US India Pakistan - The Eternal Triangle

President Barack Obama will soon be sitting with his team to prioritise his to-do-list for his legacy that will be intertwined with how he handles his country’s strategic and national concerns.

Domestically, the most important issue would be the ‘fiscal cliff’, where President Obama’s climb up the hill is being constantly hobbled by the belligerent Republicans. The economic crisis in the US is deeper than one would normally want to admit but 2013 is going to be a difficult year for the US and consequently for the world as well. Externally, the Afghan quagmire continues, the deep seas of the Western Pacific have an assertive China, the bloodied sands of the Middle East provide neither solution nor solace, where the Arab Spring seems to have gone all wrong with the Salafists and Sunni Radicals of various hues beginning to take control from Tunisia to Syria. Of these, the two issues that will affect India most closely both in 2013 and later are the US economy and the manner and aftermath of US exit from Afghanistan.

Need of the hour: President Obama’s primary goal in Afghanistan is to extricate his country with as much dignity as possible. 

 

There have been other economic problems arising from the mismanaged banking and financial crisis following the crash of Lehman Brothers. The financial liabilities incurred after more than ten years of incessant wars in West Asia and Afghanistan adding to the coffers of the military-industrial-intelligence complex but did precious little for the rest of the economy.

There is another looming crisis — the fate of the dollar. A decade ago, one ounce of gold could be had for US$ 250; today it has soared to $ 1,750 while the cost of silver has gone up from $ 4 to $ 34 per ounce. More people are shoring their assets in these two metals than in the past and globally the gold holdings have gone up from 10.5% in 2006 to 12.8% in 2012, holdings in other currencies have gone up from 38.4% to 44.4% while the dollar holdings have shrunk from 36.6% to 28.7% during the same period as economies have shifted to other currencies.

If countries decide to settle their international obligations in currencies other than the $, the demand for the dollar would shrink pushing its value down further. Maybe this is a bit of a doomsday prediction but it would be unwise not to take these factors into consideration while assessing the future. Naturally, a continued decline of the world’s largest economy will impact on India at a time when ours is finally showing signs of serious market and economic reforms so desperately needed in the immediate years ahead.

President Obama’s primary goal in Afghanistan is to extricate his country with as much dignity as possible. The US today has its foot caught in a trap and Pakistan has the key which it periodically threatens to throw away but desists after it is promised some financial compensation. Only very recently the US promised to release US $ 700 million from the Coalition Support Funds for Pakistan, also absolved the ISI of any hand in the Mumbai Terror and has encouraged Pak backed Taliban for negotiations in Paris even as sections of the Taliban continue to kill and assassinate. The US is the biggest donor to Pakistan and also the country that is disliked most in Pakistan. US munificence, and indulgence, towards Pakistan remains legendary and would be truly inexplicable but for self-induced excessive US dependency on Pakistan for the execution of its war on terror and now, equally, for its withdrawal from Afghanistan.

The US needs Pakistan to withdraw from Afghanistan and Pakistan needs all the money it can get. Pakistan also dreads that if the US leaves without helping Pakistan get what it wants from the Indians now, which is a concession on Kashmir, they will never have another chance. The US economy could do nicely with increased access to markets and investments in India, something that India needs the US to do as well. Long held positions by India and Pakistan will not disappear and the sticking points surface very soon.

The US in its own interests needs to give satisfaction to Pakistan to be able to leave. India will, in return, be “allowed” to play a larger role in Afghanistan, something that was strongly opposed not too long ago, on the belief that this would prevent Pakistan from being the sole arbiter in Afghanistan post 2014. The gentle nudge (read pressure), from the West on the Indians (mostly Track 2) to give satisfaction to Pakistan without a quid pro quo on terror, will continue. The hope is that India would be able to oblige and assist the US make an honourable exit from Afghanistan.

   It is a complicated ménage-a-trois in the India Pakistan US triangle for the US. For India this challenge is an opportunity both for our economy and strategic interests.

