10 January 2014

*** On Forecasting

January 9, 2014

Soon after George W. Bush was elected president and before his inauguration in January 2001, there was a quiet assumption among some in Washington that Bush would appoint then-former senator from Indiana, Dan Coats, as his defense secretary. A second quiet assumption followed that Coats would appoint the bipartisan realist Richard Armitage as deputy defense secretary. Coats and Armitage would no doubt have run the Defense Department from the philosophical vantage point of tough caution in world affairs -- never flinching from a challenge, but also never overreacting.

Coats apparently failed his interview with President-elect Bush; or Bush simply had a change of heart. There was reportedly a need to balance Colin Powell at the State Department with an equally towering figure at Defense, and Coats apparently wasn't the one to do that. It was Bush's vice president-elect, Dick Cheney, who reportedly had an idea to solve the dilemma: bring back Donald Rumsfeld, who had already been defense secretary in the Ford Administration in the mid-1970s, and who therefore could both handle the job and stand up to Powell. Rumsfeld became defense secretary and appointed Paul Wolfowitz as his deputy. Armitage, meanwhile, went to work at the State Department as Powell's deputy. Thus, largely because of a series of events involving personnel that few could have predicted, you had the aggressive team of Rumsfeld and Wolfowitz reacting to 9/11 rather than the more cautious team of Coats and Armitage. Moreover, you now had a bureaucratic war between the restrained team of Powell and Armitage at the State Department and the newly aggressive team at the Defense Department.

Such factors, again, all having to do with personnel, and all exceedingly difficult, if not impossible, to predict in advance, would have a profound effect on geopolitics in the ensuing decade. Indeed, the Iraq War, which defined the last decade for American foreign policy, might well not have happened, or, at a minimum, would not have played out at as it did, had Coats become defense secretary.

In other words, to say that individuals do not matter amid larger forces is rubbish. Think of World War II without Hitler, of the Balkans without Slobodan Milosevic or Richard Holbrooke, or of Russia in the 1990s without the indiscipline of Boris Yeltsin.

Moreover, very odd, utterly unpredictable events matter greatly to world history. Imagine the decade after 9/11 if only a few votes in Florida had shifted -- or if just one Supreme Court vote had shifted -- giving Al Gore the presidency. Would we have gone to war in Afghanistan the way we did? Or gone to war in Iraq at all?

And yet events can be forecast. Or rather, trends can be discerned that the daily media regularly miss. They can be forecast because, as I have detailed, while half of reality is utterly unpredictable events involving individuals, the other half is composed of large geographical, demographic, economic and technological forces whose basic trend lines can be foreseen, however vaguely at times. If one concentrates on those larger forces, it still won't be possible to predict, say, the philosophical makeup of a particular president's foreign policy team, but it can be forecast to some impressive degree the kind of world that team will face. 9/11 itself may have been unpredictable, but the trend of an emboldened al Qaeda mixed with further radicalization of the Middle East clearly was predictable.

Disaster Centennial: The Disturbing Relevance of World War I

By Klaus Wiegrefe

It has now been 100 years since the outbreak of World War I, but the European catastrophe remains relevant today. As the Continent looks back this year, old wounds could once again be rubbed raw.

Joachim Gauck, the 11th president of the Federal Republic of Germany, executes his duties in a palace built for the Hohenzollern dynasty. But almost all memories of Prussian glory have been eliminated from Bellevue Palace in Berlin, where there is no pomp and there are no uniforms and few flags. The second door on the left in the entrance hall leads into a parlor where Gauck receives visitors.


In the so-called official room, there are busts of poet Heinrich von Kleist and Social Democrat Friedrich Ebert, the first German president after Kaiser Wilhelm II fled the country into exile, on a shelf behind the desk. There are two paintings on the wall: an Italian landscape by a German painter, and a view of Dresden by Canaletto, the Italian painter.

Gauck likes the symbolism. Nations and their people often view both the world and the past from different perspectives. The president says that he doesn't find this disconcerting, because he is aware of the reasons. In 2014, the year of the 100th anniversary of the outbreak of World War I, the eyes of the world will be focused on Germany's head of state. It will be the biggest historical event to date in the 21st century.

And Gauck represents the losers.

More than 60 million soldiers from five continents participated in that orgy of violence. Almost one in six men died, and millions returned home with injuries or missing body parts -- noses, jaws, arms. Countries like France, Belgium and the United Kingdom are planning international memorial events, wreath-laying ceremonies, concerts and exhibits, as are faraway nations like New Zealand and Australia, which formed their identities during the war.

Interactive Map

Poles, citizens of the Baltic countries, Czechs and Slovaks will also commemorate the years between 1914 and 1918, because they emerged as sovereign nations from the murderous conflict between the Entente and the Central Powers.

Unthinkable in Germany

In the coming months, World War I will become a mega issue in the public culture of commemoration. The international book market will present about 150 titles in Germany alone, and twice as many in France -- probably a world record for a historic subject. The story of a generation that has long passed on will be retold. New questions will be asked and new debates will unfold. British Prime Minister David Cameron is even making funds available to enable all children attending Britain's government-run schools to visit the battlefields of the Western Front.

A response of this nature would be unthinkable in pacifist Germany.

Don't Let Populism and Central Planning Wreck India

January 8, 2014

On December 29, 2013, my wife and I boarded a United Airlines flight from New York to Mumbai for our first trip to India. We spent three days in Mumbai and one in Delhi. That short trip gave me a chance to observe a tiny sliver of a vast, diverse, and contradictory country. The startling contrast between rich and poor is so vividly etched in my mind that I'd like to devote this column to what I observed on my trip. The country's many microenvironments and the larger macroeconomic picture help explain the great disparity of wealth.

The View on the Ground

In Mumbai, within shouting distance of heated toilet seats in luxury hotels, there lies squalor and poverty. The exteriors of most of the ramshackle structures that line Mumbai's packed streets are battered and pock-marked. Upstairs, tiny, decrepit dwelling units lie hidden behind endless amounts of laundry hung out to dry. Downstairs are the small shops that are literally holes in the wall crammed full of merchandise, much of it foodstuff and electronics. There are no large shops in evidence, and the distribution system that services this peculiar form of retailing can only survive because of some hidden set of restrictions that prevent the emergence of larger and more rational forms of industrial organization.

The fragmentation of this system was made real to my wife and me when we sought to buy a local phone to make the occasional call back to family in the United States. What should have been a simple transaction became a major production. At stage one, our intrepid driver weaved and darted through a bewildering maze of streets to a small shop to have my picture taken for the needed government form. Eight copies of the same photograph were duly provided. The next leg of our car trip had us purchase the phone at another tiny shop; the SIM card was procured at yet another shop, smaller than the first.

