Nollywood – New Kid on The Global Filmi Block

Ulzee, a Nollywood pioneer maker of big Nollywood hit “Osuofia in London,” | Image source & courtesy - techcrunch.com

A Story From Nigeria

In 2003, an unknown Nigerian Azuka Odunukwe, landed in London, with a ‘venture’ in his mind.

His investment in the ‘venture’ was less than US$10,000. In this venture, with him, was his lawyer wife. Over the next few months, this ‘venture’ succeeded – and with his ‘partners’, he netted more than US$500,000.

This was not the usual Nigerian banking scam,  that is now so famous across the world. Popularly known as

Ulzee, a Nollywood pioneer who decided to make movies after getting a science degree. His wife, trained as a lawyer, joined him along the seemingly crazy journey. His biggest hit was “Osuofia in London,” one of the first Nollywood films to get international attention. He shot it on location in London and it cost about $6,500 to make– a jaw-dropping investment for a Nollywood picture back in 2003. But it grossed more than $650,000. (via You Think Hollywood Is Rough? Welcome to the Chaos, Excitement and Danger of Nollywood | TechCrunch).

Together, director Kingsley Ogoro, and ‘marketeer’ Azuka Odunukwe ‘Ulzee’, made the world sit up and take note of Nollywood.

‘Miracle’ in Nigeria

Nigerian film-makers (collectively, Nollywood) have done what Germans, French, British, Japanese, even the Chinese, have not been able to do.

Challenge – and leave Hollywood behind.

Without support from the Nigerian Government. Even with State-support, the Chinese have difficulty in sustaining a film industry. Chinese film production, across 4 production centres (Singapore, Hong Kong, Taipei, or mainland China), cannot match Nigerian production. The entire Islamic world produces negligible footage. Based on revenues, a 2007-report, notes that,

Still from the Nollywood movie - Osuofia in London| Image source & courtesy - ImageShack | Click for source image.

The Nigerian film industry is the third largest in the world, after Hollywood and Bollywood. Outside its native continent, Nollywood remains relatively unknown. Yet millions of African fans can’t get enough of its movies.

Unlike their international counterparts, the films coming out of Nollywood aren’t intended for the big screen. Nigerian filmmakers use a mix of quick-and-dirty digital technology, shooting their movies entirely on digital video, editing them on home computers and delivering them to the market on VHS, DVD and video compact discs, or VCDs.

Since its inception in the 1990s, the burgeoning Nigerian movie scene has bloomed into a $286 million business annually, despite the fact that films have minimal budgets (ranging from $10,000 to $25,000) and sell for just a few dollars apiece. What this industry does have is volume, with some 300 directors churning out an average of 2400 films annually. (via Nigerian Film Industry Mixes Digital Tech, Homegrown Scripts).

For media,

It is hard to avoid Nigerian films in Africa. Public buses show them, as do many restaurants and hotels. Nollywood churns out about 50 full-length features a week, making it the world’s second most prolific film industry after India’s Bollywood. The Nigerian business capital, Lagos, is said by locals to have produced more films than there are stars in the sky. The streets are flooded with camera crews shooting on location. Only the government employs more people.

Nigerian films are as popular abroad as they are at home. Ivorian rebels in the bush stop fighting when a shipment of DVDs arrives from Lagos. Zambian mothers say their children talk with accents learnt from Nigerian television. When the president of Sierra Leone asked Genevieve Nnaji, a Lagosian screen goddess, to join him on the campaign trail he attracted record crowds at rallies. Millions of Africans watch Nigerian films every day, many more than see American fare. (via Nollywood: Lights, camera, Africa | The Economist).

All this, in less than 20 years.

Nigerian film posters seen at Idumota market in Lagos, Nigeria. | Image source & courtesy - cbc.ca | Click for larger image.

The secret ‘chutni’

Some in Western media, quick to deny credit, think that Nollywood’s success is probably linked to that ‘most of the movies are in English, allowing for the widest possible crossover appeal.’ But English language, may not be the biggest reason for Nollywood’s success. As the UN report confirms,

The survey also revealed that about 56 per cent of Nollywood films are made in local languages, while English remains a prominent language, accounting for 44 per cent, which may contribute to Nigeria’s success in exporting its films. (via Nigeria surpasses Hollywood as world’s second largest film producer – UN).

However, actors in Igbo and English Nollywood films do seem to be paid more than the Yoruba language films.

For most, especially in the Yoruba movie sector, the wages are lower. Their names are considerably bigger than their bank statements.

There are Yoruba movie actors with more than 50 lead roles who remain anything but wealthy. Yemi Solade, a big name in the sector, once told this magazine that many of his colleagues may die in poverty. “The industry is not organised and there are few professionals. Everybody wants to produce, direct, and at the same time, act. As a result of this, they do what I call man-know-man, a system whereby when I work for you, you won’t pay me and vice versa. It is absolute rubbish and the industry and individuals will never grow with that. Also, I detest the idea that everybody must produce films. It is only in the Yoruba sector that you will see a generator man claiming to be a producer because he managed to get some coins from a marketer in Idumota,” he said.

According to Solade, an actor, who co-starred with Yinka Quadri in the award-winning film 150 Million, got only N15,000 for his role in the two-part flick. (via Nollywood: Sex Glamour And Fake Life | The News Nigeria).

