Cost of living in KATHAMNDU ...and other major cities in the world.....

Oslo remains the world's most expensive city to live in, according to the latest Worldwide Cost of Living survey. It is now more costly to live in London and Paris than in Tokyo, which was unseated from the top spot in last year's survey. Eight of the ten dearest cities are in Europe, partly reflecting the strength of European currencies. New York, 28th of the 132 cities surveyed, is the most expensive destination outside Europe and Asia. Those looking to live on a budget should move to Latin America, which accounts for a quarter of the cheapest 30 cities. The cost of living in Buenos Aires is a little over half that in New York.

The Worldwide Cost of Living survey compares the cost of living in over 130 cities in nearly 90 countries. It gathers detailed information on the cost of more than 160 items—from food, toiletries and clothing to domestic help, transport and utility bills—in every city. More than 50,000 individual prices are collected in each survey round, and a cost-of-living index is calculated from the price data to express the difference in the cost of living between any two cities.

The fieldwork for the Worldwide Cost of Living survey is carried out by researchers from the Economist Intelligence Unit. Great care is taken to assess accurately the normal or average prices international executives and their families can expect to encounter in the cities surveyed.

Interest rates

THE Federal Reserve is widely expected to cut its key interest rate by 25 basis points at its next meeting on December 11th. America's central bank has already cut rates by 75 basis points since September. At the beginning of the Fed's last rate-cutting cycle in 2001, central banks elsewhere followed suit. But so far this year, no other rich-world country has lowered its key lending rate. Several, including Sweden, Norway and Australia, have tightened policy since the Fed's first cut. China, facing rising inflation, has also made money dearer. In Britain and the euro area, rates were increased earlier in the year but have been on hold since the summer.

H1B

DADAL STREET ---- Financial HUB of INDIA

Nepal ranked 142 out of 177 countries in UN's 2007 Human Development Index (HDI),

Nepal ranked 142 out of 177 countries in UN's 2007 Human Development Index (HDI), which measures achievements in terms of life expectancy, educational status and standard of living.


The Global Human Development Report (HDR) for 2007/08 released by the United Nations Development Programme (UNDP) Tuesday states that enrollment in primary, secondary and tertiary education in Nepal is up to 58.1 percent from 56.1 percent last year and life expectancy of Nepalis has increased to 62.6 years from 62.1 years of last year. Similarly, Gross Domestic Product (GDP) has increased by one third and purchasing power parity in US dollar terms has also increased.

Although in 2006 Nepal was placed at 138th spot, major adjustment was made in the index later due to shift in the statistics and Nepal ended at 144 th spot among the 177 countries on the HDI .

But despite positive changes in key indicators Nepal trails behind all the South Asian countries in terms of HDI. Sri Lanka (99 th) is the top among South Asian countries in terms of HDI, It is followed by Maldives (100th), India (128th), Bhutan (133rd), Pakistan (136th), Bangladesh (140th ) and Nepal.

Iceland has left Norway behind to take the top post this year. Norway had held the number one rank for the past six years.

The report notes that over a period of fifteen years, Nepal's life expectancy at birth increased by more than eight years, GDP per capita increased by one third and adult literacy rate grew by 18 percentage points.

But on the flip side, in terms of Human Poverty Index (HPI) the country ranked 84th among 108 developing countries. Furthermore, 17.4 percent of the population has probability of not surviving past the age of 40, adult literacy rate is merely 51.4 percent, 10 percent people are without access to safe water and 48 percent of children are underweight.

The report also states that the gender inequality is high in the country. In terms of gender related development index (GDI), Nepal ranks 134 th. Similarly, Nepal's HDI of 0.534 is well below the regional average of South Asia and substantially below the average of HDI for all developing countries.

The theme of this year's HDR is 'Fighting Climate Change: Human Solidarity in a Divided World' and seeks to draw attention to the devastating effects of climate change. It says that climate change has already led to rise in exposure to droughts, floods and storms and is destroying opportunity and reinforcing inequality in mainly third world countries.

