Farewell Nokia: The rise and fall of a mobile pioneer

Farewell Nokia: The rise and fall of a mobile pioneer

Nokia was once a dominant force in the wireless world. CNET takes a look at its successes — and what went wrong.



Nokia’s headquarters in Espoo, Finland, is known as Nokia House, or NoHo, and is the centerpiece of an industrial park on the bay. It’s about a 10-minute drive from the center of neighboring Helsinki. Roger Cheng/CNET

You never forget your first cellphone.

Mine was the Nokia 5190. By today’s standards, it was bulky and embarrassingly lacking in features. It made phone calls and played the game “Snake.” Forget a Retina Display; it boasted a monochromatic screen with a green backlight. And how’s this for fashionable: It came with a freebie leather case and belt clip that I, regrettably, wore proudly.

It was perfect.

Nokia served as my ambassador to the wireless world, letting me experience for the first time what it truly meant to be unfettered from landlines and payphones (remember those?). It was a massive revelation for a young reporter on the road. For better or worse, Nokia helped set me on the path to becoming the gadget-obsessed geek I am today.

So it’s with a fair bit of melancholy that I bid farewell to Nokia. On Friday, the once-staid Finnish company confirmed that it had completed the sale of substantially its entire devices and services business to Microsoft. Microsoft said the unit, now named Microsoft Mobile Oy, would fall under its devices group.

Nokia’s headquarters has a lounge that features a lineup of past notable devices. Roger Cheng/CNET

“Today is an exciting day as we join the Microsoft family, and take the first, yet important, step in our long-term journey,” said Stephen Elop, the former CEO of Nokia and the new head of devices at Microsoft, in a blog post.

Microsoft’s $7.5 billion acquisition is a sobering reminder that even the strongest companies can fall.

Next to Motorola, which invented the mobile handset, there was no bigger name in the business than Nokia. The company has been on such a steady downward slide over the past six years that it’s easy to forget how dominant and long-lasting its reign was over the cellphone business. Samsung Electronics is heralded as a titan with just over a quarter of the global handset market today; Nokia at its peak in 2007 controlled 41 percent of the market.

“It’s hard to imagine any vendor reaching 41 percent share in today’s world,” said Ken Hyers, an analyst with Strategy Analytics.

Stephen Elop, former Nokia CEO and now head of Microsoft’s devices business, speaking at Mobile World Congress last year. Stephen Shankland/CNET

By the end of last year, Nokia’s market share still sat at 15 percent, thanks to a horde of cheaper basic phones, according to data compiled by Strategy Analytics. Its share of the smartphone market was in the low single-digits.

But when Nokia was on top, nobody could touch it. That kind of success eventually bred an obstinate attitude and vulnerability that was exposed first by the Motorola Razr, and then more fully by Apple’s iPhone.

Floundering in a world that was moving forward without it, Nokia tapped outsider and Microsoft veteran Stephen Elop in 2010 to shake things up, which he promptly did with a controversial decision to drop the company’s proprietary software and adopt Microsoft’s Windows Phone mobile operating system. What followed was a three-year battle to gain acceptance for Windows Phone software and its Lumia phones.

Now, Nokia’s devices and services business finds itself a part of the Microsoft family. “You forget when you see a giant fall, when you’re that tall, that high, the collapse is pretty dramatic,” Hyers said.

Rubber roots

Nokia isn’t going completely away. Beyond mobile devices, the company’s telecom infrastructure business, mapping services, and advanced technology division will continue operating under the Nokia brand. It’s the latest incarnation of a 150-year-old business that can trace its origins back to making rubber galoshes.

Nokia was an industrial conglomerate in multiple areas before Jorma Ollila took over as CEO in 1992. Prior to his appointment, Nokia was in shambles, having made several poor investments in new businesses — all in an attempt to transform itself from a paper supplier. Those investments went sour after a massive recession hit Finland. At one point in the late ’80s, the board had considered selling the fledgling mobile phone business.

Ollila, however, convinced Nokia to not only stick with the business, but to throw its full weight behind it and the telecommunications infrastructure unit. The company would go on to jettison the rubber, cable, and consumer electronics divisions in the subsequent years.

Ollila made a lot savvy bets early on. Nokia played a big part in the development of GSM wireless technology, a global phone standard still used today. He set up the company’s internal manufacturing supply chain, allowing it to quickly and efficiently build its own phones.

The cellphone industry was highly fragmented with multiple vendors who looked at the market on a country-by-country basis. Nokia was one of the first to view the global market as a whole, building phones that worked in many countries at once. But at the same time, it recognized the importance of reaching every price tier. It established a strong presence in high-end Western markets, and saw one of its phone featured in films such as “The Matrix.” It played well to audiences in emerging markets such as India, where phones would sold for as little as $40.

In 1998, Nokia overthrew Motorola to become the world’s largest phone manufacturer. By the time I purchased the 5190 in a year later, Nokia supplied a little more than one out of every four phones in the market.

