008 and for three years between 2012 and 2015 but due to its continuous efforts the Task Force removed Pakistan from the list in 2015 after the country agreed to take actions against Hafiz Saeed’s Jamaat-ud-Dawa (JuD), Falah-e- Insaniyat Foundation (FIF) and Lashkare Tayyba.8

Earlier in February 2018, some member countries including USA, UK joined by France and Germany nominated Pakistan to be placed in FATF Grey list during the International Country Risk Guide (ICRG) session which was held a day before the FATF plenary.9 Upon this the advisor to the then Prime Minister, Dr Miftah Ismail offered that Pakistan was ready to submit a report on their concerns and FATF should take their decision based on that. At that time Japan supported Pakistan. ICRG also agreed to that proposal that FATF should take decision based on those measures. China also advised Pakistan that it should sign an agreement with FATF based on its measures to be taken in upcoming three months. The pre plenary meeting ended positively and this resulted in the tweet from the then Defence Minister of Pakistan, Khawaja Asif in which he announced that FATF postponed the decision. However to the surprise of Pakistani authorities FATF decided to place Pakistan on

7 http://www.fatf-gafi.org/pages/members/asiapacificgrouponmoneylaunderingapg.html 8 Shahbaz,Rana. “Pakistan to Go on FATF Terror Financing List in June”. The Express Tribune. Accessed July27,2018 https://tribune.com.pk/story/1643185/1-pakistan-go-fatf-terror-financing-list-june/ 9 Ibid. PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 2

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the Grey list due to continuous pressure from USA and on June, 27 Pakistan was placed in this list due to “strategic deficiencies” in anti-money laundering and terrorism financing. 10

This decision was due to US allegations that Pakistan has not taken any actions against Hafiz Saeed, the mastermind behind Mumbai attacks and Pakistan’s lack of action against terrorist organizations likes Jamaat-ud-daawa, Jaish-e-Muhammad and other sectarian groups. The decision highlighted a weakness that Pakistani courts during conviction were not awarding penalties on charge of terrorism-financing also that Pakistan was unable to control cross border smuggling of cash.

After the decision of placing Pakistan on the grey list in the first plenary meeting in February, Pakistan represented a 26 point action plan to FATF prepared by ICRG. After this negotiation Pakistan was formally placed on the grey list in June 2018. If failed to implement this plan, Pakistan would be placed on the “Blacklist.” This ranking in grey list is making the position of Pakistan worse in other indexes. For instance, Pakistan is ranked by the Basel Anti-Money laundering Index, that currently ranks Pakistan 46 out of 146 countries which place it in a better position than Tajikistan (4) Kenya (11) and Panama (30). All of these are currently not in the grey list. Its ranking is also associated with FATF. Now that Pakistan is placed in grey list it will also affect its ranking in Basel Anti-Money laundering Index.

The world must recognize Pakistan is a victim of terrorism as the Global Terrorism Index 2017 by Institute for Economics and Peace (an independent, non-partisan, non-profit think tank) ranks Pakistan as the fifth most affected from terrorism behind Iraq, Afghanistan, Nigeria, and Syria.11

Implications for Pakistan

This grey listing has a negative effect on the image of Pakistan internationally. There are a number of ways in which this grey listing will implicate Pakistan.

i. Pakistan’s financial sector might take a direct hit as Standard Chartered, the largest international bank in Pakistan as well as Citibank and Deutsche bank might decide to pull out due to uncertainty of proper issuance of their funds.12 ii. A decline in foreign transactions and foreign currency inflows could lead to worsening of Pakistan’s current account deficit (CAD). iii. Financial Institutions such as the World Bank and IMF would hesitate in transactions with Pakistani Banks or would avoid Pakistan altogether. iv. It would be harder for foreign investors/companies to do business in Pakistan. v. Accessing funds from international markets would be difficult for Pakistan. Action Plan and Concerns of FATF

The 26 point action plan prepared by ICRG which Pakistan negotiated with FATF requires to remove all sources of financing to terrorist organizations. This list includes Lashkar-e-Taiba (LeT), Jaish-e-Mohammad (JeM), Jamaatud Dawa (JuD) and its affiliates,

10Ibid. 11 Usman, Hayat. “Pakistan on FATF’s Grey List-What, Why and Why Now”. Dawn Accessed July30, 2018 https://www.dawn.com/news/1418143 12 Ibid. PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 3

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the self-styled militant Islamic State (Daesh), the Haqqani Network, Pakistani Taliban and Al Qaeda.13

The FATF said Pakistan will have to demonstrate that remedial actions are applied. The Country will also demonstrate that authorities are identifying cash couriers and controlling illegal movement of currency. Pakistan also has to improve inter-agency coordination between provincial and federal authorities to counter terror financing risks. Law enforcement agencies need to identify and investigate terror financing. In its last points the Task Force suggested that Pakistan needs to demonstrate enforcements against TFS (Targeted Financial Sanctions) violations. It includes administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases.

Actions already taken

The ICRG report showed that Pakistan has already taken some action but they were not duly acknowledged. “Banks in Pakistan are not providing any financial services to designated entities and individuals and are continuously conducting ongoing transaction monitoring for terrorism financing concerns,” according to the ICRG report. Since October 2017, Pakistan has frozen 177 additional accounts in the amount of Rs48.2 million due to indirect linkages and association of customers with the UNSC-listed persons and entities.14 Apart from all these improvements Pakistan is still placed on the grey list.

Who supported Pakistan and then backed out?

After the first plenary meeting of FATF in February 2018 Pakistan was supported by China, Turkey and Saudi Arabia but after intense pressure from USA, Saudi Arabia and China backed out. USA negotiated with Saudi Arabia to give permanent membership in FATF and China also withdrew its support on Pakistan after negotiations with India. The message from Beijing is that if Islamabad chooses a policy that is not in line with Beijing’s economic or security interests, it should not expect any support from China. Beijing is clearly not happy with Pakistan’s lack of action against groups such as Jamaat-ud-daawa, Jaish-e- Muhammad and other sectarian groups.15

Reforms taken by Pakistan

After the first plenary meeting Pakistan hurriedly took some steps. Pakistan changed the terrorism legislation to keep it in line with that required by The United Nations. As a result the Anti-Terrorism Act was amended through a presidential ordinance that simply added the words "listed under the United Nations Security Council Act (1948)" into the section which provides the legal basis for proscriptions. 16

