10 June 2013

Who will be the next foreign secretary?

All lined up Jaimini Bhagwati, Sujata Singh, S. Jaishankar and Sudhir Vyas are said to be in the reckoning for the fore
government: mea 

It’s A Sprint Diplomatique 

After Mathai... 
Sujata Singh: Topper of the 1976 IFS batch; non-controversial, has strong political connections

Jaimini Bhagwati: Of the 1976 IFS batch; strong on economic issues; has served with the World Bank 

S. Jaishankar: Of the 1977 IFS batch; impressed many with his effective handling of China affairs

Sudhir Vyas: Topped the 1977 IFS batch; has experience of S. Asia 


The selection of bureaucrats for key positions seldom generates interest beyond the contenders and their family and friends. Not so when the foreign secretary is being chosen. For some years now, this South Block appointment has been watched with enthusiasm by those in the foreign policy establishment as well as others. Ranjan Mathai, the current incumbent, ends his tenure on July 31. Already, speculation, analysis—and some lobbying—has begun, with the aim of ensuring that a favourite gets the top post in the ministry of external affairs. 

It is bruited in South Block circles that the three frontrunners are Sujata Singh, the ambassador to Germany; S. Jai­shankar, the ambassador to China; and Jai­mini Bhagwati, the Indian high com­missioner in London. One other diplomat in the reckoning is Sudhir Vyas, secretary (west) at the MEA headquarters. Of course, the selection process will sieve a much bigger pool, comprising diplomats of the 1976 and 1977 bat­ches of the Indian Foreign Service (IFS). 

Sujata, the topper of the 1976 IFS batch, has garnered a wide range of experience and expertise, especially of western Europe. Bhagwati, of the same batch as Sujata’s, is said to have an edge because of his understanding of economics. Jaishankar, of the 1977 IFS batch, not only has experience of serving in neighbouring countries, he is considered strong on the West, particularly in dealing with the United States. Vyas topped the 1977 IFS batch. He has served in the neighbourhood—Pakistan and Bhutan—and is said to have the advantage of being posted at headquarters. 

Most MEA-watchers believe that the next foreign secretary will be from the first three. For, besides their capabilities—something that is widely acknow­ledged—they also have the right political connections. Sujata’s father, T.V. Rajeshwar, is a former IB chief and has also served as governor of Uttar Pradesh. Her connection to the Congress leadership is well-known. Jaishankar is the son of the late K. Subrahmanyam, one of India’s foremost strategic thinkers, and is well cued in to key members of the ruling party. Bhagwati, who has served with the World Bank, is said to be close to Prime Minister Manmohan Singh. 

Much of the confusion and speculation surrounding the choice of the next foreign secretary stems from the government’s own policy, which many see as arbitrary and lacking in transparency. For choosing a foreign secretary, two key elements are said to be considered by the political leadership in general and the prime minister in particular: seniority and merit. Seniority is easily determined. Merit, however, is very difficult to even define, leave alone determine, especially in the context of diplomacy and its complexities. So the choice involves a lot of subjectivity. 

As defined by procedure, the foreign secretary is chosen by a committee comprising the prime minister, the home minister and the foreign minister. But, MEA officials point out, a lot depends on the stature and heft of the foreign minister. An “assertive” foreign minister, they say, may have greater leverage that an “aspirational” minister, who would leave everything to the prime minister. Ultimately, of course, the prime minister’s choice prevails. 


India can still become an important FDI destination 

By S.L. Rao 

Managers of the Indian economy face the challenge of the collapse of growth. There are four factors that are responsible: continuing inflation, fiscal deficit, declining investment and a record current account deficit. Poor growth is related to poor investment. Investment is sluggish. High interest rates and the declining foreign exchange value of the rupee are two reasons. Cuts in expenditures and subsidies and improved tax collection have reduced the deficit. But the unwillingness of the government to slash social welfare expenditures and improve administrative efficiencies remains. Ballooning social welfare expenditures, boosted by the looming annual Rs 60,000 to 100,000 lakh crore food security bill, remain as threats. 

Land acquisition delays, slow environmental and forest clearances, absence of timebound bureaucratic clearances and honest investigative practices, slow court judgments, to name a few causes, have kept away investment. 

The current account deficit is caused by high crude oil, coal and gold imports. Nationalized coal mining has been inefficient and unable to dig the coal out. Exports are depressed owing to the sluggish world economy and the scams that have affected major commodity exports like iron ore. The suspicions (now proven by Ranbaxy and Wockhardt) about falsification of trial results will affect pharmaceutical exports. 

Rising foreign investment can restore the balance of payments and stimulate the economy. Rising domestic investment (both private and public) would be an economic stimulus. But domestic investment is actually going overseas. Foreign investment is not as confident about India as it was some years ago. 

The Reserve Bank of India categorizes foreign investment into direct and portfolio investments. Direct investment is in equity or debt and recently has been redefined to include foreigners holding above 10 per cent in any venture. Portfolio investment is in debt, securities through the foreign direct investment route, is up to 10 per cent of the securities traded in both primary and secondary capital markets including shares, debentures, warrants, and units of mutual funds, government securities and derivative instruments. Between 2000-01 and 2011-12, direct investment rose from $3,270 million to $22,006 million; and portfolio investment from $2,590 million to $17,171. Our dependence on the latter is high. They are volatile and inflows and outflows seesaw the stock market and rupee exchange rates. 

Compared to China, India comes out poorly on consistent gross domestic product growth, low inflation, current account surplus, superlative infrastructure and FDI. China has grown primarily because it was such an attractive destination for FDI. Low wages, productive labour and practically non-existent labour legislation made it a great manufacturing destination. From housing mere assemblers, China has moved over the years to producing important manufacturers of basic industrial goods. It had no restrictions on technology imports or royalties. It is known that a significant amount of foreign investment was money belonging to Chinese residents sent illegally abroad and brought back as foreign investment. Another chunk was from overseas Chinese in Taiwan, Hong Kong, the United States of America and elsewhere. But it also came from Japan, Korea and Europe. Most of the foreign investment was direct. In recent years, as the stock markets developed in China, investment has also come as portfolio investment. Return on FDI has been poor in China; copying is common and patent protection weak. 

