19 April 2013

Mexico's Drug War: Balkanization Leads to Regional Challenges

April 18, 2013 
Stratfor

Editor's Note: This Security Weekly assesses the most significant cartel-related developments of the first quarter of 2013 and provides updated profiles of Mexico's powerful criminal cartels, as well as a forecast for the rest of this year. It's the executive summary of a more detailed report available to clients of our Mexico Security Monitor service.

By Tristan Reed
Tactical Analyst
Balkanization of Cartels

Since the late 1980s demise of the Guadalajara cartel, which controlled drug trade routes into the United States through most of Mexico, Mexican cartels have followed a trend of fracturing into more geographically compact, regional crime networks. This trend, which we are referring to as "Balkanization," has continued for more than two decades and has impacted all of the major cartel groups in Mexico. Indeed the Sinaloa Federation lost significant assets when the organizations run by Beltran Leyva and Ignacio Coronel split away from it. Los Zetas, currently the other most powerful cartel in Mexico, was formed when it split off from the Gulf cartel in 2010. Still these two organizations have fought hard to resist the trend of fracturing and have been able to grow despite being affected by it. This led to the polarized dynamic observed in 2011 when these two dominant Mexican cartels effectively split Mexican organized crime in two, with one group composed of Los Zetas and its allies and the other composed of the Sinaloa Federation and its allies.

This trend toward polarization has since been reversed, however, as Balkanization has led to rising regional challenges to both organizations since 2012. Most notable among these is the split between the Cartel de Jalisco Nueva Generacion and the Sinaloa Federation. The Sinaloa Federation continues to struggle with regional crime groups for control in western Chihuahua state, northern Sinaloa state, Jalisco state and northern Sonora state. Similarly, Los Zetas saw several regional challengers in 2012. Two regional groups saw sharp increases in their operational capabilities during 2012 and through the first quarter of 2013. These were the Cartel de Jalisco Nueva Generacion and the Knights Templar.

The Beltran Leyva Organization provides another example of the regionalization of Mexican organized crime. It has become an umbrella of autonomous, and in some cases conflicting, groups. Many of the groups that emerged from it control specific geographic areas and fight among each other largely in isolation from the conflict between Los Zetas and the Sinaloa Federation. Many of these successor crime groups, such as the Independent Cartel of Acapulco, Los Rojos and Guerreros Unidos are currently fighting for their own geographic niches. As its name implies, the Independent Cartel of Acapulco mostly acts in Acapulco, while Los Rojos and Guerreros Unidos mostly act in Morelos state.

The ongoing fragmentation of Mexican cartels is not likely to reverse, at least not in the next few years. Despite this, while Los Zetas and the Sinaloa Federation continue to face new rivals and suffer from internal splintering, their resources are not necessarily declining. Neither criminal organization faces implosion or a substantial decline as a transnational criminal organization as a result of rising regional challengers. Both Los Zetas and the Sinaloa Federation continue to extend their drug trafficking operations on a transnational level, increasing both their influence and profits. Still, they will continue to face the new reality, in which they are forced to work with -- or fight -- regional groups.

Los Zetas

In Hidalgo state, a former Zetas stronghold, the Knights Templar have made significant inroads, although violence has not risen to the level of that in the previously mentioned states. Also, the turf war within Nuevo Leon and Tamaulipas states between the Gulf cartel and Los Zetas that began when Los Zetas split from the Gulf cartel in 2010 continues.

In light of Ivan "El Taliban" Velazquez Caballero's dissent from Los Zetas and the death of former leader Heriberto "El Lazca" Lazcano Lazcano, Zetas leader Miguel "Z-40" Trevino Morales could face organizational integrity issues during 2013. Signs of such issues appeared in Cancun during the first quarter when some members of Los Zetas reportedly broke from the group and adopted the Gulf cartel name. Besides possible minor dissent, a seemingly new rival has emerged in Tabasco state to counter Los Zetas. A group called Pueblo Unido Contra la Delincuencia, Spanish for "People United Against Crime," carried out a series of executions in Tabasco state throughout the first quarter, but the group's origins and significance remain unclear. No indicators of substantial splintering among Los Zetas have emerged since the Velazquez split.

India Has A Strategic Culture

By James R. HolmesApril 19, 2013

Last month the Economist published a brace of articles setting in motion a spirited debate over whether India has a strategic culture. The authors draw an unfavorable contrast between neighboring China, whose "rise is a given," and India, which "is still widely seen as a nearly-power that cannot quite get its act together." They catalogue several factors that purportedly explain New Delhi's underperformance in diplomacy and strategy. They pronounce the diplomatic apparatus "ridiculously feeble," for example, not to mention trivial in size; the political class evinces little interest in or taste for grand strategy; civilian officials at the Defense Ministry are "chronically short of military expertise." The authors mention ideas mostly in passing. Nonalignment, quasi-pacifism, and mistrust of the West remain the north star for decision makers, inhibiting strategic thought and action.

Insightful as the Economist pieces are, they conflate several related but separate things under the rubric of strategic culture. Indian commentators such as retired rear admiral Raja Menon have largely followed suit. Individual leadership, bureaucratic politics, and civil-military relations put in appearances in such accounts alongside strategic culture itself. These dimensions are closely related but far from identical. It's worth separating them out to glimpse the challenges before India. Some of these challenges are relatively straightforward to tackle. Others will demand time, determined political leadership, and, in all likelihood, some event or series of events that demonstrates — in irrefutable fashion — that the cultural reform project is worth undertaking. Military defeats and other setbacks have a way of clearing the national mind. Often times it takes a debacle to overcome political inertia and create a constituency for modifying a nation's strategic culture.

What is strategic culture? To borrow from scholar Colin Gray , it refers to the "disarmingly elementary" notion that "a security community is likely to think and behave in ways that are influenced by what it has taught itself about itself and its relevant contexts. And that education, to repeat, rests primarily upon the interpretation of history and history’s geography (or should it be geography’s history?)." What have the subcontinent's geography and venerable history primed Indians to think about strategy? How should New Delhi comport itself in regional and world affairs, and what sorts of actions are unthinkable?

