ALAIWAH!

The Centaurus in Islamabad… work continues, but completion won’t happen in 2009

Last year, I listed out a set of predictions and just recently I evaluated how they turned out. But on to more important business: what’s 2009 going to be like for Pakistan, for the IT industry and for the world at large? There are lots of very important trends unfolding before our eyes and they can cause some pretty dramatic changes to the status-quo. You may have read recently about the Russian Prof. Panarin’s prediction concerning the dissolution of the United States, or various other hypotheses about the economic disasters that are lying in wait for us as we enter 2009… and if you haven’t, I would encourage you to take a look. I won’t say whether I agree or disasgree, but will tell you that 2009 is a phenomenally imporant year for the whole world, and it is never a bad thing to understand the forces behind the change.

And that’s not a bad topic to start with, why is 2009 more important than most other years? Here’s (partially) why:

1) The US is in dire straits, economically and politically. It faces a resurgent Russia, a Rising China and it remains tied up in multiple, expensive conflicts. People in the US realize the shaky ground their country stands on today and want to change things for the better. They wanted ‘change’ bad enough to vote an inexperienced Senator in to the White House, because they associated him with the ability to affect the greatest change. If Obama fails, the World and the US, will both pay a heavy price. Whether or not he is on the path to success will be determined in 2009.

Gen. Kayani will keep the Army out of politics, while ensuring that the Army’s stance is well understood by everyone.

2) Pakistan has gone from a progressive government headed by Gen. Musharraf to a relatively ineffective civilian government. So far, there has been considerable infighting and very little action. There are some fundamental issues that must be resolved in 2009, such as energy, water, trade imbalances and the security situation on the Afghan border. If the present government, which is almost a year old now, is not seen to radically alter its behaviour and implement improvements in these key areas, the traditional ’safety valve’ in Pakistani politics will cause a change of government.

3) The world has been hit by a simultaneous, global recession. Depending on what happens in 2009, the effects of this recession can be tremendous and long-lasting. China needs a certain level of growth to ensure political stability. The US needs growth to prevent the country from being sold off in debt, and in order to maintain the traditional stability of its society. The US must keep its people employed and prevent large numbers from feeling the economic pinch. If this is not done, there is nothing stopping the increasingly frustrated unemployed millions from exhibiting agitational behaviour on display in other less stable parts of the world. India needs growth if it is to feed its hungry millions. If it fails to do so, you will have more of what is going on in the Indian state of Assam, where a Marxist rebellion has taken firm hold and has resulted in the loss of thousands of lives and a complete breakdown of the Indian state’s authority.

4) From an IT perspective, there are plenty of key things unfolding in 2009. What happens to Apple with Jobs inevitable departure? What happens to Microsoft is Windows 7 is not a great success? Do they get a third chance? What happens to the PC industry with people buying cheaper computers? Dell, in particular, is vulnerable.

So what’s going to happen? Well, your guess is as good as mine. I’ll put my guess down first and you can tell me what yours is later.

Political Predictions:

Obama is in – will he be able to deliver change?

1. Asif Zardari is heading down a dangerous path. He will be significantly weakened and potentially removed in 2009. The conflicts with Amin Fahim, Nawaz Sharif and now Yusuf Raza and Mumtaz Bhutto, are fundamentally unsustainable. Combined with the Benazir tragedy fading further and further into the past, time will rob him of his number 1 political ally: sympathy. Were he a sounder statesman, he would have used 2008 to build alliances; he has tried, but ineffectively. 2009 will not be good for him.
2. Despite rumours, there will be no martial law in 2009; the Army will certainly have their input, but they will abstain from direct political involvement.
3. In the US, Obama will be constained in his ability to implement his election promises. In Iraq, he will find that he will either have to come to grips with an out-right US ‘loss’ in the sense the that government there, in 2-5 years, will not be pro-US. Or he will have to do an about turn on his election promises and find some way of prolonging US involvement. This will be hard to do, because the US cannot afford it politically and financially. Any progress claimed by the pro-surge camp, will be seen to be visibly undone – but we’ll get to that in 2010 and 2011.
4. Also in the US, Obama will have a very hard time with Afghan policy. Troop levels are going up as we speak, but the US military will soon discover that even 70,000 soldiers in Afghanistan are probably 130,000 too few. Afghanistan will not be policeable directly by the US military and sometime in 2009 we will see the US buying off warlords selectively, claiming that everything is ok and trying to set a course for departure. Of course, underneath the surface, nothing would have changed and Afghanistan will revert to being Afghanistan.
5. 2009 will not be a good year for Pakistan-India relations. While there is an understanding that two nuclear armed neighbours have to live in peace, there is also a realization in Pakistan that India is an ungracious and scheming neighbour that sees itself as a global power – which it is not. Due to these grandiose visions it has of itself, India feels it can deal with Pakistan brusquely, and in this it is deeply mistaken. The region will continue to pay the price, through 2009, of these Indian misconceptions.
6. Terrorism in India will continue to hit hard through 2009. The insurgency in Assam will not be controlled and will continue to get more serious. It already poses a threat to the Indian federation, and this threat will get more severe in 2009.