13 Anwar, Iqbal. “Pakistan Made High-Level Political Commitment to End Terror Financing” Accessed July 3, 2018 https://www.dawn.com/news/1417204 14 Shahbaz, Rana. “Pakistan Formally Placed on Grey List”. The Express Tribune. Accessed. Aug 3, 2018. https://tribune.com.pk/story/1746079/1-pakistan-formally-placed-fatf-grey-list/ 15 Umair, Jamal. “Why Did China Pull Support For Pakistan at the Financial Action Task Force”.The Diplomat. Accessed Aug 1,2018. https://thediplomat.com/2018/02/why-did-china-pull-support-for-pakistan-at-the- financial-action-task-force/ 16 “Pakistan Placed on Grey List by FATF”. FirstPost. Accessed Aug 4,2018. https://www.firstpost.com/world/pakistan-placed-on-grey-list-by-fatf-support-for-hafiz-saeed-hurt-country- as-did-prioritising-elections-over-fighting-terror-4628591.html PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 4

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Pakistan decided to upgrade its systems at border posts and ensure better coordination among its agencies to comply with FATF concerns regarding smuggling of currency by terrorist groups across the Afghan border. The cross border movement of currency by terrorist groups like Haqqani Network and Talibans were among the concerns the FATF had for putting Pakistan on grey list.

Securities and Exchange Commission of Pakistan (SECP) issued an Anti-Money laundering and Countering Financing of Terrorism Regulations for all the securities brokers, insurance companies, non-banking finance companies and modarabas with the aim to harmonize the AML and CFT regime.17

FATF Implications for Non Profit International organizations

Civil Society includes NPOs (non-profit organizations) who contribute in society’s welfare. According to FATF, the definition of NPO is: “A legal person or arrangement or organization that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of good work.” 18 It is important for countries to take into account the objectives of Recommendation 8 which are set out in paragraph 3 of its Interpretive Note as follows:

The objective of Recommendation 8 is to ensure that NPOs are not misused by terrorist organizations: (i) to pose as legitimate entities; (ii) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; or (iii) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes, but diverted for terrorist purposes.

Within the FATF definition this recommendation concerns only those NPOs that are involved in terrorist financing activities or money laundering. In some jurisdictions, this may mean those NPOs that control a significant portion of the financial resources of the sector and those NPOs that have a substantial share of the sectors international activities. Pakistan government has gradually paused functioning of many international NPOs whose future is hung in balance besides the fact that these NPOs are supporting civil society in numerous welfare projects.

Conclusion and Way Forward

Pakistan was previously placed on this list in 2003 and from 2012-2015. This recent decision of placing Pakistan on this list seems more due to intense pressure from USA and India besides country’s legislative, policy and administrative measures to curb terror financing. It seems Pakistan will be placed on this list till it convinces that it has shut down any financing leads to terrorist organizations like Jammat-ud-Daawa led by Hafiz Saeed. ICRG prepared 26 point action plan for Pakistan which was presented to FATF. This action plan requires Pakistan to take a lot of actions the most important of it is to erase all sources of financing to Terrorist Organizations. In the first phase of plenary meetings Pakistan’s allies, China, Saudi

17 “SECP Rolls Out New Anti-Money Laundering Regulations In Line With FATF Recommendations”. The Express Tribune. Accessed Aug 4, 2018 https://tribune.com.pk/story/1738512/2-secp-rolls-new-anti-money- laundering-regulations-line-fatf-recommendations/ 18 “Combating The Abuse of Non-Profit Organizations (Recommendation 8)”. FATF-gafi. http://www.fatf- gafi.org/media/fatf/documents/reports/BPP-combating-abuse-non-profit-organisations.pdf PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 5

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Arabia and Turkey supported it but after facing intense pressure from USA they backed out except Turkey.

Pakistan should continue following the action plan. The has completed legislation for FATA Reforms which will markedly improve writ of state and rule of law in the region previously vulnerable to infiltrators from Afghanistan border. Pakistan has conducted around 12 operations against militant groups in FATA and Baluchistan that shows its zero tolerance to any safe havens for terrorists. Fencing of Pak-Afghan border now at an advance stage will diminish smuggling of currency, trade of terrorists and ammunition. The agencies-backed mainstreaming of religious parties in the disguise of new political parties have been defeated by the people’s resolve in the general elections 2018 as all such parties couldn’t win a single seat no matter they proved not more than spoilers in 19 National Assembly seats, which could have seen a different winner according to recently launched GALLUP Pakistan report in Sept., 2018. According to World Bank, less than 50% of Pakistanis have bank accounts.

In order to control terror financing and money laundering we need to have a modern banking system where everything is digitized. All individuals should have bank accounts for transaction of their money. It is imperative that in order to implement the action plan and improve country’s ranking at FATF, the newly elected civilian regime should guide and direct armed forces and intelligence agencies to work in unison to halt any patronage or support to banned outfits from any side.

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ANALYSIS

Supplementary Finance Bill 2018: Summary and Salient Features

Muhammad Rizwan Manzoor Research Officer, PIPS Budget and Economy Desk

The newly elected PTI led Government presented the supplementary Finance Bill 2018 and the Federal Minister for Finance and Revenue Asad Umar termed the economic conditions of the country as vulnerable and inevitable for immediate financial reforms to bring economic sustainability. Pakistan’s current GDP is approximately Rs39000 billion and at present its total targeted tax revenues are Rs4889 and total budgetary expenditures stand at Rs6175 billion. Fiscal deficit is projected around Rs2800 billion almost 7.2 % of GDP against the target of 4.1 % in last fiscal year’s budget. Total public debt is about Rs30000 billon and interest payment is Rs1800 billion about 34 % of total budget. Being in extremely difficult position as for as fiscal deficit is concerned this supplementary finance bill is an attempt to rescue the economy from further deteriorating.

In the Supplementary Finance Bill, the Government gave Rs. 5.3 trillion revised budget for the remaining three quarters of fiscal year 2018-19 which seem to have mix of measures where on one side Government looks ambitious to curtail fiscal deficit through cutting developmental budget by Rs. 225 billion and increasing taxes on high income class, levying duties on imports, raising gas tariffs etc. But on the other hand non-development budget has been increased by Rs. 234 billion, nearly neutralizing the effect of reduction in development budget. In other words, the adjustment of Rs. 814 billion is provided for by the net impact of only Rs. 9 billion1.

Through this mini budget, the fiscal adjustment of 2.1% of Gross Domestic Product (GDP) was made that are equal to Rs. 814 billion. It is being projected that as a result of this adjustment, the budget deficit that was projected to widen to Rs. 2.8 trillion or 7.2% of GDP would narrow down to Rs. 1.9 trillion or 5.1% of GDP2. Still the proposed Rs. 1.9 trillion or 5.1% of GDP budget deficit target is Rs. 89 billion higher than the original budget deficit target that was set by the last PML-N government for this same fiscal year 2018-19.