But we discovered that the phone could not be issued until we complied with government security measures that were put into place after the 2008 terrorist attack on the Taj Mahal Hotel. To comply, I had to secure copies of my passport, along with copies of our driver's identity card, as he was required to vouch for the purchase. The SIM card was then inserted into the phone only after the proprietor filled out detailed forms. Then we had to purchase a package of minutes. All in all, seven separate stages were needed to execute this transaction, each of which was expertly executed by a reasonably well-educated work force.

This episode raised two obvious questions. First, how could the registration of every phone purchase in India control a terrorist threat when potential terrorists can find other ways to acquire telephones inside and outside the country? Second, why were seven steps needed for a single transaction? There is a strong state bureaucratic impulse in India. The first question shows a mismatch of means to end, while the second implies a maze of protectionist government regulations that block integrated producers from opening up shop in India.

Sochi 2014: A Security Challenge

DECEMBER 9, 2013 


The Russian city of Sochi will host the 2014 Winter Olympics from Feb. 7 to Feb. 23 and the Paralympics from March 7 to March 16. Russia is no stranger to hosting high-profile global events; it hosted the 1980 Summer Olympics and is preparing for the 2018 World Cup final.

Though the 2014 games seemingly offer Moscow a perfect platform for showcasing the strength of its security apparatus, Russia will have to work overtime to protect athletes and spectators. This in turn could leave surrounding regions such as the Northern Caucasus and major cities such as Moscow and St. Petersburg exposed to militancy, terrorism and organized crime. Militants from the Caucasus striking elsewhere in Russia during the games to avoid the intense security that will be present in Sochi and to capitalize on news coverage of the highly publicized event pose the greatest threat to the games.

Security Preparations

Russian security forces possess the experience and numbers necessary to provide for safe Olympic Games. They will have an intense multilayered system in place throughout Sochi. The Federal Security Service of the Russian Federation, or the FSB, is the primary security agency in Russia -- it is the successor to the Soviet KGB and the country's chief counterterrorism agency -- and has taken the lead in guaranteeing security for the Sochi Olympics since 2010.

The FSB will lead close to 100,000 security personnel in securing the games and Sochi overall. Other elements involved in Olympic security operations will be in place:

  • More than 40,000 police are expected to be on duty during the games and will be trained to converse with spectators in three languages other than Russian (English, French and German). They will also have a 24-hour hotline available for assistance.
  • Roughly 30,000 members of the armed forces will deploy to the Sochi area.
  • A Russian military group dubbed "Operations Group Sochi" is expected to supervise and secure the mountainous belt from Sochi to Mineralnye Vody near the Olympic Mountain Cluster using roughly 10,000 troops.
  • Russia's 58th Army will be responsible for securing and supervising the southern border with Georgia.
  • Surveillance for the games will include drones, reconnaissance robots, sonar systems and high-speed patrol boats.
  • A computer system called Sorm will be upgraded and operational to monitor all Internet and communication traffic by Sochi residents, visiting competitors and spectators during the Olympics in the hopes of intercepting any sensitive information that could help to avoid any potential disruptions.
Moscow has implemented extensive security measures on land, on the Black Sea and in the air. In January 2014, there will be travel and transport restrictions implemented along with enhanced security zones, to include restricted and controlled zones that will be designated throughout the region using signs and authorities on post. Restricted security zones will cover a large territory outside the internal border of Karachay-Cherkessia (more than 322 kilometers, or 200 miles, east of Sochi) and the external border between Russia's Krasnodar Krai region and the breakaway Georgian territory of Abkhazia. Also included will be the Olympic Park and its Olympic venues, Olympic Villages in the Olympic Mountain Cluster and Olympic Coastal Cluster, as well as Sochi's seaport, railroad terminal, airport and national park. To move through checkpoints in these zones, one will have to produce both a ticket and a spectator pass or fan passport (acquired by providing personal and biographical information to the Russian government through the Sochi 2014 Organizing Committee) or Olympic accreditation.

Even so, areas remain vulnerable to potential disruption. Attempted attacks are likeliest at venues containing large, concentrated numbers of participants, such as the Olympic Park in the heart of the Olympic Coastal Cluster and perhaps the Adler/Sochi airport. Open venues at the games will also be attractive targets, including the venues that make up the Olympic Mountain Cluster, where snowboarding and skiing events will be held. They are located in Krasnaya Polyana and are accessible by bus, high-speed rail and helicopter. Other potential targets include the transportation hubs in Sochi and Krasnaya Polyana, as well as the high-speed rail link connecting the Olympic Coastal Cluster to the Olympic Mountain Cluster.

Controlled zones where all visitors and vehicles will undergo police inspections include the areas surrounding Olympic Park and checkpoints along the Sochi and Adler coast, including Matsesta and Khosta. As in the restricted zones, those equipped with a spectator pass will be permitted to attend events during the Olympics, and all motor vehicles will need a permit provided by the Sochi Olympics Transport Administration to enter Sochi before and during the games.

Security in Sochi and at all Olympic venues clearly will be comprehensive. This means that the greatest threat in the run-up to and during the games will likely be an attack carried out by militants outside of Sochi in locations such as the North Caucasus or large metropolitan areas like Moscow.

Alliances Between Insurgent Groups in North East: Is it a Source of Concern

The announcement by Paresh Baruah, leader of ULFA (I) in December 2013 of a new alliance between various insurgent groups[1] in the Northeast to jointly fight the common enemy has the potential to once again dislodge the fragile peaceful state existing today. He said that the insurgent groups have been working on the modalities for a number of years and a formal announcement would soon be made on the planned alliance. He also emphasized that groups already in talks with the government agencies will not be part of the proposed alliance. The insurgency in the Northeast is one of the longest insurgencies having destabilized the region for nearly six decades. Three major fault lines have been exploited by various insurgent groups, namely, locals versus outsiders, tribals versus non-tribals and inter tribal rivalries. Over the years the fault lines have been used to exploit the emotions of the masses on basis of tribal identity and ethnic sub-nationalism to carve out their areas of influence as well as have secure bases and sanctuaries along with perennial sources of funding.

There are 15 major active insurgent groups as per Ministry of Home Affairs Annual Report 2012-13[2], though the South Asia Terrorism Portal (SATP) lists 38 active groups. The insurgent groups have suffered heavy reversals in the last 10 years due to consistent regularity of operations by army and to some extent by the state police. The insurgents have suffered heavy casualties with almost 32,000 of their cadres killed/ captured/ surrendered. Their training camps across the border in Bhutan and Bangladesh have been raided and destroyed to some extent, cadres depleted and even the leadership has been forced into hiding. This had resulted to some extent in weakening of their hold which would have a negative impact on their funding and activities. The figures below provide a summary[3] of violence cycle exacerbated by the insurgents over the last decade.

