Pakistan And The IMF

Every time I tell someone that I am working on the history of Pakistan’s relationship with the IMF, there is one question that always comes up: “Is the IMF evil?”

There are many iterations of this question, but it always boils down to this: “They say once a country borrows from them,” said one particularly keen questioner, “that country can never repay the debt and remains in their clutches forever, is it true?”

I’m always struck by the level of fear and awe that the Fund commands in our popular imagination. It is run by the Jews, some say. It operates like a medieval money lender, it has usurious terms on its loans, nobody who falls in their clutches ever gets out. The better off try and connect it with some imperialist ambitions: it is a tool of US foreign policy, used to reward those who serve the imperial masters and punish those who disagree. It engineers the overthrow of governments and works in cahoots with the CIA, another told me rather insistently, brushing aside my questions that would cast doubt on the assertion.

Protesters condemned conditions of the IMF on Pakistan and urged international financial institutions to write off Pakistan’s loans.— File Photo

 answer to the question is always the same: no, the IMF is not evil, but it’s also not as innocent as it would like us all to believe. Does this mean that it is only slightly better than what popular imagination would say? No, the fact of the matter is actually far more humdrum than what popular imagination would like to believe. The Fund is actually just another bureaucratic body, trying to pursue an increasingly difficult mission, in an increasingly divided world.

The popular imagination in Pakistan is used to perceiving this country as permeated by foreign interests, a mindset that is in part a legacy of the many frontline roles the country has played in superpower campaigns. It’s also used to perceiving all government bodies with extreme distrust and an equally extreme disdain. International institutions that interact regularly with the government, therefore, find themselves sucked into the perceptions that arise from this distrust and disdain. 

And few international bodies have had a longer and more intrusive role to play in Pakistan than the IMF.

So what exactly has this long role been that the Fund has played in our economy?

Let’s start with the obvious. The IMF is an international institution created in the aftermath of World War II along with a whole number of other international institutions that were designed to help operate the post-war order that emerged from the ruins of the British Empire. Those institutions include the United Nations, the World Bank and the International Postal Union to give a couple of examples.

The IMF had a specific mandate. It was designed to help countries tide over temporary balance of payments difficulties. If the price of cotton collapsed in one year, for example, due to a bumper harvest in some other cotton producing country, small countries that relied on cotton exports to earn their foreign exchange would find their reserves of dollars deplete very rapidly. The depleting reserves would curtail their ability to pay for their imports which could end up crippling large sections of their economy if, let’s say, they couldn’t afford to make payments on oil imports any longer.

A small and temporary payments difficulty of this sort could cascade through the economy and create a much larger crisis, maybe even lead to default on external debt obligations. There needed to be, the architects of this new order agreed, some way for countries vulnerable to periodic balance of payments difficulties, to be able to borrow quickly to tide over short term problems without falling into a full blown crisis that could have international ramifications.

Total exports per capita (in real terms)

Those were the good old days when the world was a simpler place. Pakistan borrowed three times from the IMF during the Ayub Khan regime, and each of those facilities was a short-term Standby Arrangement of exactly the sort envisioned in the original Articles of Agreement under which the Fund was created.

The more interesting borrowing history began in the 1980s. Those were the years the world economy was emerging from a debilitating decade of stagnant growth and high inflation that the 1970s became famous for. But the renewed global growth came at a cost. Many parts of the Third World, as it was known at the time, fell into a massive debt crisis, as the levels of their borrowing fast exceeded their ability to repay. Latin America was at the epicentre of that crisis, and by mid decade a massive effort had to be launched to ensure that the region did not default on its external loans, in part by urging those banks that had extended loans to them to soften the terms on which repayment would be made.

The Fund’s mission underwent an important change during that time. When the dust settled from the Latin American debt crisis, the Fund was no longer confined to lending only to paper over temporary balance of payments problems. From that point onwards, the Fund’s mission grew to include reviving economic growth in stagnant economies.

This was a critical turning point, and it carried the Fund deeper into the borrowing countries economic management than it had ever gone before. Reviving growth, it turned out, was a far more complex affair than simply papering over a temporary balance of payments problem. The Fund staff had to become party to the myriad and complex dysfunctions that afflicted the borrowing country’s economy, and the terms of its loans entered into areas that they had never imagined they would be entering.