The actual development spending would be still higher than the last fiscal year where the public development spending will be Rs725 billion as against Rs661 billion in the last fiscal year. However, the Rs661 billion was fully funded from the budget previous year but the Rs725 billion this year includes Rs150 billion that is not part of the Public Sector Development Programme. In these Rs. 150 billion, National Highway Authority

1 Dr. Pervez Tahir, "PTI’s budget: the old normal" Express Tribune, September 21, 2018 https://tribune.com.pk/story/1808253/6-ptis-budget-old-normal/ (Accessed date September 21, 2018) 2 A. F. Ferguson & Co. "Note on Supplementary Finance Bill (Amendment) 2018", Business Recorder, September 19, 2018 (https://fp.brecorder.com/2018/09/20180919408949/) , Accessed date: September 22, 2018 PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 7

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(NHA) would raise Rs100 billion off the budget to fund its projects while Karachi Infrastructure Development Company will also generate Rs50 billion through Public Private Partnership to finance Karachi projects.

According to the revised estimates the government’s revenue will drop by Rs. 350 billion and expenses will increase by Rs. 250 billion. The budget deficit due to increased spending will reach Rs 2.7 trillion or 6.6% of the total GDP compared to the previous budget deficit of Rs. 1.89 trillion or 4.9% of the total GDP3. Some key features of the Supplementary Finance Bill 2018-19 are given as under:

 Federal development targeted at Rs. 725 billion in the current year Budget deficit to be brought down to 5.1 percent

 Increased federal excise duty on imports of luxury vehicles and duties on 'expensive' cell phones (for vehicles over 1800 CC and phones of worth over Rs. 15000)

 Tax relief revoked from salaried persons earning more than Rs. 200,000 per month

 Increased federal excise duty on tobacco

 Tax rate in highest income tax slab for individuals raised to 25 percent and 29 percent

 Customs duty increased on more than 5,000 'luxury' items.

 Regulatory duty increased on import of more than 900 items

 Rate of withholding tax on banking transactions for non-tax filers also increased to 0.6 percent

 Issuance of Insaf Sehat Cards approved for Fata and Islamabad Capital Territory

 According to the revised estimates the government’s revenue will drop by Rs. 350 billion and expenses will increase by Rs. 250 billion.

3 The News, Highlights of the proposed supplementary Finance Bill, 2018, September 18, 2018, https://nation.com.pk/18-Sep-2018/highlights-of-the-proposed-supplementary-finance-bill-2018 (Accessed date: September 21, 2018) PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 8

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 The budget deficit due to increased spending will reach Rs 2.7 trillion or 6.6% of the total GDP compared to the previous budget deficit of Rs. 1.89 trillion or 4.9% of the total GDP4.

Revenue Measures:

 Tax exemption for Prime Minister, Ministers, Governors and Parliamentarians in respect of accommodation, conveyance and sumptuary allowance has been withdrawn.

 Around Rs. 92 billion is expected to be collected through the use of modern technology. While total revenue measures would save up to Rs. 183 billion.

 Banking transactions other than cash by non-filers to be taxed at a 0.6% up from 0.4% for transactions over Rs. 50,000

 Non-filers can buy new cars and property because they government has removed the blanket ban, which barred non-filers from purchasing new assets.

 FED on tobacco have been increased

 FED on 1800cc and above vehicles to be increased to 20% from 10%

 Duty to be increased on expensive mobile phones

 Existing tax rate on income slab between 1.2 to 2.4 million rupees is not changed. However, income tax rate for highest income tax slabs will be charged at 25 percent for an individual where income chargeable under the head "salary" exceeds fifty per cent of his taxable income and at 29 percent for individuals not falling in the first category.

Relief Measures:

 To protect the farmers and agriculture sector, government has given Rs7 billion subsidy on imported urea in addition to providing gas to the local plants.

 Insaf health cards will be issued in Islamabad Capital Territory and defunct tribal areas to give up to Rs. 540,000 annual health insurance cover to each vulnerable family.

4 Ibid PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 9

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 Rs. 4.5 billion will be released immediately for the construction of pending houses for underprivileged class and another 10,000 houses to be constructed in a short duration.

 The government has increased pensions by 10% for low-income pensioners (85% of EOBI registered members fall in the minimum pensioner’s category).

 Petroleum levy increase during the last budget amounting to Rs. 100 billion has been reversed as part of this amendment.

 The government has removed duties from 82 imported items that are used in export-oriented industries and announced Rs. 5 billion subsidies for this purpose.

Key Criticisms and Way Forwards:

 Government did not scale back non-development expenditures but has cut the development budget. The development budget helps any government to create new business and employments in the economy. The cut of Rs. 225 billion on development budget may make the promise to raise employment by the incumbent government. It is also important thing to note in which sectors / departments this development cut is being planned as shown in figure below:

2.3% 0.3% Current Expenditure: 2018-19 1.6% 2.6%

Debt Servicing Defence Public Order and Safety 21.9% Economic Affairs 44.2% Social Sector EP, Housing, Recreation

If we review the ongoing spending under current expenditure, it came forward out of the total spending 44.2 percent is going towards debt servicing and around 22 percent towards defense. It is worth noting that the portion allocated for Defense

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has the same weightage in the current expenditures of the country which percentage agriculture sector have in the GDP of Pakistan. The remaining 33 percent budget goes to all the remaining departments of the country. If government is planning any cut on development or current budget, it should be proportionate across all the divisions/departments rather than axing the weak divisions fund and remaining the strong institutions funding intact. In other words, austerity measures should be taken across the board.

 Government reversed a major reform that the PMLN Government had introduced to broaden the tax net that was the restriction on the non-filers of income tax from buying vehicles and property and this initiative worked positively by great increase of new entrants in the tax net. The move to allow non-filers to buy property and cars is clearly incentivizing mockery of law and noncompliance of tax filing. On the other hand, instead of broadening the tax net by bringing any new sector or class of people in the tax net, the Government has increased the burden on the existing taxpayers.

 The fiscal and expenditure measures that Government unveiled do not fully reflect the PTI’s manifesto. Government announced withdrawing tax-free perks of parliamentarians, governors and federal ministers but did not touch the perquisites being availed by judges and generals.

