31 March 2013

Governance, Identity, and Counterinsurgency: Evidence from Ramadi and Tal Afar


 March 20, 2013
Type: Monograph
188 Pages
Download Format: PDF 
Cost: Free

Brief Synopsis 

The premise of most Western thinking on counterinsurgency is that success depends on establishing a perception of legitimacy among local populations. The path to legitimacy is often seen as the improvement of governance in the form of effective and efficient administration of government and public services. However, good governance is not the only possible basis for claims to legitimacy. The author considers whether, in insurgencies where ethno-religious identities are salient, claims to legitimacy may rest more on the identity of who governs, rather than on how whoever governs governs. This monograph presents an analytic framework for examining these issues and then applies that framework to two detailed local case studies of American counterinsurgency operations in Iraq: Ramadi from 2004-05; and Tal Afar from 2005-06. These case studies are based on primary research, including dozens of interviews with participants and eyewitnesses. The cases yield ample evidence that ethno-religious identity politics do shape counterinsurgency outcomes in important ways, and also offer qualified support for the argument that addressing identity politics may be more critical than good governance to counterinsurgent success. Key policy implications include the importance of making strategy development as sensitive as possible to the dynamics of identity politics, and to local variations and complexity in causal relationships among popular loyalties, grievances, and political violence.

BRICSwall: Zuma has no time for PM, keeps him 40 km away

Mar 31 2013 

The Indian delegation has returned quite upset from South Africa and for good reason, because this is, perhaps, the first time that the Indian Prime Minister has gone to a country and failed to hold a separate meeting with the host. 

There was no grand diplomatic stand-off with the South African government, just poor planning and organisation that squeezed out the bilateral meeting between Prime Minister Manmohan Singh and South African President Jacob Zuma, said sources. 

What probably hurt more was that Singh was the first among the BRICS leaders to reach Durban on March 25, a day before the summit, and still Zuma could not find the time while he played the proper host to his Chinese and Russian counterparts. In the end, Singh managed to hold separate meetings with all BRICS leaders except Zuma. 

The Chinese side had turned Xi's visit into a state visit, which meant South Africa had full-fledged bilateral fare laid out, with agreements and deals being signed on the side. While Zuma had to give nearly an entire day to Xi in Pretoria, he could not ignore Russian President Vladimir Putin in Durban because Moscow had converted the trip into a "working" visit which meant formalised bilateral content like adding some new clauses to their bilateral treaty of friendship and cooperation. 

As a result, India and Brazil seemed relegated. India, perhaps, a bit more. For starters, the South African government took control of all hotel accommodation in and around Durban since heads of states and government of some 18 African countries were also to be there for a retreat with BRICS nations on March 27. 

It's not clear how the dice rolled, but the Prime Minister found himself allotted a resort in Zimbali, 40 km from Durban while the Brazilian, Russian and Chinese leaders were lodged in hotels within Durban, close to the venue where the summit was held over two days. Almost as a consolation, the retreat with the African countries was held at the Zimbali resort after the summit was over. 

So, Singh had to travel into the city on both days of the summit, March 26-27, and also suffer the long delays in the programme. On the first day, Singh wound up from Durban around midnight, whereas he was to be back in his resort by 10 pm according to his schedule. 

This was also the day he was originally slated to meet Zuma, but it did not work out because the South Africa-Russia bilateral meeting overshot by an hour. The original plan was for Singh to meet Brazilian President Dilma Rousseff around 5:45 pm, which happened. After that was the meeting with Putin at 6:15 pm and then with Zuma at 6:45 pm, following which was the cultural programme and banquet for the BRICS leaders. 

India a mere spectator in the Great Game!

By Col Danvir Singh
30/3/13

The Great Game or the Geo Strategic power play, in Afghanistan, started somewhere in 1813, post Russo-Persian treaty. Since then over the two centuries, this region has witnessed varied players; however centrality of this area to their changing interest has remained unaffected. The great powers of their times, The British Empire, Czar Russia and Soviet Union have jostled over supremacy in pre WW II era. Even in the post WW II in the periods of cold war and there on, this quest has continued. The region has seen conflict between the Soviet Union, NATO and allies, The United States of America, Saudi Arabia, Pakistan, Iran and India from the late 1970s till date. They have all contributed directly or indirectly towards gaining control of the Central Asian region. The end game to the existing phase of dominance of Afghanistan by the western powers has begun; simultaneously the new rules and new players are set to enter the fray. The Americans are working hard on their planned exit from Afghanistan by the end of 2014 and Pakistan is playing real politic by trying to establish its hegemony behind the shield of its all-weather friend China. The strategic wisdom reflected by the rulers of Pakistan in handing over Gawadar port to the Chinese has not augured well in its neighbourhood. This development may not prove good to long term stability in the region which will not go unchallenged by both India and the US. 

With the Chinese feet getting washed by the warm waters of Arabian Sea, they are likely to be seen as posing a threat to the American and Indian interests and upset the strategic balance of the region … 

Post American withdrawal from Afghanistan, The Chinese want to establish strong influence in this region as it is important for them in achieving long term energy security that they are aggressively pursuing. China wants to transport oil and gas imported from Africa, Middle East and Iran through transnational pipeline, rail and road network that it proposes to construct from Baluchistan in Pakistan and connect to the existing network running from Russia into China through Kazakistan. With the Chinese feet getting washed by the warm waters of Arabian Sea, they are likely to be seen as posing a threat to the American and Indian interests and upset the strategic balance of the region who will not relent it so easily and are likely to leave no stone unturned to up stick the Chinese. Baluchistan’s insurgency which Pakistan always alleges to be aided and supported by the Indians is likely to come in the forefront with USA actively supporting it, thus riding the popular Baluchi sentiment of hatred towards the colonial attitude of Pakistan as referred by their leaders, thus challenging the Chinese dreams. 