From here on, the Fund found itself examining the budgets of every borrowing country and urging structural changes in the economy that they could not have done in the earlier times. Privatisations, trade liberalisation and altering the institutional architecture of the state were all far reaching requirements that the Fund began to insist upon from borrowing countries in this time.

This new and intrusive commitment is what sparked the first big criticisms of the IMF. In Latin America, the Fund was accused by left leaning critics of being a tool of Western capital, seeking to pry open the economies of the region for penetration by American companies seeking profitable terms of investment. In later years, the criticism was echoed from Africa as well.

The next big growth in the Fund’s mission came in the wake of the collapse of the USSR in 1991. As Eastern European countries lined up for bailouts, the Fund threw its weight behind the “shock therapy” programmes dreamed up by champions of free market thinking. The long and painful years of collapsing infrastructure and unemployment that followed were blamed on the Fund, and the kind of thinking it had embraced in its search to kick-start growth in “transition countries” of the former Soviet bloc.

In the late 1990s, the Fund found itself sucked into a new kind of crisis altogether, with the onset of the East Asian financial crisis. This was no ordinary debt crisis, nor a temporary balance of payments issue, and not an issue connected with transitioning from a centrally planned economy to a liberal market economy. The sudden drain of foreign exchange reserves that countries like South Korea, Indonesia and Thailand experienced in this crisis was the popping of a large bubble, and there was little to no guidance available within the economics profession on how to properly manage the aftermath of such an event.

Another critique of the Fund emerged following its bailouts of East Asian economies in this episode. It was championed by some of the biggest names in the economics profession, like Joseph Stiglitz, a Nobel Prize winner, who argued the Fund acted to safeguard the interests of western bond investors rather than the common citizenry of the countries in question.

And most lately, the Fund has again found itself in the middle of a new type of crisis, this time centred on the United States and particularly Europe. For the first time, the Fund departed from its traditional recipe for crisis management, and has advocated moving away from strict fiscal discipline as the main remedy for crisis, arguing that a rapid unravelling of the myriad stimulus schemes put in place in the aftermath of the 2008 financial crisis is undesirable, and that large economies such as Germany should shoulder some of the pain of rescuing smaller European economies like Greece and Portugal.

Pakistan’s story in the Fund

The interesting thing to note through all this is that none of the large critiques developed about the IMF applies to the case of Pakistan. Western investors are not exactly battering down the doors to gain access to our economy or its natural resources. Our financial system is hardly so large or so deeply connected with the global economy to present a risk to the international financial system, like was the case in East Asia in the late 1990s. We are strategically important to the superpower, but nowhere near as important as Russia was in the 1990s, or Eastern European countries were during the decade of their transition, nor has our opening up involved anywhere near the complexities that were involved in transitioning from communist to liberal capitalist systems in the former Soviet Union.

Our region too, has no sustained history of interaction with the Fund. India signed one facility with the IMF in 1991, Bangladesh has had three facilities since 1990, Sri Lanka has had two while Nepal has had three. Pakistan, by contrast, has had 12 IMF programmes since 1988, more than all the other countries of the region combined. Our story with the Fund is uniquely ours, it does not partake of any of the larger critiques developed about the Fund over the decades.

Even in the case of other South Asian countries, it is hard to employ any of the critiques of the Fund that have grown out of the experience of other regions in other times. The role the Fund has played in South Asia is fundamentally different from the role it has played in Latin America, Africa, East Asia, Eastern Europe or the European Union today. The nature of the crises in which it has had to intervene in South Asia is also fundamentally different from the debt crisis of the 1980s, or the foreign currency crisis of East Asia in the late 1990s, or overseeing the transition of post communist societies in the early 1990s, or the restarting of growth in the EU today. In short, the story of the IMF and Pakistan has been told very sparsely, and is not widely understood.

What exactly is this story?

One place where the story has been told is in a paper written in 2013 by two former Fund staffers of Pakistani origin that was circulated amongst a select group and is now available online from the website of the Asia Research Center at the London School of Economics. The authors are Dr Ehtisham Ahmad and Azizali Mohammad, both of whom have held senior positions in the Fund and have a reputation that is global in scope.