Probably, since English films have larger markets outside Nigeria, the returns are better. Even then, there are large number of films made in Yoruba.

Why?

Nollywood viewers seem to see African stories, told differently.

Shooting past Hollywood without the world noticing, Nollywood has made it to second place with films about family, love and honor, about AIDS, prostitution and oil, and about ghosts and cannibals.

In other words, films about Africa.

Nollywood movies with limited budgets use locations instead. | Image source & courtesy - esquire.com | Read more: http://www.esquire.com/the-side/NOLLYWOOD/nollywood-part-3#ixzz1jqJhGB3y

The ‘Bigness’ of Nollywood

Nollywood is the apparent African iceberg, much of which is hidden out of sight. Post-colonial Africa, emerging from the shadows of its population and cultural destruction, films are the new narrative form.

But Africa’s most populous country Nigeria 18 years ago burst into production with affordable movies now shot with digital cameras that shun the more expensive classical 35mm format.

Nollywood has in recent years galloped ahead of Hollywood to be ranked second in the world in production terms after India’s Bollywood.

Nollywood “has taken over completely” from Hollywood, said Nigeria’s film producer and director Teco Benson, saying it is the latest “superpower” in the movie industry.

“It’s Africa’s new rebranding tool”.

One reason for Nollywood’s popularity lies with South Africa-based pay television MultiChoice. It has four 24-hour channels dedicated to African content, predominantly Nigeria productions. Two of the channels run movies in two of Nigeria’s main languages, Yoruba and Hausa.

But in poor neighbourhoods, shacks with old TV screens placed on dusty alleys or verandas pass for video viewing centres. Bootleg copies sell for a couple of dollars across the continent.

In central Africa, Nollywood movies are the only ones sold by market vendors as “African movies”, with the Nigerian productions dubbed into French in such countries as Cameroon and Gabon.

In Kenya, Nigerian films are also a hit – many of them broadcast on terrestrial networks – but face competition from Bollywood due to a historic large Indian population in the eastern African country.

Nollywood films are also immensely popular in Sierra Leone, to the extent of choking the growth of the country’s own movie industry, said Thomas Jones, a radio play scriptwriter.

“Nollywood has hampered the growth of the local film market because my contemporaries have just resigned themselves to watching these films from Nigeria,” he said.

More affluent South Africa on the other hand has seen a growth in its movie sector since the end of apartheid, and Neill Blomkamp’s science fiction “District 9″ was this year nominated for an Oscar.

In the Democratic Republic of Congo, Nollywood is “very popular on television” after being dubbed into the local Lingala dialect,

even in the tiniest of African countries such as Gambia, “Nollywood is ahead of Hollywood”, said Nigerian businessman Barnabas Eset, who since 2000 has been renting out both Nollywood and Hollywood movies. (via Nigeria’s Nollywood eclipsing Hollywood in Africa – Films – Arts & Entertainment – The Independent).

Nollywood – the birth and growth

If the market was so big, and the need was so great, why were other film makers unable to exploit this opportunity. Behind Nollywood were seemingly random events and coincidences, that triggered this seminal rise.

The Nigerian film industry emerged in the late 1970s, as the nation’s economy collapsed. Public funding of movies and original television programming vanished, and crime made cinemas too dangerous to visit. European and American shows soon dominated national television. But, disturbed by the absence of black faces on Nigerian television, the country’s fledgling filmmakers began spinning vibrant tribal plays onto the screen. By the early 1990s, filming on celluloid had become too expensive and production shifted to video.

Unlike African art films, which appear on the global film circuit and are commonly financed by European investors, Nollywood films are backed by African merchants. For instance, a merchant-investor could pay a director $10,000, covering the production costs and procuring the film’s distribution rights. About two weeks later, the merchant-investor gets the film’s master tape, then sends it to one of many mass-dubbing centers in Nigeria. The movie is copied onto a Video Compact Disc, known as a VCD and widely used across the developing world. VCDs cost $1.50 to make and are usually sold to consumers at outdoor markets in Nigeria for $3, or less.

Borrowing the style and structure of American soap operas and Bollywood films, Nigerian movies had gained popularity across sub-Saharan Africa by the mid-1990s, even in French-speaking countries. Soon, Nigerian expatriates were stuffing their suitcases with videotapes and VCDs on trips back to Britain and, eventually, the United States. Some of the films were passed on to relatives. Others, however, wound up in the hands of distributors, who have copied an unknown number of DVDs and sold them to stores or over the Internet. (via Nigeria On-Screen – washingtonpost.com).

The Case of The Missing State

While Australia, Europe, Japan, China subsidize domestic film-making, Nollywood success is without the support of Nigerian State.

Government film subsidies are almost nonexistent in Nigeria, and if there are any subsidies, most people assume that the money never leaves the pockets of those at the top echelons of industry unions.

Using basic filming technology,

The (Nigerian film) industry is in dire need of investment, however; presently, it self-finances through cable deals and street sales of DVDs. Churches often finance films to spread their message and many production companies are happy to take their money, particularly as competition is getting stiffer from countries like Ghana. (via Welcome to Nollywood: Nigeria’s Film Industry Is More Prolific than Hollywood — and Faces Even More Piracy – TIME).