The issue of energy security is of utmost importance to China, considering the fact that majority of its oil reserves and upstream infrastructure is located in vicinity to, or on the Eastern sea board, leaving them highly vulnerable to Taiwanese missiles. In order to secure and diversify energy supplies, the Chinese have launched an offensive oil acquisition programme. Today China’s import from the Middle East and Africa accounts for 51% and 24% respectively of their total oil import. Gawadar port and Myanmar-China oil and gas pipeline are being developed to transport this very oil to avoid the choke point of the Strait of Malacca and a potential flash point in the South China Sea (SCS), considerably reducing the risk of supply disruptions. 

China is the world’s most populous country that has a rapidly growing economy. This has driven the country’s energy demand steeply upwards and hence its quest for securing more and more energy resources is being perused on a war footing. The Chinese assertive claims in SCS are part of this policy. Today China accounts for a total of 10% of the total world consumption of crude oil. According to estimates China holds 20.4 billion barrels of proven reserves which is highest in the Asia Pacific region and it is estimated that SCS by itself holds anywhere from 27 billion barrels to 210 billion barrels making it potentially the largest known oil reserve in the world. 

Afghanistan After the War Is peace possible?


Will Afghanistan, which has been at war since 1978—thirty-four years, or a period longer than the two world wars and the intervening years combined—finally see a minimal kind of peace before American forces leave next year? Can the United States focus enough diplomatic energy to help generate a cease-fire and a political deal between Kabul, Islamabad, and the Taliban? Can America and its allies satisfy the wider region that includes Iran, Central Asia, India, China, and Russia, so that they do not start undermining Afghanistan’s still uncertain future?

For many months now the American media has been obsessed with the timetable for a drawdown of some 100,000 American and NATO troops, and with whether the 350,000-strong Afghan army and police can hold the line on their own against the Taliban, and with how many troops the United States will leave behind after 2014 to train Afghan forces and run its counter-terrorism campaign.Despite the unpopularity of the war in the United States and the drain on tax dollars, the Pentagon naturally favors a long timetable, slowing down the troop withdrawals and keeping as many soldiers in country after 2014 as the White House will concede. The White House is fighting back. Last November the military’s demands for troops beyond 2014 were in the thirty thousand range, and now they are in the ten thousand range, while the White House is more likely to agree to between three thousand and six thousand. In January, during his trip to Washington, President Karzai said that what matters is the magnitude of the American commitment to Afghanistan, not the troop numbers. 1

There is no doubt that the American military is suffering terribly. Last year more active duty American soldiers died as suicide victims than died in combat. Another twenty thousand soldiers were wounded. Those ailing from war-related mental problems run into the tens of thousands. In 2012 alone, more than sixty American and NATO troops were killed in insider attacks by fellow Afghan soldiers or policemen, which means that they cannot trust the very Afghans they have spent so many years training. It will take a generation to deal with the repercussions for the American military of the wars in Iraq and Afghanistan.

So it is not surprising that for most Afghans, the delineation of America’s and NATO’s so-called “transition strategy” to Afghan forces looks increasingly like an exit strategy, as politicians and parliaments in home countries urge an ever-quicker evacuation. Afghans see the transition as a Western excuse to get out, rather than an effort to ensure Afghanistan’s future as a democratic and peaceful country.

The debate in Washington about troop numbers is misplaced.

Sensible Afghans do recognize that the waning public support in the United States and Europe is owed not just to the recession in the West or to the length of the war, but also to the failure of the Afghan leadership to deliver on governance.2 Meanwhile the U. S. and NATO high commands issue bland “all is well” statements, ignoring the devastating Taliban attacks on military airports and bases, and the rising casualty toll.

The debate in Washington about troop numbers is misplaced. It has nothing to do with the major issues facing Afghanistan, which require a transition to a peace plan rather than an exit. The first part of such a plan is the urgent need for talks for a negotiated cease-fire between the Taliban, the United States, and the Afghan government, so that NATO troops can exit with dignity and the horrendous levels of violence can be reduced. Afghanistan cannot be stabilized by fighting to the very last day. And this first negotiation needs to be followed by further talks between the Taliban and Kabul over a political power-sharing arrangement that will enlarge the space for the cease-fire, integrate the Taliban into state structures, and produce an ultimate political agreement to end the conflict.

Pakistan’s Dangerous Quest for Tactical Nukes


Pakistan’s quest to acquire tactical nuclear weapons (TNWs) has added a dangerous dimension to the already precarious strategic equation in South Asia. The security discourse in the subcontinent revolves around the perennial apprehension of a conventional or sub-conventional conflict triggering a chain reaction, eventually paving the way for a potential nuclear crisis haunting peace and stability in the region.

The Pakistan army’s directorate of Inter-Services Public Relations (ISPR), announced the successful testing of the 60-km nuclear-capable short-range missile Hatf IX (Nasr) on 11 February 2013 and declared, “…Nasr, can carry nuclear warheads of appropriate yield, with high accuracy… and has been specially designed to defeat all known anti-tactical missile defence systems.” The test, an implicit signal to the region about Pakistan’s commitment to developing “full spectrum deterrence including the use of TNWs”, was witnessed by the Chairman, Joint Chiefs of Staff Committee, General Khalid Shameem Wynne, Director General Strategic Plans Division, Lieutenant General Khalid Ahmed Kidwai (Retd), and Commander Army Strategic Forces Command, Lieutenant General Tariq Nadeem Gilani.

While Pakistan believes that the Nasr “adds deterrence value to Pakistan’s strategic weapons development programme at shorter ranges,” it has, in fact, further lowered its nuclear threshold through the likely use of TNWs. Pakistan has not formally declared a nuclear doctrine, but it is well known that nuclear weapons are its first line of defence. Its presumed “first-use” policy is aimed at negating India’s conventional military superiority by projecting a low nuclear threshold. The use of TNWs in the India-Pakistan case will alter the strategic scenario completely as Pakistan would threaten India with the use of TNWs in the event of New Delhi responding against Islamabad with a conventional strike in reaction to a 26/11-style terrorist attack. According to the Pakistan army, TNWs are designed to counter India’s Cold Start doctrine. Under this new policy, Indian troop formations could well face an onslaught of Pakistani TNWs.

