Netanyahu’s Dependence on Hamas

The preceding part of this series examined a question ordinarily left outside discussions on riba: who should create money? It argued that commercial-bank money creation is not, by itself, riba, but that the power to create purchasing power through credit is a matter of public importance requiring transparency, restraint and accountability. One possible reform is to separate transaction money, fully backed by sovereign money, from funds deliberately committed for investment. That proposition leads to an even more fundamental question. What exactly is a bank deposit? The answer appears obvious only because modern banking has merged several economically different relationships into the same institution. A person places salary in a current account because it must be available tomorrow morning. Another person places accumulated savings with a bank hoping to earn a return over five years. A business maintains money for payroll and suppliers. An investor deliberately commits capital to a project knowing that commercial gain is accompanied by the possibility of loss. Calling all these balances “deposits” conceals distinctions that become crucial in a financial order seeking to eliminate riba. There is a basic difference between money and investment. Money held for payment performs the functions of medium of exchange and store of nominal value. Its owner expects Rs.100 deposited today to remain Rs.100 tomorrow and to be transferable on demand. Investment capital performs another function. It is consciously placed in productive activity in expectation of gain and consequently bears the possibility of commercial loss. One cannot logically demand both absolute safety and entrepreneurial return from the same contractual relationship unless somebody else is made to carry the risk. Islamic jurisprudence recognised these distinctions long before modern banking. Funds entrusted purely for safekeeping can constitute amanah. A trustee does not own them and is not ordinarily liable for loss occurring without negligence or misconduct. Where fungible money is transferred to another person with authority to use it and an obligation to return its equivalent, the relationship acquires the character of qard, or loan. State Bank of Pakistan’s own glossary reflects precisely this reasoning. It describes an amanah as property held in trust and states that current accounts may initially be regarded as trust deposits. Once a bank obtains authority to use current-account funds in its business, however, the relationship becomes a loan because the bank must repay the full amount. This point deserves much greater attention. If a bank accepts Rs.100,000 from a customer, is free to use that money for its own financing operations and remains legally bound to repay Rs.100,000 whenever demanded, the customer is not bearing an investment risk. Whatever terminology appears on the account-opening form, economically the bank has received financing from the customer. No difficulty necessarily arises if the customer receives nothing beyond repayment of the amount advanced. The difficulty arises when banking system treats this repayable-at-par money simultaneously as the raw material from which additional financing and monetary claims can be generated. Part II suggested one possible solution: transaction accounts should be treated entirely differently. A current account used for wages, household expenditure, business payments and ordinary transfers should represent protected transaction money. If such balances are fully backed by sovereign money or central-bank reserves, they need not be exposed to the bank’s commercial financing decisions. The account holder would possess money, not an investment claim upon the success of a bank. The bank would provide custody, payments, transfers, cards, digital access and settlement services. It could legitimately charge transparent fees for those services. What it would not receive is free investment capital merely because citizens require access to a payment system. The consequences are significant. Fully backed transaction accounts would remain available on demand and at par. They would not earn an investment return because their owners have assumed no investment risk. Nor would their repayment depend upon the quality of the bank’s commercial portfolio. This is not merely a theological distinction. Modern central banking itself recognises the peculiar character of bank deposits. The Bank of England recently described commercial-bank deposits as liabilities used as money, expected to be redeemable at par on demand and relied upon as a safe store of value. It contrasted them with investment products whose values fluctuate and whose losses are borne by investors. A riba-free financial system should take that distinction seriously. The second category would consist of genuine investment accounts. Here