India True News

U.S. Diplomat Couple Cause Furor in India With Offensive Facebook Posts

2014-01-23T15:32:00.000-08:00

Indian media have been giving wide play to derogatory comments by a U.S. diplomat couple on Indian life and culture, exacerbating already strained relations between the two countries in the wake of the Devyani Khobragade affair.

The Times of India identified the couple as Wayne May, who headed the security team at the U.S. embassy in New Delhi, and his wife Alicia Muller, who worked, ironically, as a community liaison officer.

May had been expelled from India in retaliation for the recent arrest in New York City of Khobragade, an Indian diplomat, who was indicted on charges of visa fraud and mistreatment of her maid before being allowed to return to New Delhi.

On his Facebook page, May made fun of the Indian way of life and said his pet dog was better nourished than his Indian gardener as the dog got more protein in his diet. In one Facebook post, Muller referred to India’s reputation for sexual violence: “It’s the vegetarians that are doing the raping, not the meat eaters — this place is just so bizarre.” The couple also made fun of cows, which are a religious symbol in India. When one of Muller’s friends pointed out that she had insulted an Indian god, she retorted “Not the first time, not the last.”

Washington on Monday was at pains to distance itself from the postings. “Those comments absolutely do not reflect U.S. government policy, nor were they made on any official U.S. government social-media account,” State Department spokeswoman Marie Harf said. “I would underscore that these do not in any way represent the U.S. government position.”

Although the offensive remarks appear to have been deleted, several websites in India, including Racist American Diplomats, published a selection of screenshots of them.

Indian commentators have conceded that the posts were “frivolous” but argued that they were nevertheless in bad taste in light of the couple’s diplomatic status.

“Given the sensitive positions they occupied in the U.S. embassy, they are, particularly in hindsight, astonishingly offensive” the Times of India said.

India raises evacuation of family of Indian diplomat's maid with John Kerry

2014-01-23T15:29:00.002-08:00

In the first such meeting since the Devyani Khobragade incident rocked India-US relations last month, External Affairs Minister Salman Khurshid on Wednesday discussed with US Secretary of State John Kerry the need to put in place “institutional arrangements” regarding privileges and immunities of diplomats.

Devyani’s arrest and strip-search over low wages to her domestic help Sangeeta Richard has led the Indian government to retaliate and cut back on US diplomats’ privileges in the last one month.

During the meeting with Kerry on the sidelines of the Geneva II meeting on Syria being held in Montreux, Khurshid also expressed “concern” at the evacuation of Richard’s family from India, which was done by US embassy officials.

The Ministry of External Affairs said in a statement, “In view of the recent episode involving the arrest of an Indian diplomat in New York, External Affairs Minister and the US Secretary of State recognised the need to put in place institutional arrangements to look at all outstanding issues relating to the privileges and immunities of diplomats of both countries so that such issues could be resolved in a timely manner.”

“The minister also underlined India’s concern over trafficking visas issued to Indian nationals by the US Embassy in India,” the statement said.

Reviewing the recent developments in India-US relations, they agreed that the bilateral relationship was “very important” for both countries.

Both sides looked forward to the “early realization of the mutually-agreed calendar of bilateral exchanges, including the visit of US Energy Secretary Moniz for the India-US Energy Dialogue and the visit of the Commissioner of the US Food and Drug Administration, Dr Margaret Hamburg”.

The ongoing defence cooperation between India and the US was also mentioned during the discussion. “The two ministers agreed to remain in contact to follow up on the progress on these issues,” the MEA’s statement said.

In Washington, Indian ambassador S Jaishankar said the Devyani case was handled “appallingly” and needs to be resolved, but the US remains probably India’s most important ally. “I won’t underplay this incident, I won’t overplay this incident. I think we need to see it in perspective,” Jaishankar said

in an interview. “I think we are in the midst of working this one out.”

Jaishankar said India was “perplexed” by the decisions of US authorities to arrest and strip-search the 39-year-old diplomat after she was accused of visa fraud and underpaying her maid. “There was a fair measure of anger about both the substance of the problem and the way it was handled,” he said. “It was not just done publicly; frankly it was done appallingly.”

A Monetary Policy Rule for Emerging Market Economies The Impossible Trinity and the Taylor Rule

2014-01-22T07:54:00.001-08:00

The recent global debate on monetary policy has centred on whether policy should target financial stability in addition to the domestic business cycle. With relatively tightly regulated fi nancial markets, where concerns presently are more developmental than regulatory, the counterpart debate in emerging market economies centres on reconciling two widely held economic policy formulations, namely, the Mundell-Fleming "Impossible Trinity" and the "Taylor Rule". This article argues that EMEs can get around the trilemma by adopting a separate0 instrument as part of a consistent policy framework to target the external financial cycle. This would free up their interest rate policies to target the domestic business cycle, without the need to deviate from the Taylor Rule from time to time to target external fi nancial stability. The currency crisis sweeping emerging market economies (EMEs), which has compelled Brazil, Turkey and Indonesia to tighten policy rates amidst collapsing growth, merits revisiting the application of two widely held economic policy formulations, namely the Mundell-Fleming “Impossible Trinity” and the “Taylor Rule” of monetary policy. According to the impossible trinity, a country can have only two of the following three: a fixed exchange rate, monetary independence and free capital flows. A free monetary policy means that it is free to respond to the domestic business cycle. The Taylor Rule is a rule-bound – as opposed to discretionary – monetary policy by which the central bank adjusts its short-term policy interest rate based on a mathematical formula using differentials between a country’s potential GDP and actual GDP, and between the inflation target and actual inflation. The Taylor Rule and its variants are now used by almost all advanced country central banks. The author of the rule, John B Taylor of Stanford University, is of the view that it is relevant for developing country central banks also. Many developing countries have indeed started using the Taylor Rule. In advanced economies the Taylor Rule responds to the domestic business cycle. Monetary policy in developing countries, on the other hand, is in addition constrained to respond to the external financial cycle, which distorts the application of the Taylor Rule. Thus, if domestic growth concerns warrant low interest rates, a sudden stop in capital inflows may induce them to keep interest rates unduly high to attract foreign capital, thereby magnifying the downturn in the business cycle. In other words, they end up trying to negotiate the impossible trinity. Raising interest rates at such times rarely works because the stops are frequently not country specific, and in any case foreign investors are more concerned about capital losses than higher interest income. The impossible trinity is no longer very relevant for advanced economies whose currencies – the dollar, pound sterling, euro and the yen – are now fully convertible against each other. There is therefore very little difference between their internal and external imbalances as these can both be backstopped by their central banks by printing currencies that are both freely convertible and tradable in liquid international financial markets. Monetary policy is therefore free to respond to the domestic business cycle. However, following the recent global financial crisis, there is now an animated debate in advanced economies as to whether their central banks need to explicitly target the financial cycle as well to ensure financial stability, and as to what policy instrument is best suited to meet this objective. In EMEs, where currencies are not freely convertible, and where financial systems are much more tightly regulated, the counterpart of this debate has for long centred on the impossible trinity. Only domestic deficits can be backstopped by their central banks. Their external deficits are denominated in international reserve currencies, for which they are dependent on market support. They are therefore always susceptible to external payments crises in the event of market revolt if their deficits are perceived to be excessive and unsustainable. This happened on a large scale in Latin America in the early 1980s, in east Asia in the late 1990s, and across a broad swathe of EMEs currently. In the past such external payments crises pushed EMEs to seek “conditional” bailouts from the International Monetary Fund (IMF), the international lender of last resort. It is this threat of an external payments crisis that compels developing countries to frequently use monetary policy for managing external imbalances, in addition to managing the domestic business cycle. This can result in the loss of monetary independence. They therefore need a separate instrument, as part of a consistent policy framework, to target the external financial cycle if the central bank is to retain monetary independence. Many EMEs, including India but with the notable exception of China, have, like advanced economies, also chosen to have independent monetary policy and free capital flows. Their exchange rates float mostly freely on the current account, and to a great extent also on the capital account, with most of the capital restrictions imposed on residents rather than non-residents. This is because of the need to attract and conserve foreign capital: putting restrictions on external investors makes the latter less willing to bring in capital if it is not be allowed to be repatriated at will. Amongst the major EMEs, China has famously chosen a combination of a fixed exchange rate, monetary independence and closed capital account. While there are few formal restrictions on capital inflows, since China runs a current account surplus this effectively means that the central bank mops up as much dollars from the market as required to maintain more or less a fixed nominal exchange rate against the dollar. Since China runs large current account surpluses against the US, it has accumulated a huge cache of dollar reserves in its attempt to keep its exchange rate pegged to the dollar in nominal terms. Its real effective exchange rate (REER) against the dollar has been depreciating continuously on account of relative productivity shifts. Under persistent criticism and pressure from the US, China has, of course, depreciated its nominal exchange rate against the dollar slightly from time to time, even as its REER continues to remain significantly undervalued. Effective Exchange Rates One of the main reasons why several EMEs floated their currencies was to prevent the build-up of external imbalances, as a currency float is expected to automatically adjust external imbalances: a current account imbalance should depreciate the currency, thereby boosting exports by making them more competitive, and compressing imports by making them more expensive. This tends to move the current account back towards balance. Ceteris paribus, if a country runs a current account deficit (CAD), its currency should depreciate in nominal terms against those of its trading partners. The nominal exchange rate, which is observable, is however, different from the REER, which is non-observable. The REER is the adjustment made for changes in both the nominal exchange rate and relative prices and productivity between trading partners, as the REER = (Exchange Rate* $ price)/domestic currency price. From this simple equation it would be evident that, ceteris paribus, if the domestic currency depreciates in nominal terms, the REER would depreciate by an equivalent margin. However, since the domestic currency price of goods also increases relative to the dollar price of the same goods, the real depreciation is countervailed to that extent. Indeed, when there is a spike in inflation it is entirely possible for the nominal exchange rate to depreciate even as the REER appreciates. On the other hand, a relative improvement in productivity puts a downward pressure on domestic currency prices, thereby depreciating the REER. Ceteris paribus, higher inflation tends to erode international competitiveness, while improved productivity enhances it. When EMEs floated their currencies the expectation was that capital account flows would simply be the counterpart of the current account, and that the exchange rate would respond primarily to the current account balance. Inflation tended to be higher in EMEs, which appreciated the REER. However, productivity improvements were on the whole higher in EMEs on account of the structural shift in employment from the less productive agricultural sector to the more productive manufacturing and modern service sectors, and this tends to depreciate the REER. Therefore, with effective macroeconomic management that keeps inflation within reasonable limits, it should theoretically be possible for EMEs to keep their nominal and REER closely aligned. There are, however two major circumstances, one emanating from the current account (the “Dutch Disease syndrome”), and the other from the capital account (“Southern Cone syndrome”) under which this reasoning does not hold. The Dutch Disease arises when there is a sudden spurt in a country’s current account surplus, usually on account of a new resource discovery, such as oil. The consequential sharp appreciation of both the nominal and REER makes the country lose export competitiveness in all except the windfall sector. As a result huge external imbalances can arise once the windfall is depleted. More germane to the present argument, however, is the second set of circumstances, emanating from the capital account, and increasingly a far more frequent phenomenon, namely, large and volatile capital inflows into EMEs. Cross-border flows to EMEs increased manifold since the 1970s following the oil price hikes and export-led high growth strategies adopted by several east Asian economies. The first manifestation of this syndrome in developing economies was the wave of financial liberalisation which led to a debt fuelled recycling of petrodollars by US banks in the Southern Cone in Latin America. Misalignments, Imbalances and Stops While large capital inflows can sustain large CADs for sometime, over the medium to long-run they tend to magnify external imbalances and lay the ground for external payments crises. If there is a surge in capital flows that exceeds the CAD, assuming that there is no central bank intervention to increase foreign currency reserves, the (nominal) currency depreciation may not be adequate to push the CAD towards balance. Indeed, it is possible for the nominal exchange rate to even appreciate despite the CAD if the capital surge is excessive, thereby magnifying the external imbalance. If simultaneously the REER were also to appreciate because of inflation differentials, the CAD could worsen even further. Once the capital surge abates, or in the event of a sudden stop, there is a likelihood of a sudden, rapid and accelerated correction in exchange rates, with the nominal exchange rate depreciating sharply, and the REER overshooting its neutral (long-term “fundamental”) rate. This can cause short-term macroeconomic instability, such as higher inflation, a loss in international confidence and a credit downgrade that could compound the reversal in capital flows and could precipitate an external payments crisis. Over the medium to long-term, however, the correction increases the likelihood of the current account moving back closer to balance. What pushes capital into EMEs, and what triggers sudden stops? While fundamentals and the prospects of higher returns are certainly contributory factors, over the years it has become increasingly clear that the major factor driving flows in and out of EMEs has little to do with the fundamentals of recipient countries but yields in the source countries, in particular the US which has the biggest and deepest financial market in the world. The flows and outflows, seem to come in waves, and across a wide swathe of countries. It is not entirely coincidental that the capital stop in the Southern Cone in the early 1980s, in east Asia in the late 1990s, and across a broad sweep of EMEs since May 2013, followed a tightening of monetary policy by the United States Federal Reserve. With the integration of financial markets and globalisation the spillovers of US Fed monetary policies are only increasing because of the overarching dominance of the dollar in the international monetary system. Its policies therefore hugely determine the direction and velocity of cross-border capital flows. No other central bank comes even close to exercising this influence across its own borders. Over the years the dollar has effectively become the global reserve currency. As a result, US monetary policy has a determining influence on the direction of global capital flows. This in effect gives the issuer of the global reserve currency the flexibility to soak up capital when it needs it most, and to export it out when it suffers from excessive domestic liquidity. Through this mechanism the US can fund literally unlimited amounts of external and internal deficits without being penalised by markets as happens in the case of other countries. Open capital accounts, espoused by the IMF, only facilitate this funding and magnify the “exorbitant privilege” of the dollar. It has long been argued, from the days of John Maynard Keynes, that the extant international monetary system has a structural flaw in that it lacks a mechanism, market-based or otherwise, to induce surplus countries to adjust. This can lead to the persistence of large imbalances. Recent history however indicates that this is not entirely correct, as there is also little pressure on countries with reserve currencies, and especially the global reserve currency, to adjust even when they run current account deficits, on account of the large external demand for their currencies. The latter is also consistent with the “Triffin Paradox”, by which the reserve currency issuer is expected to run larger and larger current account deficits to meet the growing needs of global liquidity. This is manifestly not true in the cases of currencies like the Japanese yen and the Swiss franc. Both countries have run current account surpluses over the last decade and a half. Similarly, even while its currency was becoming important in the composition of the global portfolio of reserve currencies, the euro was running a roughly balanced current account position with the rest of the world. This is because it is really the dollar that is accepted as the de facto global reserve currency by markets, even though the IMF may have classified other currencies also as reserves. In effect, the US Federal Reserve acts as the global central bank. In the not too distant past, easy monetary policy by the US Federal Reserve, both prior to and following the global financial crisis, led to a surge in capital inflows into emerging markets, appreciating their currencies. There were intervening periods of sudden stops, as US monetary policy changed course, resulting in sharp currency depreciation, sudden stops and external payments crises. This again happened in the 1980s in Latin America, in the 1990s in east Asia, and is now affecting EMEs globally. International financial markets in EMEs appear to respond more to US Fed actions than to economic fundamentals in these economies. External Payment Crises The Southern Cone and east Asian economies were constrained to turn to the international lender of the last resort to bail them out of their external payment crises. This time around, however, EMEs have not turned to the IMF. Apart from providing immediate relief, these bail-outs rarely had a happy ending, with some notable exceptions such as the Indian programme of the early 1990s. Stiff conditionalities led to a protracted period of low growth, and protracted loss of access to international markets because of the “stigma” attached to approaching the IMF. Over the long run the IMF solution has not made EMEs less susceptible to external payment crises. Following the east Asian crisis, for whatever reason, conscious or fortuitous, EMEs self-insured themselves against sudden stops by accumulating large foreign exchange reserves. This has not prevented sudden stops, and sharp depreciation, but has nevertheless – so far – prevented external payments crises that in the past pushed them to turn to the IMF. During a sudden stop markets tend to overshoot far out of proportion to economic fundamentals. Following sharp and rapid depreciation a number of EMEs felt constrained to put in place precautionary liquidity facilities to reassure markets. It is pertinent that the bigger EMEs turned to the US Fed, rather than to the IMF, for currency swaps. It was the former, rather than the latter, that was regarded as the lender of last resort, or the ultimate bazooka. Even central banks that issued reserve currencies, such as Bank of England and the European Commercial Bank turned to the US Fed for dollar denominated facilities. This underscores the increasing systemic irrelevance of the IMF: despite the large replenishment of its resources it is now seen as the lender of last resort only for small developing countries. If, at the end of the day, there is only one global reserve currency, the dollar, the US Federal Reserve has a bottomless supply, whereas the IMF’s resources are finite. This arguably makes the US Fed some kind of a global central bank, setting monetary policy and providing liquidity. The US Fed swaps notwithstanding, it is quite clear that EMEs that had good self-insurance mechanisms in place weathered the sudden stops of the global financial crisis better. There is also no good reason why EMEs would find dependence on the US more palatable than on the IMF in the event of sudden stops. They therefore need an effective policy instrument to manage sudden stops. Two Instruments for Two Targets On the one hand, EME monetary policies have got caught up in the “impossible trinity”, with the central bank being constrained to set short-term policy rates that are inconsistent with the domestic business cycle, leading to loss of monetary independence. On the other hand, they have conceded policy independence by committing themselves in the G-20 to “market determined exchange rates” even though volatile capital flows distort market exchange rates, aggravating external imbalances and macroeconomic instability. Instead, they have negotiated policy space to impose temporary capital controls in the face of a surge in capital inflows. Their experience with imposing capital controls has not been very happy: capital controls are notoriously leaky, at best they throw some sand into the wheels while leading to long-term damage by discouraging capital inflows when they are most needed. They are particularly counterproductive in the event of capital outflows as they aggravate the problem they seek to address, as foreign investors are likely to see discretionary controls as capricious, making them even more risk averse. Therefore some countries like India have relied more on interventions in the foreign exchange market to manage volatile capital flows. This has two advantages. First, by keeping the nominal exchange rate aligned to fundamentals, it keeps external imbalances in check which in turn could minimise the overshooting during episodes of capital stops. Second, by sequestering excessive inflows during episodes of excessive inflows, it enhances the war chest for combating disorderly adjustment which can boost market confidence relative to EME peers. According to the well accepted “Tinbergen Rule” a policy instrument can be effective only if it has a single objective. Despite this, EME central banks have been using a single policy instrument, namely, the interest rate, to sometimes target domestic imbalances (the inflation-growth matrix) and sometimes external imbalances (the exchange rate-current account balance matrix), supplemented occasionally by market intervention, depending on which balance appears more pressing at the moment. This risks making the instrument ineffective, the policy inconsistent and magnifying rather than attenuating both domestic and external imbalances. Since there are two targets, a second policy instrument is required to achieve both objectives. The interest rate is clearly better suited to target domestic imbalances. Targeting a neutral REER through market intervention, on the other hand, is clearly better suited to targeting external imbalances. This would ensure that the exchange rate remains close to fundamentals, i e, that it responds primarily to the current account and is not distorted by volatile capital flows that can be destabilising from time to time, even though they might at times make it easier to finance current account deficits over the short term. Such a policy/instrument is also entirely consistent with Article i(iii) of the IMF’s Articles of Agreement that purports to promote “exchange rate stability”. Although a number of EME central banks monitor movements in the REER, they neither target it consistently, nor are they consistent in the use of instruments to achieve their target. A consistent, well-articulated and effectively communicated exchange rate and/or reserve management policy which protects monetary independence has still to be worked out by EME central banks. The use of separate instruments to target domestic and external balances by the central bank must be done within an overall framework of policy consistency that attenuates conflicting outcomes. There would, for instance, be no conflicting outcomes when there is a need to tighten monetary policy and sell foreign exchange reserves, or inversely when there is a need to loosen monetary policy and buy foreign exchange reserves. There could, however, be some conflict when there is a need to loosen monetary policy and sell reserves, and inversely when there is a need to tighten monetary policy and buy reserves. In the case of such conflict the central bank would need to conduct sterilisation/liquidity provision operations alongside market intervention so that the monetary policy stance is not compromised. Whether or not the exchange rate target is clearly communicated to markets, it would be only a matter of time before markets figure out that the central bank is targeting a neutral REER. There is therefore a danger that they could try and game the system by placing one way bets. This could be avoided by being less predictable in intervention – such as adopting a “random walk” approach – and being tolerant of fluctuations within a band rather than targeting a specific rate as such. During a capital stop episode it is important that the central bank’s response is a measured one, fully appreciating that markets have a tendency to overshoot at such times, otherwise it risks rapidly running out of reserves and damaging market confidence. Conclusions The recent global debate on monetary policy has centred on whether it should target financial stability in addition to the domestic business cycle. With relatively tightly regulated financial markets, where concerns presently are more developmental than regulatory, the counterpart debate in EMEs centres on reconciling the impossible trinity with the Taylor Rule. The problem has become all the more compelling in a rapidly globalising world where large, volatile capital flows lead to misaligned and volatile exchange rates that threaten macroeconomic stability. The argument is that EMEs can get around the trilemma by adopting a separate instrument as part of a consistent policy framework to target the external financial cycle, instead of using a single instrument, namely, the interest rate, to target both cycles. This would free up their interest rate policies to target the domestic business cycle, without the need to deviate from the Taylor Rule from time to time to target external financial stability.