Tactical nuclear weapons, often referred to as “battlefield”, “sub-strategic”, or “non-strategic” nuclear weapons, usually have a plutonium core and are typically distinct from strategic nuclear weapons. Therefore, they warrant a separate consideration in the realm of nuclear security. The yield of such weapons is generally lower than that of strategic nuclear weapons and may range from the relatively low 0.1 kiloton to a few kilotons. As Pakistan is already building its fourth nuclear reactor at Khushab—a plutonium producing unit, the clamour in the Pakistan armed forces for manufacturing tactical nuclear weapons has gone up.

Pakistan has been advocating the concept of a Strategic Restraint Regime based upon the principle of nuclear restraint and conventional force reductions and has termed it as a strategic confidence-building measure. Often citing what it terms as “India’s conventional military threat”, Pakistan forgets that given its offensive strategic posture and continuing involvement in terror strikes in India, it is New Delhi which is confronted with the problem of developing a strategy to counter Pakistan’s “first-strike” and proxy war in light of its declared “no-first-use” policy.

Afghanistan After the War Is peace possible?


Will Afghanistan, which has been at war since 1978—thirty-four years, or a period longer than the two world wars and the intervening years combined—finally see a minimal kind of peace before American forces leave next year? Can the United States focus enough diplomatic energy to help generate a cease-fire and a political deal between Kabul, Islamabad, and the Taliban? Can America and its allies satisfy the wider region that includes Iran, Central Asia, India, China, and Russia, so that they do not start undermining Afghanistan’s still uncertain future? 

For many months now the American media has been obsessed with the timetable for a drawdown of some 100,000 American and NATO troops, and with whether the 350,000-strong Afghan army and police can hold the line on their ownagainst the Taliban, and with how many troops the United States will leave behind after 2014 to train Afghan forces and run its counter-terrorism campaign.Despite the unpopularity of the war in the United States and the drain on tax dollars, the Pentagon naturally favors a long timetable, slowing down the troop withdrawals and keeping as many soldiers in country after 2014 as the White House will concede. The White House is fighting back. Last November the military’s demands for troops beyond 2014 were in the thirty thousand range, and now they are in the ten thousand range, while the White House is more likely to agree to between three thousand and six thousand. In January, during his trip to Washington, President Karzai said that what matters is the magnitude of the American commitment to Afghanistan, not the troop numbers. 1

There is no doubt that the American military is suffering terribly. Last year more active duty American soldiers died as suicide victims than died in combat. Another twenty thousand soldiers were wounded. Those ailing from war-related mental problems run into the tens of thousands. In 2012 alone, more than sixty American and NATO troops were killed in insider attacks by fellow Afghan soldiers or policemen, which means that they cannot trust the very Afghans they have spent so many years training. It will take a generation to deal with the repercussions for the American military of the wars in Iraq and Afghanistan. 

So it is not surprising that for most Afghans, the delineation of America’s and NATO’s so-called “transition strategy” to Afghan forces looks increasingly like an exit strategy, as politicians and parliaments in home countries urge an ever-quicker evacuation. Afghans see the transition as a Western excuse to get out, rather than an effort to ensure Afghanistan’s future as a democratic and peaceful country. 

The debate in Washington about troop numbers is misplaced.

Sensible Afghans do recognize that the waning public support in the United States and Europe is owed not just to the recession in the West or to the length of the war, but also to the failure of the Afghan leadership to deliver on governance.2Meanwhile the U. S. and NATO high commands issue bland “all is well” statements, ignoring the devastating Taliban attacks on military airports and bases, and the rising casualty toll. 

The debate in Washington about troop numbers is misplaced. It has nothing to do with the major issues facing Afghanistan, which require a transition to a peace plan rather than an exit. The first part of such a plan is the urgent need for talks for a negotiated cease-fire between the Taliban, the United States, and the Afghan government, so that NATO troops can exit with dignity and the horrendous levels of violence can be reduced. Afghanistan cannot be stabilized by fighting to the very last day. And this first negotiation needs to be followed by further talks between the Taliban and Kabul over a political power-sharing arrangement that will enlarge the space for the cease-fire, integrate the Taliban into state structures, and produce an ultimate political agreement to end the conflict. 

China’s Road to Becoming a “Responsible” World Power

Yukon Huang Op-Ed 
March 26, 2013 Financial Times


In 2005 Robert Zoellick, as US deputy secretary of state, proposed that China might play the role of a “responsible stakeholder” in helping to shape the international agenda. But despite its meteoric rise, most observers now do not see Beijing playing this role. China is often seen as uncooperative on issues ranging from trade and investment flows to intellectual property rights, climate change and the acquisition of natural resources. This has created the impression that Beijing is more inclined to use its clout to advance core interests than strengthen partnerships.

Some observers have interpreted President Xi Jinping’s “China dream” to mean that he will adopt a more nationalistic policy. But in advance of his first state trips to Russia and Africa, Mr Xi stressed that China’s “great national renewal” would benefit the world and that “as its strength increases, it will assume more international responsibilities” and contribute to “world peace and development”. Mr Zoellick may have been right, just a decade premature. Evolving circumstances could lead China to becoming a responsible stakeholder but much will depend on the actions of China and western powers.

China is becoming a more “normal” economy – relying less on centrally driven investments in moving to a more market-driven growth path. But normality means slower growth and greater vulnerability to cycles. The country can no longer maintain stability by controlling interest and exchange rates and limiting capital movements, while internationalising the renminbi involves greater risks. This has made Beijing less secure and reinforced historical tendencies to focus on internal needs.