“Nokia was to mobile as Kleenex was to tissue paper,” Hyers said. “That was how dominant they were.”

It wasn’t just the nuts and bolts that won Nokia praise. The phones looked great. And Nokia did a lot of work to reduce the size with each new generation. The Finnish design aesthetics worked for consumers. “Back then, cellphones were simple, but did they have style? No,” said IDC analyst Ramon Llamas. “That was something Nokia was quick to pick up.”

The company was in full expansion mode.

“Those first years were crazy,” said Petra Soderling, a former Nokia employee who worked at the company between 2000 and 2012, and now runs a nonprofit software support community called Mobile Brain Bank. “New people were being hired from left and right…even the bust of the dotcom bubble didn’t seem to have much impact on how fast mobile was growing.”

Nokia embraced “Nokia DNA,” a concept that its phones all have a distinct, but consistent look. While the company experimented with multiple designs, its engineers were wedded to the “candy bar” look.

That stubborn refusal to change the design turned out to be the first crack in its dominance.

Rise of the Razr

While most of the world was gobbling up Nokia’s steady menu of candy bar-shaped cellphones, consumers in North America began eyeing flip phones, handsets with a clamshell design.

Motorola, mounting a comeback of its own, led the charge for flip phones, and cemented the trend with the debut of the ultra-slim Razr in late 2004. It remains one of the most successful cellphones ever, reigning as a top seller for nearly three years.

By the time I purchased a Razr through Verizon Wireless, the model was almost two years old. I was still excited to own one. And it had been years since I thought about Nokia.

Motorola’s ultra-thin Razr. CNET

Nokia refused to succumb to the whims of a select region, instead pressing on with its candy bar designs featuring higher-end components such as metal ball-bearings found in luxury cars. I asked Nokia executives about the possibility of a flip phone several times in those years. They dismissed it as a fad.

Hyers recalled that a Nokia executive complained about how he couldn’t open it up with a single hand. Meanwhile, the analyst and his colleagues were all using flip phones (which they had little trouble operating with one hand).

It was at this point that Nokia largely abandoned the US market. The US carriers were increasingly looking for vendors to supply customized phones, a request that upstarts Samsung and LG were all too happy to fill. The carriers backed away from Nokia, which maintained a niche presence in the US through a handful of boutique stores.

“Nokia wasn’t delivering, or not delivering quickly enough,” said Gartner analyst Tuong Nguyen. “The Korean vendors could deliver it faster, and they were able to pick up on (Nokia’s) weaknesses.”

Nokia’s N95, for example, was hailed by the company’s fans as the ultimate showcase device. But in the US, it was largely ignored because the carriers refused to sell it.

Motorola, fueled by the Razr, had taken the crown in the US, and then-Motorola CEO Ed Zander believed he had enough momentum to realistically gun for Nokia’s global leadership position.

Ultimately, Motorola failed to build upon the success of the Razr. Nokia’s decision to abandon the US market didn’t have any immediate consequence; it continued to gain market share around the world and hit its peak until the second half of 2007. That was after the release of Apple’s first iPhone.

Apple’s smartphone revolution

Contrary to public misperception, Apple did not invent the smartphone. Before Steve Jobs’ touchscreen powerhouse came on the scene, Nokia was the leader in the smartphone business, owning roughly half the market.

But what the iPhone brought to the market was a new sense of what a smartphone could do, and who could benefit from such a device: virtually everything and everyone. Apple led the charge in turning the smartphone into a consumer device from one primarily used in a corporate setting, a notion that then-Research in Motion had scratched at the year before with its compact and consumer friendly BlackBerry Pearl.

The original iPhone. Declan McCullagh/CNET News.com

Apple’s slick iOS touchscreen-based software revolutionized how people interacted with their phones. In comparison, the slew of smartphones in the market worked on older, clunky operating systems. Nokia’s Symbian software was no different, and it was starting to show its age just as the iPhone, and later Google’s Android operating system, began to take off.

Still, Nokia refused to jump on the touchscreen bandwagon, again showing its inability to adapt to new trends. It waited a year after the original iPhone launched to unveil its first touchscreen phone, the Nokia 5800. Unfortunately, it was less a smartphone and more a handset optimized to play music.

Just as important was Apple’s success in popularizing the concept of an app store. Nokia actually had a fairly robust app store, but it was geared to more technically savvy users, and not as easy to use as the iOS App Store. The app ecosystem is credited with locking customers into Apple’s operating systems, firming its lead in the smartphone business.

In doing research for a profile on Nokia in late 2012, I had a chance to talk with a several former and current employees about what it was like at the company at that time. To many of them, it wasn’t just arrogance that kept them rooted in Symbian, but the inability to take risks.

The first floor of Nokia House’s central building houses the Cantina, the largest public space in the company’s headquarters. Roger Cheng/CNET

“There wasn’t a sense of urgency,” a former Nokia executive told me. When dealing with a machine that pumped out millions of phones, a single mistake or bad call could cost the company billions of dollars. As a result, management was structured around many layers of approval bodies and meetings. “The whole structure was built to prevent mistakes.”