Conscious cultural reform is a project of mammoth scope. Inexpert individuals can be replaced with knowledgeable ones. Civil-military relations can be revamped, as the United States has done several times within living memory. One of my mentors, Professor Carnes Lord, observes that bureaucracies can be remade through the artful — and, one hopes, metaphorical — wielding of Niccolò Machiavelli's "poisoned stiletto" to remove recalcitrant officials. But revising Indian strategic culture requires investigating the dim recesses of the subcontinent's past. Scholars must foray well beyond the post-independence decades to sketch a meaningful cultural profile. Kautilya's Arthashastra, a manual of statecraft from classical antiquity, is worth studying. So are the habits of mind foisted on the nation by outsiders such as the Mughal Dynasty and the British Empire. And on and on. Figuring out where the nation stands is central to discerning its path ahead.

Once scholars and statesmen understand Indian strategic culture, what should they so about it? It's ultimately up to Indians to decide what kind of nation they want to be. To manage the culture, they could do worse than study U.S. history, especially the century after our founding. Nonalignment, quasi-pacifism, and mistrust of the West — in this case European empires — were once the watchwords of American diplomacy and strategy, just as the Economist notes they are for India today. New Delhi could do worse than review how Americans consulted their "usable past" and used it to manage the republic's self-image, and its strategic behavior, as it ascended to world power.

India has a strategic culture. Learning from others can advance its cause of self-discovery.

Law which is is not secular

Friday, 19 April 2013 


Free India's Constitution pledged to make everyone equal. But Shariat courts turn this belief on its head

India is not alone in feeling threatened by the operation of Shariat courts, which negate modern secular jurisprudence, hinging on equality of all citizens. Britain too is grappling with the disastrous fallout of mediation by these religious bodies, particularly in marriage and divorce-related problems.

‘Inside Britain's Sharia Courts', an article by Jane Corbin in the Daily Telegraph, details how Shari’ah councils' rulings are contrary to national law, tilting in favour of men while delivering verdicts on cases of marital discord and violence against wives by spouses, and custody of children. The saving grace is that Shari’ah councils lack legal status in Britain. The article states: “If decisions made by these councils conflict with national law, then national law will always prevail”.

It is the very opposite in India. Muslim Personal Law (Shariat) Application Act, 1937 under the British raj had allowed Islamic code to apply in personal matters. Free India's secular and democratic Constitution pledged to make everyone equal. But this was not quite true. Hindu laws were changed to ensure parity among women and men and different communities while the personal code of Muslims was retained. They were the largest minority segment, to be wooed for support in elections.

Hindus were amenable to change. Sati was banned by the British in December 1829 in Bengal Presidency and gradually elsewhere. Christian missionaries and Hindu reformers pushed through the ban. Polygamy was rampant. Manusmriti allowed Brahmins to take a wife from each of the four castes, the best being from their own. Kshatriyas could have three wives and Vaish two. In reality, Bengal's Kulin Brahmin males, for instance, married numerous little girls for dowry and abandoned them. A mid-19th century report claimed that 10,000 of the estimated 12,000 whores in Calcutta were Kulin Brahmin widows and destitutes. Ishwar Chandra Vidyasagar, a Kulin Brahmin himself, knew intimately the evils of the system, and struggled to get polygamy banned. He also fought for girls' education.

The Child Marriage Restraint Act was passed in 1929. And, polygamy was outlawed in 1955-1956, with the enactment of the Hindu Code Bill. It c overed Sikhs, Jains and Buddhists too. Earlier bans in this matter applied to Christians and Parsis. Monogamy was enforced; divorce and widow remarriage allowed; alimony provided to women by former spouses; daughters accorded coparcenary right, along with sons, to father's self-acquired property, and in 2005, in ancestral property; and demand and giving of dowry made cognisable offences.

Muslims firmly resisted change, and the Congress played along by ignoring the constitutional directive to introduce a uniform civil code. The constitutional guarantee of freedom to every religious denomination to manage its own affairs gave Muslims the right to establish Dar-ul-Qaza or Nizam-e-Qaza. These were Shariat courts. Muslim Personal Law gave men the right to have four wives. They could also divorce via talaq-ul-bidat, irregular divorce. It did not have the sanction of Prophet Mohammad or Quran. The man obtained divorce simply by uttering ‘talaaq' thrice in person or over the phone, or relaying it in a telegram and now via email. Wives' right to divorce through khula was hardly ever invoked.

Before marriage, the groom was required to fix mehr, a security amount that would accrue to the woman if he divorced her. This amount was often withheld. Demanding and receiving dowry, an alien custom, became common, as did the ensuing harassment of the bride and her natal family.

The Supreme Court's attempt in 1985 to standardise application of civil law by conceding the plea of the aged Muslim divorcee Shah Bano, mother of five children, for payment of maintenance by her husband was aborted by the expeditiously passed Muslim Women (Protection of Rights on Divorce) Act, 1986.

Reach out to China, via Sikkim

Apr 19, 2013


It must be nearly 40 years since I made my way to Nathu-la, the pass at 14,400 ft that is supposed to be one of three Himalayan trade routes between India and China. It was a different world. Sikkim was a monarchy then and India and China bitterly critical of each other.

My travelling companion, Prince Wangchuck, was an engaging youth full of fun and promise. Now revered by legitimists as the 13th consecrated Chogyal of Sikkim, he is a 60-year-old recluse lost in meditation in some Nepalese sanctuary.

Wangchuck had a smattering of Mandarin. “Ni hao ma … How are you?” he asked the Chinese soldier on the other side of the barbed wire beyond the crudely painted “India Wall”. The man stared at us in surly silence. Wangchuck repeated the question. Again, there was no reply. Finally, when he yelled, “Ni hao ma?” a third time, the Chinese sentry grunted “Wo hen hao, xiexie… I am well” in an angry tone that suggested the opposite.

India probably hoped that China’s willingness to trade through this gap in the Himalayas implied acceptance of Sikkim’s status as an Indian state. For China did not reciprocate when India acknowledged Chinese sovereignty over Tibet in the 2003 “Declaration on Principles for Relations and Comprehensive Cooperation” between India and China. An American scholar, David Scott, points out in Sino-Indian Territorial Issues: The Razor’s Edge?, “the text shows a one-way agreement, one-way obligations and one-way concessions”. As for the complacent claim of implicit Chinese acceptance of Indian sovereignty, Scott warns “that was implied rather than explicit, de facto rather then de jure.” As if to bear out Scott’s doubts, China contested Indian control of the 2.1-sq-km Finger Area tract in northern Sikkim five years after the Declaration.