The paper’s title gives away the biggest clue: Pakistan, the United States and the IMF, great game or a curious case of Dutch Disease without the oil?

Right at the outset, we can see that they are casting the role of Pakistan IMF relations within the matrix of larger Pakistan-America relations. The subheading tells us more; Dutch Disease is a technical term used by economists to describe a situation where a country is used to easy money from a particular source — let’s say oil exports. The country in question is therefore unable to develop any other sectors of its economy or break its dependence on the stream of easy money flowing in through a single source. That, of course, is a gross simplification but in a nutshell describes the problem at hand.

Consider how Dutch disease works in a typical case. Take a country that exports oil, and the resultant inflows of foreign exchange are so large that its currency is very strong in comparison to that of its trading partners. People in that country will not be able to invest in manufacturing because whatever they produce will be so much more expensive that what they can simply import from abroad, rendering the country unable to develop an export base beyond oil and oil based products. 

Look at how the Gulf countries, for instance, have been utterly unable to build any economic sector beyond oil that is competitive globally, and you’ll understand how the phenomenon works.

Consider the impact this has on the host economy. With a narrow base for the economy, the country’s exports will remain stuck in one product, and the revenue base of the state will not grow either. So long as oil prices are high, in the example of the oil producing country we’ve taken, the government will be happy to accumulate plenty of reserves, generate ample revenue from the oil economy, and pay for imports to help sustain its consumption. High levels of consumptions will come easy to this sort of country, but only while international factors like high oil prices help pay for it.

In the case of Pakistan, the authors of the paper argue, the Fund’s role appears to have produced an effect similar to Dutch disease, except there is no oil or any other resource in the picture. The resource that has produced continuous inflows of easy money that prevent a broadening of the revenue base as well as hinder the accumulation of reserves through broadening of the export base, is what they call a “locational rent”.

In a nutshell, what this means is that Pakistan was too important to fail. During the 1980s, the country was too important a player in American foreign policy, and was kept afloat through generous aid programmes. When the aid dried up, the IMF stepped in and disbursements continued. Once the aid resumed following 9/11, the Fund became less important as a source of foreign exchange for Pakistan. 

Following 2008, a complex system was instituted to channel civilian aid with very high accountability mechanisms through the Kerry-Lugar bill. Military aid continued in the form of CSF “reimbursements”, and the IMF was engaged to provide balance of payments support to shore up the reserves. But at no point was Pakistan cut off from its continuous injections of external assistance, except perhaps for a brief period following the nuclear detonations in 1998, and even then the Fund came to the rescue with a small facility in 2000 that prevented the country from slipping into a balance of payments crisis.

This history of continuous injections from abroad inculcated a warped sense of priorities in successive governments. Rather than focusing on reforms to “mobilise domestic resources”, that is, to encourage tax reforms and encourage productivity to promote exports in a rapidly globalising world, the emphasis for successive governments came to be on ensuring the release of the next tranche of dollars from the Fund. And the Fund itself, under instructions from its patrons in the US government, readily obliged each tranche by going easy on the reviews and giving Pakistan a continuous series of waivers.

All of the 12 facilities that Pakistan has signed with the IMF since 1988 have had two objectives: one, to close the gap between revenues and expenditures in order to prevent the deficit from getting out of control and; two, to raise the level of the foreign exchange reserves. For almost a quarter century now, these are the two core priorities that Pakistan has been grappling with.

And every programme has had fundamentally similar conditionalities to achieve these objectives. Raising revenues has meant instituting new taxes on consumption, called the General Sales Tax, which is designed to help document the economy and broaden the base of the revenue machinery. Raising foreign exchange reserves has meant boosting export competitiveness, and freeing the currency from political influence.

In order to achieve these objectives, it was considered necessary to reform the tax machinery and to grant autonomy to the State Bank to manage the reserves. Each programme that Pakistan has signed has tried to accomplish these objectives, but in every case the authorities have been unable to follow through with their commitments. The authors of the paper mentioned earlier refer to “10 red cover reports on tax policy and administration” that were developed over the decade of the 1990s to little avail. The tax code remained moth eaten, riddled through with exemptions and the tax bureaucracy remained as uninterested in pursuing documentation and implementing a transparent sales tax as it ever was.