Source : The Mid Day , Mumbai , Vikram Sood is a former chief of Research and Analysis Wing (RAW)

Pakistan triumphs in India

The good cop-bad cop routine is a common practice that investigative and interrogating agencies adopt to break a suspect. This technique is often used by others — politicians and diplomats — to convey a message and deny it subsequently. Pakistan has perfected this to a fine art.

We saw evidence of this when Rehman Malik, Pakistan’s adviser on interior affairs, visited India a few days ago. The only thing was that this time, the affable and free-talking Malik was playing both roles with aplomb.

The Pakistani visitor was coming ostensibly to sign a liberalised visa agreement between India and Pakistan. Aware of the kind of statements he has been making in his own country about India in the past, it was not difficult to anticipate the kind of statements he could make. As good Indian hosts, we gave him that opportunity, he took it, sounded arrogant, made insensitive remarks at first and then pretended to back-track, claiming injured innocence.

Mr Malik was thus able to assert that Abu Jundal, deported from Saudi Arabia as he was wanted by the Indian authorities, was an Indian. Thus implying that the 26/11 Mumbai terror attacks were not an act of the Pakistan state but non-state actors from India, Pakistan and the US. We should have known that Pakistan would continue forever to obfuscate and procrastinate on terrorism and on many other bilateral issues. As always, Mr Malik was evasive on Pakistan’s terror icon, “Mr” Hafiz Saeed, and that group, but promised to send a judicial commission to examine witnesses like Abu Jundal. Upon his return to Pakistan, Mr Malik also claimed that in his discussions with the Indian authorities he had taken up the issue of Indian interference in Balochistan.

Inevitably, our media picked up the controversial statements and while the visitor complained that the media was interested only in TRP ratings, actually he was loving it because, as usual, a visiting Pakistani politician, general or diplomat only says things here to be heard in his constituency or by his mentors back home. In this case it is not an elected constituency that Mr Malik was addressing but the khaki and Islamists, both of whom have to be kept happy.

A statement of assertion is one way of making oneself heard, but it is far better to create a controversy because then heated debate is sure to follow. So every time 26/11 is now mentioned, so will be Abu Jundal the “Indian”. The effectiveness of this ploy is Goebbelsian in a way. Mr Malik played it well and we fell for it. He gave us nothing and took away the triumph that 26/11 was a non-state conspiracy among malcontents from India, Pakistan and the US. With Ajmal Kasab dead, it is now the end of story, bar the shouting.
It was advantage Pakistan when we agreed that both India and Pakistan were victims of terrorism, forgetting that the only common factor was that both Pakistan and India were victims of Pakistani terrorism. This allows Pakistan to club the one-off Samjhauta Express with sustained terrorism from Pakistan. It was advantage Pakistan again when we agreed that terrorism would not affect bilateral talks. This has enabled Pakistan to talk of the alleged Indian involvement in Balochistan, deny that 26/11 was a Pakistan-sponsored attack and yet continue talks with India. More than anything else, the references Mr Malik made to various incidents in India, like the Babri Masjid demolition, reflects a certain mindset that exists in the ruling circles in Pakistan. He was definitely not batting on his own when fielding questions.

Our failure to anticipate the likely stance and behaviour of a government with whom relations have remained difficult is inexplicable. Mr Malik was representing Pakistan’s interests and not Indian interests and, by his book, he did it well, because we let him. Nevertheless, the anger and exasperation in India is justified and the only way to avoid such situations would be to stay away from insensitive neighbours as much as possible.

It may be worth recalling Pakistan foreign minister Shah Mehmood Qureshi’s antics during the visit of external affairs minister S.M. Krishna to Islamabad in July 2010 and the controversial press conference. Or, earlier in February 2010, when the visiting Pakistan foreign secretary dismissed the Indian dossier as being so much literature. In 2001 many of us saw Pervez Musharraf speak to a select gathering of very senior members of the Indian media in what was quite clearly a press conference by subterfuge and a scoop by some standards. It did precious little to improve bilateral relations. Things soured soon after that in Agra. My column of March 24, 2009, in this paper, which was a commentary on what Mr Musharraf said at one of the media events in New Delhi in 2009 was appropriately headlined: “The general spoke here to be heard in Pakistan.” Pakistani politicians have often used India as a platform for anti-India statements to score points at home. Our fetish for correct behaviour as gracious hosts and polite guests leads us into these awkward situations at home and abroad.