Terrorism is now global and local

2014-01-21T04:41:00.001-08:00

News that the Iraqi branch of Al Qaeda, the Islamic State of Iraq and al Shams and its affiliates, have occupied key cities in the country's Anbar province, is only the latest in a series of advances made by violent and extremist Islamist groups in a wide arc stretching across, West Asia and Africa, particularly during the past year. The Arab Spring, which began with a successful popular movement against a corrupt and despotic regime in Tunisia in December 2010, soon engulfed Egypt, Libya and Syria but the original democratic and liberal impulse behind the movement soon yielded place to better organised, often armed and violent sectarian forces. The US and its Western allies not only ignored this unfolding though uncomfortable reality, but instead sought to ride the fundamentalist Sunni wave to isolate Shia Iran and to destabilise its regional ally, Syria. The Gulf monarchies, in particular Saudi Arabia and Qatar, were actively encouraged to provide funds and weapons to the most fundamentalist and violent opposition groups in these target countries. Turkey, under Recep Erdogan, was also drawn into this cynical game. The results were predictable and were analysed in my column "Arab Spring turns searing summer" (September 19, 2012), warning, in particular, of the danger to India's plural and secular dispensation from these forces being unleashed in our neighbourhood. What needs to be understood is that the danger does not emanate from a monolithic and coherent entity called Al Qaeda, but rather from an increasingly exclusionary, fanatical and violent ideology, which is shared by a loosely constituted international network of local Al Qaeda branches, their numerous affiliates and associated fundamentalist groups. These may be powered by local grievances or causes anchored in different national narratives. However, one should not make the mistake of identifying such groups as being "nationalist" or "conservative" and hence allow them to escape the scrutiny they deserve as real or potential sources of international terrorism. We see such tendencies in the US and some other Western countries, that now appear willing to accept the Afghan Taliban as a local and nationalist group not necessarily targeted against Western interests as is, avowedly, the Al Qaeda. In Pakistan, we have witnessed, for some time a sharpening Shia-Sunni divide, with extremist groups such as the Sipaha-e-Sahaba targeting Shia mosques and communities with brutal violence. Several other groups such as the Lashkar-e-Taiba and the Jaish-e-Mohammed that began as and remain state-sponsored terrorist outfits focused on India, have developed broader regional and even global agenda. With the imminent US withdrawal from Afghanistan during this year, these groups are likely to come together with the Afghan Taliban to attempt to reverse the gains made in Afghanistan and install a fundamentalist Sunni regime in Kabul. This is likely to revive the offshore havens for Pakistan-sponsored cross-border terrorism against India and it would be no consolation to us that, in Western eyes, this may not be directly linked to an exclusive Al Qaeda threat. There is, today, a global network of fundamentalist and violent Islamic groups of which Al Qaeda may be a prominent component, but segmenting these groups and indulging in selective focus on some and not on others, is to miss the transformed nature of the threat of international terrorism. The Al Qaeda may have a global agenda, but it pursues that agenda through exploiting and co-opting local and regional opportunities wherever they might arise. We see this in the Gulf, in the Indian sub-continent and more lately, in Africa. Recently in Bangladesh, the argument has been made that one should not alienate conservative Islam, including the Jamaat, despite its patently violent proclivities. While it would have been preferable to have had a more inclusive electoral process in the country, the BNP's alliance with the Jamaat has been deeply troubling. Next door in Myanmar, the rise of militancy among young Buddhist monks and the mishandling of the Rohingya issue has led to a new breeding ground for extremist activity. The fallout was felt in distant Bodh Gaya, though there was no local cause for the terrorist bombing at the Mahabodhi temple. These developments have created the real prospect of India's eastern flank being as exposed to the spread of sectarian and fundamentalist forces as its western flank already is, with the real possibility of these spilling across our borders. India has the second largest population of Shia Muslims after Iran. There has been no history of Shia-Sunni conflict in the country, but lately there have been stray incidents of clashes between the two communities both in Uttar Pradesh and recently in Kashmir. This is an ominous development and needs to be handled swiftly and firmly. While one does see the growing influence of Wahhabi Islam in some sections of our Muslim population, the sheer diversity of India and its democratic processes has spared the country from the kind of sectarian divide and hostility that is growing, particularly in our Western neighbourhood. We need to ensure that plural democracy prevails and is nurtured and respected across the political spectrum. The impending general elections place the country in a relatively vulnerable position. Appeals to narrow sectarian and parochial sentiments to gain electoral advantage may be tempting for some political parties. It is imperative that we create a national awareness of what is happening in our neighbourhood, both to the east and west, understand the potential dangers to our national security and refrain from creating, domestically, a congenial environment for such inimical forces from across our borders, undermining what has so far been one of the world's most successful plural democracies with a deeply rooted tradition of inter-religious harmony.

US;losing friends gaining nothing.

2014-01-21T04:32:00.001-08:00

It’s a good thing that the U.S. economy is on an uptick these days, for in the friends department, the U.S. is facing a depletion.

Obeying China’s December diktat on the no-fly zone over the Senkaku Islands, and urging its western allies like Australia to do so too, was a move in the opposite direction of east and south east Asia which is fearful of Chinese dominance.

Now the U.S. is losing friends in South Asia too, most notably India, Bangladesh, Afghanistan and Pakistan. The expulsion of an Indian diplomat from New York, the support given to the Bangladesh Nationalist Party (BNP) and its extremist ally the Jamaat in Bangladesh, pushing Afghanistan into a military treaty, and continuing its hypocrisy with Pakistan are some of the more recent reasons.

India first: On January 9, the New York attorney’s office indicted Devyani Khobragade, Counsellor at the Permanent Mission of India to the United Nations, of alleged visa fraud and misrepresentation. Having turned a diplomatic spat into an international incident, the State Department expelled a diplomat to whom it had granted immunity just the day before. Washington could have sought a way of reducing the charges against Khobragade – especially given that diplomats are generally treated discreetly on the basis of reciprocity, and some like the Saudis in the U.S., excessively so. Expelling Khobragade was a way out of the impasse, certainly; but it was perhaps the worst way out embittering both Indian politicians and serving professional diplomats.

Would that Washington view its actions in a mirror. For the immunity issue a la Khobragade is small thing compared to the scale of what it is demanding from Afghanistan. The U.S. wants full legal immunity for all its forces staying on in Afghanistan, as also the 100,000 contract employees under its cover, so it can continue its project in Afghanistan – threatening Afghan President Hamid Karzai that it may otherwise exercise a zero troop option as it did in Iraq precipitating the return to near civil war conditions there, leaving Afghanistan with neither military nor repeatedly promised economic support, should complete immunity not be granted to U.S. forces.

Immunity is also what the U.S. demanded – and extracted – in Pakistan for embassy contractor Raymond Davis who in 2011 shot dead two Pakistanis in broad daylight, in front of witnesses.

Is this exceptionalism gone haywire? The U.S. praises a brave Karachi police chief killed on January 9 by the Taliban, and a 14-year-old schoolboy who died the same day preventing a suicide bomber from entering his school gates – but it continues its drone strikes. Here it is complicit with successive Pakistani governments which publicly decry the strikes but privately welcome them. Former U.S. Defence Secretary Robert Gates in his new book, Duty reveals that he has defended Pakistan in the U.S. Congress but believes that Pakistan is no ally. What a way to treat a “friend” with whom you are co-fighting the “war on terror?”

Terror is just what is being unleashed in Bangladesh by the BNP-Jamaat combine – but the U.S. prefers to assess it differently. Washington was supportive, sotto voce, when the Egyptian military ousted the Muslim Brotherhood from power last year. Certainly the Brotherhood was unpopular, but it was elected. In Bangladesh, however, the unelected Jamaat, a more vicious version of the Brotherhood which committed genocide on its own people in 1971 in complicity with the Pakistani army, is receiving sympathy from the U.S. over the secular elected Awami League of Sheikh Hasina. Religious minorities, especially Hindus, are also the victims of the Jamaat’s dangerous, shocking violence. The Jamaat in the sub-continent’s east, is the counterpart of the al Qaeda and Taliban in its west.

Despite India’s diplomatic efforts, especially with Washington, to support a moderate Hasina government, the U.S. looks at Bangladesh through the lens of Pakistan, as it did in 1971, suspicious of Hasina’s outreach to China and Russia for lucrative development contracts.

Finally Sri Lanka. Washington has been critical of Colombo, as has India, over the wanton killings of the Tamils in the endgame with the LTTE. But while India has been hobbled by domestic Tamil politics, the U.S. has frittered away its influence in this strategically placed teardrop of an island in the Indian Ocean.

The narrative that the U.S. should pay attention to is this – the three major Islamic countries in South Asia are in flux, and the U.S. role is far from constructive in appreciating the efforts of their secular and democratic forces.

Towards India, which is experiencing the arrival of an optimistic new democratic and governance agenda – to which all of south Asia is awake – the U.S. is flippant, disregarding a relationship which yesterday was characterised as the most critical of the twenty first century, code words for balancing China should it completely shed the restraints it placed till the beginning of this century.

Caught in the tit-for-tat game that is being played on the chessboard of the bilateral, are vital interests. U.S. Energy Secretary Ernest Moniz cancelled a critical trip this month which would have charted out U.S. – India energy co-operation and the initiation of U.S. shale gas exports to India.

It is a loss for both sides, certainly. A secure south and east Asia is in the interest of both India and the U.S. But miscalculations have set back the agenda. Resuming initiatives and rebuilding trust and high comfort levels will take time – vital time lost – when instead the two countries should be in close consultation over the changing security matrix of an Asia repositioning itself around an assertive China – and emboldened extremism in South Asia that’s positioning itself for a post-2014, post-U.S. influence, era.

Measures for Improving Management of National Security

2014-01-20T06:57:00.001-08:00

Measures for Improving Management of National Security

Gurmeet Kanwal

India faces multiple external and internal security threats and challenges, but its response to defeat these successfully has often been inadequate. India’s response is usually marked by knee jerk reactions that fail to optimise the capacities of various organs of the state. With the experience gained over the last six decades, there are several steps that the government can take to improve the functioning of higher defence organisations and better manage national security, including planning for the neutralisation of emerging threats and challenges.

The first and foremost item on the government’s defence and national security reforms agenda should be the formulation of a comprehensive National Security Strategy (NSS), including that for internal security. The NSS should be formulated after carrying out an inter-departmental, inter-agency, multi-disciplinary strategic defence review. Such a review must take the public into confidence and not be conducted behind closed doors. Like in most other democracies, the NSS should be signed by Prime Minister, who is the head of government, placed on the table of Parliament and released as a public document. Only then will various stakeholders take ownership of the strategy and work unitedly to achieve its aims and objectives.

The armed forces are now in the second year of the 12th Defence Plan (2012-17) and it has not yet been formally approved with full financial backing by the Cabinet Committee on Security (CCS). The government has also not formally approved the long-term integrated perspective plan (LTIPP 2007-22) formulated by HQ Integrated Defence Staff. Without these essential approvals, defence procurement is being undertaken through ad hoc annual procurement plans, rather than being based on duly prioritised long-term plans that are designed to systematically enhance India’s combat potential. These are serious lacunae as effective defence planning cannot be undertaken in a policy void. The government must commit itself to supporting long-term defence plans or else defence modernisation will continue to lag and the growing military capabilities gap with China’s People’s Liberation Army will assume ominous proportions. This can be done only by reviving the dormant National Security Council (NSC) as defence planning is in the domain of the NSC and not the CCS, which deals with current and near-term threats and challenges and reacts to emergent situations.

The inability to speedily conclude major defence contracts to enhance national security preparedness in the face of growing threats and challenges, exemplifies the government’s challenges in grappling with systemic flaws in the procurement procedures and processes. Despite having formulated the Defence Procurement Procedure (DPP) and the Defence Production Policy (DPrP), the government has been unable to reduce bureaucratic red tape and defence modernisation continues to stagnate. It is difficult to understand why the budgetary allocations earmarked on the capital account for the modernisation of the armed forces should continue to be surrendered year after year with complete lack of accountability. The year FY 2010-11 had brought some encouraging news as the Ministry of Defence (MoD) managed to fully utilise all the funds that were allocated on the capital account. This should become the norm rather than the exception.

While internal security challenges are gradually gaining prominence, preparations for conventional conflict must not be neglected. Major defence procurement decisions must be made quickly. The army is still without towed and self-propelled 155 mm howitzers for the plains and the mountains and urgently needs new utility helicopters, anti-tank guided missiles (ATGMs) as also to acquire weapons and equipment for counter-insurgency operations. The navy waited for long for INS Vikramaditya (Admiral Gorshkov) aircraft carrier, which has been refurbished in a Russian shipyard at exorbitant cost and with operationally unacceptable time overruns. Construction of the indigenous air defence ship has also been delayed. The plan of the air force to acquire 126 multi-mission, medium-range combat aircraft in order to maintain its edge over the regional air forces is stuck in the procurement quagmire, even as the indigenous LCA project continues to lag inordinately behind schedule. All three Services need a large number of light and medium lift helicopters. India’s nuclear forces require the Agni-III missile and nuclear-powered submarines with suitable ballistic missiles to acquire genuine deterrent capability. The armed forces do not have a truly integrated C4I2SR system for network-centric warfare, which will allow them to synergise their combat capabilities and defend against cyber-attacks. The approach followed is still a platform-centric one despite the demonstrated advantages of switching to a network-centric approach.

All of these high-priority acquisitions will require extensive budgetary support. With the defence budget languishing at less than 2.0 per cent of India’s GDP compared with China’s 3.5 per cent and Pakistan’s 4.5 per cent plus US military aid – it will not be possible for the armed forces to undertake any meaningful modernisation. The funds available on the capital account at present are inadequate to suffice even for the replacement of obsolete weapons systems and obsolescent equipment that are still in service well beyond their useful life cycles. The central police and para-military forces (CPMFs) also need to be modernised and better trained as they are facing increasingly greater threats while continuing to be equipped with sub-standard weapons.

The government must immediately appoint a Chief of Defence Staff (CDS) or a permanent Chairman of the Chiefs of Staff Committee to provide single-point advice to the CCS on military matters and to synergise operational plans as well as capital acquisitions. Any further dithering on this key structural reform in higher defence management on the grounds of the lack of political consensus and the inability of the armed forces to agree on the issue will be extremely detrimental to India’s interests in the light of the dangerous developments taking place in India’s neighbourhood. The logical next step would be to constitute tri-Service integrated theatre commands to synergise the capabilities of individual Services. International experience shows that such reform has to be imposed form the top down and can never work if the government keeps waiting for it to come about from the bottom up.

India- South Korea relations

2014-01-18T22:59:00.001-08:00

SPECIAL REPORT
India - South Korea Strategic Partnership
HE Joon-gyu Lee
SR140-Korea-Ambassador.pdf

Transcript of the speech delivered by HE Lee in May 2013, as a part of the IPCS Ambassador Lecture Series

Dr. Suba Chandran, Director, Institute of Peace and Conflict Studies (IPCS), Prof. P.R. Chari,Visiting Professor, IPCS, Major General Dipankar Banerjee, Mentor, IPCS, Ambassador Tayal, Distinguished participants, Ladies and Gentlemen,

It is my great pleasure to be here this morning and address this distinguished gathering on Korea-India Strategic Partnership.I would like to extend my sincere thanks to the Institute of Peace and Conflict Studies for organizing this lecture and inviting me to share my thoughts. The IPCS has a well deserved reputation as one of India’s premier think-tanks. The eminent team of scholars associated with the Institute, who are engaged in research, dialogue and policy recommendations, has significantly contributed towards enriching our understanding of the issues of regional and global importance. I would like to take this opportunity to commend the Institute for its academic contribution to issues of contemporary Korean affairs and varied facets of bilateral relations between Korea and India.

Ladies and Gentlemen,

This year marks the 40th anniversary of the establishment of the diplomatic relations between Korea and India. It is indeed, a milestone in our bilateral engagement. Over the past 40 years, our two countries have come a long way together to forge sound and healthy ties. The establishment of strategic partnership between the two countries reflects our common desire for a stronger bilateral relationship in all areas of mutual interest. It also envisages two countries playing valuable roles in the regional and international affairs so as to protect and promote their common interests.