Same was the story with State Bank autonomy, except for a brief period in the 1990s again, but which became outmoded in the years following 9/11. To this day, the government remains hesitant on this measure, unsure how to follow through on this commitment without giving away the important controls it exercises over the central bank for purposes of borrowing as well as setting the currency and managing the reserves.

A careful look at the IMF and its role in Pakistan over the decades shows that the Fund is certainly not evil, as the popular imagination would like to believe. But it also is not the purely technocratic “lender of last resort”, coming in with purely economic advice in times of crisis either. In fact, the Fund appears to be responding to political compulsions as much as to its own bureaucratic interests when dealing with Pakistan.

Nobody in the world wants to push an unstable, nuclear armed country too hard on difficult economic choices. Such a course of action was indeed adopted against other countries, most notably Sudan in the mid 1980s, when it was unplugged from the global financial system once the IMF refused a bailout. That country slid into unviability very fast and was engulfed by civil war within a decade. Nobody wants to risk similar consequences with Pakistan. So it’s a lot cheaper to keep the country afloat with a couple of billion dollars a year in subsidised inflows, whether through formal aid channels or through the IMF.

But the very fact of keeping the line open, of keeping the country afloat, ends up underwriting a status quo that is increasingly becoming unsustainable, as the expenditures required for the upkeep of the state increasingly outstrip revenues, and the shortfalls on the foreign exchange inflows increase every year. So Pakistan presents the international community with a difficult choice: how to deal with a country that uses its own instability as a bargaining chip for larger and larger bailouts, that would prefer to keep living on bailouts instead of reform domestically and fundamentally rewrite the rules of engagement between the state and the economic elites?

Loud and clear.

Within Pakistan, there is no constituency for change, the rhetoric of some parties notwithstanding. Given the ferocity with which power struggles are waged domestically, nobody, not even military governments, have had the space to attempt to rewrite the social compact between ruler and ruled, which means first and foremost the economic elites. With no constituency for change, the status quo has found new ways to defeat any attempts at reform. So documentation of the economy has not happened, the base of exports has not broadened, the institutional architecture of the state has not been reformed to close of discretionary spaces of decision making. In short, the rulers have always opted to retain the tools with which to reward allies and punish enemies, rather than move to boost productivity and generate revenues.

What this means is that the IMF’s role has been to underwrite the status quo more than the urge to reform. This is a very different role to what it has played in other regions in other times. Contrary to what the popular imagination has conceived, the Fund has worked to give Pakistan exactly what it wants rather than hoist difficult choices upon the state, and by doing so has stalled any possibility of change. It has not done so because it is evil.

Quite the contrary, it has done so because it is powerless before the larger interests that operate with the country, and the international partners, particularly the superpower, that would prefer to keep the country chugging along rather than risk any semblance of instability. The Fund is, therefore, not some powerful international agency pushing a foreign agenda upon us. Instead, it is a toothless bureaucracy trying to keep its head above water in the stormy seas that Pakistan is drifting upon.

Footprints: Opposition to madressah reforms

In this photo, a student of a madrassa attends a test in reciting verses of the Quran in a Mosque in Islamabad. — AP/File

Sitting at a tea stall near Jamia Farooqia, a seminary in Karachi’s Shah Faisal Colony, a group of five young students discuss the current issue of madressah reforms.

One of them is Mansoor Abbasi, a 26-year-old student of the seminary, who feels that the government wants “to shut down all the madressahs in the country at the behest of the US and foreign-funded NGOs”. The others nod their heads in agreement.

In response to the Dec 16 attack on the Army Public School in Peshawar, the government has announced a National Action Plan (NAP) to fight terrorism and militancy. The plan includes the registration and regulation of madressahs and a committee has been formed to meet the wifaqs of different madressahs to reach a consensus.

But the Ittehad-i-Tanzeemat-i-Madaris-i-Deenia (ITMD), a coalition of five wifaqs (Deobandi, Barelvi, Ahl-i-Hadith, Shia and Jamaat-i-Islami), have come out strongly in defence of the seminaries. Supporting them are religious political parties, especially the Jamiat Ulema-i-Islam-Fazl (JUI-F).