Delivering the K. Subrahmanyam Memorial Lecture, “China in the Twenty-First Century: What India Needs to Know About China’s World View” in New Delhi last August, Shyam Saran, former national security adviser, observed that although China handed over maps during Wen Jiabao’s 2005 visit “showing Sikkim as part of India… recently, some Chinese scholars have pointed out that the absence of an official statement recognising Indian sovereignty leaves the door open to subsequent shifts if necessary.”

Even the ostensible commercial rationale for reopening Nathu-la (ironically, on the Dalai Lama’s birthday, July 6, 2006) doesn’t appear to have been realised. Traditionally, trade between Sikkim and Tibet was conducted along 13 routes. The British preferred Nathu-la because of its gentler gradients and shorter distances (54 km from Gangtok, 520 km to Lhasa). Its closure in 1962 together with all the other passes marked the end of an era in history. The only person permitted for 44 years to cross the barbed-wire frontier at Nathu-la was a Chinese postman with an Indian military escort, who would hand over an empty mailbag to his Indian counterpart in a building at the border.

The closure sounded the death-knell of Kalimpong in West Bengal, once the meeting place of kalons (ministers) from Sikkim, Bhutan and Tibet and the nerve centre of the Tibet trade. More than 10,000 men were employed in sorting mounds of dirty white, grey or black wool from Tibet into neat bales for export to Britain and the US. Thousands more provided fodder and maize for mules, and exotic entertainment for their masters enjoying a 10-day respite from the privations of a bleak and dangerous road. The daily turnover of more than `400 million persuaded the State Bank of India to open a branch in Kalimpong.

Apart from wool and Kuomintang silver dollars, the caravans brought yaks’ tails, musk, borax, curios and Chinese rice. They took back cement, kerosene and all the manufactures of Indian factories. A car for the Dalai Lama was dismantled and carted up piece by piece. Indian officials turned a blind eye when rations and equipment for Mao Zedong’s forces, including jeeps from Kolkata, were similarly exported and reassembled at a factory at Phari on the Tibetan plateau.

Two new marts were set up at Sherathang in Sikkim and Rinqingang in Tibet under the 1991 Sino-Indian memorandum of understanding. But only local people can use the marts. However, Sikkim can now import several new items including readymade garments, shoes, quilts and blankets, carpets and Tibetan herbal medicines. The earlier list was restricted to 15 items like wool, cashmere goat, yak tails, sheep skins, horses and salt. Traders complained these items were of little value. “Who wants yak tails nowadays?” they asked.
The original export list of 29 items (including clothes, tea, rice, dry fruits and vegetable oil) has also been expanded to include processed food, flowers, fruits and spices, and religious products like beads, prayer wheels, incense sticks and butter oil lamps. The Sikkimese would like much more relaxation. They say the restriction to locals only encourages Rajasthani traders to operate benami through Sikkimese front men.

Two other passes — Gunji in Uttarakhand and Shipki in Himachal Pradesh — have also been opened. But the total trade isn’t even an infinitesimal fraction of the $66 billion bilateral trad. It makes no dent in India’s $23 billion trade deficit. Smuggling is rife through Nepal and, to a lesser extent, some north-eastern states.

But even if neither the political nor the economic argument for reopening the three passes has been fulfilled, it doesn’t mean they should be closed again. On the contrary, more passes should be opened and imaginatively administered on both sides of the border to encourage the human contact that is now sadly absent from Sino-Indian relations.
Back in Gangtok after many years, I couldn’t visit Nathu-la again. Severe hailstorms had blocked the road.

The writer is a senior journalist, columnist and author

Tortured arguments

Apr 19, 2013

Should a democratic state, that upholds the civil liberties and personal rights of not only its own citizenry, but also of others within its borders, engage in a practice that is both barbaric and cruel?

In both law enforcement and counter-terrorism circles, in India and elsewhere, a debate exists about whether or not the use of torture can ever be justified. The proponents of torture argue that under exceptional circumstances, especially when time-sensitive information can be extracted from a potential or suspected terrorist, the resort to torture may well be justified.

Opponents have always argued that confessions or information obtained under such duress is not only morally reprehensible, but frequently unreliable and flawed. To end the sheer pain associated with torture, a suspect may well make any statement deemed necessary.

A 577-page report of a private group, The Constitution Project, a legal research and advocacy organisation in the United States, released this week concludes that in the wake of the terrorist attacks on the United States on September 11, 2001, a number of entities within the US government sanctioned and resorted to the use of torture against various terrorism suspects. This reliance on torture was, in all likelihood, a violation of the expectations of the international Convention Against Torture to which the United States is a signatory.

Two aspects of the report merit discussion, especially in the Indian context as the country is no stranger to the scourge of terror. First, should a democratic state, that upholds the civil liberties and personal rights of not only its own citizenry, but also of others within its borders, engage in a practice that is widely considered to be both barbaric and cruel? Second, does the use of torture genuinely yield time-sensitive, valuable information that can prevent the commission of terrorist atrocities? The first question involves questions of ethics and morality while the second is strictly instrumental.

What then can one glean from this bold, candid and topical report? Might its conclusion contain lessons for India’s approach to dealing with terror and its purveyors? Human rights advocates in India will, undoubtedly, argue that the firm condemnation of torture in this report is both desirable and appropriate. From their standpoint, the findings of this report would only affirm what they have long held as being beyond the pale of the conduct of any civilised state. They will wholeheartedly agree with the statement of one of the two co-authors of the report, that the US “lost its compass”. Given their stated abhorrence toward torture under any circumstances, their response will hardly come as a surprise to anyone.

How should India’s law enforcement and counter-terrorism communities view the conclusions of this report? No official in India has publicly or officially condoned or justified the use of torture. When either allegations or evidence of the use of torture against terrorism suspects have been brought to light, officials both from the armed forces as well as the intelligence services have dismissed these incidents as unfortunate lapses and not the result of sanctioned policies.

Private conversations with informed journalists and retired officials, however, tell a different story. Though no formal sanction may have ever been granted, on many an occasion, torture has apparently been used to extract information from suspects of acts of terror. The justification for using torture that they proffer is no different from what various Bush administration officials argued to rationalise their use of torture, namely, that invaluable information about planned attacks was obtained through the use of these techniques. Of course, whether in the United States or in India or elsewhere, it is all but impossible to ascertain the veracity of these assertions. Those who claim that the information that they extracted from terror suspects averted other attacks or undermined terror networks also insist that they cannot reveal more because they are sworn to secrecy. As a consequence, one is simply left to accept the authenticity of their claims without any independent means of verification.