Korea and India began to factor in each other in their economicand strategic calculus only recently. Until the 1990s, the relations between the two countries had much less economic and strategic content. Throughout fifties and sixties, Korea was busy rebuilding the country from the destruction of the Korean War. The new leadership under Park Chung-hee carried out the export oriented strategy leading to the economic development throughout the period. Bilateral relations took off only in 1973 when the two countries established the diplomatic ties. Korea and India had numerous exchanges of high-level officials and maintained cordial relations. It should be noted that until the end of the Cold War in the late eighties, India still observed Non-Alignment Movement, but despite such circumstances, relationship between the two countries continued to develop, providing a foundation for the eventual enhancement in cooperation.

The early 1990s saw far reaching changes at global stage and also in the domestic milieu of the two countries, which compelled them to redefine their foreign policy orientations. The end of the Cold War changed international dynamics from geo-politics to geo-economics. The march towards globalization and economic regionalism led to the opening of the closed economies.

Keeping in view the changing realities, India announced its New Economic Policy, moving from command economy to market economy. Simultaneously, New Delhi initiated its Look East Policy in an effort to engage initially with Southeast Asia and later with Northeast Asia. Around the same time, Korea had emerged as an industrial power and was looking beyond its traditional economic partners.

Against this backdrop, both Seoul and New Delhi recognized the overwhelming need to deepen the process of economic engagement with each other. Indian Prime Minister Narasimha Rao paid a historic visit to Korea in 1993 and invited Korean investors to come and invest in India. Korean investors responded with passion and interest. Consequently, bilateral trade and investment relations expanded exponentially.

Ladies and Gentlemen,

As Indian economy began to register impressive growth and with rising economic stature, India’s strategic importance also got significantly enhanced. The countries of South-east and North-east Asia began to accord importance to India in their foreign policy making and looked at India as a partner to ensure stable balance of power in Asia. The growing importance of India for the countries of the region came to be reflected in a flurry of high-level exchange of visits between India and countries of the region and number of strategic and free trade agreements that India signed with them as well as India’s entry into the multilateral organizations such as East Asia Summit (EAS).

Korea did not miss to recognize the new profile of India and evinced much interest in building strong bilateral ties on a range of issues. India, too, realized the importance of

Korea as a partner in the emerging geo-political scenario. A definite step in this direction was taken when the two countries established ‘Long-term Cooperative Partnership for Peace and Prosperity’ in 2004. The two countries started an annual Foreign Policy and Security Dialogue to deliberate on regional and international security issues. Subsequently, the two countries laid the foundation for defence cooperation, by signing a MOU on cooperation in defence industry and logistics in 2005 and another MOU on cooperation between the coast guards of the two countries in 2006.

The real turning point in bilateral relations came in the year 2010, when Korea and India upgraded their relationship to a ‘Strategic Partnership’. Cognizant of the importance of economic relations in the overall framework of Strategic Partnership, both Korea and India put in force the Comprehensive Economic Partnership Agreement or CEPA. With these two landmark agreements, our two countries laid down the strong foundation for the future development of bilateral relations.

As I see, the formalization of Korea-India strategic partnership is an important development in our bilateral relations, which has the potential to accrue long-term benefits to both our countries across a number of areas. It has often been noticed that strategic partnership between nations ends up being only diplomatic rhetoric. But, I strongly believe that ours is truly a strategic partnership, which has emerged as a natural corollary of our shared values, and commonality of interests.

Today, a robust exchange of high-level visits has emerged as one of the defining features of our special partnership. President Lee Myung-bak’s State Visit to India in 2010 was quickly followed by the visit of the President of India, Pratibha Patil to Korea in July 2011 and Prime Minister Manmohan Singh’s visit in March 2012. We have witnessed an increase in the Ministerial visits, too. The Defence Ministers of our two countries have exchanged visits to add substance to the evolving strategic partnership.

The newly inaugurated President of the Republic of Korea, Madam Park Geun-hye accords highest priority to Korea’s relations with India and is keen to further build on the strategic partnership between the two countries. Given the new president focus and priority, I am sure, bilateral relations between the two countries will grow further, scaling new heights. We are working to realize the State Visit by President Park to India this year.

On the economic front, two-way trade and investment have witnessed a surge. In the first two years of implementation of CEPA, bilateral trade witnessed almost 70 per cent growth. Despite continuing global economic slow down, our two-way trade reached 19 billion US dollars last year. The two countries have set a new trade target of 40 billion US dollars by 2015. Korean investment in India and Indian investment in Korea has also picked up with bilateral investment amounting to 4 billion USD. I think the success story of our bilateral trade and investment relations are far too well-known and I need not elaborate it further.

Ladies and Gentlemen,

As strategic partners, the two countries are working together bilaterally as also in regional and international fora to address strategic challenges facing the region, which include maritime security, freedom of navigation, maintaining stable balance of power and putting in place open and inclusive regional security architecture, among others.

As many of you would be aware that Korea and India along with Japan have launched a trilateral dialogue among the thinktanks of the three countries to shape common policy responses to issues of regional and global importance. At the moment, the dialogue is at track II level but there is every possibility that it could be elevated to government level in due course.

Our two countries have scaled up cooperation in the field of defence and as part of this effort, they are regularly holding joint naval exercises and military consultations. Exchange programs, which include exchange of defence related experience and information, mutual exchange of visits by military personnel and experts including civilian staff associated with defence services, have begun to gain primacy in our interaction. For a long time, India’s Defence Attaché stationed in Tokyo held dual charge for South Korea. Last year, India posted a permanent Defence Attaché in its Embassy in Seoul, signifying the importance of defence cooperation in evolving strategic partnership. The defence cooperation between the two countries, among others, also envisages cooperation of defence equipment, transfer of technology and joint research and development.

Ladies and Gentlemen,

Undoubtedly, the way bilateral relations have been progressing is impressive. Nonetheless, the vast potential of our strategic partnership still remains untapped which provides room for further expansion. An analysis of trade and investment figures would reveal that our current trade and investment is just a fraction of what we are capable of. For example, Korea’s share in India’s global trade volume is less than 3 per cent, Similarly, India accounts for only 1.3 per cent of Korea’s total outbound FDI flow. This clearly indicates that there is still much to be done. Although our efforts in strengthening cooperation in the fields of politics and culture has been particularly successful with the increase in recent exchange of high-level visits and more intensified people to people contacts. But these exchanges by no means have reached where we would like to see them to be.

In the sub-regional context, there are no two views that both Korea and India require peaceful and stable periphery for their continued economic growth. The geo-strategic realities in our immediate neighborhood and the common concerns that our two countries share call for a stronger and deeper strategic cooperation between the two countries.

In the larger regional context, Asia-Pacific is one of the most dynamic and thriving regions in the world today. Our security, stability and prosperity are anchored in the region. So, our two countries have common interest in the peace and stability of the region. However, complex security situations, deep rooted difference in perceptions of history, competing territorial claims threaten to disturb the peace and stability which the region has enjoyed for more than four decades. The foreign and security policy of our two countries cannot afford to ignore these realities.

In this context, I strongly believe that cooperation and accommodation than choosing sides should guide the actions of all the nations having stakes in the peace and stability of the region. We all have seen the futility of block politics during the protracted Cold War period. The need of the hour is putting in place a comprehensive cooperative mechanism which swears by mutual accommodation.

So, if one considers bilateral, sub-regional and regional situation, one finds that there are compelling reasons for Korea and India to seek a stronger strategic partnership. And, I believe, as the centre of gravity of world politics and economics shifts to Asia-Pacific, South Korea and India, with no conflicting or competing interests between them, will find many grounds to work together strategically so as to reap the economic benefits resulting from the growth of the region as also to counter strategic challenges facing the region.

Ladies and Gentlemen,

It would be difficult to talk about strategic issues without mentioning recent developments on the Korean peninsula, which has direct implication for peace and stability in the region. As you all know, a series of provocative actions by North Korea over the past few weeks, including launching of a ballistic missile, nuclear testing and now threatening war against South Korea have escalated tension on the Korean peninsula.

The latest provocation indeed is serious but South Korea has the strength and wherewithal to address any threat from the North. We don’t see North Korea taking any action beyond their usual saber rattling. The entire world knows that behind the nuclear adventurism and war rhetoric stands an impoverished and isolated country. So, the move seems aimed at drawing world’s attention and bargain for de-escalating tension.

On North Korea, Seoul is unambiguous in its position. President Park Geun-hye administration has made it clear that Seoul will not tolerate any provocation from Pyongyang and respond decisively and resolutely to any new North Korean attacks. President Park has offered North Korea a new trust-building process which is expected to build a foundation for the eventual peaceful reunification of Korea.

The process is based on two pillars:

One, Seoul will never accept a nuclear-North Korea and respond decisively and resolutely if provoked by North Korea. Second, if North Korea decides to make the right choice, South Korea will be ready to engage Pyongyang in a much more proactive manner.

We hope North Korea to respond to our call for building trust on the Korean Peninsula through dialogue. Now, it is time for North Korea to make that choice. If North Korea abides by its international obligations and commitments and stops behaving the way it is behaving now, we are ready to work with international community to implement the commitments under the 19th September Joint Statement adopted by the Six-Party Talks in 2005 which calls for economic aid to North Korea in exchange for Pyongyang’s abandonment of all nuclear weapons and existing nuclear plans.

As you may know that North Korea has also unilaterally withdrawn its workers and prohibited the entry of South Korean workers to the Gaeseong Industrial Complex, which was the last remaining symbol of cooperation between the two. We made a proposal to North Korea to hold working level talks to resolve the problems regarding the industrial complex, which has been rejected by North Korea. As North Korea did not accept our dialogue proposal and continued its suspension of the operation of the GIC, our government has withdrawn all our remaining workers from the industrial complex. However, a window of dialogue still remains open with North Korea. If North Korea is truly interested in de-escalating the tension and improve inter- Korean relations, it must come to conversation table with South to resolve this issue.

Ladies and Gentlemen,

In the prevailing disturbing scenario, Seoul looks up to support and understanding of the international community, including India on its initiative and efforts to maintain peace and stability on the Korean peninsula. In view of India’s shining legacy of promoting peace and democracy around the world, it is hoped that India can contribute, once again, to peace and prosperity of the Korean peninsula.

Thank you.

India-ASEAN Relations

2014-01-18T22:47:00.001-08:00

India's Look East Policy was initiated in 1990s and since then, India's relationship with ASEAN remains one of the cornerstones of our foreign policy and the very foundation of our Look East Policy. India became a sectoral dialogue partner of ASEAN in 1992, which was upgraded to full dialogue partnership in 1996. Since 2002, we have had annual Summits with ASEAN. ASEAN and India commemorated the 20th anniversary of dialogue-level partnership and the 10th anniversary of Summit-level partnership with a Commemorative Summit in New Delhi under the theme 'ASEAN-India Partnership for Peace and Shared Prosperity' on December 20-21, 2012. The Commemorative Summit attended by the Leaders from all the 10 ASEAN countries endorsed elevating our partnership to a 'Strategic Partnership'. The Leaders also adopted the 'ASEAN-India Vision Statement', which charts the future of ASEAN-India cooperation. ASEAN-India functional cooperation is diverse and includes cooperation across a range of sectors, such as trade, science & technology, agriculture, environment, human resource development, space science, new and renewable energy, information and communication technology, telecommunications, transport and infrastructure, tourism and culture, and health and pharmaceuticals. At the 7th ASEAN-India Summit in October 2009, India announced a contribution of USD 50 million to ASEAN-India Cooperation Fund to support implementation of the ASEAN-India Plan of Action 2010-15, which envisages cooperation in a range of sectors in the political, economic and socio-cultural spheres for deepening and intensifying ASEAN-India cooperation. This was in addition to the ASEAN-India Science & Technology Fund set up in 2007 with an initial corpus of US$ 1 million and the ASEANIndia Green Fund also established in 2007 with US$ 5 million for funding pilot projects to promote adaptation and mitigation technologies in the field of climate change. At the ASEAN-India Commemorative Summit in December 2012, the Leaders welcomed the conclusion of the negotiations on ASEAN-India Trade in Services and Investment Agreements. The ASEAN-India Trade-in-Goods Agreement was signed on 13 August, 2009 at the ASEAN-India Economic Ministerial Meeting in Bangkok and became fully operational from 1 August 2011 when the process of ratification by all the ASEAN countries was completed. The total trade between India and ASEAN increased by 37% in 2011-12, reaching USD 79.3 billion, surpassing the trade target of USD 70 billion by 2012. The Ministry of Commerce and Industry, Government of India organized the 2nd ASEAN-India Business Fair from December 18-20, 2012. Meetings of the ASEAN-India Business Conclave and the ASEAN-India Business Council were also held on December 19, 2012. ASEAN-India Ministers of Trade met on the sidelines on December 19, 2012. The Ministry of Agriculture convened the 2nd ASEAN-India Ministerial Meeting on Agriculture and Forestry in New Delhi on 17 October 2012 along with an Agri Expo from 17-19 October 2012. The Ministry of Environment and Forests convened the 1st Meeting of the ASEAN-India Environment Ministers on 6-7 September 2012 in New Delhi which followed an ASEAN-India Workshop on Capacity Building on Nagoya Protocol on 4-5 September 2012. The Ministry of New and Renewable Energy convened the 1st ASEANIndia Ministerial Meeting on New and Renewable Energy in New Delhi on 7 November 2012, preceded by a Workshop on New and Renewable Energy on 5-6 November 2012. The 4th ASEAN-India Tourism Ministers Meeting was held in Vientiane on January 21, 2013, where a Protocol to amend the MoU on Strengthening Tourism Cooperation between ASEAN and India was signed and the ASEAN-India tourism website (www.indiaasean.org) was launched. Visa on arrival facility is extended to 7 ASEAN countries (Lao, Cambodia, Vietnam, Myanmar, Singapore, Indonesia and Philippines). The first ever meeting of the Heads of Space Agencies of India and ASEAN member countries was held in Bangalore on 19-20 June 2012 to discuss cooperation in the space sector. An ASEAN-India Expert Meeting on Climate Change was organized at the Indian Institute of Science, Bangalore on 27 – 28 June 2012. The first ever Joint Consultations between ASEAN SME Working Group and India was held on 15 November 2012 in Hanoi, Vietnam. The interface between Parliamentarians has also been strengthened through participation at the 31st, 32nd and 33rd General Assemblies of ASEAN InterParliamentary Assembly (AIPA) in 2010, 2011 and 2012 as Observer. An AIPA delegation, led by its President and Speaker of the House of Representatives of Indonesia, Mr.Marzuki Alie visited India from July 28-August 2, at the invitation of the Speaker, Lok Sabha. Co-operation between India and ASEAN is also being intensified in the cultural, educational and academic fields, through the promotion of people-to-people contacts, and ongoing initiatives such as the Youth Exchange Programmes, Media Exchange Programmes, Special Training Courses for ASEAN Diplomats and Eminent Persons Lecture Series. India has established Centres for English Language training (CELT) and Entrepreneurship Development Centres (EDC) in Cambodia, Lao PDR, Myanmar and Vietnam (CLMV countries). An ASEAN-India Eminent Persons Group (AIEPG), established as per the Plan of Action 2010-15, to “chart a vision statement towards the long-term strategic partnership between ASEAN and India in addressing regional and global issues”, with Eminent Persons representing all the 10 ASEAN countries, ASEAN Secretariat and Eminent Persons from India held four meetings: Phnom Penh, Cambodia, 2-3 August 2011; New Delhi, India 20-21 October 2011; Kuala Lumpur, Malaysia, 9-10 March 2012 and Kochi, India, 16-17 September 2012 and finalized their Report to the Leaders. The 10th ASEAN-India Summit in Phnom Penh took note of the 'Report to the Leaders' of the AIEPG and commended the AIEPG for their excellent work in producing a good and concise Report. Delhi Dialogue is a track 1.5 event held annually in New Delhi where leaders, opinion makers, diplomats, academia and think-tanks of India and ASEAN come together to discuss ways to intensify and broaden political, strategic, economic and civil society interaction between the two regions. Delhi Dialogue V under the theme 'India-ASEAN: Vision for Partnership and Prosperity' was held in New Delhi on February 19-20, 2013. It was inaugurated by Shri. Salman Khurshid, External Affairs Minister of India. H.E. Mr. Le Luong Minh, Hon'ble Secretary General of ASEAN, H.E Senator A. Kohilan Pillai, Deputy Foreign Minister of Malaysia, H.E. U. Zin Yaw, Deputy Foreign Minister of Myanmar, H.E. Mr. Pham Quang Vinh, Deputy Foreign Minister of Vietnam and senior representatives from all other ASEAN member states participated in it. Two other major events organized in the run-up to the Commemorative Summit included the 2nd ASEAN-India Car Rally and a Shipping Expedition of the sail training ship INS Sudarshini to ASEAN countries. The INS Sudarshini Expedition was flagged off from Kochi on 15 September 2012. The Ship port calls included Padang, Bali, Manado, Brunei, Cebu, Manila, Da Nang, Sihanoukville, Bangkok, Singapore, Klang, Phuket and Sittwe, before it returns to India via Port Blair to conclude at Kochi on March 29, 2013. The ASEAN-India Car Rally 2012 was flagged off from Yogjakarta, Indonesia on 26 November 2012. The rally traversed through 8 ASEAN countries (Indonesia, Singapore, Malaysia, Thailand, Cambodia, Vietnam, Lao PDR, Myanmar) and reached Guwahati on 16 December 2012 after covering a distance of about 8000 kms over 21 days. ASEAN and Indian Leaders gave a ceremonial flag down to the Car Rally on 21 December 2012 at New Delhi. Several “Marker” events, including business seminars, tourism road-shows and cultural performances were organized along the route of the Car Rally and the ports of call of INS Sudarshini, to highlight how connectivity can impact business and people-to-people linkages. An ASEAN-India Artists Camp was held in Darjeeling, India, from June 11-17, 2012 and the ASEAN-India Civilizational Dialogue in Patna on July 20, 2012. Cultural troupes from all ASEAN countries performed in various cities in India including Bengaluru, Chennai, Kolkata, Guwahati and Thiruvananthapuram on December 13/14, 2012 and finally participated at a fusion cultural performance on the evening of December 20, 2012, to mark the ASEAN-India Commemorative Summit.