the relationship is entirely different. A customer does not merely park money awaiting payment instructions. He consciously makes capital available for investment and accepts that lawful profit cannot be separated completely from commercial risk. Mudarabah provides one classical framework. One party supplies capital and the other enterprise and expertise. Profit is divided according to an agreed ratio; financial loss, in the absence of negligence or breach by the manager, falls upon the provider of capital. SBP itself explains Islamic investment deposits on this basis: the depositor acts as rabb-ul-maal and the bank as mudarib. Restricted mudarabah allows the investor to specify where the funds may be deployed; unrestricted mudarabah gives the bank wider investment authority. The principle is straightforward. If the depositor wants profit because capital is being employed commercially, the depositor must understand what capital is doing and what risk attaches to it. This is where present banking practice requires closer examination. Islamic banks commonly pool deposits, calculate weighted-average yields and distribute profits under elaborate regulatory rules. SBP presently prescribes profit-distribution arrangements for savings depositors, including minimum distribution requirements linked to the weighted-average gross yield of the institution. It also permits additional hiba in specified circumstances. These measures protect customers against inequitable allocation of profits by banks. Their consumer-protection purpose is understandable. At the same time, an increasingly managed and smoothed return can create in the depositor’s mind an expectation remarkably similar to a conventional savings rate. The crucial question is not whether the return happens to fluctuate by a few basis points. It is whether the depositor actually bears the economic character of an investor. An investment account should identify the pool in

Pakistan’s debt problem has entered a new phase. The headline figure is alarming: total debt and liabilities reached Rs. 99.59 trillion by the end of fiscal year (FY) 2025-26. The deeper concern, however, lies in the composition of this debt, the burden of servicing it and the channels through which public borrowing now affects every productive sector of the economy. According to the latest State Bank of Pakistan data, total debt stood at Rs. 97.88 trillion. Gross government domestic debt reached Rs. 59.44 trillion, while external debt amounted to Rs. 36.20 trillion. Central government debt increased by 7.39% over the preceding year to Rs. 83.64 trillion. External debt and liabilities stood at US$138.85 billion. These numbers confirm the central argument developed in the a ten-part series published in these columns [‘Bankruptcy of ideas—X: Debt, Taxes & Democracy’, Minute Mirror, June 21, 2026]. Pakistan has not merely borrowed against its future. It has increasingly borrowed to service earlier borrowing, while failing to create sufficient productive capacity from the accumulated debt.   ‏The external debt-servicing profile for FY2026 makes this particularly clear. Pakistan serviced US$21.59 billion of external debt during the year. An extraordinary US$10.14 billion—nearly half of the annual amount—fell in the final quarter alone. Quarterly servicing was 2.63 times the amount paid in the preceding quarter, mainly because principal repayments jumped from US$2.70 billion in the third quarter to US$8.81 billion in the fourth. This concentration of repayments is as important as the overall debt stock. A country may carry a large debt if its economy generates sufficient revenue, exports and foreign exchange to service it. Pakistan’s difficulty is that debt obligations have expanded much faster than the productive and export capacities needed to meet them. The debt accumulated over decades cannot be attributed to one government or one fiscal year. Persistent fiscal deficits, a narrow and inequitable tax base, losses of state-owned enterprises, the energy-sector circular debt, excessive recurrent expenditure, exchange-rate depreciation and repeated balance-of-payments crises have all contributed to it. Borrowing became the preferred substitute for reform.  