The lack of urgency is understandable; Nokia’s share of both the smartphone and total cellphone markets were in decline, but the drop-off wasn’t dramatic. In countless interviews with Nokia executives, they were quick to point to their market leadership as proof they were still in a strong position.

Nokia attempted to dress its Symbian platform with well-crafted hardware, using premium materials and high-end camera technology. But the company knew Symbian couldn’t be its long-term software option, and was readying a next-generation platform, Meego, as its successor.

Aside from one commercial device, the N9, Meego was not to be.

Jumping off a “Burning Platform”

After four middling years with Nokia veteran Olli-Pekka Kallasvuo at the helm, the company’s board opted to go with an outsider. In came former Microsoft executive Stephen Elop, who was unburdened with the institutional baggage that had developed at the company.

Just a few months after taking over in September 2010, Elop made waves with his infamous “Burning Platform” memo, which called for the company to take drastic action to change or die. That change came in the form of Nokia dumping Symbian and its burgeoning Meego platforms and betting on his former employer’s Windows Phone platform for its high-end smartphones.

Nokia CEO Stephen Elop speaks with CNET October 2012
Nokia CEO Stephen Elop showing off a the Lumia 900. Josh Miller/CNET

Some veteran Nokia employees were appalled. Others applauded the new direction.

Love or hate him, credit Elop for bringing a new sense of urgency to the company. My profile of Nokia found a company whose employees were geared up for a startup mentality. There was a willingness to take risks. Some even allowed themselves to hope a comeback was possible.

Starting with the Lumia 800 and Lumia 710, which debuted in October 2011, Nokia began a long, slow battle to win fans over for its own phones. It also became Microsoft and Windows Phone’s biggest cheerleader.

Innovating with Lumia

Roughly a year later, during the debut of the Lumia 920, Elop boldly touted the phone as the most innovative in the industry.

It wasn’t simple marketing bluster. The Lumia 920 featured an ultra-sensitive touchscreen that your fingers could swipe even if you had gloves on. It was one of the first phones to popularize wireless charging – complete with color-coordinated wireless charging accessories.

Stephen Elop showing off the latest Lumia phone at Microsoft’s Build developer conference. James Martin/CNET

Most important was the optical image stabilization found in its “PureView” camera lens. Nokia had a heritage of strong camera phone technology, and the company continued to build upon that with a more stable camera that could also take low-light pictures. The following year, Nokia pushed the technology further by packing a 41-megapixel camera into the Lumia 1020, allowing for 3X zoom.

But all of those innovations did little to turn the heads of consumers, who were still gravitating toward the iPhone and the increasingly popular Samsung Galaxy S franchise. The first Lumia phone for the US, the Lumia 900, enjoyed a joint marketing push by Nokia, AT&T, and Microsoft, including a launch concert featuring Nikki Minaj in Manhattan’s Times Square. Unfortunately, those efforts fizzled when it came to raising awareness.

Nokia XL
The Nokia XL, a larger version of the company’s Android-powered phone. CNET

It wasn’t until Nokia began expanding its portfolio to include more affordable Lumia phones that its market share position began to tick up. The company pressed the affordable strategy at Mobile World Congress in February with the debut of Nokia X, an Android-powered smartphone priced around $120 without a contract.

“This is such an awesome opportunity,” Llamas said.

The progress has been slow, but steady. In the US, Nokia finally overtook Motorola in market share in the third quarter of 2013 as the fourth-largest smartphone vendor – long overdue payback in the back-and-forth between these two storied, but dramatically diminished, companies (Google is in the midst of foisting money-losing Motorola on to Chinese vendor Lenovo).

Despite the work that went into reviving Nokia, the company couldn’t pull itself out of the red. Microsoft, with far more financial resources, looks like a logical home.

I’m not alone in my melancholy. Former Nokia vet Soderling said she started feeling emotional today when her Facebook stream started filling with pictures of the glowing blue Nokia sign being taken down at the Espoo, Finland, headquarters, replaced with a white Microsoft logo.

That Nokia could fall so low serves as a lesson to all handset vendors. As dominant as Samsung and Apple are, Nokia was even bigger in its prime.

Perhaps Microsoft and Elop can continue to build the Lumia brand with more advanced bells and whistles. But sometimes, I do miss the simplicity of the 5190, stubby antenna and all.




Ms Alfayez was only 15 years old when she married King Abdullah, who was then in his 40s, but he divorced her just over a decade later


Prisoners at the palace: Saudi princesses plead for help as they claim they are being held by the king against their will

  • Princesses plead for help from captivity at royal compound in Jeddah
  • Their mother has written to UN human rights agency to intervene
  • Sahar, 42, and Jawaher, 38, claim they can only go out to shop for food
  • Saudi Arabia is one of the world’s worst countries for women’s rights

By Damien Gayle


King Abdullah: Two daughters of the Saudi leader say that they and their sisters are being held against their will in the royal compound in Jeddah

King Abdullah: Two daughters of the Saudi leader say that they and their sisters are being held against their will in the royal compound in Jeddah

Two daughters of the King of Saudi Arabia claim they and their sisters have been held prisoner in the royal palace for 13 years.