If piracy, funding are Hollywood’s problems, these are bigger problems for Nollywood. State supported academia and critics ignore or pan Nollywood – even as

The brash populism of such Nollywood fare sits in sharp contrast with movies from Francophone Africa. The latter, frequently backed by French funding, often secure critical success, and get an outing at Fespaco, the continent’s premier film festival held every two years in Ouagadougou.

Nollywood films rarely secure Fespaco praise. But nor is this an industry reliant on subsidies: although plagued by piracy, it remains popular, independent and accessible. In a continent with few cinemas, an ever-changing selection of video CDs are sold for a few dollars a pop on street corners. (via Nollywood comes of age – FT.com).

Story-telling is worth big money and Nollywood made the world sit-up and note that

Africa is a gigantic market, with 150 million people living in Nigeria alone. Nigerian films are exported to other African countries, like Ghana, Sierra Leone and South Africa, but also to the United States and England, and to Germany, where they are sold in African shops — in other words, to places where they can capitalize on the nostalgia of a large African Diaspora.

Lagos from the Okada backseat - the Nigerian motorcycle taxi. | Image source & courtesy - esquire.com | Click for larger image.

Let numbers do the talking

More than entertainment, Nollywood has given Africa reasons for satisfaction.

For post-colonial Nigeria particularly ‘next to the oil industry, Nollywood is the second-largest employer in Nigeria.’

It has its own stars and its own red carpets, even its own version of the Oscars: the African Movie Academy Awards. Hundreds of thousands of the home videos it produces are displayed on dealers’ shelves, in the form of VCDs and DVDs, and the films are also broadcast on television channels like Africa Magic. Hollywood films play almost no role at all in this country. (via Nigeria’s Silver Screen: Nollywood’s Film Industry Second only to Bollywood in Scale – SPIEGEL ONLINE – News – International.

By 2009, the UN noted that the Nigerian film industry (Nollywood) was the second largest in the world – based on number of films released.

The three cinema heavyweights were followed by eight countries that produced more than 100 films: Japan (417), China (330), France (203), Germany (174), Spain (150), Italy (116), South Korea (110) and the United Kingdom (104). (via Nigeria surpasses Hollywood as world’s second largest film producer – UN).

Ahead of Hollywood, behind only after Bollywood, as the Indian film industry has become known.

In 2006 Nigeria made 872 films (in video format, with about half of them in English), about 200 less than Bollywood and roughly 400 more than Hollywood.

Nigerian films took off in the early 1990s, helped by the availability of cheap video technology. Already massive in Africa, Nollywood is now gaining a reputation elsewhere. (via Nollywood comes of age – FT.com)

Rather surprising, when the larger Chinese market is having difficulties. Hong Kong, which led Chinese film-making from front is in trouble.

In the mid-90s, the Hong Kong film industry ate itself alive. In 1993, it had produced a record 238 films and its doyen director, John Woo, was about to dive, twin guns aflame, through Hollywood’s doors. Six years later, production had crashed to just 40 films a year and not even the local triad gangs could prevent their own films from being pirated: there were bootlegs VCDs on sale everywhere of Casino, a gangster pic about and financed by the notorious Macau hoodlum, “Broken Tooth” Koi. (via Back in action: the fall and rise of Hong Kong film | Film | guardian.co.uk).

German publication, Der Spiegel wrote of

Nollywood is the massive, pulsating film industry in Nigeria, which the United Nations Educational, Scientific and Cultural Organization (UNESCO) has declared the world’s second-largest film industry, after India’s Bollywood, based on the number of films produced.

Mysterious puzzle

How did Nollywood leave Hollywood behind?

Without the benefit of funding or technology, that Hollywood has? Nollywood has achieved, what ‘advanced’ economies like the British, German, French, have failed at.

Sustain a viable, domestic film industry.

Even the oil-rich Islamic world, equally, has little to show. For instance, the film industry in Iran, Turkey, Egypt has sputtered for decades – without success. Pakistani film industry has been slowly asphyxiated as the ruling elites deny their Indic roots.

As have the Japanese and the Chinese.

The surprising growth of the Nigerian industry, without State support, direction or promotion, seems to be rooted in a deeper cultural streams than the apparent coincidences. Africans want to hear different stories, told differently and Nollywood directors

make films with plotlines that reflect the rapidly changing political and cultural climate, often weaving in aspects of current events. Whether revolving around corruption, prostitution, folkloric legends, HIV/AIDS, cautionary tales, romantic comedies or even epic period pieces about slavery and civil wars, the films present an unfiltered view of African culture, intended for an African audience.

As Peace Anyiam-Fiberesima, founder of the Africa Movie Academy Awards, puts it in This Is Nollywood, “It’s not about quality at the moment.… Africa still has people living on $1 a day, and these are the people that really watch these films.” (via Nigerian Film Industry Mixes Digital Tech, Homegrown Scripts).

Drawing deeply from the well-springs of their civilization, film industries seem to die out, when cut from their inspiration.

And what are Nollywood’s inspiration?

A typical story line went something like this: poor boy meets rich girl; they fall in love; rich girl’s parents strongly disapprove of union; boy and girl fight all obstacles and true love prevails in the end. Other typical story lines included voodoo tales, historical epics, religious conflicts and economic hardship.

The average flick sold over 50,000 copies. Some even sold as many as several hundred thousand, while a few hit a million. And at $1.50 per disc, they were affordable for most Nigerians and generated astounding returns for the producers. (via Hollywood, Meet Nollywood – Forbes).