Unless, as the Pakistanis will tell you, this is a typical devilishly clever Indian ploy to make Pakistan look the spoiler, but actually the Indians wanted to create this situation by using the media. You cannot win either way.

Source : Asian Age , 20th December 2012 , The writer is a former head of the Research and Analysis Wing, India’s external intelligence agency

It's the politics, stupid

We had record sales, we had record savings, we had record reinvestment back into our capital....” This is what Scott Lee, President and CEO of Walmart, flamboyantly told his audience of its employees or (associates), shareholders and stakeholders in a packed hall some years ago. Lee spoke about profit, and still more profit. The speech was a throwback to the classical principles of capitalism of maximising profits that Adam Smith enunciated in the eighteenth century. This is from a 2005 Robert Greenwell documentary and evocatively called “The High Cost of Low Prices.” This should be mandatory viewing by the rulers and ruled. The documentary highlights the poor wage and working conditions in the anti-union Walmart outlets. It is also about how FDI in China and Bangladesh has functioned which may be a truer indicator of what can happen in India.

A recent study in the US by the Manhattan Borough found that between 30 and 41 small retailers would be knocked out in the neighbourhood of a Walmart were it to open there. 60 others would similarly suffer the following year. This study is based on an earlier Chicago study in 2009 which had found that 25 per cent shops within a one-mile radius closed after a Walmart store opened in West Chicago. 40 per cent closed the following year. In addition, as the Robert Greenwell documentary found out, owners of small businesses in the smaller towns had to shut down and seek employment in Walmart at much lower remunerations. Today, discussion about FDI in retail has become a discussion about Walmart practices but there are other players also.

The recent debate in our parliament was an exhibition of caste politics, power and opportunism. It was not about a government of the people acting for the people and by the people but a government for some of the people by the few. Handouts promised just ahead of the vote ensured dramatised walk outs or votes in favour. Politicians were thus able to claim their continued opposition to FDI but also helped the government win the vote with their walk out. We must be naive if we accept this logic and it must be insulting if it assumed that we do not see through this charade.

We need increased FDI as our economy slows down. No one denies that. A measure of the success of our economic reforms is the amount of FDI that is flowing in. But we really need more FDI in infrastructure, technology, energy and power production and distribution, education, health, transport and communications and defence. We need assistance to give a boost to our declining capabilities in manufacturing activity, and we need investments in our agriculture sector where 70 per cent of our people live, mostly in abject poverty. FDI in multi brand retail is certainly not a priority for India.
Besides, FDI is not about just removing the middleman or about preserving 65 per cent of our perishable products in refrigerators and minimising wastage. If 70 per cent of the goods to be sold are allowed to be imported then in the case of Walmart, this would be imported from China who would then happily use the distribution system of Walmart in India, keep its factories running, while our neighbourhood kirana stores will shut down but what is more, small factories in India will close.
While we go headlong into FDI in retail, it is worth remembering that China opened 49 per cent of its retail to FDI in 2002, 24 years after the economic reforms kicked in and after its retail firms had grown sufficiently. In the US, Walmart draws maybe 90 per cent of its products from China. In China, it draws 95 per cent indigenously and supplied by about 15,000 suppliers. This is in complete contrast to what we are planning. Maybe, if there were regulations that such retailers who import products from outside would need to export a similar percentage and that the retailers would also bring in FDI for their capital investment, then there could be a way out.

Neither profits nor FDI are an unmitigated evil; only the excess of either can be devastating because everything has a price. A great deal depends on the sourcing of the products to be sold, the shop floor tactics of the management and the relationships the investor works out with his suppliers. In our country, the economic and social merits or otherwise of FDI in multi brand retail have been lost to electoral compulsions and political considerations.

Source : Mid Day , Mumbai , 13th December 2012, The writer is a former chief of Research and Analysis Wing (RAW)