The result is that for many global issues, Beijing’s instincts are reactive rather than designed to forge longer-term solutions. Its economic success is pushing it to act as a major player but prematurely, since it lacks the institutions to deal effectively with other powers.

China’s tensions with the west intensified as its trade surpluses surged beginning in 2005 and then peaked in 2008 as a share of gross domestic product before declining to more modest levels. These surpluses have been depicted rightly or wrongly as the result of exchange rate manipulation and unfair subsidies with the outcome that China has become the number one target for World Trade Organisation complaints.

Beijing’s intentions to upgrade its indigenous technology supported allegedly through intellectual property right violations has also been under attack, while its search for natural resources has generated hostile receptions in many countries.

And while Beijing’s support for climate change objectives exceeds that of Washington, it is nevertheless perceived as being uncooperative for its unwillingness to commit to absolute reduction targets which it sees as being inappropriate for developing countries.

China’s long history also affects its thinking. Unlike the other powers, whose ascendancy represented a broadly continuous process, China is a returning economic power – one that accounted for 30 per cent of global production two centuries ago but saw its share fall to less than 5 per cent by 1950, and even today at 15 per cent it is only half of what it once was.

Timothy Thomas: Why China Is Reading Your Email

Beijing's cyber attacks are rooted in military strategy, says one of America's foremost experts. The best way to combat them is for the U.S. to go on the cyber offensive too.
Timothy L. Thomas By DAVID FEITH

Fort Leavenworth, Kan.

For several years, Washington has treated China as the Lord Voldemort of geopolitics—the foe who must not be named, lest all economic and diplomatic hell break loose. That policy seemed to be ending in recent weeks, and Timothy Thomas thinks it's about time.

The clearest sign of change came in a March 11 speech by Tom Donilon, President Obama's national security adviser, who condemned "cyber intrusions emanating from China on an unprecedented scale" and declared that "the international community cannot tolerate such activity from any country." Chinese cyber aggression poses risks "to international trade, to the reputation of Chinese industry and to our overall relations," Mr. Donilon said, and Beijing must stop it.

"Why did we wait so long?" wonders Mr. Thomas as we sit in the U.S. Army's Foreign Military Studies Office, where the 64-year-old retired lieutenant colonel has studied Chinese cyber strategy for two decades. More than enough evidence accumulated long ago, he says, for the U.S. to say to Beijing and its denials of responsibility, "Folks, you don't have a leg to stand on, sorry."

U.S. targets of suspected Chinese cyber attacks include news organizations (this newspaper, the New York Times, Bloomberg), tech firms (Google, GOOG -1.06% Adobe, ADBE +2.00% Yahoo YHOO -0.26% ), multinationals (Coca-Cola, KO +0.55% Dow Chemical DOW +0.19% ), defense contractors (Lockheed Martin, LMT +2.17%Northrop Grumman NOC +0.36% ), federal departments (Homeland Security, State, Energy, Commerce), senior officials (Hillary Clinton, Adm. Mike Mullen), nuclear-weapons labs (Los Alamos, Oak Ridge) and just about every other node of American commerce, infrastructure or authority. Identities of confidential sources, hide-outs of human-rights dissidents, negotiation strategies of major corporations, classified avionics of the F-35 fighter jet, the ins and outs of America's power grid: Hackers probe for all this, extracting secrets and possibly laying groundwork for acts of sabotage.

Ken Fallin
Timothy Thomas

China's aggression has so far persisted, Mr. Thomas says, because "it makes perfect sense to them." The U.S. has difficulty defending its cyber systems, the relatively new realm of cyber isn't subject to international norms, and years of intrusions have provoked little American response. "I think they're willing to take the risk right now because they believe that we can't do anything to them," he says. "You have to change the playing field for them, and if you don't, they're not going to change. They're going to continue to rip off every bit of information they can."

Hence the promise of Washington's apparent shift in policy. "There's something going on," Mr. Thomas says, and the Donilon speech was only one part. This month's more significant news, he argues, was the announcement that the U.S. military's Cyber Command (founded in 2009) would for the first time develop and field 13 offensive cyber-warfare teams. The Chinese "now know we are ready to go on the offense. There's something that's been put in place that I think is going to change their view."

Not that he expects Beijing to back down lightly. On the contrary, Mr. Thomas points to the literature of the People's Liberation Army to demonstrate that China's cyber strategy has deep—even ancient—roots.

The essence of China's thinking about cyber warfare is the concept of shi, he says, first introduced in Sun Tzu's "The Art of War" about 2,500 years ago. The concept's English translation is debated, but Mr. Thomas subscribes to the rendering of Chinese Gen. Tao Hanzhang, who defines shi as "the strategically advantageous posture before a battle."

"When I do reconnaissance activities of your [cyber] system," Mr. Thomas explains of China's thinking, "I'm looking for your vulnerabilities. I'm establishing a strategic advantage that enables me to 'win victory before the first battle' "—another classic concept, this one from the "36 Stratagems" of Chinese lore. "I've established the playing field. I have 'prepped the battlefield,' to put it in the U.S. lexicon."

Global Tilt : Book Review

March 30, 2013

Ram Charan is a path breaking author who draws great lessons for the future from the current global economic and business trends. According to Jock Welch, he has this rare ability to distill meaning from meaningless and transfer it to others. His latest book “Global Tilt” is an incisive look into the “Rise of the Rest” amidst apparent decline of the West as articulated by Farid Zakaria in his 2008 Book, ‘ Post American World’. 

However, while Zakaria stops at outlining the contour of rise of the rest from largely a political view point (with some economy included) Ram Charan defines this global shift as one from North (West) to South (below 31stparallel) with lessons for nations, economists and corporates in handling the tilt. In fact he prepares an outline for the new rule book to ride the tilt. 

He establishes economic trends which have reshaped current geoeconomics and geopolitics where money (and jobs) are moving from the North to the South and where South is defining new fundamental market economics by increased reliance on trade among emerging economies. As the Souths’ dependence on North decreases, North is becoming increasing dependent on South for new markets and growth. A process where “unlearning is essential to new learning”. He also suggests ‘Fighting the Short-Term Beast’ and ‘Changing Psychology. 