"Avalanches and floods pose special risks to densely populated mountain regions. One of the countries facing severe risks today is Nepal, where glaciers are retreating at a rate of several meters each year. Lakes formed by melting glacier waters are expanding at an alarming rate - the Tsho Rolpa lake being a case in point, having increased more than sevenfold in the last 50 years", states the report.

The HDI forms part of the Human Development Report 2007, a flagship study produced annually by the United Nations Development Programme (UNDP). It was released simultaneously in Brasilia and at UN Headquarters in New York on Tuesday. nepalnews.com ag Nov 28 07

Indian energy firm to acquire 80% stake in a Nepali firm

GMR Energy, a subsidiary of GMR Infrastructure, has entered into a share purchase and joint venture agreement to acquire 80% stake in Kathmandu-based Himtal Hydro Power, reports Business Standard online.

The report states that according to a release issued by GMR, Himtal has a survey license issued by the Department of Electricity Development to undertake the feasibility and environmental impact assessment studies for setting up a 250 Mw Upper Marsyangdi - 2 hydro power project.

The company said necessary applications have been submitted to the investment promotion board, Department of Industries of the government of Nepal for their approval.

GMR Energy manages six projects -- 220 Mw barge-mounted power plant near Mangalore in Karnataka, 200 Mw plant at Chennai, 388.5 Mw plant at Vemagiri in Andhra Pradesh and 140 Mw plant at Alaknanda, Uttarkhand. It is also developing a 1000 Mw thermal power plant at Dhenkal in Orissa and a 160 Mw hydro power plant at Talong in Arunachal Pradesh. nepalnews.com sd Nov 28 07

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PETRO PRICE HIKE

By SANJAYA DHAKAL

Like every other time, the past one week also witnessed a volley of debates, discussions, demonstrations and expert-speaks on the issue of price hike of petroleum products.

No sooner had the government decided to hike the prices of petroleum products, some political parties – notably the Maoists – and their student organizations have started demonstrating demanding the rollback.

It does not need an expert economist to see the utter necessity of hiking the fuel price – notwithstanding the terrible problems common people are certain to face due to its hike.

Since past few years, the price of crude oil in the international market has been spiraling out of control. From around $ 30 a barrel in 2003, the price has continued to soar to reach $93 a barrel this week (One barrel is equal to 159 liters). And Nepal being a country that has to import all of the petroleum products, it is unnatural and against normal economic sense to continue to subsidize the fuel at the cost of cutting down much-needed investment on areas such as health and education.

Moreover, it has been substantiated by various studies that less than 10 percent of the populations are actually dependent on the POL products for their energy consumption. All the rest are dependent on traditional sources such as fuel-wood, bio-mass etc.

In fact, the NOC’s decision to hike fuel price had become long overdue given its mounting losses. As it failed to pay its dues to sole supplier Indian Oil Corporation (IOC), the latter even cut down supplies leading to an acute shortage of the fuel in the country. Since last one year, an average urban consumer has been subjected to serpentine queues and snap shortages at petrol stations and cooking gas depots.

Given the unbridled rise of the price of crude oil, the NOC’s price hike last week could be too little for it.

The political parties and student organizations who protest the fuel price hike always point at the need to control the corruption, leakage and irregularities within the NOC. They also demand that tax be cut down on fuel import. “However, given the magnitude of price hike in the international market, even if you have a corruption-free and zero-leakage situation, you will need to hike the price because they only affect a very small part of the price component,” said an economist.

The economist also exposed the utter irrationality of doing away with the tax on fuel. “The tax on fuel is a major source of income for the government. If it is done away with, that will affect government’s spending on areas like education, health and development,” he said.

Price Hike

The government announced the hike in fuel price last Wednesday (October 24). As per its decision, the price of petrol has been increased by Rs 6.5 to reach Rs 73.5 per liter. Likewise, the price of diesel has increased from Rs 53.15 to Rs 56.25 per liter. The price of kerosene has increased from Rs 47.65 to Rs 51.2 per liter while the price of cooking gas has increased from Rs 900 to Rs 1100 per cylinder.

According to Nepal Oil Corporation (NOC), it will still be making losses to the tune of Rs 70 million per month. Earlier it claimed it was losing Rs 400 million a month due to lack of price hike in the domestic market despite spiraling prices in the international market.

