The US is on the thin edge of strategic failure in two wars: the war in Iraq and the war in Afghanistan/Pakistan. This failure may never reach the point of outright defeat in either country. Iraq may never become hostile, revert to civil war, or come under anything approaching Iranian control. Afghanistan and Pakistan may never become major sanctuaries for terrorist attacks on the US and its allies.

Yet Iraq is already a grand strategic failure. The US went to war for the wrong reasons, let Iraq slide into a half decade of civil war, and failed to build an effective democracy and base for Iraq’s economic development. Its tactical victories if they last did little more than put an end to a conflict it help create, and the US failed to establish anything like the strategic partnership it sought.

The US invasion did bring down a remarkably unpleasant dictatorship, but at cost of some eight years of turmoil and conflict, some 5,000 US and allied lives and 35,000 wounded, and over 100,000 Iraqi lives. The Congressional Research Service estimates that the dollar cost of the war to the US alone is over $823 billion through FY 2012, and SIGIR estimates that the US and its allies will have spent some $75 billion on aid – much of it with little lasting benefit to Iraq.

The outcome in Afghanistan and Pakistan now seems unlikely to be any better. While any such judgments are subjective, the odds of meaningful strategic success have dropped from roughly even in 2009 to 4:1 to 6:1 against at the end of 2011. It is all very well for senior US officials to discuss ?fight, talk, and build, and for creating a successful transition before the US and ISAF allies withdraw virtually all of their combat troops and make massive cuts in the flow of outside money to Afghanistan. The US, however, has yet to present a credible and detailed plan for transition that shows the US and its allies can achieve some form of stable, strategic outcome in Afghanistan that even approaches the outcome of the Iraq War.

Far too many US actions have begun to look like a cover for an exit strategy from Afghanistan, and the US has never provided a credible set of goals indeed any goals at all for the strategic out- come it wants in Pakistan. Unless the US does far more to show it can execute a transition that has lasting strategic benefits in Afghanistan and Pakistan well after 2014, it is all too likely to repeat the tragedy of its withdrawal from Vietnam.

Such a US strategic failure may not mean outright defeat, although this again is possible. It is far from clear that the Taliban and other insurgents will win control of the country, that Afghanistan will plunge into another round of civil war, or that Afghanistan and Pakistan will see the rebirth of Al Qaida or any other major Islamist extremist or terrorist threat.

However, the human and financial costs have far outstripped the probable grand strategic benefits of the war. Given the likely rush to a US and ISAF exit, cuts in donor funding and in country expenditures, and unwillingness to provide adequate funding after 2014, Afghanistan is likely to have less success than Iraq in building a functioning democracy with control over governance, economic development, and security. Worse, Pakistan is far more strategically important and is drifting towards growing internal violence and many of the aspects of a failed state.

Even if Afghanistan gets enough outside funding to avoid an economic crisis and civil war after US and allied withdrawal, it will remain a weak and divided state dependent on continuing US and outside aid through 2024 and beyond, confining any strategic role to one of open-ended dependence. As for a nuclear-armed Pakistan, it is far more likely to be a disruptive force in Afghanistan than a constructive one, and there is little sign it will become any form of real ally or effectively manage its growing internal problems.

Regardless of which outcome occurs, the result will still be strategic failure in le estimates of total Afghan casualties since 2001, but some estimates put direct deaths at around 18,000 and indirect deaths at another 3,200-20,000. And the war is far from over.terms of cost-benefits to the US and its allies. The Afghan War has cost the US and its allies over 2,700 dead and well over 18,000 wounded. There are no reliable.

The Congressional Research Service estimates that the dollar cost of the war to the US alone is over $527 billion through FY2012, and SIGAR estimates that the US and its allies will have spent some $73 billion on aid much of it again with little lasting benefit. Similar cost estimates are lacking for Pakistan, but they have also taken significant casualties and received substantial amounts of US aid.

The key question now is whether the US can minimize the scale of its strategic failure. Can the US move from concepts and rhetoric to working with its allies, Afghanistan, and Pakistan to create a credible transition plan that can secure Congressional and popular sup- port and funding? Can they actually implement such a transition plan with the effectiveness that has been lacking in its efforts in Iraq and Afghanistan to date?

Some form of success (or limited failure) may still be possible, but the analysis in this paper warns that nothing the US government has said to date raises a high probability that this will be the case, and that much of the progress it has reported may be misleading. There are four critical areas wherein any lasting level of success is now unlikely:

Strategic failure?

The US has not shown that it can bring about enough of the elements required to create Afghan security and stability in a way that creates more than a marginal possibility that Afghanistan will have a successful transition by 2014, or at any time in the near future. It has never announced any plan that would make this possible. It has no strategic plans or clearly defined goals for Pakistan, although it has far more strategic importance than Afghanistan. Talk Without Hope: It is far from clear that any major insurgent faction feels it is either losing, or cannot simply out wait, US and allied withdrawal. Nor is it clear that Pakistan will ever seriously attempt to eliminate insurgent sanctuaries within its borders. If insurgents do chose to negotiate it may well be because they feel the US, allied, and GIROA position is becoming so weak they can use diplomacy as a form of war by other means and speed their victory through deception and by obtaining US,allied, and GIROA concessions. They have already used similar tactics in Helmand and Pakistan, and Nepal and Cambodia are warnings that ?talk may do little more than cover an exit. Tactical Success? The very real gains the US and ISAF have made in the south may not be possible to hold if the US move forces east, and the US and ISAF are cutting forces so quickly that it is doubtful they can achieve the goals that ISAF set for 2012. ANSF development is being rushed forward as future resources are being cut, and it is far from clear that the insurgents cannot out wait the US and ISAF and win a war of political attrition without having to win tactical battles in the field. The ISAF focus on significant acts of violence is a questionable approach to assessing both tactical and strategic progress, and ANSF transition has been little more than political symbolism. Spend Not Build?

The latest Department of Defense and SIGAR reports do little to indicate that US and allied efforts to improve the quality of government, the rule of law, representative democracy, and economic development are making any- thing like the needed level of progress. They are a warning that Afghanistan and the Afghan government may face a massive recession as funding is cut, and the dreams of options like mining income and a ?new Silk road are little more than a triumph of hope over credible expectations. Once again, the very real progress being made in the development of the ANSF is being rushed as future funding is being cut, and it is unclear that current gains will be sustained or that the US has sufficient time left in which to find credible answers to these questions, build Congressional, domestic, and allied support, and then to begin implementing them. It is now entering the 11th year of a war for which it seems to have no clear plans and no clear strategic goals. The new strategy that President Obama outlined in 2009 is now in tatters.

There are no obvious prospects for stable relations with Pakistan or for get- ting more Pakistani support. The Karzai government barely functions, and new elections must come in 2014 – the year combat forces are supposed to leave. US and allied troop levels are dropping to critical levels. No one knows what presence – if any – would stay after 2014. Progress is taking place in creating an Afghan army, but without a functioning state to defend, the ANSF could fragment. Far less progress is taking place in creating the police and justice system. Massive aid to Afghanistan has produced far too few tangible results, and the Afghan economy is likely to go into a depression in 2014 in the face of massive aid and spending cuts that will cripple both the economy and Afghan forces.

It is time the Obama Administration faced these issues credibly and in depth. The US and its allies need a transition plan for Afghanistan that either provides a credible way to stay with credible costs and prospects for victory or an exit plan that reflects at least some regard for nearly 30 million Afghans and our future role in the region. It needs to consider what will happen once the US leaves Afghanistan and what longer term approaches it should take to a steadily more divided and unstable Pakistan.

In the case of the US, this also means a detailed transition plan that spells out exactly how the US plans to phase down its civil and military efforts, what steps it will take to ensure that transition is stable through 2014, and a clear estimate of the probable cost. The US needs a meaningful action plan that Congress, the media, area experts, and the American people can debate and commit themselves to supporting. If President Obama cannot provide such a plan within months, and win the sup- port necessary to implement it, any hope of salvaging lasting success in the war will vanish.

Even if the US does act on such a plan and provide the necessary resources, it may not succeed, and Pakistan may become progressively more unstable regardless of US aid and actions in Afghanistan. Any de facto ?exit strategy? will make this future almost inevitable.

The most likely post-2014 out come in Afghanistan, at this point in time, is not the successful transition to a democratic Afghan government with control of the entire country. Nor is it likely that the Taliban will regain control of large parts of the country. Rather, the most likely outcome is some sort of middle ground where the insurgents control and operate in some areas, while others are controlled by the Pashtun. Some form of the Northern Alliance is likely to appear, and the role of the central government in Kabul would be limited or caught up in civil conflict.

This would not be what some US policy makers call ?Afghan good enough,? it would be ?Afghan muddle through.? What, exactly such an ?Afghan muddle would look like, and how divided and violent it would be, is impossible to predict. But it is the most likely outcome and the US needs to start now to examine the different options it has for dealing with a post-2014 Afghanistan that is far less stable and self-sufficient than current plans predict, and make real plans for a Pakistan whose government and military cannot move the country forward and contain its rising internal violence. As is the case in Iraq, strategic failure in the Afghanistan Pakistan War cannot end in a total US exit. The US must be ready to deal with near and long term consequences.

Courtesy CSIS

Taiwan is a part of the geographical area of operation of India’s Look East Policy (LEP). Although India does not recognize Taiwan as a sovereign state, its functional and people-to- people contacts with Taiwan are explainable under the LEP. Besides, India’s economic activities are on the rise in the vicinity of Taiwan. Though commercial in nature, India’s presence in the South China Sea, along with improvement in its bilateral relations with Asia-Pacific countries especially in the realm of politics and defense cooperation is of strategic significance. In the overall strategic context of the region, increasing functional ties with Taiwan without undermining the support to the one China Policy would be a stiff challenge requiring clarity of vision and skilled diplomacy. Thus, it is imperative for India to have a much better understanding of Taiwan, and the Asia-Pacific region.

In the author’s view, functional ties/cooperation and people-to-people relations could make a separate category without attaching any diplomatic, political or strategic meanings. The main attributes of this category can be listed as below:

• A comprehensive package that includes cooperation in education, culture, science and technology, trade and investment and other similar issue- areas.
• The package could also be characterised as people-to-people relations.
• Cooperation without manifest strategic underpinning and implications.

Engagement with Taiwan would lead India to have a more informed Taiwan policy. Its unique geographical location and political situation would also con- tribute to India’s understanding of the Asia-Pacific region. Taiwan is situated in the middle of the disputed waters of the South and the East China Seas. Considering the continued threat from the People Republic of China (PRC) to its national security, Taiwan not only has a natural interest in the modernization of the People’s Liberation Army (PLA), China-Japan tensions, and the dynamic of Sino-US relations, but also a natural expertise on them. Taiwan and China have historical and cultural affinity, but political and strategic distance. Strategically, Taiwan is close to the US and figures in Japan’s security considerations. It is obliquely mentioned in the US-Japan Defense Guidelines, 1997. But the US and Japan’s support for PRC’s One China Policy has set a limit on their relations with Taiwan. Thus, Taiwan is not fully open to either of the major regional players. This situation leaves it marginalized and dissatisfied with every major power in the region and makes it a neutral interpreter of the region’s politics. India could tap into this consultative potential of Taiwan.

Functional cooperation with Taiwan is even more valuable. Taiwan is a thriving and industrialized economy that is closely integrated with the international economy. It is amongst the world’s leading exporting and importing countries. It is the leading producer and manufacturer in the world in foundries, IC packages, blank optical discs, mask ROMs, mobility scooters/powered wheelchairs and chlorella. If the products made by Taiwanese companies outside Taiwan are also taken into account, the list of products commanding a high share in the world is even longer. Notebooks, Tablets, LCD monitors, IC packages, motherboards (System & Pure MB), WLAN CPEs, cable modems, and digital blood-pressure monitors are a few examples. Apart from electronics, Taiwan’s agro industries, particularly food-processing, maintain international standards. It also holds high rank in the international rating by agencies like the Institute for Management Development (IMD), Business Environment Risk Intelligence (BERI), the World Economic Forum (WEF), and the Heritage Foundation. Its business environment, research and development, and innovation are recognized worldwide. (Data relating to all these is available in the tables at the end of this monograph). Further, Taiwan’s education system ranks quite high. For instance, fourteen Taiwanese universities in 30 disciplines are on the list-compiled by the QS World University of the UK of the top 200 universities in the world.1 India could become an important destination for Taiwan’s new Go South policy for diversifying Taiwan’s trade and investment basket. India could also become an alternative to China for many Taiwanese companies in view of rising wages and costs in that country.

In fact, a regulated flow of skilled labour from India can help overcome the problem of high costs in Taiwan itself. Taiwanese FDI can contribute to India’s manufacturing, infrastructure and other sectors. India and Taiwan make a case for mutual benefit by being substantial complementary economies, as India’s computer software industry complements Taiwan’s computer hardware capability. India’s demography, with a more than 300 million strong middle class, offers an economic opportunity for Taiwanese entrepreneurs. India is also one of the leading suppliers of natural resources. It can be a gateway to South Asia, and even West Asia, for Taiwanese companies. Further, like Taiwan, India too has a reasonably impressive record of achievements in science and technology. For instance, India has gained inter- national recognition in the automobile, electronics and space science sectors. In education, India has internationally recognised institutes- like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs). Besides, there is sufficient space for cooperation between the two countries in the spheres of culture and tourism. This monograph deals with Taiwanas it exists in the world today.

It does not deal with the legal question, whether Taiwan is an independent state or a Chinese province. Despite its ambiguous diplomatic status, Taiwan remains an important factor in the East Asian security scenario. In spite of the Cross-Strait relations in their best phase, the solution to the Cross-Strait conundrum remains elusive. Taiwan and the People’s Republic of China (PRC) have signed 19 agreements related to functional areas since 2008. However, a formal political dialogue or a peace agreement that the PRC is pushing hard for, is not in sight. Taiwan does not appear inclined to yield on the question of sovereignty. Any formula that would downgrade Taiwan’s international standing is unacceptable to both Taiwan’s political class and the common Taiwanese.

Contrary to Chinese expectations, the prospects of economic cooperation and integration have not made the Taiwanese amenable to Chinese claims over Taiwan. Similarly, on the other side of the Taiwan Strait, Taiwan’s unification with China continues to be a powerful reference point for Chinese nationalism. China still has its missiles deployed against Taiwan. Moreover, it is yet to renounce the use of force as an option to resolve the Cross-Strait problem. This reinforces Taiwan’s perception of China as a threat to its security. Finally, the US, the security guarantor of Taiwan under the Taiwan Relations Act (TRA) 1979, continues to maintain diplomatic ambiguity over the Cross-Strait issue. Therefore, any conflagration in the volatile waters of Taiwan Strait could result in a US- China face off.

Taiwan is also a part of problematic territorial claims in the East China Sea and the South China Sea. Its claims overlap with those of China and are ignored by the other concerned parties. Taiwanese claims mostly address domestic constituency. It appears con- tent with the practical arrangements for resource-sharing. A good example is its fishery pact with Japan in 2013. However, since these claims stoke popular sentiment in Taiwan, it is difficult for the Taiwanese government to ignore the public opinion on these issues. Therefore, overlooking Taiwan in the regional security map would bring pres- sure on the US alliance in the region, of which Taiwan is a part. Taiwan success- fully drove this point during the stand- offs between Japan and China in the East China Sea over the Senkaku/Diao Yu islands in 2012-13 by its diplomatic manoeuvrings. In fact, the Japan- Taiwan fishery pact has effectively made the dispute tripartite, and implies that Taiwan is a player in the dispute. In May 2013, the government of Taiwan conveyed that diplomatic recognition or not, it is capable of taking care of its citizens when it flexed its economic muscle against the Philippines over the killing of a Taiwanese farmer-fisherman by the Philippines coastguard.

Finally, accelerated interaction and cooperation in functional areas between India and Taiwan would, in the long-term, also contribute to increased mutual awareness. The Cross-Strait unification would not be the only eventuality in the dialectics of Cross-Strait relations. Whether Taiwan would eventually unify with China, or the status quo would persist, or some other form of Cross-Strait relations would emerge, is difficult to predict. To study and engage Taiwan is important irrespective of the scenarios, because each scenario will shape the regional security dynamics in its own way.

 – Prashant Kumar Singh

Telangana will be the 29th state of India comprising 10 districts with plenty of water and some other natural resources in a backward region lacking development that was at the heart of the separate state demand.As and when the state is formed, the jewel in the crown will always be the city of Hyderabad, which may for some time, at least 10 years to start with, be the joint capital for the rest of Andhra.

With a population of over 3.5 crore, the new state comprising mostly the areas of the princely Nizam state will have 17 Lok Sabha seats and 119 assembly seats.When it joins the Indian Union, people of the region would hope that the new identity would help them over- come the challenges of poverty and backwardness which were at the roots of the separate state movement.

The demand for a separate identity for Telangana is virtually as old as the state of Andhra Pradesh, which came into existence in November 1956 through the States Reorganization Act. The Andhra Pradesh government website says: “Telangana agitation was started by the people of the region when they felt that Andhra leaders had flouted the Gentlemen’s Agreement which facilitated the formation of Andhra Pradesh.

“In the beginning, the movement demanded the implementation of the safeguards agreed upon earlier, but later it wanted the separation of Telangana from Andhra Pradesh.” That the seat of government in Hyderabad has persistently ignored the needs of Telangana at the expense of the other regions of the state has been a constant grouse of the advocates of separate statehood. The new Telangana state would comprise the 10 districts of Hyderabad, Medak, Adilabad, Khammam, Karimnagar, Mahbubnagar, Nalgonda, Nizamabad, Rangareddy and Warangal. Now, according to the Backward Regions Grant Fund 2009-10, 13 districts in Andhra Pradesh have been identified as being backward, of which nine are in Telangana.

Classified as a semi-arid region with a predominantly hot and dry climate, Telangana is not amongst the most fertile regions of the country.But it does have its share of natural resources and notably contains 20% of the country’s coal deposits. Among other natural resources are mica and bauxite along with some limestone reserves.But given the lack of development, Telangana has served as a fertile ground for the Maoist insurgency to take root.A clutch of leaders of the Naxalite movement hail from the region. Slain Maoist Kishanji, who was No.3 in the rebels’ hierarchy, hailed from Karimnagar district.

Doer Nitish Kumar scores over political rhetoric of Lalu and Ram Vilas

On the morning of counting day, driving through rain and the blossoms of Laburnum and Gulmohar in Patna, I was surprised to find that the road outside Nitish’s residence deserted. For a moment I assumed the other news channels had decided to skip the early morning slightly pointless pre results dispatches, till I walked a few steps away to the next lane. Sure enough, the entire media cavalcade of cameras and broadcast vans was parked right there – outside the home of Rabri devi, Lalu’s wife and the proxy Leader of Opposition.

Why would the media ignore the bigger story – Nitish Kumar, the man being wooed by all political formations, praised by Rahul Gandhi, hand-grabbed by Narendra Modi, and generally seen as Bihar’s great hope – to chase the by now predictable story – the decline of Lalu Prasad, the Railway minister who looked all set to go off track this election??This could a matter of habit – after all, Lalu has been the centre of gravity in Bihar for two decades. Or it could a more calculated journalistic gambit, linked to the well known contrast between the two men – Impetuous Lalu might supply some drama even as a loser, while Punctilious Nitish would not allow the media in except at the designated hour dutifully phoned and faxed to media offices. Nitish, as the consensus goes, does not believe in springing surprises.

And the initial leads came as no surprise. Both reporters and exit polls had picked up the astonishingly high level of Nitish’s personal popularity on which the NDA hoped to sweep Bihar. The only subject of speculation then – what would be the final tally? Lalu’s elder son, a Krishna Bhakt and mildly notorious in Patna, drove in from a morning visit to the temple, flashing the victory sign, holding up both his hands. He is giving four seats to his party – quipped one journalist. Uncannily, that’s what the RJD ended the day with.

Ram Vilas Paswan, the LJP leader who completes the Bihar triumvirate, had all morning been ensconced in a five star hotel suite – the one that he occupies when he is in Patna, which is not too of- ten, usually around election time. He has a reason, or excuse, to stay away – as par t of every single government since 1996, his duties as Union Minister have kept him busy in Delhi. Except this election took that excuse away. Paswan lost from Hajipur – a seat he won seven times since 1977, losing just once in the Congress wave of 1984. This time, an 88 year old man, Ram Sunder Das de feated him. Das could be this Lok Sabha’s oldest candidate.

As far as age goes, many have claimed this election has upturned an old truth about the way Bihar polls. That it is no longer about Jaat or caste, the vote is for Vikaas or development. Hardly one to dispute the remarkable transformation underway in Bihar, led by Nitish, I would slightly modify that claim. The reality is more nuanced.

Nitish has revived Bihar’s comatose administration, kickstar ted schools and hospitals, used the centre’s money well to build roads and infrastructure – public goods meant for all, they have indeed created a groundswell of support for him across the state and across communities. But what Nitish has also done is target benefits to specific communities, based on caste: the EBC’s or extremely backward castes, numerically larger among the backward castes but edged out by the more powerful Yadavs and Kurmis, have finally been given political space through reservations in panchayats; Mahadalits, dalits minus chamars and Paswans, for whom state largesse now ranges from subsidised homes to monthly supply of bathing soap; even among Muslims, Nitish has singled out the Pasmanda or backward and dalit muslims for special schemes like Talimi Markaj, a scheme aimed to bring Muslim children to school.

This is social engineering, Nitish style. And it pays. It has created new vote banks. Numerically, the most significant is the EBC bloc, 100 odd castes that add up to around 30 % of Bihar’s vote. In 2004, not a single EBC candidate was voted to Parliament. In 2009, three will be sworn in as MPs, all three are from Nitish’s party.

Further proof of how caste realigned this election – Lalu’s outburst post defeat. Two months ago, on poll eve, he dismissed my questions on the impact of the potential consolidation of the EBC and Mahadalit vote. But as his own electoral defeat from Pataliputra flashed on TV screens, he turned to the group of journalists and ranted : ‘Everyone has united against Yadavs, there is hatred against Yadavs’. His other villains: the administration for rigging the polls, an upper caste media for biased reporting. Familiar targets from the nineties.

Not surprising. But what was mildly stunning was Lalu’s dismissal of development as a factor. He said if Vikaas could win votes, he would have won hands down for the turnaround of the Railways. He was emphatic : development does not win votes. It was scary to see a man stuck in the nineties.

Nitish, as expected, called for a press conference and walking into 1, Anne Marg had a surprise in store : a mandatory security check, at sharp contrast from the mad chaotic unchecked stampede into Lalu’s home. The security guards, including women constables, were trained to frisk, but did not have the detectors. Another insight into how Bihar is changing – step by step.

The press conference took place under the mango tree, the sole unchanging landmark in a vastly different Chief Ministerial Residence. The briefing lasted twenty minutes and a beaming Nitish Kumar repeated several times, the word ‘Nakaraatmak’, translated best as ‘Negative’, but far more potent in its original meaning. Nitish said voters had rejected the ‘Nakaraatmak’ approach of his opponents. Nitish reiterated that this was a vote against ‘Nakaraatmak’ politics. At final count, Nitish had used the word 10 times. Nitish may have chosen the negative adjective, but his work has been an affirmative one, both as the chief minister trying to bring governance back to Bihar, and as a politician schooled in the politics of social justice.

The stream combines the socialist ideals of Jayaprakash Narayan, and the modified socialism of Karpoori Thakur – Bihar’s second backward caste chief minister and the first to introduce reservations for OBCs in Nor th India, way back in 1978. Both Lalu and Nitish were claimants to this legacy. But while Lalu squandered it, Nitish is building on it – by deepening the reach of reservations and social targeting. It is Mandal Part Two. And like Mandal Part One, you could have a problem with it, if you oppose affirmative action based on caste. Except, by further refining reservations, Nitish has actually taken on what has been one of the prinicipal criticisms of Mandal – that it helped dominant caste groups like Yadavs and Kurmis become even more powerful, at the cost of the more backward and less powerful groups.

Lalu may have privately wished that Nitish’s agenda would lead to a backlash from the upper castes, Yadavs and Kurmis – but it didn’t. Possibly one explanation : even if the others are slightly resentful of reservations, the resentment is offset by the larger benefits of a functioning state that has finally begun to deliver.

No wonder, at his press conference, Nitish didnt look partic- ularly crushed at the national picture of a UPA win, and an NDA defeat. Instead, he asked the new government at the centre to live up to the promise of special status for Bihar – just a day ago, ever y political party had shown a willingness to consider the demand when a hung verdict seemed likely and the support of Nitish seemed crucial. Still beaming, Nitish wrapped up : Good that the elections are over, now lets all get back to work.

Post Script: Observations overheard that day: RJD has be- come Rajput Janta Dal. Apart from Laloo, the other three RJD candidates who won are Rajputs. The election has ended the Raj of Gundas – Gundis. Gundas are dons turned politicians. Gundis are their wives, propped up as proxy candidates. All 10 of them lost. Including Munna Shukla on a JD U ticket. A jubilant Nitish had one reason to be upset. Digvijay Singh, his former party colleague turned rebel, won from Banka defeating Nitish’s candidate. This setback could be crucial – in keeping Nitish grounded. Bihar cannot afford another arrogant leader.

 – OE News Bureau

Vote for him in the December’s Gujarat Assembly elections and pave the way for him to be the Prime Minister of India. That will save the Hindus and the India, appeals the Indian American Intellectuals Forum. December is a very crucial month for the Chief Minister Narendra Modi, for the State of Gujarat, for the Hindus in India, and for India as the country. The State Assembly elections in Gujarat are scheduled for December 13 and 17 – and the results will be announced on December 20.

In India, Shri Narendra Modi is an embodiment of courage and valor. He is a powerful orator, a consummate communicator and a forthright thinker. He is a fearless fighter, a legend who under- stands how to capture the collective imagination of the people he wants to lead. In spite of the mean and mendacious media blitzkrieg launched against him by anti-Hindu Congress Party in collusion with the dangerous combination of anti-national radical Islamists, Leftists and foreign-funded NGOs, Narendra Modi has not only stood strong, but has also made them eat the humble pie.

Gujarat under Narendra Modi, the “Lion of Gujarat”, has blossomed in the last eleven years and has become the growth engine of India. Modi has completely transformed the state’s economic and political landscape. He is punctilious in his thoughts, deeds and actions and runs the state like an efficient CEO.

Narendra Modi is endowed with a syncretistic vision which enables him to lead Gujarat in a harmonious manner. Under his dynamic leadership, Gujarat is practically leading the country in every segment of economy. the power, petroleum, petrochemicals, ports, steel, minerals, gems, jewellery and auto industry.

When he first took over as the Chief Minister, Gujarat had a power shortage of 2000 MW, but now it is a power surplus state. Gujarat actually contributes 16% to the country’s overall industrial production. Agricultural growth of Gujarat is at 11%; the rest of India it is barely 4%.

In a quantum leap, in April 2012, Narendra Modi dedicated to the nation 600 MW of installed solar power projects, including the Asia’s largest solar park with 214 MW generation capacity. With achievements like these, Narendra Modi has established himself as the man with vision, mission and conviction.

His zero tolerance policy towards the terrorism has won him big laurels. Gujarat, which was the home of some of the worst communal riots in independent India has seen no communal disturbances in the last ten years. Politically, Narendra bhai got a big boost to his image and stature when in April 2012 the Supreme Court-appoint- ed Special Investigation Team (SIT) cleared him of the charges related to Gujarat riots of 2002. In its report SIT has exposed the nexus between the top State Congress officials, the so-called ‘secular’ journalists, NGOs and the police. For such legendary courage and conviction, Narendra Modi actually deserves the nation’s ovation and admiration, rather than the dishonor and defamation.

Recently, the prestigious “Time magazine” featured Modi on its cover page. Financial Times, another world-class publication, applauded Gujarat’s growth under Modi in glowing terms. A September 2011 report drawn up by the US Congressional Research Service (CRS) describes Modi as the “King of Governance.” The world-renowned Brookings Institution’s Managing Director writes about Modi in March 2012 that India could elect him as its Prime Minister.

Over eighty three percent of India’s population or Nine Hundred Ninety million people in the country are Hindu. Yet, shamefully, the country is being ruled by the minorities, who are barely 18% of the population count. India is the only country in the world where its minorities principally the Muslims and the Christians — have ganged up together to enact laws that decide how the Hindu majority should behave in their own country! It is truly a matter of great regret and shame that Hindus are taking this injustice and tyranny lying down!

Sinister efforts are underway to selectively appoint the Christians and Muslims in sensitive and powerful posi- tions within the administration. Here are a few glaring examples of it: Chairperson of the country’s ruling political alliance UPA is Sonia Gandhi, a practicing Catholic Christian. Her son Rahul Gandhi, another Catholic Christian, is being groomed to be the next Prime Minister of India. Country’s Defense Minister A.K. Antony, the Foreign Secretary Ranjan Mathai, and Head of the Air Wing of military Anil Kumar Browne, P.J. Kurien Dy. Chairman Rajya Sabha, P.C. Chacko, newly appointed Congress Spokesperson, P.J. Thomas, 14th Chief Vigilance Commissioner (appointment subsequently quashed) are all Christians.

The country’s Foreign Minister Salman Khurshid, Minister of State for External Affairs E. Ahamed, the Chief Justice Altmas Kabir, the nation’s Vice President and Chairman of Rajya Sabha Hamid Ansari, Chief Election Commissioner S.Y. Qureshi, Attorney General of India, Goolam Essaji Vahanvati, K. Rahman Khan, Minister for Minorities Affairs ad Rashid Alvi, Congress Spokesperson are all Muslims.

To add an insult to the injury Syed Asif Ibrahim, a Muslim IPS officer has been appointed as Chief of Intelligence Bureau (IB). Many Hindu leaders believe that his appointment could endanger India’s internal security. In this connection, readers should note that in order to pave the way for Asif Ibrahim to be the Chief of IB, at least four of his senior Hindu officers (R.N. Gupta, V. Rajagopal, S. Jayaraman and Yashovardhan Azad) were transferred to insignificant posts.

Closest political advisors of Sonia Gandhi are Margaret Alva, a Christian, Ahmad Patel, a Muslim and Osar Fernandez, a senior Indian National Congress leader, a Christian. The country’s Minister of Health and Family Welfare Gulam Nabi Azad is a Muslim. For all practical purposes, the over-all Hindu people and India as the country are presently under a state of siege. Unknown to the common public, that siege has been laid with the help of radical Islamists, jihadists, and Marxists. The chief aim of this insidious conspiracy is to demoralize and denigrate the Hindus and their organizations… and encourage the centrifugal forces to balkanize India into several mini-Pakistan .Almost all Hindus have already been driven out of Kashmir. Over 30 million Bangladeshi Muslims have infiltrated into Assam, West Bengal and other neighboring states. The states like Assam, Bengal, and Kerala are witnessing a big demographic change. No matter how strongly we deny it, the unfortunate fact still remains intact that the “demographic con- quest of any land is the most permanent form of a conquest.”

Discrimination against Hindus in India is rampant. Top Hindu temples like Tirupati and Sabrimala are taken away from Hindu hands – through the legislation – and given to ‘secular’ civil servants for managing them. From the religious offerings of Hindu devotees meant strictly for the Hindu issues, the bureaucrats unfairly dole away Rs. 690 crores a year as the Haj subsidy alone.

There is a complete economic mess and utter chaos in India created by various mega-scams: Coal-gate scam worth Rs. 186,000 crores, 2G scam worth Rs. 176,000 crores, and Commonwealth Games scam worth Rs. 70,000 crores. Massive payoffs from these scams have made it possible for a half-literate Italian-Indian woman like Sonia Gandhi to become the fourth richest politician in the world.

Amidst all this gigantic plunder and loot, there is little hope for our country. The only way out is if the honest and courageous leaders like Narendra Modi man- age to get into the driver’s seat… and, maneuver the country away from the sure doom and disaster waiting ahead. If you want to restore the dignity to India, if you wish to put Bharat Mata on the pedestal of glory, if you want the country to be a super-power in real terms… it is incumbent upon all such residents of Gujarat to come out in big numbers on the polling day and vote for Narendra Modi… the only honest, hardworking and charismatic leader of Gujarat.

 – OE News Bureau

Finally, the much anticipated elections for the National Assembly along with four Provincial Assemblies got over last week. While the results are clear in terms of who won and how many seats, it would take few weeks to identify the major trends in 2013 elections. This commentary focuses on eight major trends/out comes that could be identified, as a preliminary analysis.

First and foremost, the election process and the polling, was by and large free and fair, especially in a South Asian, and in particular Pakistani context. Though there was violence, it did not totally disrupt the election process. And more importantly, there are no reasons to believe that either the military or the intelligence agencies tried to change the outcome of the results. Invariably, every political party, perhaps except the ANP (Awami National Party) had a level playing field in terms of freeness and fairness of the election process and polling.

Zardari deserves a big applause for not only his deft handling of internal political issues and external issues in such a manner that there was no dissolution of the elected assemblies, but also for conducting elections as per the schedule. And perhaps it deserves special applause for the smooth transition, through the appointment of caretaker governments both at the national and provincial levels. It is unfortunate, that the PPP lost badly, despite its success in completing the term, amongst threats from the TTP, failing economy and huge foreign policy and security challenges.

Second major outcome that could be identified is the rationalization of all national political parties in Pakistan. Though it is generally being voiced both inside and outside the region, that Pakistan has voted Nawaz Sharif to power, an analysis of the seats that the PML-N has won, clearly projects that the seats for the National Assembly has been primarily from the constituencies in Punjab. Of the 123 seats that the PML-N has won, except for a few seats from KP, the rest had come primarily from Punjab. For the PPP, almost all its seats that it has won for the National Assembly have come from Sindh. Similarly, for the PTI of Imran Khan, majority of the seats it has won for the National Assembly has come from Khyber Pakutunkhwa.

Third major outcome, which could be easily identified, is the failure of religious political parties to make any significant impact. Though the last two general elections witnessed a decent growth in their contribution to the National Assembly, 2013 elections should have been a disappointment for the religious political parties. While the JUI (Fazlur Rahman) and Jamaat-e- Islami (JI) could manage to win ten and three seats respectively, rest of the religious parties could not capture a single seat. Perhaps, this election has cremat- ed whatever was left of the MMA.

Those who have been following the performance of the religious political parties in Pakistan would agree that in any free and fair elections, the Right did not have much of a success. They may have a strong street power, but it never materialised into seats, if the elections remained free and fair.

If the religious political parties did not perform well in the elections, nor did the liberal and secular parties, such as the PPP, ANP and MQM, which could be identified as the fourth major outcome of this election. For the PPP, it was almost a complete disaster. From being the ruling party for the last five years, all that the PPP could manage was 31 seats, that too only from Sindh. The implications of this election for the PPP should be a larger discussion; with no Benazir Bhutto and with a corrupt image for Zardari, the PPP will need nothing short of a miracle to bounce back, first within Sindh and second at the national level. Bilawal Bhutto is too far physically and emotionally from Pakistan, and especially from the PPP supporters.

The ANP, PPP’s partner performed worse. The party has been completely wiped off and decimated both at the national level, and in the KP province, which is its stronghold. Undoubtedly, the ANP was the primary target of the TTP and took most of the violence perpetrated by the Taliban before and during the elections. As a result, when compared to the other political parties, the ANP could not campaign that effectively. Though the TTP led violence could be considered as a reason for the ANP’s bad performance, the fact is, it could not project a coherent road map or win the support of people from its performance. All it could manage was a single seat for the National Assembly!

Though the MQM could manage 13 seats, mainly from Sindh, more data is needed to find out in which regions it has performed well and whether it has been able to retain the vote bank. PML- Q, the other liberal party could manage only two seats.

Fifth major outcome, when compared to above liberal political parties, is the substantial performance of Imran Khan and his PTI. His party has won 26 seats, few short of the PPP, but way ahead of the rest of other established political parties. Though he has secured most of seats from KP, he did manage to win a few from other provinces as well.

However, for someone who has been touted as the next Prime Minister, and an alternative for the PML-N in Punjab, Imran Khan and his PTI was a bubble that had burst. All he and his party could manage is a collation government in KP province.

Despite the above drawback, undoubtedly the PTI was a success story; along with the PML-N, both the political parties could be seen as right of the center in terms of ideology. Both are not exactly liberal political parties, and that could be the sixth major outcome of this election.

Seventh major outcome could be the relative stability in provincial assemblies. The biggest province Punjab will be ruled by the PML-N, with much ease, and Sindh by the PPP. There seems to be an understanding already in KP in letting Imran Khan’s PTI to form the government. Balochistan may remain the only province in terms of political stability within the Assembly.

Finally, the biggest outcome of the election was the general participation and the rejection of TTP’s threats. The violence has neither affected the outcome, nor the process; the people took part with enthusiasm and in big numbers. Perhaps, this could be a new beginning that Pakistan has been looking forward. Much will depend on how the process is taken forward by Nawaz Sharif and the provinces.

Courtesy : Institute of Peace and Conflict Studies (http://www.ipcs.org)

London: It appears that the attempt to manipulate Lashkar-e-Toiba operative Ishrat Jehan’s death to persuade Narendra Modi to withdraw from India’s prime ministerial race has more sinister roots than immediately apprehended. An insider with intimate knowledge of Anglo American policy towards India suggested that a virtual resolution of the historic Kashmir issue has already been negotiated discreetly through the intercession of Washington. It seems an understanding has been reached with Manmohan Singh’s government that major Indian concessions would be on the table.Apparently, this entire package would be in jeopardy if Narendra Modi were to become prime minister of India.

Pakistan, whose rapid acquisition of nuclear weapons’ capability is considered an urgent problem, including its known proliferation activities, is prepared to reciprocate with suitable steps acceptable to Washington. It is hoped that the lowering of India-Pakistan tensions would also reduce the dangers of a nuclear exchange that would have devastating wider global consequences. Pakistan will also restrain the Taliban and accept a half way house in its expedition to control Afghanistan’s destiny though Hamid Karzai will apparently have to depart.

The grim inference is that the incumbent Indian government is not entirely in dissonance with Pakistani agencies, including the Inter Services Intelligence and its arms-length proxy, the Lashkar-e-Toiba, to corner Narendra Modi. The evident bonhomie between the two parties is a product of Washington’s mediation, which is keen to retrieve something from the mess of its Afghan misadventure. Certainly, the elimination of Narendra Modi, physically if need be, as some observers, including myself, have warned of, would suit some quarters because otherwise he is guaranteed to propel the Bharatiya Janata Party ahead at the 2014 general elections.

Private polling has been showing that in the best case scenario, the Sonia Gandhi Congress would simply not have the numbers to consider forming a government, even if the BJP itself failed to approach the magic number of 220 seats. An interesting question is the extent of involvement of some senior BJP leaders and their advisers in this colossal conspiracy. Some have enjoyed close ties with United States’ agencies since the Cold War period when Nehruvian nonalignment was considered nothing short of support for the Soviet Union. Even closer ties have evolved between some leaders through the intervention of a prominent Indian business family in London who have always been US surrogates.

The so-called solution to the Kashmir dispute would almost certainly be based on the four-point formula suggested by the former Pakistan military president, Parvez Musharraf. It entails softening of Line of Control (LoC), self governance, phased withdrawal of troops from entire Jammu and Kashmir and joint supervision by India and Pakistan. Pakistan is confident that such a plan would enable it to absorb the entire Kashmir Valley eventually making Indian resistance to such an outcome both politically costly and militarily expensive. Publicly aired Pakistani misgivings about Musharraf’s four-point formula when it was first out- lined were officially sponsored to create the impression that Pakistan would only acquiesce reluctantly. The idea was to make the Indian public believe that it was the gainer from the agreement. However, in private, there was widespread official consensus that the agreement would be a prelude to Pakistan gaining full sovereignty over the Kashmir Valley and possibly even more. The survival of other areas under Indian control would be rendered untenable if Pakistan were to achieve political suzerainty over the Valley and some adjacent areas.

The interim policy, in the aftermath of the agreement being fully implemented, would be to embark on a policy of demographic assault that has already succeeded in Pakistan occupied Kashmir. The extensive marital links between PoK Kashmiris and Punjabis, for example, has ensured huge support for the Lashkar-e-Toiba’s activities against India. It is reasoned that encouraging marriage between residents of India’s Kashmir Valley and those on the Pakistani side with the help of local religious authorities would create a growing constituency within the Kashmir Valley that would be Pakistani in essence.

It is concluded that it would be impossible for the Indian authorities to curb this development because there would be an international human rights’ outcry. It is also perfectly well-known in Pakistan that India has failed to stop the massive migration of Bangladeshis into India which has grown to startling proportions in many cities far removed from the Indo Bangladesh border. The result of such demographic changes would also guarantee the election of governments in Kashmir that would favor Anschluss with Pakistan.

Once such an elected government agitated, in the first instance, for closer ties with their Pakistani coreligionists, prior to elevating the demand to formal accession, the Indian government would be left in an unenviable position. It would have to consider intervening militarily from a position of huge political and military weakness. The Indian authorities would have to arrest very large numbers of Kashmiri politicians, stop all electoral processes and embark on a military crackdown that would result in massive casualties. The inter- national and domestic Indian reaction to such a response to adverse developments can easily be anticipated. It appears Pakistan has leveraged its nuclear weapons with extraordinary success. By contrast, India’s aspiration to great power status would be in tatters, reduced to a weak, minor player.

In addition, it can be safely predicted that Pakistan will find ways to prevent India reaping any sort of peace dividend, by reducing military commitments on the India-Pakistan border once an agreement with Pakistan on Kashmir has been implemented. Such a peace dividend for India would be opposed implacably by Pakistan’s all- weather friend, China, itself examining every option for cutting India down to size. Any reductions in military commitments in relation to Pakistan would immediately mitigate India’s two-front war threat that alarms its defense planners. China will make sure that Pakistani re deployments in the after- math of any peace deal with India will nevertheless remain a sufficient threat to prevent any significant Indian reduction in commitments against Pakistan. Indeed it may well be hazarded that the loss of Kashmir to Pakistan will create a strategic nightmare for India owing to altered military options on the ground and require even greater attention to the India-Pakistan border. The final denouement will be in the shape of an emboldened Pakistan facing an India militarily and politically weakened by the loss of Kashmir. Nothing that has transpired in the past sixty years suggests that Pakistan will abandon its determined quest to rival India, having emerged victorious over Kashmir.

As the conspiracy unfolds to derail Narendra Modi’s pursuit for national power, though he enjoys massive support along the length and breadth of the country, many outwardly innocuous events acquire more significance. The successful campaign that stopped Narendra Modi from even addressing a mere student gathering in the United States is likely to have been officially instigated. The same officials responsible for intervening against Narendra Modi also hold compromising files on the alternative to him, pertaining to his corrupt financial dealings and personal peccadilloes.

Former US spy, Edward Snowden, has highlighted the extraordinary reach and assiduity with which information is collected by Anglo American intelligence agencies on even their closest allies. He has also confirmed that India enjoys a special place on their intrusive radar. It is they who have been collecting evidence on the murky social life and financial dealings abroad of their preferred candidate for prime minister of India.

Editor’s note: Intelligence Bureau officials have sounded the warning that they are under enormous pressure from the ruling Congress party to implicate Narendra Modi in the Ishrat Jehan case. A particularly vocal Congress party general secretary has been meeting and harassing Central Bureau of Investigation and Intelligence Bureau officials to manufacture evidence against the Gujarat chief minister. There is desperation in ruling party circles as Modi nears his goal of becoming prime minister. The Intelligence Bureau is resisting the pressure and there is growing resentment within the institution about this. Worse is expect- ed in the coming days unless Manmohan Singh steps in and ceases the witch hunt against Narendra Modi.

 – Dr. Gautam Sen, A report from overseas press. The writer has taught Political Economy at the London School of Economics. (Expressed views are personal opinion of the writer )

Food Security Bill: Where’s the money for this colossal waste?

“This would perhaps be the biggest ever experiment in the world to distribute subsidized grain to achieve food and nutritional security.” “This” refers to the Food Security Bill, [FSB] the brain child of the National Advisory Council and widely expected to be the route to political nirvana for UPA. But pray who calls this grand design of distributing food grains to approximately two-thirds of our population at subsidized prices an “experiment?” The Opposition? No. The Media? Never. The Judiciary? Not at all.

Ordinance on Food Security Bill postponed

In fact, this is the view of the Ministry of Agriculture contained in The  Discussion Paper on National Food Security Bill and prepared by the Commission for Agricultural Costs and Prices, Department of Agriculture and Cooperation. That is not all. The document laments that “The Bill, in its present form, throws up major operational and financial challenges and would have enormous ramifications on the cereal economy/markets and therefore Indian agriculture as a whole.” To appreciate the “enormous ramifications” mentioned above, its consequences and implications on national grain markets a reference to the food grains production as well as procurement and distribution by the Government through the extant Public Distribution System [PDS] needs to be appreciated.

Government as a hoarder

India produces approximately 250 MT of food grains annually. Of this one- half i.e. 120 – 140 MT is estimated to be consumed by farmers and theoretically does not enter the national grain markets. Of the balance 110-130 MT that enters the national grain markets, Government procures approximately half of this for public distribution. The balance a small portion say 60 MT enters our grain markets.

It is in this connection this document correctly points out that “The government already procures one-third of the cereals production (which amounts to almost half of marketed surplus of wheat and rice).” That makes the Government a dominant player. This has profound implications on food grains prices. As we have an open-ended purchase policy, we continue to endlessly purchase over and above our buffer stock requirements. For instance, as against the buffer stock norm of 31.9 million tons of Rice & wheat (as on July 1 of each year), total central stocks were at 80.5 million tons as at July 1, 2012.

Debate: Does India need the ‘Food Security Bill’?

Obviously the Government, thanks to its inefficiency, is unable to distribute what it procures. In the process, little do we realize that this is public hoarding by the Government. This in turn robs the common man of grain stocks while artificially inflating its prices. This hoarding by the state is at the root of the extant chronic food inflation and shortage in India.

Another dimension of the problem is that only a handful of States have marketable surplus. That implies concentrated procurement. And this needs to be distributed nationwide. It may be noted that 70 per cent of rice procurement is done from Punjab, Andhra Pradesh, Chhattisgarh and Uttar Pradesh while 80 per cent of wheat procurement is done from Punjab, Haryana and Madhya Pradesh. This is a logistic person’s nightmare. For instance, moving wheat from Punjab situated in one corner of the country through an archaic transportation system and storage network mechanism into Kerala virtually doubles its cost as it arrives in the point of consumption in Kerala.

Interestingly, the economic cost of FCI for acquiring, storing and distributing food grains is about 40 per cent of the procurement price. Obviously, Food Corporation of India must be a unique organisation that suffers from dis economies of scale! But who cares? The more it procures, stores or distributes, the more it leaks. In such a scenario, importing wheat, at times from international markets, theoretically becomes a wiser proposition. But when a country like India enters the international grain markets, (in view of her volumes) instantly international prices spike, making imports practically a non option. That makes us extremely dependent on the national grain markets to feed our gargantuan population.

Yet, what is galling is the fact that the National Sample Survey [NSS] studies reveals massive leakage of food grains in the Targeted PDS mechanism that aims to deliver food grains for BPL families. This is simply because PDS has virtually collapsed in several states in India due to weak governance and lack of accountability. In fact, this document by the Ministry of Agriculture demonstrates the dismal performance of this scheme for 2004-05 and 2009-10, the two years for which NSS data on consumption from PDS are available.

In 2004-05, compared to an off take of 29 million tonnes of rice and wheat by States, only 13 tonnes were actually lifted by households for consumption suggesting a massive leakage of 54 per cent. In 2009-10, 25 million tonnes was received by the people under PDS while the off take by states was 42 million tonnes indicating a leakage in excess of 40 per cent. Further, the FCI storage facilities are still primitive. For instance, the FCI is facing an acute storage crisis with covered capacity estimated at around 45 million tonnes and Covered and Plinth storage of 17 million tonnes against the stocks crossing 80 million tonnes. This once again adds to the wastage of grains while storing and handling.

Suicidal mission

There is a yet another piece of data that possibly is hidden from most Indians. Most economists within the establishment have a skewed view of the massive levels of malnutrition and food deprivation. Thus they assume we have a distributional problem. In the process most policies laid out by the Government aim to set right this issue when the challenge lies elsewhere. The Economic Survey document for 2011-12 reveals that the average daily per capita food grain consumption of an Indian in 1965 was 418 grams and that of pulses, 62 grams. Remember, in 1965 we had a war with Pakistan on top of a deadly drought.

Approximately after five decades of our ‘successful’ tryst with green revolution, the survey shockingly points out that the average daily per capita food grain consumption of an average Indian in 2010 was a meagre 407 grams and of pulses, a disappointing 32 grams. It is in this connection it has to be noted the National Institute of Nutrition is reported to have prescribed a minimum of 2,400 calories per day per person. Significant sections of our population do not have access to this minimal requirement. By the way, the average calorie intake available to an inmate at the dreaded Guantanamo Bay daily is well in excess of 4,000 calories.

Obviously, we are not producing enough food grains or pulses now when compared to 1965 on a per capita level. Yet, for the past four decades or so we have been under the mistaken belief that distribution, not production, to be the key to the issue on hand. That explains why we created a monstrous public distribution system in the first place.

Simply put, the Food Security Act is implementable only when we produce food grains in excess of 350 MT. And in such a scenario with massive stocks of food we do not require state intervention. And should we produce less than 350 MT and seek an intervention of the state, it will be a futile exercise.

Crucially, the PM and his economists within the Government assume that this outlandish legislation will settle our production, distribution and storage deficiencies in our farm sector. But assuming that it can be done what is the cost? Crucially where is the money? The document prepared by the Ministry of Agriculture states that the total financial expenditure entailed will be around Rs 682,163 crores over a three year period.

This works out to in excess of Rs 225,000 crore every year. Given this massive sums of money required to administer this flight of fancy the Finance Minister of India has allotted a paltry sum of Rs 85,000 crore in the Budget of 2013-14. And should the FM provide money for this food subsidy, his promise to assiduously restructure the finance of the country goes for a toss. And even if the money is available [remember money can be printed, but not paddy or wheat] how can it be a solution? To improve food security to our people we need to produce more of food.

For decades socialist ideas was all about distributing poverty, not wealth. Food security bill, consequently, is a repetition of our mistakes of the Nehruvian era. Consequently, it is a by- product of dangerous analysis, bad diagnosis and awful prognosis. The net impact of this silly idea of FSB is that can ruin the farm sector in India, deny food security and dynamite the food grain economics of the nation. No wonder, the document concludes that the FSB’s impact on the economy may be adverse.

And is that what the UPA aiming at destroying the farm sector too completely before demitting office? PS: My aged father tells me that ordinary cloth was rationed in the mid forties. But once the production of cloth increased, rationing stopped. Likewise the solution to food shortage is to increase food production. Reducing this to a distributional issue is absolutely foolish.

–  Venkatesh Ramachandran (The author is a Chennai-bbased Chartered Accountant. He can be con- tacted at mrv@mrv.net.in)

China and economic stagnation in Europe and America is making the West increasingly uncomfortable. While China is not taking over the world militarily, it seems to be steadily taking it over commercially. In just the past week, Chinese companies and investors have sought to buy two iconic Western companies, Smith field Foods, the American pork producer, and Club Med, the French resort company.

Europeans and Americans tend to fret over Beijing’s assertiveness in the South China Sea, its territorial disputes with Japan, and cyber attacks on Western firms, but all of this is much less important than a phenomenon that is less visible but more disturbing: the aggressive worldwide push of Chinese state capitalism. By buying companies, exploiting natural resources, building infrastructure and giving loans all over the world, China is pursuing a soft but unstoppable form of economic domination. Beijing’s essentially unlimited financial resources allow the country to be a game-changing force in both the developed and developing world, one that threatens to obliterate the competitive edge of Western firms, kill jobs in Europe and America and blunt criticism of human rights abuses in China.

Ultimately, thanks to the deposits of over a billion Chinese savers, China Inc. has been able to acquire strategic assets worldwide. This is possible because those deposits are financially repressed savers receive negative returns because of interest rates below the inflation rate and strict capital controls that prevent savers from investing their money in more profitable investments abroad. Consequently, the Chinese government now controls oil and gas pipelines from Turkmenistan to China and from South Sudan to the Red Sea.

Another pipeline, from the Indian Ocean to the Chinese city of Kunming, running through Myanmar, is scheduled to be completed soon, and yet another, from Siberia to northern China, has already been built. China has also invested heavily in building infrastructure, undertaking huge hydroelectric projects like the Merowe Dam on the Nile in Sudan — the biggest Chinese engineering project in Africa and Ecuador’s $2.3 billion Coca Codo Sinclair Dam. And China is currently involved in the building of more than 200 other dams across the planet, according to International Rivers, a nonprofit environmental organization.

China has become the world’s leading exporter; it also surpassed the United States as the world’s biggest trading nation in 2012. In the span of just a few years, China has become the leading trading partner of countries like Australia, Brazil and Chile as it seeks resources like iron ore, soybeans and copper. Lower tariffs and China’s booming economy explain this exponential growth. By buying mainly natural resources and food, China is ensuring that two of the country’s economic engines urbanization and the export sector are securely supplied with the needed resources.

In Europe and North America, China’s arrival on the scene has been more recent but the figures clearly show a growing trend: annual investment from China to the European Union grew from less than $1 billion annually before 2008 to more than $10 billion in the past two years. And in the United States, investment surged from less than $1 billion in 2008 to a record high of $6.7 billion in 2012, according to the Rhodium Group, an economic research firm. Last year, Europe was the destination for 33 percent of China’s foreign direct investment.

Government support, through hidden subsidies and cheap financing, gives Chinese state owned firms a major advantage over competitors. Since 2008, the West’s economic downturn has allowed them to gain broad access to Western markets to hunt for technology, know how and deals that weren’t previously available to them. Western assets that weren’t on sale in the past now are, and Chinese investments have provided desperately needed liquidity.

This trend will only increase in the future, as China’s foreign direct investment skyrockets in the coming years. It is projected to reach as much as $1 trillion to $2 trillion by 2020, according to the Rhodium Group. This means that Chinese state-owned companies that enjoy a monopolistic position at home can now pursue ambitious international expansions and compete with global corporate giants. The unfairness of this situation is clearest in the steel and solar- panel industries, where China has gone from a net importer to the world’s largest producer and exporter in only a few years. It has been able to flood the market with products well below market price and consequently destroy industries and employment in the West and elsewhere.

THIS is the real threat to the United States and other countries. However, most Western governments don’t seem to be addressing China’s state driven expansionism as an immediate priority. On the contrary, European governments dealing with their own economic crises see China as a country that can help, either by buying sovereign debt or going ahead with investments in their countries that will create jobs.

The Chinese state-owned company Cosco currently manages the main cargo terminal in the biggest Greek port, Piraeus, near Athens a 35-year concession deal. And China’s sovereign wealth fund, C.I.C., took a 10 percent stake in London’s Heathrow Airport in 2012, as well as a nearly 9 percent stake in the British utility company Thames Water. The state-owned firms Three Gorges Corporation and State Grid are the main foreign investors in Portugal’s power-generation sector, and C.I.C. also bought a 7 percent stake in France’s Eutelsat Communications.

In the Greek port the Chinese have been able to triple capacity, amid local unions’ criticism of worsening labor conditions. It’s too early to measure China’s impact in the other investments, but the fact that Chinese companies are able to invest in sectors that are closed or restricted for European firms in China says a lot about how minimal Europe’s leverage with China is.

Take Germany, which accounts for nearly half of the European Union’s exports to China. It’s highly unlikely that Berlin would make unfair competition the cornerstone of its China policy. Moreover, the lack of leverage and leadership in Brussels means that the union is unable to take firm action to force China into adopting measures that would level the playing field or guarantee reciprocity in its domestic market. The only exception is the United States, which seems to be addressing the issue by pushing forward the Trans Pacific Partnership, a regional trade association that is seen by critics in Beijing and elsewhere as an American led policy to contain China. The club is thought to be restricted to countries that meet high American standards on issues like free competition, labor and local regulations would allow the arrival of thousands of low wage Chinese workers.

The Arctic territory didn’t have too many alternatives. No other country is in a position to become Greenland’s strategic partner for its future development, given the business risks involved in the Arctic region and the scale of the investment needed in a territory bigger than Mexico but without a single highway. An American oil company couldn’t have handled the task alone. The Chinese state capitalist system, by contrast, allows multiple state owned companies to work together, making it possible for the China National Petroleum Corporation, for instance, to extract oil while China Railway builds basic infrastructure.

Greenland’s leaders accepted China’s terms because they likely believed these costly projects might never go ahead if the Chinese didn’t get involved; only China has the money, the demand, the experience and the political will to proceed. Moreover, there are not enough skilled workers in Greenland for such projects, so the Greenlandic government made an exception to the law, allowing Chinese laborers to earn less than minimum wage figuring that local residents would benefit from new infrastructure and royalties.

China’s deep pockets, as well as its extensive labor force and unlimited demand for natural resources, made all the difference, and accordingly Greenland was prepared to pass tailor made legislation to meet Chinese needs. Even Denmark, which holds authority in Greenland in areas like migration and foreign policy, decided not to interfere.

IT is even happening in progressive bastions like Canada. President Obama’s refusal thus far to approve the Keystone pipeline project has made Prime Minister Stephen Harper’s conservative government turn to China to secure an export market for Canadian crude oil reserves. The Calgary based oil industry has lobbied Mr. Harper to adopt a new diversification strategy that includes the construction of a controversial pipeline to western British Columbia, despite strong opposition from environmental groups, the First Nations aboriginal communities and the public. In the meantime, Canada also signed a Foreign Investment Promotion and Protection Agreement with China, which gives remarkably generous investment protection to the Chinese.

With China in the center of debates over FIPA and the west coast pipeline, Canada’s government then approved the takeover of the Canadian energy giant Nexen by the Chinese state owned oil firm Cnooc. The $15.1 billion transaction was China’s largest foreign takeover.

Closer economic ties have had political side effects; the Harper administration now seems much more cautious in criticizing China’s human rights record. Given that Canada was until very recently one of the fiercest voices on China’s handling of dissidents, this is not only a remarkable 180-degree turn, but also a clear indication of how China’s economic influence can push the political agenda to the sidelines, even in the West.

In Australia, Chinese accumulated investment inflows at the end of 2012 surpassed $50 billion. The trend is striking: Chinese direct investment in Australia in 2012 increased 21 percent from 2011 levels to reach $11.4 billion, making it an important player in Australia’s mining industry. Australia’s trade portfolio remains highly diversified, but the Chinese share is growing rapidly.

China has also become the biggest investor in Germany (in terms of the number of deals), surpassing the United States. Chinese companies are looking for companies that, like Putzmeister, have a technological edge and have become world leaders in niche markets. Those takeovers also allow them to absorb Western know how on branding, marketing, distribution and customer relations. Others are more opportunistic. Faced with recession, struggling European firms like Volvo quickly welcomed Chinese partners who were ready to inject capital and take full control.

The loans that Beijing is giving worldwide are even more significant, in dollar terms, than direct foreign investment. These loans include $40 billion to Venezuela and more than $8 billion to Turkmenistan in recent years. China’s policy banks (China Development Bank and Export Import Bank of China) are the key institutions supporting China’s “Go global” strategy, as they provide billions of dollars in loans to foreign countries to acquire Chinese goods; finance Chinese-built infrastructure; and start projects in the extractive and other industries.

This is clearest in countries where the West claims to link its aid to human rights and good business practices. Chinese loans have been crucial in countries like Angola that have faced threats of a cutoff in financing from Western creditors, the World Bank and the International Monetary Fund. Ecuador, Venezuela, Turkmenistan, Sudan and Iran have all faced such difficulties, and China has stepped in without political or ethical strings attached. Chinese statistics reveal little about these loans, but a study by The Financial Times showed that, between 2009 and 2010, China was the world’s largest lender, doling out $110 billion, more than the World Bank.

It is important to remember what is really behind China’s global economic expansion: the state. China may be moving in the right direction on a number of issues, but when Chinese state owned companies go abroad and seek to play by rules that emanate from an authoritarian regime, there is grave danger that Western countries will, out of economic need, end up playing by Beijing’s rules.

As China becomes a global player and a fierce competitor in American and European markets, its political system and state capitalist ideology pose a threat. It is therefore essential that Western governments stick to what has been the core of Western prosperity: the rule of law, political freedom and fair competition.

They must not think shortsightedly. Giving up on our commitment to human rights, or being compliant in the face of rapacious state capitalism, will hurt Western countries in the long term. It is China that needs to adapt to the world, not the other way

Courtesy New York Times

The world’s biggest electorate goes to the polls soon but the 700 million voters won’t decide who runs India. Instead they will elect 543 representatives, belonging to a score or more of parties, who after much horse- trading will then pick a leader. Of course in parliamentary democracy there is no direct election for the prime minister.

The paradox for India is that the casting votes belong to the unelected. India’s political parties are mostly family run – famously, India’s ruling Congress Party is Gandhi personal property.?The issue of ownership was dramatically illustrated in 2004 when Sonia Gandhi crisscrossed the country as the Congress party’s prime ministerial candidate.

When she unexpectedly won, Mrs Gandhi stepped aside for her loyal aide Manmohan Singh – a respected economist who has never won an election – to take office. A shrewd operator, Mrs Gandhi retained power, wielded from behind the throne. The exceptions to politics as family business are the two major opposition parties – the Bharatiya Janata party and the communists. But faceless men operating in the shadows decide the leaderships of these par ties.

The BJP cannot easily pick a leader not approved by the central command of the Hindu nationalist movement, the Rashtriya Swayamsevak Sangh, and the communists take their orders from an unelected politbureau. Because members of political parties cannot stake a claim to the leadership of the major national par ties (the Congress and the BJP) in India, people leave and create their own outfits drawing support from regional power bases. The other option for ambitious politicians is to start up on their own – scooping up votes from the disenchanted. This strategy works best on the local level. The self-styled champion of the lowest castes, Mayawati is essentially a provincial politician, albeit in India’s most populous state, Uttar Pradesh.

Mayawati’s rise is remarkable given that she hails from the deepest trenches of Indian society: the untouchable caste. Although the Indian constitution abolished untouchability essentially barring the lowest castes from wells and temples – it is rampant in village and small-town India.

However, Mayawati is a troubled figure, mired in claims of corruption and an out sized cult of personality that would embarrass an eastern European communist. Her only political ideology appears to be the pursuit of power.With half a million villages and 60% of people living off the land, India’s politics are rural and often very local. Corruption in politics and the inability of the poor to get a better deal remain concerns. But from the ground up it is the lack of roads, water, electricity and schools as well as complex caste issues that dominate politics.

This again makes the national parties, who are run from the top down, appear irrelevant. Unless they have exceptional local candidates, the big ticket draws are the party leaders who, thanks to India’s linguistic diversity, often cannot mobilize people in their own language. These trends have an unyielding logic. Since 1989, no single party has been able to run India. As national parties shrink, the space is filled by regional parties. With an ever-proliferating array of parochial politicians, the only way to gain power is to compete for votes locally and co-operate nationally to gain power.

The last two governments, both of which lasted a full term, have been anchored by the two national parties. However most think that their executive strength has been sapped by bickering between partners. The caravan of Indian government moves only as fast as its slowest member – which is very slowly indeed.

This year could see the rise of a third force, a grouping of smaller regional parties who would bandy together to form a government. This would only happen if the two national parties lost so heavily they could no longer dominate the parliament. Only the communists and perhaps Mayawati could win big enough to provide the third front with the numbers for government. Because it would be collection of regional interests, settling big national questions is likely to take longer than it does today.

– Randeep Ramesh

Voters Kept It Simple

Karnataka elections results are along predictable lines, many opinion polls and exit polls have scored right on seats prediction. Congress has emerged as the winner, BJP has been demolished and Janata Dal (Secular) refuses to be written off. The national parties were eying big in Karnataka primarily to consolidate platform for up coming Lok Sabha elections, off course Congress won and BJP facilitated the victory. First, there is no sweeping sentiment; Congress has won by a slim margin in the 224 seat house and that is therefore no endorsement of its brave assertion of ‘we survive everything’.

Second, national issues had little bearing, and like most states Karnataka voted on the basis of factors that affect the daily lives of the people things like governance and civic amenities. BJP state leadership and its central leadership has messed up the government right from on set of its formation of its first government in any southern state. Yeddyurappa, Reddy brothers in Bangalore and Anant Kumar and Venkya Naidu in collaboration of their god father’s in Delhi has delivered worst government in any BJP state ruled state of India.

Third, even if Congress would have us believe it, the elections cannot be seen as a victory of Rahul Gandhi, who took some time out to campaign in the state. In the same vein, the results should also be viewed as a wakeup call for Narendra Modi for he has a long way to go before he is accepted as a national leader. Even though he campaigned only briefly, the BJP fared poorly in all the regions he visited like central and coastal Karnataka or Bangalore. Salman Khurshid lost no time in saying, “Message for Modi is that there is no Modi.” That may be an overstatement but not entirely out of place. Amidst all this, one factor has remained a constant over the decades. HD Devegowda remains pertinent to state even in his loss and his legacy is being carried forward by his younger son HD Kumaraswamy. Devegowda has always amazed with his hunger for power after all how many will accept being chief minister after having been the prime minister once and with his instinct to remain relevant.

But the joker of the elections this time was clearly BJP rebel BS Yeddyurappa, whose breakaway Karnataka Janata Paksha, was possibly one of the main factors for BJP’s terrible showing. Yeddyurappa ate away at the party’s roots after having single handedly won the first southern bastion for the BJP and also significantly fragmented the Lingayat vote bank, even if he managed no significant political victory for the KJP. In a sense, except taking comfort from sweet revenge, he did more harm to others than good to himself. It is a repeat of UP BJP story wherein Kalyan Singh was pushed out of the party and UP BJP has never recovered from the stock. Now even when the Kalyan Singh is back to BJP several times, or Yeddyruppa will surely be back with BJP in the near future, the damage is done. What Yeddyurappa did to the BJP, JD(S) has done to some extent to the Congress. It has nibbled away at its vote bank in areas like Mysore where the electorate had punished it earlier for its betrayal of the BJP. While the Congress has won by 2:1 ration in urban cities, JD(S) damaged it in rural parts.

As far as region wise outcomes were concerned, Congress made small gains in Bangalore where it managed under 50% of the seats, while JD(S) has gained significantly. Mumbai Karnataka has possibly been the best success story of the Congress. This is obviously where Yeddyurappa has had maximum impact on the prospects of the BJP. The Congress has also regained in the northern region of Hyderabad Karnataka, but has fared worst in the Southern part of the state where JD(S) has made most gains. The 2008 results got swapped in the western and coastal regions, where Congress wrested most of the seats BJP had won last time.

Interestingly, while an indicted Yeddyurappa, who also bears the ignominy of being the first chief minister of India to go to jail, had the ability to dent his former party, the tainted Reddy brothers have received a drubbing in Bellary. Also while Lakshman Savadi, who was one of the three MLAs caught watching pornography in the Assembly, won, his co-accused colleagues CC Patil and Krishna Palemar thankfully lost.

Considering the mixed fate of these tainted politicos there can be no certain verdict on how the moral question pans out. But it is precisely moral high ground that BJP chose to take after the picture from down south became clear. Overall, despite the victory, Congress should ideally not be in a celebratory mood and there is no reason for them to gloat about their triumph in the south. What they must accept is that Karnataka elections are neither a positive verdict on the scam soiled government at the Centre nor a defeat of the BJP ideology, as asserted by PM Manmohan Singh. If anything Karnataka elections are about what factionalism can do to a corruption riddled party, which cares little for governance issues. And if that is the reading, Congress better watch the wall for results in 2014 though with a rider that Congress despite corruption allegations has looked a unit under Sonia Gandhi.

Report filed by Diwakar Shetty from Bangalore Bureau