Ram Charan defines the tilt to be the greatest shift in business history. A shift which calls for new rules of thumb, as it opens mega opportunities for both, if they can handle the competition, volatility and uncertainty of this new equation. Lastly, he focuses on radical changes in strategic thinking, leadership and organisational social systems to keep ahead of the change brought about by the tilt. 

He has lucidly explained his concept of this tilted world, its contours, perceptible pattern of change and the new power of the South through brilliantly researched chapters each complete with definitions, empirical evidence and records that establish the unmistakable rise of the South. Does this signal the rise of the protean enterprise? Well yes and no but what it establishes beyond doubt is that the South is taking on the mantle of business leadership from the North – slowly but surely. 

Beyond the projections of global growth, however, the book leaves many questions unanswered. Will the North, which thrives on its ‘ technological superiority’ let go of the mantle so soon. Today US produces 1000 PhDs per year in diverse technological fields such as biotechnology and nano technology. It dominates the production curve from innovation, design to distribution and marketing of ever new products lapping up the cream of the production cycle’s smiley curve. The South, excels as a factory or service provider getting the left overs. How long will the South take to traverse this technology gap remains a question mark. What Ram Charan, who has primarily written a business book, skips is the geo economics based alliances such as BRICS which, if managed adroitly, could be the South’s alternative to critical funding and cooperation to challenge and overtake the North in a new economic and therefore political world order. 

While Ram Charan explains the tilt by highlighting the progress of South companies like Bharti Aritel, GMR, Aditya Birla Group and Haier, he also highlights success of Northern companies making a difference in the tilted world. The DNA of all such enterprises is the right combination of strategy, leadership, organization and execution. 

Ram Charan has taken pains to explain, with suitable examples, that the South companies are “real, unrelenting and based on excellence in leadership strategy and execution and that they need to be taken very seriously by the North”. These leaders love not only the optimism, tenacity and drive but also superb business acumen: an obsession with exactly how money is made and under what conditions which enable them to attract financing. 

The BRICS Expose the West’s Hypocrisy

Mar 28, 2013 

Who do they think they are, these upstart economies, Brazil, Russia, India, China and South Africa

That might sum up the feeling in the U.S., Europe and Japan as the BRICS nations consider a new development bank that might challenge the World Bank and International Monetary Fund. The move brings to mind Alice Amsden, the Massachusetts Institute of Technology economist who died last year, and her 2001 book, “The Rise of ‘the Rest.’” 

The richest nations can stew about this turn of events, as those on the periphery of the world economic system start seeing themselves as the core. Or developed countries can look in the mirror and consider how their actions have helped accelerate the shift. 

Take Japan’s success in weakening the yen 17 percent in the past six months to help stimulate exports. It has prompted talk in China and elsewhere about a return to the currency wars. Concern about exchange-rate volatility that undermines trade and growth is a big reason the BRICS, the vanguard of “the rest,” want to use their combined $4.4 trillion of foreign-currency reserves to protect their economies and raise their international clout. 

The yen’s plunge coincides with the contortions of the IMF as it twists every which way, and then some, to preserve the euro. Never mind that the euro zone may be too messy and incompatible to save. Forget that Cyprus never should have been included in the enterprise, or that Spain’s 50 percent youth- unemployment rate makes the euro area’s fourth-biggest economy a potential time bomb. The IMF, run by former French Finance Minister Christine Lagarde, is determined to make the unsustainable in Europe sustainable. 
Perception Problem 

That has created a bigger perception problem than the IMF and World Bank realize. If you are a world leader, such as Dilma Rousseff of Brazil, Vladimir Putin of Russia, Manmohan Singh of India, Xi Jinping of China or Jacob Zuma of South Africa, do you want to support such a euro-centric arrangement? Is our Bretton Woods-derived system, one forged in the middle of the last century, really in the best interest of five still-developing nations with 43 percent of the world’s population? Will the IMF have anything left if, say, India experiences a crisis? 

It hasn’t escaped notice that Europe is being treated very differently from Asia in 1997. Back then, the IMF browbeat Asia into harsh reforms that deepened its crisis. It demanded higher interest rates, stronger currencies and fiscal tightening while forcing Thailand, Indonesia and South Korea to let weak banks fail. When Malaysia imposed capital controls, it was demonized. Europe has gotten a pass on all of the above. 

Life After Oil and Gas

Published: March 23, 2013 

WE will need fossil fuels like oil and gas for the foreseeable future. So there’s really little choice (sigh). We have to press ahead with fracking for natural gas. We must approve the Keystone XL pipeline to get Canadian oil.
Robert Samuel Hanson







Multimedia
 

This mantra, repeated on TV ads and in political debates, is punctuated with a tinge of inevitability and regret. But, increasingly, scientific research and the experience of other countries should prompt us to ask: To what extent will we really “need” fossil fuel in the years to come? To what extent is it a choice?

As renewable energy gets cheaper and machines and buildings become more energy efficient, a number of countries that two decades ago ran on a fuel mix much like America’s are successfully dialing down their fossil fuel habits. Thirteen countries got more than 30 percent of their electricity from renewable energy in 2011, according to the Paris-based International Energy Agency, and many are aiming still higher.

Could we? Should we?

A National Research Council report released last week concluded that the United States could halve by 2030 the oil used in cars and trucks compared with 2005 levels by improving the efficiency of gasoline-powered vehicles and by relying more on cars that use alternative power sources, like electric batteries and biofuels.

Just days earlier a team of Stanford engineers published a proposal showing how New York State — not windy like the Great Plains, nor sunny like Arizona — could easily produce the power it needs from wind, solar and water power by 2030. In fact there was so much potential power, the researchers found, that renewable power could also fuel our cars.