Governments borrowed because they could not tax influential sectors, restructure loss-making enterprises, reduce wasteful expenditure or build a competitive export economy. External lenders financed temporary stability, while domestic banks financed the fiscal deficit. Each arrangement postponed difficult decisions without removing the causes of the crisis. The Ministry of Finance reported public debt at 70.7% of GDP by June 2025. The ratio may improve when nominal GDP grows faster than debt, especially during periods of inflation, fiscal consolidation and lower interest rates. A declining debt-to-GDP ratio, however, does not necessarily mean that the debt burden has become harmless. Pakistan’s debt stock is still increasing. What has improved is the immediate cost of servicing parts of it. Total debt and liabilities servicing declined from Rs. 13.16 trillion in FY2025 to Rs. 11.97 trillion in FY2026. Interest payments on debt fell by more than 23%, from Rs. 9.47 trillion to Rs. 7.27 trillion, largely because lower policy rates reduced the cost of servicing domestic government debt. Interest payments on gross government domestic debt consequently fell from Rs. 8.08 trillion to Rs5.99 trillion. This is welcome relief. It should not be presented as the end of the debt crisis. Lower interest rates reduce the flow cost of debt; they do not extinguish the stock. Principal repayments on external debt and liabilities increased from Rs. 3.47 trillion to Rs. 4.47 trillion during FY2026. Pakistan therefore obtained relief on domestic interest payments while facing a substantially heavier external repayment burden. The distinction is between debt management and economic transformation. Pakistan may be moving from an acute debt-accumulation crisis towards a more manageable financing position. It has not escaped debtocracy—the system in which fiscal policy, taxation, banking, foreign relations and development priorities become subordinate to the requirements of borrowing and repayment. Debtocracy does not remain confined to the accounts of the Ministry of Finance. It is transmitted throughout the economy. The first channel is the banking system. Government securities offer banks sovereign backing, liquidity and attractive risk-adjusted returns. Lending to the government is easier than evaluating businesses, financing innovation or supporting small and medium enterprises. A large domestic borrowing requirement therefore creates continuous competition for available liquidity. The result is crowding out. The State obtains the funds it requires, banks earn relatively secure returns and the private sector bears the adjustment. Productive businesses face limited access to credit, higher risk premiums and shorter financing horizons. Smaller enterprises suffer the most because they cannot compete with the sovereign for bank liquidity. This creates a financial system that can remain profitable while the productive economy remains weak. Deposits are mobilised from citizens and businesses, channelled into government securities, and then used substantially to meet recurrent expenditure and service earlier debt. Banking expands without an equivalent expansion in productive capacity. The second channel operates through foreign exchange. External debt repayment creates demand for dollars. That demand places pressure on reserves and the current account. Any resulting exchange-rate depreciation increases the rupee value of external liabilities and raises the domestic price of imported fuel, machinery, raw materials and intermediate goods.  The chain is direct: External repayment creates foreign-exchange demand; reserve pressure increases exchange-rate sensitivity; depreciation generates imported inflation; and inflation raises working-capital requirements and production costs. Debt consequently becomes a corporate balance-sheet issue. An industrial enterprise may have no external loan, yet still bear the effects of sovereign external debt through a weaker rupee, costlier imports, higher energy prices and restricted access to domestic credit. Consumers ultimately pay through inflation, reduced employment and lower real incomes. The third channel is fiscal. Every rupee allocated to debt servicing is a rupee unavailable for education, health, water, climate resilience and productive infrastructure—unless the State raises additional revenue or borrows again. Pakistan then enters a circular arrangement: borrowing creates servicing obligations, servicing compresses development expenditure, weak development limits growth and revenue, and insufficient revenue necessitates further borrowing. This is why a primary surplus, though necessary, is not sufficient. It can stabilise debt dynamics, but

A man’s hand emerges from a moving car window on Lahore’s Ferozepur Road, opens, and lets go, garbage tumbling onto the road like something the city never asked for. He drives on, does not look back. Nearby, another man treats a red light as inconvenience, not command, and guns through it because the road, for one careless breath, looks empty, not realizing a motorcyclist is already crossing into that emptiness. Neither would call himself careless. Ask them, and they will say, with the confidence of the unexamined life, that they are decent, law-abiding citizens, and narrowly, they are not wrong. Neither has broken a law that will ever find them. What they are missing is something smaller than law and, in the end, far heavier: civic sense. Civic sense is a phrase worn smooth by overuse and rarely defined. It is