Mufti Munibur Rehman, who heads the ITMD alliance, says that the madressahs will not “tolerate any negative propaganda and agenda against the madressahs”. He headed the Jan 3 meeting of the coalition at the Jamaat-i-Islami’s central office in Lahore and says that the government should consult the ITMD leaders regarding the action plan and take them into confidence about any issues related to madressahs.

It is not the first time that the madressahs federation has voiced opposition to government attempts to regularise them. In fact, the ITMD was formed in 2004 in opposition to retired Gen Pervez Musharraf’s introduction of the Pakistan Madressah Education Board in 2003.

Meanwhile, security analysts believe that this is not the right time to address seminary reforms. Muhammad Amir Rana, an Islamabad-based security expert, who also attended the meetings of the working group for the establishment of the NAP, says that religious parties and seminaries of different sects become united whenever the government tries to impose any kind of control over them. “The working group has recommended to the government to examine the connections of different madressahs with militancy,” says Rana. He adds that the government should “push the seminaries managements to provide assurances that their teachers and students would not be involved in any sort of terrorism”.

Rana points out that madressahs provide political, social and financial support, as well as manpower, to religious political parties, the key reason why they always unite to stop government intervention in madressahs matters. “They do not want to lose their strength,” Rana says.

This time, JUI-F chief Maulana Fazlur Rehman is leading the campaign to oppose attempts to regulate madressahs and is trying to build a larger alliance of religious parties and wifaqs to pressure the government. Mufti Muhammad Naeem, who heads the Jamia Binoria Al-Alamia in Karachi, says that Rehman represents all five major wifaqs and they “support his struggle”.

Commenting on federal Interior Minister Chaudhry Nisar Khan’s statement that 10 per cent of the madressahs are involved in terrorism, Naeem says that those madressahs should be exposed. “We will support the government action against them,” he says.

Liberal political parties and civil society organisations are in agreement that seminaries should be reformed. “They impart extremist and violent sectarian ideologies catering to militant movements and feed armed conflicts,” says Afrasiab Khattak, an Awami National Party leader and part of the NAP committee.

Some Shia and Barelvi groups are also demanding action against madressahs involved in militancy but point out that there should be no restrictions on madressahs that are not. Allama Amin Shaheedi of the Majlis Wahdat-i-Muslimeen says that Chaudhry Nisar should identify the seminaries associated with militancy. “It is a fact that some madressahs have turned into militant training centres and prepare young students for suicide attacks,” says Shaheedi.

Interviews with seminary teachers and religious scholars suggest that following the announcement of NAP’s formation, law enforcement agencies started collecting information such as connections of teachers, management and students with religious and jihadi groups and their funding sources from seminaries. They insist that in the last five years, all major wifaqs have directed their seminaries to keep an eye on students and teachers for involvement in militancy.

“Forget about the past, now almost all seminaries have been asking students and teachers to sign affidavits that they would not become part of any religious, sectarian and jihadi groups,” says a teacher at Jamia Farooqia, requesting anonymity. He adds that they had expelled a number of students for violating the instruction and “are not responsible for acts by any students who have graduated”.

However, he agrees that some seminaries associated with banned jihadi and sectarian groups are not under the influence of the wifaqs.

Sleeper cell awakes France’s worst fears in three days of terror

People gather at the Place Royale in Nantes to show their solidarity for the victims of the attack by gunmen on the offices of the satirical weekly, Charlie Hebdo. — AFP/File

PARIS: Blood-curdling, Al Qaeda-inspired murder that tore at the heart of the nation which raised him was not ghoulish enough for Cherif Kouachi. His body, felled by elite soldiers' bullets and stun grenades, was not yet cold when he also came back from the dead.

Kouachi had picked up the phone when a reporter for news channel BFM rang the printing plant, his and his elder brother Said's final redoubt, where an army of soldiers, police officers, and helicopters cornered them after a 40-plus-hour manhunt through villages and woodlands of northern France.

BFM waited until after the brothers and another member of their terror cell, who killed four hostages in a kosher grocery in Paris, were dead before broadcasting its haunting audio.

Sounding determined and so chillingly sure of himself and his extremist rhetoric, Kouachi's fluent French put words to France's worst nightmare: its own sons, heads filled with dreams of murder and martyrdom, coming home from foreign battlefields to wage war.