Adding to this melee is the Christian Church, saving Nigerian souls from getting corrupted

Fire-and-brimstone evangelical preachers set up keyboards and microphones in the middle of the street to save souls, only adding to the chaos.

Bollywood & Nollywood

Thoughly vastly different in form, and substance, there are some who think that Bollywood and Nollywood may have similarities. Some Nollywood viewers from West Indies, now living in America are

struck by the similar good-versus-evil themes often found in the Indian Bollywood film genre she became fond of growing up.

Borrowing the style and structure of American soap operas and Bollywood films, Nigerian movies had gained popularity across sub-Saharan Africa by the mid-1990s, even in French-speaking countries.

Many African intellectuals dismiss the movies for playing up witchcraft, which they argue perpetuates negative Western stereotypes of Africans, said Onookome Okome, an English professor at the University of Alberta and author of the forthcoming book, “Anxiety of the Local: From Traveling Theatre to Popular Video Films in Nigeria.”

Some film experts remain skeptical that the Nigerian movies will penetrate the broader U.S. market. Jonathan Haynes, a Long Island University professor and author of the book, “Nigerian Video Films,” noted the films’ heavy emphasis on the supernatural and said, “Culturally, they’re from someplace else.” (via Nigeria On-Screen – washingtonpost.com).

“That can seem weird to Americans, especially if it’s not being cast as part of some traditional African past,” Haynes said. “It’s an acquired taste.”(via Nigeria On-Screen – washingtonpost.com).

Even Hollywood is an acquired taste, sir. Distaste comes from too much of this acquired taste. Ask me.

Looking for Nollywood roots, outside from ancient African culture, one is stuck by Nigeria’s post-colonial literary success.

Nigeria has perhaps the most distinguished literary tradition in Africa; Chinua Achebe, Wole Soyinka, Ben Okri and Ken Saro-Wiwa are the best-known writers, but it is clear that Nigeria’s home video industry has no pretensions to high art. (via Welcome to Nollywood | Film | guardian.co.uk).

Looking for threads of narratives and the dominant themes, Hollywood, Bollywood and Nollywood occupy different spaces altogether.

If Hollywood’s forte is jaw-dropping spectacle and Bollywood’s is heart-warming musical slush, then Nollywood’s special draw is a genre that might be described as the voodoo horror flick: films that revolve around witchcraft and demonic possession. (via Welcome to Nollywood | Film | guardian.co.uk).

After years of consuming foreign fare, Nigerian film-makers have finely chiselled their theme – away from other global narratives of Hollywood and Bollywood.

Ultimately, it’s the way the films are crafted, rather than their juicy content that gives them universal appeal, says Fry. “The storytelling is so good. Nigerian filmmakers really know how to entertain their audiences. They’ve studied the populist genres from other countries – Bollywood musicals, low-budget horror and Brazilian soap operas, for example – and reworked these to appeal to anyone with a love of drama.”

The process is tried and tested, and the main reason Nollywood is currently in such rude health, but how long can it stay that way? It’s hard to see how an industry that prides itself on producing so much in so little time won’t start to lose its momentum in the coming years. (via Hooray for Nollywood! | Film | guardian.co.uk).

How does Nollywood do so much, in so little time – and so little money.

Necessity – The mother of invention

Film production in Nigeria, is a different story.

The market traders control Nollywood to this day. They make films for home consumption rather than for the cinema—a place few can afford, or reach easily. DVD discs sell for a dollar. Print runs can reach a million. Studios, both in the physical and the corporate sense of the term, are unknown. There are no lots, no sound stages and no trailers for the stars. There are no studios and no film lots. Market traders double as financiers

“Films are made on the run, sometimes literally,” says Emem Isong, one of Nigeria’s few female producers, during a shoot. “Some of the guys are hiding from the police.”

All scenes are shot on location and with a shoestring budget of no more than $100,000. Most of the financiers are based in a vast, chaotic market called Idumota. It is a maze within a labyrinth. Crowds push through narrow, covered alleys. The sound of honking motorbikes is drowned out by blaring television sets showing film trailers. The flickering screens light up dim stalls lined with thousands of DVDs on narrow wooden shelves. (via Nollywood: Lights, camera, Africa | The Economist).

The Alaba market for Nollywood DVDs. | Image source & courtesy - techcrunch.com | Click for larger source image.

The rise and rise of Nollywood

As Nollywood nailed its formula of TV screens, direct retail to the audiences, Africa-themed stories, acceptance and growth has been phenomenal.

Nigeria is home to one of the world’s youngest film industries, but it’s booming. In just 13 years it has gone from nothing to estimated earnings of US$200m (£114m) a year – making it the world’s third biggest film industry after that of America and India. The films are made on the cheap, but they are big box office.

Except that there is no box office, of course. In Nollywood, as it has inevitably been dubbed, movies are shot on video and copied straight on to tapes or DVDs and then sold on from thousands of street stalls and hole-in-the-wall shops, not just in Nigeria but across the continent, as well to the African diaspora via markets in the west.

“They sell a lot of our films in Peckham and in Dalston market [in London],” says Paul Obazele, the veteran producer.