not patriotism, that loud, flag-waving thing. It is not obedience, that bowed, fearful thing. It is, instead, a kind of seeing, the awareness that one’s actions ripple into rooms one will never enter: the neighbour’s wall, turned dumping ground; the footpath, swallowed by parked motorcycles, leaving the pedestrian nowhere to stand but the road; the river downstream, carrying someone else’s filth to a family that never asked for it. It is the quiet discipline of behaving as though other people exist and matter, even when no policeman stands at the corner. Pakistan is not short of laws. Karachi’s bylaws on waste disposal would look entirely respectable in any city hall in the world. Islamabad’s traffic regulations are detailed enough to please the most exacting planner. What is missing is not ink on paper but something beneath the skin: the private sense that a rule is worth keeping even when no one is watching. This is why civic sense cannot be legislated into being, however many statutes are stacked atop one another. You can fine a man for littering. You cannot fine him into loving the street he lives on. Take something as unremarkable as a queue. Anyone who has stood at a bank counter, a railway window, a hospital OPD here knows the choreography by heart: the line exists as an idea until someone decides their time outweighs everyone else’s, and it dissolves like sugar in water. This was never really about queues. It is about a deeper assumption: that public space belongs to no one in particular, and rules, somehow, are meant for other people. Multiply that across a city of ten million restless souls, and you get gridlock that swallows whole afternoons, bins overflowing like wounds left untended, and parks abandoned within a year of their own birth. There is a cost to all this, rarely counted honestly. Karachi bleeds away enormous productive hours each year to congestion worsened, not created, by drivers who treat lanes as suggestions and red lights as optional punctuation. Public health suffers when open drains and uncollected waste become nurseries for disease, an arithmetic residents of nearly every major Pakistani city have learned to expect each monsoon. None of this appears, tidy and legible, in a budget document. It appears in hospital wards, in wages lost to sick days, in a low-grade sense that public life is something to survive rather than inhabit. It would be convenient to lay the blame entirely at poverty or lack of schooling, and there is a grain of truth there; a person fighting daily to feed a family has little room left for civic virtue. But the explanation only carries so far. Plenty of well-off, well-schooled Pakistanis fling litter from car windows and treat public parks as private gardens annexed from the commons. Civic sense is not a simple function of income. It is a habit, built through repetition, example, and whatever a society quietly agrees to call normal. This is precisely where schools could do far more. Civic education in most Pakistani classrooms, where it exists at all, survives as a chapter memorized for an exam rather than a practice lived out. A child taught that littering is wrong, who watches the adults around her litter daily without flinching, will absorb the adults’ hands, not the textbook’s words. Civic sense must be modelled, not narrated: teachers who insist on a clean classroom, parents who do not fling wrappers from car windows in front of watching children, local governments that follow a complaint through to its end instead of letting it dissolve into some forgotten file. None of this demands grand reform. It demands a shift in what ordinary people find embarrassing. In cities where civic sense runs deep, a litterer feels a small, hot flush of shame, not because a fine is coming, but because it simply is not done, the way one does not spit at a wedding. That social pressure is more powerful, and far cheaper, than any enforcement machinery a government could design. Building it takes time, and begins small: a shopkeeper sweeping the pavement outside his door, a driver waiting his turn at a roundabout though no one would know if he cheated, a resident reporting a broken streetlight instead of learning to walk around the dark. Cities are not, in truth, built by planners and engineers alone. They are built street by street, choice by choice, by the accumulated decisions of the people who walk them. A country may possess the widest roads and tallest towers in the region and still feel chaotic if the people moving through them share no responsibility toward them. Civic sense is not a lesson for children, nor a slogan for a billboard. It is the invisible infrastructure, unseen and indispensable, that makes every other infrastructure actually work. The writer is serving as Director of the Institute of Humanities and Arts at Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan.