India and Maldives:Ties Must Be Consolidated(policy brief)

2014-01-18T03:48:00.001-08:00

Mr. Abdulla Yameen Abdul Gayoom, the President of Maldives, visited India from January 1-4, 2014. His decision to visit India first, after his election in November 2013, is an indicationthat he wants to repair India-Maldives relations which had received a setback sincePresidentNasheedwas deposedin February2012.
PoliticalTurbulenceand Strain in Bilateral Relations
Maldives has undergone considerable political turbulence in 2012-13. The presidential electionheld on September7, 2013 was annulled by the SupremeCourt over allegation of voting irregularities.The court also cancelled the second round planned on September28, because none of the candidates could poll more than 50 per cent of the votes. In the annulled election former President Mohamed Nasheed of Maldivian Democratic Party (MDP) had secured 45.45 per cent, while Abdullah Yameen of the Progressive Party of Maldives (PPM) camesecondwith 25.35 per cent of the votes.
In the first round of electionheld subsequentlyon November 9, 2013, Nasheedwon about 47 per cent of votes leaving behind his nearest rival Abdulla Yameen at 30 per cent. However, in the second round of election, Abdulla Yameen, getting the support of other opposition parties, managed to get 51.39 per cent, compared to 48.61 percent for Nasheed. The turnaround in Yameen’s fortunes happened as all opponents of Nasheed joined hands to isolate and defeat him. It is interestingthat Nasheed accepted his defeat graciously despite the narrow margin of his loss. Hopefully, this will help bring political stability in the country. Soon after his electionthe new Presidentsaid thathis priority was to stabilize rupiahand createjobs.
During 2012-13, India-Maldives relations suffered considerably. The Maldivian Government terminated the Indian company GMR contract of the Male airport on allegations of irregularity in awarding the project. The former President Nasheed had to take shelter in the Indian embassy in 2013 due to violent protestson the streets of Male. The bilateral relations touched a new low in February 2013. It is in this context that Mr Yameen’s visit to India becomesimportant.
PresidentYameen’s Visit
During the visit, Mr Yameen was effusive in praising India. He said, “In every hour of national distress,be it a foreign terroristcoup attempt as with the 1988 mercenary attack or a natural catastrophesuchas the 2004 Asian Tsunami, India helpedus wholeheartedly and generously in restoring normalcy to the lives of our people." For India, Maldives’ location in the Indian Ocean and close to its southern tip makes it a strategically significantcountry. The reportof increasingChinese presencein the Maldives is a matter of anxiety for India. Mr Yameen’s visit was aimed at reassuring India that his country recognises India’s importance for Maldivian stability and would take India’s security concernson board.
During the visit, Mr Yameen soughtIndia’s help in puttingthe Maldivianeconomyon track. He specificallyaskedfor India’s assistancein skill buildingand training of personnel.
Key Agreementsto Boost Cooperation

Trade and Investment, Connectivity

The 1981 trade agreement between the two countries provides for export of essential commodities and bilateral trade has grown to Rs.700 crores (See Table-1 below). India imports scrap metals from Maldives while its exports include agriculture and poultry produce,sugar, fruits, vegetables, spices,rice, flour (atta), textiles, drugsand medicines, a variety of engineeringand industrial products, sand and aggregate, cement for building, etc. In June 2011, India released three-yearquota for export of essentialcommodities like Stone Aggregates, Rice, Wheat Flour, Sugar, Dal, Onion, Potato and Eggs from India to Maldives.
During President Yameen’s visit, further attention was paid to strengthen bilateral trade and investment. The Indian Prime Minister highlighted the key agreements and decisions based on the jointstatement . These include the facilitationof trade credit to the Maldives to the amount of 25 million dollars, the relaxation of restriction on export of stone aggregates, the favourable disposition of India for the Maldives request to import petrole

umfrom India, and the supplyof other essential commodities.
India and Maldives have also agreed to enhance connectivity, s
et up a joint consultative commission, promote investments, and step up security cooperation between the two countries. President Yameen acknowledged that Indian supplies of petroleum product would help Maldives to reduce its debt
burden and the visa regime would be simplified to promote peopleto people contacts.
Security

Security cooperationis a highly significant dimension of bilateral cooperation. The joint statementrecognises that“security interests of both the countriesare interlinked”. Within the institutional framework of security cooperation, India and Maldives have agreed to enhanceanti-terrorism cooperationand intensify cooperationin the areas of training and capacitybuildingof the Maldives NationalDefence Force and the Maldives Police Service.
Cooperationin Indian Ocean
A notable feature of the joint declarationis thatit recognisesIndia-Maldivian cooperation not only in the context of South Asia but also in the context of the Indian Ocean. Importantly, Maldives is willing to acknowledge India’s role in regional integration. The Maldivian President urged India to play a leadership role in strengthening SAARC. The declarationsays, "The two leadersshared the confidence thatcooperationat the bilateral, sub-regional and regional levels will enable the two countries to realise their developmentalaspirations, and contributeto peace, prosperity and security in the Indian Ocean Region and South Asia". Further, they agreed to "strengthen cooperation to enhancemaritime safety and security in the Indian Ocean Region through joint patrolling and aerial and maritime surveillance, exchange of information, capacity building and the developmentof an effectivelegal framework against piracy." This is a welcome framework for bilateral cooperationbut should also be seen in the context of the ongoing trilateral India-Sri Lanka-Maldives talks on regional security. Interestingly this is a first trilateral security cooperation of its kind for India. The security dialogue at sub-regional cooperation,whichwas agreedto (see IDSA commentaryby author), mustcontinue.
New Opportunitiesfor Consolidationof Relations
The visit has opened up an opportunity for the consolidation of relationship. The two leaderships must take the process forward and address each other’s concerns. The Maldivian President should walk the talk and try to resolve the contentious GMR issue quicklyto help restore investors’confidence in his country. He should also reassure India of the reportsof growing Chinesepresencein the country.
India on its part should help Maldives in buildingits economyand addressingthe needsof its manpower development. India should also provide developmental assistance to Maldives the way it has done for Bhutan. The Framework agreement of November 2011 and 2014 joint declaration provide the ground for deepeningof the ties. The two sides should work outa comprehensiveplan of developmentalpartnerships.
No doubt there are many factors of instability operating in Maldives. Internal politics in Maldives has beenvolatile lately. A stable democracyin Maldives is in India’s interest. It is fortunate that the results of the November 2013 elections were accepted by all concerned. India needs to remain engaged with all sections of the society and its approach should be people-centric. India should share its democratic experiences to strengthen Maldives fledgling institutions of democracy. People-to-people contacts must be strengthened.A regular bilateral security dialogue amongst the officials of both sides should be instituted to expand the scope of security cooperation. This should be supplementedby Track-II and Track-1.5 dialogues. India can help build think tanksin the country.
A deeper and comprehensiveengagementwith Maldives as with the other neighboursis vital for India. Any hesitation in dealingwith its neighbourswill only invite external powers to step in making a difficult situation even more complex. With the visit of the newly electedpresident,India has made a good beginningin its relationswith Maldives and this should be truly sustained.

Post-CHOGM Dilemmas of Rajapaksa(IDSA comment)

2014-01-18T03:33:00.001-08:00

TjeCommonwealthHeads of Government Meeting (CHOGM) took place in Colombo, Sri Lanka in November, 2013. The theme for this year’s CHOGM was “Growth with Equity: Inclusive Development”. Of the 50 countries that attended the meeting , 27 were represented by their Heads of State. They adopted the Colombo Declaration on Sustainable, Inclusive and Equitable Development. While many issues were discussed, however, media attention was focussed on the reactions of various countries to the human rights recordsof Mahinda Rajapaksa regime.
In the run up to the CHOGM meet, there were calls of boycottin Sri Lanka becauseof the alleged war crime committed by the Sri Lankan military during the last phase of Eelam War IV and the poorhuman rights records of the Lankan government.Though such calls were largely ignored, the Prime Ministers of Canada, India and Mauritius among others decided not to attend the meet reportedly to express their concerns against the Lankan government’s atrocities on the Tamils. The primeminister of UK, David Cameron, on the other hand, decided to attend the meet and raise his concerns on alleged human rights violations. In an article in Tamil Guardian, on November7, 2013, he wrote that rather than “sitting on the sidelines”,“attending the summit [was] not a betrayal of Britain’s values or the Tamil people, it [was] the way we champion them”. He reiterated the points in his op-ed piece in Times of India on November14, 2013.
On November 16, 2013, after meeting Rajapaksa the previous evening, in his address to the media Cameron gave an ultimatum to the Rajapaksa government to complete an independent investigation of the alleged war crimes by March 2014 failing which he threatenedto push for international investigation through the United Nations Human Rights Commission(UNHRC).
Interestingly,on November18, responding to the media enquiry on Cameron’s remarks, the Chinese Foreign Ministry spokes person Qin Gang said that “human rights conditions should be improved by the governments of countries concerned through their efforts and constructive help should also be offered by the international community”. The Chinese embassy in Sri Lanka later in an e-mail statement clarified that media distorted the original statement and the Chinese position on Sri Lanka remained unchanged. Qin’s comments drew a lot of media attention as China was elected to the UNHRC in 2013. Even Japan’s Special Envoy for Peace-Building, Rehabilitation and Reconciliation in Sri Lanka Yashushi Akashi, who had, in his previous visits,complemented Rajapaksa government for its efforts and requested international community to have patience, modified his views duringhis five day visit in December2013 and statedthat it was notonly the International Communitybutalso
The Sri Lankans who wereanxiously“waiting for actionand notjustsoundand fury”.
Although the Lankan Government as well as the main opposition party United National Party (UNP) vehemently rejected international investigation, pressure on the government seems to be building up. There are possibilitiesof meeting serious consequencesin the UNHRC in March 2014. Reportedly, the secretary to the ministry of defence, Gotabaya Rajapaksa, had secret meetings with the UN Deputy Secretary General Jan Elisson on December16 in New York and also with the Indian NationalSecurity Advisor and External Affairs Minister in New Delhi. Later, on December 23, he met the Deputy National Security Advisor of India at the Defence Ministry premisesin Colombo. The detailsof the discussionwere, however, kept away from media. At the sametime, to show to the world thatthe UPFA governmentwas taking up some concrete steps,the departmentof census and statisticslauncheda surveyto enumeratehuman and materiallossesdueto the war.
Colombo had thought that the CHOGM would provide an opportunity to project its developmental activities (infrastructure) and reconstruction of the post-war economy to the world. In reality, however, it provided the world the ground situation. Prime Minister Cameron along with some foreign journalists visited Jaffna and spent time talking to the internally displaced people (IDP) at the Sabapathipillai Welfare Centre for the war displaced. While driving through Jaffna, Cameron’s convoy was mobbed by demonstrators carrying photographs of their loved ones who disappeared during and after the war.
Participants in the CHOGM also came face to face with the restrictions on peaceful protest and freedom of expression.People coming from the North to participate in a human rights festival in Colombo were stopped by security forces. The Lankan government did allow the reporters of Channel 4, known for its investigative reports on the war-crimes in Sri Lanka, to enter the country duringthe CHOGM.
There is a view in Lanka that CHOGM did more harm than good. In fact many are now questioning the wisdom of the government to host the meet. The government could only ensure participation, which is the lowest in the history of CHOGM. It also failed to make the main opposition attend the summit. In economic terms too, CHOGM did not prove lucrative for the service industry. According to local media reports city hotel occupancy levelswere far below expectations.The average occupancy rate of city hotels at this time of the year usually is around 75 to 80 per cent. But during the CHOGM only 50% rooms were occupied.
However, the pro-government media is defiant with editorials strongly denouncing the threat of international investigation as interference of Sri Lanka’s internal affairs. It is expectedto galvanize popular support for Rajapaksa. Rejecting the March 2014 deadline by Cameron to hold credible investigations, Rajapaksa reportedly said that “it was extremely unfair to issue such ultimata when the government was already working towards genuine reconciliation”. He expressed his displeasure “against attempts to sow the seeds of discord through deadlines,ultimata and suchdeeds when what is needed is to rebuild the mindset of all people who had suffered so long under the brutality of terrorism”.
As the chair of the commonwealth for next two years and a signatory to the final communiquéwhichtalked about freedomof expression,freedom of religion and protection of human rights,it is the responsibility of the Lankan governmentto take some affirmative measures on these issues in the island. Even without Cameron’s statement, the governmentwould have had to make visible progress on these issues before the March 2014 UNHRC session.
However, caught up in a self-propelled internal debatein Sri Lanka on the justifiability of ‘international investigation’, the Rajapaksa government’s damage-control diplomacy seemsto be spending more time on buying timerather than initiating concrete measures to convincethe internationalcommunityof its intentions.After raisingSinhalesenationalist fervour to an all-time high since the war, it is caught up in its own claims of non-negotiablesovereignrights, whichis making it difficult on its part to take any progressive step forward without losing its popularityamong the Sinhalesepopulation.
It seems thus probable that Rajapaksa will continue with his nationalist rhetoric to rally around solid domestic support behind him to duck the threat of UNHRC-driven investigation,even at the cost of risking international opprobrium.Some commentatorsin Sri Lanka even believe that there are high chances of Rajapaksa advancing the date of Presidentialelectionin 2014 to prolong his stay in officeby re-fuelling electoral support throughhis inflexible nationaliststance, this time, on human rights. It remains to be seen whetherthe governmentinitiates crediblemeasures to correct its human rights. records or starts preparations for the Presidential election.

Turmoil in the heart of Africa

2014-01-17T02:09:00.001-08:00

Since rebels ousted the ruling government
in March 2013, civilians in the CAR have
suffered routine exactions, arbitrary
arrests, looting, arson, recruitment of
child soldiers, and summary executions.
Here, African Union peacekeepers from
Burundi walk through the Fouh
neighbourhood, as they investigate the
area after anti-Balaka militiaman
attacked a truck and killed at least one
Muslim passenger attempting to flee the
capital, in the Fouh neighbourhood of
Bangui, Central African Republic.
The crisis in the Central African Republic
and the ongoing military intervention
highlight the security challenges in Africa
and the need for a rapid reaction force
The Central African Republic (CAR) is an
impoverished country of 4.5 million
inhabitants spread over 623,000 sq. km,
located in the centre of Africa, which
became independent from France in 1960. It
has recently turned into another hub of
instability. Responding to an urgent appeal
from the African Union and the transitional
authorities of the CAR, on December 5,
2013, France decided to deploy 1,600
soldiers in the country. The French soldiers
are bolstering the African-led International
Support Mission to the Central African
Republic (MISCA). Several international
partners — many European — have
contributed with logistical and financial
support.
This intervention was urgent and necessary
to prevent a catastrophe. Since rebels
ousted the ruling government in March 2013,
the daily life of civilians was reduced to
exactions, arbitrary arrests, looting,
recruitment of child soldiers, scorched
villages, rape, mutilation, and summary
executions. One out of ten inhabitants was
forced to abandon their house, 70,000
Central Africans have fled the country, and
2.3 million people urgently need help. Even
more disquieting, the clashes between
Christian and Muslim groups had assumed
extremely dangerous communal and
religious tendencies.
Threat of anarchy
Anarchy in the CAR is also a threat to its
neighbours, especially Sudan as well as the
Democratic Republic of Congo, and South
Sudan, where the United Nations maintains
peacekeeping operations with large Indian
contingents. In an already quite fragile
region, the CAR must not become a new
sanctuary for trafficking, militias and
terrorist groups.
Our goals are clear. The first is to restore
security in the CAR, check the spiralling
extortions and religious drift, and enable the
return of relief organisations as well as the
reinstatement of a functioning government.
The situation is still fragile, but the initial
results are encouraging. Through dissuasive
patrolling, French soldiers have been able to
avert widespread massacres at a time when
the situation in the capital city of Bangui
was becoming particularly critical.
The second goal is to put the MISCA in a
position to ensure control over the security
situation, with the task of disarming militias
and facilitating political transition before
2015. We support swift augmentation of
MISCA capabilities from 2,400 men to 6,000
men. The French engagement is temporary
and not a substitute for African efforts. But
in the face of the urgency of the situation, it
was necessary to act promptly with
sufficient and swiftly deployable resources.
France, a permanent member of the United
Nations Security Council, responded in
keeping with its international responsibilities
and on the basis of a UN mandate.
Resolution 2127 provides for the option of a
UN peacekeeping operation to follow the
MISCA, should the Security Council so
decide.
Working hand in hand with our African
partners, we hope to enhance the
international forces swiftly and stabilise the
situation on the ground within a few months.
The intervention in the CAR is quite different
from that which took place in Mali. Mali
required countering a terrorist offensive led
by particularly determined groups operating
from strongholds they already occupied in
the north of the country. We repulsed and
defeated this offensive, helped Mali regain
its territorial integrity and have
democratically elected political authorities,
with the presidential election held in July
and legislative polls in December. Of course,
on the ground, the fight to defeat any
terrorist resurgence continues. In the CAR,
we have to disarm militarily not a specific
enemy but completely out-of-control
militias, and prevent communal violence
between Christians and Muslims.
In the face of such crises, terrorism, piracy,
and all kinds of trafficking, Africa must
organise ways to deal by herself with such
challenges rapidly and efficiently. At the
Summit for Peace and Security in Africa,
held in Paris in early December, the African
Heads of State and government agreed on
the necessity of forging collective security in
Africa by establishing an African rapid
reaction force in the coming months. France
hails this important development and will
support this force. The international
community must rise to this challenge
together in the interest of Africa’s security,
which is important for all of us, well beyond
the boundaries of this continent.

Afghanistan After America

2014-01-15T08:52:00.001-08:00

Historically a crossroads of commerce and culture linking Persia and Central Asia, the ethnically mixed western region of Afghanistan has more recently been notable for the stability and wealth of its most important province, Herat, and its capital city of the same name. The province of Herat, which borders Iran and Tajikistan, owes much of its prosperity to customs revenue, which in turn is one of the two main domestic sources of revenue for the central government in Kabul. Herat’s growth and integration with the rest of Afghanistan, however, are threatened by instability and poor infrastructure in the surrounding provinces.

Since 2005, Italy has served as the lead nation of the International Security Assistance Force (ISAF) in Regional Command West, which includes Herat and the surrounding provinces of Ghor, Badghis and Farah. There are currently about 5,000 ISAF troops in the region, from a peak of about 8,000 in late 2011, and under the draft U.S.-Afghanistan bilateral security agreement currently pending signature, the military base south of the city of Herat would be one of nine across the country the U.S. would retain access to after 2014.

The Afghan National Security Forces (ANSF) began to assume lead responsibility for security in Herat in late 2011, and have gradually taken over in the rest of the western region since then. Herat itself has remained secure in the transition period, according to Aziz Hazim of the Herat Government and Media Information Center. “Given the relative stability” of the provincial government, he says, after the handover to Afghan forces, “there was not much change in the security situation in Herat province.” Col. Stefano Cianfrocca of the Italian air force, deputy chief of staff for stability in Regional Command West, says the ANSF passed the crucial early test of securing the voter registration process ahead of the presidential election set for this April. “There have been elections before, but they have been closely supervised and supported by ISAF and international organizations,” Cianfrocca says. “This time the Afghans have taken the lead on the elections.”