The NOC executive director Digambar Jha has claimed that consumers will now enjoy easy availability of fuel.

The decision to hike the fuel price was long overdue. The government had said it would not increase fuel price before elections fearing rioting by some elements. But since the election has been suspended it had little option than to hike the fuel price.

Due to lack of price revision, the NOC was becoming unable to pay its dues to supplier Indian Oil Corporation (IOC), which in turn, had cut down supply volume. The NOC says it still needs to pay dues over Rs 4 billion to IOC and over Rs 6 billion to domestic banks and financial institutions.

Immediately after the decision by the government to hike the fuel price, the Maoists, student groups associated with communist parties and transport entrepreneurs protested the government decision.

The protesting student organizations affiliated with seven parties demanded transparency in the Nepal Oil Corporation and slashing of commission given to the truck entrepreneurs for transportation. Spokesperson of the Maoists Krishna Bahadur Mahara issued a statement condemning the government’s decision to hike the fuel price. Mahara has said that the government should have controlled corruption and leakage within the NOC instead of burdening the common people with price hike.

NOC Says No To Roll Back

Saying that it is bleeding due to soaring losses, the NOC has said that it cannot roll back the decision to hike the price of fuel. According to NOC executive director Digambar Jha, any revision would lead to short supply.

Jha said that there was no alternative to the price hike as the government did not compensate for the loss the corporation incurred by distributing fuel at a subsidized rate. Jha added that the price of the petroleum products was still cheap as compared to the international markets.

Who Uses POL Products?

Parties who raise pro-poor slogans when protesting fuel price hike have ignored the basic fact about who uses the petroleum products in Nepal. Even now, overwhelming mass of Nepalese population depends on traditional sources for energy.

According to various Economic Surveys by the government, less than 10 percent of the population depend on petroleum products for energy. Fuel wood comprises the single biggest source of energy at around 7000 thousand tons of oil equivalent (TOE) – out of the total of over 8500 TOE of energy consumption .

The traditional sources include fuel wood, animal dung and agriculture wastes. Commercial sources include POL products, coal (2%) and electricity (1.6%). As such, it is obvious that POL products are used by a limited number of people residing in urban centers.

“The bottom 40 percent of Nepalese households use kerosene primarily for lighting (which consumes little kerosene) and not for cooking. Furthermore, the percentage of households who rely on kerosene for lighting is falling with time. The percentage fell from 80 percent in 1995/96 to 58 percent in 2003/04, and even in rural areas this percentage declined from 84 to 67 percent between the two periods on account of increasing electrification. The estimated direct impact of raising the price of kerosene to the cost-recovery level—an incremental cost of approximately Rs 20 per month per household for the poor—seems too modest to justify a price subsidy scheme with evidence of leakage and a significant cost to the country,” states a report titled “Socio Economic Impact of Fuel Price Increases in Nepal” prepared by the World Bank in October, 2004.

However, despite the voluminous justifications for doing away with subsidies on POL products, the political parties continue to attempt to mix oil with politics. This explosive mixture is neither sustainable nor prudent if looked at from long-term perspective instead of short-term political angle.

10 Golden Trading Rules

Micro Analysis of Micro Enterprises-By Elissa Fox

There’s a lot of talk about micro enterprise and its associated issues at the moment, with many sallying into the debate on poverty solutions waving around concepts like micro finance and technology inclusion as sorts of panacea pin ups. There are plenty of advocates arguing that if only we could get the capital, or the computers, or the craftsmanship into the hands of the poor, we could deal a fatal blow to world poverty as we know it. But while micro enterprise undoubtedly has a key role to play, the evidence suggests there’s plenty of room for improvement in the construction of the concept. In Nepal, the Small Farmer Development Programme’s micro finance operation reports loan default rates as high as 60%, while in Bangladesh, journalist Gina Neff found 55% of the Grameen Bank's clients were not able to meet their basic needs after eight years of borrowing, with most using their loans to buy food rather than invest in businesses. What is going wrong? And what can be done to turn the situation around?