 The Government is increasing regulatory duties on 612 tariff lines and the sales tax on gas. The increase in electricity, gas, fuel and transportation, would have a substantial impact on inflation given that just four of these items i.e. electricity, gas, transport and housing have a weightage of almost 37 percent in the consumer price index. These fiscal adjustments will put adverse pressure on economic growth and accelerate inflation by different channels especially price of bread, staple food of lacs of poor will increase at the “tandoor.”

 The Government did not announce new projected annual economic growth target but said it will be significantly lower than the PML-N’s announced target i.e. 6.2%. There should be some set growth targets if Government is re-setting the parameters of its own choice.

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 Government is reviewing amount kept for Youth Schemes, which is a contradiction of much trumpeted vision for creation of opportunities of 60% young population. There is huge need for increasing opportunities for the youth and extending incentives. The youth schemes started by PMLN Government benefited lacs of students in initiatives such as laptop scheme for students, youth loan scheme, youth internship programs should remain continue.

 Free market economy should be promoted for inclusive growth. The construction of mega projects through public sector departments should be discouraged as it excludes the private sector from development process.

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ANALYSIS Turkey-US Relations at Crossroads

Fakiha Mahmood Research Officer, PIPS International Relations Desk

Introduction

Under the framework of Global Magnitsky Act, the Trump Administration imposed sanctions on two Turkish Ministers on 1st August 2018. The Act provides legal cover for penalizing authorities in cases of human rights abuses. Target authorities include Abdulhamit Gul, Justice Minister, and Suleyman Soylu, Interior Minister. They have been targeted for sanctions over the detention of US pastor Andrew Brunson on espionage charges. Days before the imposition of sanctions, President Trump warned Turkish President during a telephone call to immediately release the pastor. Turkey has reacted by rejecting the threats, and even pondering over trading without US dollar. Turkey has also imposed tariffs on US products ranging from alcoholic beverages to passengers cars, tobacco, cosmetics, rice and coal.1

Turkey-US relations are experiencing a showdown for quite some time, the imposition of sanctions has brought the bilateral relations to lowest ebb since decades. Some other issues include the US support to Kurdish elements accused of harboring terrorist activities in Turkey, the purchase of Russian made S-400 anti-aircraft systems by Turkey, and the prosecution of Turkish banker in the US court. Most importantly, the Trump administration’s policies in the Palestine-Israel conflict have cast dark shadows on the bilateral relations. The shifting of US embassy from Tel Aviv to Jerusalem thereby providing legitimacy to Israeli acts recognized illegal internationally, as well as cutting humanitarian aid to UNRWA have all elicited an anti-west and anti-US alignment in Turkish foreign policy.2

Background

Turkey-US bilateral relations date back to the period of Ottoman Empire. Diplomatic relations between the two countries were established in 1831 which continued up until the US invasion of Germany during the First World War in April 1917. US established diplomatic relations with modern Turkey, an heir to the Ottoman Empire, in 1927.3 Due to its strategic significance, Turkey has remained a priority in the US regional calculus. US has extensively relied on Turkish territory, transport of arms, cargo, personnel in order to pursue

1 Asli Aydintasbas, “The pastor, the banker, and the irresistible drama in Turkish-US relations,” August 2, 2018, https://www.ecfr.eu/article/commentary_the_priest_the_banker_irresistible_drama_turkish_us_relations, (accessed August 24, 2018); Burhanettin Duran, “Cautious optimism for Turkey-US partnership,” Daily Sabah August 5, 2018, https://www.dailysabah.com/columns/duran-burhanettin/2018/08/06/cautious-optimism-for- turkey-us-partnership, (accessed August 24, 2018); Hurriyet Daily, “Turkish President proposes to trade without US dollar,” http://www.hurriyetdailynews.com/turkish-president-erdogan-proposes-to-trade-without- u-s-dollar-136412, (accessed September 04, 2018); Yeliz Candemir, “Turkey raises tariffs on US products as dispute escalates,” The Wall Street Journal August 15, 2018, https://www.wsj.com/articles/turkey-to-raise- tariffs-on-a-number-of-u-s-products-1534307758, (accessed September 19, 2018). 2 Ibid. 3 US Embassy and Consulates in Turkey, https://tr.usembassy.gov/our-relationship/policy-history/io/, (accessed August 24, 2018). PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 13

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its strategic objectives in the region during the cold war as well as post-cold war era. For NATO, Turkey has acted as buffer zone between Europe and the Middle East. In the post Second World War scenario, Turkey took a Western orientation in contrast with the eastern camp which was led by the Soviet Union. Over the decades during the cold war and later on, Turkey-US relations remained largely security oriented and on several occasions, both countries fought over the issue of US military installations in Turkey.4

The Incirlik air base located in the Southern part of the country, hosts the 39th Air Base Wing of the United States. The US military operations in Iraq and Afghanistan have largely been supported from Incirlik air base since 1991. The number of US forces deployed at the Turkish air base has peaked up to 2,500. However, recent reports suggest a sharp decline in US forces. The use of US air base by the 2016 coup plotters has threatened the future of US presence in Turkey. According to the terms and conditions agreed upon between both the states, US can be asked to relinquish the air base on three days’ notice.5

The Middle Eastern Challenge  Israel-Palestine Conflict: On December 06, 2017, the United States under the Presidency of Donald Trump recognized Jerusalem as the Capital of Israel. Although, it is not yet clear that whether the grant of recognition is specified for the West Jerusalem or would that be extended to the Eastern part of the Jerusalem as well. The absence of internationally agreed boundaries in the respective areas further adds into the confusion.6 However, irrespective of the technical aspect of the recognition, the unilateral move attracted criticism from across the world. The United Nations Security Council resolution condemning the action was vetoed by US, however, it was Turkey apart from Yemen which led the United Nations General Assembly resolution to condemn the US actions despite threats and provocative statements from US Ambassador to UN, Nikey Haley.7 More recently, the US decision to cut relief aid to the UNRWA8 has caused further strain in the Turkey-US relations. UNRWA is the “lifeline” of more than five million registered Palestinian refugees living in 58 recognized refugee camps in the West Bank and the Gaza Strip, Lebanon, Jordan and Syria. The Agency was established in accordance with the United Nations General Assembly Resolution 302 (IV) of 8 December 1949 in the aftermath of the 1948 Arab-Israel conflict. It is mandated to “offer food supplies, access to education, healthcare, social services and employment.” More than 500,000 students are getting education in 700 schools run by UNRWA.9