Princesses Sahar, 42, and Jawaher, 38, said that they are being kept against their will in a guarded villa in the royal compound in Jeddah.

Their claims shed light into the usually secret world of royal family of a country where women are effectively treated as second-class citizens.

Saudi Arabia is the only country in the world that prohibits women from driving. It scored 130th out of 134 countries analysed by the World Economic forum in a 2009 report on gender parity.

But the restrictions allegedly placed on Sahar and Jawaher go well beyond what is allowed under Saudi law.

In emails and phonecalls to a Sunday newspaper, Sahar and Jawaher claimed that their sisters Hala, 39, and Maha, 41, are also being held, incommunicado, in separate villas in the Jeddah compound.

Their mother Alanoud Alfayez, who is divorced from Saudi King Abdullah, has reportedly written to the UN’s human rights agency to intervene on their behalf.

She told the Office of the High Commissioner for Human Rights (OHCHR) that her daughters are ‘imprisoned, held against their will, cut off from the world’, according to a report in The Sunday Times.

Sahar and Jawaher told the newspaper in an email that they are kept alone in a house most of which they have closed off as they have been left to fend for themselves with nobody to help them with the housework.

Royal visit: King Abdullah, who has 38 children by many wives, is pictured with the Queen in London in 2007

Royal visit: King Abdullah, who has 38 children by many wives, is pictured with the Queen in London in 2007

‘We slowly watch each other fading away into nothingness,’ they said, adding that their sister Hala had told them ‘that her mind is slipping away … that the life is being sucked out of her.’

They added that they can only go out to shop for food – and even for this, they need permission from a half-brother whom the king has put in charge of them.

It was also revealed that Sahar found a teller’s job at a bank through a friend, which she enjoyed because it ‘saved me from the monotony and tediousness of life in Saudi’. 

However, upon telling her father that she wanted to start working full time, he blocked it – and said he did not want any of his daughters to be an employee.

‘I tried to persuade him that it was a small women’s bank that dealt with university students’ accounts and that it was quite a decent place,’ she said. ‘He ridiculed my efforts.’

King Abdullah and Prince Philip review a Guard of Honour at Horse Guards, London: Saudi Arabia is a key Middle-East ally of the West. Its royal family enjoy massive wealth, with the king one of the world's richest men

King Abdullah and Prince Philip review a Guard of Honour at Horse Guards, London: Saudi Arabia is a key Middle-East ally of the West. Its royal family enjoy massive wealth, with the king one of the world’s richest men


Abdullah became king of Saudi Arabia in 2005. The oil-rich state is a key ally of the U.S. in the Middle East and its extensive royal family enjoy massive wealth, with the king one of the world’s richest men.

Ms Alfayez was only 15 years old when she married King Abdullah, who was then in his 40s, but he divorced her just over a decade later. 

The king, who has 38 children by a number of wives, has placed his four daughters with Alfayez under the control of three of their half-brothers, according to Sahar.

Under Saudi law, girls and women are forbidden from travelling, conducting official business, or undergoing certain medical procedures without the express permission of their male guardians.

Sahar said that the sisters had enjoyed a pampered adolescence but that animosity towards her and her sisters had grown after they began to complain to their father about the poverty endured by most of the Saudi people.

In discussion: Former US president George W. Bush (left) talks with King Abdullah before a dinner at Al Janadriyah Ranch in Saudi Arabia, in January 2008

In discussion: Former US president George W. Bush (left) talks with King Abdullah before a dinner at Al Janadriyah Ranch in Saudi Arabia, in January 2008


Some of the young princes had also criticised them because of their party-loving lifestyle.

‘We slowly watch each other fading away into nothingness’


But it was in the late Nineties that matters came to a head when Hala, who has a degree in psychology, complained that the regime’s political opponents were being locked up in the psychiatric wards of the hospital where she worked.

The Sunday Times said that full details of the allegations made by the sisters and their mother had been put to the Saudi embassy, but there had been no reply.

The OHCHR said that it would pass on Ms Alfayez’s letter to Rashida Manjoo, who is the UN special rapporteur on violence against women.