Empty claim? How global is Nollywood.

an entrepreneur named Jason Njoku (whose) parents are Nigerian, but he grew up in the United Kingdom. Entranced with Nollywood a few years ago and bored with London, he moved here, stunning his family and friends. He started Iroko Partners to catalog this vast Nollywood inventory and give it a new global distribution life on the Web. It sounds like a recipe for a city boy to get fleeced, but so far that hasn’t been the case.

Njoku spent weeks trolling the Alaba markets introducing himself to producers and trying to explain to them how a YouTube channel could be an answer for revenues, not simply another channel for the pirates to steal their intellectual property. Once he sold a few of the bigger ones like Ulzee, word spread and more producers piled in. Just four months in to his business, Njoku has bought the online rights to 500 movies from 100 different one-man production houses. Last month his YouTube channel had 1.1 million uniques, 8 million streams, and is on pace to do more than $1 million in revenues this year from YouTube ads. (via You Think Hollywood Is Rough? Welcome to the Chaos, Excitement and Danger of Nollywood | TechCrunch).

What are Nollywood themes? How different are these stories?

So, what did I glean from titles such as Sharon Stone in Abuja, Beyonce: The President’s Daughter, Good Mother and Blood Billionaires 1 and 2? (Most titles have at least one sequel). A lot.

Good girls can lose their way in Lagos, village values trump city truths, corruption is rife, witchcraft is everywhere, and stepmothers are bad news. And every man in Lagos, as one character told his wife, has a mistress. These films were peopled by poor village women, business men in Mercedes and hardy entrepreneurs.

These were tales of love, money and betrayal. Buried within these at times fantastic stories were, I thought as the passengers around me laughed and groaned in recognition, African realities. (via Nollywood comes of age – FT.com).

What do viewers make of these films?

The movies can be read as fantasies; they allow the powerless to feel vicariously powerful. The stories tell of poor men getting rich, of errant husbands who find their penises shrinking, of love rivals who go blind or crazy and end up running naked and shrieking into the streets.

Not all Nollywood movies are about the occult, of course. Nigeria is a country of startling inequality; in Lagos, skinny fishermen in pirogues skim past the skyscrapers of Victoria Island, the palm-studded local equivalent of Manhattan, and slums sprawl under flyovers. But as is true of Bollywood, Nollywood likes to eschew the grit of everyday life for a more upbeat vision.

As well as occult movies, and gangster movies, another popular genre involves straightforwardly aspirational tales. American Dream is typical. it’s the story of a driven advertising executive who falls in love with an American woman and then jeopardises his high-flying career with increasingly desperate attempts to get a visa for America.

Nigeria’s home video industry has no pretensions to high art. What it’s all about is money. Nollywood movies were originally financed by importers of blank video tapes as a way of promoting sales of their product – and commerce remains king.

The heart of the story

Getting to know Nollywood, the usual and

first point of call in Surulere is the home of one of the most prolific and successful Nollywood directors, Lancelot ‘the Governor’ Imasuen, whose unbroken record of blockbusters includes such titles as Last Burial, August Meeting, Games Men Play, Games Women Play, Games Men Play 2, and Games Women Play 2.

‘I recently had the pleasure of shooting a film in Hollywood,’ Imasuen tells me. ‘And I told them, “I want you to know that 75 per cent of your budget and timing is wasted! Sixty days to shoot a film!”‘ He looks shocked, bemused. ‘How many working hours are actually in those 60 days? It’s all razzmatazz. You see endless trucks and trailers parked on their locations. How much of this equipment is actually used in the process of making films? You see, in Nollywood, what we’ve done is to do away with all that excess; what we’ve done is to simplify the process of making films.’

With its potholed roads teeming with industrious street vendors, feral urchins, and extraordinarily brave commuters – perched calmly on the back seats of the motorbike taxis nicknamed, with morbid irony, ‘Okada’ after a now defunct airline – Surulere is the birthplace and headquarters of Nollywood, the Nigerian film industry. A far cry from Beverly Hills, Surulere is home to the Nollywood elite – the top producers, directors, marketers, distributors and some of the stars of an industry that has been blazingly successful where successive administrations, guided by the expert and combined wisdom of the IMF and the World Bank, have failed: not only is it a viable industry, it is the second biggest employer in Nigeria.

Although this is hotly contested, Nollywood saw its inauspicious beginnings in Living in Bondage: a tawdry, ineptly shot, earnestly didactic ‘home video’ that unleashed itself on the world in 1992. Many commentators believe Nollywood was born after the television industry stopped making popular dramas, which were infinitely better than the first several hundred Nollywood films.

Living in Bondage, filmed in Igbo, one of Nigeria’s languages, with English subtitles, had just the right mix of all the ingredients of a great soap opera

My first point of call in Surulere is the home of one of the most prolific and successful Nollywood directors, Lancelot ‘the Governor’ Imasuen, whose unbroken record of blockbusters includes such titles as Last Burial, August Meeting, Games Men Play, Games Women Play, Games Men Play 2, and Games Women Play 2.

‘I recently had the pleasure of shooting a film in Hollywood,’ Imasuen tells me. ‘And I told them, “I want you to know that 75 per cent of your budget and timing is wasted! Sixty days to shoot a film!”‘ He looks shocked, bemused. ‘How many working hours are actually in those 60 days? It’s all razzmatazz. You see endless trucks and trailers parked on their locations. How much of this equipment is actually used in the process of making films? You see, in Nollywood, what we’ve done is to do away with all that excess; what we’ve done is to simplify the process of making films.’