India has all of China’s faults, not its strengths. We encourage round tripping of Indian funds by treating investments from countries like Mauritius to their tax laws (no capital gains tax). For years, technology imports were controlled, royalties low, bureaucratic approvals were many and time wasting. 

Old friends, new challenges

By  KG Suresh 
10 June 2013

India's relations with Japan are important not only for its economic development but also because Japan is India's natural and indispensable ally in its quest for stability and peace in the region, especially in the Indo-Pacific and East Asia

Of all the recent summit-level meetings Prime Minister Manmohan Singh had with the leadership of different countries last month, perhaps the most significant was his engagement with the Japanese leadership.

While a grave trust deficit remains at the core of the relations with China in the backdrop of Beijing’s expansionist agenda, uncertainty prevails on the relationship with Afghanistan in the light of the proposed withdrawal of North Atlantic Treaty Organisation troops, the growing strength of the Taliban and the volatile ties with Pakistan.

In contrast, India and Japan have shared fraternal ties since time immemorial. Exchanges between the two nations date back to the 6th century. Indian Buddhist priests, who migrated to Japan through Korea, laid the first foundations of people-to-people relationships between the two countries. Ties were then renewed in the Meiji Era when Shourindramohan Tagore of Kolkata sent three musical instruments to Emperor Mutsuhito in 1877. In the days before independence, Rabindranath Tagore, who visited Japan several times, pioneered efforts to bring the two nations together.

India and Japan signed a peace treaty and established diplomatic relations on April 28, 1952. Ever since, the two countries have enjoyed cordial relations. In the post World War II period, India’s iron ore helped Japan in its recovery from devastation and since 1986 while Japan continues to be India’s largest aid donor.

Prime Minister Singh’s visit also assumed significance as it took place in the backdrop of the recent Chinese incursions across the Line of Control in Ladakh as also Beijing’s aggressive postures vis-a-vis the Senkaku/Diaoyu islands in East China sea currently under Japanese control, besides its obstinacy in South China sea.

In the political and security fields, the two Prime Ministers decided to further improve joint maritime exercises between the Japan Maritime Self-Defence Force and the Indian Navy as well as to establish a Joint Working Group on the US-2 amphibian aircraft, while on civil nuclear cooperation, the two leaders confirmed that their countries would accelerate negotiations for the early conclusion of a bilateral agreement on cooperation in the peaceful uses of nuclear energy.

Apart from Japan deciding to provide 17.7 billion yen for the Campus Development Project to Institute of Technology, Hyderabad (Phase 2), the two countries agreed to cooperate in the areas of large-scale infrastructure and energy projects including the Delhi-Mumbai Industrial Corridor and high speed railway system in India.

The Chinese nervousness over these developments was apparent from a recent article in the state-run Global Times, which said strategic cooperation with Japan “can only bring trouble to India”. It also expressed apprehension that there may be some tacit understanding in strategic cooperation between India and Japan, “given the long-lasting islands’ dispute and China-India border confrontation”.

Notwithstanding China’s reservations, both Japan and India share a symbiotic relationship. It is not just India that needs Japan; it’s a two-way street. In its assessment of Mr Singh’s visit, the Japanese Ministry of Foreign Affairs stated in unambiguous terms that, “India is strategically an important country for Japan, sharing such basic values as freedom, democracy, fundamental human rights and the rule of law, and positioned on sea lanes between the Middle East and East Asia.”

Three techniques of Naxal supporters

By Ravi Shanker Kapoor 
June 8, 2013


A few years ago, prominent journalist Arun Shourie wrote a book whose theme was evident in its title—Will the Iron Fence Save a Tree Hollowed by Termites? This comes to the mind while viewing the May 25 massacre by Naxalites in Chhatisgarh: termites are wrecking our fight against what Prime Minister Manmohan Singh called the single biggest threat to national security.

We have a professional army, an air force with latest equipment, and paramilitary forces capable of combating any threat. India is a country aspiring to become a global power, so how come that it is not able to suppress the ragtag gangs of amateurs? The real threat emanating from the killings fields of Bastar can be comprehended fully and more easily if we look at a completely unrelated event—the collapse of France in six weeks during the Second World War.

It is a well-known fact that France was a great imperial power at that time. Its quick and unexpected fall in 1940 was mainly because of pacifism and “moral disarmament” that prevailed in the country particular and in Europe in general. Prominent intellectuals, including French writer Romain Rolland and British authors H.G. Wells and Bertrand Russell, signed a famous petition in 1926 which called for “some definite step toward complete disarmament and the demilitarizing of the mind of civilized nations.” Weapon manufacturers were demonized as “merchants of death”; Rolland termed them as “profiteers of massacre.”

It was just idealistic writers who were pacifists. Even Aristide Briand, France’s foreign minister and a Nobel Peace Prize winner, said, “Away with rifles, machine guns, and cannon.” This at a time when Hitler was gaining influence in Germany.

American scholar Thomas Sowell wrote in Intellectuals and Society, “A key role in the spread of pacifism in France was played by the schools—more specifically, by the French teachers’ unions, which began campaigns in the 1920s, objecting to postwar textbooks favorably depicting French soldiers who had defended their country against German invaders in the First World War. Such textbooks were called ‘bellicose’.” In fact, history was rewritten to instill the virtues of “moral disarmament” in the minds of children.

Charles de Gaulle, the heroic French general and statesman who later successfully fought against the Nazis, “blamed a lack of national will, or general moral decay, for the sudden and humiliating collapse of France in 1940,” writes Sowell. Sentimentalism made the French incapable of recognizing the Nazi menace; it not only confused them but also lethally impacted their fighting spirit and capability.

The situation in India is not much different from the one that prevailed in the 1920s and the 1930s in France. It is not the personnel of paramilitary forces on the ground or some shortcomings in the standard operating procedures that are failing us; the all-pervading sympathy for Naxalites and the influence of their sympathizers are responsible for the growing spread and audacity of Red terrorists.