“It’s absolutely not true that we need natural gas, coal or oil — we think it’s a myth,” said Mark Z. Jacobson, a professor of civil and environmental engineering and the main author of the study, published in the journal Energy Policy. “You could power America with renewables from a technical and economic standpoint. The biggest obstacles are social and political — what you need is the will to do it.”

Other countries have made far more concerted efforts to reduce fossil fuel use than the United States and have some impressive numbers to show for it. Of the countries that rely most heavily on renewable electricity, some, like Norway, rely on that old renewable, hydroelectric power. But others, like Denmark, Portugal and Germany, have created financial incentives to promote newer technologies like wind and solar energy.

Loss Leader

The Army needs to admit it has a problem -- or things will only get worse.
BY DAVID W. BARNO | MARCH 29, 2013

I'm glad to see a concerned senior Army officer respond to my recent piece on the risks of brain drain inside the U.S. military. Lt. Gen. Ben Hodges undoubtedly speaks for many senior leaders in each service who feel exactly the same way about this looming challenge: "Hey, we don't even have a problem!"

Maybe, maybe not. Frankly, I remain worried. The issue is not that the best and brightest in the military have already left. My concern is that the worst effects of the ongoing drawdown are still to come -- and may well be years away. The people who must ultimately judge whether Hodges's defense is sound are the junior officers and sergeants wrestling with tough individual decisions about staying in or leaving the service. But for the Army, now is the time to look for leading indicators and craft proactive strategies to avert what could easily become one of the worst unintended consequences of shrinking the force.

Each service will have unique challenges keeping top-drawer talent as numbers drop, budgets tighten, and opportunities to serve in combat dwindle. But the Army most of all faces a perfect storm of vexing issues. It is gradually coming down from a wartime high of nearly 570,000 troops, planning to hit 490,000 by 2017. Most Army leaders and defense analysts expect that number will decline farther -- perhaps to 400,000 soldiers or less. Officer and NCO reductions -- voluntary and otherwise -- under that scenario could number in the tens of thousands.

At the same time it gets smaller, the Army is leaving a decade of combat that has energized the force with an unparalleled focus and sense of mission. The next Army will largely be a garrison force based almost entirely in the United States, with limited opportunities to serve abroad. Even its planned exercise program to rotate units regularly overseas is jeopardized by lack of funding. Convincing experienced combat leaders that this force will be an empowering, exciting place to serve is the ultimate challenge. The bare bones remedies Hodges outlines are not nearly adequate to the task. Fundamental change is needed. Here are a few ways to do it:

Reform the Army personnel system. Hodges notes that 22 of his 25 assignments resulted from superiors intervening in the process. That's the definition of a non-functioning personnel system. Three years ago, the Army developed an innovative new personnel system dubbed "Army Green Pages." This prototype created a market system for talent within the Army, allowing both unit commanders and individual officers to "bid" on leaders to fill open jobs. Despite enthusiastic support by then-service chief (and now chairman of the Joint Chiefs of Staff) Marty Dempsey, it has since languished, blocked by Army bureaucrats. Adopting this system would completely revolutionize Army personnel management, and move it overnight from a wholesale Cold War system to a 21st century retail version. Individual goals would be matched with the needs of the service in ways the current system rarely manages.

Water is the elixir of life, let us join hands to conserve it

Prakash Nelliyat

Cooperation is critical for achieving water access, security and poverty alleviation

The U.N. General Assembly has declared 2013 ‘International Year for Water Cooperation’. Further, it dedicated the 2013 World Water Day (March 22) to ‘Water Cooperation’.

The estimated global population in 2050 is 9 billion, all of which will depend on finite and vulnerable water resources. This indicates that our interdependence on water issues is growing every day. Water issues cannot be solved on their own, or be left to professionals. In reality, every one’s water use affects others. We use or waste or pollute the common water resources.

Challenges, concerns

Cooperation is critical for achieving water access/security, poverty alleviation and environmentally sustainable economic development. The growth of agriculture, industry and the service sector depends on water availability. However, various development activities create pressure on the sector through excess demand and disposal. Economic development should plan in harmony with the biophysical limit of the water cycle. In this respect, maintaining the environmental flow in surface water sources, stabilising groundwater stocks and managing water quality are important.

The availability of good quality water in adequate quantities for drinking and other domestic purposes is a criterion for health and social security. In the world of privatisation, water faces the threat of commercialisation; wherever water markets exist, the ‘ability to pay’ becomes the criterion for access. Hence, the water rights of the poor and vulnerable communities should be safeguarded.

Benefits of water cooperation

Water is a renewable natural resource and public good. But the ownership right on land bestows a private character on water. However, most rivers, ponds, lakes and aquifers are common property. Therefore, water rights (except for private wells) are not clearly defined and the right to using the resources is not protected.

Hence, excluding others from using water is not possible and the results are competition, over-extraction and conflict. However, cooperation has a greater role in achieving social harmony in water allocation and increasing human welfare.

Water cooperation can avoid the costs (tension and disputes) associated with conflicts between neighbours.

Cooperation at the river basin level can promote efficiency in water management through better storage, distribution, and expanding irrigation acreage.

Cyprus Is Doomed: Why the Country Must Leave the Euro Immediately

On the brink of a great depression, Cyprus could become -- and should become -- the first country to abandon Europe's failing experiment

Mar 28 2013 

Protesters outside the Cypriot parliament voice their disgust with the original bailout (Reuters)

What if doing the right thing in Cyprus bankrupts Cyprus?

That's not so much a "what if" as a "what is". The finally agreed to Cypriot bailout and bail-in will save the Cypriot financial system by destroying it, along with the rest of their economy. In other words, Cyprus has traded default for depression, instead of devaluation. But this depression -- and it will be a capital-d "Depression" -- will make staying in the euro a political and economic nightmare. The sooner Cyprus wakes from it and abandons the common currency, the better. 