Mapping the Kashmir trajectory

January 10, 2014
Asma Khan Lone

Instead of wielding a partnership with the people of Kashmir by addressing their grievances and assuaging their fears, India put in place a system of extended patronage pivoted on select individuals

Narendra Modi’s proposition of revisiting Article 370 has opened a Pandora’s box of sorts. Animating the intellectual landscape, it has triggered a variegated debate over the constitutional jurisdiction, technicalities and legal course of the Article. However, beyond the juris prudentia there is a need to understand the genesis of the conflict and its various expressions.Through the Pakistan prism

At the core of the conflict lies Kashmir’s aspiration for autonomy, epitomised in the preservation of its distinct regional identity and character. The recipient of a vibrant historical legacy, a rich civilisation, discrete geographical and demographic features and an eclectic value-system in contrast to the prevalent regional orthodoxy, Kashmir over the ages evolved a distinct regional pride and identity. Intermittent phases of foreign rule marred by ruthless oppression and a tendency to alter the Kashmiri way of life sharpened its regional identity. Its sense of self became defined by the desire to resist the alien yoke and retain the glory of indigenous rule, elevating the significance of identity to Kashmiri lives. As a deterrent to foreign intrusion, Kashmiri identity further recoiled within its regional demarcation, and this at times manifested itself in a more militant form. India’s inability to recognise the undercurrents of Kashmir’s preoccupation with its identity further exacerbated Kashmiri vulnerability. Generating an additional set of grievances, it stymied the prospects of a constructive and trustful engagement between India and Kashmir. India’s overtures in turn stemmed from its own insecurities based on its presumption of Kashmir’s proclivity toward Muslim Pakistan. Misconstruing Kashmir’s inherent inclination for autonomy with a preference for Pakistan, India erroneously built the edifice of its relationship with Kashmir through the prism of Pakistan. This deprived India of the initiative to construct an independent and proactive association with Kashmir based on positives rather than the reactionary political architecture it eventually ended up creating.

While Kashmir always had a socio-cultural and religious fascination with Pakistan which persists to this day, it conveniently kept its political interests apart. Despite the inroads of the Muslim League (ML) throughout India on the premise of a shared religious ideology as a means of coalescing a geographically disparate people, it failed to strike an influencing chord in Kashmir. The corresponding movement in Kashmir was more region-centric than pan-Indian. The socio-political congruity of Kashmir also allowed its freedom movement to be more sophisticated and evolved based on tangible issues and concrete agendas rather than the abstract of Islamic appeal alone. The inclusive nature of “Kashmiriyat” along with the early influence of the Indian National Congress (INC) and the utility of a resourceful Pandit community within the regional context, kept the freedom movement in Kashmir at a distance from the ML. The organisational assistance that Sheikh Abdullah, spearheading the Kashmiri movement, received from the “State People’s Party” — a subsidiary of the INC which supported the cause of the subjects in the princely states and the personal differences between him and Jinnah further eschewed the possibility of any political convergence. The opposition of the ML along with the J&K Muslim Conference to the “Quit Kashmir” movement in 1946 and the lack of audience given to G.M. Sadiq by the top leadership in Pakistan when sent there as an envoy by Sheikh Abdullah in October 1947 seemed to have been the last straw that prevented rapprochement between Kashmir and Pakistan. The successive stances by the Pakistani state in the form of aligning with the detested Maharaja (Standstill Agreement — though a tactical necessity for Pakistan), subsequent economic sanctions, infiltration of the tribesmen and their ensuing loot and rampage and the inclination of Sheikh Abdullah toward India all reinforced the chasm between Kashmir and Pakistan in those early days.Alignment with India

Taking Kashmir Seriously

January 9, 2014 by Team SAISA

Adfar Shah 

There is a dire need to understand the theoretical significance of Kashmir as a social reality, as a conflict prototype, as a conscious society, as a vulnerable zone, as a social collective of sensitive human beings and as a prolonged conflict hit region! An idealized image of Kashmir, assuming the people there as less informed, less intellectual, less conscious, more violent, terrorist aides, chaos loving and so on and so forth, is still in the minds of many analysts and agencies who are conceptualizing Kashmir through different prisms. Similarly, an idealized image for India, viewing the whole nation as oppressive, undemocratic and tyrannical, has distorted the thinking in a plethora of minds regarding Kashmir – a Kashmir that needs serious perception management for the social reality of torture and the livid scars of gross mishandling have led to a cocoon mentality and vision of hatred. This indicates to many that the chasm between the Kashmiri and the outsider is widening rapidly instead of getting abridged despite numerous efforts and initiatives at peace building (reveals the ground level observation). Further, amid the range of self-fulfilling prophecies and theory building by leaders of diverse groups and a myriad conflicting perspectives by pseudo K-Experts, it has been forgotten that resolving Kashmir or making a difference in the Valley does not merely mean the redressal of the state’s economic disruptions or political waywardness, but purely repairing the damaged social tissue (that lies almost untouched). Such a project – namely that of Kashmir in conflict – has now remained less political but more social, thereby inviting the attention of rehabilitation work, social planning or social engineering. The dominant clusters thus far though have propagated their dominant narratives and, to succeed, have created specific labels and stereotypes even for the poor victims (not to talk of the dissenting/sensitive youth)! With their frivolous arm chair ideologies they have been trying to justify their unjust diktats and power laws, however the discerning masses know better than to take it all at face value and believe it all! They even attempt to oppress the masses by impoverishing them of their economic, social and psychological capital (by their slogans for vested interests). On the contrary, strategists claim that ‘work is in progress’, however, I disagree emphatically. According to my views, ‘just work’ may be in progress but such work that does not take the psychological and social sensibilities of the people in question, into account, definitely cannot be termed synonymous with progress!