4 Jim Zanotti and Clayton Thomas, “Turkey: Background and US Relations in Brief,” Congressional Research Service (June 06, 2018), https://fas.org/sgp/crs/mideast/R44000.pdf, (accessed September 04, 2018) p. 2. 5 Ibid. p. 3. 6 Ofer Zalzberg and Nathan Thrall, “Counting the costs of US Recognition of Jerusalem as Israel’s Capital,” International Crisis Group (7 December 2017), https://d2071andvip0wj.cloudfront.net/7decCounting%20the%20Costs%20of%20U.S.%20Recognition%20of% 20Jerusalem%20as%20Israel's%20Capital.pdf, (accessed May 30, 2018). 7 Peter Beaumont, “UN votes resoundingly to reject Trump’s recognition of Jerusalem as capital,” The Guardian 21 December 2017, https://www.theguardian.com/world/2017/dec/21/united-nations-un-vote-donald-trump- jerusalem-israel, (accessed May 25, 2018). 8 UNRWA stands for United Nations Relief and Works Agency for Palestine Refugees in the Near East. 9 Peter Beaumont, op. cit. PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 14

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 The fight against ISIS in Syria: The fight against ISIS is one of the most pressing questions in the current Middle Eastern politics. While Turkey and US have jointly conducted air operations against the terrorist groups using the Incirlik air base, for example the Operation Euphrates Shield conducted in Northern Syria. However, the disagreement exists over the place of Democratic Union Party (PYD) and its armed wing the People’s Protection Unit (YPG). In Turkish view, the PYD/YPG is an offshoot of the PKK (the Kurdish Workers Party), considered a terrorist organization. On the other hand, the US considers the PYD/YPG an important asset in fight against the ISIS.10  US sanctions on Iran: In August 2018, the Trump Administration pulled out from the Iran nuclear deal and revived the economic sanctions on Iran. However, Turkey has declined from implementing the economic sanctions. Turkey and Iran have bilateral trade of around $10 billion. Both countries entered into preferential trade agreement in 2015, resultantly tariffs were reduced from hundreds of products. Turkey is heavily dependent upon Iranian oil and natural gas. Iranian crude oil is around 55 percent of Turkey’s total crude supplies, and natural gas from Iran has a share of 13 percent in Turkeys’ overall gas imports. The sanctions imposed on Iran deteriorated Turkish-Iranian bilateral trade. Turkey welcomed the Iran nuclear deal which was expected to relieve the pressure out of the sanctions. However, the US decision to rescind the nuclear deal with Iran has once again revived the issue which severely impacted upon the Turkish-Iranian bilateral trade. The conviction of a banker from Turkish state-owned Halkbank in US court on charges of evading Iran sanctions is yet another bone of contention between Turkey and US.11

Transatlantic dynamics

Turkey has been as member of NATO since 1952. Over the decades Turkey has retained a significant place in the transatlantic alliance. It is the only Muslim country among all members, and the only Muslim country whose forces joined US led mission in Afghanistan. According to 2018 estimates, it is the seventh largest country among NATO members in terms of defense expenditure (see table below). Top ten NATO countries in terms of Defense expenditures 2018 estimates (Million US dollar) 1 United States 706,063 2 United Kingdom 61,508 3 France 52,025 4 Germany 51,009 5 Italy 25,780 6 Canada 21,601 7 Turkey 15,219

10 Alex Snow and Audrey Williams, “Difficult Choices: Prospects for US-Turkey Relations in 2017,” Turkish Heritage Organization (April 03, 2017), https://www.turkheritage.org/en/publications/analysis/difficult- choices-prospects-for-us-turkey-relations-in-2017-3230, (accessed August 28, 2018). 11 Gonul Tol and Engin Polar, “Iran sanctions may see US-Turkey ties get a lot worse,” Middle East Institute August 09, 2018, http://www.mei.edu/content/article/op-ed-iran-sanctions, (accessed August 28, 2018). PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 15

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8 Spain 13,863 9 Netherlands 13,023 10 Poland 12,088 Source: NATO, “Defense expenditure of NATO countries (2011-2018)” July 10, 2018, https://www.nato.int/nato_static_fl2014/assets/pdf/pdf_2018_07/20180709_180710- pr2018-91-en.pdf, (accessed September 18, 2018).

Turkey is a NATO member and consequently an ally of the US and Europe, however the complications in this alliance emerge from the fact that Turkey is not a member of the European Union. Hence, Turkey’s relationship with US, NATO and EU are closely knit. More recently, Turkey has successfully leveraged the Syrian refugee crisis in its favor while dealing with the EU. By accommodating the refugees, Turkey has renewed the negotiation for a possible EU accession.12

Turkey-Russia relationship has been a key determinant in Turkey’s relations with western nations. Both US and EU still consider Russia a threat. Turkey’s drift from the western nation has drawn it closer to Russia. Turkey has concluded an agreement with Russia in December 2017 for the purchase of S-400 air and missile defense system. The system would be delivered by early 2020. The agreement has been looked at with suspicion in the NATO camp. In view of NATO members the strain in US-Turkey can be exploited by Russia to access NATO intelligence. On the other hand, Turks have maintained that the agreement has been reached after the cancellation of similar agreement with China in 2015 under US pressure. As a counter move, the members of Congress have introduced the legislation to hinder the transfer of F-35 Lightning II Joint Strike Fighter aircraft to Turkey. Moreover, although both Russia and the US use Syrian Kurds as proxy against the Turks, the policy makers in Ankara have benefitted from partnership with Russian in pursuing their strategic interests in Syria.13

Turkey’s Domestic Politics

Since Erdogan took over as the Prime Minister of Turkey in 2003, the country has been witnessing significant power shifts in domestic politics. The consolidation of power by Erdogan is coupled with shrinking space for military and the secular elite which held the reins of power in since the founding of the Republic by Kamal Ataturk in 1923. Moreover, during this time period Turkey has been transitioning from a parliamentary democracy to presidential system of governance. Recip Tayyip Erdogan became first elected President of Turkey in the aftermath of August 2014 elections. The failed coup attempt of July 2016 has accelerated the progress towards presidential form of government. In the aftermath of the coup attempt Turkish Parliament approved three months state of emergency which has been renewed since then. Major changes were incorporated in the constitution following a referendum in April 2017. The steps taken by the Government as a result of coup attempt have largely been denounced in the western countries and organizations like the US and EU.