SAUDI KINGDOM – They are all the same and equal in the sight of God


“… Yasmin Alibhai Brown

The confinement of four Saudi princesses is a reminder that the Gulf states are evil empires, especially if you are a woman

In the country where Islam’s most precious shrine is located, there is no equality, no dignity, no basic humanity extended to daughters, sisters, or mothers ::

A story appeared this weekend which has really shaken me up. It was about four Arab princesses – Sahar, 42, Jawaher, 38, Maha, 41, and Hala, 39 – daughters of the ailing King Abdullah of Saudi Arabia, who have, allegedly, been held under palace arrest, for 13 years. He has given his sons control over the captives. They are allowed no visitors or staff. Two are held in one gilded, echoing cage, the other two in another. Their mother Alanoud Alfayez, 57, lives in London and has been trying all these years to free her daughters who are unmarried, childless and fading away. Hala has serious mental problems. Two of the sisters contacted the British-Lebanese Sunday Times writer, Hala Jaber, via email and she wrote about their cruel incarceration. Jaber is an inspiring award-winning investigative journalist. I am in awe of her, more so now than ever before.

She did what I should have. She proved herself a worthy, honourable journalist; I failed. About eight years ago (I think) I was contacted by Alanoud Alfayez. I invited her to my home and she arrived with a big bunch of flowers. She was in her forties and incredibly beautiful. Her perfume overpowered the scent of the pink lilies she’d brought. She told me about her life, a fairy tale. She was from a well-connected Jordanian family and they had arranged for her to marry Abdullah when she was only 15. He was then a top chap in the army, much older, handsome and urbane. He won her heart and she became his second wife. In time he became the ruler. Afterwards he took several other wives and fathered over 30 children. She had her daughters, one after another. She must have been pregnant for most of those years.

The girls were beautiful, loved and spoilt by their father. Unusually, he allowed them to travel, to go on skiing trips and filled their lives with money and things. They went to college, developed ambitions and discovered talents. And then, suddenly, their mum was set adrift – her husband decided to divorce her and did, just by telling her, the way they can in Islam. She went to Jordan with her children. Abdullah wooed her back, didn’t keep his promises and he divorced her again, but kept the daughters. She fled to London in 2002. When we talked, I felt she still loved him.

He is punishing her for going away, by slowly letting his daughters lose their heads and hopes. I listened and witnessed her distress. Then I gave her contact details for Anthony Lester, QC, now a peer. Perhaps he could give her legal advice, I said, and maybe find a way of helping to release her daughters. I thought she had got what she prayed for because she never contacted me again. Now all these years have gone by. I think perhaps I thought someone who was so wealthy and privileged would find a way. I want to apologise to this mother for the careless assumptions I made.

Saudi Arabia is an evil empire, as are other Gulf States. In these nations the oppression of women is institutionalised and embedded. A Human Rights Watch report states unambiguously that Saudi rulers have failed to protect nine million females and nine million foreign workers. Although there is now the first ever female editor of a newspaper, Samayya Jabari, Saudi Arabia is a hellhole, its rules and rulers – best mates with our politicians – monsters.

When Muslims go on pilgrimage to Mecca, men and women perform the rituals together, dressed the same. They are all the same and equal in the sight of God.

But in the country where Islam’s most precious shrine is located, there is no equality, no dignity, no basic humanity extended to daughters, sisters, mothers and grandmothers. Saudi feminists say their mothers and grandmothers could travel without permission. Now they can’t. Last July a car chased by the religious police crashed. The driver was killed. His wife needed her hand amputated but doctors couldn’t operate because no male relatives had authorised the procedure.

When I taught English as a foreign language, a student, another princess, killed herself in London because she didn’t want to go back home. She turned on the gold taps in her bath and got in after taking an overdose. She left me a gold pendant with the name of Allah, which a servant smuggled to me. He told me, “She will have a happy life in paradise. Not easy to be a princess in my country.”

Economic and resource dependency have made our politicians cowardly.  They say nothing about these violations or the Saudi takeover of Islam in Britain. Please, let some of them speak up for these four sisters before they too float  off to paradise.


Institute of Public Affairs calls for the abolition of the minimum wage

Ben Schneiders
Published: April 7, 2014 – 12:56PM

It has been a feature of Australia’s social safety net since not long after federation – a minimum wage not set just by market forces, but that considers the living needs of a worker.

But the Institute of Public Affairs – an influential free-market think tank well-connected within the Liberal Party – wants Australia’s minimum wage abolished.

The institute’s Aaron Lane said there was a ‘‘moral case’’ to abolish minimum wages to allow people to experience the ‘‘dignity of work’’.

‘‘Our position is an ideological one and we don’t shy away from that,’’ he said. ‘‘This position can be seen as heartless and wanting people to work for a low wage. But it’s about empowering individuals in being able to choose their own employment.’’

Mr Lane said the current system priced thousands of people out of work and forced employers to cut back staff hours.

‘‘I’m not so concerned about the working poor, I’m more concerned about the unemployed poor,’’ he said.

‘‘Continuing to increase the minimum wage is a threat to the dignity of the unemployed.’’

For this year’s minimum wage decision, to be decided by the Fair Work Commission in June, the institute wants to see it frozen at $16.37 an hour, but its longer-term goal is for there to be no minimum wage at all.It is a radical position.

Most years employer groups push for modest increases in minimum wages.

