Pakistan reverses fuel price hike

ISLAMABAD - Pakistan’s beleaguered Prime Minister Yousuf Raza Gilani has caved in to political pressure and reversed controversial fuel price hikes, a move dubbed by the US a “mistake” as it undermines its efforts to bolster the ailing economy.

“In respect of the national political leadership, and this house, and the whole nation, I restore the old petroleum prices,” Gilani told the National Assembly Thursday.

According to Geo TV, Gilani said: “There was a consensus among the entire political leadership and parliamentary leaders that petroleum prices of December 31 should be restored.”

Rolling back the kerosene, diesel and petrol price increases was one clause in a package of 11 reforms demanded by main opposition Pakistan Muslim League-N leader Nawaz Sharif in a 72-hour ultimatum Tuesday.

The Pakistan Peoples Party (PPP) government led by Gilani came into minority after the Muttahida Qaumi Movement (MQM) withdrew support to it over the price hike. PPP has 125 members in the National Assembly, 47 short of simple majority to keep the government in office. It has the support of the Awami National Party’s 13 lawmakers, five from the Pir Pagara-led Functional League and around 17 independent members.

Western allies are concerned about any prospect of further destabilisation in Pakistan at a time of economic meltdown.

However, US Secretary of State Hillary Clinton said it was a “mistake” for Islamabad to reverse the fuel price rises as the move undermined its efforts to bolster its ailing economy.

“We believe that the government of Pakistan must reform its economic laws and regulations, including those that affect fuel and its cost,” Clinton said in Washington.

“We have made it clear… that we think it is a mistake to reverse the progress that was being made to provide a stronger economic base for Pakistan and we will continue to express that opinion,” she said.

PML-N welcomed the reversal, but stood by its ultimatum on the government to implement all its demands within 45 days.

“We appreciate it,” party spokesman Siddiqul Farooq told media.

“This was one point on our 11-point national agenda, which includes loan recovery, investigation of major scandals, a 30-percent cut in the non-developmental budget, the formation of an independent election commission and others.”

Faisal Sabzwari, an MQM cabinet minister in the southern province of Sindh, also welcomed the government’s U-turn but called on Gilani to go further.

MQM has also been at odds with the PPP over political violence in Karachi, which a senior PPP leader blamed on MQM supporters.