Maoist sympathizers disregard and distort facts, make implausible theories appear reasonable, and bestow respectability on a vile ideology. They deploy three main techniques to undermine our fight against Naxalites. The first is an attempt to overlook an indisputable fact: that the chief inspiration of Maoists, Mao Zedong, was a cruel tyrant. Anybody reading the authoritative Mao: The Unknown Story by Jung Chang and Jon Halliday will get the feeling that our politicians, despite all their scams and misdemeanors, are angels in comparison! Chang and Halliday have shown how Mao was responsible for the death of 70 million people in peacetime. So, it is not unnatural that the followers of Mao take his dictum that ‘power flows from the barrel of the gun’ literally, as evident from the recent killing and countless earlier ones.

But what were we taught in schools? According to the standard Class 10 history textbook, The Story of Civilization, “In the areas under Communist Party’s control, the estates of landlords had been expropriated and the lands distributed among the peasants. Because of the policies pursued by the Communist Party, it gradually had won over millions of Chinese people to its side.” At the same time, Mao’s purges and disastrous policies which led to the killing of millions are not even mentioned.

This is our grounding in history. Against this backdrop, the smoke-and-mirrors strategies deployed by a section of intellectuals work perfectly well. So, we have a situation that the violence innate in Maoism is ignored and Naxal brutality is somehow condoned, if not openly justified; often these bloodthirsty terrorists are romanticized. At the same time, grand motives are attributed to their barbarity. They have been called Gandhians with guns, “our people”, idealists espousing a good cause but with bad means, champions of the poor, and so on. All these claims are false, but few have the courage to say that. Nor have many people pointed out that change and uplift of the poor is also possible by using peaceful methods. Jaiprakash Narain, Mother Teresa, Baba Amte, Anna Hazare, and many others never picked up the gun.

Meeting the Maoist Challenge

June 8, 2013 

The gruesome murder of political leaders by the Maoists in Chhattisgarh has once again brought to the forefront the fragility of the internal security situation in Central and Eastern India and the inability of the state police forces to deal with it effectively. Clearly, the nation has failed to evolve a comprehensive strategy to counter Maoist terrorism.

In May 2006, Prime Minister Manmohan Singh had for the first time described the Maoist-Naxalite insurgency as India’s most serious internal security challenge. Naxalite activities have spread to about 230 districts across 20 states, though some are very moderately affected. Maoist incidents have accounted for almost 60 per cent of terrorism-related violence in India over the last decade. These include intimidation, killings of innocent civilians, reprisal killings, abductions and kidnappings, IED blasts and the destruction of government and private property. In many of the areas of their influence, the Maoists have been collecting taxes and dispensing instant and brutal justice through kangaroo courts.

Through their sheer capacity to cause violence, the Naxalites extort huge sums of money from a wide variety of sources: the corporate sector, mine owners, forest and public works contractors, individual businessmen, rich landlords and corrupt government officials. According to reports in the public domain, their annual income from extortion could be as high as Rs 1,500 to 2,000 crore. A substantial portion of these ill-begotten funds goes towards clandestine arms procurement.

Maoist attacks on the security forces and the symbols of state power are characterised by meticulous planning, systematic preparation, near surgical execution and a high degree of coordination. On several occasions, the rebels have achieved considerable success in launching synchronised attacks on multiple targets involving large numbers of cadres. For the Maoists, besides waging a protracted people’s war with the ultimate objective of capturing or seizing political power, participating in a peace process and talks is a ‘tactic’, and is considered ‘war by other means’.

The Maoists have been consolidating their gains and expanding to newer areas. They have been steadily enhancing their military capabilities and improving their tactics, techniques and procedures (TTPs). The response of various state governments and the Centre has often, if not always, been reactive and inadequate. The reasons for this apathetic approach are, firstly, that Naxal terrorism is not an emotive issue at the national level like the insurgency in Jammu and Kashmir (J&K); secondly, there has been some confusion whether the Naxalites are terrorists or not as they have a ‘social justice’ tag attached to them; and, lastly, am impression has gained currency that the Naxal menace is not “as bad as the media makes it out to be.”

Coordination between the police and intelligence agencies of various affected states has been generally unsatisfactory. The acquisition, compilation, collation, analysis, synthesis and dissemination of intelligence are poorly organised. The Naxalites are continuing to spread their tentacles and it is crucial that intelligence about their activities, arms and equipment, training, sources of funding and future operations is shared on a daily basis so that it trickles down in near real-time to the functional level. A great deal more needs to be done if the states are to coordinate anti-Maoist operations across their borders.

India's Goldilocks principle

By Devesh Kapur
June 9, 2013 

The author searches for India's interests as the US and China swing between confrontation and accord 

With Chinese President Xi Jinping wrapping up his visit to the United States, India needs to ponder where, between rising tensions on the one hand and an encomium between the world's superpowers - perhaps a G2 - on the other, the Goldilocks principle applies to its national interests.

The past few weeks have seen a hectic round of meetings among the Asian powers. Chinese Premier Li Keqiang's recent visit to India followed weeks of rising tension after the intrusion by Chinese troops into Ladakh. The visit certainly calmed tensions and offered the possibility of improved relations between the two nations. Nonetheless, the next round of travels was just as revealing of the complex moves on the global chessboard. Premier Li Keqiang went to Pakistan to both provide strategic reassurance to a key partner ("a friendship more precious than gold") and signal China's continuing capacity to check India in its neighbourhood. As the Chinese government's mouthpiece, The Global Times, pointedly observed, "India must accept and adapt to the enviable friendship between China and Pakistan. China cannot scale down this partnership merely because of India's feelings!" 

But India played the same game with Prime Minister Manmohan Singh's visit to Japan - doing unto China what China has been doing unto India. Both declared strategic partnerships with countries that have a deep animosity and rivalry with the other. Little wonder, then, that this time The Global Times was less pleased, warning in an article titled "India gets close to Japan at its own peril" that "overheated strategic cooperation with the Abe administration can only bring trouble to India and threaten its relationships with the relevant East Asian countries". As you sow, so shall you reap. 