“We are the defenders of the Prophet,” he said. “I, Cherif Kouachi, was sent by Al Qaeda from Yemen.” Paris will never quite be the same after the carnage that started Wednesday. Never again will fears of homegrown terrorists coming back battled-hardened by extremist training, indoctrination and fighting in Iraq, Syria and elsewhere to commit mass murder be just theories.

As Prime Minister Manuel Valls would later say: “There will be a before and an after.” Heavily armed, dressed head-to-toe in black, the Kouachi brothers forced their way into the Paris offices of Charlie Hebdo as the satirical magazine's staff gathered for an editorial meeting.

Household names in a country which regards cartoons as serious literature and a gateway to reading for children, Charlie's artists had already been up to their usual mischief, tweeting moments earlier a cartoon of Abu Bakr al-Baghdadi, leader of the Islamic State group, sending New Year wishes with the words “above all, good health!”

More than merely cheeky, the weekly's drawings are often grossly offensive. Proudly calling itself an “irresponsible newspaper,” it put an erect male member on its front cover as long ago as 1974. But it had its place in French newsstands and hearts. It may not always have made them laugh, but its very existence demonstrated that freedom of speech was alive and kicking.

Charlie Hebdo artist Jean Cabut, known simply as Cabu, also featured in and drew for a fondly remembered children's television program in the 1980s. His killing by the Kouachi brothers felt, to some, like the death of their childhoods, too.

Shouting “Allahu akbar!” — God is great in Arabic — the Kouachi brothers had, in their own words, come to avenge Charlie Hebdo's caricatures that have repeatedly poked fun at the Prophet Muhammad (PBUH).

Charlie's cartoonists knew this was incendiary stuff. A firebombing destroyed their offices in 2011. Editor Stephane Charbonnier, known as Charb, had a police bodyguard and was on an Al Qaeda hit list. After the assassinations, distraught people around the world flooded social media with the phrase “I am Charlie.”

But that isn't, strictly speaking, true: not everyone has the courage to keep going to work in the face of such danger. The gunmen headed straight for Charbonnier, killing him and his bodyguard first, said Christophe Crepin, a police union spokesman. Also sprayed with bullets and murdered were seven other journalists, among them leading cartoonists, a maintenance worker and a visitor.

A grisly photo showing trails of blood and papers strewn across the office floor testified to the cruelty that, in weeks and months ahead, will test how attached the French — non-Muslims and the estimated 5 million who follow the teachings of the Quran — are to their liberties and to each other. Back outside, the gunmen rejoiced.

“Hey! We avenged the Prophet Muhammad (PBUH). We killed Charlie Hebdo!” they were heard yelling on amateur video. It also showed them coolly interrupting their getaway to kill another policeman, finishing him with a shot to the head as he writhed injured on a sidewalk. The officer was later identified as Ahmed Merabet, a Muslim.

The phrase “Je Suis Ahmed” — I Am Ahmed — caught fire on social media. Police unions were horrified to see weapons of war, semi-automatic rifles firing high-velocity rounds, used against officers who arrived on mountain bikes and in flimsy Renaults.

Already, debate has begun on whether security services need bigger weapons and more resources to keep better track of hundreds of men and women who have traveled overseas for militancy. The challenge for France and other European democracies who know they could be the next targets is to boost security without compromising on liberty.

The Kouachi brothers exploited what is both democracies' weakness and strength: fundamental respect for citizens' rights, even for those suspected of terrorist links and sympathies. Cherif Kouachi, 32, was convicted on terrorism charges in 2008.

Said, 34, is believed to have trained and fought with Al Qaeda forces while in Yemen. Both were barred from travel to the United States, according to a senior US official, because of such links. But Said had no criminal record, and the latest legal case against Cherif was ultimately thrown out.

Their competence with weapons, the way one kept guard while the other executed Merabet, the attack timed for the editorial meeting, made immediately clear the gunmen were trained, focused and working to a plan.

That Said Kouachi left his ID card in their getaway car, leaving a trail police jumped on, was simply baffling. That same afternoon, just hours after the attack, police identified the Kouachi brothers as suspects and later released their mugshots, both with small chin beards and close-cropped hair. The hunt was on.