Kashmir has currently become the world’s laboratory for experiments in theory building, where policy makers, the power elite, social scientists and analysts have continued an overpowering bombardment with their ideologies; however, the fact remains that except the assumed progress, the tangible progress and increased magnititude of trust and faith in the system is still not satisfactory. They even refute the ideas/narratives of the locals who have literally lived the conflict (white man’s burden); and that is why, today, the fact remains that even a lay man will not fail to notice the limitations in the current understanding of Kashmir by outsiders, the security apparatus, NGO’s, ideological state apparatus, etc, for there are still a plethora of inadequacies in the existing socio-political atmosphere, institutional forms and socio-legal practices in locating the real violence and putting that in its proper perspective. The decline in quality strategies on peace building in Kashmir, with scores of dysfunctional deviations and paradoxes, have excited and bemused the masses, who feel lost in the whole conflict and conflict resolution game. Kashmir, as of now, provides an open platform to refine the existing theories of terror, security actions, positive interventions like giving a significant boost to the educational infrastructure, tackling insurgency and conflict within, but that needs a strong political will, which seems to be sadly lacking! Therefore, there is a dire need to build a new and valid body of knowledge on Kashmir and ‘thinking Kashmir seriously’ must assume priority as a theme at all the levels of research on Kashmir – both in and outside the valley – so that something worthwhile comes out of the entire process. Something concretely positive which will make a tangible difference! There must be a nationwide awakening and motivation for an economically sound Kashmir, there must be a common slogan of zero tolerance on Human Rights abuses by one and all, there must be stress on good governance, love for justice, a new vision for justice, and a blueprint for peace which will endure; above all, there must be a unanimous commonality in the thoughts and goals of the common masses, as well as the formidable police forces and armed forces, to make a noticeable difference. It could all have come together in a comprehensive and peaceable manner but somewhere we have missed a vital beat. Though so much water has flowed under the bridge (of strategy), yet a uniform way of countering the peace deficit is yet to be explored. Kashmir does not need quantitative work to be done on the peace front but rather qualitative work that can penetrate the social fabric deeply (reaching out to peripherals) and casting a wide arc of positive effects. People in corridors of power have to be clear about what they mean by Kashmir, peace for Kashmir, justice for Kashmir and how do they define the actions for peace by armed forces, statecraft, civil society, youth, women and others. Justice does not merely mean legal based actions but also how to decrease the graph between the victim and the wheels of justice, needs new thinking, in fact serious thinking , that is still lacking. When we talk about Kashmir, there must be a separate and unique justice manifesto developed by all the significant stakeholders be they the police, army, local government and media, with a distinct vision of justice. The Centre, State and Armed Forces need to ensure the delivery of justice in all circumstances (like the recent decision of court martials against erring army men). There has to be basic foot work for accomplishing the ‘visual component of peace’ and for that we need to go beyond the regular slogans, beyond the political aspect of the issue, beyond tried and tested methods and back to the drawing board because we have to bear in mind that Kashmir is not just an event happening out there but a tragedy, a collective suffering and a political tsunami! After all the drawing room conversations, TV shows, hundreds of roundtable confabulations and mere interlocutions, we have still not reached an understanding on Kashmir. We are yet to ascertain a how to define youth and how to define the power of youth there in the valley. They (the power elite) even say that a storm of peace is imminent but practically there is a short-lived wave of understanding and progress, which then subsides and there remains nothing but a lot of meaningless noise, which fails to translate into anything positive.

Butter chicken at Birla

What succeeds at home may not work overseas. The chairman of Aditya Birla Group, Kumar Mangalam Birla, says Indian companies must be prepared to change long-held traditions if they are to thrive on the global stage.December 2013 | byKumar Mangalam Birla

Mahatma Gandhi was killed in my great-grandfather’s home. Near the end of his life, India’s founding father used to stay at Birla House when he came to Delhi, and in January 1948 an assassin shot him point-blank as he walked out into the grassy courtyard where he held his daily prayer meetings. The house and garden are now a shrine and museum, visited by tens of thousands of admirers every year.

Growing up, I hardly needed to visit the memorial to be reminded of the values held by my close-knit Marwari family. Our tiny community, originally from Rajasthan, has had spectacular success in business, in part because we have maintained tight familial relations and traditional values—including many of those promoted by Gandhi himself. Marwari traders apprenticed their sons to other Marwari firms, loaned each other money, and insured one another’s goods, confident that their partners held to these same codes. To some in the West, our ways probably looked old-fashioned: when I took over the company, in 1996, at age 29, after the sudden death of my father, no meat was cooked in Birla cafeterias; no wine or whiskey was served at company functions.

Seven years later, we bought a small copper mine in Australia. The deal wasn’t a huge one, worth only about $12.5 million, but it presented me with a unique challenge of the sort I had not yet faced as chairman. Our newest employees were understandably worried about how life might change under Indian ownership. Would they have to give up their Foster’s and barbecues at company events? Of course not, we reassured them.

But then several of my Indian managers asked why they should have to go meatless at parties, if employees abroad did not. At Marwari business houses, including Birla, the top ranks of executives traditionally have been filled with other Marwaris. I had introduced some managers from other firms and other communities, and they had a valid point. I was genuinely flustered. My lieutenants were relentless: I had never faced a situation where my own people felt so strongly about something. Yet at the same time, I knew vegetarianism was a part of our values as a family and as a company. A core belief! I had broken a lot of family norms, but I thought this one was going to be multidimensionally disastrous for me.

A different model for DRDO

January 10, 2014 
Ashok Parthasarathi

The HinduCRITICAL: The consequences of success or failure of defence systems under development by the DRDO have a direct bearing on national security and the credibility of the organisation. Photo: G. Krishnaswamy

Setting up a Defence R&D Commission will make little difference by way of increasing self-reliance in defence systems and equipment, but it will increase the autonomy of functioning of the DRDO laboratories

There is hardly any lecture or discussion on the Defence Research and Development Organisation (DRDO) and the Defence Ministry more broadly in which a call is not given for the setting up of a Defence R&D Commission “on the pattern of” the Atomic Energy Commission and the Space Commission. The rationale for such a proposal is that it would enable the DRDO to have steeply increased autonomy and more administrative and financial powers and, thereby, to be more effective.

However, those who so argue are rarely aware of the detailed organisational structure and managerial practices of the two existing commissions. This article is intended to bring out those structures and practices.

First and foremost, the Cabinet Minister for those commissions is no less than the Prime Minister himself. So, the chairmen of those commissions have direct access to the very head of government. There is not even a Minister of State in between. Where such a Minister of State has been brought into the picture, his only role is to lighten the burden of the Prime Minister in answering parliamentary questions and other matters related to Parliament. The commission chairmen meet the Prime Minister whenever they want to and also submit files directly to him/her. This gives both chairmen unrivalled power.

Second, the commissions are small and compact and the membership is at a very high level e.g. both the principal secretary to the Prime Minister and the cabinet secretary are invariably members of the commissions. As for scientists, not only is the chairman an eminent atomic/space scientist or engineer, but he is also the secretary of the executive arm of the commission concerned viz. the departments of atomic energy or space. The members (R&D) of the commissions are usually the directors of the largest or principal R&D centre of the atomic energy and space programmes respectively viz. the Bhabha Atomic Research Centre (BARC) and the Vikram Sarabhai Space Centre (VSSC). To give the commissions the semblance of not being entirely “in-house affairs,” one eminent scientist from outside the atomic and space programmes is also made a member. But most often the scientist concerned has little detailed knowledge of the atomic or space programmes. So, the commissions are, in fact, wholly in-house structures de-facto.Continuity till realisation

How to win at leapfrog

India has a unique opportunity to avoid repeating other countries’ mistakes. Khosla Ventures founding partner Vinod Khosla argues that the “leapfrogging” mind-set requires policies that foster innovation not imitation.December 2013 | byVinod Khosla

There’s a general tendency in life to want to do what others have done. It’s an understandable impulse but shortsighted. One of the great things about being a relatively poor, trailing, but rising power like India is that you have the opportunity to see what you want to imitate—and, more important, what you want to skip.