12 Xenia Wickett and Jacob Parakilas, “Transatlantic rifts: averting a Turkey/Russia conflict,” Chatham House August 2016, https://www.chathamhouse.org/sites/default/files/publications/research/2016-08-05- transatlantic-rifts-turkey-russia-wickett-parakilas.pdf, (accessed September 17, 2018). 13 David Hutchins, “S-400s and F-35s: two weapons systems changing the future of Turkey-US relations,” Turkish Heritage Organization June 01, 2018, https://www.turkheritage.org/en/publications/factsheets/security/s-400s-and-f-35s-two-weapons-systems- changing-the-future-of-us-turkey-relations-5445, (accessed August 28, 2018). PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 16

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However, the victory of Erdogan in 2018 elections have failed all attempts to reverse the process of change initiated by Erdogan since coming into power at the dawn of twenty first century.14 The strain in the Turkey’s relations with US as well as European countries has come about largely as a result of US role in 2016 failed coup attempt. Turkey has accused Fethullah Gulen of supporting the coup plotters. The US refusal to hand over the accused has caused much damage to the bilateral relations. With the coming into power of President Erdogan in 2018 elections the western aspiration to bring political change in Turkey has died down.

Turkey-US economic relations

Turkey US bilateral relationship has remained largely security oriented. The economic factor has gained significant currency only in recent years. The graph below shows the bilateral trade balance between Turkey and US. The upward trend in trade began only during 2004 to 2006, earlier bilateral trade was minimal. The statistics reveal that the upward trend peaked around 2011 to 2012 and witnessed a downward slide in the subsequent years. In terms of economic interdependence, fact of the matter is that Turkey’s place in the list of countries trading with the US is around 30. On the other hand, even for Turkey US is among top five trading partners, however, it is not the largest trading partner of Turkey, which has significant trade with countries like Germany, United Kingdom, China, Italy, Iraq, and Russian (see table below). The issue relates more with the fact that US sanctions have come at a time when Turkish economy is witnessing volatility. The Turkish Lira depreciated against the US dollar by almost 20% from January to June 2018. The currency depreciation has aggravated Turkey’s corporate debt which is almost 70% of GDP.15

Turkey - US Trade Balance 1985-2018

15000

10000

5000

0

Millions Millions ofUS Dollars 19851987198919911993199519971999200120032005200720092011201320152017 -5000 Year

Source: United States Census Bureau, https://www.census.gov/foreign- trade/balance/c4890.html, (accessed August 28, 2018).

14 Jim Zanotti and Clayton Thomas, op.cit. p. 13. 15 Jim Zanotti and Clayton Thomas, “Turkey: Background and US Relations in Brief,” Congressional Research Service (June 06, 2018), https://fas.org/sgp/crs/mideast/R44000.pdf, (accessed September 04, 2018) p. 14. PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 17

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Turkey-US Trade: Summary With $19.2 billion worth trade in goods during 2017, Turkey is 32nd largest goods trading partner of US. Exports:  Turkey was the United States’ 28th largest export market in 2017.  US goods exports to Turkey in 2017 were $9.7 billion, up 4.1% ($387 million) from 2016 and up 49.9% from 2007.  The top export categories (2-digit HS) in 2017 were: aircraft ($1.8 billion), iron and steel ($1.1 billion), mineral fuels ($979 million), machinery ($760 million), and cotton ($735 million).  US total exports of agriculture products to Turkey totaled $ 1.8 billion in 2017. Leading domestic export categories include: cotton ($730 million), tree nuts ($308 million), distillers grains ($229 million), soybeans ($139 million), and feeds & fodders nesoi ($51 million).  US exports of services to Turkey were an estimated $3.1 billion in 2016 0.6% ($18 million) less than 2015. Leading services exports from the US to Turkey were in the travel, intellectual property (industrial processes), and financial services sectors. Imports:  Turkey was the United States’ 34th largest supplier of goods imports in 2017.  US goods imports from Turkey totaled $9.4 billion in 2017, up 17.1% ($1.4 billion) from 2016, and up 104.6% from 2007.  The top import categories (2-digit HS) in 2017 were: vehicles ($1.4 billion), iron and steel ($1.0 billion), machinery ($942 million), carpets and other textile coverings ($478 million), and stone, plaster, cement ($354 million).  US total imports of agricultural products from Turkey totaled $938 million in 2017. Leading categories include: processed fruit & vegetables ($185 million), tobacco ($151 million), snack foods ($102 million), coarse grains ($79 million), and other vegetable oils ($73 million).

Source: Office of US Trade Representative, https://ustr.gov/countries-regions/europe-middle- east/europe/turkey, (Accessed September 19, 2018).

Top five trading partners of Turkey (as of December 30, 2016)

Market Trade ($US million) Exporter Trade ($US million) 1 Germany 13,999 China 25,441 2 United Kingdom 11,686 Germany 21,475 3 Iraq 7,637 Russian Federation 15,162 4 Italy 7,581 United States 10,868 5 United States 6,624 Italy 10,218 Source: WITS, The World Bank, https://wits.worldbank.org/CountryProfile/en/Country/TUR/Year/LTST/Summa ry, (accessed September 19, 2018).

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Conclusion

The bilateral relationship between Turkey and US is dependent upon host of inter-related factors working at national, regional as well as global levels of analysis. These factors are further complicated by the economic side of the relationship. The perceived role of the US in 2016 failed coup attempt has seriously threatened the future of already fragile bilateral relationship. With the consolidation of power by the AKP led by Recip Tayyip Erdogan, the US seems to losing hope of power transition in another direction in Turkey. The US refusal to hand over the accused in the failed coup attempt has severely deteriorated the bilateral relationship.

Both the countries have got serious differences of opinion in Middle Eastern paradox. Recent developments in Israel-Palestine conflict, US-Iran relations, the fight against ISIS in Syria, and the Kurdish issue have served to cast further suspicions in each other’s’ intentions.

The drifting apart of Turkey from the western countries is demonstrating the emergence of a multipolar power configuration at the global level. This departure is coupled with increasing closeness with Russia, Iran and China of a country which remained largely western oriented for several decades. However, a deeper look at the Turkish policy over past few years demonstrates that Turkey has chart a course of its own thereby establishing its own identity free of western or eastern camps.

For both Americans and European, Turkey provides protection from the war ridden Middle East. Recently, the handling of Syrian refugee crisis has demonstrated the significance of Turkey in matters pertaining to the Middle East. A European Union minus Britain, and a NATO with decreasing commitments from the US as envisaged under the Trump Administration, the western camp seems to be facing serious challenges. The damage caused to Turkish economy due to the US sanctions may be harmful for Turkey in the short run, but it would be detrimental for US in the long run.

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PARLIAMENTARY HISTORY

History of Provincial Assembly of the Punjab, Pakistan

Khalid Mahmood Deputy Secretary (Legislation), Provincial Assembly of Punjab

Introduction

Pakistan emerged as an independent state after the end of British rule in India in 1947 and comprises four provinces: Punjab, Sindh, and Balochistan, besides the Federally Administered Tribal Areas. Islamabad is the federal capital of Pakistan.