Imasuen, a theatre arts graduate, is shooting from the hip. Behind the braggadocio, though, lurk the aspirations of a filmmaker and a lover of film whose aspirations are embodied in what he had just pooh-poohed. ‘I had an experience in America recently,’ he says. ‘I went to Paramount Studios and was taken on a tour. I almost fainted at the sheer scale of it, the size of the place, the sound stages, the backlots. And I thought, Is this what they’re comparing us to? But we’ll get there, I promise you. We’ll get there.’

In a career spanning 12 years, the 36-year-old director has helmed more than 150 films – an average of one a month. (And there I was thinking Woody Allen was prolific.)

With its potholed roads teeming with industrious street vendors, feral urchins, and extraordinarily brave commuters – perched calmly on the back seats of the motorbike taxis nicknamed, with morbid irony, ‘Okada’ after a now defunct airline – Surulere is the birthplace and headquarters of Nollywood, the Nigerian film industry. A far cry from Beverly Hills, Surulere is home to the Nollywood elite – the top producers, directors, marketers, distributors and some of the stars of an industry that has been blazingly successful where successive administrations, guided by the expert and combined wisdom of the IMF and the World Bank, have failed: not only is it a viable industry, it is the second biggest employer in Nigeria. (via Welcome to Nollywood | Film | guardian.co.uk).

About 30 new titles arrive weekly at Lagos’s giant open-air markets, where canvas banners with gaudy portraits of movie stars flap above the mediaeval hubbub. A new movie costs the equivalent of £1.80 to buy, and only about 27p to rent from a video club.

For the most part, Nigerians are proud of their movie industry and other African nations are envious. “I think there’s a lot of things that converge to make this possible in Nigeria,” says Femi Odugbemi, president of the Independent Television Producers’ Association. “By tradition, we’re a storytelling people. We have more than 230 languages, different cultures, all unique in themselves.”

Nigeria is an African giant – it is the continent’s most populous nation, with 133 million people. But it’s also a country that appears to be constantly on the verge of a breakdown. (via Welcome to Nollywood | Film | The Guardian).

Nollywood has travelled far in its 15 years of existence. Its revenues are estimated to be over $250m a year and its films – all digitally shot – have a captive audience of 600 million Africans and millions more in the diaspora, particularly in the Caribbean and even here in the UK. There are few places in south-east London, the heart of the Nigerian community in Britain, where there isn’t a Nollywood DVD stall. The cable channel BEN shows several of these films every night.

After Hollywood and Bollywood, Nollywood is the world’s third-biggest film-producing industry. It has achieved this impressive feat without subsidy or investment and – fortunately perhaps – without attracting the faintest glimmer of interest from the Nigerian government or any NGO. It has a long way to go to achieve its dream of catching up with Mumbai or Los Angeles, but it is perfectly capable of doing so. The will is there. And at the rate it’s going, soon, so will be the means. (via Welcome to Nollywood | Film | guardian.co.uk).

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Indian fake currency trail gets hotter

A Rs.100 Pakistani Haj Note - for use in Saudi Arabia only. | Image source State Bank of Pakistan - sbp.gov.pk | Click for larger image.

When India counterfeited Pakistani currency

For a few years after Partition, Reserve Bank of India (RBI) was the common authority for India and Pakistan until 30th September 1948.

‘Pakistan (Monetary System and Reserve Bank) Order, 1947′ allowed for Indian Notes to be modified for use in Pakistan and to be placed into circulation from 1st April 1948. The modification to the Indian Notes consists of two inscriptions on the front of the Notes “Government of Pakistan” in English at top, while “Hakumat-e-Pakistan” at bottom of the white area reserved for viewing the watermark were inscribed. The inscribed Notes were in the denomination of 1, 2, 5, 10 and 100 Rupee. It is important to note that these inscriptions are due to modifications to the printing plates and they are not ‘overprints’.

From 1948-1956, Pakistan independently issued different currencies of varying denominations. In 1956, came news from the Pakistani Joint Secretary Cabinet to the Pakistani Cabinet

that according to some reliable source, there was an offically (sic) sponsored organization in Calcutta which were forging Pakistani currency notes on a big scale, that were in circulation in India.

In this connection it was suggested that the new series of Pakistani Bank Notes with a portrait of Mr. Muhammad Ali Jinnah should introduced. In this regard the 100 Rupee Note was issued on 24th December, 1957. It was predominantly green in color, a portrait of Mr. Muhammad Ali Jinnah, watermark of Mr. Jinnah and a security thread on front and the illustration of the Badshahi Mosque on back of the Note were introduced. (via State Bank of Pakistan – Museum & Art Gallery; Pakistani Currency).

Soon afterwards, to print Pakistani currency independently of India, Pakistan contracted with British companies – mainly, Thomas De La Rue & Company.

This name,  De La Rue, rings a bell. A loud bell.

History repeats

Now De La Rue is the same company that supplies currency paper to RBI also for Indian currency notes. Curiously, the specific paper that RBI uniquely specified also landed up in the hands of Pakistani counterfeiters, who have released fake currency worth hundreds of crores.

Cut back to 1956 Pakistan.