The reasons for this flurry of activity are well recognised. China's phenomenal rise and recent assertiveness of national power have caused serious apprehensions among its Asian neighbours, virtually inviting the US pivot to the region. The dangers of what Graham Allison has called the "Thucydides trap" - in which a rising power, as it begins to rival a ruling power, becomes more confident and results in fear and anxiety for the ruling power - are entangling alliances and partnerships across Asia and creating new dilemmas for India.

It is hardly news that the rise of China has been an important factor in driving the India-US relationship in the last decade. However, the foundations laid under the Bush administration have grown only modestly subsequently, as uncertainties about each other's capabilities have sown the seeds of doubt about each other's interests.

When China meets India


Earlier this year in April, Chinese President Xi Jinping chose Russia as the destination of his first state visit. Now Li Keqiang, China’s new premier, has chosen India as the first stop of his overseas debut. Both choices echo China’s policy of building ‘new big power relations’, a phrase recently minted by the incoming leadership.

But nobody knows exactly what ‘new big power relations’ will mean for Sino-Indian relations. For all their geographical closeness, China and India are remarkably unfamiliar with each other. Bilateral interactions are frequently fraught with miscommunication. In mid-April, a long-running boundary dispute in the western Himalayas flared up again when India and China moved more troops to the area. Both countries have since withdrawn to their previous positions, ending the standoff. Indian external affairs minister Salman Khurshid spoke of the incident as just an ‘acne’, a minor blip that is to be expected as China and India’s relationship continues to ‘grow up’. He is probably correct, but the standoff does raise the question of how either country could have engaged in such a juvenile and potentially risky exercise.

Economic cooperation has often been called in to smooth over border disputes. Bilateral trade increased from US$2.9 billion in 2000 to around US$80 billion in 2012. China is now India’s third-largest export partner and the largest source of imports into India. India is China’s seventh-largest export partner and the 20th-biggest source of its imports. Leaders of both countries have confidently proposed to increase bilateral trade to US$100 billion by 2015.

But the economic relationship between the two countries is asymmetrical. India runs a large trade deficit with China, which increased from US$4.3 billion in 2006 to US$27 billion in 2011. And bilateral investment is still relatively insignificant. Despite increasing seventeen fold from 2006 to 2011, China’s investment in India only accounts for around 0.2 per cent of India’s total foreign investment. India’s investment in China makes up an even smaller 0.01–0.05 per cent of China’s overall foreign investment. Additionally, India’s concerns about its increasing trade deficit with China have frequently prompted it to initiate anti-dumping investigations on imports from China. Chinese companies also complain that India discriminates against Chinese investment.

Discomforts with China

By Aditya Puri  
Jun 10 2013

Its military adventurism and economic uncertainty open opportunities for India 

The Chinese incursion into our territory was disturbing. The world is troubled by the nationalism and authoritarianism of China. Yet, going by feedback from senior executives in American and Japanese corporations, it offers great opportunities for India. 

China's rise as an economic superpower has been a source of concern for the West and for neighbours like India. The accusation levelled against China is that it has not played fair on the economic battlefield. Through a combination of artificially undervalued exchange rates, subsidies to state enterprises routed through its state-controlled banking system, rigid wage controls and dubious trade practices, it has decimated one industry after another in competing economies. 

Things have changed over the last three years. Wages have increased, international pressure has forced it to ease its draconian control on the exchange rate. The possibility of its financial system imploding has forced it to reconsider its usual policy of using massive doses of credit to ward off any downturns in its business cycle. Rising political and social tensions, underpinned by growing inequality, have forced China's politicians to focus more on domestic markets and buttressing domestic consumption, instead of devoting all their attention to exports. While this transition in its basic economic model is incomplete, it has slowed growth to 7-8 per cent for a while to come. 

With its economic momentum slowing, Chinese politicians appear to be repackaging the Chinese dream through a mix of strident nationalism and regional authoritarianism based on military might. It seems to be a throwback to the days of imperial China. The fracas with Japan over the disputed Senkaku/Diaoyu islands in the East China Sea is an example of China's new military adventurism. The recent military incursion into Indian territory is yet another. 

For India, this presents a massive economic and business opportunity. China has been among the biggest recipients of global FDI. In 2012 alone, it received $112 billion. This could change in future. The world, particularly the US and Japan, seem deeply troubled by China's rising nationalism and its aspirations to hegemony in the Asia-Pacific region. 

Japanese and American commercial interests are re-evaluating China, appraising the impact of concentration, uncertainty and geopolitics. They are, in fact, looking at alternatives and India is a major destination under consideration. We need to get our act together as this is a big opportunity to get FDI to meet our capital and employment needs. We must make the Japanese comfortable and the Americans enthusiastic. 

While China's shifting political and foreign policy stances (and associated geopolitical risks) affect its viability as an investment destination, there are economic considerations like rising wages and an appreciating currency that justify a shift away from China. Recent surveys show average industrial wages in China, at $300 a month, are the highest in the region. Despite inflation and the shortage of skilled workers, India's average organised-sector wage level, at about $270 a month, is still considerably behind China's. Besides, unlike the Chinese yuan, which is likely to appreciate further, the Indian rupee could see a period of sustained depreciation, making the manufacturing sector that much more competitive. 

Pakistan: Challenges before the New Government

By Alok Bansal and Manjima Madhuri
June 8, 2013 

The elections held in the Islamic Republic of Pakistan on the 11th of May, 2013 attracted attention from all over the globe. The second largest Muslim democracy of the world has again attracted attention of experts due to the reemergence of Nawaz Sharif and his party Pakistan Muslim League (N). The PML(N) won 183 seats, including minorities and women’s seats, out of 332 seats 10 results are still awaited for the 14th General Assembly. In terms of votes polled, Imran Khan led Pakistan Tehreek-e-Insaf (PTI) surprised a large number of political pundits by coming in second ahead of the Pakistan Peoples Party (PPP), which had been in power before the elections.

