6 June 2016

*** Mother China: A ‘Chinese Revolution’ Sweeps Across Pakistan

By Nasir Jamal on 05/06/2016
Like many love affairs, the one between China and Pakistan is made of unrealistic expectations – mostly among Pakistanis – and a hard-nosed pursuit of strategic goals and political and economic objective — mostly by the Chinese.
It is quite late in the night but Rawalpindi’s China Market is still swarming with customers. An array of shops in narrow alleys selling imported Chinese goods next to the bustling Raja Bazaar, the market is stuffed with all kinds of merchandise, leaving little space for the tired customers to move around. “Be careful; you may break the vase. It is expensive,” a salesman in a crockery shop warns a little girl trying to feel the smooth surface of a vessel on display.
At another shop, a woman is haggling over the price of what looks like a Versace handbag. She knows it is a copy – a good one though – and wants the shopkeeper to give her a hefty discount on it. “You are demanding a lot of money for a copy,” she politely reproaches the man at the counter who reminds her that it is a “first” copy and not just an “ordinary” bag. But then he agrees to give her a handsome discount.

Able to buy copies of branded luxury goods which look as good as the originals, and at prices that are within the shopping budgets of most middle-class households across Pakistan, customers in the country have much to thank traders in China Market for. “The best thing about these goods is that our middle-class people can now afford to live in style,” says Noshad Sheikh who runs a shop at China Market. “[Shopkeepers selling these goods have] brought international brands within the reach of local customers who, otherwise, would see those brands only in movies and on television shows,” he says. “Of course, I am talking about copies and not the original products,” he adds with a smile.
Shopkeepers in the market are not bothered by the fact that they are dealing in counterfeit products. On the contrary, they take pride in what they are doing. “We are helping middle-class consumers access new trends and fashions in the world,” says Mohammad Ishaq, another trader at China Market. He goes on to acknowledge that the real credit is owed elsewhere. “This was not possible before China entered our market.”

Like most traders across Pakistan, he wonders if Pakistan’s retail sector could have blossomed like it has in the last decade or so if there were no China. “We wouldn’t have built sprawling markets at such a fast pace or created thousands of jobs [in the retail business] if we did not have these Chinese goods to sell,” says Ishaq. The new commercial culture introduced by China has not just facilitated the creation of middle and low-income consumers in Pakistan, it has also helped small traders like Ishaq and Sheikh to explore options they could have only dreamt about without access to Chinese merchandise. Foreign travel was the prerogative of rich businessmen and the exclusive domain of large-scale traders when business and trade destinations were mostly Western countries. China’s arrival on the scene has allowed even small-scale traders to go abroad and purchase their merchandise first-hand: visas are easy to get, expenses for travel and boarding and lodging are not as big as they would be for European or American destinations and goods in demand back home are dirt cheap when purchased in bulk in China.
“You can go to China every week, depending on your sales and cash flow,” says Mohammad Usman, who deals in mobile phone accessories at Lahore’s Liberty Market. Pakistani traders usually go to Yiwu city in Zhejiang province, about 300 kilometres to the south of Shanghai. The city, according to the United Nations, houses the “largest small commodity wholesale market in the world”. What has made all this possible? How can Pakistani traders go out and shop for Chinese imports with such ease? How have ‘Made in China’ products become so easily available all over Pakistan and at prices that almost everyone can afford? The answers lie in a free trade agreement (FTA) that came into effect between China and Pakistan in July 2007.

*** Let Us Engage Pakistan In A New And Non-Diplomatic Way


Kriti Upadhyaya and Rahul Deans June 3, 2016,
India needs to relook and change its diplomatic policy towards Pakistan and its sponsored terror
India’s economic strength should be properly deployed to change Pakistan’s agenda
India has been pursuing traditional diplomacy in handling Pakistan and its use of State sponsored terror. This approach has not succeeded.
Using economic strength as an instrument of foreign policy is the best way to deal with Pakistan, in a manner that satisfies India’s domestic objectives, while ensuring that its actions don’t attract adverse international attention.
Pakistan’s ability to force its agenda on India, peaked in 1991 - when the Pakistan `won’ in Afghanistan and India’s ally, the USSR, withdrew. India had both political instability and a serious insurgency in Kashmir and had a less robust economy. India has moved ahead since then – with the gap only increasing. We hypothesise that this was because Pakistan, in 1991, chose Islamisation as its path forward, while India chose liberalisation.
By 2001, (after Kargil and 9/11), though India’s progress relative to Pakistan was obvious, Pakistan continued on a path of increasing and more radical Islamisation, which caused it to fall further behind and made a normal relationship with India impossible.
2007-08 represented a tipping point in India’s strength relative to Pakistan. Firstly, India’s per capita income overtook Pakistan (India’s GDP growth has been higher than Pakistan’s in every year since 1991) and the gap keeps increasing. Secondly, the number of security forces and civilians killed in Kashmir, since 07-08, dropped to below 100 and those numbers continue to broadly decline – while Pakistani casualties in its own war on terror have increased.

India will soon start `adding a Pakistan’ to its GDP each year. At the same time, internal conflict within Pakistan and societal divisions, have made it far more unstable than India and can give India leverage that it hasn’t capitalized upon. These include the various ethnic and social divides in the army (`Green vs greener’, Punjabi vs. Pashtun), insurgencies in Baluchistan & KP provinces etc. All happening amid steady radicalization of Pakistani society.
Added to this are unfavourable external and economic factors. Pakistan has never been more isolated internationally, with its neighbours (Afghanistan and Iran) against it as well as its traditional allies (Gulf countries & USA) having a warmer relationship with India than Pakistan.
Declining water and power availability, low literacy and adverse balance of payments are other problems Pakistan faces.
In this context, we believe the relationship between India and Pakistan would soon resemble that between South and North Korea. Thus India’s policy should be based on:

Silent economic strangulation: Measures that can be taken quietly to exacerbate Pakistan’s economic problems.
Hit exports: Textiles make up over half Pakistan’s exports, led by cotton products. Any dent in this through enhanced Indian exports, could push Pakistan’s BOP deficit over the edge- while helping our farmers. Banning cotton exports to Pakistan ($ 381 million in 2014) and a rail subsidy (eg. from Gujarat to TN) are required. The interest subvention scheme for textile exports should be extended to cotton yarn and merchant exporters, while the MEIS scheme can have a 5% benefit instead of 3% for tariff lines significant to Pakistan. Indian companies could also be subsidised to acquire assets of companies in Vietnam and Uzbekistan, which compete with Pakistan for cotton exports.
Basmati rice is Pakistan’s second largest export and given the very low exporter margins, even a minor subsidy (eg. reduced rail freight) will severely hit Pakistan’s exports.