Remember that 1956 was also the year when Pakistan became a republic – and the first constitution of Pakistan was adopted. Governor General Sahibzada Sayyid Iskander Ali Mirza (a Shia Muslim from Bengal, direct descendant of Mir Jaffer) became the first President of the Pakistani Republic. Two years later, came Ayub Khan’s coup that started the tradition of Army rule in Pakistan.

To an emerging Pakistan in 1956, after a 9 year struggle to write a constitution, when confronted with news that its economy was threatened by fake currency from its estranged neighbour, India, was confirmation of its worst fears. After the 1949 British devaluation of the pound, the Pakistani rupee (like the Indian rupee), was overvalued. To overcome the hawala and smuggling threats to the Pakistani economy, Pakistan introduced a special currency – the Haj Notes. The counterfeit currency problem (reportedly centered in Kolkatta) added to Pakistani woes.

Some 50 years later, India, an emerging economy, making its mark on the world in the 2000-2010, discovered that Pakistan was counterfeiting Indian currency.

Something fishy here.

A man in Zimbabwe goes shopping. Hyper-inflation has made things difficult for Zimbabwe. | Image source - smh.com.au | Click for source image.

Parallels & Patterns

The common factor between the 1956 Pakistani problem of counterfeit currency – and in India now, is the De La Rue company.

Currency paper technology is not available off-the-shelf – or the kind of paper that any one can buy from the corner stationery shop or the local paper mill. India did not have the paper technology in 1956, and Pakistan does not have the technology today to make counterfeit currency.

There are roughly about 12 companies, mostly European, in the world that dominate the security printing business – and these are monopoly businesses. These companies work closely with their respective parent governments – and clients governments.

Gaddafi’s regime was starved of currency notes, before his downfall. He could not pay his soldiers. Robert Mugabe’s regime has been without a national currency, due to sanctions imposed by the German government on the German company, Giesecke & Devrient. When the German company resisted sanctions against Mugabe, the Anglo-Saxon press, started a smear campaign against the German company. There have been thin reports about Jura JSP, an Austrian company, replacing the German company, which may help Zimbabwe to tide over the currency crisis.

All the while, some British companies are keep a hold over some critical Zimbabwe assets..

The De La Rue scandal

In 2010-2011, RBI which imports 95% of its security paper requirements, did not invite De La Rue for negotiations.

Why? RBI is not saying anything.

RBI in most years was a huge chunk of De La Rue’s business – and in most years, about 25% of De La Rue’s profits.

What is De La Rue saying about loss of RBI business?

Nothing except, that it has sacked its CEO – John Hussey, a De La Rue veteran of 27 years. De La Rue’s French rival, François-Charles Oberthur Fiduciaire, or simply Oberthur Technologies, promptly picked up Hussey as an ‘advisor.’

Shortly after that, De La Rue also confirmed that the British Serious Fraud Office (SFO) had been called in – and two other senior executives, Mark Jeffery (Director – Manufacturing) and Jonathan Garside (Director –Sales), also resigned.

So, what happened?

The paper that RBI specified is not the paper that De La Rue supplied. De La Rue wrongly self-certified this inappropriate quality paper, to be as per RBI specs.

Coming to brass-tacks

The British press, hinted much and said little. De la Rue, RBI’s biggest supplier of many decades, was shut out from recent tenders. And later denied security clearance, also. So much for the story and intrigue.

All this still does not answer an important question.

This was not an accident – or an aberration? 1956 in Pakistan; and in 2006, in India. John Hussey, the previous CEO of De La Rue, instead of hiding his face in disgrace, has joined  French company as a valuable ‘advisor.’

Obviously De La Rue is protected.

Who is protecting De La Rue?

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2ndlook blogs have written extensively and covered this subject in the past. For more click at previous posts below

• Terrorists And Counterfeit Indian Currency

• Fake Indian Currency Note – The root of it all

• India to take up fake currency note issue at global fora

Related articles

• NIA busts major counterfeit currency racket with Pak links (thehindu.com)
• Dealing With Pakistan (quicktake.wordpress.com)
• Single biggest fake IC haul in country (thehimalayantimes.com)
• Pakistan’s PM throws down gauntlet to military (smh.com.au)
• Examples of Currency Breakup (jrvarma.wordpress.com)

Getting the China story right

Once, China could do no wrong. Now, China is going bust. Modern China has become a set of caricatures in mass media and public imagination.

Does China have an alternative to the US consumer? | Cartoonist - Joe Heller, from Green Bay Press-Gazette on 12/1/2011 12:00:00 AM; source & courtesy - caglecartoons.com | Click for a larger source image.

Caricatures all

Indian government and media has long promoted the image of an aggressive, expansionist China – which is strictly not based on facts. Piecing together the Chinese jigsaw becomes a time-consuming and intricate exercise in history and politics.

While global media was busy with the Euro-currency crisis, some interesting data from China government has received little attention.

Especially, in India – China biggest and near neighbour.

Velvet fist inside an iron glove

Belief that the Chinese Communist Party has an iron grip over China, ruling over a cowering populace is misplaced. China’s occupation of Tibet keeps Tibetans on the boil. Xinjiang erupts periodically. Capital Beijing went through a Tiananmen bloodletting a little over two decades ago in 1989.

Not surprisingly,

This year, the (Chinese) government plans to spend 624.4 billion yuan on public security, a 13.8 percent increase from 2010, and 601.2 billion yuan on defense, a 12.7 percent increase, according to the Finance Ministry. The announcement comes days after hundreds of police deployed in cities across the country following an online call for rallies inspired by uprisings in the Middle East.