The tiny island has become the epicenter of the latest round of euro-angst after its too-big-to-save banks got in need of saving. Those banks had inflated to seven times the size of the €18 billion ($23 billion) Cypriot economy due to massive inflows of (sometimes illicit) offshore money, mostly from Russia, looking to dodge taxes back home. Now, there are plenty of tax havens around the world, but none of the others made the balance-sheet-destroying mistake of investing in Greece. That left Cypriot banks woefully undercapitalized. And the Cypriot government was woefully unable to fill their capital holes.

That's when the tragicomedy of errors began. Cyprus, Russia, and the so-called Troika of the European Commission, European Central Bank, and the International Monetary Fund, entered into a potentially high-stakes game of chicken over who would pay for the island's insolvent banks. First, Cyprus rejected the Troika's plan to wind down its two biggest and most troubled banks; then rejected the Troika's backup plan to tax insured and uninsured bank deposits; then got rejected by Russia in its bid for a Hail Mary loan; and then, finally, under pressure from the ECB, agreed to ... wind down its two biggest and most troubled banks. In other words, it was a productive week, if their goal was to achieve nothing other than destroying all confidence in their economy.

Thanks for the Bailout ...

Not that much confidence is justified. The ultimate deal in Cyprus was right on the merits, but those merits will leave its economy in ruins. Cyprus got €10 billion ($12.8 billion) from the Troika to bail out its government, and, in return, agreed to "bail-in" bank creditors to pay for its bank rescues. Here's how the bail-in is going to work.

-- Laiki Bank, Cyprus' second-biggest, will be shut down, and split into a good and bad bank. The good bank will get all insured deposits of €100,000 ($128,000) or less, and €9 billion ($11.5 billion) of assets used to get "emergency liquidity assistance" (ELA) loans. The bad bank will be capitalized by wiping out shareholders, bondholders, and uninsured depositors. The latter will recover whatever money the bad bank gets from selling off its toxic assets -- but that's not expected to be much. Cypriot officials estimate uninsured depositors at Laiki could face losses of up to 80 percent.

Why the Euro Is Doomed in 4 Steps

It's the gold standard minus the shiny rocks
Mar 30 2013,

(Reuters)

We're going to need a bigger acronym.


In the beginning, it was just the "Greek debt crisis". Then markets realized Portugal, Ireland, Italy, and Spain were in bad shape too, and the PIIGS (or GIIPS) were born. But now Cyprus and Slovenia have run into trouble as well, giving us the ... SIC(K) PIGS? At this rate, we're going to have to buy a vowel soon, assuming Estonia doesn't end up needing a bailout.

The euro crisis is entering its fourth year, and, sorry world, this won't be its last. Now, its long periods of boredom have gotten a bit longer, and its moments of sheer financial terror a bit less terrifying, ever since the European Central Bank (ECB) promised to do "whatever it takes" to save the common currency. But, as Cyprus and Slovenia show, the battle for the euro isn't over yet. Not even close.

Here's the Cliff Notes version of the euro crisis. The euro zone doesn't have the fiscal or banking unions it needs to make monetary union work, and it's not close to changing that. In the meantime, the euro's continuing flaws continue to suck countries into crisis. And their politics get radicalized. Most recently, Cyprus was forced to accept a bailout and bail-in, because its too-big-to-save banks made some horrendously bad bets on Greek bonds. Slovenia looks like it could next on the euro-bailout tour, because, as Dylan Matthews of the Washington Post points out, its too-big-to-save-ish banks made some horrendously bad bets on its own companies. Now, banks make bad bets all the time, but those bad bets can bankrupt you as a country if you don't have your own central bank. Like euro countries.

Of course, this "diabolic loop" between weak banks and weak sovereigns isn't the only problem in euroland. The common currency has plenty of other flaws. Here's why the euro, as it's currently constructed, is a doomsday device for mass bankruptcy. (How's that for solidarity?).

1. Too Tight Money

The euro zone isn't what economists call an "optimal currency area". In other words, it was a bad idea. Its different members are different enough that they should have different monetary policies. But they don't. They have the ECB setting a single policy for all 17 of them. That's a particular problem for southern Europe now, because their wages are uncompetitively high relative to northern European ones, and the ECB isn't helping them out.

There are two ways to fix this intra-euro competitiveness gap. Either northern European wages rise faster than normal while southern wages stay flat, or northern European wages grow normally while southern European wages fall. It's the difference between a bit more inflation or not -- in other words, between looser ECB policy or the status quo. Now, it might not sound like it really matters which option they choose, but it very much does. Falling wages make it harder to pay back debts that don't fall, setting off a vicious circle into economic oblivion. The ECB apparently prefers pushing more and more countries into oblivion with too tight money than risk anything resembling more inflation.

SOUTH CHINA SEA: EVERLASTING ANTAGONISMS

Harnit Kaur Kang

Protracted tensions between nation-states over disputed territories are a universally occurring and indeed expected phenomenon of politics. Since time immemorial, the acquisition of territories has translated into greater political and economic control. Be that control over new markets, cheaper labor or natural resources; expansion has been understood historically as a way of sustaining power. Yet, apart from the ‘slicing of the Chinese melon’ during the colonial era, rarely has the modern or the post-modern world witnessed a dispute involving 5 countries and that too over island groups and boundaries in the sea.

The South China Sea (SCS) has acquired that distinction particularly in the past 3 decades with the 1982 convention on the United Nations Law of the Sea (UNCLOS) which introduced clear demarcations on what constitutes as the territorial sea, exclusive economic zone (EEZ), continental shelf, contiguous zone and alas the free for all high seas. Consequently, the dispute has involved Philippines, Malaysia and Brunei Darussalam all of who seek to posses their newly realized pounds of flesh. China and Vietnam have apart from economic motivations, the pride of a lost heritage driving their claims. Finally, all the claimants are in varying degrees, smitten with the lure of purported large reserves of crude oil and natural-gas under the seabed of the SCS. Additionally, the Spratlys & Paracel archipelagoes comprise not only as disputed oceanic territory but are also contested ‘land’ territory, delineating the SCS dispute as not only maritime-jurisdictional between all the claimants but also a political-sovereignty dispute between Vietnam and China in particular. This paper explores the geopolitical constrains and motivations of the claimants and that of the crucial external stakeholder, USA. It seeks to analyze also the role of ASEAN and the utility of international maritime law in the mitigation of the dispute, offering a prognosis cognizant of recent developments in the region.