Remittances: Remittances (mostly from the Middle East) are Pakistan’s 2nd biggest source of foreign exchange. If the Indian Government steps in as a `placement agency’ for State run companies in the Middle East, it could ensure that the cost of recruitment for both employer and worker are reduced (no commission charged), worker quality improved and more Indian’s are recruited from lower wage areas in the country (rather than higher income states like Kerala) who would be induced to work at the falling wage levels in the Gulf, thereby displacing Pakistani workers.

Trade: India should continue extending MFN (most favoured nation) to Pakistan, even if Pakistan does not, because it does not make any difference to Indian trade, but enables India to show that it believes in a prosperous Pakistan through enhanced trade (which is why normal diplomatic and track 2 engagement should continue). Trade policy should focus on the impact on inflation, or economic competitiveness in Pakistan. Thus power should not be exported, as it would alleviate Pakistan’s crippling power shortages, nor beef (the increased price of which leads to social unrest). India can also stipulate that foreign companies bidding for projects in India, cannot be a supplier to any Pakistan state run organisation (though exceptions can be made and bans can be on grounds of national security, rather than official policy). Visa denials for Pakistani executives (on the same grounds) would have a far bigger impact on the Pakistani business environment (and none in our media) than a visa denial to a performing artiste.

Afghanistan: The developing of Chabahar port in Iran and development work in Afghanistan are `baby steps’ in what should be a much larger intervention to develop Afghanistan and use it as a base to undermine Pakistan. Afghanistan has 0 duties on many items which have high tariffs in Pakistan. Exporting these items to traders in Afghanistan, who smuggle them across into Pakistan, will not only undermine Pakistan’s import duty collections, but finance freedom fighters in Baluchistan – whose representatives can handle distribution into Pakistan. To facilitate this, India needs a military presence (to train the Afghan army) in Nimroz province - bordering Iran and Baluchistan (where it has built the only highway in the province), along with enhanced development of the railway from Iran to Afghanistan and increased development work. India’s relations with Iran and Afghanistan have never been better and their relations with Pakistan have never been worse, which gives India the perfect opportunity to enhance its profile in the region.

Water: Pakistan will soon be one of the most water stressed countries on earth (per capita water availability will soon be half of India’s). Even if India sticks to the provisions of the Indus water treaty -in which 80% of Indus water goes to Pakistan, it can take several legitimate measures to restrict water availability for Pakistan such as:

-Work with Afghanistan to complete hydel projects on the Kabul-Kunar river system, (which contributes 16% of the total Indus river water available to Pakistan)

- Upper Indus rivers: Using the Kishenganga project arbitration award as a template, complete other identified `run of the river’ projects. India has exploited only about 6000 of the 20,000 MW of power potential from these rivers. Completing projects on the Indian side quickly also renders unviable Pakistan’s own hydel projects and reduces the flow of water to Pakistan in winter. India should also fully utilise the irrigation potential allowed under the treaty – currently only 0.79 million acres are irrigated, of the 1.34 million permitted.

- Lower Indus rivers: Extending the Rajasthan canal to Kutch (a project the PM identified back in 2002) and completing the Sutlej-Yamuna canal, will sharply reduce water availability to Pakistan from the 3 lower Indus tributaries (the water from which is fully allotted to India under the IWT, but not fully exploited).Taken together, these measures will badly affect water availability for Pakistan’s rabi crop.

Exploit Internal divisions in Pakistan

Kashmir dominates India-Pak discussions and puts India on the defensive. However, Pakistan’s own disaffected ethnic groups want `Azadi’ more than Kashmiri’s in India and form a larger proportion of Pakistan’s population. The increasing economic gap between India and Pakistan also means that income levels in Indian Kashmir (already higher than POK) would result in unfavourable comparisons with POK (where the level of autonomy and freedom is possibly less than in Indian Kashmir). This is missing from GOI’s narrative on Kashmir.

** To Catch a Cyber Thief Stratfor: crime-fighting against cyberthieves

Summary: 2016 is the breakout year for cybercrime. Ransomware went global, the third major theft using the global banking SWIFT system, and a multi-million attack on Japan’s ATM’s network. Here Stratfor looks at the mechanics of crime-fighting against cyberthevies.
Stratfor, 3 June 2016
South Africa’s Standard Bank, so far the only institution to come forward as a victim of fraudulent withdrawals by an organized network, will not be able to recoup all of its $12.7 million in losses.
Arresting the street criminals associated with unlimited operations will do little to stop future strikes, which will continue until the hackers behind the heist are found and detained.
Nevertheless, authorities will likely apprehend the hackers behind the latest unlimited operation in Japan, though it may take years.
In the early hours of May 15, hundreds of people withdrew millions of dollars from more than 1,000 ATMs throughout Japan using fraudulent information. KATAMAKURA/Wikimedia.
Financial institutions face a growing list of cyberthreats that can detract from the bottom line. And increasingly, cybercrime and street crime are finding common ground. In the early hours of May 15, more than 100 individuals used fraudulent financial information to make nearly 14,000 withdrawals from ATMs at 1,400 7-Eleven convenience store locations scattered throughout Japan, according to Japanese police. As a result, South Africa’s Standard Bank suffered $12.7 million in losses, though its individual customers did not lose any money. This suggests that the heist was not a case of widespread identity theft but rather a more sophisticated form of electronic intrusion known as an unlimited operation.
Unlimited Operations