There is a particular kind of exhaustion that sets in when a war refuses to end on schedule. Five months into the conflict between the United States and Iran, we are living through it. Ceasefires are announced and collapse within weeks. Strikes are billed as decisive and are followed, days later, by more strikes. Each side insists the other will soon come to its senses, and each side is wrong. What we are watching is not a war moving toward resolution. It is a war that has become self-sustaining, and the longer it runs, the more countries get pulled into its logic whether they wanted a role in it or not. Saudi Arabia is the clearest example. For nearly four years, Riyadh had quietly extracted itself from the Yemen war, treating the 2022 ceasefire with the Houthis as one of the few unambiguous foreign policy wins of Crown Prince Mohammed bin Salman’s tenure. That restraint is now gone. When the Houthis resumed missile fire at Israel in solidarity with Tehran, and then began striking Saudi oil infrastructure directly, Riyadh had no real choice but to respond. It bombed Hodeidah. The Houthis retaliated against Aramco facilities in Yanbu and Jizan. A conflict Saudi Arabia spent years trying to bury is now, again, live on its border, not because Riyadh chose it but because a war between Washington and Tehran left no room for neutrality. This is the pattern worth naming plainly: nobody in this conflict is fighting the war they intended to fight. Washington launched its campaign framed around Iran’s nuclear program, wagering that decisive strikes would force capitulation or collapse. Instead it has strikes running past the two-week mark with no clear terminus, American service members killed in Jordan and Iraq, and a president publicly conceding that the exit could be “diplomatic or military” — which is another way of saying nobody currently knows how this ends. Iran, for its part, has responded to devastating strikes on its cities not with capitulation but with exactly the kind of asymmetric, proxy-driven defiance its doctrine was built for, activating fronts in Iraq, the Gulf, and now Yemen that cost it little and cost everyone else a great deal. The Strait of Hormuz tells the same story in economic terms. Daily vessel traffic through one of the world’s most important oil chokepoints has fallen to a small fraction of its prewar level. That is not an abstraction. It shows up in tanker insurance premiums in Piraeus and London, in fuel costs in Mumbai and Rotterdam, in the balance sheets of countries that have precisely nothing to do with this fight. War aims that once seemed narrowly bilateral — Washington versus Tehran, over centrifuges and missile stockpiles — have metastasized into a tax on global trade that nobody voted for and nobody can opt out of. It is tempting, watching this unfold, to look for a single culprit. Commentators sympathetic to Washington will point to Iran’s decades of proxy warfare, its nuclear ambiguity, its crackdown on its own protesters, and argue the current campaign is simply overdue accountability. Commentators sympathetic to Tehran will point to a US-Israeli strike that killed Iran’s Supreme Leader and ask what state, faced with the assassination of its head of state, would not treat that as an act of war demanding a response. Both arguments contain real grievances. Neither survives contact with what has actually happened since: a conflict that both sides insist is about narrow, defensible aims but that neither side has been able to keep narrow. Wars rarely stay the size their architects intend. What should worry observers most is not any single strike or retaliation but the absence of an exit ramp anyone believes in. Ceasefires here have not functioned as steps toward peace; they have functioned as pauses for rearmament, evidenced by how quickly each one has collapsed back into nightly bombing. That is the signature of a conflict without a theory of victory — one where both governments can inflict real pain on the other indefinitely, but where neither can convert that pain into a settlement it can sell to its own public. In that kind of war, the fighting does not stop because someone wins. It stops, if it stops, because the costs finally exceed what either government’s domestic politics can absorb — and on the evidence of the past five months, that threshold keeps receding rather than approaching. Saudi Arabia’s reluctant return to the Yemen battlefield should be read as an early warning rather than a footnote. It shows how a conflict that both Washington and Tehran describe as fundamentally about themselves keeps finding new participants who never agreed to join. If this war continues on its current trajectory, the question worth asking is not which superpower prevails, but how many other countries, currencies, and shipping lanes get quietly conscripted before it does.