Financial and Economic Predictions:

Mian Mansha’s MCB bank is a roaring success. Corporate Farming is where he’s heading next.

1. There is a belief that the economic problems in America can be solved – to some degree – by spending gobs and gobs of money. This money is essentially being borrowed from the future and raised through excessive taxation. While in the long term, society in the US will pay the price on both counts, in 2009 at least, Obama will have to take measures to inflate the stock exchange – even if artificially. This will be done through the passage of trillions of dollars of bailout packages. Therefore, in 2009 the major US stock indices will likely see a very modest increase.
2. Not to be confused with the increase in stock indices, the US economy on the whole will be in bad shape through 2009. Many major businesses will file bankruptcy, unemployment will continue to rise at least through the first quarter or two of 2009 and spectacular corporate failures will continue to make headlines for the foreseeable future.
3. In Pakistan, the KSE has taken a massive battering due to the incorrect policies of the SEC, KSE and the Ministry of Finance. Specificaly, the lower lock prevented investors from selling when they wanted to and that caused an avalanche when the lower lock was ultimately removed. But everyone realizes this. And 2009 will see Pakistani stocks head higher. I would guess by as much as 10%.
4. The trade gap in Pakistan will be reduced somewhat and the out-of-control imports that were a major issue through the second half of 2007 and most of 2008, will be arrested.
5. Food will be big on the international economic agenda and corporate farming in Pakistan will mark 2009 as the year of its birth. This is one of the biggest trends to watch in Pakistan and globally, for the foreseeable future.
6. Iran will begin to supply about 1 Gigawatt of electricity to Pakistan and an additional 600-900MW will come online within the country in 2009. While this will reduce the power deficiencies to a great degree, it won’t be until 2010 that load shedding is firmly in our past.
7. The US$ will trade between Rs. 75 and 85 through 2009. While the Rs. might weaken, we believe the US $ isn’t on very firm ground either. One risk to this prediction is a potential devaluation of the Pakitani Rs. to spur exports and narrow the trade gap. We don’t think that would be a very smart move…

IT Industry Predictions:

1. The Software Tower in Lahore will finally get wrapped up close to the end of 2009. Fingers crossed.
2. Netsol will remain in serious trouble through 2009 and will either face some sort of shareholder action or will become a dirt-cheap acquisition target.
3. The economic downturn in the West will make it harder for Pakistani companies to expand services and we will start to see some very interesting Web 2.0 and other consumer-focused products emerging from Lahore, Islamabad and Karachi in particular. Due to the massive adoption of mobile technology in Pakistan, many of these products will cater to mobile phones/users.
4. 2009 will be a good year for WiMAX in Pakistan. There are now two competing offerings and Wateen is working hard to resolve coverage issues. Pakistan will be a WiMAX success story.
5. Windows 7 will be released early – before the holiday season in the US – and it will do well. It will be the only new version of a Microsoft operating system that will have more modest hardware requirements as compared to the previous version, and this will be a key reason why it will succeed.
6. Android will threaten to become pretty big in 2009, but will not actually become a dominant platform for the next year or more.
7. Palm will come out with a ‘Hail Mary’ piece of technology during CES, and it will not work for them. Palm will be pretty close to an untimely death by the end of 2009.
8. PSEB will remain relatively ineffective through 2009; since Yusuf Husain’s departure, this has unfortunately been the case and will continue to be the case… The primary reason is that the Ministry of S&T is being fundamentally mishandled and with the government’s occupation with all sorts of ridiculous infighting, the PSEB is not getting the attention necessary to attract and retain a top-class Managing Director.

We’ll revisit the list on Jan 1st, 2010 and see how right or wrong I was. Here’s to hoping that when I’m wrong, it’s because reality turned out to be sweeter!!