Before the incident in Japan, criminals had pulled off four major unlimited operations since 2007. Over the years, the attacks have become more ambitious, progressing from a $5 million caper in 2007 to a $55 million operation that spanned two years from 2011 to 2013. Regardless of the size of the operation, they all follow the same basic plan.
In unlimited operations, a small group of hackers deploys street criminals to help exploit vulnerabilities in the banking system. First, intruders gain access to the bank or third-party servers that process ATM transactions. Once in the server, the hackers create credentials that allow them access to unlimited account values. They then recruit intermediaries to fabricate access cards and make withdrawals. As the intermediaries, known as “cashiers,” make their withdrawals, the hackers can monitor account transaction activity through the ATM processing servers.
After the operation is finished, cashiers retain a cut of the proceeds and send the rest to the hackers. The crimes are remarkable in their collaborative aspect: Neither the hackers nor their accomplices on the ground could execute the operation alone. And by teaming up with street criminals, the technical masterminds are better able to evade capture and plan future strikes.
Limited Similarities

So far, details from the Japanese case support this model. Like previous unlimited operations, it targeted a bank — and not its customers — and employed scores of people to withdraw millions of dollars from thousands of ATMs in a matter of hours. But the Japanese case differs from the other operations in two notable ways. For one, the latest incident was more geographically focused. In three of the earlier cases, leaders distributed fraudulent account information to cashiers around the world; the two-year operation, linked to a Turkish hacker, Ercan Findikoglu, spread across 26 countries, including Japan.
Although Japan is the only country so far connected with the latest case, this could change. In the previous cases, investigators worked for years to uncover the extent of the crimes. Furthermore, the May operation could have hit other banks that have not yet come forward. After all, Japanese authorities waited a week before making this case public. Japan and South Africa are relatively soft targets for an unlimited operation since neither has fully implemented the more secure chip-and-pin electronic payment system. Without chip-and-pin technology, thieves can overwrite account information on a credit card’s magnetic strip, a tactic that prior operations relied upon.

Speech of the Defence Minister Shri Manohar Parrikar at the Shangri-La Dialogue

PIB Press Release
Jun 4, 2016 
 Speech of the Defence Minister Shri Manohar Parrikar at the Shangri-La Dialogue
Following is the full text of the speech of the Defence Minister Shri Manohar Parrikar at the Plenary Session II: Managing Military Competition in Asia, at the Shangri-La Dialogue in Singapore, today: -

“I thank the organisers, the International Institute of Strategic Studies and the Government of Singapore, for inviting me to address this year’s Shangri La Dialogue.
Before I commence my comments on the subject for this Session, a disclaimer is perhaps necessary. For India, located as we are at the centre of the Asian landmass astride the Indian Ocean, any reference to Asia implies its fullest geography ranging from the Suez to the shores of the Pacific.
This is a vast area with many complexities.
As we are aware, large parts of West Asia have been grappling with a new and dark variant of violent conflict.
Closer home, to India’s west, the brave Afghan people continue their efforts to revive their nation and rebuild their state in the face of terrorists nurtured in the neighbourhood.
Today, I will, geographically speaking, limit myself to what is now aptly and increasingly referred to by the strategic community as the Indo-Pacific.
I come from a coastal state of India. It is natural for me to have a bias towards the maritime domain. Seriously speaking, this is also the domain of India’s “Act East” policy in all its dimensions – cultural, economic and security.

Ladies and gentlemen,
The theme of this session suggests that we are confronted with a new challenge. A broad look at trends in the region suggests that countries in the Asia-Pacific are spending more on defence. If you look at recent figures, Australia, China, India, Indonesia, Japan, Philippines and Vietnam, all appear to be spending more on military capabilities.
A closer look suggests the picture is more complex. In some cases, there is a catching-up happening after years of neglect of capital expenditure in defence. In other cases, there are new challenges and new roles for the armed forces.
Regardless of what view we take, I believe that we cannot reach a definitive conclusion that we are witnessing emerging military competition in the region based on figures of military expenditure.
What really matters is the manner in which military capabilities are developed and how they are deployed. These two aspects – you may simply call them transparency and behaviour - are perhaps more important than expenditure alone.

IPSO FACTO Taking the ordnance route

June 4, 2016 
No foul play: “The cause of the Pulgaon explosion is still being ascertained, but the Army brass and the Defence Minister have virtually ruled out sabotage since the CAD is well-secured.” Army officials pay tribute to the mortal remains of Lt. Col. Ranjit Singh Pawar who died in the fire tragedy at CAD Pulgaon in Maharashtra, during his last rites in Haridwar.Photo: PTI
The Pulgaon explosion puts focus on the serious gaps in the modernisation process of the Army’s ammunition depots.
Sarthak Patil (name changed), a 21-year-old engineering student, was at his friend’s house on Tuesday night when a deafening explosion rang out in the distance. Sarthak and his friend, residents of the Nachangaon locality in Pulgaon town of Wardha district, Maharashtra, looked out and saw a towering blaze emanate from beyond the boundary wall that cordons off the Indian Army’s Central Ammunition Depot (CAD) located nearby; one of the sheds inside the compound was on fire. He rushed home — his family and the entire neighbourhood were woken up by the impact of roughly 130 tonnes of ammunition blowing up. “It was like an earthquake. But when we moved out of our houses, we could see large flames from the depot,” says his mother.
Beyond the boundary
Residents of Nachangaon, Pulgaon, Agargaon, Nagjhari, Pipari and Loni village — all places in the vicinity of the CAD — think the Army depot was a “big secret” which has been outed to the world with the explosion which claimed at least 19 lives, including two officers, four Defence Security Corps jawans and 13 firefighting staff. “Please do not name us. We may face trouble if our names are quoted in newspaper reports,” Sarthak’s family members request. Some villagers from Agargaon went on to claim that Pakistan might attack this Army installation now because the media has revealed its location. “You media people have defamed Pulgaon. The world did not know what’s here. Because of you, now our lives are at risk. Terrorists will come to Pulgaon now,” villagers led by a local leader, Manish Shahu, shouted at mediapersons the morning after the fatal explosion.