Pakistan is a federal republic with the parliamentary form of Government. At federal level, there is a bicameral and at provincial level, each of the four provinces has a directly elected unicameral Provincial Assembly.

The province of Punjab is the largest of the four provinces and it was once a part of Indian Punjab before independence in 1947. For this reason, the history of Provincial Assembly of the Punjab is divided in two periods, i.e. pre-independence period and the post- independence period. Like other parliamentary institutions in the country, it has evolved through a long process of constitutional development.

Pre-Independence Period:

The origin of the legislature in the sub-continent can be traced back to the nineteenth century. From 1833 to 1861, the Governor General in Council was the sole administrative as well as the legislative authority in the British India, who ran the administration and was assisted by the executive and legislative councils. Beneath the Governor General were the Governors of Provinces of India.

The War of Independence waged in 1857 against the British rulers of India made them realize the necessity of establishing closer contacts with the local public and its opinion. The enactment of the Indian Councils Act 1861 was the aftermath. This Act provided for the establishment of a Council of the Lieutenant Governor at the state level to transact legislative business as the legislative council. The 1861 Act thus laid the foundation for the future legislature as an independent entity separate from the Executive Council.

The first council in the Punjab, however, was yet to be constituted when the Indian Councils Act 1892 was enacted. This Act enlarged the functions of the Council in two respects, firstly, the Council could discuss the annual financial statement and secondly, it could ask questions subject to certain limitation. Members were to hold office for two years.

First Legislative Council in the province of the Punjab under the Indian Councils Act 1861, as modified by the Indian Councils Act 1892, was constituted in 1897. This Council comprised both official and non-official members. The meetings of the Council were presided over by the Lieutenant Governor himself.

Element of election in the Legislative Council was introduced for the first time by the Indian Councils Act 1909, also known as the Minto-Morley Reforms. The 1909 Act gave the

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Indians a limited role in the legislative councils. It dispensed with official majorities in the Provincial Legislative Councils and gave them power to move resolutions upon matters of general public interest and also upon the Budget and to ask supplementary questions. This Act carried constitutional development a step further.

Six years later, the Government of India Act 1915 was enacted with a rationale to consolidate the provisions of all the preceding Acts. This Act also provided for the constitution of the Punjab Legislative Council instead of the Councils of Lieutenant Governor. During the period from 1897 to 1920, four Councils of Lieutenant Governor were constituted, in 1897, 1910, 1913 and 1916.

The Montague-Chelmsford Reforms were introduced by the British Government to set up self-governing institutions in India. The reforms were outlined in the Montague-Chelmsford Report prepared in 1918 and formed the basis of the Government of India Act 1919.

The 1919 Act was essentially transitional in character. The franchise was extended, and increased authority was given to the central and the provincial legislative councils. The most important feature of the 1919 Act was the introduction of a new system of diarchy or double government in the Provinces. The Act created 11 self-governing provinces. The Governor could not be a member of the Legislative Council, he could, however, address the members in the Legislative Council. Four Legislative Councils under this Act were constituted in Punjab; in 1921, 1924, 1927 and 1930.

Under Section 84 of the 1919 Act, a statutory commission was to be appointed at the end of ten years, to determine the next stage in the realization of self-rule in India. Accordingly, the British Government appointed a Commission under Sir John Simon in November 1927. The Commission, which had no Indian members, was given the task to investigate India's constitutional problems and make recommendations to the government on the future Constitution of India. The Commission recommended further constitutional changes, which were embodied in the Government of India Act 1935. This Act granted Indian provinces autonomy and the dyarchical system was discontinued.

The 1935 Act provided for a Federation and the constituent units as the Governor's Provinces. This Act, for the first time, provided for the constitution of an Assembly in place of a Council. Almost all the members of Assembly were to be elected, with the exception of some special and otherwise unrepresented groups. The term of the Assembly was fixed as five years. The 1935 Act also made a division of powers between the Centre and the Provinces. Two Legislative Assemblies were constituted under this Act, in 1937 and 1946.

Post-Independence Period:

In 1947, the British rule in India came to an end and the sub-continent was divided into two sovereign and independent states of Pakistan and India under the Indian Independence Act 1947. Pending promulgation of a Constitution, the Government of India Act 1935, with necessary alterations and modifications through the Pakistan (Provisional Constitution) Order 1947, was adopted as the provisional Constitution.

With the creation of Pakistan, the province of Punjab was also divided into two provinces, i.e. Western Punjab (in Pakistan) and Eastern Punjab (in India) resulting in the division of the Punjab Legislative Assembly, constituted in 1946, into East Punjab and West Punjab Legislative Assemblies. This carried forward West Punjab Legislative Assembly was declared PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 21

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to be the first Provincial Assembly after independence under the Pakistan (Provincial ) Order 1947, and was dissolved in 1949.

In 1950, the Province of West Punjab was renamed as Province of Punjab and the second Assembly was constituted in 1951 which ceased to exist when under the Establishment of West Pakistan Act 1955, the provincial units and other states were incorporated into a single Province namely Province of West Pakistan.

Awaiting enactment of the first Constitution by the Constituent Assembly, the 1955 Act contained provision for constitution of an interim Provincial Assembly of West Pakistan which was elected in 1956 in accordance with the provisions of the said Act, however, before it could hold its first sitting, the first was enacted and the interim Assembly was declared to be the first Provincial Assembly of West Pakistan in accordance with the provisions of the 1956 Constitution. On October 7, 1958, Martial Law was imposed in the country, the Assemblies were dissolved and the 1956 Constitution was abrogated. No elections under the 1956 Constitution, therefore, could be held.

The second Constitution of Pakistan was promulgated on March 1, 1962 and the Martial Law was lifted. The 1962 Constitution provided for a unicameral legislature. The principle of Basic Democracy was introduced for the first time in the country and the system of indirect elections was presented. The next two Provincial Assemblies of West Pakistan were constituted in 1962 and 1965 under the 1962 Constitution. On March 25, 1969, Martial Law was again imposed in the country, the 1962 Constitution was abrogated and the Assemblies were dissolved.

In July 1970, the Province of West Pakistan was abolished and the status of provinces was restored under the West Pakistan (Dissolution) Order 1970 (PO I of 1970). A Legal Framework Order, 1970 was issued which provided for setting up of a National Assembly and Provincial Assemblies of East Pakistan, Punjab, Sindh, NWFP (now Khyber Pakhtunkhwa) and Balochistan. The elections to the National Assembly and Provincial Assemblies were held on December 7 and 17, 1970 respectively. However, due to political crisis, the elected Assemblies could not become functional till 1972 when the Martial Law was lifted and an Interim Constitution came into force on April 21, 1972.