Australia has the fourth highest minimum wage in the world, according to one measure. Unemployment is rising, but is much lower than the wealthy country average.

The idea of a ‘‘living wage’’ has been a feature of Australia’s labour market since 1907.

Then, Justice Higgins decided that wages at the Sunshine Harvester Company in Melbourne had to consider the needs of the ‘‘workman’’ and his family.

‘‘I cannot think that an employer and a workman contract on an equal footing, or make a ‘fair’ agreement as to wages, when the workman submits to work for a low wage to avoid starvation or pauperism . . . for himself and his family,’’ Justice Higgins wrote.

‘‘Or that the agreement is ‘reasonable’ if it does not carry a wage sufficient to insure the workman food, shelter, clothing, frugal comfort, provision for evil days.’’

ACTU secretary Dave Oliver sings a similar tune. He wants a $27-a-week rise in the minimum wage. He attacked the institute, saying: ‘‘Many Australians would find it offensive for executives of the IPA to say our lowest paid workers don’t deserve a wage increase.

‘‘The truth is that productivity is up, wages growth is slow, businesses are enjoying huge profits while workers’ share of the pie is diminishing.’’

Mr Oliver said the minimum wage in Australia was slipping when compared with average wages. He said if the trend continued Australia would have an ‘‘entrenched US style working poor’’ by 2035.

This story was found at: http://www.smh.com.au/federal-politics/political-news/institute-of-public-affairs-calls-for-the-abolition-of-the-minimum-wage-20140406-366ve.html

Military’s continued interference


UNTIL around sometime in 2007, the question ‘which is the strongest institution in Pakistan?’ was always met immediately with the reply: ‘the military’.

The reply was unambiguous and did not call for any elaboration. For almost six decades after independence, Pakistan’s military, specifically its army, reigned supreme over the political economy of the country.

However, since 2007, there has been not just far greater ambiguity regarding the question, but for once, there are a number of possible answers. While the military is still powerful, it has now been forced to share the stage with at least two, and possibly three, institutions which can make some valid and genuine claim to being powerful — perhaps not dominant, but at least vying for power, with varying degrees, amongst a handful of contenders.

The military’s hegemony has been questioned, and at times even challenged, since 2007, by institutions which have not until now, been able to do so.

The judiciary, parliament and to some degree the media, have tried to assert their independence and sovereignty over the public and political domain, in effect pushing the military aside, and making elbow room at the table for themselves.

The superior judiciary, and the (now retired) chief justice of Pakistan since 2008 passed judgements which have found the military as an institution, as well as serving and retired senior officers, guilty of violating the Constitution, some of their acts amounting to treasonable offences.

While decisions and judgements are still pending and under review, and while some of those that have already been made have not resulted in the concerned officers being imprisoned, the fact that the judiciary, which has until recently been a partner of the military in their anti-democratic political stance and decisions, is in a position to challenge the military and assert its own democratic and independent stance, is highly significant in a country which has not seen such belligerent action.

Parliament has also flexed its independent muscles after 2008, though, sadly, not enough, to demonstrate its right to govern challenging the dominance of the military. The media which has been a participant of this transition, for the most part, has been a tool for democratic forces to hound out the military for its past anti-democratic behaviour and position, as the Tahirul Qadri charade revealed.

The undisputed dominance of Pakistan’s military in the Pakistani political settlement, has been successfully challenged, and from being a hegemon, the military may at the moment perhaps just be a veto player, a huge transformation in Pakistan’s political economy.

And while there is no clear dominant institution at this moment, for a country which has known military dominance for over six decades, these are extraordinary developments. The military is not what it once was in the eyes of the public, nor in the equation which explains Pakistan’s political economy.

There have been enough signs that the military’s hegemony has been broken, not least the largely symbolic indictment of retired Gen Pervez Musharraf, himself. Yet, one needs to remind oneself, that such transitions, where civilian institutions begin to dominate, and when the military recedes, can take years.

Academic research from countries where the military ruled for as long as two or three decades at a stretch shows, that it can be between eight to 10 years before the military begins to accept civilian supremacy and when it loses its supreme power.

In the case of Indonesia, for example, it took almost a decade before the military had lost even its power to veto key civilian decisions. We have not even completed six years of civilian transition, and war on our borders and within Pakistan gives greater legitimacy to military interference than ‘normal’ countries.

The latest interference by the military in sabotaging Pakistan’s trade policy is a sign that while the military is down and out, civilian supremacy and dominance over the military, is still incomplete. What right does the military have to decide which country Pakistan should trade with?

Under civilian control, Pakistan’s military needs to deal only with issues which affect security and Pakistan’s borders, not what consumers can buy and sell, or which country they can buy from and sell to. While civilian control over many institutions has been gradual, it still has to confront the military’s lingering supremacy in some areas.

Newspapers reported that GHQ ‘convened’ a meeting of the main economic ministers, including the finance, commerce and water and power ministers, where these and other ministers had to ‘satisfy the military leadership’ over whether Pakistan should increase trade with India.