What implications do the conclusions of this report have for India’s policymakers? Of course, it is possible for them to argue that since the use of torture is not formally sanctioned, its findings have no relevance for the Indian context. Such a response, however, would not only be disingenuous but, frankly, self-defeating. A more considered response would suggest taking its conclusions more seriously as the country faces the continuing threat of terror from a variety of sources.

Obviously, the Indian state will have to take firm and stern measures to protect its citizenry. However, these steps should remain firmly limited within the ambit of Indian law and constitutional safeguards. Allowing state officials to flout existing legal (and moral) strictures with the hope of extracting pertinent information from terror suspects or accused will simply send the country sliding down a very slippery slope. Quite apart from the violation of moral sensibilities there are compelling instrumental reasons for not heading down this road. Those allowed to disregard the law under particular circumstances may well decide that they need to pay little heed to such legal and ethical constraints under others. The consequences that could ensue from such a stance are simply too disturbing to contemplate.

The writer is the director of the Centre on American and Global Security at Indiana University, Bloomington

India accounts for 1/3rd of the world poor: World Bank



Last updated on: April 18, 2013

India accounts for one-third of the world poor, people living on less than $1.25 (about Rs 65) per day, a World Bank report on poverty has said.

The report said that 1.2 billion people are still living in extreme poverty across the world.

"The State of the Poor: Where are the Poor and Where are the Poorest?," using data released in the latest World Development Indicators, shows that extreme poverty headcount rates have fallen in every developing region between 1981 and 2010 from half the citizens in the developing world to 21 per cent.

This despite a 59 per cent increase in the developing world population.

However, a new analysis of extreme poverty released on Thursday by the World Bank shows that there are still 1.2 billion people living in extreme poverty, and despite recent impressive progress, Sub-Saharan Africa still accounts for more than one-third of the world's extreme poor.

"We have made remarkable progress in reducing the number of people living under $1.25 a day in the developing world, but the fact that there are still 1.2 billion people in extreme poverty is a stain on our collective conscience," said World Bank Group President Jim Yong Kim. .

"This figure should serve as a rallying cry to the international community to take the fight against poverty to the next level. Our analysis and our advice can help guide the way toward ending extreme poverty by 2030, by showing where the poor live and where poverty is deepest," he said.

"We have made strides in cutting down poverty, but with nearly one-fifth of the world population still below the poverty line, not enough," said Kaushik Basu, World Bank senior vice president and chief economist.


"Directing investment towards the poor will require coordinated effort by the Bank, our country partners, and the international development community, and will, let's face it, entail sacrifice on the part of those who are fortunate enough to be better off," Basu said.

According to the report, after steadily increasing from 51 per cent in 1981 to 58 per cent in 1999, the extreme poverty rate fell 10 percentage points in Sub Saharan Africa between 1999 and 2010 and is now at 48 per cent -- an impressive 17 per cent decline in one decade.

In Latin American Countries, after remaining stable at approximately 12 per cent for the last two decades of the 20th century, extreme poverty was cut in half between 1999 and 2010 and is now at 6 per cent.

However, despite its falling poverty rates, Sub-Saharan Africa is the only region in the world for which the number of poor individuals has risen steadily and dramatically between 1981 and 2010.

There are more than twice as many extremely poor people living in SSA today (414 million) than there were three decades ago (205 million).


As a result, while the extreme poor in SSA represented only 11 per cent of the world's total in 1981, they now account for more than a third of the world's extreme poor.

India contributes another third (up from 22 per cent in 1981) and China comes next, contributing 13 per cent (down from 43 per cent in 1981).


Army as a Microcosm of Society: Understanding Sexual Violence under AFSPA


Recent discourse on development and human rights again brings gender to centre stage. By now it is an accepted fact that unless gender concerns are addressed in a nation, long-term and lasting development cannot take place. The process of socialisation and the prevailing social norms and values have a major impact on gender relationships in any society. The Army, like any other institution in society is both in structural and functional terms a microcosm of the larger society. This paper argues that these facts are significant for the army and the recent happenings in areas where the army carries out its operations.

A lot of interest and concern in recent times has been around AFSPA and the arguments for and against repealing it. The major reason for the debates is allegations of misuse of powers under AFSPA by the Army when deployed for CI/CT operations. Allegations of sexual assault in its various forms are sometimes made during such operations. These pertain to disrobing, searches that violate the bodily integrity of a woman, physical assault and rape. These, if true, are very serious crimes and have to be taken note of, acted upon and the guilty persons dealt with in the manner laid out by the law.

It is useful however to recognise and understand two underlying aspects to the alleged incidents of sexual assault in areas under AFSPA. These aspects emerge out of decades of primary research and analysis of gender relationships and sexual violence in regions across the globe. According to these pioneering studies, sexual violence is greatly influenced by a) the socialisation process and b) the play of gender power politics. The process of socialisation and the kind of norms and values that a person imbibes from childhood shapes his/her personality to a large extent. The influences in the socialisation process come from the family, the school or any other place of learning, the neighbourhood and literature and art forms emanating from the larger society. In recent times the latter includes the mass media, cinema and the new technologies of communication. It is the value system instilled through the process of socialisation that shapes gender roles, relationships and inequalities. The inequalities and the differences that come to exist between women and men in terms of access to resources such as education, employment opportunities or property invariably places men in a powerful position vis-à-vis women.

How do these dynamics get translated in the context of the Army, its personnel and its operations? Firstly, the violators or the offenders from the army are as much a part of Indian society and cultural ethos as any other person not belonging to the Army. Thus, it can be assumed without any major evidence to the contrary that the persons who join the army are socialised into these cultural norms and values like any other citizen. Secondly, the play of power and the desire to dominate is often strengthened in a context where the soldier may consider himself as superior because of being the protector. As already stated, this sense of superiority and dominance, in any case, is ingrained in unequal gender relationships. Thus, the Army as a microcosm does reflect and replicate in its behavior some of the dominant values in society.