Working in the ANSF’s favor in western Afghanistan is the absence of conditions faced by Afghan forces in other parts of the country. “Western Afghanistan has not had a history, like that of the east and south, of intertribal fighting over the decades,” says Karl Eikenberry, who served as U.S. ambassador to Afghanistan from 2009 to 2011. (Disclosure: I worked for Eikenberry as a graduate research assistant at Stanford University from 2011 to 2012.) “There were sources of violence and instability in the west, but not to the degree we found in Regional Commands East, South and Southwest,” he adds.

It also helps that western Afghanistan does not share a border with Pakistan. Iran has demonstrated a keen interest in western Afghanistan’s development, and though there have been reports of Iran arming and training militants there, its alleged support for the insurgency has not been nearly so widespread and well-funded as Pakistan’s. Iran has meanwhile provided some $500 million in aid to Afghanistan, most of it concentrated in the western region; it has granted Afghanistan access to its Chabahar port, freeing Afghan businesses from nearly exclusive reliance on Pakistan’s port at Karachi; and it is constructing a railway link between eastern Iran and Herat, which could further cement Herat’s role as a regional trade hub.

But if geography has given western Afghanistan, and Herat in particular, some advantages, it also presents dangers. Iran has deported thousands of Afghan refugees, exacerbating a potentially destabilizing flow of migration along Afghanistan’s western border. Meanwhile, rising instability in Herat’s neighboring provinces could suffocate Herat’s growth or damage its links to the rest of Afghanistan. A recent Pentagon report noted rising violence in Farah, which borders Herat to the south, attributing it to militants pushed out of neighboring Helmand province by the 2009 U.S. military surge.

But the conditions for Farah’s instability predated the surge. Farah is a large province with poor infrastructure, making it difficult and expensive for Afghan security forces to control; they rely instead on local militias known as the Afghan Local Police, which are controversial for their history of abusing residents. “Just keeping the road infrastructure safe must be . . . a nightmare,” says Fabrizio Foschini of the Afghanistan Analysts Network, who has documented “a serious deterioration in security” as the province transitioned to Afghan security lead. Farah is also the only province in western Afghanistan heavily affected by the opium economy. “We’ll see it again in a couple of months come harvest time—you have Taliban and communities fighting side by side against the government,” Foschini says. “The situation can become problematic in the next few years in what lies around this sort of security oasis” in Herat.

Even Herat’s wealth has attracted its own kind of violence, more opportunistic than ideological. While the province rarely makes headlines for spectacular attacks—though a suicide attack on the U.S. consulate last September, claimed by the Taliban, showed the city was not immune—insurgents and criminals more often resort to kidnapping for ransom. “Herat has long been the kidnapping capital of Afghanistan,” Foschini says. Criinal networks that may not be formally allied with the Taliban have a freer hand to extort locals given that the police are, in Foschini’s words, “fighting basically a war”—in turn, the unsafe environment they create may scare off the businesses Herat depends on, creating opportunities for the Taliban through rising instability.

The Taliban’s fall, and international investment in infrastructure and development, have allowed western Afghanistan to capitalize on some of its geographical advantages. Through expanding trade links and improved customs collection, Herat’s growth in particular is less dependent on international aid than that of other pockets of relative wealth in Afghanistan, making it more likely that most of Herat’s gains over the past 12 years will outlast the international presence there. Whether and to what extent those gains can benefit the rest of the country, given the belt of instability that surrounds Herat, is unclear, though, and protecting western Afghanistan’s “security oasis” will test ANSF for many years to come.

Why World Bank’s growth forecast is good news for India

2014-01-15T00:40:00.002-08:00

The World Bank has released its latest set of forecasts for the world economy. There are several interesting nuggets about the trajectory of various economies in the coming years.

First, the year 2014 is expected to see a recovery in global economic growth. This will be led by the rich countries despite the fact that they are being weighed down by fiscal austerity measures.

Second, a demand recovery in the rich countries could give a boost to exports from countries such as India. We have already seen this in recent months, as the recovery in the US as well as a more competitive rupee has benefited net exports.

Third, the gap between economic growth rates in India and China could narrow to a sliver by 2016. Chinese economic growth will remain at current levels while Indian growth will accelerate. There will be only a 0.4 percentage point gap in 2016 compared with the 3.1 percentage points gap in 2014.

Fourth, economic growth in the developing countries is about 2 percentage points lower than what it was during the 2003-07 boom. They will not cover the entire lost ground because growth in those years was unsustainably high. But growth in the developing countries will continue to be higher than in the rich countries as well as more impressive that in the last two decades of the previous century.

Fifth, India will be close to its potential growth rate in 2016—which is still more than 2 percentage points below its peak during the boom years. The potential growth rate is what it can sustain without generating imbalances such as high inflation and a wide current account deficit.

Sixth, the effects of the tapering of quantitative easing in the US and the structural shifts taking place in China—from exports to domestic demand and from investments to consumer spending—will be two developments to be watched, for they can upset the new growth forecasts.

Mint is broadly in agreement with what the World Bank has said, even though it is sceptical about the pace of the recovery in the Indian economy that is being forecast over the next three years. There are signs that the Indian economy cannot lose further momentum from here. But it is not clear that there will be a sharp growth recovery without domestic policy support. Inflation continues to be a worry.

To be sure, strong rural demand following a good monsoon could support a mild growth recovery. The exports recovery will also help.

But it is very unlikely that India can get to its potential growth rate of around 7% without a recovery in the investment cycle. That will require policy stability, economic reforms, macroeconomic stability and a switch in government spending from subsidies to capital expenditure. Much of that will be clear only when the next government takes charge in New Delhi.

The Phillips Curve of politics

2014-01-14T08:04:00.002-08:00

A file photo of Delhi chief minister Arvind Kejriwal. Photo: Rituparna Banerjee/Mint

Ask a central banker about the importance of managing expectations in an economy and he will tell you that perhaps it is the most important task he has to face. The trade-off between the rate of inflation and the rate of unemployment, the Phillips Curve—with a lower rate of unemployment leading to a higher rate of inflation—is a textbook example of how expectations affect economic outcomes. An increase in expected inflation in one period leads to an increase in actual inflation in the next period. Managing expectations is vital to keeping prices in check.

Something similar is afoot in Indian politics.

In a matter of less than a year, the Aam Aadmi Party (AAP), now in power in Delhi under Arvind Kejriwal as chief minister, has raised expectations of citizens to a high not seen in a long time in Indian politics. He has promised to root out corruption, provide cheap electricity and free water—to a certain limit—to the residents of India’s capital.

This is an extreme elevation of expectations. Its effects on the confidence of citizens will also be extreme. The AAP’s promises—in three key areas, namely corruption, electricity and water—are way out of line of what it can deliver. And the first signs of disillusionment are not far. For example, in recent days, AAP leaders have been noticeably silent about providing cheaper electricity and free water. Perhaps the realities of running a government are sinking in. But what will hit the AAP hard is its promise of providing a “corruption-free” government. This is too deep a problem to be addressed by mere telephone helplines and vigilante action. Sure these things will help. A meaningful dent in corruption, however, will require a careful rethink about how laws are designed in India and how laws affect the use and abuse of discretionary power by officials and ministers. This is way beyond what the AAP is capable of doing. So it is not surprising that what ministers in Delhi are doing has the air of a tamasha.

It is tempting to export the Phillips Curve to the political arena. The variables are, of course, different. In democracy, too, there is a clear link between expectations of citizens on various matters—a variable controlled by parties that come to power—and the confidence of citizens in government. The play is between expectations and confidence. Just as in an expectations-adapted Phillips Curve, expectations and confidence in the political system, too, pan out in lags. For example, at the start of a period—say just before elections—a political party can raise expectations to a very high pitch, totally out of line with what it can deliver when it is in government. If it is unable to meet them, citizens lose confidence by the end of that electoral cycle. This interplay is the normal stuff of politics at moderate levels of expectations. That’s how democracy works in India.

If this sounds too speculative, one should turn back to India’s political history for some illustrations. There are at least three instances when a similar interplay between heightened expectations and their fallout has led to poor economic and political outcomes. They are worth recalling. The first instance was in 1967 when a number of Congress-party led state governments were voted out of power. The second instance dates to 1977 when the Janata Party experiment led to the first non-Congress government at the Centre. In 1989, a Congress government tainted by allegations of corruption was booted out and another Janata experiment, led by V.P. Singh this time, began. One can leave out 1967 as an outlier—as that rejection of the Congress had deeper reasons: the party’s inability to accommodate middle castes in power- sharing. The remaining two—1977 and 1989—are in the same class as the AAP experiment: the leaders of those coalitions promised too much and they could not deliver. During their rule, high inflation, low growth and a general sense of cynicism towards politics ensued.

Is there no room for political change in India? That can be one cynical answer. There is, however, a more meaningful conclusion: Experienced political leaders never raise expectations beyond what they can deliver. And this does not mean that politicians who don’t make such promises are corrupt and cynical. For example, good administrators—Naveen Patnaik and Raman Singh come to mind—never make promises to deliver cheap electricity and root out corruption. It is not that they don’t want to get rid of these problems but they realize the limits of what can be done. There is also a class of leaders who make big promises without realizing what their fulfilment requires. One is forced to conclude that chief minister Kejriwal belongs to this class. He needs to borrow a leaf out of Reserve Bank of India governor Raghuram Rajan’s book in managing expectations.

Love in the time of Nehru

2014-01-14T08:01:00.003-08:00

A gallery at Teen Murti Bhavan, New Delhi. Photo: Pradeep Gaur/Mint

One recent afternoon, in a raddiwala’s (scrap dealer’s) home in Old Delhi, I discovered a polythene bag filled with letters and picture postcards. The envelopes had the addresses of New York, Allahabad, Geneva, Dar es Salaam, Bombay, Moscow and Delhi.
There were dozens of letters spanning the period from the 1940s to the 1980s. Each was marked with the date on which it was received and the date on which a response was sent (but a New Year greeting card that bore the signature of the Dalai Lama was undated).
Picking up a letter, I randomly read a few lines:
“I still have all the bank work to do. You too have to look after yourself as we can’t afford to lose each other at this juncture. As it is, I’ve been scared to death these last few years about your complaints of your health and your tantrums. It has all taken its toll on me. That’s life—one does the best one can.”
The letter begins with “My dearest ...” and ends with “All my love, ...”—in fact, most of the letters in the bag were between these two. The writer’s address—Vasant Vihar, Delhi—was scribbled in the top-right corner. The envelope is labelled “personal” and addressed to India’s senior-most representative to a global organization in a foreign metropolis.

The raddiwala, Muhammad Izamuddin, could not tell me which home these letters had been picked up from. “These things are passed down from one hand to another,” he says.
It is always thrilling to read someone else’s letters, especially if it is a collection of mails exchanged between people in love. I acquired the bag of letters for Rs.1,000 and over the next few days, was immersed in the lives of this couple—such sensitive and sharply observant people, with graceful writing styles. The world they created in these letters is unique to them, but the emotional component of their correspondence has a universal echo.
There could have been convincing reasons to cast off these letters. Maybe the memories they stirred were too painful; maybe they were the most unnecessary lot of a larger stack; maybe these letters were dumped by mistake. Perhaps the recipients had died and their heirs had no interest in the correspondence, even though it allows profound insight into the bureaucracy of everyday life.
Since the writers must not have considered the possibility of their letters going public, and because they may be well known in diplomatic circles (they both find passing mention in the WikiLeaks disclosures), we are not naming them, their children or the others mentioned in the letters.
Nevertheless, the appearance of these letters on the pages of this newspaper may horrify not only the relatives and friends of this couple, but also many of us readers who cherish privacy. I have only tried to reassemble however—respectfully and with discretion—the fragments of a rich life salvaged from trash.
Here is a poetic and high-status existence shrunk into a little pack. When unfolded, the deeply intimate moments of a bureaucrat and his spouse acquire the sublimity of a period novel.
On 18 April 1976, the bureaucrat writes from his hotel in Dar es Salaam, Tanzania, to the lady, who is at their home in the US.
“We are nearing the end of our work here and will fly tomorrow to Lusaka. President Nyerere remembered me and spoke to the others of my contributions in 1954. He has developed into a first-rate leader with humility, humour and self-assurance. The leaders of the liberation movement for Rhodesia are in disarray and seem to have lost control over the military wing, which has come under the revolutionary inspiration of Mozambique. Armed struggle has become the only credible alternative… It’s getting lonesome and I’m beginning to miss you.”
The days and evenings of an ambassador and his spouse are made of a series of luncheons, receptions, speeches and sightseeing. And if they get around to writing a memoir, expect musings on local cuisines, wars and the weather. One of the best depictions of such an existence is in Ambassador’s Journal, a collection of diary entries and letters that economist John Kenneth Galbraith composed during his spell as the US envoy to India in the 1960s.
Shortly after settling in Delhi, the American ambassador wrote: “In the last two days, we have had two vast receptions—one for the Asian economic planners and one for the tennis team. At these functions, one stands for a terrible hour or two while people file in and then for another hour when they go out. In the interim, they stand around and drink mostly soft drinks and consume the greasy and repulsive objects which our Indian cook turns out under the impression they are hors d’oeuvres. Last night, he had French fried potatoes fried in extra deep fat. My wife, who never eats his stuff, strongly defends him.”
Galbraith’s book gives the reader a glimpse into his delights and disappointments with India—but it lacks the personal spark of the correspondence we started with. In an undated letter, the bureaucrat describes a dream surreal enough to have come out of an Ingmar Bergman sequence:
“It is dark and I’m alone in a street seething with sweating humanity. There is in me an enormous desire to join the throng and to feel the sensations to which they are subject, yet I feel that I am divided by a wall of loneliness. The crowd walks past me laughing and chatting and in the crowd are many of my friends, and you are there too. I turn my pleading eyes towards you but you look through me and beyond me as if I don’t exist. I gesture vehemently and scream but nobody hears me. I feel I have been abandoned and relegated to a land of memories while the life to which I belong to surges past me.”
Outside of these letters, this gentleman-bureaucrat exists as the prototype of a diplomat who, post-retirement, wrote foreign policy articles for newspapers and academic journals. A brief entry in India’s Who’s Who, compiled in the 1970s, describes him as being born in the second decade of the last century in a temple town in south India. Joining the Indian Foreign Service a year after India attained independence, he began by serving in the capital of a neighbouring nation. The first ambassadorial job came in the 1960s when he was appointed to represent India in a southern European country. This was followed by a stint in a tiny but beautiful central European republic. In the 1970s, he moved to a prestigious diplomatic post in North America.

Some of the letters recovered from a ‘raddiwala’We have a number of memoirs by Indian diplomats that touch upon the lives of Nehruvian aristocrats such as our bureaucrat. These species were the senior civil servants and their wives who thrived in an era when socialism was a necessity, non-alignment the missionary position and the possibility of a right-wing politician becoming India’s prime minister as far-fetched as an Indian satellite on its way to Mars.
After Nehru’s death in 1964, his aristocracy survived in the form of outward appearances at least. In her 2005 book Raga ‘n Josh: Stories From a Musical Life, the late Sheila Dhar, wife of P.N. Dhar—founder of the Delhi School of Economics and principal secretary to prime minister Indira Gandhi—painted the most meticulous picture of a Delhi bureaucrat’s wife that has ever been printed: “This lady had a well-groomed head of silvery hair with a stylish bluish tinge obviously acquired in a salon. She was draped in an exquisite handloom sari of khadi silk. A string of unobtrusive pearls, little diamond ear tops, and ethnic leather sandals with gold accents, completed the ensemble. Her appearance proclaimed that she combined in herself the best of East and West, that she was the personification of enlightened Indianness, the ultimate repository of good taste.”
According to Dhar, this classical look was modelled after Nehru’s sister Vijaya Lakshmi Pandit and daughter Indira.
The bundle of letters that landed with the raddiwala has a photograph of the bureaucrat and his lady, along with other colleagues—all the sari-clad women appear to have derived their sartorial sense from Vijaya Lakshmi Pandit.
In 1979, the lady, who was in Delhi, responded to a rather depressing poem that the bureaucrat had written to her from the US. The letter provides a glimpse into their marriage:
“But life isn’t at all that bad; this “vale of tears” can be quite pleasant too. It’s a beautiful day today, bright sun (not hot), with a half-dozen different birds chirping outside and the brightly hued bougainvilleas stirring softly in a light breeze. My blood pressure must be down, if I’m feeling at peace with myself and the world!! I have had a lot of time for introspection about the years you were immersed in your work. Very often I felt you had no soul, that my special mission in life was to help you find it—strange presentiment. The line in your poem “take care not to love yourself alone” brought this back to mind, because very often I felt that you did love only yourself. A couple of weeks back I went through a very bitter mood, which I could not repress. Either it was my BP, or tension, or just years and years of being at the receiving end of anger, resentment, mental anguish and turmoil. It has all left its mark on me—an indelible, ugly scar. I think the last stanza should stand by itself and not be attached to the other two. Sometimes I feel that we in India aren’t doing too badly in our day-to-day lives, in spite of the interim government and all the political wrangling we have today.”
In 1984, our bureaucrat, now stationed in a scenic lake town, received a mail from New York. The envelope enclosed a poem, a regret slip by The New Yorker magazine, and a note from a friend, saying:
“I just received this and return it to you sadly. They kept it so long that I was certain they meant to use it.”
The bureaucrat’s wife shared his poetic sensibilities. In April 1965, when he was posted behind the Iron Curtain, she wrote a letter to someone in Allahabad.
“It is still cold and the snow has not yet all melted. The trees are still bare—the leaves will begin to come only next month. The days are already long and the twilight lasts till 8 pm. ... is extremely busy these days. Prime Minister Shastri will be coming here on May 12, so a lot of preparatory work has to be done. He seems to be bringing his wife too! We have to make a show of our “sati-savitris”—after all they are the real India!”
The letters suggest the couple diligently wrote to each other either when he was travelling on business, or she was visiting India. In fact, most of his mails can be described as the lyrical musings of a frequent flier.
In October 1968, he wrote on the letterhead of Westbury hotel:
"The original model of such a romantic man who went on to become an ultra-urbane career diplomat is arguably the late BK Nehru, a cousin of Jawaharlal "
“The flight to London was so long and boring. I slept between Tehran and Geneva. Switzerland was overcast but around the lake it was clear. We could see all the peaks including the Mont Blanc. The pilot had to circle the lake thrice and each time we saw Montreux at one end. So far I have not spent a penny. It is all on Air India. Do take care of your BP and avoid getting worked up. Hope chaprasis are helping.”
Such were the privileges of the Nehruvian aristocracy. India was desperately poor in the 1960s but it had faith in its socialist prime minister. Nehru set up the Bhilai Steel Plant in 1955 with the help of the USSR. He himself poured the first concrete into the foundations of the Bhakra dam that was completed in 1963. Three years before, the lady wrote to her man from Burnpur, West Bengal, excitedly sharing the wonders of the country’s new temples:
“Yesterday we went to see the pumping station and the Maithon hydel project. This morning we drove to Durgapur to see the Barrage—the water on one side is like a wide estuary, whereas on the other side it is a narrow river, 10 feet lower! Remarkable engineering feat! Chotoma has promised to take us in the evening to the fabulous steel plant.”
Dedicated to John F. Kennedy and Nehru, Galbraith’s Ambassador's Journal was a gently critical investigation of Nehru’s India, complete with travel tales of dams and droughts. In June 1961, during a tour of the Bhakra dam, he described a side trip that in foresight appears to doubt the Nehruvian idea of progress. Galbraith wrote: “Later we visited a fertilizer plant which seems to be using an inordinate amount of the power from the dam and in all outward aspect appears to set a remarkable standard of inefficiency. The cost of the fertilizer, I was told, is very high. I was puzzled as to how one could know for almost none was being produced.”
As later happened, Nehru’s socialism often ended up creating tragicomedies. In a 1979 letter, the lady warns the bureaucrat about the household items he can get through the Indian airport customs:
“You will have to declare the transistor which is more than 10 years old, perhaps also the toaster and iron and hot plate, all of which cost only about 14 or 15 dollars each. You are allowed Rs.1,000 as gifts. They should allow more since we are returning after more than 10 years.”
Today, when most of us have switched to email and WhatsApp, it is difficult to comprehend that the elite segment of an earlier generation would draft its entire private histories by regularly writing letters to relatives and friends. The correspondence between the couple began when he was still her suitor.
In the early 1940s, he posted a letter to her Allahabad address from the hill town of Mashobra:
“I enclosed with the letter I wrote to you yesterday some purple flowers and I wonder if they are irises. Perhaps not. The few discreet enquiries that I have made disclose that irises are rather large and since you want the tiny specimens I plan to gather wild flowers. But the weather has been so damnably rainy that it is impossible to stir out and so I sit at home and nurse my secret love for you… (The love letter changes tone midway)… Why don’t you banish the pose you have unconsciously acquired from your English education and become just simply natural? Do not bespatter yourself with the mire of conventionality which has now practically become an essential part of your fibre. Cannot the sweep of a tremendous passion spike your cold dignity? I need your love and all I have is a promise that you may love me.”
The original model of such a romantic man who went on to become an ultra-urbane career diplomat is arguably the late B.K. Nehru, a cousin of Jawaharlal. An alumnus of the London School of Economics, he was our ambassador to the US and our high commissioner to the UK. He later served as the governor of Assam, Jammu and Kashmir and Gujarat among others.
In her book Kashmir: A Tragedy of Errors, journalist Tavleen Singh described B.K. Nehru, then the governor of Jammu and Kashmir, as one of those “civil servants from a pre-Indira (Gandhi) phase of Indian history who could not be easily persuaded to do the bidding of prime ministers when they felt that the prime ministers were in the wrong.”
Singh paints governor Nehru as “a genteel patrician figure who intimidated journalists even by the manner in which he served cucumber sandwiches in his study” with its “elegant teak desk and its shelves lined with books”.
To get a sense of the society of these Nehruvian nobles, you could read their autobiographies (including B.K. Nehru’s Nice Guys Finish Second). Alternatively, you may head to Teen Murti Bhavan, Nehru’s official residence in Lutyens’ Delhi. The British-built mansion has long corridors, grand staircases, unobtrusive chandeliers, sparse-design sofas and beds, and miles and miles of shelves stacked with books by intellectuals such as Leon Trotsky and Annie Besant. The walls have framed portraits of statesmen such as Soviet leader Nikita Khrushchev and Marshal Josip Broz Tito of Yugoslavia; the two countries today exist only in history books.
By 1991 the bureaucrat, now retired, published his memoirs (they are out of print) and dedicated it to his wife and daughters, “my only links with life”.
Thirty years before, exasperated with their school-going daughters, the lady had written, saying:
“All that ... and ... want to do is to take a story book and read all their waking hours! I have tried to make them realize that they cannot go through life just reading. There are other necessary and essential things they must learn to do.”
The same letter soon turned to the nature of true love:
“It is a willingness to give off the spirit on both sides, just as there has to be a voluntary giving of the body on both sides in a physical union. If one builds an impenetrable wall of anger and silence and tries to live in self-centred isolation, then there can be no sympathy, understanding or camaraderie. Tell that fat Muttu to clean all the window panes in all the rooms before our arrival. He can start from now.”
One of the most melancholic letters that the lady wrote was in January 1961, when she was visiting her aged parents in Allahabad. The description of the dilapidated state of the home inadvertently heightened the increasing aloneness of her mother and father:
“Everything is full of dust and cobwebs. Mamma, as usual, concentrates intently on her pots and pans and it is impossible to divert her attention. Papa goes about in a moth-eaten pullover and a wholly patched up dressing gown that even a tramp would discard. I’ll have to start probing into his wardrobe to find out if he hasn’t got anything better to wear. The bathroom window has been eaten up by white ants. It is a painful experience, coming home.” The couple, it appears from their correspondence, always confided in each other their deepest hopes and fears.
In late 1991, a Bombay-based acquaintance posted a letter to the lady:
“I’m shocked and deeply grieved to learn from yesterday’s Times of India issue the sudden passing away of dear ... and hasten to express my heartfelt sympathies in your sad bereavement.”
This was the year in which former bureaucrat Manmohan Singh was appointed India’s finance minister. One of the first things he did was to end Nehru’s Licence Raj.
The jottings on the envelope tell us that while the lady received the condolence note in November, she only replied to it the following year in February.

Indonesian ore ban likely to hurt China

2014-01-14T07:47:00.006-08:00

With just months to go for general elections, Indonesia’s outgoing President Susilo Bambang Yudhoyono has taken one of his tenure’s most significant economic policy decisions, by banning exports of unprocessed mineral ore. The impact of this decision will roil global industries from aluminium to steel manufacturing.

Indonesia is the world’s largest exporter of nickel ore, refined tin and thermal coal, and home to the fifth-largest copper mine and the top gold mine. Mineral shipments totalled $10.4 billion in 2012 according to the World Bank. Not all minerals will be equally affected by the ban however, and certain, primarily American, mining corporations, have been granted exemptions as well.

The reasoning behind the ban lies in an attempt to boost the domestic processing industries, by mandating that ores are processed locally before being exported. Despite having seen an average of 6 percent growth in recent years, Indonesia’s remains a largely commodities-driven economy and policy-makers are keen to try and kick start more high-value added, local manufacturing.

However, the move has been opposed by both domestic and foreign miners resulting in lay-offs and strikes in the mining sector. Officials are also worried that a short-term cut in foreign revenue could widen the current account deficit, which could further put pressure on the already battered, rupiah, the country’s currency.

Companies that build local smelters and process the ore domestically will still be allowed to export their products. However, the hundreds of small domestic miners that cannot afford to build a smelter, which can cost hundreds of millions of dollars, will be adversely impacted.

New regulation

President Yudhoyono has now signed a regulation that waters down the export ban somewhat, largely to accommodate the demands of American mining giant Freeport.

Freeport, which holds a 73 percent market share in Indonesia’s copper production, warned last month that unless the ban was revised, it would reduce output at one of its mines by 60 percent and also be forced to lay off half of its 15,000 Indonesian employees.

Under the regulation, Freeport and Newmont Mining, would still be allowed to export copper, manganese, lead, zinc and iron ore concentrate until 2017, by when they must build smelters to process the ore locally. But nickel ore and bauxite exports worth more than $2 billion annually will be banned.

Good news for India

Coal and tin shipments will not be affected. This is good news for India, since Indonesia supplied 75 percent of Indian imports of thermal coal in 2013.

Worst hit by the ban will probably be China. China imports close to a quarter of its bauxite – a raw ingredient for the production of aluminium — from Indonesia, and may force China to curtail some of its refining and smelting capacity. Again, halting exports of nickel ore would hurt the Chinese stainless steel industry, which accounts for almost 50% of the global output.

The move has been opposed by both domestic and foreign miners resulting in lay-offs and strikes in the mining sector

Kalashnikov repented killings: report

2014-01-14T07:47:00.003-08:00

Mikhail Kalashnikov, designer of the legendary AK-47 assault rifle, turned to the head of the Russian Orthodox Church shortly before his death to express fears he was personally guilty for those it killed.

Kalashnikov, who died in December at the age of 94, in April wrote a lengthy emotional letter to Russian Orthodox Church Patriarch Kirill, Izvestia, a pro-Kremlin daily, reported on Monday.

“My spiritual pain is unbearable. I keep having the same unsolved question: if my rifle took away people’s lives, then can it be that I... am guilty for people’s deaths, even if they were enemies?” he asked.

The typed letter on Kalashnikov’s personal writing paper, reproduced by Izvestia, is signed with a wavering hand by the man who describes himself as “a slave of God, the designer Mikhail Kalashnikov.”

Kalashnikov, whose funeral was attended by President Vladimir Putin, came up with the durable and simple rifle design after experiencing the Red Army’s dire lack of weapons during World War II.

Now the AK-47 is widely manufactured unlicensed around the world and has become a visual hallmark of armed insurgent movements, including those using child soldiers.

Kalashnikov wrote that he first went into a church at the age of 91 and was later baptised.

The Patriarch’s press secretary, Alexander Volkov, told Izvestia that the Russian Church leader received the letter and wrote a personal reply.

“The Church has a very definite position: when weapons serve to protect the Fatherland, the Church supports both its creators and the soldiers who use it,” Mr. Volkov said.

“He designed this rifle to defend his country, not so terrorists could use it in Saudi Arabia.”

The Russian Orthodox Church has sought to consolidate its new-found strength after the Soviet era by building up close ties with state agencies and powerful officials.

When Kalashnikov was feted by the Soviet authorities, it would have been unthinkable for him to have declared himself anything else than an atheist.

His daughter, Yelena, told Izvestia: “Of course you can’t say he went to services or lived strictly according to the commandments. You have to understand his generation.” — AFP

We don’t know who is fighting, say Syrian refugees

2014-01-14T07:47:00.000-08:00

A Syrian mother and her daughters stand near the family tent as they watch the installation of a caravan for their neighbours at Zaatari refugee camp, near the Syrian border, in Mafraq, Jordan.- file PHOTO: AP

Lugging three plastic sacks full of clothes, Abu Mohammed and his three daughters pulled back the wrought iron border crossing gate, stepped through it into Turkey and smiled.

As one daughter wept tears of relief, her father recounted their 12-hour journey from Aleppo, through some of the most terrifying and volatile scenes of the Syrian civil war.

“It was miserable,” he said, his eyes haggard from the stress and the relentless two weeks of aerial bombardment that preceded it.

“At every checkpoint along the way, we didn’t know who was in charge. There was The Islamic State of Iraq in Sham [Isis, a name given to the main al-Qaeda group in the north — the Islamic State in Iraq and the Levant], the Free Syria Army, the Islamic Front. It changed every few miles.” The family had woken early last Friday, sensing the latest outbreak of violence to ravage the north meant a hope of escape. For one week prior, the myriad fighting groups that make up the opposition had been at each other’s throats from Idlib in the north-west, to Raqaa several hundred miles east. Isis, which had steadily been enforcing a religious tyranny across a broad swath of land, had been ousted from many of its strongholds and was being surrounded in others. The fratricidal fighting erupted several weeks before a much-anticipated detente scheduled for 22 January in Geneva, adding another layer of complexity to a war that long ago ceased to have two clear-cut protagonists.

“It’s not clear who is winning,” said Abu Mohammed. “It’s not even clear who is fighting. What really matters to us is that we could finally leave.”

As his and other families continued to flee, Syria’s main opposition group was under intense pressure to attend the Geneva conference, which would involve its members sitting at the same table as the regime it has been trying to oust for nearly three years. Fearing the disunity that continues to plague the opposition will give it limited leverage, leading members have said they might not attend.

The US Secretary of State, John Kerry, and envoys from 10 other countries met opposition leaders over the weekend in a final attempt to prepare a united front.

On the battlefields, however, there are no such moves.

The Syrian Observatory for Human Rights said that more than 700 people had been killed in the north over the past nine days alone. Many hundreds more had disappeared. Isis — whose ranks are made up mainly of foreign jihadists who have entered Syria from Turkey and Iraq — has been under attack since 3 January in areas where its authority had remained unchallenged since it became a dominant player around eight months ago.

“They have fled from Sarmada,” said Abu Haneyah, another refugee who had just stepped across the border, speaking about his hometown 20 miles south. “For the past few days, we haven’t seen them at all.”

Ten miles across the border in the Syrian village of Atmah — one of the first crossings used by jihadists to enter the country in mid-2012 — gunfire crackled near a refugee camp for internally displaced people.

A local resident on the Turkish side of the border near Atmah, Abu Hussein, told the Guardian he had seen hundreds of jihadists pass through on the way to war. Now, he said, some were fleeing back to Turkey. “Just after I last saw you I had them as thick as a herd outside my house,” he said.

Macedonia prey to global racket in holy icon theft

2014-01-14T07:46:00.002-08:00

Church guardian Mile Skrceski (left) looks at icon niches at the St. Nicholas church in village of Radozda, in southwestern Macedonia.- FILE PHOTO: AP

The sumptuous altar screen in this village church rises in tiers of crimson, royal blue and gold leaf, all the way up to a crucifix flanked by dragons. Near the top, icon niches gape empty like blown-out windows.

The two dozen paintings were torn out in April, apparent victims to an art theft racket catering to rising international appetite for Orthodox religious paintings a market worth tens of millions of dollars.

Arse Gligurovski, caretaker of the 19th-century church of St. George high in the Macedonian massif, says that every time he looks at the desecrated altar screen he feels as if “the robbers have ripped out and taken away our souls.”

Among the 30 icons stolen from the church in Lazaropole, high in the Macedonian massif, were 23 by the 19th-century Dico Zograf one of the nation’s most famous painters. Zograf’s works can sell for tens of thousands of dollars on the black market.

Over the past decade, this small Balkan nation of 2.1 million has seen more than 10,000 religious artifacts stolen from its churches, including precious icons painted in the stylized Byzantine tradition. None of the works have been recovered. Thieves have removed whole sections of altar screens, altars, crosses, lamps and Bibles.

Macedonia’s art-rich rural religious sites, mostly dating from the 15th-19th centuries, are seen as the custodians of the predominantly Orthodox Christian country’s cultural and religious identity. The cultural heritage department says about 201 churches and monasteries are registered as national treasures. According to rough estimates, about two-thirds are poorly guarded.

“Most of the targeted churches are in remote villages, which are abandoned during the winter,” said Milco Georgievski, senior curator of the Icons Gallery in the southwestern town of Ohrid. “There are no alarms and anybody can open the doors with a simple kick. These are ideal conditions for robbers.”

Thieves mostly focus on churches in the western part of the country that borders Albania, and is dominated by ethnic Albanians who make up about a third of Macedonia’s population.

One simple explanation is that Orthodox sites don’t resonate as much with the mostly Muslim Albanian minority. Authorities believe many of the thefts are masterminded in Albania, using an organized network of collaborators among minority regions.

“Albania is maybe only the collection centre for stolen icons,” Georgievski said. “The speculation is that most are sold on clandestine auctions in western Europe and end up in private collections, including those of Russian tycoons.”

Saso Cvetkovski, director of the Doctor Nikola Nezlobinski Museum in Struga, says more than 500 “priceless” icons have been stolen from churches in the west over the past decade. The country has about 23,000 registered icons.

“It is difficult to estimate the value of this national treasure,” Cvetkovski said, “which has exceptional historical, cultural and religious value for Macedonia.”

In October, police in the Albanian capital of Tirana seized 1,077 stolen icons, frescoes and other pieces of religious and secular art dating from the 15th to the mid-20th century, including pieces from Macedonia.

Cvetkovski and another Macedonian expert visited Tirana in December to inspect the confiscated works and identified 21 stolen icons, whose return Macedonia is expected to formally request from Albania.

Georgievski said that he could not attach a value to the icons. But to give an idea of their worth, he explained that Macedonia’s five most valuable icons were insured for $50 million when they travelled to New York for an exhibition in 2004.

The task of guarding religious sites lies with the country’s Orthodox Church, and some say that is part of the problem- The church, which grew in influence after the collapse of communism in 1991, lacks specialized conservators who could care for the churches and their contents. And in many cases, local church authorities block moves to remove valuable works for safe storage elsewhere.

For example, the 19th-century church of St. Nicholas, in the village of Radozda, was targeted three times since 2012 before authorities agreed to remove some of the valuable surviving works. Caretaker Mile Skrceski says 23 icons from the altar screen were taken.

Bishop Timotej, spokesman for the Macedonian Orthodox Church said work is under way to document and register all icons in the west, and hopes that by the end of next year most will be housed in a museum planned to be built in Ohrid.

While it’s too late for Lazaropole, some 150 kilometers (90 miles) southwest of the capital Skopje, church caretaker Gligurovski still holds out hope that the altar screen can regain its plundered icons.

“They preserve the essence of who we actually are,” he said

Saving relics, Afghans defy the Taliban

2014-01-14T07:45:00.002-08:00

Three hundred of 2,500 objects the Taliban had smashed have been reassembled

The Taliban in 2001 smashed every museum artefact that they could find that bore a human or animal likeness.— photo: AFP

Every piece of antiquity that is restored to the halls of the bombed, pillaged and now rebuilt National Museum of Afghanistan sends a message of defiance and resilience.

These are messages to the Taliban, who in 2001 smashed every museum artefact that they could find that bore a human or animal likeness. But these are messages for others as well: to the warlords who looted the museum, some of whom are still in positions of power in Afghanistan; to corrupt custodians of the past who stood by while some 70,000 objects walked out the door.

Just a few years ago, the National Museum here was defined by how much it had lost — some 70 percent of its collection destroyed or stolen, including precious objects dating back to the Stone and Bronze ages, through Zoroastrianism and Buddhism to early Islam, and documenting some of the world’s most mysterious ancient cultures.

Now, it might better be defined by how much it has regained.

Three hundred of the most important of the 2,500 objects the Taliban had smashed have been painstakingly reassembled in recent years, and many of the others are arrayed in boxes and trays, awaiting their turn for restoration.

The looted objects have also been returning, as word has gotten around to customs agents worldwide about how to identify Afghan artifacts. In recent years, Interpol and UNESCO have teamed up with governments around the world to interdict and return at least 857 objects - some of them priceless, like 4,000-year-old Bactrian princess figurines that had disappeared from the National Museum. Another 11,000 objects have been returned after being seized by the border authorities at Afghanistan’s own frontiers.