The National Assembly formed a Constitution Committee on April 17, 1972 to prepare the first draft for framing a Constitution. The report of the Committee was presented on December 31, 1972 along with a draft Constitution. It was unanimously passed by the National Assembly in its session held on April 10, 1973, was authenticated by the President on April 12, 1973, and came into force on August 14, 1973.

Under the 1973 Constitution, as amended from time to time, all the four provinces of Pakistan enjoy considerable autonomy. Each province has a Governor, a Council of Ministers headed by a Chief Minister appointed by the Governor, and a Provincial Assembly elected by universal adult suffrage. The Provincial Assemblies also have reserved seats for women and non-Muslim minorities.

Provincial Assembly of the Punjab, constituted as a result of general elections held in December 1970 under the Legal Framework Order 1970, was declared to be the first Assembly in accordance with the provisions of the 1973 Constitution. The term of the Assembly was fixed as five years; however, it was dissolved few months before completion of its tenure. PIPS Parliamentary Research Digest- Volume: 5, Issue: 10 Page 22

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The second Assembly under the 1973 Constitution was constituted in April 1977; however, it was also dissolved after only two months and twenty-seven days, as a result of promulgation of Martial Law on July 5, 1977. The 1973 Constitution was kept in abeyance for a period of about 8 years and, after having been substantially amended, it was partially reactivated on March 10, 1985. With the lifting of Martial Law on December 30, 1985, the Constitution was wholly restored. The successive Punjab Assemblies were constituted in 1985, 1988, 1990, 1993 and 1997. All these Assemblies were dissolved well before completion of their constitutional tenure of five years.

The proclamation of emergency in October 1999, kept the Constitution of Pakistan and the political institutions inactive for three years. In order to revive these institutions, the Chief Executive of Pakistan promulgated a Legal Framework Order 2002 (Chief Executive’s Order No. 24 of 2002), which, after slight modifications, subsequently became part of the 1973 Constitution through 17th Constitutional Amendment.

The Legal Framework Order, as amended from time to time, brought significant changes in the 1973 Constitution including alteration in the composition of the Assemblies, e.g. membership of the Assemblies was increased and a substantial percentage was fixed for seats reserved for women. The members to fill the general seats were to be elected by direct and free vote on the basis of joint electorate and single member constituency and the seats reserved for women and non-Muslims were to be elected through proportional representation system of political party’s lists of candidates on the basis of total number of general seats secured by each political party in the Assembly.

Along with other sister Assemblies, the Punjab Assembly, consisting of 371 members (297 general seats, 66 seats reserved for women and 8 seats reserved for non-Muslims), was constituted as a result of general elections held on October 10, 2002. In the year 2007, when the Assemblies were about to complete their constitutional tenure of five years, the then Chief of Army Staff (President) declared emergency in the country on November 3, 2007, after political unrest, increasing acts of terrorism and judicial activism resulting in rift between three tiers of state. A Provisional Constitution Order was issued and the Constitution was held in abeyance. During the proclamation of emergency, the National Assembly stood dissolved on completion of its constitutional tenure on November 15, 2007, however, the Provincial Assemblies were dissolved on November 18, 2007 by the Governors on the advice of Chief Ministers, few days before completion of their tenure in order to hold elections of all the Assemblies simultaneously. The state of emergency was lifted on December 15, 2007 and the Constitution was restored with certain amendments. Following the assassination of former Prime Minister, Ms Benazir Bhutto on December 27, 2007, general elections, scheduled for January 8, 2008 were postponed till February 18, 2008.

Next Punjab Assembly was constituted as a result of February 2008 general elections with the same composition as that of previous Assembly, i.e., 371 members. Two major political parties, PML (N) and PPPP decided to form coalition Government in the Centre and the Punjab. However, subsequently a rift developed in the coalition over the issue of restoration of higher judiciary. The decision of Supreme Court of Pakistan on February 25, 2009, declaring the then Chief Minister, Punjab disqualified from the Assembly, aggravated the rift. With the disqualification of sitting Chief Minister, the cabinet also stood dissolved and the imposed Governor’s rule in the Punjab on February 25, 2009 under Article 234 of the Constitution. The Governor’s rule was, however, lifted on March 30, 2009 and a special session was called for ascertainment of new Chief Minister, Punjab to be held

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on April 1, 2009. However, on March 31, 2009, the Supreme Court of Pakistan suspended its earlier decision of February 25, 2009, resulting in restoration of Chief Minister, Punjab and the cabinet. This event-full Assembly, which was sworn in on April 9, 2008, was dissolved on March 20, 2013, a few days before completion of its Constitutional tenure of five years.

First Assembly to complete 5 year Constitutional Term:

The next Provincial Assembly of Punjab was constituted as a result of general elections held on May 11, 2013 and had the same composition; i.e. 371 members. The Assembly was sworn in on June 1, 2018 and PML N won majority of seats. It became the first Assembly to have completed its constitutional tenure of five years as envisaged in the 1973 Constitution that ultimately stood dissolved on completion of term on May 31, 2018.

The present Provincial Assembly of Punjab was constituted after the recent general elections held on July 25, 2018. The newly-elected members of the Provincial Assembly of Punjab took the oath on Wednesday, August 15, 2018 as the provincial assembly held its inaugural session for the new five-year term.

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Socio - Economic Indicators 2018-19 Global Competitive Index (GCI 2017-18)

Pakistan India Bangladesh Sri Lanka South Korea GCI -overall (137) 111 39 106 71 26 Institutions 90 39 107 77 58 Infrastructure 110 66 111 85 8

Macroeconomic Environment 106 80 56 94 2

Health and Primary 129 91 102 43 28 Education

Higher Education and 120 75 117 78 25 training

Goods Market Efficiency 107 56 94 83 24

Labor Market Efficiency 128 75 118 131 73

Financial Market 96 42 98 83 74 Development

Technological Readiness 111 107 120 106 29 Market Size 28 3 38 59 13 Business Sophistication 81 39 91 59 26 Innovation 60 29 114 54 18

ii. Limited Fiscal Space - Current Expenditure of Pakistan: 2018-19 1.6% 2.3% 0.3% 2.6%

Debt Servicing Defence

21.9% Public Order and Safety Economic Affairs 44.2% Social Sector EP, Housing, Recreation

PIPS seminar and quiz contest to celebrate International Day of Democracy, September 14, 2018

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