Revealed: India's Ambitious New Naval Strategy

New partners show New Delhi is thinking regionally.
June 2, 2016
Recent developments in the Indian Ocean have been a witness to India’s mustering enough political will to advance its regional interests through actionable deliverables, visibly in opposition to mere notional assertions of the past. As India reorients its Indian Ocean policy, a tripartite transformation is underway—a regional outlook that ties together India’s Act East policy, its Look West policy and, most noteworthy, its cooperation with the United States in the regional maritime domain.
Acting East

The transformation from a Look East to an Act East policy has been at the center of India’s maritime recalibrations in the past few years. Such an approach has been accompanied by an improvement in relations with not just the individual countries to its east, but with strong regional organizations such as ASEAN. Countries of specific focus for India have recently included Vietnam, Brunei, Thailand and Indonesia.
The maritime area extending from India’s Andaman and Nicobar Islands has also been critical to India’s recent regional maritime calculus. The focus on the Andaman Sea, for instance, has been critical to both India’s developing role in the Indo-Pacific as well as its by now axiomatic desire to be a regional net security provider. In this regard, from April 19–27 in the Andaman Sea, INSKarmuk along with a Dornier maritime patrol aircraft participated in the twenty-second Indo-Thai Coordinated Patrol (CORPAT). CORPAT has been underway since 2005, taking place biannually to ensure the safety of international trade and shipping lines. The twenty-second CORPAT had a clear focus on search and rescue at sea and preventing unlawful activities, furthering India’s regional net security provider agenda. India has also extended naval cooperation with Thailand in other areas, such as training of Thai navy and coast guard trainees. For this purpose, Indian naval ships Tir and Sujata and sail-training ship Sudarshini, along with the Indian Coast Guard’s Varuna, were deployed in Phuket, Thailand as part of an overseas deployment this spring.

Indian Bankruptcy Reforms: Where We are and Where We Go Next

June 2nd, 2016
in india
by Ajay Shah, ajayshahblog
-- this post coauthored by Susan Thomas
Bankruptcy reforms have been moving forward at a blistering pace for the last few weeks, with the Insolvency and Bankruptcy Code ("IBC") being enacted by the Lok Sabha and then the Rajya Sabha. In this article, we take a look at where we are in Indian bankruptcy reform, and where we need to go next.

Follow up:
1. Bankruptcy reforms in the context of Indian economic reform
All business plans are speculative views of the future. Some will inevitably go wrong, either because of failures of conception or of execution. As India lacks the requisite institutional arrangements, at present, when a firm goes into default, the management, capital and labour get stuck in an interminable mess. With a sound bankruptcy process, we would be able to rapidly resolve the situation, and everyone would move on. This is the best outcome for society at large. In such a world, there would be more entrepreneurship, more risk taking, more debt, more unsecured debt, and more non-bank debt.
In India, the lack of a sound bankruptcy process implies a flawed legal foundation of limited liability companies. The classic definition of limited liability is a bargain: Equity is in charge of the company as long as all dues to Debt are met. When the firm defaults on its debt obligations, control over the assets of the firm shifts from Equity to Debt. This is not how India understands limited liability today. We tend to think that a company belongs to its founding family no matter what happens by way of firm default.
As a financial agency with a keen interest in good bankruptcy outcomes for banks, RBI has led many attempts at bankruptcy reform. These include CDR, SDR, wilful defaulters, and ARCs. However, these have not delivered results. Even if these policy initiatives had been better designed, the role of RBI in the credit market is inherently limited because there is much more to lending than lending by banks. The bankruptcy process requires a machinery that is grounded in Parliamentary law, which is beyond the powers of regulations or informal arrangements made by a financial agency.

One component needed for bankruptcy reforms was built by the Financial Sector Legislative Reforms Commission (FSLRC), led by Justice Srikrishna from 2011 to 2013. The `resolution corporation' in the draft `Indian Financial Code' (version 1.0 in 2013 and then version 1.1 in 2015) is a specialised bankruptcy process for two kinds of financial firms: those that make intense promises to consumers, and those that are systemically important. This component has been slowly moving towards implementation, after MOF first setup a `Task Force' on the subject, and then made an announcement in Para 90(i) of the budget speech of February 2016. But the bankruptcy process for all other firms was a project waiting to be done. Some work on these lines went into the Companies Act, 2013, but it only partly dealt with the mechanisms of restructuring and winding up.
2. The journey to the law

The Budget Speech in July 2014 had one sentence in Paragraph 106:
Entrepreneur friendly legal bankruptcy (sic) framework will also be developed for SMEs to enable easy exit.
This sentence could have been done in an incremental way. Instead, it was taken on a more ambitious scale at the Ministry of Finance (MOF) with a policy project that would go beyond just an SME bankruptcy framework for India. In late 2014, MOF setup the Bankruptcy Legislative Reforms Committee or the BLRC, led by Dr. T. K. Viswanathan, with the objective of building a full fledged bankruptcy code.
The work of the BLRC was placed in the FSLRC division of the Department of Economic Affairs (DEA), so as to harness the institutional memory about the working of FSLRC. The BLRC submitted a two volume report on 4 November 2015. The report is similar to the output of the FSLRC: the economic rationale and design features of a new legislative framework to resolve insolvency and bankruptcy was in Volume 1 and the draft bill was in Volume 2. These materials were put on the MOF website. A modified version of this bill, with public comments incorporated, was tabled in Parliament in the winter session on 23 December 2015.
After the IBC was tabled, the Joint Parliamentary Committee on Insolvency and Bankruptcy Code, 2015 (JPC) was set up on the same day to analyse the draft bill in detail. The JPC submitted its report which included a new draft of the law. This is the draft Insolvency and Bankruptcy Code (IBC) that has since been passed by both houses of Parliament.

Why India will be Kept Out of the Nuclear Suppliers Group

Ruhee Neog, June 2, 2016
Ahead of this month’s Nuclear Suppliers Group (NSG) plenary, at which the consideration of India’s membership is expected, a couple of things have happened in quick succession. China announced its opposition to permitting non-Nuclear Nonproliferation Treaty (NPT) members into the NSG, and Pakistan, citing its observance of NSG guidelines, made an application for membership. The United States, which has been quite vociferous in its support for India’s membership, and has, for some time, lobbied NSG members for their positive vote, reiterated its traditional line. Of the 48 members of the NSG, three players—China, the “non-proliferation hardliner” countries, and the United States—will play an important role in deciding which way the vote will sway.
First, China’s position, although premised on the principled-sounding “non-admittance of non-NPT signatory” argument, takes into account wider geostrategic calculations. Its opposition, though not new, is primarily based on two factors: keeping India out, and keeping Pakistan pegged with India.