The ministry of commerce has argued that not only are there advantages to Pakistani consumers, it estimated that GDP would grow by two percentage points, and 500,000 jobs would be created in three years once this trade began.

To modify a popular cliché: if it is not the business of the government to be in business, it is certainly not the business of the military to interfere in civilian trade.

Extensive evidence shows that Pakistan’s economy and its people would benefit markedly by opening up trade with India. Clearly, Pakistan’s old-school military does not seem to have the interests of its people or of the country’s economy at heart. But then, it never has.

Its rather narrow and limited corporate interests have inflicted huge damage on Pakistan’s society, economy

and politics, with civilian governments having to bear the burden of numerous misadventures and misdeeds. Only a much stronger civilian society, particularly, a more self-confident political and democratic order, can end the military’s continued interference.

The writer is a political economist.

Price rises of Electricity in Pakistan – April 2014


ISLAMABAD: Amid the government’s rush for coal-fired power plants, the National Electric Power Regulatory Authority (Nepra) is under pressure to increase upfront tariff for such plants by 30 per cent to lure investment, mostly from China.

A Nepra official told Dawn that the regulator was being asked by the government to relax key parameters of plant quality and efficiency, project cost and operation and maintenance expenses and also ignore a legal requirement.

He said Nepra had offered a lucrative rate of 20 per cent return for plants based on local coal and 17 per cent for those based on imported coal through an upfront tariff announced by the regulator in June and notified by the government in September last year.

The higher rate of return was offered as a one-time incentive for six years to encourage investment in coal-fired plants with the condition that investors should take benefit of the special tariff by June 30, 2019.

“Revising a tariff approved after a lengthy process of public hearings, expert opinions and feasibility studies is unusual,” the official said, adding that Nepra should have rejected the government’s request at the very outset. But it has admitted the request for public hearing to avoid confrontation with the government.

Under the law, a determination announced by the regulator could be returned for reconsideration by the government in 15 days. In this case, the government has accepted the Nepra’s determination on upfront tariff for coal-fired power plants and also notified it.

“It is requested that 15-days time limit for the reconsideration request as stipulated under section 31 (4) of the Nepra act be condoned,” acting secretary of water and power Saifullah Chatta has said in a letter to Nepra.

The request for re-opening of upfront tariff for coal-based power plants has been made by the ministry of water and power, headed by Khawaja Mohammad Asif. His close relative Khawaja Mohammad Naeem, currently working as acting chairman of Nepra, was nominated by Punjab Chief Minister Shahbaz Sharif for the post. Mr Naeem’s daughter Shaza Fatima belongs to the PML-N and is a member of the National Assembly on a reserved seat for women.

The notification had offered an upfront tariff of 8.2 cents to 9.6 cents per unit for 200MW plants, between 7.7 cents and 9.2 cents per unit for 600MW plants and between 7.4 cents and 8.75 cents per unit for 1000MW plants. Interestingly, these tariffs were based on feasibility studies conducted by two private sector firms — the AES Corporation and the Engro Corporation.

An official said the change in basic parameters being sought by the ministry meant the average tariff for a 600MW plant would go beyond 12-13 cents per unit, an increase of more than 30 per cent, and hence may deprive the nation of the benefit of cheaper energy. The government wanted to go out of the way to facilitate Chinese firms, he said.

The ministry has asked Nepra to increase the per megawatt cost for a 200MW plant by 36 per cent to $1.70 million. It has sought an increase in the cost by 28 per cent to $1.50m for a 600MW plant and an increase in the cost by 32 per cent to $1.40m for a 1000MW plant.

Secondly, the government has asked the regulator to reduce plant efficiency rate for a 200MW plant to 36 per cent from an approved, and notified, 39.5 per cent. It has sought a reduction in the efficiency rate for 600MW and 1000MW plants from approved 42 per cent to 39 per cent.

Thirdly, the regulator has been requested to double the operation and maintenance cost of a 200MW plant from 48 paisa per unit to Re1 per unit.

The government has sought to increase the cost for a 600MW plant by 41 per cent to 65 paisa per unit and by 40 per cent to 60 paisa per unit for a 1000MW plant.

An operator of a power plant said the three factors would contribute to higher upfront tariff ranging between Rs12 and 13 per unit against the existing upfront tariff of Rs7-9 per unit.

He said allowing per megawatt cost to go beyond $1.25m was unrealistic even for German and American plants, but here the government was offering up to $1.70m per megawatt cost to Chinese plants.

“It seems the government is about to offer equal tariffs for wind and coal-based plants even though the former are environment-friendly and comparatively easier to finance,” he said.



Jamaat loves TTP leader Hakimullah Mehsud, who was killed in a drone strike, a martyr


The arrival of Sirajul Haq as the fifth emir of the Jamaat-i-Islami (JI) is being interpreted variously. Most commonly, however, it is being viewed as the restoration in the Jamaat of the Qazi Hussain Ahmed strain of populist politics fired by a strong desire to evolve into a mainstream political party.

“Sirajul Haq will follow Qazi Hussain’s style of leadership,” one of the top Jamaat leaders from Lahore told Dawn.

Speaking on the condition of anonymity because of party discipline, he said: “He will prove to be more accommodating [in forging alliances with other parties] and avoid controversies because of his experience of working in the coalition government of the MMA [from 2002 to 07] and now with the PTI in Khyber Pakhtunkhwa.”The election of a JI emir has always attracted considerable public interest because of the political ideology it represents and the street power it is supposed to wield, even though the JI has never succeeded in attracting voters to itself. The results have always been predictable, until Haq sprang this surprise.

He emerged as the winner on Sunday as the Jamaat Arakeen (members with voting rights) voted out the sitting emir, Syed Munawwar Hasan, for the first time in the party’s history. If this was not significant enough, he defeated another JI stalwart, Liaquat Baloch, a bit of a pragmatist politician himself with his own constant appeal, particularly in Punjab.

There are two points that need to be discussed. One, how is that the Jamaat broke away with its tradition of never voting out a sitting emir, even if it was accepted that Hasan was a somewhat reluctant candidate for re-election? And, two, if the fight effectively was between two more pragmatic, relatively young contestants in Haq and Baloch, how did the Jamaat members distinguish one from the other?

The answers to these questions can be found in the Jamaat’s politics under Hasan who has always been more of an ideologue in the party. It was quite clear that his style of politics created a craving for a return to the days of his predecessor. This is where leaders such as Baloch and Haq emerged as his likely heirs. It was to a large extent Hasan’s own preferences of partners — which saw the Jamaat allying itself with the PTI in Khyber Pakhtunkhwa — that could have given Haq an edge over Baloch.

Dr Hasan Askari Rizvi, a Lahore-based author and political analyst, who was expecting Baloch to replace Hasan, argued that Haq’s win was a rejection of his predecessor’s “combative style” of politics. “Syed Munawwar’s controversial statements undermined the Jamaat’s image outside the party. Siraj will follow Qazi Hussain to repair the JI image.”

He obviously was referring to the sitting emir’s statement declaring TTP leader Hakimullah Mehsud, who was killed in a drone strike, a martyr. He didn’t stop there and argued that if an American who died on the battlefield was not a martyr how could those from among the Pakistan army fighting [the American war] be termed as martyrs.

The statement had drawn a strong response from the army, which had called for an unconditional apology from the JI emir for hurting the feelings of the families of the thousands of Pakistani soldiers who had laid down their lives fighting the terrorists. Though the Jamaat defended its leader after the army condemned his remarks, it distanced itself from his statement by saying it represented Hasan’s “personal views”.

The anonymous Jamaat leader agreed with Dr Rizvi. “Syed Munawwar listened more to his heart. The kind of statements he has given in support of the Taliban didn’t represent the party’s stated policy or its culture. We do not have a soft corner for the Taliban. Our party has never favoured militancy. So when they got a chance, our Arakeen gave their decision [against him],” he argued.

While Farid Paracha, another top Jamaat leader from Lahore, agreed that the new JI emir would bring the same ‘concept of change’ as was brought in the party by Qazi Hussain whose protégé Haq is, he rejected ‘speculation’ that the Arakeen had punished Hasan for his controversial statement. “Syed Munawar, who is 73 years old and has some health issues, was reluctant to lead the party for another term. The Markazi Shoora turned down his request but the party Arakeen accepted it by electing a new emir.” He was hopeful that Haq’s election would revitalise the party and its workers.

The JI emir-elect has a public perception of being a hardliner and sympathetic to the militants. Yet both the Jamaat leaders and analysts reject this view about him. “Contrary to his public perception of being a hardliner, Sirajul Haq is a moderate [politician] in the old tradition of the Jamaat,” the anonymous JI leader contended.

People like Dr Rizvi warn against singling Haq out. “The JI as a party is supportive of the Taliban. Why single him out? He could be a bit more sympathetic [towards the militants] for being from the area.” He also rejected speculation that the military establishment engineered his win as part of its strategy to prepare the ground in KP for a post-Nato Afghanistan. “I don’t think the state can influence such a large number of voters [JI Arakeen] to manipulate the party emir’s election.”

While Haq’s victory is seen as a return in the Jamaat of a politically more accommodative era, the defeat of Baloch is being seen as consolidation of the forces in the party that want alliances with political forces like the PTI that are “ideologically more compatible”. “Baloch represents the Punjab party that is more inclined towards forging an alliance with the PML-N. This stance was rejected when Syed Munawwar refused to make electoral adjustments with the PML-N in last year’s elections and chose the PTI over it. The election of Siraj has consolidated that political outlook further,” said a senior journalist who also refused to give his name.

Thus Hasan may be gone, one of his legacies will survive, at least for the time being.