Here’s an example. In 2000, I chaired a three-day telecommunications seminar for McKinsey & Company in New Delhi. I talked to everybody about skipping the landline. I said, “If I were India, I wouldn’t worry about adding ten million more copper lines. I would go straight to voice over Internet and mobile.” I didn’t have it exactly right; I missed how big mobile could become and how quickly. But my argument was that the giant traditional telecom-equipment and -system providers were offering the wrong system for the 21st century. Happily for India, despite its plans to the contrary and its focus on “traditional technology” landlines, the right thing (mobile) has happened. And India is not alone in this path—Africa has taken a similar evolution toward mobile telephony.

Was this a one-time phenomenon? No. There are many areas where a developing country can apply this kind of leapfrog mentality and find a different path to a better future: education, health care, energy, even infrastructure. But the key, which leapfrog advocates often miss, is how you go about creating this alternative path.

It’s not enough to say, “Let’s look beyond today and plan for 2025.” Most emerging-market countries do that. Such plans are usually far too prescriptive: let’s build 40 new universities by a certain date, add 80,000 doctors, build 8,000 kilometers of new highway, or install 10 million solar panels. Usually, these plans are based on a regressed estimate of today’s baseline. Rushing to do specific things is a big mistake. Technology advances in ways that are quirky and unpredictable. It’s unwise to rely on plans that presume to see the future too clearly; strategic-planning and consultant forecasts almost invariably mislead.

So rather than trying to predict the future, India’s leaders should be trying to fit into the future as it happens. Instead of setting out ten concrete goals, they should encourage one broad direction and adopt an evolutionary mind-set. That way, as the world changes, as the price of oil shifts or a breakthrough technology comes along, India can adapt.

Toward a uniquely Indian growth model

November 2013 | byAnand Mahindra 
India can’t afford to emulate China. Mahindra Group chairman Anand Mahindra says the country’s states must compete, not march in lockstep, if India is to develop its own path to sustainable prosperity.

When I listen to pundits, economists, and multinational CEOs talk about India, often I detect a familiar note of frustration. India, they insist, should be blasting upward like a rocket, its growth rate ascending higher and higher, bypassing that of a slowing China’s. India’s population is younger than that of its Asian rival and still growing. Its democratic government enjoys greater legitimacy; its businesspeople are more internationally adept. And yet the Indian rocket continues to sputter in a low-altitude orbit—growing respectably at 5 to 7 percent each year but never breaking through to sustained double-digit growth. 

Reimagining India: A conversation with Anand MahindraIn this video, Mahindra Group chairman Anand Mahindra explains why India’s states must drive the country’s economic growth 

According to this way of thinking, India is an underachiever, perversely holding itself back—and needs only to fire some particular afterburner in order to get its rocket to full speed. The government needs to go on an infrastructure building spree, or open the door to big-box retailers. Political parties need to crack down on corruption and nepotism. Farmers need to adopt smartphones. Something will trigger the long-awaited boom, and the billions in foreign direct investment (FDI) that have flowed to China over the last two decades will at last head south. 

If we continue to judge India’s progress by China’s, using metrics like FDI and GDP growth, or statistics like the kilometers of highway and millions of apartments built, we will continue to be branded a laggard. India’s messy coalition governments are not suddenly about to become as efficient and decisive as China’s technocrat-led Politburo. Nor should that be the goal. 

Moreover, India simply cannot afford to grow like China has over the last two decades. In authoritarian, tightly controlled China, the costs of that headlong economic expansion are obvious. Unbreathable air and undrinkable milk, slick-palmed officials and oppressive factory bosses provoke tens of thousands of protests each year. In a society as diverse as India’s—riven by religious, community, and caste divides—those kinds of tensions can easily erupt in violence and disorder. Already the battle between haves and have-nots is driving a powerful rural insurgency across nearly a third of the country. Labor riots can turn into religious pogroms. Farmer protests can turn into class wars. 

The rediscovery of India

Is diversity an excuse for disunity? CNN’s Fareed Zakaria says Indians must embrace their common ambitions if the nation is to fulfill its tremendous potential.November 2013 | byFareed Zakaria

Is India even a country? It’s not an outlandish question. “India is merely a geographical expression,” Winston Churchill said in exasperation. “It is no more a single country than the Equator.” The founder of Singapore, Lee Kuan Yew, recently echoed that sentiment, arguing that “India is not a real country. Instead it is thirty-two separate nations that happen to be arrayed along the British rail line.”

India gives diversity new meaning. The country contains at least 15 major languages, hundreds of dialects, several major religions, and thousands of tribes, castes, and subcastes. A Tamil-speaking Brahmin from the south shares little with a Sikh from Punjab; each has his own language, religion, ethnicity, tradition, and mode of life. Look at a picture of independent India’s first cabinet and you will see a collection of people, each dressed in regional or religious garb, each with a distinct title that applies only to members of his or her community (Pandit, Sardar, Maulana, Babu, Rajkumari).

Or look at Indian politics today. After every parliamentary election over the last two decades, commentators have searched in vain for a national trend or theme. In fact, local issues and personalities dominate from state to state. The majority of India’s states are now governed by regional parties—defined on linguistic or caste lines—that are strong in one state but have little draw in any other. The two national parties, the Indian National Congress and the BJP, are now largely confined in their appeal to about ten states each.

And yet, there are those who passionately believe that there is an essential “oneness” about India. Perhaps the most passionate and articulate of them was Jawaharlal Nehru, India’s first prime minister. During one of his many stints in jail, fighting for Indian independence, he wrote The Discovery of India, a personal interpretation of Indian history but one with a political agenda. In the book, Nehru details a basic continuity in India’s history, starting with the Indus Valley civilization of 4500 BCE, running through Ashoka’s kingdom in the third century BCE, through the Mughal era, and all the way to modern India. He describes an India that was always diverse and enriched by its varied influences, from Buddhism to Islam to Christianity.

Nehru well understood India’s immense diversity—and its disunity. He had to deal with it every day in trying to create a national political movement. The country’s chief divide, between Hindus and Muslims, was to create havoc with his and Mahatma Gandhi’s dreams for a united India. But he was making the intellectual case for India as a nation as the essential background for its national independence. And he had a good case to make. India has existed as a coherent geographical and political entity, comprising large parts of what is modern India, for thousands of years. Despite its dizzying diversity, the country has its own distinct culture. Perhaps that’s why, for all its troubles, India has endured.

Bill Gates: What I Learned in the Fight Against Polio

India's success in eradicating polio offers lessons for solving other human welfare issues world-wide

Updated Nov. 10, 2013 

Bill Gates meets with a farmer in the Indian village of Guleria in May 2010 to talk about the country's polio program. India has now been polio-free for more than two years. Bill & Melinda Gates Foundation 

Our foundation began working in India a decade ago, at a time when many feared that the country would become a flashpoint for HIV/AIDS. Since then, we have expanded into other areas, including vaccines, family planning and agricultural development. In all of this work, Melinda and I have seen many examples of India's poor making dramatic contributions. But nowhere has this power been demonstrated more clearly than in the fight to end polio. Indeed, India's accomplishment in eradicating polio is the most impressive global health success I've ever seen.I first began traveling to India in the 1980s, drawn by a fascination with this ancient country that cherishes its history and harbors great ambitions for the future. My interest was professional as well as personal. Microsoft MSFT -0.77% was expanding, our need for talent was growing, and I was attracted to the vitality and ingenuity of the Indian people.

A few years later, several colleagues and I were flying into Bangalore. As we made our final approach, I looked out the window and saw an area of densely packed, tiny, dilapidated homes stretching out for miles. At that moment, one of my Indian companions declared proudly, "We have no slums in Bangalore." Whether out of denial or innocence, my colleague didn't see the "other" India. I don't mean to single him out. It can be easy to turn our eyes away from the poor. But if we do, we miss seeing a society's full potential. 

When Melinda and I started our foundation's work in India, we began to meet people from the areas we'd been flying over. They had little education and poor health, and lived in slums or poor rural areas—the kind of people many experts had told us were holding India back. But our experience suggests the opposite: What some call a weakness can be a source of great strength. 

Different visions of the Indo-Pacific: China, India, the US and Australia

by Melissa Conley Tyler


Each country has a different vision of the so-called 'Indo-Pacific' and its role in it. The views of India, China and the US are of particular interest to Australia given its interlocking relationships with each.

Some of these views were on display recently in Kunming (the closest China comes to the Indian Ocean) at a conference hosted by the Research Institute for the Indian Ocean at the Yunnan University of Finance and Economics. How does each country see the Indo-Pacific and conceptualise its role? Speakers from various countries at the conference gave distinctive views.

For India, the Indo-Pacific (viewed as an extended Indian Ocean) is home: its backyard, its swimming pool. The Indian Ocean is India’s historic sphere of influence; India engages with the region out of geographic, historical and political necessity. For example, 97% of India’s trade and 70% of its energy comes via the Indian Ocean. If India isn’t respected in the Indian Ocean, where can it command respect?

Today, when India looks out at the Indian Ocean, it sees China’s expanding engagement with the region, especially infrastructure-building and a military presence, and views this as 'encroachment'. This creates anxiety and a sense of being eclipsed. According to Jawaharlal Nehru University Professor Swaran Singh, the growth of China’s engagement with the Indian Ocean means that 'India is sensitive to China-India ties becoming increasingly asymmetric.'

At the same time, India doesn’t want to be drawn into any US strategy of China containment, which would run counter to New Delhi's tradition of non-alignment, its preference for strategic autonomy, and its own interests, for example in freedom of navigation.

For China, the Indo-Pacific (viewed as two linked oceans) is a vulnerable super-highway for transporting much-needed resources. Its role is to use its growing strength prudently to mitigate risk. This includes immediate action such as anti-piracy measures and long-term infrastructure development to reduce dependence on shipping through the Straits of Malacca.

From a Chinese perspective, it is unfortunate that Indian commentators find this disturbing and characterise China as a threat rather than a contributor. As described by Professor Ye Hailin, Editor of South Asian Studies, China would like to show that it is a 'good guy' in the Indian Ocean.

17 Corps: As China rises, India's army raises the stakes

by Shashank Joshi

Last year, after a long period of dithering and uncertainty, India’s cabinet finally gave the go-ahead for the raising of a massive new offensive army unit, the 80-90,000-strong China-facing 17 Corps (a corps comprises roughly three divisions). Its underlying purpose is to provide conventional deterrence against China, strengthening India’s hand in crises. Four years after the idea was first mooted, and after a rough year for Sino-Indian relations, it is finally coming to fruition.

The new 17 Corps is the most significant of India’s various efforts to respond to China’s rise in general, and Chinese probing at the disputed in border in particular. Why? Only three of India’s 13 existing army corps are so-called 'strike corps' (1, 2 and 21 Corps), all of which are directed towards Pakistan. 17 Corps will therefore be thefirst such unit dedicated to China and the first dedicated to mountain terrain, in which offensive operations are much more demanding.

It is now reported that the corps will be based in Panagarh in the eastern state of West Bengal from 2015 (it’s temporarily in Ranchi), with two divisions in Bihar and Assam, and other units spread further. Panagarh was developed as part of the US Army’s 'over the hump’ operations to supply nationalist Chinese forces across the Himalayas during the Second World War. India’s expanding fleet of American C-130 transport aircraft will also be deployed there, making it easier to move troops across difficult terrain, as will six new mid-air refueling aircraft the air force is procuring. The corps commander will be Major General Raymond Joseph Noronha, who currently heads the Northern Command’s 13 Corps, which was raised after the Kargil War.

Not everyone is celebrating. Some Indian analysts have argued that 17 Corps will further bloat the Indian Army’s payroll, divert funds for more important capital acquisitions, and be rendered immobile by the poor state of roads in India’s north. Others contend that China is more vulnerable at sea than on land, and India's offensive capabilities should be concentrated in the navy. The question now is whether 17 Corps will get up and running on schedule (within eight years) or with the same torpor that preceded its formation.

Afghanistan: The Desert of Death

Anja Niedringhaus/AP/Corbis An Afghan officer after a patrol in Helmand Province, Afghanistan; the image on his vehicle's windshield depicts anti-Taliban warrior Ahmed Shah Masood, October 19, 2012

I met a traveler from an antique land,
Who said, “Two vast and trunkless legs of stone 
Stand in the desert…
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away.”

A number of writers have preceded me in quoting Shelley’s Ozymandias to evoke the huge US and NATO bases planted since 2001 in Afghanistan. The comparison is irresistible, but not necessarily apt. Even if only the head and legs were left, bits of Ozymandias’s statue had still presumably survived for three thousand years or so, which is a pretty good record as these things go. Few US or NATO officials, by contrast, seem to be planning seriously much beyond the next three years.

In Kabul, the changes wrought by the West’s twelve-year Afghan adventure have a certain solidity, at least to the point where the banks and office buildings would make for reasonably imposing and long-lasting ruins. Even some more intelligent members of the Taliban seem to recognize that the Afghan capital, a city of some five million people, is no longer the rubble-filled and shrunken city that they ruled in 2001; that the modern educated classes have grown to the point where they cannot be subjected to the moral code of a madrassa in a Pashtun mountain village; and that if a future Afghan government including the Taliban wants the help of these people—those who do not depart following the West’s withdrawal—in ruling and developing Afghanistan, it will have to grant them some freedom.

In the southern Pashtun province of Helmand, however, the atmosphere is very different. The presence of the Taliban is much more palpable both from conversations and the watchfulness of the Western forces. The veil of progress brought by the West is also a great deal thinner. During a recent trip with NATO officials, I was kept within the fortified perimeters of the US and British forces and the Afghan government centers—an indication of the current level of concern about the Taliban.