Beijing’s “non-NPT” argument is not so much a matter of principle as it is resistance to India being granted the same privileges as China, an NPT signatory. NSG membership would give India greater access to the international nuclear market, and to the perks and benefits that China enjoys. In addition to opening up nuclear commerce, the NSG can be a source of legitimacy for a nuclear-armed state outside of the NPT, and for regional power projection.
This is why tying India’s entry with that of Pakistan’s is an effective delay tactic. Incidentally, keeping India out of the NSG keeps Pakistan out as well—so much for the China-Pakistan “all weather” friendship. Equating Indian membership with Pakistan could also allow China to balance the scale by having another powerful voice oppose India’s commercial moves in the nuclear sphere. For China, therefore, keeping India out of the NSG necessitates campaigning for Pakistan, in order to assert its geopolitical interests, and avoid a possible India-China hyphenation or equivalence.

MiG - 21 : The Story Of Russia’s ‘People’s Fighter’ And Its Service In The IAF

Rakesh Krishnan Simha
June 5, 2016,
The MiG-21 holds the record for being the most produced jet aircraft in aviation history. Over 11,000 MiG-21s, derivatives and copies have been built over the last 60 years.
The aircraft was the Indian Air Force’s mainstay fighter for many decades.
Rakesh Simha takes a look at the history, service record and legacy of this aircraft that is now slowly on its way out.

The time: 2 pm, December 12, 1971, India-Pakistan War.
The place: A forward airbase in Jamnagar, Rajasthan.
One of the most eagerly awaited dogfights in aviation history is about to take place. The Americans have supplied their ally Pakistan with the Lockheed F-104 Starfighter, the most advanced jet in their inventory, while the Indians have opted for the Russian MiG-21. It will be the first aerial combat between Mach 2 (twice the speed of sound) aircraft.
Two F-104s of the Pakistan Air Force enter Indian air space for an attack on the airbase. As the first Pakistani aircraft dives in towards the airfield, a patrolling MiG-21 pilot spots the attacking aircraft and gets after him.
Observing the MiG on his tail, the Pakistani F-104 breaks off the attack, turns and tries to shake off its pursuer. However, the Indian pilot pulls the MiG-21 into a tighter turn well inside the enemy plane and launches an air-to-air missile. It misses.
In the meantime, the pilot of the second Pakistani Starfighter, the wingman, sees a second MiG-21 turning towards him. Realising he’s up against a much superior aircraft, he makes his escape.
His captain, however, is not so lucky. He attempts to get away using sheer speed but realises the MiG-21 is equally fast. The desperate chase now takes them over the shark-infested waters of the Arabian Sea. This time, instead of using missiles, the Indian pilot takes aim with his cannon and fires a long burst. Wise decision – flashes on the F-104’s metallic surface indicate a direct hit. Seconds later the American-built aircraft spins out of control and crashes into the sea.

The Indian Navy sends out rescue boats but the Pakistani pilot is not found. At that speed when you hit the water’s surface it’s like hitting concrete.
During the war the MiG-21s were pivotal in giving the IAF air superiority, which played a huge part in India’s victory. Military analyst Edward Coggins writes in ‘Wings That Stay On: The Role of Fighter Aircraft in War’ that by the time the hostilities came to an end, the IAF MiG-21s had claimed four Pakistani F-104s, two F6, one F-86 Sabre and one Lockheed C-130 Hercules. The Russian fighter had clearly won the much anticipated air combat between the MiG-21 and the F-104, he writes. Indian Air Force MiG-21 (modernized - MiG-21) during Aeroindia 2005, Bangalore, India. (Photo: Sheeju)

With top cover provided by the MiGs, the IAF’s Sukhoi-7s and Hunters launched relentless attacks on Pakistan’s forward airbases, forcing the PAF to operate from bases further inland. This curtailed their range and the PAF aircraft were no longer able to attack freely.
According to the IAF’s official history of the 1971 War, from December 8 Western Air Command changed its tactics for counter air and close air support operations. “Deliberate attempts were made to attract the PAF’s attention and invite aerial engagement. Strike missions were led by fighters which flew high enough to be seen on Pak radar screens. But the PAF refused to cooperate. Instead there was a marked decline on attacks on Indian troops.”
The main reason why the PAF refused to engage in dogfights was the fear of encountering the MiG-21. The Pakistanis were now psyched by the multiplier effect of the MiG-21. The Russian aircraft was – to use an American football term – running interference for IAF bombers and strike aircraft and the PAF could do nothing about it.

Why Prioritising Citizenship For Hindu Refugees From Pak Makes Humanitarian Sense

Surajit Dasgupta,  June 4, 2016,
Hindus persecuted in Pakistan and Bangladesh about to find a home in India.
The long-drawn struggles of Omendra Singh Ratnu of Rajasthan and Tajinder Pal Singh Bagga of Delhi are about to draw to a happy close. The Vishwa Hindu Parishad’s Rakesh Ranjan, Santosh Rai, Chandra Prakash et al, and advocate Bhim Singh,who got a stay on the order of deportation of Pakistani Hindu refugees from the Delhi High Court on 21 December 2011, will be happy, too.
But the most relieved of them all will be the few lakh refugees who escaped that hellhole of persecution called Pakistan, using tourist visas with the intention of never returning from India. Swarajya caught up with some of them living in mud and bamboo huts next to Gurudwara Majnu ka Tila (Maharana Pratap Camp), Sector 11 of Rohini and Adarsh Nagar of Jahangirpuri.

Former government employee Chaudhary Nahar Singh, who worked tirelessly to ensure that 940 refugees got some accommodation in Delhi when the UPA government was about to deport them in 2011, sounds satisfied with his work today. When Hindu organisations in this country were yet to put up organised resistance against the senseless attempts of the former administration to deport persecuted people, Singh had offered his own house to shelter hundreds of refugees.
Overall, an estimated two lakh Hindus have fled Pakistan and Bangladesh and sought shelter in this country. At the time of Partition, there were about three crore Hindus in East and West Pakistan. They are now reduced to a small fraction of that number in Pakistan and Bangladesh.
Hari Om Sahu of the VHP, who has been working for the uplift of these refugees by arranging for their employment, food, education of children, and health facilities for all, is happy that the inmates of the camp in Rohini have begun earning decently. This list is not exhaustive; there are many other unsung, heroic volunteers who worked for the cause.