In the run up to the elections, both Nawaz Sharif and Imran Khan spoke against US drone attacks and supported negotiation with the Tehreek-e-Taliban Pakistan (TTP). While this may have won them some votes, it may be difficult to make good on their electoral promises. Besides handling the Taliban, and the inherent radicalization of society, there are a number of issues which need the immediate attention of the Government. The elections have impacted all the major fault lines that afflict Pakistan and the major challenge before the new government will be to tackle them. The vulnerable issues of Pakistan polity that needs utmost attention can be divided primarily into four aspects: sectarianism, economic crisis, ethno-nationalism, and talibanisation.


Sectarianism is the natural corollary of the divisive ‘Two Nation Theory’, which required an ‘object of hate’. After the liberation of Bangladesh, the number of minorities became so insignificant that new demons had to be created within the fold of Islam and this aggravated the sectarian fault line.

Pakistan is believed to be the home to the second largest Shia community in the world after Iran. Shias have had disproportionately larger share of political power in Pakistan. From Jinnah, Nazimuddin, Mohammad Ali Bogra, to Yahya Khan, Bhuttos and Zardari have all been Shias. In recent past the sectarian violence in Pakistan has worsened and within the first sixty days of 2013, over 300 Shias have been killed. The Shia pilgrims going to Iraq and Hazara community, who are easily discernible because of their Mongoloid features, have been targeted regularly. Till recently, the Shia community found succor and security in the fact that President Zardari and chairpersons of both houses of parliament were Shias. However, the election results have aggravated the sense of insecurity amongst Shias. Not only will all the top Shia functionaries have to go, but the Shia community is also concerned by the fact that Nawaz Sharif and his brother Shahbaz have had close relations with various Sunni sectarian outfits. Nawaz Sharif’s reported proximity to Saudi Arabia further enhances these fears.

The Shia fears were quite evident in the victory of Shia political party Majlis Wahadat Muslimeen (MWM) from a Hazara dominated seat in Quetta. MWM won the seat from Hazara Democratic Party (HDP), indicating that the beleaguered community is now giving eminence to their sectarian identity over ethnic identity. 

In days to come, one could see a spurt in sectarian violence. The weakening of MuttahidaQaumi Movement (MQM) in Karachi, which has been perceived to be the defender of Shias, would further create insecurity amongst Shias. The recent assassination of eminent lawyer Kausar Saqlain, along with his two sons in Karachi, was probably a trailer of impending sectarian crisis. 

Economic Crisis

Nawaz Sharif has given a clear indication that improving the economy is going to be a priority. The GDP growth for the last four to five years has been approximately at the same level as the population growth. This has resulted in per capita income remaining stagnant, and taking into account the huge income inequality that persists, the poor have probably turned poorer.

The foreign exchange reserves, which had touched a high of $18.313 Bn on 30 July 2011, have come down to $11.6 Bn as on 24 May 2013, of which only $6.564Bn are with State Bank of Pakistan. By June 2014, Pakistan has to pay back four billion dollars to the IMF, which could place Pakistan on the verge of default. Foreign investment has dried up, the industries are relocating and the Public Sector Units are losing billions every day. The only redeeming feature has been the rising remittances, but even there the rate of growth has been coming down and this year’s target is unlikely to be met. Fiscal deficit has been rising and the tax to GDP ratio has remained abysmally low.

Nawaz Sharif: Battling the demons within

By Monish Gulati
Jun 8, 2013 

Just days before Nawaz Sharif was sworn in for an unprecedented third term as the prime minister of Pakistan, a US drone strike on May 29 at the village of Chashma, some three kilometres from Miran Shah, killed the Tehreek-e-Taliban Pakistan (TTP) deputy chief Waliur Rehman. The TTP confirmed his death the next day, and declared that they were withdrawing from peace talks with the Pakistani government. On June 7, two days after Nawaz Sharif was sworn in, another drone strike took place 100 km southwest of Miran Shah, killing seven suspected militants. Analysts have pegged securing a negotiated peace deal with the TTP and stopping US drone strikes as the biggest challenge for the new Pakistani government.

The US drone strike on May 29 was the first inside Pakistan since April 17 this year and the first since Pakistanis voted overwhelmingly on May 11 for political parties (Pakistan Muslim League-Nawaz (PML-N), and Pakistan Tehreek-e-Insaf (PTI)) that had promised to strongly oppose the US’ use of drones in Pakistan and secure peace with TTP. The drone strike left Nawaz Sharif with an agitated TTP and a public loss of face on the drone issue.

TTP had also threatened to extract "revenge in the strongest way". On May 31, approximately 100 militants launched an assault on a security post in Mamuzai, Orakzai agency in FATA, which left three Pakistani soldiers and 20 militants dead. Security sources believe that the attack occurred in response to the death of Waliur Rehman.

The US State Department did little to underplay the drone strike and soon announced that Rehman was targeted on a tip-off provided by a member of the Hakimullah Mehsud-led group and the US will award the informer with $5 million. In 2010, US had declared Rehman a "specially designated global terrorist" and offered a $5m reward for information leading to his arrest. Two days after Waliur Rehman was killed, James Dobbins, US special representative to Afghanistan and Pakistan, met Nawaz Sharif in Lahore, who according to reports indicated that Pakistani support for the US’ exit strategy in Afghanistan could hinge upon US cooperation on drone strikes within Pakistani territory.

Waliur Rehman was also a key TTP negotiator in the 'peace talks' with the Pakistan government and was considered ‘close’ to the military establishment, which was pushing for ceasefire in return for holding back any possible direct military action. He was against attacking Pakistan and its security forces and was eager for a negotiated ceasefire settlement as it allowed TTP the option of stepping up its activities in Afghanistan in support of the Afghan Taliban and the Haqqani network. On the other hand, Rehman’s boss TTP chief Hakimullah Mehsud was not keen to negotiate with the Pakistani government.