A few years back, the 18th Amendment was introduced with the promise that devolution of power is necessary to solve the people’s problems. It was necessary to empower people and bring resources to the ground level to positively impact their lives. The devolution of power was promised through the establishment of strong local governments.    However, devolution stalled at the provincial level.  Provincial governments refused to grant the promised autonomy to local governments. Moreover, local governments do not have financial autonomy at all, which is a prerequisite to empower them. For example, political parties at the provincial level use it to get maximum financial resources and autonomy, but refuse to devolve it to local governments.  Therefore, instead of benefiting people and the country, it has added to problems. Now, it is on the verge of collapse. Many voices ask to roll back the 18th Amendment, and they are justified.     Now the debate has started about creating new provinces, and the size of provinces is portrayed as a problem, as devolution of power and local governments were portrayed before the 18th Amendment. However, before creating new provinces, there is a need to learn from the failure of the 18th Amendment. It is necessary to analyze the reasons for the failure of the 18th Amendment. There can be many reasons, but the most prominent ones were governance and political culture. Thus, there is a need to first understand these before venturing into creating new provinces.    What is governance? There are different ways to define governance, but for me, “governance is an art and a science for satisfying people’s needs, building institutions to protect their interests and life, and keeping people’s aspirations or dreams alive. Governance is a basic ingredient of state-building and sustaining it; rather, it shoulders the existence of the state. Why? Because it ensures justice and social justice, provides security, and protects people from injustice and security threats. It holds true from ancient times to modern statehood. Hence, it is used to measure a country’s success and failure.    Over time, humans have developed different models of governance. In modern history, there are three prominent models: Western, socialist, and empathy-based (Islamic) models. The Western model, based on Liberal democracy, prefers democratic governance, which hinges on elections and accountability. It works through the slogan “government of the people, by the people, and for the people.” Unfortunately, over time, this slogan and accountability began to weaken, and elections alone remain the main component. Moreover, manipulation of the election process and the use of money further weaken the system, as marginalized people get pushed out of the system. Popular slogans, identity, ethnicity, and hate become the driving force.      The socialist model is based on the slogan of people-centric governance and the whole-process people’s democracy. People-centric governance means all policies and actions must be people-oriented, and outcomes must serve the people and bring positive change in their lives. The whole process of people’s democracy means that the interaction between the state and the people is continuous, not just at election time. Moreover, the merit and character of governance actors are determining factors to ensure people-centric governance. This model was invented in China and is practiced there, where it has achieved remarkable success.     The Islamic model hinges on three fundamental pillars: empathy, people, and accountability, in accordance with Sharia law. Empathy and people must be the focus of all policies and actions at all levels. People’s say must matter at all levels. Accountability must be ensured at all levels, without any discrimination. Famous incidents of Hazarat Umer (RA) and Hazarat Ali provide the true essence of accountability and governance. Lastly, the actors of governance must have the highest virtuous character and should not engage in any form of prejudiced behavior. Unfortunately, it is not practiced anywhere in the contemporary world.       From the above comparison, it can be inferred that despite differences in philosophy and actions, the goal of each model remains the same: to serve the people. Serving the people is the key to sustaining power and the state.    Unfortunately, Pakistan does not follow any of these models. Pakistan has its own style of governance, which is a mix of everything, and we cannot say exactly what it is. However, the most prominent features of our governance are relationship-based networks, misuse of power, and a money- and power-driven system. The system is devised through complicated webs of laws, rules, and requirements. It makes the system prone to corruption and rent-seeking behavior, exclusiveness, and clubs of interest groups, which have become common elements. The system operates through money in exchange for favors, business deals, or power and influence, and is facilitated by relationship-based networks.    It has given rise to a new type of governance model: elusive governance. There is no systematic way to plan and execute the plans. Plans are being made for short-term gains, not with proper planning or a futuristic approach. Haphazardness has become the most prominent feature of governance. People and people’s interests are largely missing. Let’s try to understand it with an example from Islamabad, the seat of government.    A few years ago, the Pakistani government initiated the Safe City program. The government spent billions of rupees to complete the Safe City program. It was sold as a program to secure the people. After that, a new government came to power and initiated the construction of signal-free corridors by building underpasses and flyovers. The government again spent billions of rupees to build the signal-free corridors. People were told it was being done to serve them by facilitating mobility. The process is still going on.     After spending hundreds of billions on the Safe City program and signal-free corridors, the government one day decided to install check posts at major points. The installation of check posts severely disrupts traffic flow and puts the lives of hundreds of people at risk across the city every day. Now, a common-sense question is: why do governments spend