Heavy Water leakage at the Kakrapar Nuclear Power Plant

ISSSP Reflections No. 43, June 2, 2016
Author: Kaveri Ashok
Kakrapar Atomic Power Station (KAPS) is situated near Vyara town of Gujarat. The campus houses two units of operational 220MW Pressurised Heavy Water Reactors (PHWR), and two units of 700MW PHWRs under construction. The unit 1 was declared world’s best performing PHWR in 2003 by the CANDU owners group (COG). The fact that the Kakrapar nuclear power plant, located about 400km southeast of the epicentres of the 2001 quake scaling 7.9 in the Ritcher scale, continued to function even in the aftermath of the 2001 quake, is evidence of their in-built quake-proof technology.
In its 24 years of operation, the reactor has been shut down thrice due to operational anomalies:
Unit-1 was temporarily shut down for 66 days in 1998 due to a leak in its stator water systems.
On 10 March 2004, when Unit-1 was in operation generating 170 Megawatts of electricity, an event involving rise of reactor power occurred. (Level 2, INES)
On March 11, 2016, a leakage of heavy water from the coolant pipes led to the shutdown of the Unit 1. (Level 1, INES)
In order to better understand the March 11 incident at KAPS 1, this article attempts to contextualise the current incident within the history Heavy Water spills/leaks in similarly designed Pressurized Heavy Water Reactors (PHWRs) in India.

Nuclear Reactors: Pressurized Heavy Water Reactor
A nuclear reactor is based on the process of neutron-induced nuclear fission, in which a heavy nucleus, such as that of uranium or plutonium is split into fission products, releasing energy. Each fission reaction releases 2-3 neutrons, which can induce fission in more nuclei, thus starting a chain reaction. Nuclear reactors are designed to achieve a self-sustaining chain reaction to steadily produce energy. The minimum fissionable material required to attain chain fission is called critical mass and when the reactor first sustains a chain reaction, it is said to have become critical. The region of the reactor where the chain fission reaction takes place is known as the core. Typically in a nuclear reactor, the energy produced in the core is transferred to a primary coolant, whose heat is in turn used to generate steam to turn the turbines and hence produce electricity.

RBI review unearths Rs 2,41,000 cr bad loans in last 6 months of FY16

Gross NPAs have gone up from Rs 349,113 crore in September 2015 when the RBI ordered the asset review to Rs 590,772 crore by March 2016, say figures compiled by Care Ratings.
Written by George Mathew MumbaiUpdated: Jun 4, 2016, 

Banks have reported a 69 per cent spike in non-performing assets in the last two quarters following the asset quality review ordered by the Reserve Bank of India (RBI) and fresh slippages in restructured loans.
Gross NPAs of lenders have surged by a whopping Rs 2,41,000 crore in just six months — December and March quarters of fiscal 2015-16 — mostly due to the aggressive provisioning undertaken by PSU banks at the behest of the RBI. As a result, gross NPAs have gone up from Rs 349,113 crore in September 2015 when the RBI ordered the asset review to Rs 590,772 crore by March 2016, say figures compiled by Care Ratings.

The NPA ratios of at least four banks are in a precarious position, warranting “prompt corrective action” by the RBI, banking sources said. Indian Overseas Bank has gross NPAs of Rs 30,049 crore, or 17.40 per cent, of its advances are bad loans. UCO Bank’s gross NPA ratio is 15.43 per cent, UBI 13.26 per cent and Bank of India 13.07 per cent. Punjab National Bank, Canara Bank and Allahabad Bank have virtually doubled their bad loans after the RBI review.
“The RBI review has clearly brought out the skeletons from banks’ cupboards. Some of them were clearly understating their bad loans in quarterly results before the RBI review. We are yet to see the bottom of this problem,” said a top banking source. State Bank of India, which showed a stable trend in NPA levels before the RBI asset quality review added Rs 42,000 crore to the overall NPA level of Rs 98,172 crore after the stringent provisioning ordered by the RBI. As much as Rs 62,000 crore of SBI bad loans is accounted by large and mid-corporates with the latter’s defaults aggregating Rs 41,515 crore.
Has NPA level peaked or will there be more disclosures in the ongoing quarter? “I would like to wait for another two quarters to conclude that the worst is over. I think there is still some cleaning up to do which will be done in these two quarters if need be. But this would be bank specific and not universally. We have witnessed fairly aggressive provisioning in the last two quarters which should start tapering off now,” said DR Dogra, managing director & CEO, Care Ratings.

America's Biggest Defense Contractors

by Felix Richter, Statista.com
-- this post authored by Niall McCarthy
The U.S. government is replacing a whole host of military equipment worn out after the wars in Afghanistan and Iraq as well as Cold War era hardware that is becoming obsolete.

In 2015, the Pentagon's top-100 contractors had obligated contracts worth $175 billion, according to government figures. Lockheed Martin, who are currently developing the F-35 Joint Strike Fighter, were the largest government contractor by far with $36.2 billion contracted. Of that, $29.4 billion was contracted for defense projects. The F-35 is the most expensive U.S. weapons system ever, costing some $400 billion and due to cost $1 trillion more over the course of its life cycle.

This chart shows U.S. Department of Defense expenditure with contractors in 2015.

Water — Scarcity, Excess and the Geopolitics of Allocation

Jun 02, 2016
Downloadable PDF
Water -- Scarcity, Excess and the Geopolitics of Allocation
Download the PDF

Water — Scarcity, Excess and the Geopolitics of Allocation
“When the well is dry, we learn the worth of water,” said Benjamin Franklin.
Much of the world has taken water for granted over the years, but that situation is quickly changing. Today, the use of this essential resource is being more closely scrutinized as shortages proliferate worldwide. Population growth, the rising middle class and urbanization increasingly are stressing existing resources. At the same time, water security and geopolitical stability depend on resolving global and local tensions affecting efficient and equitable use. This special report, based on a conference held in March and organized by the Joseph H. Lauder Institute of Management & International Studies, offers a comprehensive look at the potential challenges and solutions facing the future of water globally.