With Rehman’s death analysts expect Hakimullah to extend greater control over the TTP, and the new Pakistani government consequently would find TTP less amenable to a peace deal. The TTP instead may launch fresh attacks across Pakistan to avenge Rehman's killing, which would create new pressures on the Pakistani government. With Hakimullah refusing to give up targeting Pakistan, the army could be forced to once again take a call on launching a military offensive against TTP in North Waziristan. Nawaz had opposed military operations against the TTP during the election campaign, and will find it difficult to back a new offensive against the TTP.

If the killing of Waliur Rehman was seen to dent hopes of peace talks with TTP, two events on June 3 caused a further setback to the prospects. Farid Khan, an independent candidate and a newly elected provincial lawmaker, who had recently joined the PTI, was assassinated in Hangu. The PTI, which heads a coalition government in Khyber Pakhtunkhwa province and was most vociferous about its anti-drone and pro-peace policy, has found itself in TTP’s firing line. This is likely to put a spanner in the peace prospects at the provincial level also. Security forces and police in a joint operation have since arrested a TTP commander Mufti Hamid for allegedly being involved in the killing of Farid Khan.

Pakistan: Descent into Chaos?

ISLAMABAD, Pakistan, May 28 — Massive power outages in Quetta and other districts this week once again disrupted the lives of millions of Pakistanis. Here in the capital city, outages have become commonplace. With temperatures around 110 degrees Fahrenheit, electricity is on everyone’s mind. A designer from Lahore joked over dinner that if U.S. officials could solve the problem it might actually put a dent in the country's notorious anti-Americanism.

The chronic countrywide blackouts may be an apt metaphor for Pakistan. Nearly everyone I’ve met here over the past week shares a rather grim perspective at the moment, a feeling that Pakistan is teetering on the brink. Double-digit unemployment, double-digit inflation, decaying urban infrastructure, calamitous problems in basic health care and education — and the country is at war. The military trumpets each success — this week 45 militants were killed in Fata and Swat. There were also claims this week that Maulana Fazullah, a top leader of Pakistan’s Taliban, has been killed by Afghan police near the Pakistani border. It’s all a drop in the bucket. The country’s border regions with Afghanistan — the North-West Frontier Province and the Federally Administered Tribal Areas — are home to desperate populations held hostage to high unemployment, high crime rates, drug trafficking and seething jihadism. As the Americans prepare for crucial operations in Khandahar, Taliban forces, Afghan and Pakistani alike, are said to be crossing the border freely to take up a crucial round in the fight.

Meanwhile back here in Islamabad, ubiquitous checkpoints and security posts have kept the city relatively safe of late. The Marriott hotel, blown up by terrorists in 2008, has been reconstructed; kidnappings are down. But the heavy security also attests to the fact that authorities here remain deeply concerned.

Pakistan’s recent decision to ban Facebook and close down some 1,000 Web sites, including YouTube, may be another metaphor for Pakistan’s free fall. There’s ample menu of choice and ferociously lively debate in Pakistan’s media. But reports critical of the government or military can be restricted. As a result, self-censorship is a problem. In the case of Facebook, a Pakistani court recently handed down blasphemy laws against the site. The material that first generated the controversy — including the Prophet Mohammed depicted as a pig urinating on the Koran — is offensive. The country’s blasphemy laws are also strict. Anyone who “defiles the sacred name of the Holy Prophet Mohammed” — by word, spoken or written; or by visual representation; or “by any imputation, innuendo, or insinuation, directly or indirectly — “shall be punished with death, or imprisonment for life.” Freedom House ranks Pakistan’s media as “unfree.”

The media crackdown stems from a deep, convulsing culture war in Pakistan, a phenomenon that throws into sharp relief the challenges America faces in much of the Muslim world. On one side, the country confronts a small group of vicious, violent fanatics whose vision of the future is barbaric and medieval. On the opposite side is a small group of liberals, mostly modern, many secular, who feel comfortable with women’s rights and Salman Rushdie and feel at home in the frequent flier lounges of Frankfurt Airport and London Heathrow. Incidentally, less than one percent of Pakistan’s 170 million people have a Facebook page.

Then comes the big fat middle of Pakistani society. Religious, traditional, socially conservative. They reject the horrors of Taliban rule on the one hand; and what they see as the horrors of Western secularism, materialism, and hedonism on the other. A columnist in the daily the Nation applauded the Facebook ban, but then asked whether such modest steps suffice. “Has the blasphemy ended?” he asked.

I visited the home of the deputy head of Pakistan’s version of the Muslim Brotherhood, a member of the parliament who also directs a prominent think tank. Khurshid Ahmad counts as a moderate in Pakistani politics. He rejects the Taliban vision for Pakistan, condemns suicide bombings (at least in conversation with me) and says the September 11 attacks were a crime. He also blames America for many of his country’s ills, sympathizes with the plight of Iranian mullahs and wants a Pakistan where religious leaders play an active role in governing. For the foreseeable future the real battle for Pakistan’s soul remains a struggle not between liberals and jihadists but between Islamists of different stripes.

In large part, Pakistan’s military will determine how this struggle plays out. Despite the formal end of a decade of its dictatorship, the military, not the elected government, continues to be the country’s most powerful institution. It is complex and contradictory. It fights the insurgency. It also feeds extremism. And part of its folly has been to believe it can separate good terrorists from the bad.

Hard Lessons of Afghan History

June 2013

“The Chaous Baushee”: The British respected their foe in the First Afghan War 

As the West prepares to withdraw from another bruising encounter with Afghanistan, two books appear which underline the dangers of going there in the first place. As every pub pundit knows, invading Afghanistan is probably a bad idea. Just how bad is evident in William Dalrymple's history of the First Afghan War. The sensible approach is spelled out in Con Coughlin's account of Winston Churchill's 1897 encounter with the Pashtun warrior tribes of the North West Frontier. That is, that "the less the outside world interfered with the affairs of the frontier tribes, the less inclined the frontier tribes would be to interfere with the outside world" — a formula that could be applied usefully to the whole region. 