Perhaps the first place to look for answers is in the modern history of development aid and micro enterprise as a poverty alleviation program. Micro enterprise is not a new concept – since time immemorial, individuals producing goods or providing services and trading them in the market has formed the most basic level of economic activity. Accordingly, in the experience of the developed world, it’s to these foundations that people and governments perennially turn in time of economic hardship. Government support for small business and “ma and pa” operations across the developed world waxed throughout the 20 th century during depressions and recessions, only to wane in favour of big business in times of plenty. And the Western world’s approach to development aid for third world countries, a concept only really formalised in the late 1940s, has mostly reflected these changing trends. Large-scale anti-poverty projects and campaigns with multi billion dollar price tags implemented by behemoth organisations have had their time in the not-for-profit sun, as multinational conglomerates enjoyed tax breaks and policy privileges in the corporate sector. But after years of globalisation, homogenisation and continual widening of the rich-poor gap, it seems there’s been something of an awakening to the flaws of big business in the West, and a backlash against it. Workers are demanding flexible hours and family friendly arrangements, or abandoning the corporate infrastructure altogether. “Buy local” campaigns are rallying citizens to keep their consumer dollar within the national borders. The slow food movement is gathering pace in resistance to the ubiquitous fast food, low taste culture. One-of-a-kind, handcrafted clothes and homewares are hailed an expression of individuality while their mass produced counterparts are seen as a sign of conformity. And micro enterprise, brought to prominence by the success of operations like the Grameen Bank and Opportunity International in the 1970s and 80s, has experienced a surge in foreign aid policy popularity.

This backlash has had a huge impact on the developing world as well. Aid delivery via small, locally operated projects is now favoured over remotely managed, international NGOs and program strategies focused on cutting the foreign funding apron strings sooner rather than later are the new conventional wisdom. These trends significantly alter the course of funding flows, with micro enterprise a darling of the current policy push. But for the most part, the developing world has skipped the step of disenfranchisement with big business that in part is driving the program donors as it leaps into the arms of micro enterprise – which has always formed the backbone of its economies but is now fêted in policy. The effect of this leap is that many micro entrepreneurs, instead of embracing the competitive advantages at the essence of a micro enterprise, are trying to replicate the big business model on a small scale. Instead of concentrating efforts on designing and developing unique products that reflect the ever changing nuances of the market, the focus is on duplicating the style of the homogenised competition. Instead of deliberately charging premium prices that reflect the extra time and creativity required to produce unique, individually crafted products, there’s a doomed battle to match the price of the mass produced competition, and perpetual pressure to cut costs and wring out the last drop of labour capacity. Instead of preserving the traditional techniques necessary to produce finely crafted, premium goods, handlooms and wooden spoons are being replaced by powerlooms and industrial mixers to produce cheaper imitations of the originals. And the result is a swath of struggling micro enterprises churning out a plethora of products that are neither handcrafted nor mass produced, but are inferior to both, which consequently are given a lukewarm reception at best in the market.

Perhaps one of the keys to resolving these shortcomings lies in reconsidering how micro enterprise programs are typically constructed. Firstly, there seems to be some confusion about the difference between micro enterprise and micro finance. Micro finance, as the name suggests, is concerned primarily with providing the cash necessary to operate the business. Micro finance services often also encompass some analysis and feedback on the business plan and training on basic budgeting and accounting skills as a means of ensuring a return on their investment, but that capital is the main focal point. Capital is an important component in establishing and growing an enterprise, but it’s by no means the only one, and the potential achievements of a program that focuses solely on the provision of credit are restricted from outset. In fact, any program that focuses on just one element of enterprise development constrains its own success. Programs concentrated on skills development, or improving access to technology, in isolation from other key components, like credit provision, entrepreneurship training and product marketing, are no better at delivering more than mediocre outcomes.

On the other hand, the Micro Enterprise Development Program, a joint initiative of the UNDP/Nepal and the Nepal Government, boasts a healthy – and realistic – success rate of 95% in establishing sustainable enterprises among the poor. MEDEP provides a package of services covering the key elements of entrepreneurship, which are offered to new micro entrepreneurs in sequential order. Business management skills training is provided before technical skills training; access to credit and then technology is addressed after that. The MEDEP model aims to develop micro entrepreneurs who are equipped to grow their business from start up to maturity and overcome the inevitable operational hiccups, rather than simply providing potential entrepreneurs with a hammer and hoping they will be able to figure out how to build the house themselves.