For example, estimates suggest that by 2030 almost four billion people — nearly half of the world’s predicted population — will live in areas with serious water shortages, mostly in Africa, Australia, East Asia, South Asia and the Middle East. Already, nearly 700 million people lack access to clean drinking water and about 2.8 billion face water scarcity during at least one month a year. Beyond drinking water and its role in food production, water is also essential for almost every source of energy — about 90% percent of all electric power generation is water-intensive.
So there is no shortage of challenges regarding water. Yet, a variety of technologies — from desalination to wastewater reuse, and from information-driven innovations to new market-based mechanisms — have the potential to improve efficiency and open up other solutions. More generally, sharing the world’s water wealth will require better management, infrastructure and technology but also delicate diplomacy, especially given the potential effects of climate change on the world’s hydrology.

The full report can be downloaded from this page as a PDF.

Earth's Relentless Warming Just Hit A Terrible New Threshold

Special Report from ProPublica
- this post authored by Sarah Smith
In an age of broken temperature records, this one is especially worrisome.
The number of climate records broken in the last few years is stunning. But here's a new measure of misery: Not only did we just experience the hottest April in 137 years of record keeping, but it was the 12th consecutive month to set a new record.
It's been relentless. May 2015 was the hottest May in records dating back to 1880. That was followed by the hottest June. Then came a record July, August, September, October, November, December, January, February, March - and, we learned from the National Oceanic and Atmospheric Administration on Wednesday - the hottest April. In an age of rising temperatures, monthly heat records have become all too common. Still, a string of 12 of them is without precedent.
Perhaps even more remarkable is the magnitude of the new records. The extremes of recent months are such that we're only four months into 2016 and already there's a greater than 99 percent likelihood that this year will be the hottest on record, according to Gavin Schmidt, who directs NASA's Goddard Institute for Space Studies.
The chart below shows earth's warming climate, measured by land and sea, dating back to 1880.

Click to see full graphic

If NASA's Schmidt is right, 2016 will be the the third consecutive year to set a new global heat record - the first time that's ever happened. So far, 15 of the hottest 16 years ever measured have come in the 21st century.
Results from the world's chief monitoring agencies vary slightly, and the National Aeronautics and Space Administration says April is only the seventh consecutive record-breaking month. But NASA, NOAA, and the Japan Meteorological Agency all agree that the extremes of 2016 are unrivaled in the modern climate record.
The NASA map below shows how heat was distributed across the globe last month. The most extreme heat swept the Arctic, where ice levels have been setting daily lows for this time of the year. Come summer, the ice cap at the top of the planet will likely be the smallest on record.

Nuclear Pakistan vs. Nuclear Iran: There's No U.S. Double Standard

Washington isn’t playing favorites.Farhad Rezaei,June 3, 2016
Observers have been particularly puzzled to understand why the United States considers the Islamic Republic of Iran a threat and why, therefore, it is unlikely to give up its quest to stop Iran from acquiring nuclear weapons.
There has been enormous debate among scholars that the reaction of the United States—as one of the guardians of the Non-Proliferation Treaty (NPT)—to Iran’s weaponization efforts and its breaking of the NPT rules has been entirely different from its approach to other proliferators, Pakistan in particular. On May 28, 1998, Pakistan’s long-suspected work on nuclear weapons, revealed by five simultaneous underground nuclear-weapons tests, introduced a new element of volatility into the region. However, regardless of some modest criticism and short-lived sanctions imposed by the U.S. Congress, Pakistan’s proliferation was almost universally accepted. In contrast, Iran’s effort to acquire nuclear weapons triggered tremendous anxiety and unprecedented efforts by Washington to roll it back.
This article posits that a number of factors were the source of these differences. First, and on a theoretical level, the debate in Washington addressed the question of whether rogue countries like Iran are rational enough to be trusted with nuclear weapons.

Fighting Weapons of Mass Disruption

It’s no secret that violent extremist groups around the world are seeking to buy, steal, or build destructive weapons to use in a relentless campaign of terror. One potential weapon is a radiological dirty bomb, which is also known as a “weapon of mass disruption.”
Unlike an improvised nuclear device (IND), a dirty bomb made with a radiological source would not cause catastrophic levels of death and injury. But depending on its chemistry, form, and location, it could cause billions of dollars in damage due to the costs of evacuation, relocation, and cleanup – and it would clearly have severe economic and psychological consequences.

While a dirty bomb would be less catastrophic than an IND, there is a higher probability of it occurring, because radiological materials are more widely available and less secured.
Radiological materials are dispersed across thousands of sites in more than 100 countries. They are located at private sector facilities with minimal or no physical protection, and many sites have no trained on-site security forces. These medical, academic, and research sites are by their nature open environments and accessible to large numbers of people.

The terrorist attacks we’ve seen in cities around the world should serve as a wake-up call to governments, the medical community, and industry around the globe to immediately secure all radiological materials or replace them with alternative technologies, where feasible. 

New Report on the State of Global Terrorism

The State of Global Terrorism in 2015
Micah Zenko
Council on Foreign Relations
June 2, 2016
Today, the U.S. State Department published its Country Reports on Terrorism: 2015—a congressionally mandated analytical and statistical review of global terrorism. It is important to understand how the U.S. governmentdefines this subjective phenomena: “The term ‘terrorism’ means premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents.”
Based upon my initial reading, there are five significant findings that stand out from the latest report.
There was an overall decrease in global terrorism. Reversing trends that had been established in recent years, there was a decrease between 2014 and 2015 in total attacks, from 13,463 to 11,774, and total fatalities, from 32,727 to 28,328. There was also a slight decline in the number of countries where attacks took place from 95 to 92. However, to keep this slight decrease in perspective, it still represents a remarkable growth of 215 percent over the past five years—during President Obama’s first full year in office, in 2010, there were 13,186 individuals killed by terrorists around the world.