Having said that, the spectacle of British armies' repeated attempts to bludgeon, bribe and bamboozle the Afghan clans into submission makes for great history. The story of the march into Afghanistan in 1839 to oust the supposedly pro-Russian Dost Mohammed Khan and the traumatic exit three years later has been told many times, but never with the verve, wit and dramatic force that Dalrymple brings to bear. Books are shrinking, victims of busy lives and diminishing attention spans. This one is a heroic 500 pages, but the galloping pace of the narrative will keep you turning them eagerly. The tale is full of great British characters: the envoy William Macnaghten blinking behind his outsized blue spectacles, unable, despite his acknowledged abilities, to see disaster looming; his brilliant but fatally lascivious deputy Alexander Burnes; and the boorish Brigadier Shelton, whose military stupidities compounded Britain's monumental political errors. 

Until now, though, we have not known much about the Afghans. Dalrymple's researches turned up several previously unused Persian-language contemporary accounts that give a real feel for the character and motivations of the main Afghan players. They include some marvellous epic poems, rolling in rich metaphor, that give the view from the other side. The culture they reveal make it easy to understand why many Britons found the Afghans more to their taste than the Indians they had a much easier time ruling. To be sure, they were treacherous, ruthless and capable of appalling barbarity. But then so were we, as the numerous atrocities against the locals detailed in both books make clear. In their favour, the tribal warriors had a proper respect for good horseflesh and fine clothes and loved a fight, qualities that in the eyes of General William Nott made them "fine looking fellows indeed" and "quite the gentlemen". 

Germany and China have become conjoined twins

Jun. 08 2013


They are half a world apart, separated by a gulf of language and history and democracy, but the two most successful countries in the world are coming to resemble each other in important ways. The decisions they make are going to have a profound impact on our future, and the world will become a more stable and prosperous place if they can avoid each other’s mistakes.

Together, China and Germany account for more than a fifth of all global exports, having outstripped even the United States. The rest of us pay $2-trillion (China) and $1.6-trillion (Germany) a year for their products.

Yet they both share similar challenges. Both countries are dependent on large-scale imports of natural resources and energy. Both have relied, in recent years, on restrictive fiscal and monetary policies that have angered their recession-battered trading partners. Both are islands of growth amid seas of simmering recession in their export markets – and both have been blamed for igniting or sustaining these crises.

Both, too, have fast-aging populations, small family sizes, shrinking work forces and difficulty finding and keeping the workers they need for their booming industries.

Neither country, significantly, is a big player in international military adventures – which may be one of the root causes of their trade success. As Jan Techau of the Carnegie Europe centre wrote recently, both China and Germany have, “for at least a generation, focused on internal affairs and economic development, at the expense of foreign policy. Both are fearful of losing the political stability and wealth that these efforts have created.”

And both are having a tense moment. Growth and exports have recently slowed or stalled in both Germany and China, in large part because of crises in their market countries. Both have populations frustrated with living standards that haven’t kept up with growth. They ought to start learning from one another.

What Germany can learn from China: keeping clients out of ruin. Both Germany and China became leading exporters because they kept domestic wages and social costs low enough to be able to compete aggressively in exports. This led to crises – cash pooled up at home and debt piled up in their clients (for China, the United States; for Germany, the European periphery).

China has managed to solve this problem in a big way. Over the past six years, it has gone from having a current-account surplus (that is, cash piling up from export earnings) of 10 per cent of its economy in 2007 to just 2.6 per cent last year. It did this by allowing its currency, the yuan, to rise in value, by allowing domestic wages and consumer spending to rise quite dramatically, and by investing a larger chunk of its $3.4-billion cash surplus in big projects that boosted the domestic economy.

Germany has been slower to respond. While it has allowed some wage rises, its surplus has fallen just from 7.5 per cent to 6.4 per cent – a big reason why the euro crisis continues. Fear of an expansionary policy and unhealthy embrace of austerity continues to grip its politics, but domestic growth would be a big part of a European solution.

China’s Other Environmental Problems

China is destroying itself, and I’m not talking about its corrupt, autocratic government. No, pollution, industrial accidents, traffic deaths, and far too many other man-made causes are killing millions of people—and animals. 

Newspaper pictures of the brown pollution clouds over Beijing and Shanghai are distressing enough, but the pollution actually caused 1.2 million premature deaths in 2010, the British magazine Lancet reported recently. And the problem isn’t improving. The Economic Observer, a Chinese magazine, said levels of two major pollutants in Beijing’s air, nitrogen dioxide and dangerous particulate matter, increased by nearly 30 percent in just the first three months of 2013. 

If only that were the sole problem. But in fact, China burns more coal than any other nation, by far; 70 percent of the nation’s energy comes from coal. And more people die in coal-mining accidents there than anyplace else. In fact, 28 people died in a coal-mine gas explosion late last month, just the latest of several in recent weeks. 

That explosion happened the same day as 83 people working in a Tibetan gold mining area died in a massive landslide, apparently set off by the mining work. 

Official government figures show that 1,384 people died in coal-mine accidents during 2012, figures that probably understate the problem, as so many Chinese statistics do. 

China also has more fatal road accidents than any other nation, even though automobile ownership per capita, while growing fast, remains low—on a par with Sri Lanka. The trouble is, people often buy cars before learning how to drive. 

In 2011, the Lancet published a despairing piece about needless Chinese deaths on the roads. It noted that government figures grossly underestimate the problem—admitting to less than half the accidents—and concludes that “until the Chinese government is honest with its people, and with itself,” the problem won’t be solved. 

Then think about the 16,000 diseased, decomposing pigs found in the river that supplies water for Shanghai’s 23 million people. China assured everyone: No worries, the water is clean. But one Shanghai resident told the London Telegraph, “I’m worried about the drinking water. It really, really stinks.” 

That’s not the only problem of this sort. Early this month, authorities discovered a massive die-off of ducks, at least 1,000 of them, in the Nanhe River of southwestern Sichuan Province. Meanwhile, in the eastern city of Nanjing, residents are accusing several factories along the Yangtze River of dumping toxic effluent into the Yangtze River, killing thousands of fish, the Yangtze Evening News reported late last month. 