The discussion till now focuses on the reasons for the incidence of sexual violence under AFSPA in areas of CI/CT operations. It is equally important to look at the solutions to this problem. If the reasons for the incidence of sexual violence are emergent from the larger society, the solutions cannot be divorced from it. Firstly, there needs to be a conscious attempt by society to question and challenge some of the traditional norms that place women at a great disadvantage. This initiative has to be led by policy makers and intellectuals in the society. This is an enormous task and can only be undertaken gradually. Yet, it shall definitely impact gender relationships in a positive manner. With changes in norms and values, socialisation in general will help men and woman perceive each other as equals and not as objects for exploitation. Secondly, the specialised training for the Army at the time of recruitment and later can focus on building more equal gender roles and relationships. Planned and systematic efforts would include development of training modules and conduct of training in consultation with persons with expertise and experience on these issues.

Drilling holes in the Thirst Economy

P. Sainath

WATER PLUNDER: The owner of this brand new borewell rig says that all told it cost him Rs.14 million. But he can recover that in six months by drilling just two wells a day. Photo: P. Sainath
RUNNING DRY IN TAKWIKI: Let alone new borewells that fail from day one, older wells are drying up or yielding much less water than before. 

As the borewells go deeper in Maharashtra, there have been worrying instances of ‘paleo-historic storages’ being breached

“Only two of them work,” says Badri Kharat of his borewells in Roshangaon. That’s hard — when you’ve sunk 36 of them spending millions of rupees, as he has. Kharat, a big landowner and local political personage, has been generous to his neighbours in this village of Jalna district. He pipes in drinking water from a well he’s sunk quite a distance away. Twice a day, for two hours, the people of Roshangaon can draw water free from this source.

Meanwhile, the failure of most of his wells spells disaster for him. Borewells cost money. “This could be the biggest growth industry in the water-crisis districts,” says one administrator. “For the rig-makers, rig-owners and drillers — this is boom-time. The farmer pays up, whether the wells yield water or not.” The borewell industry is a key sector of the Thirst Economy and is worth billions.

The unchecked guzzling of groundwater in Maharashtra has even seen a few, but worrying instances, of striking what are called “paleo-historic storages,” as the wells go deeper. That is, water which is many millennia old.

High failure rate

The current failure rate is extremely high. Perhaps 90 per cent or worse in some villages. “Normally, I have 35-40 labourers working for me,” says Kharat. “Now, zero. My fields are quiet. Almost all the new borewells in our village have failed.” Many older ones have run dry.

But despair has drilled thousands of new borewells across the water-crisis districts. As the wells go down deeper, their debt goes up higher. “No irrigation borewell is now less than 500 feet,” says Bharat Raut in Takwiki in Osmanabad district. Of his village’s 1,500 borewells, “over half have been drilled in the past two years. Perhaps 300 new points were sunk between January and March this year. Almost all the new points have failed. But people were desperate, with the crop dying in the fields.”

If the most visible vehicle on the roads is the water-tanker, in the fields it is the borewell rig. These may be operated, sometimes even owned, by a local in the district. But the rigs themselves are mostly from Tamil Nadu, Karnataka and Andhra Pradesh. Of the Rs.1,50,000 a farmer spends on a 500-foot borewell, a little over 70 per cent goes on the steel pipe, submersible pump, cable, setting and transpiration costs. The rig operator collects the remaining Rs.40,000. That’s for the drilling: Rs.60 per foot for the first 300 feet. Then, Rs.10 more per foot for every 100 feet thereafter. And Rs.200 per foot for the casing pipe protecting the bore. That can go down to 60 feet.

In one estimate, the State has seen at least 20,000 borewells drilled in the first three months of this year. Some officials fear the figure could be higher. “A hundred villages like Takwiki would themselves account for close to 30,000,” they point out. Even if pumps and steel pipes were purchased for only a third of Takwiki’s new bores, it means this single village spent at least Rs.25 million in 90 days from January to March. Even if all the 30,000 in the crisis districts went no deeper than 500 feet, that would have been business worth Rs.2.5 billion.

India’s “Golden” Opportunity?

By James Parker
April 19, 2013

The massive run up in gold prices over the last decade has been one of the major stories in global financial markets. The metal, which offers no financial returns in the way that investing in stocks or bonds does, has been favoured by an increasing number of investors as a way of hedging against the “debasement” of fiat (paper) currencies as central banks across the globe continue to undertake quantitative easingpolicies. 

From lows of under USD$260 per (troy) ounce in the first half of 2001, the metal climbed fairly consistently up to highs of more than USD$1870 per ounce in 2011. After that, the metal has pulled back fairly steadily and remained in a $250 dollar band between $1550 and $1800. 

That was the status of gold, that is, until last week.. On April 12 and April 15, Gold saw its biggest two-day drop in decades, as prices plummeted by up to $200USD per ounce The argument over whether or not gold prices have been in a bubble intensified. “Goldbugs” (those calling for even higher prices in future years) saw a buying opportunity, whilst the bears sensed that the bubble is finally bursting. Meanwhile several investment banks’ research outfits started calling for lower prices by year end. Gold seems to have stabilised for now below $1400 per ounce.

One country for whom the gold price is particularly important is India. As Pacific Money has previously covered, Indian economic policy is complicated greatly by the large current account deficit facing the country. As gold’s dollar value has soared over recent years, it has become a major cause of India’s chronic trade deficit – with the country importing USD$56billion of the metal in 2012. Furthermore, gold makes up roughly two thirds of India’s deficit.

The central bank’s desire to ease policy is partially constrained by the current account deficit, so the fall in the market value of gold, should prices stay lower, will eventually provide more room for easing as growth struggles. 

However, India is also struggling with inflation and a fall off in foreign investment. The reduction in the trade deficit, which will occur if gold (and general commodity) prices stay suppressed, should eventually lead to a relative strengthening of the Rupee too. A stronger currency can help in the fight against inflation, giving further room for easing should the government and central bank deem it necessary. Inflation has alreadyshowed signs of easing, as wholesale prices rose at their slowest rate in over three years at 5.96%. India’s economic road ahead is still fraught with difficulties, but lower gold prices certainly provide some welcome relief after months of tough policy dilemma.

What's holding up India-Pakistan trade normalization?

Michael Kugelman , 
April 16, 2013 


On March 19, Pakistan's government gave a briefing to the country's top military officials.
The topic of this high-level meeting was not the Taliban's takeover of the Tirah Valley, fresh tensions with Afghanistan, or other urgent national security matters. Rather, the briefing-delivered by the commerce secretary to the army, air force, and navy chiefs-was about tightening trade ties with India.

This issue has been a priority for Pakistan's civilian and military leadership alike since November 2011, when Pakistan announced its intention to extend Most-Favored Nation status to India (New Delhi granted this privilege to Islamabad in 1996). The decision was rooted in the realization that the potential benefits of a formal trade relationship with India-lower prices and variety for consumers; bigger export markets for producers; more employment for the masses; and greater revenues (currently lost to smuggling and other informal trade) for the government-were too immense to pass up.

Since then, both countries have continued to give strong indications that they intend to make their trade relationship a close and formal one. Last year, Pakistan abolished its positive list of goods that could be imported from India, and replaced it with a shorter negative list of items that couldn't be imported. The two capitals also launched a new integrated checkpoint at the Attari-Wagah border crossing (which serves the only land route for Pakistan-India trade), and concluded a landmark visa agreement that loosens travel restrictions.

This year, even after political relations took a plunge following a series of deadly exchanges along the Line of Control in January, the desire for trade cooperation remains strong. In recent weeks, each nation's ambassador to Washington has publicly affirmed-one at Harvard, the other at CSIS-the imperative of a strong trade relationship. Just days ago, Islamabad's envoy to New Delhi assured an audience of Indian and Pakistani businessmen that "we want trade normalization and there is a roadmap for that."

However, despite these encouraging signs, trade normalization remains a work in progress. Pakistan had pledged to phase out its negative list by the end of last year-thereby bringing the two countries closer to a fully operational MFN regime-yet today it remains in place.

So why the holdup?

One commonly cited explanation is the resistance of Pakistan's powerful agricultural interests, who fear the consequences of heavily subsidized, cheap food products coursing into Pakistan-particularly those, such as bananas and oranges, which Pakistani farmers already produce in abundance. Predictably, last November, the president of the Basmati Growers Association warned that his members faced "economic suicide." And the head of Farmers Associates Pakistan (a lobby group) threatened to literally block Indian agricultural products from entering Pakistan.

However, a new Wilson Center report on Pakistan-India trade, edited by Robert M. Hathaway and myself, presents a more complex picture. Some food producers actually relish the prospect of acquiring foodstuffs from India, because they believe such products will be of higher-quality then their own, and hence generate greater profits. Another surprising source of support is the textile industry, which believes it can capture major shares of the Indian market. Pakistani home textile and bed ware manufacturers have already explored joint venture options with Indian partners.

There is, however, strident opposition from other sectors. The pharmaceutical industry fears that India's surfeit of raw materials and large economies of scale will marginalize Pakistani products, while the chemical/synthetic fibers sector worries that India will dump its large fiber surplus in Pakistani markets. Our report also highlights opposition within the automobile industry. Manufacturers are anxious that Indian car parts will flood Pakistani markets and devastate local industry, and fear that Pakistani parts exports will suffer because Indian car makers prefer domestically manufactured parts. Islamabad has given in to the car industry's protectionist proclivities; the sector has nearly 400 items on the 1,209-item negative list-far more than any other sector.

Another likely reason for the MFN delay is politics. Security and territorial disputes have a historic habit of contaminating Pakistan-India trade relations at the most inopportune of times. In 1965, the two countries went to war over Kashmir, bringing an abrupt end to a promising period of commercial ties (in the preceding 18 years, the two nations had concluded 14 trade facilitation agreements). Banks in both countries were seized as enemy properties, and customs officials at the Wagah border crossing were the war's first civilian prisoners of war.

The Afghan puzzle

Chintamani Mahapatra, 
April 15, 2013

The Afghan war has cost the US more than half a trillion dollars national debt, budget deficit and, of course, thousands of American lives.

The Obama Administration has made it amply clear that the US forces will leave Afghanistan by end of 2014. However, deadly war has not ceased in Afghanistan. Will Afghans be able to manage their affairs after foreign forces leave?

The end-game is softly unfolding, even as behind-the-scene negotiations are inaudibly taking place. How will India handle the situation in coming months and years? India already seems to be in an election mode. Amidst corruption exposes, economic downturn, and off-and-on turmoil in UPA coalition, New Delhi these days has not as much of focus on foreign affairs. Domestic politics will largely consume attention of Indian leadership well until the elections due in 2014.

Pakistan may be in a better position, since national elections in that country will take place this year. There will be less political uncertainty in Islamabad during Afghan transition. China is luckier, as ten-year political transition in Beijing was over last year. Nor is Russia going to witness any political uncertainty in coming few years. 

The big question is how and how many American forces will leave Afghanistan in 2014 and in what condition. Slow recovery of US economy and resilience of the Taliban make it abundantly obvious that Washington would not risk carrying on the war in that country.

Afghan war has cost the US more than half a trillion dollars, a huge national debt, a large budget deficit and, of course, thousands of American lives. Yet victory to the United States is not in sight. 

The Taliban leadership has shown no great eagerness for dialogue with the US. In fact, the Taliban are patiently waiting, so that Nato forces leave their country with war-weariness. In a stalemate, the insurgents generally hesitate to make compromises. The Taliban thus are not in a hurry to end the war and trying to push foreign "occupying forces" to the corner.

What are the future scenarios of Afghanistan? It is hardest to predict anything in Afghanistan. The US Administration does not seem to be united on withdrawal time-table and the modalities. Taliban seem to have been embroiled in internal differences among the moderates and the hardliners. Pakistan no longer enjoys the comfort of dealing with a Taliban it created and put about a hundred Taliban behind the bars for attempting to negotiate with President Karzai or the Americans. 

Nonetheless, among the multiple scenarios, the first one is Afghanistan becomes the second Vietnam for the Americans. They just cannot carry on a losing war and; instead of dealing with head-strong Taliban leadership; they make a deal with Pakistan and get out of the country. In that case, Pakistan-backed Taliban are back to power in Kabul! The second scenario is the US successfully strikes a deal with a faction of the Taliban that are not under the influence of Islamabad and puts in place a coalition government that would allow Washington to station about ten thousand trainers in Afghanistan and end the major military operations. 

The third scenario suggests that the US successfully persuades Pakistan to rope in the like-minded Taliban factions for dialogue and for creation of a broad coalition government consisting of pro-US Afghan factions and pro-Pakistan Taliban factions.

Common factor

All three scenarios have one common factor—the Taliban will be an important segment of any future government in Kabul! In the first scenario, the implications of old Taliban returning to power in Kabul can be disastrous for regional peace and stability. The Kabul regime may return to its old ways, claiming victory over the mighty US-led Nato forces, and executing Jihad with ever more zeal and ruthlessness. 

America and Nato leave Afghanistan to regional tussle

Sajjad Ashraf
Apr 17, 2013 


As the US and their allied forces begin withdrawing from Afghanistan, a process that will be completed by the end of next year, India and Pakistan continue to jostle to fill the vacuum they will leave behind. Kabul is “the new battleground for the India-Pakistan rivalry” says Ahmed Rashid, the best selling author and analyst.

The importance of Afghanistan for both New Delhi and Islamabad stems from its location. Any country dominating Afghanistan potentially dominates the natural resources of Central and South Asia. Afghanistan has long been the victim of political games. But these games are only going to become more cut-throat in the months and years ahead.

The 2,700 kilometre Pakistan- Afghanistan border is rugged, and nearly impossible to control. It straddles the Durand Line, which successive Afghan governments have refused to recognise, and which plays into Pakistan’s psyche: afraid of domination by India, and preoccupied with Afghan policy of avoiding encirclement by India.

For much of Pakistan’s first three decades of independence, Afghan territory was used to fan demand for a Pashtun homeland. And India covertly supported this demand. This separatist irritant weakened only after the Soviet invasion of Afghanistan in 1979, but it remains a potent card in the hands of future trouble makers.

This experience compels Pakistan to continue to try to shape the make-up of the Kabul government. The Afghan president, Hamid Karzai, meanwhile, says Pakistan would like Afghanistan to “cut all ties to India, send army officers to Pakistan for training, and sign a strategic agreement” of cooperation.For its part, India has historically supported successive Afghan governments, except the one under the Taliban. The Indian-Afghan alliance has thus heightened Pakistan’s paranoia that India wants to use Afghanistan to destabilise Pakistan.

Pakistani intelligentsia and decision makers believe that in its aversion to Pakistan, India follows Kautilya, the ancient Indian military philosopher, who argued that “immediate neighbours are considered as enemies, but any state on the other side of a neighbouring state is regarded as an ally”. Pakistan therefore believes India attempts to deny Pakistan a healthy relationship with Afghanistan, thereby hoping to contain Pakistan both militarily and economically.Pakistan watches warily when relations between India and Afghanistan deepen. India’s aid disbursements of over $2 billion (Dh7.34 billion) during the past decade puts India among the top four aid donors to Afghanistan. That is a number that Pakistan cannot match.

Projecting India’s soft power serves India’s strategic goals and encourages governments in Kabul to remain at odds with Pakistan, or so the thinking goes.

Pakistan is deeply suspicious of India’s consulates and embassy in Afghanistan; some Pakistani intelligence officials see these as covert centres of subversion against their nation.

But there are more concrete links between Kabul and New Delhi. For instance, over 200 Afghan military officers attend Indian military institutions under a strategic partnership agreement. Pakistan’s attempt to engage the Afghan military in a similar fashion has yet to succeed. In fact, Pakistan’s deal to get 11 Afghan military men to take part in a simulated military exercise at a staff college in Quetta collapsed at the last minute in late March.

China-Pakistan nuclear axis

India factor behind their game plan
by Harsh V. Pant

LAST month Beijing confirmed its plans to sell a new 1,000 megawatt nuclear reactor to Pakistan in a deal signed in February. This pact was secretly concluded between the China National Nuclear Corp (CNNC) and the Pakistan Atomic Energy Commission during the visit of Pakistani nuclear industry officials to Beijing from February 15 to 18.

This sale would once again violate China’s commitment to the Nuclear Suppliers Group (NSG) and is in contravention to China’s promise in 2004 while joining the NSG not to sell additional reactors to Pakistan’s Chashma nuclear facility beyond the two reactors that began operation in 2000 and 2011.

While this issue is likely to come up for discussion at the June meeting of the NSG in Prague, Beijing has already made it clear that nuclear cooperation between China and Pakistan “does not violate relevant principles of the Nuclear Suppliers Group.” This when the CNNC is not merely constructing civilian reactors in Chashma, it is also developing Pakistan’s nuclear fuel reprocessing capabilities and working to modernise Pakistan’s nuclear arsenal. At a time when concerns about Pakistan’s nuclear programme are causing jitters around the world, China has made its intentions clear to go all out in helping Pakistan’s nuclear development. At a time when many in India are contemplating a new bonhomie in Sino-Indian ties under the new Chinese leadership, China is busy trying its best to maintain nuclear parity between India and Pakistan.

After all, this is what China has been doing for the last five decades. Based on their convergent interests vis-à-vis India, China and Pakistan reached a strategic understanding in mid-1950s, a bond that has only strengthened ever since. Sino-Pakistan ties gained particular momentum in the aftermath of the 1962 Sino-Indian war when the two states signed a boundary agreement recognising Chinese control over portions of the disputed Kashmir territory and since then the ties have been so strong that the Chinese President Hu Jintao has described the relationship as “higher than mountains and deeper than oceans.” Pakistan’s President, Asif Ali Zardari, has suggested that “No relationship between two sovereign states is as unique and durable as that between Pakistan and China.” Maintaining close ties with China has been a priority for Islamabad and Beijing has provided extensive economic, military and technical assistance to Pakistan over the years. It was Pakistan that in the early 1970s enabled China to cultivate its ties with the West and the US in particular, becoming the conduit for Henry Kissinger’s landmark secret visit to China in 1971 and has been instrumental in bringing China closer to the larger Muslim world. 

Over the years China emerged Pakistan’s largest defence supplier. Military cooperation between the two has deepened with joint projects producing armaments ranging from fighter jets to guided missile frigates. China is a steady source of military hardware to the resource-deficient Pakistani Army. It has not only given technology assistance to Pakistan but has also helped Pakistan set up mass weapons production factories. But what has been most significant is China’s major role in the development of Pakistan's nuclear infrastructure, emerging as Pakistan’s benefactor at a time when increasingly stringent export controls in Western countries made it difficult for Pakistan to acquire materials and technology from elsewhere. The Pakistani nuclear weapons programme is essentially an extension of the Chinese one. Despite being a member of the NPT, China has supplied Pakistan with nuclear materials and expertise and has provided critical assistance in the construction of Pakistan's nuclear facilities. Although China has long denied helping any nation attain a nuclear capability, the father of Pakistan’s nuclear weapons programme, Abdul Qadeer Khan, himself has acknowledged the crucial role China has played in his nation’s nuclear weaponisation by gifting 50 kilogrammes of weapon grade enriched uranium, drawing of the nuclear weapons and tonnes of uranium hexafluoride for Pakistan’s centrifuges. This is perhaps the only case where a nuclear weapon state has actually passed on weapons grade fissile material as well as a bomb design to a non-nuclear weapon state.

China-Pakistan Nuclear Cooperation: Unclear Facts


April 18, 2013

A recent story by a Washington-based reporter, Bill Gertz, in Free Beacon/Washington Times, that Pakistan and China have recently concluded a secret agreement for building a 1,000 MWe nuclear power plant—Chashma-3—has evoked many comments on websites and blogs by both Indians and non-Indians. While the former have focused on the alleged “illegality” of the contract— allegedly because no evidence is given on the legal basis for such a conclusion—the latter have been more concerned about laying the grounds for such an agreement on the doors of the Indo-US nuclear deal. In doing so, they conveniently forget that the China-Pakistan collusion on nuclear transfers, both civil and more importantly military nuclear matters, started long before there was any thought given to any possible India-US cooperation on civilian nuclear transfers. The only feature common to these comments is the absence of facts.

Bill Gertz made two points in his story that requires investigation. The first relates to the Pakistan-China nuclear cooperation for a 1,000 MWe Chashma-3; and the second on the Chinese Foreign Ministry spokesman, Hong Lei, confirming this development during a press conference on March 25, when asked about the above mentioned news report, stating that “China has noted the relevant report…but denied the sale violates the voluntary NSG guidelines”. Gertz citing the press conference says, “The cooperation between China and Pakistan does not violate relevant principles of the Nuclear Suppliers Group…In recent years, China and Pakistan do indeed carry out some joint projects related to civilian use of nuclear energy. These projects are for peaceful purpose only, in compliance with the international obligations shared by both countries, and they are subject to guarantee and monitor by international atomic energy organization.”

Finding it odd, the author of this work sent repeated emails to Gertz requesting clarification on two points: First, how could the secret agreement be in respect to Chashma-3 reactor when construction of the Chashma-3 and Chashma-4 nuclear power plants is already half way through to completion? Second, since the Chinese Ministry of Foreign Affairs website with the transcript does not contain any reference to any China-Pakistan nuclear story, would Gertz provide a suitable reference to the reported reply of Hong? There has not been any response so far.

There have been some suggestions that the Chashma-3 reference is with respect to the already on-going Chashma-3 programme for a 300 MWe NPP, which will now be transformed into a 1,000 MWe project. Given that already more than half the estimated cost of the Chashma-3 and Chashma-4 projects—Rs 100 billion out of estimated Rs 189 billion —has been spent, it is not conceivable in engineering terms as to how a 300 MWe project can now be transformed into a 1,000 MWe project! Therefore, one can safely reject Gertz’s story about a 1,000 MWe Chashma-3 secret agreement between China and Pakistan.

Does this mean that there cannot, or will not, be another China-Pakistan agreement for additional reactors to be supplied by China to Pakistan as a violation of China’s assurances to Nuclear Suppliers’ Group (NSG) members? Possibly, since so far no NSG member has confirmed in any open forum about any assurances given by China to the NSG members about its contractual obligations in respect of nuclear sales to Pakistan.

Manufacturing still matters

Posted By Clyde Prestowitz 
Thursday, April 18, 2013 

In recent weeks there have been several articles debunking the early signs of a new trend toward the return of manufacturing to America as labor costs rise in China and U.S. energy costs fall as the result of development of shale gas and oil.

The most recent example was an April 8 column by Washington Post pundit Robert J. Samuelson who argued that "it's a mistake to romanticize manufacturing." He went on to make the point that hopes for a manufacturing renaissance that will take us back to the mass employment manufacturing of the past are misplaced. This is so, he claimed, because the advanced manufacturing in which the United States can be competitive is capital and technology intensive as in the production of computer chips rather than labor intensive as in the production of shoes and apparel. Most of the job of the future, he emphasized, will be in the services industries.

This may all be mostly true, but it misses the main point. Regardless of how many people are employed directly in manufacturing, it is indisputable as several major studies have shown that $1 of manufacturing activity creates $1.48 of additional activity in the economy. This is more than for a $1 spent in any other sector such as banking, retailing, restauranting, business consulting, etc. The economy gets more bang for the buck out of manufacturing than out of any other activity. So the indirect jobs created by manufacturing are numerous and important.

On top of that manufacturing pays for about two thirds of all non-government R&D and its unique economies of scale contribute disproportionately to increases in overall economic productivity and to disinflation. In addition, manufacturing supports generally higher wages than services industries. As Joel Popkin has demonstrated in numerous studies, manufacturing "is the seedbed of innovation", and innovation is, of course, what we are counting on to keep the U.S. economy competitive.

The critics say the widely held impression of decline in American manufacturing is false because output has continued to climb, and because U.S. manufacturing production, while a bit less than China's is two thirds higher than Japan's and triple Germany's. But given that the U.S. economy is about twice as big as those of China and Japan and three times as big as Germany's, one would expect U.S. output to be two to three times as high. While manufacturing as a percent of GDP tends to fall in all countries as their economies mature, it has fallen much more precipitately in the United States over the past thirty years ( 23 percent-9 percent) than in Japan (28 percent- 22 percent) or Germany (27 percent-22 percent). Indeed, Germany is an example of how capital and technology intensive manufacturing can help maintain high employment, high wages, and a trade surplus all at the same time. If the United States were doing what Germany is doing, there would be much less talk of a "post-American era."

Our problem is not romanticizing manufacturing. Rather, it's failing to correct and respond to structural impediments and market distorting policies that are eroding the U.S. productive base. We fail to do this because our analysts fail to understand the significance of the positive spillovers of manufacturing. When U.S. companies invest abroad because the United States fails to match the investment incentives being offered by foreign governments, America suffers unnecessary erosion of its productive and technological leadership.

Rationalizing that by arguing that it doesn't matter because our future is in services, is a grave mistake.