Terrorism continued to be a phenomenon that is clustered in a handful of countries. In both the 2014 and 2015 reports, just over half of all attacks took place in five countries (Iraq, Pakistan, Afghanistan, India, and Nigeria), and three quarters of all fatalities in five as well (Iraq, Nigeria, Afghanistan, Pakistan, Syria). Unsurprisingly, terrorism remains the preferred tactic of relatively weaker non-state actors who believe they can achieve their political objectives through

Pakistan's Options on India's BMD Defence

SR Monitor
May 31, 2016
Ali Ehsan Discusses Pakistan's Options on "India going ‘ballistic’?"
An article by Muhammad Ali Ehsan in The Express Tribune on May 21, says that considering the no-first use nuclear doctrine that India follows and Pakistan does not, the lack of an anti-ballistic missile technology was a gap in Indian security. But has that gap been filled now by the test-firing of the missile? Asked Ehsan , saying , If not, how long will it take for India to build up an anti-missile defence shield? What are the implications and strategic effects of this renewed Indian interest in the development, induction and expansion of missile systems in its armed forces? And how is Pakistan likely to respond to this Indian development?

According to Ali Ehsan in his article in Express Tribune, all indicators suggest that India is in the process of developing a nuclear missile shield. This won’t be a defensive arrangement as the name might suggest but an offensive deployment of radars and ballistic missiles designed and deployed to take down incoming missiles at a far-off distance. Reportedly, India has already placed two long-range missile tracking radars (supplied by Israel) in New Delhi. Ehsan stated in his Article that this is the beginning of an accelerated process that will see India deploying radars and missiles to provide a nuclear missile shield to its major cities and join the list of countries that already have such shields for their cities, including Paris, London, Tel Aviv, Moscow, Beijing and Washington. Building this nuclear missile shield will require the deployment of hundreds of ballistic missiles. For this, India is simultaneously working on both indigenous development as well as imports. The current five-year import figures of heavy weapons by India, according to a report, are 140 per cent higher than the spending in this regard in the previous five years.


JUNE 3, 2016
Editor’s Note: The following is adapted from Sen. McCain’s speech as prepared for delivery at RSIS in Singapore before the start of the Shangri-la Dialogue. 
Here in Singapore, we have the largest congressional delegation ever to attend the Shangri-la Dialogue. We have the Secretary of Defense and other members of the President’s national security team. We have the PACOM commander and the Chief of Naval Operations, Admiral John Richardson. This collection of civilian and military leaders speaks volumes about America’s enduring, bipartisan commitment to the Asia-Pacific region.
As a Pacific nation, the United States recognizes that much of the history of the 21st century will be written here in this region. Tremendous opportunities lie ahead. And I am confident we can seize these opportunities together if we stay true to the principles that brought us to this fortunate moment in the history of Asia.
Seventy years ago, out of the ashes of world war, America and our allies and partners built a rules-based international order—one based on the principles of good governance and the rule of law, free peoples and free markets, open seas and open skies, and the conviction that wars of aggression should be relegated to the bloody past. Put simply: These ideas have changed the fortunes of Asia forever.
An unprecedented era of peace and security has enabled hundreds of millions of Asians to lift themselves out of poverty and transform the economies of the region. Asia is now at the teeming center of the global marketplace. More citizens of Asia than ever before are now free to speak their minds and make their own choices. And as they secured these basic rights, Asians by the millions have voted to elect their own leaders, live under laws of their own making, and stand up democratic governments. Taken together, I believe this Asia—the peaceful, prosperous, democratic Asia—is the most remarkable rising power in the world today.

Pakistan’s Stalled F-16 Deal is a Win For India

Ravjeetsingh Atwal, June 2, 2016
India has been vehemently accused by the Pakistani authorities for lobbying to block the sale of F-16 fighter jets to Islamabad from the US. The deal was first drawn out in 2015, when Pakistan was offered to pay for US$ 699 million for eight F-16 jets. The deal was subsidized, whereby Pakistan had to shell out only US$270 million and residual amount was to be funded by Washington from its Foreign Military Financing program. But recently US Congress turned the subsidy down and asked the Pakistan government to pay the entire cost from her own treasury.

Earlier New Delhi had expressed her discontentment over the deal and constantly advocated that such sophisticated fighter jet are suitable for advance warfare and not for striking terrorist dugouts. India claimed that Pakistan pursuit to acquire F-16 jets is solely to gain advantage over Indian air superiority, especially after her recent plans induct French jet Rafale. Obama Administration has also recognized New Delhi’s concern over the sale of latest F-16 jets to India. India had been pressurizing Washington to limit her military support to Islamabad, especially in the light to recent terrorist attack on Pathankot airbase in January, 2016. India presented concrete evidence that perpetrators of the attacks came across Pakistan’s territory. Purchase of such advance fighter jets would only bolster Pakistan efforts to undermine South Asia’s security in general and India in particular. 

Myanmar’s Rohingyas: Power Struggle, Buddhist Assertion & Ethnic Divide

ISSSP Reflections No. 42, May 31, 2016
Author: Albertina Nithya B.
The Rohingya Muslims are considered as the most persecuted community of the 21stcentury. Are the Rohingyas victims of the power struggle in Myanmar? Are the Buddhists using this division among people to demonstrate their assertion vis-à-vis the military? Is the attack on Rohingyas a clash of ethnic identities in Myanmar?

What are the political undercurrents?
Myanmar is a diverse society, but the Rohingyas are not part of the 135 registered ethnic groups. While one can state the overriding common sentiment of the Burmese to consider the Rohingya Muslims as illegal immigrants, the problem goes much deeper. The Rakhines are one of the dominant ethnic groups in Myanmar. Their ability to thwart aunanimous victory to the popular NLD in the Rakhine state demonstrates their considerable influence. The Rakhine National Party, created with the merger of Arakan League for Democracy and Rakhine Nationalities Development Party, resulted in the formation of the second largest ethnic political group in Myanmar. Thus it became prudent for any party meaning to establish government, to ensure a place in the good graces of one of the largest vote banks. The Rohingya issue became a political weapon to be wielded by parties to assert their power.
The military is widely believed to be behind the scenes of the communal tensions and plays a crucial role in the recent upsurge in violence. This is evident from the various reports written about the 2012 massacre including the Al Jazeera documentary. Also theresearch undertaken by Prof. Penny Green with a team of experts from ISCI proves beyond reproach that the 2012 massacre was not a communal riot but planned violence. The research goes on to implicate the military regime in the injustices meted out to the minority community. But why does the military engage in such activities? – political survival. A false image is constructed by which the role of military becomes indispensible for ensuring safety and security in the state. This leads to closer cooperation and working relationship with the civilian government. It has been observed earlier when the first civilian government of U Nu shared power with the military to suppress the ethnic conflicts.