Breakfast with the cyberchief: He wants some RoE, and also pre-approved actions

June 7, 2013 

By Alexander Sullivan 
Best Defense guest columnist 

Gen. Keith Alexander, who as director of the NSA and commander of U.S. Cyber Command is perhaps the most knowledgeable individual on defending America in cyberspace, offered an assessment of the cyber threat that was clear-eyed and yet understated: It is here to stay, it is growing, and it will continue to get worse. 

Luckily, speaking at a breakfast held by the Association of the U.S. Army's Institute for Land Warfare on May 29, he also offered some areas of opportunity for short- and mid-term progress in confronting this danger to U.S. national security. 

DOD is currently planning a transition to the Joint Information Environment (JIE), a wholesale overhaul of its network architecture that will see most computing services delivered via the cloud. Gen. Alexander stressed the need for the JIE to comprise a "thin, defensible, virtualized" network structure protected by cryptologic platforms developed at Fort Meade. Not only will virtualization be eminently more secure (patching vulnerabilities will happen instantaneously across the network rather than iteratively on 15,000 separate enclaves), but it will provide considerable savings on hardware, software, and IT support personnel over the long term. Greater security at a lower price in a time of budgetary austerity -- this is exactly the type of investment the Pentagon should be making. 

Discussing military cyber, Alexander suggested contours of a new system for organizing, training and equipping America's cyber warriors. He called for a "joint revolution" that would further elevate coordination on cyber department-wide. (Currently, Cybercom's main role is to coordinate and direct activities of service elements, whose requirements are implemented at the service G-6 level.) As the number of cyber operators increases, the military needs to create streamlined training and doctrine that avoids bifurcation along traditional organizational lines (e.g., signals at the secret level and intelligence at the top secret level) and trains cyber operators to a single high standard encompassing both defensive and offensive capabilities. 

Hamas’s Gaza Win

The latest, just-ended battle between Israel and Hamas demonstrates once again that the Palestinian extremist group holds nearly all the cards—even though it’s an obdurate, unredeemable terrorist organization.

“From our ideological point of view, it is not allowed to recognize that Israel controls one square meter of historic Palestine,” Mahmoud al-Zahar, a senior Hamas leader, told me when I visited him 10 years ago. Then, just a few days ago, Abu Obeida, spokesman for Hamas’s military wing, said: “We are sending a short and simple message: There is no security for any Zionist on any single inch of Palestine.”

In other words, unlike most terrorist groups, Hamas exists for only one reason: to destroy Israel. This presents Israel with an unresolvable dilemma. Its military has killed a dozen or more Hamas leaders over the years, and yet new ones sprout up almost right away. And in the last five years, all of them have learned that the price can be high, but they can get what they want from Israel.

Think back a year. That’s when Hamas released Gilad Shalit, an Israeli solider they were holding. Five years earlier, they’d abducted him as he was on patrol outside the border fence. Hamas kept him safe but incommunicado—realizing they were holding a great bargaining chip.

So what finally happened? Israeli traded him for 1,027 Palestinians being held in Israeli jails. Hamas was jubilant, and no wonder.

This time, Hamas fired hundreds of missiles into Israel, provoking airstrikes that killed at least 160 Palestinians and leveled scores of buildings. But in the end, Hamas made demands in exchange for ending its rocket attacks—and appears to be getting more or less what it wants. Israel agreed to ease restrictions on the movement of people and goods in and out of Gaza and allow Palestinians more access to a buffer zones that Israel had imposed on the Gaza side of the border and at sea.

What did Israel get in exchange? Nothing except the return to the status quo—meaning no more rocket fire for now but the near certainty that the next time Hamas wants something, it will send more missiles across the fence line.

One reason Hamas does not seem more hesitant is that the world seems to be on their side, regardless of the facts on the ground. Mohamed Morsi, the Egyptian president who negotiated the cease-fire, like so many other world leaders, offered not even glancing acknowledgment of the rocket volleys Hamas fired into Israel. That’s what ignited this current crisis, not anything Israel did—other than exist.

The Mystery of Europe and the Decline and Fall of the War System

July 1st, 2011

It is an unexpected dividend of recent history that we cannot imagine a situation in which a Western European state would try to use military force or coercion against a neighbor. The “war system” that made military strength so central to national power and influence and caused so much conflict for five hundred years has simply disappeared from that region. 

How could something that had been central to so much human history, and which seemed to be an inevitable result of human nature, so quickly vanish from one of the central parts of the world? Could it be that some temporary or special circumstances make military strength irrelevant to Western European affairs today? Perhaps the experience of relying on US protection against the Soviet Union for so long has had a deep effect. Or the politics of the European Union may have been as valuable a unifying force as its advocates believe. Or these states have been diverted from internal concerns by the potential dangers from outside the region and a perhaps temporary lack of ideological division.

I would propose a different explanation—that the comity between Western European countries is based on real and permanent foundations. It is the result of inherent characteristics of modern countries (North America is the only other region deserving this designation) and is a reliable basis for national security. A traditional war system cannot exist in any region composed entirely of modern countries.

What are the essential characteristics of modern countries that make other countries feel reliably safe—even in a completely unredeemed world driven by aggressive leaders, full of conflict, rivalry, hatred, and controlled by the exercise of power? And even though the war system still exists in most of the rest of the world?
In this argument, “modern country” is not a relative term. It does not necessarily mean the most advanced country at the time. Modern countries have very productive post-industrial, information-dominated economies. The wealth of modern countries is less important than the experience that produces the wealth. And, while both wealth and production are economic matters, the social and political elements of modernization that are inseparable from the economic are also central to the character of modern countries.

While there are only some 25 modern countries today, many other countries are becoming modern, and the difference between a modern country and one that will become modern in a few years is not always clearly defined. The important thing is the near absolute contrast between fully modern countries and traditional countries—that is, all countries in the world before, say, 1900. All countries used to be traditional. Now all countries are either modern or becoming modern. Eventually all countries will be modern countries—by the fixed standards discussed here: