As President Barack Obama’s budget aimed at rebuilding the country’s economy, emerging ‘from the worst recession in generations’, looks at India as ‘one of the most important and promising emerging markets in the world’.

Obama’s proposed $3.7 trillion spending plan for 2011 hopes to ‘win the future by out-innovating, out-educating, and out-building our global competitors and creating the jobs and industries of tomorrow’, according to the White House.

‘India is one of the most important and promising emerging markets in the world, and represents a tremendous opportunity for US firms to expand their output of goods and services,’ the budget proposal presented Monday said.

‘On the margins of the president’s trip to India in November, trade transactions were announced or showcased exceeding $14.9 billion in total value with $9.5 billion in US export content and that would support an estimated 53,670 jobs,’ the White House noted.

These cross border collaborations, both public and private, underpin the expanding US-India strategic partnership, contributing to economic growth and development in both countries, it said. Notable examples include the sale of commercial and military air- craft, gas and steam turbines and precision measurements instrumentation. The budget proposals said the emergence of a global market place that includes the growing economies of China, India and other developing counties creates an opportunity for America to export US goods and services to new customers.

‘With 95 percent of the world’s customers as well as the globe’s fastest growing markets beyond our borders, we must compete aggressively to spur economic growth and job creation,’ the budget said. Obama’s third annual budget says that it can reduce projected deficits by $1.1 trillion over the next decade, enough to stabilise the nation’s fiscal health and buy time to address its longererm problems, the New York Times said citing a senior administration official.

Two-thirds of the reductions that Obama claims are from cuts in spending, including in many domestic programmes that he supports.Among the reductions for just the next fiscal year, 2012, which starts Oct 1, are more than $1 billion from airport grants and nearly $1 billion from grants to states for water treatment plants and similar projects. Public health and forestry programmes would also be cut. With Republicans in charge of the House, Obama’s budget is more a statement of his priorities and philosophy than an actual template for federal spending and tax policy, the Times noted.

 – Arun Kumar  (Arun Kumar can be contacted at arun.kumar@ians.in)

Just when oil markets appeared to be calming, crude oil prices surged as the potential for more oil shipment disruptions spread across the Middle East and North Africa.With Libya’s oil exports almost entirely halted for the last several days, renewed unrest in Oman, Iran and Iraq rattled oil traders. An interruption of shipments from any of those countries would further tighten oil supplies, even as Saudi Arabia has rushed to fill the vacuum of Libyan supplies by pumping more oil from its fields.

The worries about the oil supply rippled through other markets, with stock markets turning lower on concerns that the higher cost of energy would slow economic recovery. Gold prices also surged on the latest reports, and indexes on Wall Street declined sharply, with the Dow Jones industrial average down more than 1.3 percent. The Saudi Arabian benchmark stock index fell 6.8 percent.In the latest sign that the political contagion was spreading, demonstrators in Oman on Tuesday tried to block a major road leading to the industrial port town of Sohar. Protesters in recent days have set fire to at least one police station and two government office buildings in the normally stable Persian Gulf country, which is ruled by a family dynasty and is the largest non OPEC oil producer in the Middle East.”To have protests in Oman, which had previously been seen as a sleepy gulf kingdom, heightens concerns that nowhere is immune from the contagion affects,” said Helima L. Croft, a director and senior geopolitical analyst at Barclays Capital. “Every day we seem to have a new country with a new problem.”

Oman produces 860,000 barrels of oil daily, almost 1 percent of world supplies, and its production has been rising in recent years with investments from Royal Dutch Shell, BP, Repsol and other international companies. Its importance is magnified by the fact that its crude is of such quality that it can be blended by most refineries around the world, although most of its exports now go to China and Japan. Oman straddles the Strait of Hormuz, a strategic route through which 40 percent of the world’s oil tanker traffic crosses. On the other side of the strait lies Iran, another major producer, where there were reports on Tuesday that security forces had used tear gas to disperse protesters in Tehran. Iran, with approximately 10 per- cent of the world’s oil reserves, exports about 3.7 million barrels a day.

The price of light sweet crude rose to $99.63 a barrel while Brent crude rose 3.24 percent to $115.42. Oil jumped above $100 a barrel in after-hours trading in New York. The national average price for a gallon of regular gasoline rose by nearly a penny on Tuesday to just over $3.37, which is 20 cents higher than a week ago.

In testimony on Capitol Hill, Federal Reserve Chairman Ben S. Bernanke said that it would take a sustained increase in oil prices to push up consumer inflation significantly and threaten the economy. “Currently the cost pressures from higher commodity prices are being offset by the stability in unit labor costs,” he added.The rising tensions across the region sent the Saudi Arabian stock market into a tailspin, with Saudi shares suffering the biggest daily decline in more than two years despite rising oil prices. The Saudi index fell 6.8 percent, to its lowest close since July 2009.

Refiners around the world have been hoping that Iraq, as violence ebbed, would again become a major oil producer, with production stabilising at 2.3 million barrels a day. But over the weekend rebels bombed the country’s largest refinery, reducing the refinery’s capacity to refine petroleum products by 75,000 barrels a day. The attack came less than three weeks after a terrorist attack on a pipeline leading to a second refinery north of Baghdad.Greg Priddy, an oil analyst at the Eurasia Group, a political risk consultancy, said it was “highly unlikely” that output in another major producer in the region would be shut off. But he said that markets were jittery because “if the Saudis are going to make up for the shortfall in Libya, their spare capacity is thinner.”

He added, “Another major country going out completely would use most of their spare capacity, and that is really what the market is worried about.”

Saudi Arabia has a total production capacity of 12.5 million barrels a day, and currently produces nine million barrels after increasing its output by several hundred thousand since the beginning of the year. Saudi officials say they are ready to pump what it takes to fill any supply gap, but much of its 3.5 million barrel excess capacity contains sour crudes that do not easily replace the Libyan sweet crude European refineries in particular desire to produce diesel. In Libya, major oil operations in the eastern part of the country remained under the control of rebel forces. While foreign operators withdrew most of their foreign workers, local Libyan employees can still produce some crude. Oil experts say at least one million of the country’s 1.6 million barrels a day of production has been shut down.

Little if any oil can be shipped out of Libya because most ports were closed. Meanwhile, storage tanks were filling up rapidly. Oil traders said one major oil company cargo ship was supposed to berth this week, but no one was at the port to deliver an oil shipment, and shipping companies were reluctant to send ships into the Libyan ports.

Most fields in Libya are operated by a combination of the National Oil Company, which owns 50 percent of the fields, and international consortium, which share the other half.

The Arabian Gulf Oil Company, the largest subsidiary of the Libya National Oil Corporation, claims it had broken off from its mother company. It said it would honor its contracts but would divert the funds to the opposition, not to Tripoli.Arabian Gulf’s Hamada field had been shut, and output at Nafoora, Sarir and Misla had dropped to under half of maxi- mum capacity.The company was still exporting crude at the Tobruk terminal, according to a re- port by PFC Energy, a consulting firm, but Arabian Gulf has stated that with only sporadic loading operations, it could reach its maximum storage capacity within two weeks, even with the drastically reduced production levels.Arabian Gulf officials “have claimed that the company’s export revenues will no longer be controlled by its parent company,” PFC Energy said in the report, “but have not been able to confirm how those revenues would be managed by the subsidiary or potentially channelled to Libya’s opposition.”Eni, the Italian oil giant and largest foreign operator in Libya, evacuated most of its employees and their families last week. The company’s fields were still producing 120,000 barrels a day of oil and natural gas, about half their capacity before the re- volt began. The company declined to say which fields it had shut down and which were still in operation, citing safety concerns. Eni still has 21 Italian employees in Libya, a spokesman said.

(Courtesy: Clifford Krauss & Jad Mouawad, The New York Times..)

Indian Jew Noshir Gowadia is a sacrificial lamb like Bernie Maddoff whom the Israeli’s sacrificed by saying beat this guy he stole $75 billion where as the fact is they stole $4 trillion from US Banking system. With total control on US Congress, Justice system, Media, Banking & big Businesses Israelis have been manipulating every thing including their sales of Military Technology to China for last 5 decades.

Here are few statements from various news papers. Please feel free to send it to Israeli slaves US Congress posing as friend of India supplying free arms to Pakistan so that Israeli’s can sell their junk at inflated prices by bribing main political parties of India namely Zionist Christian Sonia’s Congress & Zionised BJP. At the same time their Israeli Masters are selling most sophisticated Military Technology after stealing from America to China another hostile neighbor of India.

“Every time we discover a new program in the Third World arms proliferation game, we always find that the Israelis have got some hand in it,” says a senior analyst with the U.S. State Department’s Arms Control and Disarmament Agency, who spoke to the Washington Report on condition of anonymity. “Israeli scientists helping with a Third World arms program [are] about as inevitable as ants at a picnic.”

Larry M. Wortzel, a former U.S. military attache in Beijing and now an analyst at the Heritage Foundation, said the Israel China arms channel has flowed for more than 50 years. “It grew and grew, and the United States just winked at a number of serious transfers,” he said.

CIA Director R. James Woolsey in a written testimony to US Senate: “We believe the Chinese seek from Israel advanced military technologies that the U.S. and Western firms are unwilling to provide,” Woolsey also informed the Senate that Israel has been selling military technology to China for over a decade, and that the sales may amount to “several billion dollars.”

Israeli Defense Ministry Director David Ivry: Israel has been selling arms to China but refused to describe the arms sold or their value.Early in 1992, Robert Gates now Defense Secretary, then director of the CIA, charged that China had illegally obtained ballistic missile secrets from the American-made ”Patriot” ground-to-air missile system, which figured prominently in defending both Israel and Saudi Arabia during the Gulf war. While Patriot missiles deployed to Saudi Arabia had U.S. crews, however, some of the Patriots in Israel were manned by Israeli crews. Gates said Israel was suspected of sup- plying China with these secrets, thereby making public suspicions that had circulated within the Pentagon since allegations of technology theft against Israel were formally raised immediately after the end of the Gulf war.

Not long after the Patriot brouhaha subsided, Israel again was denying charges that it illegally exported U.S. technology to the communist regime in Beijing. This time, the suspicions revolved around the ill-fated Lavi fighter. Israel spent more than $1 billion in U.S. aid on the aircraft, which was based on the U.S. F-16 Falcon. After Israel ditched the pro-gram at Washington´s insistence, intelligence reports said Tel Aviv was selling the F-16 avionics technology to China for in- corporation into that country´s new F10 ground attack fighter.

The Cox report confirmed the suspicion in 1999, stating, “Significant transfers of U.S. military technology have also taken place in the mid-1990s through the reexport by Israel of advanced technology transferred to it by the United States, including avionics and missile guidance useful for the PLA´s F-10 fighter.”

South Africa acknowledged that, in the late 1970s, it created six nuclear bombs with the technical assistance of Israel. Further it said they developed an inter- mediate-range ballistic missile called the “Jericho II.” Which can deliver a nuclear, biological or chemical warhead more than 900 miles away was developed with Israeli help.

So indictment and sentencing of Indian American JEW Noshir Gowadia for allegedly sending military secrets to China, Germany, Israel and Switzerland is a big joke.

 – Dev Makkar

India Inc has come down on heavily on US Prez’s protectionist policy

United States’ President Barack Obama’s proposal to reform tax structure, scrapping incentives for American companies outsourcing services to other nations, has been lambasted as a protectionist move by Indian business chambers. ‘Say no to Bangalore and yes to Buffalo,’ seems to be the latest mantra of United States President Barack Obama as he struggles to bring the ailing American economy back on track.

Meeting one of his major election promises, Obama on Monday the announced end of years of tax incentives to those US companies which create jobs overseas in places like Bangalore. Instead, the incentives would now go to those creating jobs inside the US, in places like the Buffalo city bordering

Canada in upstate New York.?”We will stop letting American companies that create jobs overseas take deductions on their expenses when they do not pay any American taxes on their profits,” Obama said at White House announcing the international tax policy re- form. Obama said he wants US companies to remain most competitive in the world. “But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens,” he argued.

Announcing a set of proposals to crack down on illegal overseas tax evasion, close loopholes, and make it more profitable for companies to create jobs in the US, Obama said his series of tax re- forms would save $210 billion in the next 10 years.

The impact of proposed tax reforms on India, which has become a hub for global IT companies, might be marginal, said the National Association of Software and Service Companies (Nasscom). ”

As far as India goes, global companies that earn profits here are subject to a tax rate of 33.9 per cent (including surcharge and cess) and the impact of the proposed reforms on them would be marginal. The tax reforms announced yesterday have only been proposed and there will be ex- tended debate on them before they can be implemented, as it requires existing laws to be changed,” it said in a written statement. The chamber is still evaluating the likely impact of the tax proposal.

India Inc believes the move by the Barack Obama administration to reduce tax breaks for US firms that ship jobs overseas will hit American companies more than impact on the Indian outsourcing industry.

“It’s a more US-US issue rather than one aimed at stopping outsourcing, or off- shoring, or anything to do with India,” said Som Mittal, president of the National Association of Software and Service Companies (Nasscom), a representative body for the industry.

“If you look at Indian companies operating in the US, or elsewhere, they work there and pay taxes there. Hence, it is not about stopping outsourcing, or offshoring, but just to collect taxes,” Mittal said.

His comments came after President Barack Obama said on Monday that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps. “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York,” Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens.

“I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to over0seas tax havens.” According to a McKinsey-Nasscom study, the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.

The Confederation of Indian Industry also felt that the remarks were more in the nature of posturing and that it was not intended at curbing outsourcing of work by US firms to Indian companies. “It’s an internal issue. It will only reduce their competitiveness,” said Hari Bhar tia, vice president of the chamber. “It is a populist posture. Perhaps his (Obama’s) intention was not the same. However, it sends a wrong message.”?Joining the chorus, another industry

body Confederation of Indian Industry (CII) said that even though the move was expected, the developed world should not resort to protectionism in recessionary times as it might not help the recovery process. “The US is going through a deep recession, and we understand the steps taken by them to rewrite their tax code. However, the CII does not want protectionism to be the order of the day,” said Secretary general Chandrajit Banerji. In fact, an early economic recovery in the US would help both the nations, given that India was a net investor in the US, Banerjee added.

Meanwhile, Federation of Indian Chambers of Commerce and Industry (Ficci) termed the proposed move a retro- grade step, forcing business concerns to take measures to restrict their economic activities in one region and not in the other. “In any case, several US corporations have come and set up operations in India because of the several advantages our country has to offer. Our large and growing market, large pool of skilled manpower, reasonable labour costs make investing in India an attractive proposition. While this move would certainly have some impact on US investments abroad and into India, in the long run this would only run counter to the interest of US corporations desirous of cost-efficient operations across the globe,” said Ficci president Harsh Pati Singhania.

The delegation was told the “Buy America” clause or moves to reduce the tax breaks for US companies that create jobs offshore was neither intended for India nor impact its software and out- sourcing industry. Infosys Technologies, India’s second largest software and outsourcing company, also felt that the US proposal was aimed at closing corporate tax loopholes and crack down on overseas tax havens.

 – OE News Bureau

Raging Battle

Parable of the Family with an Orphan: A large family takes in an orphan. The house is already crowded so the orphan must share an attic room with a child too weak to protest the intrusion. The parents give each of the two children half of the room but ask each child to share a beautiful cabinet, treasured by both. The parents take a long trip, leaving their strongest son in charge. When the parents leave, other children in the family attack the orphan and try to get him to leave. The weakest child, in particular, fights unfairly. He waits for the orphan to sleep and then attacks him. The orphan wakes up each time and hurts the weak child; he also takes over more of the room, including the beautiful cabinet.

As the orphan continues to take over more of the room, the weak child continues to take revenge. The strongest son tries to bring peace and sometimes succeeds for short periods. The basic problem, however, is that each child believes that he should have the entire attic room to himself.

Finally, the parents return. They realize that they made a mistake by leaving home while there was such a difficult situation in the attic. They don’t just ask the two children to stop fighting, however. Instead, they take immediate action.

The parents decide that the boys need temporary separation, something constructive to keep them busy, and careful supervision. The parents work with the two boys to build shelves and cabinets down the middle of the room, with private storage space for each boy on each side. They install plumbing so each side of the room has plenty of fresh water. Finally, when the crisis is over, the parents set up a way for the boys to share the beautiful cabinet.

The parents do more than just provide better space, however. They provide the love, kindness, and super vision that each child needs to do well. They also make sure that the other children support the solution.

Each boy reverts to his old behavior a few times, but the parents remove his privileges each time and the old behaviors stop. Besides, each boy becomes too busy pursuing his own goals to be distracted by fighting.

They lived happily ever after…with a few disagreements here and there.

The “large family” is the United Nations. The “orphan” is Israel. The “other children” are the Arab states. The “weakest son” is the Palestinian people. Attacking the orphan unfairly means “terrorist attacks.” The “attic room” is the territory of Palestine before the United Nations carved Israel into it. The “beautiful cabinet” is Jerusalem.

The “strongest son” is the United States. Alas, there are no wise parents to super vise the boys. The UN Security Council has not been able to perform this essential role. The “strongest son,” there- fore, must work with the “other children” to implement peace. If the “strongest son” and the “other children” work together effectively, then peace will spread throughout the entire family.

Recently, this has not happened. Instead, extremist Palestinians have engaged in bombings when Israelis agreed to work on peace. Extremist Israelis have engaged in assassinations or other acts of aggression when Palestinians agreed to work on peace. Israelis are swiftly completing a wall between Israel and Palestinian territory, but the wall is not on the 1967 border. Rather, it snakes into Palestinian territory to unlawfully take land and water rights from 200,000 Palestinians. Extremists from both sides have destroyed the peace process.

The Palestinian people are allowing extremists to lead them. The Israeli people are allowing extremists to lead them. As the violence keeps increasing, wisdom from any quarter would be welcome.

A SHORT HISTORY OF CONFLICT

After World War II, the United Nations gave land to the Jewish people of the world so they could live together in peace. This land, Israel, includes holy places for the Jewish religion and is surrounded by Muslim countries. Palestinian Muslims lived on the land at the time that the United Nations gave it to the Jewish people.

Portions of the land given to the Jewish people, or taken over by them when they won wars against Arab states, are also holy for Muslims. Certain portions of Jerusalem controlled by Israel, called “East Jerusalem,” are very important to Muslims. For religious reasons, Palestinian Muslims believe that they must gain control of East Jerusalem as part of any lasting peace settlement.

Further, Palestinians view themselves as living in an occupied nation, where invaders (Israelis) have placed them under military rule. To fight back, Palestinians have built a terrorist network to attack innocent Israeli civilians. Israelis feel they must continue to control Palestinians with military force to protect themselves against more terrorist attacks.

Palestinian View: Palestinians feel that they are not a free people because Israeli soldiers stop them at checkpoints be- tween cities. Many Palestinians, there- fore, must get Israeli approval each day to go to work, return home, go to the hospital, get groceries, or visit their own families. After a terrorist attack, soldiers sometimes refuse to let Palestinians through the checkpoints to get to work or other essential places, infuriating Palestinians even more. Further, Israelis control much of the Palestinian water supply and give Palestinians less access to water than they need. Palestinians feel humiliated and abused by the Israelis.

Another issue causing Palestinians great anger is that Israelis have continued to build settlements in Palestinian territory, illegally converting even more Palestinian territory into Israeli territory. Palestinians see the settlements as a sign that Israelis do not want peace.

In March and April of 2002, Israeli soldiers attempted to destroy Palestinian terrorist networks and attacked several of the largest Palestinian cities. In addition to attacking the terrorists, the Israeli soldiers destroyed much of the Palestinian government, including records, equipment, buildings, electricity supplies, water supplies, roads, and more. Palestinians see the attack as an Israeli attempt to keep them from ever having an independent state. In addition, representatives of international relief agencies, as well as Palestinians, accuse Israel of committing war crimes during this attack.

Palestinian Demands: Palestinians want Israel to comply with international law and retreat to the borders that existed in 1967. Palestinians express this demand as four key conditions for peace, in-

A Separate Palestinian state (with the same borders as were in 1967),

1. Palestinian control of East Jerusalem,
2. Ending Israeli occupation of Palestinian territory, and
3. Freedom of Palestinian refugees to return to their home-Land

Isralis have occasionally discussed supporting a separate Palestinian state, but insist that it must be in the distant future. In addition, Israelis may not be willing to give up actual control of Palestinian territory for security reasons, even if Palestinian territory is eventually called an “independent state.” Meanwhile, Israelis have continued to place Israeli settlements on Palestinian land, expanding Israeli territory at Palestinian expense. Palestinians no longer regard Israel as sincere in its negotiations for a separate state.

Regarding control of East Jerusalem, Ehud Barak, former leader of Israel, offered to negotiate the control of East Jerusalem. This is something no other Israeli leader had offered and something the Israeli people did not want offered. In fact, Barak was removed from power partly because of the offer and was replaced by Ariel Sharon. Although Barak had offered to negotiate control of East Jerusalem and make other concessions, Palestinians were angry that all of the key conditions they considered essential for?lasting peace had? not been offered.?Israelis were angry because they were told? that most of the key conditions for peace had been offered and that Arafat had refused to negotiate.

Regarding the third Palestinian?condition for peace, ending occupa?tion of Palestinian territory, Israelis?seem willing to do this–as long as Palestinian borders are redefined so that?Israel can continue to control Palestinian movements through checkpoints between cities?and other means. In other words, Israelis are willing to end the appearance of occupation but they are not willing to reduce their control over the Palestinians.

Barak may have offered real independence to Palestinians, but Israelis and Palestinians disagree about what Barak actually offered. The specific offer of restoration of Palestinian land has remained secret, so it is difficult to determine which side is correct. Palestinians claim that Barak’s offer to return Palestinian land was not sincere and would have continued Israeli control of land between major Palestinian cities. Israelis claim that the Barak offer did not break up the Palestinian land and that Arafat’s refusal to negotiate the offer means that he will never accept peace.

Much of the current conflict rests with the different views of what was offered. Additional information on the offer and dis- agreements is provided here.

At about the same time as Barak’s offer, Sharon deliberately provoked Palestinians by an act viewed by Muslims as extreme disrespect to their religion. Terrorist attacks by the Palestinians started in large measure in response to Sharon’s actions. Israelis were then angry by Arafat’s refusal to negotiate in good faith and by the resumption of terrorist attacks.

In short, Israelis believe that Barak offered Palestinians their land back and that Palestinians then responded with extreme violence. Palestinians believe that Barak offered no real freedom and that Israelis deliberately insulted their religion (Sharon’s visit) and killed Palestinian protesters during negotiations.

The fourth demand of the Palestinians, for Palestinian refugees to have their land back, has not been solvable. If all of the Palestinians who lost their homes to the Israelis were allowed to return, then Israel would have more Palestinians than Israelis–ending Israel as a Jewish state. Israelis have not been willing to consider this as an option. Some Palestinians, however, vow to continue fighting until all Palestinian refugees can return to their former homeland. Negotiators have proposed that Israel allow Palestinian refugees to return to the West Bank and Gaza, but not to Israel. According to international law, the West Bank and Gaza are Palestinian territories and should be under the control of the Palestinians, not the Israelis.

Palestinian Compromise: If Israel re- treats to 1967 borders and provides Palestinians with complete independence, will Palestinians stop terrorist attacks? As of March of 2006, the answer is “probably not.” Although many Palestinians simply want an independent nation, others, such as the powerful Hamas organization, consider all of the territory called “Israel” to be part of Palestine. Hamas leaders have vowed to continue their terrorist campaign until their demands are met, including the destruction of Israel. Further, when Arafat failed to accept Barak’s offer of a separate Palestinian state, many Israelis concluded that Arafat did not want peace.

Arafat did not make a serious effort to stop Palestinian terrorism against Israelis.

International law is on the side of those who advocate for two independent states sharing the land that was called “Palestine” before 1948. However, recent violence against each side has been so vicious that the majority of people may be more interested in revenge than negotiations.

Israeli View: Israelis view Palestinian militants as terrorists who will not compromise to gain peace. Palestinian extremists have, in fact, engaged in terrorist acts against Israeli civilians when peace negotiations between Israelis and Palestinians seemed (to the Israelis) to be moving forward fairly. Because Palestinian terrorists attacked at key times, moderate Israeli leaders have been replaced by more extreme Israeli leaders who do not want to compromise. Israeli leaders do not trust Palestinian leaders to negotiate peace. Israelis do not feel safe enough to reduce their control of Palestinian territories.

Israeli Demands: Israelis want the Palestinians to stop the terrorist attacks. Israelis have four key conditions for peace, including:?l Palestinian borders that ensure continuing Israeli security from Palestinian at- tacks, not the 1967 borders,

l Israeli control of all of Jerusalem,

l Enough Israeli control within Palestinian territories to allow Israel to destroy terrorist networks, and

l Prevention of Palestinian refugees from returning to their homelands

By comparing the Israeli demands with the Palestinian demands, one can see that the two sides are unlikely to find peace, the demands are completely contradictory. In addition, many Israelis believe that Israel is entitled to all of the Palestinian territories. Every time a com- promise is reached, Israeli and Palestinian extremists work against it often with violence.

Israeli Compromise: If Palestinians stop their terrorist attacks on Israelis, will Israelis retreat to 1967 borders and allow Palestinians complete independence? As of March of 2006, the answer is “definitely not.” Although a majority of Israelis are willing to have their military leave the Palestinian territories, a power full minority consider all of the territory currently called “Palestinian” to be part of Israel. They do not want to compromise or pull back. Instead, they want to keep expanding Israeli settlements into Palestinian territories.

Sharon, before entering a coma, began reducing the settlements. However, when Sharon talked about an independent state of Palestine, he meant a Palestinian state that is still under the control of Israel. Past proposals have, in fact, allowed Israel to maintain control over a new Palestinian state. Palestinians have not found such Israeli offers of “independence” acceptable. Now that Hamas won the last Palestinian election, Palestinians may be even less likely to compromise.

A Road to Peace: With hate so intense on both sides, and demands of each side so completely incompatible, peace will re- quire very powerful outside intervention. The United States and Arab Nations, especially Saudi Arabia, need to join forces. Perhaps an international group, with the United States and Saudi Arabia as leaders, needs to negotiate where to put borders to ensure Israeli security and also Palestinian land integrity. Left to them-selves, neither Israelis nor Palestinians can make a lasting agreement on borders. If an international group negotiates the borders, it will also need to determine how to separate the two sides. International forces will probably need to stand between Palestinians and Israelis for a long, long time. Israelis and Palestinians may even need a physical wall to separate them.

Israelis have destroyed much of the government and infrastructure of the Palestinians. The Palestinians will need a great deal of outside support to rebuild themselves into a separate nation. Without such support, the world will be facing “another Afghanistan” where anarchy will again breed terrorism.

Muslim nations will need to play a strong role in helping to build a new Palestine without terrorism. Muslim nations will need to help mentor new Palestinian leaders who do not support terrorism. Palestinians will need another type of leadership, other than Hamas, to build a new strategy for long-term peace.

The United States will need to use its influence to help Israel shape a new strat- egy also. Israel has had to mobilize for war, justifiably, since its beginning. It has had little peace. However, Israel elected a leader, Sharon, who was associated with a massacre of Palestinians in Lebanon. Electing a man known for brutality does not say much for the peace strategy of the Israeli people. If an international group in- sures Israel’s security, Israel will need a different kind of leadership, as well as a new strategy for long-term peace. Acting Israeli Prime Minister Ehud Olmer is following Sharon’s path and Sharon is un- likely to return to leadership.

An outside group will also have to determine how to allocate water rights fairly between the Palestinians and Israelis. Without outside intervention, water wars are likely to erupt, even if the land borders are settled peacefully.

What ideas do you have to move us to- ward a lasting peace? It is very important to realize that the Muslim religion teach- es peace and tolerance, not terrorism and war. In fact, the Muslim religion does not allow a person to commit suicide or hurt innocent people, even during war.

Methods of Fighting: The Palestinian people, led by Yasser Arafat until his death in 2004, are outraged by Israeli occupation of Palestinian territories. The Israeli leadership is continuing to use military y force against protesters. Israel has one of the most advanced military forces in the world and the Palestinians have a very limited military capability. Most of those dying in the conflict have been Palestinians.

The method of fighting for each side is quite different. The Palestinians have no army and have used bombs against civilian men, women, and children to try to make the Israelis afraid for their personal safety. They expect the Israelis to respond to the bombings by attacking the Palestinian people. When Israel does this, Palestinians hope that other countries will then help the Palestinian people and protect them from the Israelis.

The Palestinian bombers almost always die in the attacks, so the Israeli military then kills Palestinians suspected of planning the attacks. The Israeli military has killed or seriously injured many Palestinian civilians while pursuing terrorists. In addition, Israelis have damaged a great deal of Palestinian proper ty during chases.

In short, each side is responding to the other by killing civilians-men, women, and children who are not part of the military. Each side is killing for revenge, as well as to meet its own goals. Each side is trying to convince the rest of the world that it is acting with high morality. Each side is creating a climate of violence and terror for their own children and grandchildren.

This is not a matter of two nations at war, however, since the Palestinians do not yet have a separate state. Israelis have the ability to kill or drive away most of the Palestinians, while the Palestinians do not have that power against the Israelis. This unequal contest may turn out badly for all of us unless the USA and others intervene effectively. If Palestinians continue to use terrorism to try to achieve their goals, and if Israel continues to use military force against the Palestinian people to combat terrorism, many other nations may find themselves involved against each other regarding the conflict.

The Water Issue: A concern of the Israelis, Palestinians, and Arab nations in the region is the water issue. Mikhail Gorbachev (former Premier of the Soviet Union) and Shimon Peres (former Prime Minister of Israel) noted that “More than anywhere else, the Middle East exemplifies the perils and possibilities created by the water crisis.”

“In the past 10 years the various states in the Middle East have spent billions to acquire arms instead of building water pipelines or finding ways to conserve, clean and use water more efficiently on a shared, regional basis.”

“We all know that deserts create poverty, and that poverty often leads to war  especially when everyone is armed to the teeth. But missiles in an armed desert can’t carry water any more than mine- fields can stop pollution from crossing borders.”

“The alternative to another round of conflict, this time over water instead of land, is cooperation. Desalinization or joint management is cheaper than launching wars for rivers.”

A recommendation by Jad Isaac of the Applied Research Institute, Jerusalem, in- cludes a confidence building measure by the Israelis. He emphasizes that Gaza and West Bank Palestinians do not have sufficient access to water now and suggests that negotiations for peace include Israel making sufficient water available to the two areas.

Role of the USA: What is the role of the USA in this? Palestinians claim that the fighting has expanded partly because the USA has not influenced the Israeli government to use more restraint. The Israelis claim that the conflict has expanded because Palestinian leadership has not stopped the terrorism.

A plan was developed by a group of experts, led by former U.S. Senator George Mitchell, to find a path to peace. The leaders of the Israelis, Palestinians, and the United States accepted the plan. The plan requires for each side to stop attacking the other side and for each side to try to help the other side achieve what it wants most, one step at a time. However, both the Palestinians and Israelis have continued the fighting instead of actually following the plan.

Crown Prince Abdullah of Saudi Arabia then proposed a plan in April (2002) that has the support of neighboring Arab states and is consistent with the Mitchell plan. It has the interest of the United States, Israel, and the Palestinians. It includes full normalization of relationships with Israel by all Arab states and recognition of Israel as a state by all Arab states. In return, Israel must pull out of Palestinian territories, back to 1967 borders. It allows for compromise and negotiation on return of Palestinian refugees to their homeland.

Both Israelis and Palestinians have asked the USA to help broker a peace process. Intervention by the USA did seem essential to gain a lasting peace, but now that the conflict has escalated, much more than the USA may be needed for an effective intervention.

The Bush administration is focused on combating terrorism, a method of fighting associated with Arafat. Arafat has not been very convincing in trying to stop terrorism. Evidence suggests that instead trying to stop it, he may have supported terrorism.

To complicate the situation even more, Israel has been accused of committing war crimes against Palestinians and will not let the United Nations investigate to see if the accusations are true. Allegations against Israel are being made by international humanitarian agencies who tried to render aid to wounded Palestinians.

Consensus seems to be growing that a slow, step by step process, such as recommended by the Mitchell plan, will no longer work. Trust between the Israelis and Palestinians has been destroyed and the Mitchell plan requires trust by both sides. Something quite different may be needed. See “A Road to Peace” above.

Why Do Palestinians Fight This Way?:

Why are Palestinians killing civilian Israeli men, women, and children when the Qur’an specifically prohibits killing non- combatants? Why are they doing this when they know that such deaths harden the hearts of the Israeli people and will make it unlikely for Palestinian children or grandchildren to ever have peace? Why are Palestinians planting the seeds of suffering for their own children and grand- children?

The short answer is that the Palestinians are exhausted, desperate, and very angry because of the Israeli occupation of their land. They also lack a leader who is focused on long-term peace.

Why Do Israelis Fight This Way?: Why are Israelis supporting military actions against civilians and occupying land that is not theirs? Why are Israelis allowing their armies to do this when they know that such actions harden the hearts of the Palestinian people and will make it un- likely for Israeli children or grandchildren to ever have peace?

The short answer is that the Israelis are exhausted, desperate, and very angry be- cause of the terrorist attacks. They also lack a leader who is focused on long-term peace.

US and Isreal are most trusted allies? A chronological look at the evidence

There is a big debate going on in the Jews around the world, there is a striking convergence of opinion concerning the relationship between the US and Israel. The new US President and his administration is trying to balance both Israel and Arab interest by keeping channel of communications open to all players having interest in Middle East.

Supporters of the PLO – synonymous with “supporters of a Palestinian state”, because the PLO will run any such state – are convinced that the US is an ally of Israel. Some believe the US employs Israel in order to expand the American empire, and others – echoing the claims of that infamous forgery, “The Protocols of Zion” – believe that history’s greatest superpower, the US, is actually the pawn of tiny Israel. Either way, they are agreed that the US and Israel are supposedly ‘a team.’

Supporters of Israel naturally disagree with supporters of the PLO about most things but not on this point, as they also believe that the US is a friend of Israel – perhaps its only real friend. Whereas those who are pro-PLO are especially infuriated by perceived US support for Israel, those who are pro-Israel are deliriously grateful for the same (especially so in the case of Zionist Jews).

Given that across the spectrum of those politically mobilized on this issue, from one pole to the other, everybody appears to have the same opinion on this, casual observers are naturally drawn into agreement as well, creating a crushing consensus all over the world: the US is an ally of Israel.

But is it true?

Let us first ask: what is an ally? My dictionary defines ‘ally’ as “one who is associated with another as helper.”

Everybody knows that the US says it supports Israel. But actions speak louder than words. What is the evidence of US actions? In this piece I provide a chronological list of relevant US policies over the years.

I am hoping that this piece will begin a debate. It is not finished, and the research relevant to its claims is ongoing. I shall be updating the piece as I gather more data. But I have already assembled quite a lot, below, and what I have is certainly sufficient to challenge the common view. I believe, in fact, that what I have presented below is already sufficient to refute the common view many times over, and the compilation of these documented facts came as a big eye-opener. Hopefully this documentation will begin a serious debate on this question, rather than an automatic assumption based on official claims of US support for Israel – which claims are cheaply, and therefore easily, made.

It is important to remember that what is examined here is the behavior of the US foreign policy Establishment, which is secretive. The evidence therefore speaks to what is, and has been, the true position of the US ruling elite with regard to Israel and the Jewish people. It does not speak to the position of the American people, many of whom, I believe, will be outraged to find that, as I document on next pages, the US specializes in attacking Israel. In fact the section on 1947-48 contains dramatic evidence that ordinary Americans tend not to favor the anti-Jewish policies of the US ruling elite.

CHRONICLE OF CONFLICT

MAPPING THE CONFLICT

The chronology already goes up to the year 2005, but I have yet to complete the research on some of the missing years in between.

The 1930’s – Negative – The US Establishment helped sponsor the rise of the German Nazi movement.

1939-1945 Negative BThis year’s material is divided into the following sections:

Introduction

1. The general policy of the Allies towards the plight?of the Jews
2. No US visas for European Jews trying to escape the Nazislaughter
3. The allies refused to sabotage Hitler’s Final Solution by military means

1945 – Negative – After 1945, the US created US Intelligence by recruiting tens of thousands of Nazi war criminals.

1947-48 – Mixed to Negative – Forced by external circumstances, the US government gave lukewarm support to the creation of the State of Israel. But then it re- versed itself and implemented policies de- signed to destroy Israel.

1949-1953 – Negative – In Israel’s hour of supreme need, the US allied with Israel’s mortal enemies.

1955 – Mixed – The US forces Israel to withdraw from Sinai, but makes some concessions to the Israelis.

1955-1965 – Positive (in one regard only) – Israel indirectly gets some US weapons.

1958 – Negative – Israel assists US military intervention in the Middle East; when this places Israel in danger, the US doesnothing.

1964 – Mixed – The US abandoned its previous official policy of trying to get Israel to relinquish the territories won in the War of Independence. Why had it been trying to do this?

1964-1967 – Negative – Although Israel suffered terrorist attacks from its Arab neighbors during these years, when they staged a full-scale military provocation, the US refused to help.

1967 – Negative – After the Six-Day War, the US put pressure on Israel to relinquish the territory gained, even though it knew it was indispensable to Israeli defense.

1967-70 – Negative – The Arabs attack the Israelis. The US response is to try and remove the Israelis from territory they need for their defense.

1970 – Positive – Washington temporarily abandons the diplomatic ef for t to make Israel withdraw from the territories.

1973 – Positive – The US assisted Israel in the Yom Kippur War.

1973-1975 – Negative – The US sup- ported the election of a pro-PLO Nazi war criminal to the post of UN Secretary General.

1975 – Negative – The US reached an agreement with Israel not to have contacts with the PLO. The US immediately violated the agreement.

1977 – Negative – Jimmy Carter worked hard to give the terrorist PLO the dignity of a ‘government in exile,’ and then he teamed up with the Soviets to try and saddle Israel with a PLO terrorist state next door.

1978 – Negative – When Israel tried to defend itself from the PLO terrorists, the US forced Israel to stand back.

1979 – Negative – Jimmy Carter began large-scale US sponsorship of anti-Semitic Islamist terrorists, especially in Afghanistan and Saudi Arabia.

1981 – Negative – The US pushed for a PLO state in the West Bank against Israeli objections.

1982-1983 – Negative – The US military rushed into Lebanon to protect the PLO from the Israelis.

1985 – Negative – 1985 includes more material than other years, so we have di- vided it into subsections.

1. Shimon Peres acted as a US agent, against Israeli interests.
2. Bettino Craxi and Giulio Andreotti (respectively, the Italian prime minister and foreign minister) committed political suicide for the sake of pushing the PLO. The US was behind them.
3. Ronald Reagan denied the Holocaust
4. Who was in charge of US covert operations in 1985?

1987-1988 – Negative – The ‘First Intifada’ was a US-PLO strategy used to represent the Arabs in West Bank and Gaza as supposedly oppressed ‘under- dogs.’

1989 – Negative – With Dick Cheney, the US began supporting a PLO state in the open as the ‘only solution’ to the Arab- Israeli conflict.

1991 – Negative – Bush Sr.’s administration forced Israel to participate in the Oslo process, which brought the PLO into the West Bank and Gaza.

1994 – Negative – Yasser Arafat was given a Nobel Peace Prize, and the CIA trained the PLO, even though Arafat’s henchmen were saying in public, this very year, that they would use their training to oppress Arabs and kill Jews.

1996-1997 – Negative – The United States exerted such strong pressure on the Netanyahu government (including threats) that, even though Netanyahu had been elected on an anti-Oslo platform, he had the necessary cover to betray the Israeli public that had elected him.

2005 – Negative – Mahmoud Abbas, who will soon have total control over Gaza, is the one who invented the strategy of talking ‘peace’ the better to slaughter Israelis. The US ruling elite loves Mahmoud Abbas.

( Prashant Tewari inputs from R. Jerry Adams, Ph.D., Evaluation and Development Institute and Francisco Gil-White)

Time was when oil was being sold at $140 a barrel, and while consumers cringed at the high prices, the oil-rich nations of the Middle East prospered. The result was an economic boom that spanned industries ranging from financial services and real estate to tourism. Stock prices soared. Sovereign wealth funds snapped up choice assets around the globe. In late 2008, the oil bubble burst, the financial crisis began to roll across the world and boom turned to bust. How have the combined effects of the global slowdown and low oil prices affected the economies of the Middle East?

In 2002, oil prices in the nations of the Gulf Cooperation Council (GCC) stood at $25 a barrel. By July 2008, that number had jumped to $147. The increase enabled the GCC’s six member countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) to almost triple their gross domestic product from $350 billion to more than $1 trillion. Now oil prices have fallen again this time to below $40 a barrel and the oil boom and bust have come at a steep price, especially for Dubai.

In 2002, oil prices in the nations of the Gulf Cooperation Council (GCC) stood at $25 a barrel. By July 2008, that number

had jumped to $147. The increase enabled the GCC’s six member countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) to almost triple their gross domestic product from $350 billion to more than $1 tril

infrastructure overall, which had suffered from decades of under investment. Government efforts concentrated on developing oil and gas, the power sector and transport infrastructure. The private sec- tor, for its part, concentrated on residential, commercial and tourism real estate projects.

As Don De Marino, co-chairman of the National U.S.-Arab Chamber of Commerce, notes, “Real estate in the Gulf is fundamentally a private sector game. Actual recourse lending is pretty limited, so real estate investors who borrow from the banks do so personally. The rest of the investment funds come mostly from the earnings from other businesses.”

Dubai-based developers Emaar and Nakheel led the region by launching the world’s tallest tower, largest shopping mall and largest man made island, along with a string of luxury hotels and residential developments. Other developers, such as Saudi Arabia’s Kingdom Holding, jumped on the bandwagon by launching massive mixed development projects in Jeddah and Riyadh.

However, the oil boom and subsequent bust, with a decline to below $40 a barrel – came at a price. The strong project pipeline caused a surge in the expatriate population, as people came to fill open jobs. This led to increased domestic lion, according to the International Monetary Fund.

The increase in oil prices widened the fiscal surplus of GCC economies to a record high. From 2002 to 2008, an estimated $1.5 trillion in surplus was accumulated, leading GCC members to embark on a mission to diversify their economies. On developing and improving infrastructure overall, which had suffered from decades of under-investment. Government efforts concentrated on developing oil and gas, the power sector and transport infrastructure. The private sec- tor, for its part, concentrated on residential, commercial and tourism real estate projects.

As Don De Marino, co-chairman of the National U.S.-Arab Chamber of Commerce, notes, “Real estate in the Gulf is fundamentally a private sector game. Actual recourse lending is pretty limited, so real estate investors who borrow from the banks do so personally. The rest of the investment funds come mostly from the earnings from other businesses.”

Dubai-based developers Emaar and Nakheel led the region by launching the world’s tallest tower, largest shopping mall and largest manmade island, along with a string of luxury hotels and residential developments. Other developers, such as Saudi Arabia’s Kingdom Holding, jumped on the bandwagon by launching massive mixed development projects in Jeddah and Riyadh.

However, the oil boom and subsequent bust, with a decline to below $40 a barrel came at a price. The strong project pipeline caused a surge in the expatriate population, as people came to fill open jobs. This led to increased domestic demand and an acute housing?shortage. Such factors, coupled with

the weak U.S. dollar and high commodity prices, raised average inflation in the GCC to about 13% year-on-year in June 2008. The oil windfall expanded domestic credit growth but was intensified by the inflow of hot money. (All the GCC currencies, with the exception of Kuwait, are pegged to the U.S. dollar.)

The large current account surpluses and high inflation resulted in speculative inflows looking for currency revaluation.

According to widespread press reports, the impact has been especially hard on Dubai. As Ashwin Verma, a partner at Black House Development Company, a New York-based real estate investment and development firm, notes: “Dubai went from a trading economy to a real estate economy. Unlike [oil-rich] Abu Dhabi, most of Dubai’s GDP comes from real estate.

Dubai is one of seven emirates and the most heavily-populated city of the United Arab Emirates. Abu Dhabi, a sister emirate and the largest by area, is the capital of the U.A.E .Another ‘World’s Largest Mall’ The possibility of super profits in real estate attracted companies and individuals alike. The easy availability of liquidity

enticed property developers to launch such highly-ambitious projects as an underwater hotel, a mile-high tower, a kilo- meter-high tower, a revolving high-rise apartment, yet another “world’s largest mall,” massive theme parks, a floating city and a twisted residential tower. While the governments channeled most of the surpluses into their sovereign wealth funds, the government linked companies and the private sector tapped international markets to finance domestic projects. Lulled by a false sense of security brought by bulging state coffers, these companies integrated leverage into their business model. They regularly went to the international debt markets to fund their construction plans. The generous mortgage finance and attractive rental yields due to the housing shortage sparked investors’ interest in real estate, while the relaxation of strict foreign-ownership of property laws in countries such as the U.A.E., Bahrain and Oman added another impetus.

As the list of elaborate projects grew, so did the line of investors queuing overnight to book properties. Residential proper ties were sold even before they were built solely on the basis of blueprints, and strong demand led to massive

speculation in the secondary markets for these off-plan properties. In some cases, properties were sold even before the developer had approval from the respective government departments. The hype brought international attention, and that, in turn, drove overseas investment.

Flipping of properties became the most profitable venture, sending property prices to dizzying heights. What was supposed to be an auxiliary support for economic Diversification efforts become the main pillar of it. The construction contagion spread from one country to another as real estate and tourism development became the common denominator of the GCC diversification strategy.

In January 2008, the projects planned or underway totaled $1.6 trillion. This had increased to $2.54 trillion by January of 2009, with Saudi Arabia and the U.A.E making up 70% of the projects, mostly in the real estate, leisure and infrastructure sectors.

However, as the global credit crunch froze the international financial markets, the hot money evaporated. The drastic $100 slide in crude oil prices eroded investor confidence in the region. The tourist arrivals slowed to a trickle during the peak winter season as a recession engulfed major economies. In a spectacular swing, abundance of liquidity in the beginning of 2008 had vanished before the year end.

The lack of liquidity forced developers to put many projects on hold, and speculators were left with inflated assets that could not be sold, as banks tightened mortgage lending criteria. Most of the projects have either been cancelled or put on hold for lack of funding. In Dubai, construction cranes once jokingly called the national bird have mostly been idle. According to Proleads, a firm that tracks construction projects, about 150 projects in the GCC were on hold in January this year, about 88 of them in the U.A.E. alone. “Current very steep decline in oil prices is playing havoc with virtually all real estate projects,” says De Marino. “If there is a bright spot, it’s that the banks are not sitting with the properties. But clearly the downside is the private cash tied up. The fact is that no one locally saw just how rapidly oil prices would collapse.” Of course, the overbuilding and speculation are not confined to the Gulf. “Every country and city in the world is in the same spot Miami, China, even New York,” notes Verma. “However, Dubai is not supply- constrained like New York or London, so prices can fall much further.”

In explaining why the problem is magnified in the region, Verma points to three factors. “As the real estate sector unwinds, there are fewer jobs, and people are forced to leave because they cannot stay without a job. Fewer people means less demand for real estate and fewer shoppers at the mall. It becomes an obvious downward spiral.”

In addition, he says, “bankruptcy and debt laws in Dubai are very harsh. It makes sense in markets [not characterized] by the wide adoption of credit for growth. However, so many buyers have [been using] credit without knowing the legal implications of default. Now that they know, people are leaving, which once again translates to fewer buyers, less shoppers again, a downward spiral.”

Finally, he notes, “monetary policy is important. In the U.S., the government can print trillions of dollars and amortize over the largest economy in the world. They can slash interest rates to practically zero to reduce debt and the cost of servicing debt. In Dubai, they can’t. That’s why they need Abu Dhabi [to help]. They can’t lower interest rates. In fact, interest rates are going up, further squeezing borrowers and stifling any remaining growth. This further increases [the number of] defaulters, again driving people out.”

Many leading contractors and developers have laid off employees and adopted a wait- and-see approach to future projects. The retrenchments may have significant repercussions on domestic demand.

In 2007, Dubai’s construction and real estate sectors employed about 50% of the total workforce. Moreover, OPEC’s December cut of 4.2 million barrels a day will also affect the GCC countries. The cuts translate to about a 10% contraction in the oil sector of Saudi Arabia, Kuwait and the U.A.E. Meanwhile, the Algerian oil minister has said

that OPEC may announce further production cuts to support the prices on March 15. Lower oil prices, reduced oil production, out flow of expatriates and falling demand for goods and services are expected to slow GDP growth to a bare minimum.

Meanwhile, the huge amount of wealth destroyed by the crash in the GCC stock market has hurt investor sentiments. The GCC stock markets collectively lost more than $600 billion in market capitalization last year. According to the IMF’s most recent forecast, the GCC economy is expected to expand by 3.5% in 2009 compared to 6.8% last year. After years of heady growth, reality is returning to the GCC real estate market. Recent surveys indicate average home prices in the GCC falling by 10% to 40% from their peak prices with Dubai being the most affected.

Moreover, the GCC companies, mostly in real estate and finance has unveiled a 131-km metro line while Saudi Arabia, Oman, and Qatar are going ahead with power, petrochemical and trans- port projects.

A recent Gulf Construction Survey indicated this shift. According to the survey, two thirds of senior executives from construction companies predict that the operations will move away from Dubai to Abu Dhabi, Qatar and Saudi Arabia. Still, some investors are cautiously optimistic. “Dubai is a model for the region; as Dubai goes, so goes the perception of commerce and trust in commerce in the region,” says Verma. “Dubai is built on entrepreneurship and innovation. These may sound like buzzwords, but it’s actually true. They just had the world – and investors – build them a first-class city and infrastructure. So

they will use this as a base to recreate themselves.”

(The author is based in Dubai) cial?face severe head-?winds when it comes?to repayment or rollover of an estimated $40 billion of debt due?this year, given the absence of liquidity and investor appetite. Going for- ward, governments are expected to replace the private sector as the leading entity to announce new mega projects. Unlike during the 1970s oil boom, GCC governments have spent only one third of their oil wealth and can pursue counter cyclical fiscal measures to rescue their economies. The region’s countries are better equipped to weather a low-revenue scenario?due to their huge foreign asset positions?and low public?debt. The extent?of spending in?each country will?be dependent?on oil prices, as?countries have different ?break even points.

Nevertheless, the emphasis has shifted from real estate to investment in human capital and infrastructure to improve non-oil-sector growth over the long term, including technological universities, mass rapid transport systems and value-added industries. Abu Dhabi has unveiled a 131-km metro line while Saudi Arabia, Oman, and Qatar are going ahead with power, petrochemical and transport projects.

A recent Gulf Construction Survey indicated this shift. According to the survey, two thirds of senior executives from construction companies predict that the operations will move away from Dubai to Abu Dhabi, Qatar and Saudi Arabia. Still, some investors are cautiously optimistic. “Dubai is a model for the region; as Dubai goes, so goes the perception of commerce and trust in commerce in the region,” says Verma. “Dubai is built on entrepreneurship and innovation. These may sound like buzzwords, but it’s actually true. They just had the world and investors build hem a first-class city and infrastructure. So they will use this as a base to recreate themselves.”

– Romil Raj (The author is based in Dubai)

Houston: Oil prices tumbled below $50 a barrel Monday, spooking global financial markets and signaling that the remarkable 50 per cent price drop since June was continuing this year and even quickening.

The new drop in U.S. and global benchmarks of more than 4 percent was accompanied by a series of reports of increased Middle Eastern oil exports; continuing increases in U.S. production despite planned exploration cutbacks by many oil companies; and renewed worries about the declining economic fortunes of Europe.

The plunge once again sent jitters through global markets. The Dow Jones industrial average fell 331 points, or 1.86 percent, while the Standard & Poor’s 500-stock index, a broader benchmark, fell 37.62 points, or 1.83 percent. And the Vix, a measure of market volatility that is known as Wall Street’s fear gauge, leaped by around 12 percent.

In response, investors sought safety in government bonds around the world. As bond prices rose, the yield on the 10- year Treasury note fell to 2.04 percent on Monday.

The decline in oil was not the only source of concern in the markets. Worries about Greece’s ability to stay in the euro-zone have reasserted them- selves in recent days, for instance. The dollar continued its surge against the euro on Monday.

Still, as the oil price decline has continued, investors have increasingly seen it as a bad omen for the global economy. The drop may point to lower demand for oil and lower economic activity. And the decline suggests that policymakers have not managed to deal with the threat of deflation, or falling prices.

“There is certainly a deflationary mindset in the market,” said Jim Vogel, a debt markets strategist for FTN Financial, “and as we enter 2015, it’s beginning to nag some people that there could be a deflationary component to the economy.”

Leading the way is oil

“It is a very shaky start for the oil market,” said Tom Kloza, global head of energy analysis for Oil Price Information Service. “The norm is a lot of money comes into commodity index funds at the beginning of the year, and that can create a market rally. Today, instead of new money coming into oil, you got some more old money going out of oil.”

West Texas Intermediate crude dipped below $50 a barrel briefly Monday before recovering. Brent crude, the global benchmark, fell to about $53 a barrel.

The drop in prices has led to a rising tide of oil company announcements in recent days of investment cuts for the coming months. Ensign Energy Services, a Canadian drilling contractor, reported that it would be laying off 700 workers, or roughly 10 percent of its workforce, in California fields.

Several Texas based companies that have borrowed heavily in recent years to produce in new Texas and North Dakota shale fields are expected to announce steep investment and job cuts in the coming days.

Consumers continued to benefit from the oil price collapse, with the AAA auto club reporting Monday that the average national price for regular gasoline had fallen to $2.20 a gallon, 8 cents lower than a week ago, 51 cents lower than a month ago, and $1.11 below a year ago.

Energy experts say American families are likely to have as much as $115 billion more in disposable income in 2015 than last year because of lower gasoline prices alone. Additional benefits should come from drops in heating oil and diesel prices.

The last time oil and gasoline prices fell this low was in the wake of the 2008-09 financial collapse, when crude oil fell from well over $100 to below $40 a barrel in a matter of months. Energy analysts say the current price slump is of an entirely different nature, based primarily on a glut of oil being produced in the United States, along with increased production in Canada, Iraq and a handful of other countries.

While in the past the Organization of the Petroleum Exporting Countries has sometimes agreed to cut back production to shore up prices, Saudi Arabia and other Persian Gulf producers have decided to protect their global market share by cutting prices in the United States and Asian markets while increasing production somewhat.

In a recent interview with Middle East Petroleum and Economic Publications, based in Cyprus, the Saudi oil minister, Ali al-Naimi, indicated his country would remain steadfast rather than cut production anytime soon.

“If I reduce, what happens to my market share?” alNaimi said. “The price will go up and the Russians, the Brazilians, U.S. shale oil producers will take my share.”

Adding further pressure to prices is the weakening demand for oil and petroleum products in Europe and developing nations. That weakness is compounded as increasingly efficient vehicles come onto the market and China seeks to reduce the oil depend- ency of its economy.

There is little reason to believe any of those trends will change until midyear at the earliest, energy experts say. According to Simmons & Co., based in Houston, the 93 million barrel a day global market will continue to be over- supplied by at least 1 million barrels a day during the first half of 2015.

“It might be the dead of winter, but it looks as though markets will confront considerably more downside risk in the months ahead,” according to a Citi Research report released Sunday night, “and it will likely take well into the year before prices will bottom, let alone achieve a new equilibrium.”

Citi says it is most probable that the oil market will stabilize by the end of 2015, with the Brent price averaging $63 a barrel for the year – several dollars above the current price. But its more bearish forecast, with a 30 per- cent probability, is for Brent to average $55 for the year, roughly the current price.

A number of signs suggest that oil and oil product supplies will soon be increasing. The ramping up of several refineries in Saudi Arabia and the United Arab Emirates is likely to increase exports of products like gaso- line and diesel by 500,000 barrels a day in the coming months. Even without the Keystone XL pipeline, other Canadian pipelines coming online will bring as much as 350,000 more barrels onto the market.

Citi has projected that global investments in oil exploration and production will decline up to 15 percent this year, but U.S. companies continue to produce more efficiently.

Rystad Energy, a Norwegian global consulting firm, issued a report on Monday saying that the average break- even price for the principal shale fields in the United States had dropped to $58 a barrel, with the core areas of some fields remaining economical to produce at $50.

Oil-producing states are expected to suffer economically from the oil price drop, although the top oil-producing state, Texas, has worked hard to diversify its economy after the price bust of the 1980s. With a projected $3.5 billion budget deficit, Alaska has already announced a delay in six important infrastructure projects, including a gas pipeline from the North Slope.

© 2015 New York Times News Service

It is business in mind true but no. Uncle Sam is eyeing China hence left Pakistan dry and high to be with India. It is the geo political compulsion that force the most powerful man on earth to land in India for three working days. The rise of China, it’s expansionist mind set, military build up in South China sea and booming economy that is likely to overtake USA economy by 2028 has pushed USA to build solid relationship with India to counter the Chinese might collectively. For India, it is a tailor made situation to consolidate trade and technology relationship with the world’s most powerful nation. Secondly, the right wind NDA government led by hawkish Prime Minister Narendra Modi is an ideal partner to USA, presumably fighting a pitch battle with radical Islamic forces globally.

After arriving in India over the weekend, U.S. President Barack Obama concluded a series of bilateral agreements with Indian Prime Minister Narendra Modi. Obama, who was invited to India as the chief guest for India’s annual Republic Day celebrations, broached the once-uncomfortable topic of climate change with Modi, making surprising progress on the issue. The two leaders followed up on themes addressed during Modi’s September 2014 trip to the United States and addressed some issues that had been on the U.S.-India bilateral back-burner for several years now. What follows below is a quick distillation of nine high- lights out of the released joint statement, joint strategic vision document, and the visit overall. I’ll likely follow this up shortly with more detailed analysis on at least a couple of these points. I put together a similar summary of the previous U.S.-India bilateral joint statement after Modi’s U.S. trip, which focused primarily on defense and security issues that may help contextualize some of the below.

Ahead of this visit, the U.S. made it clear that both energy cooperation and climate change would be on the agenda. Unsurprisingly, one of the first announcements to come out of New Delhi during Obama’s visit was that the two countries had reached an agreement on climate change. Where previously India had resisted the notion that developing countries who had contributed little to global greenhouse gas production in the past should place caps on current emissions at the behest of developed countries, Modi seems to have partly revised India’s position. India will expand its use of renewable energy and move toward joining an international deal on global warming that would see developed and less-developed countries alike cap emissions. The development is a coup for the United States, which had similar success with China late last year. “When we think about the future generations and what kind of a world we are going to give them, then there is pres- sure,” Modi told the press after speaking with Obama. Obama, for his part, emphasized India’s importance for a global climate regulation regime: “India’s voice is very important” in negotiations, he said. Under a new agreement, the United States will also provide funding for renewable energy development in India.

Interestingly, the joint statement notes a confluence of two major East Asia-facing strategic initiatives by the two countries. The statement noted the alignment of “India’s ‘Act East Policy’ and the United States’ rebalance to Asia,” and the potential “opportunities for India, the United States, and other Asia-Pacific countries to work closely to strengthen regional ties” as result. This language did not appear in the September 2014 joint statement. Combined with the symbolism of Obama presiding over India’s Republic Day military parade, this sends a particularly strong message to Beijing. On a similar note, if you’re one for close textual analysis (as I sometimes am), the sixth clause of the statement highlights the “diversified” U.S.-India partnership with “strategic consultations, stronger defense, security, and economic cooperation.” Do take the ordering of those facets of cooperation with a grain of salt, but generally, the United States avoids emphasizing defense cooperation before economic cooperation in statements with countries that aren’t explicit allies.

On economics, the joint statement ticked all the usual points, promising increased trade and investment opportunities. The phrase “bilateral investment treaty” appears in this joint statement where it did not appear in the September 2014 document, suggesting that the two countries are serious about walking the walk on improved economic ties. U.S. firms in particular have complained about excessive red tape and corruption as risk-adding factors for doing business in India and a potential bilateral investment treaty negotiation process would likely require significant domestic political support in India.

The U.S. India Defense Technology and Trade Initiative (DTTI) once again makes an appearance. Back in September 2014, the two leaders noted that their countries would “treat each other at the same level as their closest partners” on issues including “defense technology transfers, trade, research, co-production, and co-development.” The DTTI is poised to increase co production, co-development and partner- ship in U.S.-India military-industrial matters. The initiative is line with the Modi government’s plans to increase India’s defense self-sufficiency and increase the share of India’s military hardware that is manufactured on Indian soil. There isn’t too much new information about the DTTI in this statement, though Modi’s new “Make in India” initiative gets a shout-out in the context of defense co-production.

Though not noted on the joint statement, Obama’s visit resulted in the revelation of more than a few straight- up hardware deals, including the joint production of parts and systems of the Lockheed C-130 (which India operates), and RQ-11 Raven drones. Both of these deals had appeared in reports prior to Obama’s trip. India will take delivery of six additional C-130s through 2017.

I noted back in September that the statement made then marked the first occasion the two countries official- ly pronounced their joint support for the principle of the freedom of navigation in the South China Sea and for resolving territorial disputes under UNCLOS. In the latest joint statement, neither the South China Sea nor UNCLOS makes an appearance. The Joint Strategic Vision document, however, notes that “regional prosperity depends on security. We affirm the importance of safeguarding maritime security and ensuring freedom of navigation and over flight throughout the region, especially in the South China Sea.” That same statement adds that the two countries “call on all parties to avoid the threat or use of force and pursue resolution of territorial and maritime disputes through all peaceful means, in accordance with universally recognized principles of international law, including the United Nations Convention on the Law of the Sea.” North Korea’s nuclear program makes an appearance in the joint statement yet again. Similar to the September statement, “human rights” are nowhere to be seen.

The statement as usual includes more than a few clauses addressing terrorism, law enforcement, and count- er-terrorism. Naturally, both countries will increase their cooperation on these issues. Similar to the September statement, Pakistan-based anti-India terror groups are called out by name in the joint statement. The two leaders pledged to come together “to disrupt entities such as Lashkar-e-Tayyiba, Jaish-e-Mohammad, D Company and the Haqqani Network.” Once again, they “reiterated their call for Pakistan to bring the perpetrators of the November 2008 terrorist attack in Mumbai to justice.”

One issue that has been on the U.S.- India back-burner for some time now came to the fore during this visit: the issue of nuclear energy and civil nuclear liability in India. Famously, the United States and India concluded a civil nuclear cooperation agreement 2006 and, in 2008, India received a waiver from the Nuclear Suppliers Group, making it the only non-nuclear Non-Proliferation Treaty (NPT) compliant state to engage in normal nuclear commerce while maintaining an active nuclear weapons program. Unfortunately, India is yet to attract U.S. suppliers to set up nuclear facilities on its soil due to an unfortunately harsh legal liability regime in the form of the 2010 Civil Liability for Nuclear Damage Act. This law creates unacceptably high amounts of risk for foreign suppliers. To address this, Obama and Modi are exploring the possibility of an insurance pool that will, in theory, moderate the risk exposure for U.S. suppliers and bring U.S. nuclear suppliers into India (this is a complex issue and Praveen Swami over at The Indian Express has a great primer outlining the stakes). For the moment, according to the New York Times, Westinghouse and GE Hitachi Nuclear Energy have welcomed the agreement.

As I noted above, both India’s “Act East” policy and the U.S. re balance  to Asia make an early appearance in the joint statement. The statement notes later that India and the United States will “work more closely with other Asia Pacific countries through consultations, dialogues, and joint exercises.” Interestingly enough, the next sentence specifically highlights the importance of the U.S. India Japan trilateral relationship. Japan is a U.S. treaty ally and an increasingly close partner to India. Japan’s Prime Minister Shinzo Abe was India’s chief guest at last year’s Republic Day celebrations. Overall, this visit is a strong indicator that U.S. India ties will follow a positive trajectory over the course of this year. It was indeed bold of Indian prime minister Narendra Modi to extend an offer to Obama to visit India so soon after visiting Washington himself. Obama, by accepting, became the first sitting U.S. president to visit India twice while in office (though Obama did cut his visit short to visit Saudi Arabia to pay respects to its recently deceased king). It’s been clear for some time now that the United States and India are strategically converging. Unfortunately, given India’s low standing on the list of U.S. foreign policy priorities and latent scepticism about U.S. intentions in India, the pace of that convergence was sluggish. If Obama’s visit and Modi’s 2014 U.S. visit are any indication, both countries are serious about making up for lost time. The USA think tank headed by Mr Henry Kissinger have quantified four  major blocks in the world namely USA, Europe, Arab world and China. The former NSA have never mentioned India in high priority list of foreign policy via USA. The sudden love of USA for India must be tread with caution and India must surrender itself to larger diplomatic designs by forgoing its own sovereign foreign policy. In the emerging new world order, surely there is a scope for building even deeper ties with USA. A country of over billion people must guard itself from foreign policy complacency and defense related preparation keeping in view the external and internal threats.

 – BY Prashant Tewari

Paris: The bloody denouement on Friday of two hostage crises at different ends of a traumatized Paris means attention will now shift to the gaping question facing the French government:

How did several jihadis and possibly a larger cell of co-conspirators manage to evade surveillance and execute a bold attack despite being well known to the country’s police and intelligence services?

On its own, the Wednesday morning slaughter that left 12 people dead at the satirical newspaper Charlie Hebdo represented a major breakdown for French security and intelligence forces, especially after authorities confirmed that the two suspects, the brothers Said and Cherif Kouachi, had known links to the militant group, al-Qaida in Yemen.

Then on Friday, even as police had cornered the Kouachi brothers inside a printing factory in the northeast suburbs, another militant, Amedy Coulibaly who has since been linked to the Kouachis stormed a Kosher supermarket in Paris and threatened to kill hostages if the police captured the Kouachis.

“There is a clear failing,” French Prime Minister Manuel Valls told French television Friday.

“When 17 people die, it means there were cracks.”

A U.S. official speaking about the failure to identify the plot said that French intelligence and law enforcement agencies had conducted surveillance on one or both of the Kouachi brothers after Said returned from Yemen, but later lessened that monitoring or dropped it altogether to focus on what were believed to be bigger threats.

“These guys were known to be bad, and the French had tabs on them for a while,” said the official, who spoke on the condition of anonymity to avoid complicating a delicate intelligence matter. “At some point, though, they allocated resources differently. They moved on to other targets.”

The official acknowledged that U.S.spy agencies tracked Westerners, particularly young men, traveling in and out of Yemen much more closely after a failed al-Qaida plot to blow up an airliner on Christmas Day 2009.

But the official said the United States left the monitoring of the Kouachi brothers and other French citizens in France to that country’s security services.

One reason for the lapses may be that the number of possible jihadis inside France has continued to expand sharply. France has seen 1,000 to 2,000 of its citizens go to fight in Syria or Iraq, with about 200 returning, and the task of surveillance has grown overwhelming.

The questions facing French intelligence services will begin with the attack at Charlie Hebdo.

Authorities knew that striking the satirical newspaper and its editor, for their vulgar treatment of the Prophet Muhammad, had been a stated goal of al-Qaida in the Arabian Peninsula, through its propaganda journal, Inspire.

Intelligence officers also had identified the Kouachi brothers as being previously involved in jihad related activities, for which Cherif was convicted in 2008. Investigators also have linked Cherif to a plot to free from prison an Islamic militant convicted for the 1995 bombing of a French subway station, while French news organizations have reported that Coulibaly was also implicated in that case.

© 2015, The New York Times News Service

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