UNCLOS AND THE SCS DISPUTE

The 1982 UNCLOS convention established after much deliberation with 160 participating countries, what constitutes the political oceanic periphery of a country, extending from its coastline. It fixed the territorial sea (UNCLOS, p.26) at 12 nautical miles (nm), a contiguous zone (UNCLOS, p.31) of 24nm and the EEZ (UNCLOS, p.40) up to 200nm. Furthermore the continental shelf (UNCLOS, p.49) could extend beyond the 200 nm limitation under certain topographical considerations and be claimable up to 350nm. The Philippine’s claims to the Spratlys and that of Malaysia and Brunei Darussalam’s to territories in the SCS stems from this modernization of UNCLOS and in particular the demarcation of the EEZ. The convention for all intents and purposes was drafted to provide clarity and straightforward quantitative resolution of maritime territorial disputes. However, in the case of the SCS dispute, it has resulted in the emergence of overlapping legal claims based on geographical proximity in addition to the existent political-historical contestations. Additionally, UNCLOS has classified navigational regimes into the 3 broad categories of innocent, transit and archipelagic sea lanes (ASL) passage. Transit passage is expeditious and through the straits, which have traditionally been used for international navigation and may not be impeded unduly. On the other hand innocent passage, since it involves access through territorial waters includes prohibitions on the military operations including flying of aircrafts, use of weapons systems and other activities considered prejudicial to the coastal state. Given the tense climate created due to SCS dispute, the coast guard and navies of the claimant states have a heavy presence and high vigil in their respective EEZs.

Arguably, the operative word in the acronym EEZ is not ‘exclusive’ but economic. While a coastal state may exercise sovereign rights over the fishing, drilling and other commercial resources of their EEZ; UNCLOS makes it perfectly legal for foreign military vessels to conduct marine scientific research (MSR) in the EEZs of another state. Such provisions have facilitated ambiguities between alleged benign MSR activities on the one hand and geo-strategically motivated power projection on the other. Specifically, this has served to make the SCS a volatile region by particularly exacerbating Chinese fears of an encirclement and suffocation of its vital strategic space by USA. While USA’s presence in China’s EEZ is perfectly legal, it highlights the arguably confused understanding of EEZ in the Asia-Pacific wherein there is a tendency to safeguard them as restricted national frontiers, when legally an EEZ allows for an international air space and passage for foreign military vessels. The other confusion regarding EEZ in the Asia-Pacific, pertaining to the SCS dispute specifically concerns the Paracel and Spratlys archipelagoes which are often understood as homogenous land territories by the claimants. Article 121(3) of UNCLOS states that: “Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf” (UNCLOS, p.66). Nonetheless, according to Thao and Amer (2009, p.340); “The position of China is that the features in the Paracel and Spratlys archipelagos can generate full maritime zones”.

30 March 2013

FDI in defence sector would be an effective catalyst for self-reliance

BY VINAY KUMAR

BAE Systems, a defence, aerospace and security company, employs 93,500 people worldwide. Its wide-ranging products and services cover air, land and naval forces, as well as advanced electronics, security, information technology, and support services. 

With a presence that goes back over 60 years, BAE Systems has developed India as a home market with a strategic vision to become a major and integral part of the domestic Indian defence and security industry, leveraging its global expertise to develop technologies and solutions in India for both the Indian market and for export. 

It has a joint venture in India with Hindustan Aeronautics – BaeHA. Based in Bangalore, it is focused on providing engineering and business solutions services. BAE Systems has a long-standing association with HAL on aircraft programmes such as Jaguar, Harrier, and now, the Hawk Advanced Jet Trainer which HAL manufactures under licence for the Indian Air Force and Navy. 

The board of BAE Systems, led by its global chairman Dick Olver, visited India for the first time. In this e-mail interview to The Hindu, he outlines the company’s plans for India. 

What is the Board’s overall impression of the market in India?

BAE Systems has a long association with India in many areas of aerospace and defence, with all three of the Indian Armed services — dating back to pre-independence times. I have personally had an opportunity to visit India many times — most recently in February as part of Prime Minister Cameron’s delegation. And, I am thrilled to lead the visit of the BAE Systems plc Board here this week. India is an incredible country. It is a key market for our company. So, I was keen that my fellow directors had the opportunity to see and experience that first hand. We have a solid team here, who are privileged to work with some exceptional people across the customer community and through our relationships with Indian companies. The Board has been impressed with what we have seen and experienced during our visit. 

The Indian market holds considerable opportunities for us, and I and the other directors are very excited and energised by the potential that exists here, illustrated by the steady trend in defence expenditure at around 2 per cent of GDP, a stated intent of $100 billion worth of acquisitions over the next five years, and the focus on self-reliance in defence. 

A personal highlight was the launch of the mobile mini hospital called ‘Smile on Wheels’ that will provide primary healthcare services to underserved communities in Bangalore. The mini hospital is part of the company’s corporate social responsibility programme in India through which we support development programmes in the areas of primary education and healthcare in rural and urban communities across seven states of India. . 

BAE has had a longstanding association with HAL on the India Hawk and even has a JV with the aerospace major. How do you view the future of the relationship? 

Our relationship with HAL for the Indian Hawk programme is the cornerstone of our operations in India today. We are privileged to enjoy a strong relationship with HAL, and our latest collaboration is for the licence to build Hawk Advanced Jet Trainer. India has ordered a quantity of 123 aircraft with another 20 in negotiation.