A recent security upgrade at the museum financed by the U.S. government was just completed, at least some hedge against the kind of pillaging that has plagued the institution repeatedly over the past 3 1/2 decades.

And a team of archaeologists from the University of Chicago’s Oriental Institute are halfway through a three-year-long grant from the U.S. government to register every object in the museum’s collections, creating a digital record. Intended to guard against future theft, the project will also help with restorations, and serve as a resource for scholars worldwide.

“If you don’t know what you have, you can’t protect it,” said Michael T. Fisher, the American archaeologist heading the Chicago team. “When you do, the whole story opens up, and it’s incredible what you can see. A lot of the collection is world class.”

Presiding over this institution is Omara Khan Masoudi, who does not have a degree in archaeology, but has even more impeccable credentials: he is one of the key keepers. These are the men who kept the keys to the vaults where some of the museum’s greatest treasures were hidden, including the Bactrian Hoard, a collection of exquisite gold and silver artifacts dating back more than 2,000 years.

Through guile and deception, Masoudi and his fellow key keepers kept many such valuables - the ones most easily melted down - safe during the country’s wrenching civil war and the following stretch of Islamist rule.

They hid some of the best statues in rooms at the Ministry of Culture, or in obscure corners of the storerooms scattered around the museum, preserving many before the Taliban’s rampage in March 2001. In those few weeks of fury, Islamist fighters raced to destroy images of people or animals, which they considered sacrilegious, including the giant ancient Buddha statues of Bamian province.

Afterward, people like Abdullah Hakimzada, a restorer who has spent the past 33 years working at the museum, were on hand to sweep up the fragments of the objects that the Taliban smashed - sorting many of them hurriedly into sacks and boxes that later would help the reassembly work.

“If we had enough time and resources at our disposal, we could restore everything,” he said.

Hakimzada was also one of the key keepers, to three safes inside the presidential palace that the Taliban never found.

After years of damage by the Taliban and the warlords, many of whom looted the museum’s collections on demand for wealthy collectors, the museum was a mess when it reopened in 2004. Its storerooms were stuffed with boxes and bags of fragments, and even intact objects had deteriorated during the years the museum’s roof was largely missing.

Since then, a series of archaeological teams, mainly French, have helped put it back together again. Restorers like Hakimzada were sent abroad to study the techniques of restoration at museums in Europe and America. When Fisher’s team went to work registering and digitizing the collection in 2012, it was like doing archaeology on the museum itself. “Sometimes we feel like we’re excavating the present, going through the museum and seeing what has happened,” he said.

Along the way there have been striking discoveries, many of which are yet to be put on display for lack of exhibition space and resources. A new home for the museum is planned, but it is still in the fundraising stage

India concerned over arrest of diplomat in New York

2013-12-12T17:18:00.002-08:00

One of India's senior diplomats was arrested in New York Thursday for alleged visa fraud and exploitation of her domestic help leading to expression of "strong concern" by the Indian embassy in Washington.

Devyani Khobragade, 39, India's Deputy consul general in New York was charged with one count of visa fraud and one count of making false statements, which carry maximum sentences of 10 years and five years in prison, respectively.

In response to media queries, the Indian embassy said it had conveyed its "strong concern to the US government over the action taken against Khobragade" and urged the US side "to resolve the matter with due sensitivity," taking into account a pending court case in India and the diplomatic status of Khobragade.

Announcing the Indian diplomat's arrest in New York, Manhattan's Indian-American US attorney Preet Bharara alleged that she had caused "materially false and fraudulent statements" to be made in support of a visa application for an Indian national employed as a babysitter and housekeeper at her home in New York.

"Foreign nationals brought to the United States to serve as domestic workers are entitled to the same protections against exploitation as those afforded to United States citizens," he said.

"The false statements and fraud alleged to have occurred here were designed to circumvent those protections so that a visa would issue for a domestic worker who was promised far less than a fair wage," Bharara said.

"This type of fraud on the United States and exploitation of an individual will not be tolerated," he said.

But the Indian embassy statement's said action was apparently taken against Khobragade "on the basis of allegations raised by the officer's former India-based domestic assistant, Sangeeta Richard, who has been absconding since June this year."

The diplomat was taken into custody by law enforcement authorities in New York Thursday while she was dropping her daughter at school, it said. She was later released in the evening.

The embassy statement said: "The Delhi High Court had issued an-interim injunction in September to restrain Richards from instituting any actions or proceedings against Khobragade outside India on the terms or conditions of her employment."

"The US Government had subsequently been requested to locate Richard and facilitate the service of an arrest warrant, issued by the Metropolitan Magistrate of the South District Court in New Delhi under Sections 387, 420 and 120B of the Indian Penal Code," it said.

Bharara, on the other hand, alleged Khobragade had prepared and electronically submitted an application for an A-3 visa for an Indian

national, who was to be her personal employee at a monthly salary of $4,500 per month.

The First Employment Contract stated, among other things, that Khobragade would pay the unnamed "Witness-1 the prevailing or minimum wage, whichever is greater, resulting in an hourly salary of $9.75."

However, prior to the signing of the First Employment Contract, Khobragade and Witness-1 had agreed that she would pay 30,000 rupees per month, which at the time was equivalent to $573.07.

She also instructed Witness-1 to say that she would work 40 hours per week, and that her duty hours would be 7 a.m. to 12:30 p.m., and 6.30 p.m. to 8.30 p.m.

She told Witness-1 that the First Employment Contract was a formality to get the visa, the statement alleged.

In fact, witness-1 worked for Khobragade as a household employee in New York from November 2012 through June 2013 for more than 40 hours per week and was paid less than 30,000 rupees per month, or $3.31 per hour, it alleged.

How to Win a War with China

2013-11-03T02:49:00.000-08:00

The mounting challenge presented by China’s military modernization has led the United States to review existing military strategies and to conceptualize new ones, as illustrated by the ongoing debate over AirSea Battle (ASB), a new concept of operations put forward by the Department of Defense. But in the universe of possible strategies, the idea of a naval blockade deserves greater scrutiny. By prosecuting a naval blockade, the United States would leverage China’s intense dependence on foreign trade—particularly oil—to debilitate the Chinese state. A carefully organized blockade could thus serve as a powerful instrument of American military power that contributes to overcoming the pressing challenge of China’s formidable anti-access and area denial (A2/AD) system. A blockade could also be easily paired with alternate military strategies, including those based on ASB.
In the context of a Sino-American war, the United States could try to take China’s greatest national strength—its export-oriented, booming economic-growth model—and transform it into a major military weakness. To do so, the United States would implement a naval blockade of China that attempted to choke off most of China’s maritime trade. Under the right conditions, the United States might be able to secure victory by debilitating China’s economy severely enough to bring it to the negotiating table.
Yet until recently, a blockade strategy was largely overlooked, perhaps because economic warfare strategies seem inherently misguided given the close commercial ties between China and the United States. But if a serious conflict between the two nations erupted, then their immediate security interests would quickly override their trade interdependence and wreak enormous economic damage on both sides, regardless of whether a blockade were employed.
Even if a blockade is never executed, its viability would still impact American and Chinese policies for deterrence reasons. The United States’ regional strategy is predicated on the belief that a favorable military balance deters attempts to change the status quo by force, thus reassuring allies and upholding strategic stability. The viability of a blockade influences this calculus, and can accordingly affect American and Chinese actions—both military and nonmilitary—that are based on perceptions of it. If a naval blockade is a feasible strategy, it strengthens the American system of deterrence and dilutes any potential attempts by China to coerce the United States or its allies. Moreover, if a blockade’s viability can be clearly enunciated, it would also enhance crisis stability and dampen the prospects of escalation due to misunderstandings—on either side—about the regional balance of power. In short, as Elbridge Colby put it: “the old saw remains true, that the best way to avoid war is to prepare for it.”
While a blockade is not a priori impossible or irrelevant in any situation, it is also not a ready tool in the American arsenal and would be feasible mainly within certain boundaries. Most importantly, many commentators miss the fact that a blockade is a context-dependent strategy, one that crucially depends on the regional environment.
The Strategic Context
A blockade would not be employed lightly by the United States, given its significant potential costs. Accordingly, Washington would likely only consider employing a blockade in a protracted conflict over vital interests; anything less would simply fail a basic cost-benefit analysis.
More importantly, though, a blockade strategy would depend on the cooperation of several third parties in the region. After all, China’s trade is borne on the seas largely as a result of economic considerations rather than physical limitations; if China were blockaded, it would turn to the countries on its borders for help.
While many of its neighbors would be unable to make a strategic difference because of their rugged geography or their small size, three could prove vital: India, Japan, and Russia. The latter two would be important in helping the United States by cutting off China’s trade routes in its south and east, respectively, through implementing national embargoes on China and pressuring their smaller neighbors to do the same. Without their cooperation, the United States’ task would become much more difficult.
The last of the three neighbors—Russia—would be the lynchpin of a successful blockade, and could tip the balance of a blockade in favor of either China or the United States. On the one hand, Russia is remarkably well-positioned to alleviate the blockade’s effects on China. Russian trade would be immune to American interdiction, since Russia’s nuclear arsenal and significant conventional assets preclude any serious American attempts at military coercion. But on the other hand, China’s northern neighbor could also sound the death knell for China’s ability to resist a blockade. On the political level, Moscow continues to exert sway over the decisions made in the capitals of China’s Central Asian neighbors and could convince them to refuse Chinese entreaties to act as transit states. It could also guarantee that China’s two neighboring oil producers would no longer supply it with petroleum.
Accordingly, for the United States to implement a strategically effective blockade of China, it would strive to build a “minimum coalition” with India, Japan, and Russia. If all three states made common cause with the American blockade, then China would be placed in both an economic and a political stranglehold. If not, however, a blockade strategy would regionalize a Sino-American war in a way that would be fundamentally unfavorable to American interests.
Such a minimum coalition could only arise in one way: on the heels of an assertive Chinese push for regional hegemony that precipitates local support for a drastic American response. Short of anything but an aggressive China, collective embargo action will be deterred by the potential consequences of a blockade, not least of which is the possibility of a larger regional conflict with China. The four states are unlikely to coalesce together around an implicit containment policy until each feels that its national interests may be threatened by China in the future.
While such a possibility may appear distant at present, the United States, Japan, India and Russia all fear that Beijing might someday conclude that it must use force in order to protect its interests and to resolve its security dilemma on favorable terms. All four powers have increasingly hedged their bets against this possibility. If China’s power and influence in Asia continues to increase, then the bonds between all four states will strengthen, not out of any conviction about China’s belligerent intentions, but rather because of a profound uncertainty as to their future disposition.
The Central Operational Challenge
Even assuming that the United States can rally the necessary coalition together, it would squarely face an operational challenge that bedevils all modern-day blockade strategies.
Operationally, blockades are characterized by their distance from the coast of the blockaded state, and they come in two forms: close and distant. A close blockade is typically enforced by stationing a cordon of warships off an enemy’s shores to search all incoming or outgoing merchant ships and to impound those carrying contraband. Over the last century and a half, though, close blockades have become increasingly dangerous as belligerents developed the technology to project power from their coasts. In response, blockading powers have turned to distant blockades. A distant blockade avoids the military hazards of being located near the enemy’s shores by stationing itself at a distance, albeit still astride the enemy’s sea lanes, and it then chokes off the enemy’s trade in a similar manner to the close blockade.
Neither a close nor a distant blockade of China alone would be successful thanks to the constraints imposed by military requirements and the nature of maritime commerce. On the one hand, a conventional close blockade would be severely complicated by the United States’ desire to minimize the military risk to American warships. As American forces came closer to China, they would increasingly place themselves within range of China’s A2/AD complex, possibly limiting their operational freedom and resulting in heavy losses. American forces could avoid the perils of China’s A2/AD system by implementing a close blockade enforced by submarines, long-range air power, and mines; but by so doing, the blockade would also lose much of its ability to differentiate between neutral and enemy commerce.
On the other hand, the logic behind conventional distant blockades has similarly been undermined by the exigencies of modern commerce. Today’s cargoes of raw materials and merchandise can be sold and re-sold many times in the course of a voyage, so the ultimate ownership and destination of a ship’s cargo is often unknowable until the moment it docks. Although the United States might be able to set up a conventional distant blockade that quarantined all Chinese-owned or -flagged vessels, China could still simply buy neutral vessels’ cargoes after they had passed through the blockade, defeating its entire purpose.
The Solution: A Two-Ring Blockade
To remedy the infirmities of the two blockades, the United States would take the best of both worlds and implement a “two-ring” blockade made up of two concentric rings around China’s shores.
The heart of the two-ring blockade would be its “inner ring,” which would be an unconventional close blockade primarily aimed at neutralizing vessels bound for China without having to board them first. This ring would establish an exclusion zone around China’s coast—an area that is declared off-limits to commercial shipping, and enforced by a “sink-on-sight” policy—through the use of attack submarines, long-distance airpower, and mines. Unlike other military assets, these three capabilities could operate with relative impunity within the range of China’s A2/AD complex by taking advantage of China’s feeble anti-submarine warfare capabilities and attenuated mine-countermeasure forces. While this trifecta of military assets would not guarantee total impassibility, the exclusion zone could still achieve the blockade’s aims because the fulcrum of the United States’ campaign would be grounded in deterrence rather than in force. As soon as American forces conspicuously sank several large merchant vessels, the majority of other shipping would be deterred from trying to run the blockade and much of the regular flow of China’s maritime commerce would quickly dry up.
But while submarines, long-distance airpower and mines could effectively enforce an exclusion zone as part of the inner ring blockade, they are all blunt instruments that can neither tell the difference between a ship carrying Chinese cargo and one carrying Japanese cargo, nor stop, board, and search suspicious vessels. As a result, an inner ring blockade on its own would likely spawn considerable political problems as the United States unintentionally destroyed neutral vessels, and Washington could face further political consequences from the exclusion zone’s inability to allow medical care and basic necessities through to China.
To combat these political consequences, the United States would implement a second, “outer ring” that would allow greater selectivity in applying force while also acting as a winnowing device. In contrast to the inner ring, the outer ring would be comprised largely of warships focused on both differentiating between different regional commerce with greater precision and adding a non-lethal component to the inner ring’s neutralization efforts. The outer ring would not be a prerequisite for the blockade’s operational success—although it would greatly help—but it would be vital in guaranteeing its strategic viability.
The outer ring would be positioned at the periphery of China’s near seas—outside the range of its A2/AD complex—and would be concentrated around key passageways in Southeast and East Asia, including the Straits of Malacca. The United States would establish blockade checkpoints at those passageways (like Malacca) that are most important to international shipping, while the smaller passageways would be closed off to international shipping completely.
At the outer ring’s checkpoints, the United States would need to set up and streamline a rigorous inspection regime. If the United States discovered that a vessel was destined for, owned by, or registered in China, then it could impound it.
The United States could also implement a system similar to the British navicert system in World War II, which would give the United States a fairly accurate spatial map of the positions and trajectories of all commercial vessels in the region. The United States would then integrate the navicert spatial map with the inner ring’s firepower to exert deadly force against blockade runners while also decreasing the rate of accidental sinkings—especially of humanitarian vessels. While an imperfect process, the navicert system would nevertheless substantially raise the risks of deviation for vessels to the point where running the blockade was so sufficiently perilous that it was no longer attempted, except by the most risk-loving vessels. Perhaps more importantly, though, it would help mollify the political repercussions that would flow from the inner ring blockade’s non-discriminatory and lethal neutralizations.
A Blockade’s Consequences
Although the consequences of a blockade would be exceedingly complex, manifold, and interdependent, a blockade would likely prove to be a cogent instrument of exhaustion as part of the United States’ overall campaign.
In the first place, however, it is worth recognizing that even the most effective blockade would not completely interdict Chinese trade, because even under ideal conditions, China would still be able to acquire the vital goods and resources courtesy of the inescapable laws of supply and demand. The more effectively the United States established a regional embargo, the higher the profit margins on selling imports to China. Even if all of China’s neighbors agreed to embargo, the United States would still have to resign itself to rampant smuggling at the substate level.
A blockade would also not be able to directly debilitate the Chinese military. Simply put, China could use its reserves and stockpiles, along with a limited degree of imports and domestic production, to fuel its military machine for the length of the conflict.
Therefore, the real value of a blockade would be its ability to exact an incredibly high financial toll on Beijing. In particular, a blockade would send the Chinese economy into a tailspin by hitting three distinct pressure points: China’s dual dependency on both intermediate and raw material imports and its low levels of domestic innovation. China has structured much of its export-oriented economy around the importation of intermediate goods, a phenomenon particularly evident in its high-technology sectors. This vulnerability is further compounded by its incredible dependence on raw materials (including oil) and foreign innovation as the basis of its production processes.
Because a blockade targets all three areas, it would exact a staggering cost. Of course, China might discover ways as time passed to substitute for its inability to trade and it might rebuild its economy from the ground up, but an ongoing conflict could nevertheless impose a devastating rate of economic attrition that exceeds Beijing’s compensating abilities.
Conclusion
The context, conduct, and consequences of an American blockade of China would be deeply embedded in the mire of global politics. To overcome the blockade’s various challenges successfully, the United States and its allies would have to carefully balance the strategic repercussions of their actions with their contribution to the efficacy of the overall blockade. In almost any context, this trade-off would be extremely difficult politically, and would require a high degree of flexibility and innovation on the United States’ part. The exact trade-offs would be made with a variety of considerations in mind, above all the value of the American interests implicated in the conflict.
Nevertheless, despite considerable challenges, a naval blockade is both operationally and strategically possible, albeit only within certain limits. Even against a maximally effective blockade, China would be able to meet its military needs indefinitely, and it could survive on its strategic petroleum reserves, stockpiles, and massive foreign-exchange reserves for an extended period of time. As a result, the effectiveness of a blockade would turn on its ability to impose debilitating economic costs on China.
If the United States were able to assemble its minimum coalition of India, Japan and Russia—a task that would hinge on China’s aggressive behavior—then China’s rate of economic exhaustion would sharply accelerate even as the United States gained the political support it would need to continue a blockading strategy indefinitely. In this context, while the United States would not be able to use Beijing’s dependence on maritime trade to defeat China decisively in one short blow, it would still be able to help sap Chinese strength until Beijing eventually submitted.
Sean Mirski is co-editor of Crux of Asia: China, India and the Emerging Global Order. This article is based on a longer piece originally published in the Journal of Strategic Studies.