Visiting US and NATO bases there, I found that the images that came to mind were not Ozymandian images of long-fallen imperial grandeur, but rather those of science fiction: of Ray Bradbury’s human and Martian species meeting under an enormous, indifferent sky amidst the vast and utterly strange landscape of Mars. In an even gloomier mood, I thought of the Strugatsky brothers’ dystopian novel Roadside Picnic, on which Tarkovsky’s film Stalker was based. The premise is that aliens dropped by briefly on earth for some reason of their own, leaving behind a weirdly transformed landscape littered with discarded alien objects. In fact, seen from the air at night, Helmand’s huge Western military installations—Camp Leatherneck, the US Marine base, and the adjacent Camp Bastion, the main British base—look like a giant spaceship, a great blob of blazing lights amid a dark sea of desert. At the height of the Western occupation, the camps used more electricity than the rest of the province put together. Every drop of fuel for the generators had to be shipped in through Pakistan, along with every drop of mineral water and every bite of food consumed by the troops.

Assisting Afghanistan Militarily


Prime Minister Manmohan Singh and President Hamid Karzai discussed the US-Afghanistan Bilateral Security Arrangement (BSA) when they met in New Delhi last month. The US withdrawal from Afghanistan in 2014 in the immediate aftermath of Presidential elections and rapid expansion of Afghan National Army undertaken only post 2014 does create a dilemma in respect of future stability of Afghanistan when seen in the backdrop of Taliban’s continuing rigid stance and Pakistan reportedly training scores of Mujahid battalions as irregulars and mating them with her proxies in order to increase her cross-border areas of influence once US forces depart, in pursuit of its cherished strategic depth; creating a succession of radicalised Islamic societies from the Indian-Pakistani border to Central Asia, giving the ISI the ability to create a clandestine empire composed of the likes of Haqqanis, Taliban and the LeT, as described by Robert H Kaplan in his book ‘The Revenge of Geography’.

The India-Afghanistan strategic partnership is an important facet of bilateral cooperation between the two nations, of which security is an important segment. Afghanistan has reportedly asked for military assistance in terms of tanks, mortars, artillery and aircraft besides military vehicles like troop carrying trucks, jeeps etc. Afghanistan has also sought a training facility in Afghanistan to train its officers and soldiers, in addition to assistance in maintenance of military equipment. It is but axiomatic that India would provide all possible assistance under the India-Afghanistan strategic partnership. 100 officers of Afghan National Army (ANA) will be trained for four weeks at the Counter Insurgency and Jungle Warfare School (CIJWS) located at Vairangte in Mizoram.

Maintenance and repair of military equipment will be a major problem post the US withdrawal. It is at a premium even now. As per a report released in January 2013 by the Centre for Strategic and International Studies (USA), the US direct spending for war in Afghanistan from 2002 to 2013 totaled $641.7 billion (bulk after 2009), of which $198.2 billion (over 30%) was spent in FY2012 and FY2013. Though vast majority of aid went to Afghan National Security Forces (ANSF), little was done to establish repair and maintenance facilities. The US had purchased Mi-17 helicopters from Russia and supplied these to Afghanistan. The US and NATO are presently in talks for establishing Russian repair facilities for these helicopters in Afghanistan. Since Afghanistan has asked India to also establish base repair facilities in Afghanistan, it would be prudent to optimise the India-Russia defence partnership to jointly cater for repair and maintenance of most military equipment that Afghanistan would have in 2014 and beyond. To this end, President Karzai has welcomed setting up of a joint India-Russia repair and maintenance facility in Afghanistan that has been agreed to. Afghanistan already holds military equipment with origins in some 30 countries. To add to this would be equipment that the US forces are likely give to Afghan Security Forces, one example being UAVs. In fact, it would be prudent for the US to leave behind technical staff for repair and maintenance of the US origin equipment under the BSA for a couple of years, till requisite capacity is built up within Afghan forces. Convergence of US-Russia interests should facilitate such arrangement as both countries do not want Taliban influence seeping into Central Asia and Eurasia post US withdrawal.

Afghanistan is home to some $3 trillion worth untapped mineral deposits. If this is exploited in a secure and safe environment, it could yield an annual revenue of $1.2 billion after five years and $3.5 billion after 15 years. Then there are some 3.8 billion barrels of oil between Balkh and Jazwan alone while Afghanistan only consumes 5,000 bbl per day. Estimated mean volumes of undiscovered petroleum were 1,596 million barrels (Mbbl) of crude oil, 444 billion cubic meters of natural gas, and 562 Mbbl of natural gas liquids. In Dec 2011, Afghanistan signed an oil exploration contract with China National petroleum Corporation (CNPC) for development of three oil fields along the Amu Darya. CNPC began Afghan oil production in October 2012, extracting 1.5 million barrels of oil annually. With oil hovering around $100 a barrel, an output of 250,000 bpd would earn Afghanistan about $9.1 billion a year. That would be roughly half the country's gross domestic product of $20 billion in 2011, according to the World Bank.The catch in all this is having a secure environment especially since no foreign venture is permitted to bring its own security forces along. What Afghanistan therefore needs is a strong Central Industrial Security Force (CISF) that can protect all the civil ventures including mineral, petroleum and gas exploration, as also provide protection to repair and maintenance facilities that are to be established. This force should have the capacity to ward off terrorist attacks. India can help Afghanistan in creating such a force.

A Troubling Turn for the Worse in Bangladesh

January 9, 2014

Sunday's parliamentary election in Bangladesh, a Muslim-majority country of 155 million, was a debacle. Due to a boycott by the main opposition coalition, voter turnout was visibly low and more than half the seats were won uncontested. Independent candidates made accusations of fraud and ballot box stuffing. While previous elections in Bangladesh had been closely observed and endorsed by the international community, the current round had only neighboring India and Bhutan sending token monitoring teams. Even within the ranks of the ruling coalition, many politicians remain in campaign mode, expecting another election in the coming months.

At face value, the election fiasco is the result of a dispute between the two parties that have dominated Bangladesh's political life for decades. The Awami League, currently in power, is led by Sheikh Hasina Wazed, the daughter of Sheikh Mujibur Rahman, Bangladesh's charismatic first leader. The main opposition Bangladesh Nationalist Party (BNP) is led by Begum Khaleda Zia, widow of former president and war hero Ziaur Rahman. But in fact, the discord runs far deeper, with two opposing visions of the nation and two dueling readings of its history.

At its core, the conflict is about Bangladesh's complex relation with India. For most supporters of the Awami League, India is a mostly reliable neighbor and regional superpower with which Bangladesh should be better aligned on development and secular democratic politics and against radicalism. In the BNP's vision, India is an overbearing hegemon seeking to fence Bangladesh in and make it a captive market.