The trail led SWAT teams backed by helicopters to the Picardie region north of Paris, through which troops marched a century earlier to the gory trenches of World War I. Back in Paris, under leaden, tearful skies, the mood was morose. Everyone coped with the numbness of shock as they could.

Absurd as it must have seemed, I walked the Champs-Elysees to work with my right arm thrust in the air, clutching a pen. Others left flowers, candles and, of course, drawings at makeshift shrines. A midday national moment of silence, with people falling quiet mid-phone call, the gargantuan bell of Notre Dame Cathedral tolling like a mournful heartbeat, and strangers staring at each other on halted subway trains, brought the welcome respite of solidarity.

The mutual sharing of shoulders to lean on bore out the enduring truth of “Liberty, Equality, Fraternity,” the national motto of a famously squabble-fond country that Charles de Gaulle once complained is ungovernable.

But as lights on the Eiffel Tower were extinguished that night in tribute, the Kouachi brothers appeared, incredibly, to have slipped the dragnet, having robbed a gas station and later vanished into woodlands. That and the shooting death of a policewoman in southern Paris early that morning doomed the city to an uneasy sleep.

Friday, Jan 9, 2015 — like Wednesday, Jan 7, for that matter — will, for the French, always be one of those “where were you when?” days. It started with news of the Kouachi brothers; one injured in the throat in an earlier shootout with police, finally cornered in a printing house near Paris' main international airport, Charles de Gaulle, which closed two runways as helicopters buzzed over the terrorists' hideout.

It ended, however, not only with their deaths but also with four hostages killed at a kosher Paris supermarket by a long-time friend of the Kouachis and the sinking realisation that these three days of terror were more than radicalised brothers on a murderous rampage.

This was the awakening of a sleeper cell of three, possibly more, homegrown terrorists who plotted and turned on their country together. Like Cherif Kouachi, the Paris hostage-taker, Amedy Coulibaly, also came back to haunt France even in death.

In a telephone interview with BFM from inside the grocery store, extracts of which the channel also broadcast after police killed him, Coulibaly explained with unnerving nonchalance that he and the Kouachis “synchronised the operations” and that while the brothers attacked Charlie Hebdo, “I started to do the police.”

He is thought to also have killed the policewoman in Thursday's shooting. BFM said he claimed allegiance to the Islamic State group. Seemingly determined to go out in a blaze, as self-styled martyrs, the Kouachis came out firing, continuing to shoot at elite forces even after stun grenades blew them off their feet, said Francois Molins, the Paris public prosecutor.

At that point, they were shot and killed. Almost simultaneously, reportedly as they heard Coulibaly reciting final prayers, police assaulted the grocery to stop him carrying out his threat to kill his 15 hostages if the Kouachis weren't freed.

Fierce exchanges of fire ended with Coulibaly running toward the heavily armed officers and felled by their hail of bullets. Three days of bloodshed were over. But the terror they caused is not. Authorities have yet to collar Coulibaly's widow, Hayat Boumeddiene, sought herself as an “armed and dangerous” suspect and who once posed for a photo holding a crossbow in her Islamic veil.

“We're a country at war. What I saw today was a war,” said Daikh Ramdan, a Paris service station manager rattled after witnessing the thunderous booms and gunshots of Coulibaly's end. “You have the impression you are already dead, you are vulnerable, you're cold, your heart is beating, you breathe hard,” he said. “It's very complicated. You have the impression you are no longer a man, no longer a man.”

Muslim man hailed hero for sheltering customers in Jewish market attack

Lassana Bathily, who helped hostages out of deli - DailyMail photo

A young Muslim shop assistant is being hailed a hero for giving a safe hiding place to hostages fleeing gunman Amedy Coulibaly after he stormed a Jewish supermarket in Paris.

Originally from Mali in west Africa, 24-year-old Lassana Bathily reportedly guided frightened customers to safety in a storage freezer as the gunman took hold of the Hyper Cacher supermarket in Porte de Vincennes, Paris, on Friday.

The Independent reports that Bathily has been praised for his role in helping customers.

"When they ran down, I opened the door (from the freezer),” he told BFMTV.

"There are several people who came to me. I turned off the light, I turned off the freezer.”

"When I turned off the cold, I put them [hostages] in, I closed the door, I told them to stay calm."

Daily Mail reports that escaped using a goods lift and was able to give police valuable information about what was happening inside and where the hostages were hiding.

Reluctant to tell his story he said that after the shoot-out many of the customers came to shake his hand and thank him for what he did.

At least five people, including the attacker, died at a kosher grocery in Paris where a gunman took several hostages.French President Francois Hollande confirmed that four hostages were killed in the siege.His picture – labelled Malian Muslim – has been tweeted around the world as a symbol of the good of people united against terrorism.

“It is indeed an appalling anti-Semitic act that was committed,” he said of the hostage-taking by a gunman at the Hyper Cacher supermarket in the Vincennes district.

Hollande called for national unity and said the country should remain “implacable” in the face of racism and anti-Semitism.

Security forces stormed the grocery minutes after their counterparts assaulted the building outside Paris where two brothers suspected in the Charlie Hebdo killings had holed up.

Muslim policeman's killing sparks anger

A Muslim police officer was brutally executed in the street during the horrific Charlie Hebdo terror attack.

Footage showed Ahmed Merabet being shot by terrorists at point-blank range during the attack at the magazine's Paris office.

The 42-year-old bicycle patrolman's death has led to an outpouring of sympathy in France. His name trended on Twitter under the rallying cry #JeSuisAhmed - or “I Am Ahmed”.

Many of the thousands who showed solidarity with the officer pointed out he died protecting those who ridiculed his religion.

A tweet by Dyab Abou Jahjah, retweeted more than 36,000 times, said: “I am not Charlie, I am Ahmed the dead cop. Charlie ridiculed my faith and culture and I died defending his right to do so. #JesuisAhmed”.

Merabet’s colleagues were in shock at the brutal way he was “shot down like a dog”

Arson attack at German paper that ran Charlie Hebdo cartoons

Firefighters stand outside the building of the 'Hamburger Morgenpost' in Hamburg, northern Germany, Sunday morning, Jan. 11, 2015 - AP

BERLIN: A German newspaper in the northern port city of Hamburg that reprinted Prophet Muhammad (PBUH) cartoons from the French satirical paper Charlie Hebdo was the target of an arson attack early Sunday, police said.

“Rocks and then a burning object were thrown through the window,” a police spokesman told AFP.

“Two rooms on lower floors were damaged but the fire was put out quickly.

“The regional tabloid daily, the Hamburger Morgenpost, had splashed three Charlie Hebdo cartoons on its front page after the massacre at the Paris publication, running the headline “This much freedom must be possible!

“No one was hurt in the attack, which police said occurred at about 0120 GMT.

Two people were detained, while state security has opened an investigation, police said.

Whether there was a connection between the Charlie Hebdo cartoons and the attack was the “key question”, the police spokesman said, adding that it was “too soon” to know for certain.

Police declined to provide further information about the suspects.

No one at the Hamburger Morgenpost, known locally as the Mopo and which has a circulation of around 91,000, could immediately be reached for comment.

“Thick smoke is still hanging in the air, the police are looking for clues,” the newspaper said in its online edition. The newspaper's website is however inaccessible in Pakistan.

Local users trying to access Morgenpost are greeted with a message that says "the site contains content that is prohibited from viewership within Pakistan".

Media reports said the newspaper's publishers had ordered private security protection for the building in the western district of Othmarschen.

German news agency DPA reported that the attack had occurred from a courtyard of the building and hit the newspaper's archive room where some records were destroyed.

It quoted a police spokeswoman as saying that the editorial team should be able to continue work in the building as the damage was relatively minor.

Two Islamic extremists stormed the offices of Charlie Hebdo on Wednesday, killing a total of 12 people including some of France's best-loved satirists.

Both men were killed Friday in a standoff with police.

Several German newspapers had published the Charlie Hebdo cartoons on their front pages Thursday in a gesture of solidarity with the French cartoonists and in defence of free speech.

Germany's Bild am Sonntag newspaper reported earlier Sunday that the bloodshed in France could signal the start of a wave of attacks in Europe, citing communications by Islamic State leaders intercepted by US intelligence.

Shortly after the bloodbath in Paris, the US National Security Agency had intercepted communications in which leaders of the jihadist group announced the next wave of attacks, the tabloid said, citing unnamed sources in the US intelligence services.