Poland, NATO and the Return of History

2013-11-02T12:37:00.001-07:00

After years of presuming that all significant activities by the North Atlantic Treaty Organization (NATO) would be “out of area,” big changes are afoot as key Alliance member countries are realizing that traditional military threats are returning and NATO, having placed enormous effort since 2001 on the losing war in Afghanistan, is unprepared to meet them. As NATO plans to leave Afghanistan next year, the Alliance’s future path is coming into focus.
The reemergence of Russia as a traditional military power is now clear to all who wish to see. Bolstered by oil money, the Kremlin is investing seriously in defense for the first time since the collapse of the Soviet Union. Russian naval shipbuilding, which nearly disappeared in the 1990s, is now funded at half the level of the U.S. Navy’s program, while only a few years ago it was only one-tenth of the Navy’s level. Russia’s ground forces, which have been troubled for more than two decades, are now receiving serious reinvestment and are slated to add forty new brigades by 2020 (by way of comparison, the U.S. Army will be down to thirty-two active maneuver brigades by 2017, even under unduly optimistic budget scenarios).
All this has been noticed by the NATO member countries located close to Russia, many of which were unnerved by Moscow’s recent Zapad (West) military exercises which, despite their portrayal by the Kremlin as a counterterrorism practice run, were clearly more conventional in focus and, given their location—and name—plus the involvement of Belarusian forces in the exercise, proved troubling to frontline NATO states, above all Poland and the Baltic states.
NATO’s Baltic members are accustomed to regular harassment by Moscow, with aggressive espionage, subversion, and manipulation of local politics, business, and Russian minorities being part of daily life in Estonia, Latvia, and Lithuania. Russian intelligence services are highly active in the Baltics and generally treat them as less than sovereign states, much less NATO member countries. But the return of a conventional military threat from Russia, coupled with press releases from Vladimir Putin’s Kremlin that seem nostalgic for the Soviet period, has led to a mounting sense of dread in the Baltics.

Poland’s response here has been significant, as it is the largest and most important NATO frontline state in terms of military, political and economic power. Warsaw of late has been trying to raise Alliance awareness of the rising threat from the East, but this has been met with skepticism by NATO members located farther to the West than Poland. In a typical example, the expression of current Alliance assumptions by NATO secretary general Anders Fogh Rasmussen that “war among European nations is simply unimaginable,” was countered in May by the statement of Poland’s Foreign Minister Radek Sikorski: “I’m afraid conflict in Europe is imaginable.”
Poland’s dissent from NATO’s received wisdom here matters, not least because it is one of the very few new members that has taken its defense obligations seriously since it joined the Alliance in 1999. Not only has Poland, with Estonia, been the only new NATO member country to allocate something like the officially required—but widely ignored—two percent of GDP to defense spending, that budget is rising, unlike practically every other NATO member country. When outgoing U.S. defense secretary Bob Gates in June 2011 stunned the Alliance by publicly calling out members for spending too little on defense, warning of a “dim if not dismal future” for NATO if these budget patterns did not change, he was taking aim at most members and every country that has joined the Alliance since the end of the Cold War—except Poland.
Moreover, Poland has punched far above its weight in American-led wars in the Greater Middle East since 2001. Warsaw’s contribution to the conflicts in Iraq and Afghanistan has been greater than any new NATO member, and larger even than many older members; additionally, Polish forces deployed in Iraq and Afghanistan were more aggressive and willing to engage in combat than most NATO militaries, whose lack of ardor and restrictive rules of engagement proved frustrating to the U.S. military. Poland’s contribution has been important to NATO and the United States, even though Warsaw deployed its forces during a tumultuous reorganization of its armed forces, and despite the fact that the wars in Iraq and Afghanistan were never very popular with the public at home.

As NATO’s war in Afghanistan winds down, Poland has refocused its efforts on defense at home. Warsaw’s current acquisition program, which cuts across the armed services, is clearly aimed at improving conventional defense against threats from the East. The emphasis on heavy ground forces is impossible to miss. This trend was formalized recently with the announcement by Polish president Bronislaw Komorowski of a new National Security Strategy that prioritizes territorial defense and aid to NATO allies above foreign missions. This represents a clean break with over a decade of Alliance policies and programs that Poland wholeheartedly supported.
Poland’s dissent from NATO’s received wisdom here matters, not least because it is one of the very few new members that has taken its defense obligations seriously since it joined the Alliance in 1999. Not only has Poland, with Estonia, been the only new NATO member country to allocate something like the officially required—but widely ignored—two percent of GDP to defense spending, that budget is rising, unlike practically every other NATO member country. When outgoing U.S. defense secretary Bob Gates in June 2011 stunned the Alliance by publicly calling out members for spending too little on defense, warning of a “dim if not dismal future” for NATO if these budget patterns did not change, he was taking aim at most members and every country that has joined the Alliance since the end of the Cold War—except Poland.
Moreover, Poland has punched far above its weight in American-led wars in the Greater Middle East since 2001. Warsaw’s contribution to the conflicts in Iraq and Afghanistan has been greater than any new NATO member, and larger even than many older members; additionally, Polish forces deployed in Iraq and Afghanistan were more aggressive and willing to engage in combat than most NATO militaries, whose lack of ardor and restrictive rules of engagement proved frustrating to the U.S. military. Poland’s contribution has been important to NATO and the United States, even though Warsaw deployed its forces during a tumultuous reorganization of its armed forces, and despite the fact that the wars in Iraq and Afghanistan were never very popular with the public at home.

As NATO’s war in Afghanistan winds down, Poland has refocused its efforts on defense at home. Warsaw’s current acquisition program, which cuts across the armed services, is clearly aimed at improving conventional defense against threats from the East. The emphasis on heavy ground forces is impossible to miss. This trend was formalized recently with the announcement by Polish president Bronislaw Komorowski of a new National Security Strategy that prioritizes territorial defense and aid to NATO allies above foreign missions. This represents a clean break with over a decade of Alliance policies and programs that Poland wholeheartedly supported.
The reasons for this strategic shift are not difficult to decipher. In addition to the Kremlin’s military buildup, recent Russian actions towards Ukraine, a buffer state that Poland considers vital to its security, have been ominous. As Ukraine’s government, led by the pro-Russian president Viktor Yanukovych, has seemed to favor closer economic ties to the European Union, at the expense of more engagement with Putin’s proposed Eurasian Union, the rhetoric from Moscow has heated up, culminating in an unambiguous threat to Ukraine’s territorial integrity. Last month, in language reminiscent of that used by Milosevic’s Serbia in the early 1990s, Sergei Glazyev, a top Kremlin adviser, noted that Russia has threatened to support a partitioning of Ukraine if it signs a landmark cooperation agreement with the European Union, adding that if certain regions of Ukraine where ethnic Russians live did not wish to join the EU, Moscow “would be legally entitled” to support them. It is abundantly clear that, for Putin’s Kremlin, anything less than a satellite in Kiev is unacceptable, a development that has major implications for NATO and the EU, as well as European security, not least because Ukraine is a pivotal state that is divided right along the fault lines cited by Samuel Huntington in his famous “Clash of Civilizations.” What happens to Ukraine in the near future will set the course for all of East-Central Europe in the decades ahead, and Poland knows this.
It is important to note that Poland’s resurrection of territorial defense as its key security concept has little to do with traditional Polish Russophobia. The current centrist government, unlike its predecessor, has eschewed nationalism in favor of a balanced approach to European security. While the Polish right remains deeply interested in the Katyn massacre, the Second World War and memories of anti-Communism, Warsaw in 2013 is making its calculations based on what Russia is doing today. Poland’s new strategic approach draws not from the crimes that previous inhabitants of the Kremlin inflicted on the country, but instead from what Moscow is doing now.
Poland today is attempting to lead NATO into a new era that represents a major shift from most of what the Alliance has been doing since the end of the Cold War. In the 1990s, seeing no conventional foe after the collapse of the Soviet Union, NATO invested heavily in peacemaking and peacekeeping in the Balkans. In the aftermath of the 9/11 attacks on the United States, the Alliance made large contributions to the U.S. wars in Iraq and especially Afghanistan. Defense reforms and acquisitions across the Alliance were tailored to “out-of-area” missions above all. Reading the posture statement this year by the Supreme Allied Commander, Europe to Congress, one cannot fail to notice the enormous weight given to Afghanistan, even though that war is winding down. There is much emphasis on softer missions such as counterterrorism and counterpiracy, though there is little mention of traditional defense concepts.

Although that posture statement was delivered in March, it’s clear that the era when NATO can assume there are few, if any, conventional threats to the Alliance in Europe is at an end. NATO will either accept this challenge to deter Russian aggression and manipulation of frontline states like Poland and the Baltics through readiness and vigilance, or the most successful alliance in history will have lost its purpose. Given the Pentagon’s grim budgetary realities, that burden will have to be borne more by European states than by the United States, but Poland has shown the way with its new strategy and increased defense spending. Others must now follow Warsaw’s lead. After a two-decade holiday, history has returned to Europe.

Is Japan the Perfect U.S.-Iran Mediator?

2013-11-02T12:24:00.001-07:00

On November 9-10, Japanese foreign minister Fumio Kishida will travel to Iran to meet with his Iranian counterpart, Mohammad Javad Zarif, as well as President Hassan Rouhani to discuss Iran’s nuclear program, among other issues such as the Syrian civil war and counternarcotics. Kishida’s visit will be the fourth high-level exchange between Tokyo and Tehran this fall and will build upon a leaders summit between Japanese prime minister Shinzo Abe and Rouhani last month on the sidelines of the UN General Assembly meetings in New York. During the bilateral meeting, Abe encouraged Rouhani to have flexibility in its P5+1 (United States, United Kingdom, France, Russia, China and Germany) negotiations on Iran’s nuclear program and noted that the “international expectations are high”. But of greater significance was Abe’s offer to work with Tehran in order to resolve its nuclear standoff with the West.
Rouhani for his part appears receptive to Japan’s involvement on nuclear talks. Indeed, Japan’s desire to play an active role in this dispute is not a new development. The leaders summit was preceded by a high-level visit to Tehran earlier in September by Abe’s special envoy and Vice President of the ruling Liberal Democratic Party, Masahiko Koumura. During this trip Koumura, a former foreign minister with years of experience on Middle Eastern issues, expressed Japan’s desire to rekindle its historical relationship with Iran, rather than merely calling out Tehran for its intransigence in the nuclear talks. The visit from Koumura seems to have given momentum to Japan-Iran ties, which have been stagnant for years as a result of UNSC sanctions on Tehran’s nuclear program. Indeed, Koumura’s trip began a process of healing after relations hit their nadir when the Japanese Foreign Ministry publicly ridiculed an attempt at rogue diplomacy by former prime minister Yukio Hatoyama, who traveled to Iran last year. Further inflaming ties were comments by former Japanese officials under the Noda government that Japan should be prepared to potentially deploy the Maritime Self Defense Forces to the Persian Gulf for minesweeping in the event that Iran attempts to close the strategic Strait of Hormuz.

Japan’s outreach to Iran is significant for several reasons. First, these high-level meetings highlight that both Tehran and Tokyo are keen to have the nuclear issue resolved and to expand bilateral cooperation. The primary goal of course would be to restore their significant bilateral energy trade to pre-sanctions levels when Japan imported nearly 500,000 barrels per day of Iranian crude oil in 2006. The sanctions bite has been significant for both countries. Iran’s economy has languished under the sanctions regime. Meanwhile, Japan has struggled to fully implement the strong US-backed sanctions against Tehran, not least because oil shipments from Iran constitute nearly 9 percent of Japan’s total energy imports. As a result, the US Treasury Department granted Japan a partial waiver on its Iran sanctions provided Tokyo continues to progressively reduce its imports. And these cuts have been dramatic. For example, in 2012, Japan was the fifth largest importer of Iranian crude oil, however, due to economic sanctions imposed by the United States and the European Union, exports to Japan fell to 120,000 barrels per day in June 2013 from around 300,000 in 2012.The importance of this trade loss was further magnified by last year’s nuclear crisis at Fukushima, and the reduction of domestic energy sources created by the fallout. Currently all of Japan’s fifty-four nuclear reactors are offline, which leaves Tokyo increasingly dependent on other energy sources.
But restoring the flow of crude from Iran is not the only factor driving Tokyo’s push to engage Tehran. It is not coincidental that Japan’s diplomatic outreach is dovetailing with thawing relations between the US and Iran. Even before Obama’s phone call with Rouhani, Koumura noted that his visit was largely influenced by Washington. Tokyo has obvious motivations for wanting to assume this role as a mediator, aside from its energy concerns. The US has been pushing Japan for years to take a stronger role in the international security realm as a way to reduce its burdens and also in order to strengthen the US-Japan alliance. Washington also rightly believes that Tokyo will promote it interests more so than previous Iran brokers such as Turkey and Brazil.
Japan’s dynamic-regional security environment – highlighted by an aggressive Chinese posture in the East China Sea – has also stepped up Tokyo’s confidence in and dependence on its alliance with Washington. The Abe government is now looking for opportunities to become a respected global player on international-security issues and simultaneously a more trusted ally to the US. Finally, engaging with Iran allows Japan to exploit Beijing’s tacit hedging policies directed towards Tehran. The Abe government recognizes the importance of building relationships across the continent as evidenced by his busy international travel schedule during his first year in office – mostly to states that surround China. But this effort is not purely China-centric. Abe also has been aggressively lobbying countries in the Middle East – as evidenced by visits to Turkey, the UAE, Qatar and Saudi Arabia over the past year– to work with Japan’s nuclear industry as they develop plans for their nascent nuclear programs.
In addition to these strategic considerations, there are also practical reasons for Japan’s new role. Tokyo’s experience as the sole non-nuclear weapons state that has full fuel cycle technologies and facilities strengthens its role in mediating between Iran and the West. In fact, at the conclusion of recent negotiations in Geneva with the P5+1, Abbas Araghchi, Iran’s Deputy Minister of Foreign Affairs and former Iranian Ambassador to Japan, indicated to Japanese media that Iran aims to be like Japan, that is, championing the use of nuclear energy for peaceful purposes.

Many Iran watchers have long believed that Tehran’s intention is to mimic the Japanese model, essentially mastering the nuclear fuel cycle without crossing the nuclear weapons threshold. Of course, there are those who think that Iran’s real intention is to weaponize its dual use program with little delay if circumstances rendered it necessary. This is where Japan’s expertise and experience can be particularly useful. Tokyo can discourage Iran from taking this route and stress the need to improve its nonproliferation safeguards, enhancing Tehran’s ability to practice its right to peacefully use nuclear power while reducing outside fears of its ability to “dash for the bomb”. Furthermore, despite the issues surrounding the Fukushima Daiichii reactor, Japanese nuclear expertise might be suitable for Iran since both countries experience frequent seismic activity. These sentiments may be welcomed in Japan, which might be willing to use its status as an experienced practitioner of nonproliferation safeguards to provide Iran with technical advice and equipment support in the event of a peaceful resolution to the Iranian nuclear impasse with the West.
Additionally, there is reason to believe that Japan may be more successful as mediator than previous matchmakers such as Brazil and Turkey, who in 2010, successfully negotiated with Tehran a framework for Iran to swap its low enriched uranium in exchange for fuel plates to be used in the Tehran Research Reactor. Although initially supporting the deal, the US withdrew its support in favour of imposing additional sanctions on Iran. This time around, there seems to be a potential thawing in relations between Tehran and Washington, as symbolically highlighted by the brief telephone exchange between presidents Obama and Rouhani last month, effectively greenlighting any Japanese mediation efforts on the issue for the time being. Tokyo should continue to embrace this role and leverage its historical relationship with Iran in order to push for a settlement to the nuclear row.
J. Berkshire Miller is a fellow on Japan with the Pacific Forum CSIS. Navid Hassibi is a doctoral candidate with the Research Group in International Politics at the University of Antwerp.

Supreme court bars clinical trials till safeguards are in place

2013-10-01T05:20:00.000-07:00

[dna]
In a big blow to foreign multinational companies, the Supreme Court on Monday said no clinical trials should be allowed for new drugs till a mechanism is put in place to monitor them and to protect the lives of people on whom these drugs are tested.
A bench headed by justice RM Lodha asked the Centre to create such a system in consultation with various stakeholders in order to avoid any serious and adverse impact. On its part, the Centre assured the apex court that it will also not allow clinical trials for the 162 drugs it had cleared earlier.
The SC directive comes at a time when foreign drug regulators, including the US Food and Drug Administration, have been issuing form 483s, warning letters and import alerts against Indian drug manufacturers such as Ranbaxy, Wockhardt and Strides Arcolab.
“Considering the kind of deaths that have happened in India over the past few years, a move like this was inevitable.
Indian people cannot be made guinea pigs in the name of clinical trials. If foreign drug regulators insist on complying with current good manufacturing practices by Indian drug manufacturers, the MNC pharma companies should act equally responsibly as well,” said a top industry official, requesting anonymity.
While the Drugs and Cosmetics Act awaits penal provisions, the Centre had earlier informed the Supreme Court that at least 80 people have died due to illegal clinical trials in the last seven years.
In an affidavit submitted to the court as per its directive, the health ministry has said there were 2,644 ‘serious adverse events’ of deaths from clinical trials during 2005-2012. Of these, 80 have been attributed to clinical trials, while the other deaths could be due to terminal illnesses or other life-threatening diseases. Compensation was paid to families of 44 victims till 2011.

According to the ministry, there were around 12,000 incidents of ‘other adverse effects’ in this period, of which 506 directly pertained to clinical trials.

Earlier, serious concerns were raised on the manner in which the American NGO PATH (Programme for Appropriate Technology in Health) set up office in the country and conducted clinical trials for Human Papilloma Virus (HPV) vaccines under the garb of ‘observational project’ by violating all guidelines.

The trials were suspended following deaths of five girls in Andhra Pradesh, and two deaths in Gujarat in 2009-2010 after being administered the HPV vaccine. The vaccines were provided by two pharmaceutical companies – Merck and GlaxoSmithKline – through PATH during studies carried out in collaboration with the Indian Council of Medical Research and the states concerned. The project was reportedly funded by Bill and Melinda Gates Foundation.

The apex court ruling, however, is seen having little impact on the Indian pharma sector since only a handful of players, such as Glenmark, Dr Reddy’s and Cadila, are working on new drug development.

“The strength of Indian pharma companies lies in generics, active pharmaceutical ingredients and formulation, which is a $12 billion export market. Unless something happens to that, there is very little to be worried about. The sector could expect some losses on this account, but that’ll be too small a sum,” said Ranjit Kapadia, senior vice-president, Centrum Broking.

Analysts also said that pharma MNCs may move to other countries for clinical trials if things get difficult in India. “They may consider shifting clinical trials to other countries like Philippines, Bangladesh, or for that matter China,” said a pharma sector analyst.

Life & death The health ministry said there were 2,644 ‘serious adverse events’ of deaths from clinical trials during 2005-2012

Of these, 80 have been attributed to clinical trials, while the others could be due to terminal illnesses or other life-threatening diseases.