This debate is related to a more fundamental difference. In the Awami League's reading, Islamism denies Bangladesh a level of tolerance and openness that is innate to Bengali culture. According to the BNP, a romantic Bengali elite is attempting to dilute Bangladesh's religious identity as a majority Muslim society. Many Bangladeshis, perhaps even most, see no conflict between the interlaced Bengali and Muslim facets of their heritage. And many view the exploitation of such identity politics with cynicism - a diversion from the endemic problems of governance, corruption, and environmental decay that constitute genuine existential threats to their nation.

China on Your Doorstep

January 9, 2014

If there's a Chinese business person in your neighborhood talking about buying a local company or plot of land, you're not alone. Excluding bond purchases, Chinese investment in the US set a record last year at over $14 billion, rising more than 50% from 2012. Whether more is on the way is largely our choice.

The American Enterprise Institute - Heritage Foundation China Global Investment Tracker is the world's only fully public database on Chinese non-bond investment. It contains more than 500 outward investments of $100 million or more made by the People's Republic since 2005, worth over $475 billion (plus hundreds of engineering and construction contracts).

The American performance in 2013 pushed it past Australia as the PRC's leading target. Since 2005, the US has received about $60 billion in Chinese non-bond investment.

While Chinese purchases of US Treasury bonds are much more extensive, they are also abstract. The PRC doesn't just buy slips of American paper anymore. In 2013 alone, it bought a large food company (Smithfield), extensive and recognizable properties in Los Angeles and New York, and several billion dollars in shale production rights.

Is this a good thing? It certainly is for Americans selling some of their land or parts of their companies. To block people selling what they own - to interfere in free enterprise - there better be a good reason.

General: Strategic Military Satellites Vulnerable to Attack in Future Space War

Military studying new system of smaller, survivable satellites

Gen. William Shelton, Commander, U.S. Air Force Space Command / AP

January 8, 2014 

U.S. strategic military satellites are vulnerable to attack in a future space war and the Pentagon is considering a major shift to smaller satellites in response, the commander of the Air Force Space Command said Tuesday.

Gen. William Shelton said in a speech that China currently has a missile that can destroy U.S. satellites and warned that the threat of both space weapons and high-speed orbiting debris is growing.

The threat of attack to large communications and intelligence satellites is prompting a major study on whether to diversify the current satellite arsenal of scores of orbiters.

The four-star general also said he is wary of the United States joining an international code of conduct for space, an initiative promoted by former Secretary of State Hillary Clinton. The code likely would constrain the United States’ freedom of action in the increasingly contested realm of space, he said during remarks at George Washington University.

Over the past several decades, satellites have revolutionized war fighting and caused a shift in the character of military forces from large ground armies to forces that emphasize agility and speed.

Shelton said the United States’ highest priority military satellites are those that provide survivable communications and missile warning. Current systems cost about $1 billion each.

If any of these critical satellites are attacked and destroyed in a conflict or crisis, the loss “would create a huge hole in our capability” to conduct modern, high-tech warfare, Shelton said.

“Space has become contested in all orbits, where we face a host of man-made threats that may deny, degrade, or disrupt our capabilities,” Shelton said, noting electronic jamming, laser attacks and “direct attack weapons,” which are all systems being developed by China’s military.

Jamming satellites is “a cheap and effective way of blocking our signals from space” and lasers “can blind our imaging systems, and in the future, they could prove destructive to our satellites,” he said.

“Direct attack weapons, like the Chinese anti-satellite system, can destroy our space systems,” Shelton said.

China’s successful landing of a robot rover on the moon last month revealed “an aggressive Chinese space program,” Shelton said.

China is also building anti-satellite weapons that range from ground-launched missiles that destroy orbiting satellites, ground-based lasers, electronic jammers, and cyber attacks, according to defense officials.

The latest annual report of the congressional U.S.-China Economic and Security Review Commission stated that China recently conducted a test of a high-earth orbit anti-satellite missile.

The test signaled “China’s intent to develop an [anti-satellite] capability to target satellites in an altitude range that includes U.S. Global Positioning System (GPS) and many U.S. military and intelligence satellites,” the report said. The Free Beacon first reported the test.

What could happen in China in 2014?

The year ahead could see companies focus on driving productivity, CIOs becoming a hot commodity, shopping malls going bankrupt, and European soccer clubs finally investing in Chinese ones. McKinsey director Gordon Orr makes his annual predictions.January 2014 | byGordon Orr

1. Two phrases will be important for 2014: ‘productivity growth’ and ‘technological disruption’

China’s labor costs continue to rise by more than 10 percent a year, land costs are pricing offices out of city centers, the cost of energy and water is growing so much that they may be rationed in some geographies, and the cost of capital is higher, especially for state-owned enterprises. Basically, all major input costs are growing, while intense competition and, often, overcapacity make it incredibly hard to pass price increases onto customers. China’s solution? Higher productivity. Companies will adopt global best practices from wherever they can be found, which explains why recent international field trips of Chinese executives have taken on a much more serious, substantive tone.

Author Gordon Orr discusses some of his predictions for the coming year in China with fellow McKinsey directors Nick Leung and Guangyu Li.

This productivity focus will extend beyond manufacturing. In agriculture, the pace at which larger farms emerge should accelerate, spurring mechanization and more efficient irrigation and giving farmers the ability to finance the purchase of higher-quality seeds. Services will also be affected: for companies where labor is now the fastest-growing cost, a sustained edge in productivity may make all the difference. And in industry after industry, companies will feel the disruptive impact of technology, which will help them generate more from less and potentially spawn entirely new business models. Consider China’s banking sector, where bricks-and-mortar scale has been a critical differentiator for the past two decades. If private bank start-ups were allowed, could we see a digital-only model, offering comprehensive services without high physical costs? Will Chinese consumers be willing to bank online? Absolutely—if their willingness to shop online is any guide.
2. CIOs become a hot commodity

There is a paradox when it comes to technology in China. On the one hand, the country excels in consumer-oriented tech services and products, and it boasts the world’s largest e-commerce market and a very vibrant Internet and social-media ecosystem. On the other hand, it has been a laggard in applying business technology in an effective way. As one of our surveys1 recently showed, Chinese companies widely regard the IT function as strong at helping to run the business, not at helping it to grow. Indeed, simply trying to find the CIO in many Chinese state-owned enterprises is akin to hunting for a needle in a haystack.

Yet the CIOs’ day is coming. The productivity imperative is making technology a top-team priority for the first time in many enterprises. Everything is on the table: digitizing existing processes and eliminating labor, reaching consumers directly through the Internet, transforming the supply chain, reinventing the business model. The problem is that China sorely lacks the business-savvy, technology-capable talent to lead this effort. Strong CIOs should expect large compensation increases—they are the key executives in everything from aligning IT and business strategies to building stronger internal IT teams and adopting new technologies, such as cloud computing or big data.
3. The government focuses on jobs, not growth