Apart from the design of programs at a government or NGO level, the success of micro enterprise as a solution to poverty is also dependent on society’s attitude to consumption.

And this is the point at which we all, as consumers, have a responsibility in shaping our own communities’ future. What do we demand from the products we buy? Is low price at any cost our main criteria? How much value do we place on marketers’ brands? Is it important to consider the social and environmental impact of our purchasing choices? Do those choices play a role in preserving traditions and skills or do they act to weaken them? It may be part of the answer to reducing poverty, but micro enterprise also raises a maelstrom of questions and the concept’s full impact won’t be achieved until they are addressed, not just by policy makers but by the public.

(Fox is an Australian journalist, currently living in Nepal. She can be reached at elissa.fox@hotmail.com)

ONLY 1

Nepal Left parties come closer

After the high drama on Sunday at Parliament, the political polarisation in the insurgency-ravaged Himalayan nation has become a new root of anxiety.

As the Maoists voluntarily vacated their proposal on republic, the members of the insurgent-turned political party supported the application of Communist Party of Nepal (Unified Marxist-Leninists).

In reciprocation, the CPN (UML) supported the Maoist proposal on fully proportional electoral system for the Constituent Assembly election. The undeclared “Left Alliance” in the parliament is now sure to divide the members.

Fully aware of the possibilities of polarization, Prime Minister Girija Prasad Koirala and Speaker Subhas Nembang repeatedly requested the political parties comprising the Seven Party Alliance (SPA), to maintain the bonhomie.

The CPN(UML), one of the major factions of the ruling alliance, on Monday ruled out the possibility of political polarisation. The UML is being blamed for joining hands with the “ultra-left” Maoists.

In a desperate face-saving exercise, senior UML leader Amrit Kumar Bohara on Monday ruled out the possibility of any political polarisation between the left and the non-left parties. He also ruled out possibility of any change of government’s leadership.

“Yesterday’s (November 4) support to Maoists in the special session was just a parliamentary procedure,” Bohara claimed, adding that there would be no crack in the SPA.

However, a strong rumour has been hovering around the political circle that the UML supported the Maoist proposal for proportional electoral system following a unwritten agreement between the two parties. The agreement included supporting CPN(UML) leader Madhav Kumar Nepal as the new prime Minister of the country, while Maoist leader Baburam Bhattarai would be the Deputy Prime Minister.

While the CPN (UML) amendment proposal also talked about finalising a new date for the Constituent Assembly election, the new proportional system is sure to further delay the process. The officials of the Election Commission claimed that it took them almost a year to make the preparations for the mixed system of assembly election, which was scheduled to be held on November 22.

“But adopting a fully proportional system would take much more time,” a senior EC official said, adding that new election laws and ruled will have to be passed by the interim Parliament.

The world is bumpy

In one sense, the globalisation that is transforming our world today is nothing more than the recent movement of people, ideas and technologies, taking advantage of a new era (politically and economically), of relatively easy travel, easy communication and open opportunities for education, self-betterment and self-aggrandisement.

Globalisation is ultimately about choices exercised at a global level: economic, lifestyle and identity (particularly in relation to terrorism). The real dividing line between those for and against the broader globalisation project has less to do with Right and Left than it does with a particular stance on the wisdom of leaving as many choices as possible to individuals.

What defines the anti-globalisation radicals is a lack of faith in human beings. The movement of people from one country to another will apparently destroy national cohesion and integrity. Individuals will be ground down along with their local identity by an impersonal global capitalist machine. Consumer choice will be distorted by and subjugated to the marketing of brands. The ‘comparative advantage’ of poverty, in India for example, to the export of jobs from rich countries, destituting white collar as well as blue collar workers. Globalisation is something ‘out there’, a pitiless, inexorable process, or else a shadowy, threatening conspiracy.

There are two ‘isms’ that we need to watch carefully even as we try to mould a better and more inclusive globalisation. The first of these is technological determinism. Thomas Friedman has been accused of arguing that technological developments ensure that the only route to success lies in being more like the US. His argument has been that until 1800, economic competition pitted country against country; that in the subsequent two centuries technology set company against company; and that since then information technology, in particular, has empowered individuals to compete and to collaborate, especially non-White men and women principally in Asia and — perhaps pre-eminently — in India. This has gone so far that these days large numbers of American workers, for example, outsource the preparation of their tax returns to workers in India. Outsourcing and insourcing, Netscape and browsers, Google and Yahoo, Bill Gates and Nandan Nilekani, are the heroes of this Whiggish view of onward and upward progress.

Like Friedman, I have visited the Infosys campus just outside Bangalore. It is impressive: brand new buildings like an Ivy League campus and 14,000 young Indian software engineers. For Europeans worried about competition from Polish plumbers, I have to say that this looked like the Real McCoy. But it did not convince me that the world is flat. Nor do I think Mr Nilekani would take this view. Driving to the Infosys campus, there are all too many examples of how uneven the world is even in a booming and often shining India, with too much poverty on view. Moreover, the road to the Infosys campus is anything but flat.

Friedman rightly argues that technology today can liberate and connect individuals to an unparalleled degree. But we should not exaggerate the impact of the internet, air travel and container ships with comparison to the technological developments in the last century; nor should we forget that most people don’t live in a cyberworld.


The second ‘ism’ to reject is anti-Americanism. While the US itself is the product of a long process of globalisation, the recent expansion of global society has less to do with the expansion of American society than it does with a distinctive US contribution to the structure of world affairs. The US has been a powerful enabling factor in globalisation, rather than its sole driving force. But it did more than anyone else to frame the rules and form the institutions that shaped the global economy in the last half century, aiming for a global emporium not a global imperium. Just as the US advocated capitalism and, usually, free trade, it also used its military might to support a system of world security that was not so much the extension of the US control as it was the extension of a zone within which the US denied control to any other potential contender. This occasionally led to terrible errors: overlooking lessons of history; judging some security issues in terms of whether or not a country fitted into the US’s zone or into a potential contender’s; forgetting that other people had their national pride and national interests too. Sometimes a single bilateral relationship, like that with Iran, was wrecked by all three of these mistakes.

A world in which the US is the only superpower, a world whose principal economic dynamism has reflected the American way of doing things and running businesses, is not an American empire to be hated and fought. You can criticise American policies or attitudes, as I do myself, without believing that the US is the Great Satan. To be hostile to the US is very often to be hostile to the decisions that the rest of us make — the decision as taxpayers not to spend as much as we should on our own security, the decision to buy this or that product or to run our affairs in this or that way.

The main threat to globalisation today comes from the rich and powerful States losing their nerve and their belief in markets, and failing to make the corrections in the system that would benefit all. A defence of economic globalisation does not require an ideological refusal to accept any criticism of it. Nor should we feel any necessity to defend in the last ditch the global institutions which at present manage the process: the World Bank, the World Trade Organisation and the International Monetary Fund. Much as it grieves me to say this, Mr Mahathir appears to have been more correct about many aspects of dealing with the Asian financial crash than the IMF for all its claims of infallibility. High-handedness reigned on both sides of this debate but when the Malaysian Prime Minister asked, “Why not leave us to do the wrong things we want to do?” he turned out to be dead right.


Modern global governance in economic — and indeed in other affairs — cannot be a project driven by a single State. Even if the US had the will to provide the leadership — and the swelling protectionist tide there raises doubts about this — it would have to operate as the biggest but not the only kid on the block. It has to recognise that we will not solve any of the major economic or other problems in the world without the cooperation and shared leadership of India and China.

Interdependence does not end the autonomy of States. What holds the system together is not the weakness of States but the choice that many States have made to stick together. Self-interest should be the glue that binds globalisation in economic and other matters. This constitutes both the greatest strength and the greatest potential weakness of the global environment, that it is held together by many choices made in beneficial concert.

Chris Patten was the Governor of Hong Kong and European Commissioner for Foreign Relations.
This is an edited extract of the 6th Madhavrao Scindia Memorial Lecture delivered on November 1.

Coup number two

OSCILLATING between military takeover and civilian disarray, Pakistan often seems consigned to a classical form of governmental perdition. Yet the coup that General Pervez Musharraf, the country’s president, launched on Saturday November 3rd, was in fact something new. His first coup, in 1999, was designed to restore order after civilian misrule. Now General Musharraf wants to shore up his own unpopular, and perhaps illegal, government.

He has suspended the constitution—a step the government has inaccurately described as constituting a state of emergency—and sacked most of the Supreme Court’s judges. This includes the chief justice, Iftikhar Chaudhry, a champion of swelling opposition to the general. The courthouse in Islamabad is now sealed off by barbed wire and armed police. Private television news channels, foreign and Pakistani, have been hauled off-air. On November 4th the prime minister, Shaukat Aziz, suggested that a general election due in January could be postponed for a year though the next day he insisted that it would go ahead as planned in mid-January.

Over 500 lawyers, opposition politicians and human rights activists have been arrested. They include Asma Jahangir, boss of the country’s human-rights commission and a former UN special rapporteur. In an e-mail from house arrest, where she has been placed for 90 days, Ms Jahangir regretted that General Musharraf had “lost his marbles”.

General Musharraf’s view, expressed in a midnight televised address, is that his intervention is required to prevent instability: “I cannot allow this country to commit suicide.” He identified two urgent challenges: combating Islamist militancy, which is fuelling a small, but disastrous, war in north-western Pakistan; and his urge to “preserve the democratic transition that I initiated eight years back”.

The second motive, properly understood, seems to be uppermost in the general’s mind. The Supreme Court’s judges had been due to rule on the legality of his recent re-election as president. In a poll boycotted by most opposition parties, he was restored to office in military uniform, though the constitution seems to forbid it, by the same rigged assembly that had already elected him once. Rumours last week suggested that, in a surprising turnaround, the judges were minded to conclude that this was illegal.

Around a dozen of the court’s 17 judges, including Mr Chaudhry, condemned the coup as an illegal act, and have been sacked. Five approved it, including Abdul Hamid Doger, an artful ally of the general, who has been rewarded with the job of chief justice. General Musharraf will now hope to restock the court with loyalists.

Once that is done, he may indeed restore the constitution. General Musharraf is right that Pakistan faces serious instability. But in a country itching for democracy and increasingly resentful of his autocratic and pro-America stance, he is partly to blame. Early this year, after the general tried thuggishly to sack Mr Chaudhry, tens of thousands of protesters rallied against him. Last month, in a more ambiguous challenge to the general, 200,000 supporters of Benazir Bhutto, leader of the opposition Pakistan People’s Party (PPP), rallied in Karachi to welcome her back from eight years in exile.

General Musharraf’s campaign in the north-western tribal areas, an American-ordained policy that has come to symbolise his rule to many Pakistanis, is meanwhile threatened with disaster. The army is demoralised and increasingly suffering defeat at the hands of local zealots. In recent weeks, several hundred troops have surrendered; on November 5th 200 of these were reported to have been released by the militants in exchange for some 25 militants freed by the government. In his address to the nation, General Musarraf admitted that: “the extremists don’t fear law enforcement agencies.”

Yet America, and the general’s other western allies, have frowned on his intervention. Condoleezza Rice, America’s secretary of state, urged General Musharraf to hold the election as planned. She also hinted that American aid to his government—which has amounted to over $10 billion since 2001—might be cut.

Ms Bhutto’s response is also likely to be crucial. She had been negotiating with General Musharraf to share power: indeed, her return from self-imposed exile, after General Musharraf issued her with an amnesty from corruption charges, was the sign of a tentative accommodation. In similar fashion, few PPP members have been arrested in the recent crackdown. General Musharraf may hope that Ms Bhutto and her party will offer him support.

Ms Bhutto’s dalliance with the general has cost her popularity—even within her fanatically loyal party. Failing to oppose his coup wholeheartedly would be a further blow to her credibility. Which way will she go? So far, Ms Bhutto has roundly condemned the emergency as martial law by another name. But she has not yet rallied her followers against it.

Charlie Rose - Azim Premji / Nandan Nilekani

DR RON PAUL

I ain't republican but if I am allowed to vote I would have voted him ...

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