Like national defense, China spends less on its police than the U.S. Federal, state and local governments spent a combined $213.7 billion on police, prisons and the judicial system in 2005, the last year figures are available, according to the Bureau of Justice Statistics of the Department of Justice.

U.S. spending on the justice system in 2005 was 1.7 percent of that year’s gross domestic product. China’s announced 2010 spending on public safety was 1.4 percent of 2010 GDP. (via China’s Spending on Internal Policing Outstrips Defense Budget – Businessweek).

Reuters confirms these figures and the source.

* To spend $95 bln on public security, $92 bln on military

* Security spend includes police, jails, state security

China’s spending on police and domestic surveillance will hit new heights this year, with “public security” outlays unveiled on Saturday outstripping the defence budget for the first time as Beijing cracks down on protest calls.

The 13.8 percent jump in China’s planned budget for police, state security, armed civil militia, courts and jails was unveiled at the start of the annual parliamentary session, and brought planned spending on law and order items to 624.4 billion yuan ($95.0 billion).

By contrast, China’s People’s Liberation Army budget is set to rise 12.7 percent to 601.1 billion yuan ($91.5 billion).

“This would be the first time that the openly announced domestic security budget has surpassed military spending”, said Xie Yue, a political scientist at Tongji University in Shanghai.

He called the figure a gauge of China’s spending on what officials call “stability protection.”

“This shows the rising costs of maintaining internal control,” said Xie, who studies China’s domestic security policies and spending. “This system is very sensitive to any instability or contention.” Many foreign experts believe China’s real military budget is much bigger. Xie, the Shanghai professor, said spending on “stability maintenance” was also far higher than official data. (via UPDATE 2-China internal security spending jumps past army budget | Reuters).

If China was indeed so much in command over its provinces, why do they have such a large ‘internal security’ budget.

If China was indeed so much in command over its provinces, why do they have such a large 'internal security' budget. | Cartoonist - Riber Hansson, Sweden - 2/18/2010 12:00:00 AM; source and courtesy - caglecartoons.com | Click for larger source image.

Submissive Chinese?

The expenditure on policing and imprisonment is in itself proof of a disturbed populace.

Chinese population is not a cowering lot – and Chinese reports suggest that, indeed there is a significant protests volume.

The surge in public security spending comes as so-called mass incidents, everything from strikes to riots and demonstrations, are on the rise. There were at least 180,000 such incidents in 2010, twice as many as in 2006, Sun Liping, a professor of sociology at Beijing’s Tsinghua University, said in a Feb. 25 article in the Economic Observer. (via China’s Spending on Internal Policing Outstrips Defense Budget – Businessweek).

Widely cited, sometimes quoted wrongly (probably based on a typo), this figure gives a window into Chinese administration and its acceptance. However, this figure of 180,000 mass incidents while a Chinese figure, may not give the complete picture.

Readers of the international press could be forgiven for thinking that China is a cauldron of social unrest on the brink of boiling over. Reports of riots or protests invariably cite the growing number of official “mass incidents” to emphasise the point.

But the accuracy of these numbers – which refer to anything from small, peaceful protests to the murderous ethnic riots that engulfed Xinjiang in 2009 – is questionable at best. Moreover, there is no evidence that social unrest poses an imminent threat to the Communist party’s grip on power.

Foreign reports typically cite a figure of 80,000-100,000 “mass incidents” in China per year. Yet the definition of a mass incident is so broad and the official reporting so inconsistent that these numbers have little clear meaning.

In practice, there is no agreement on the definition of a “mass incident”. Police generally use a wider definition which enables them to document how effective their enforcement is; government officials tend to use a narrower definition to minimise the apparent scale of the problem.

National statistics published by the Ministry of Public Security (MPS) show slow growth in mass incidents from 1993 to 1997 followed by a period of much faster growth through 2004. MPS only considered these data points “estimates” – numbers were rounded to the nearest hundred or thousand – and stopped publishing the data in 2005.

Journalists often cite a figure of 87,000 for 2005, which was published on the MPS website in early 2006. But this number refers to an even broader category of “public order disturbances”, that cover anything from riots and protests to participation in cults or organised crime, hacking, orgies, gambling, even insulting the national flag.

In early 2007, Liu Jingguo, the vice-minister of public security, told a press conference that mass incidents fell 16.5 per cent year on year in 2006. But there were no further statements on mass incident numbers until after the Olympics in August 2008.

After the Olympics passed and the media spotlight dimmed, the number of mass incidents mysteriously rose once again. Estimates by the China Academy of Social Sciences give a figure of “over 90,000” mass incidents in 2006 and further unspecified increases in 2007 and 2008.

Most analysts agree that anecdotal evidence, such as a steady rise in the number of petitions submitted to the central government protesting about local government misbehaviour, supports this trend.

The central government is adapting to the challenge, to some extent. Since most complaints are against local officials or businesses, the central government argues that the chief problem is petty corruption stemming from bad eggs at the local level rather than systemic flaws that would undermine the legitimacy of the regime.

Indeed, the sharp rise in petitions to Beijing about local abuses testifies to a widespread belief that the central government is more a potential solution to the problem, not its ultimate source.

But this belief may be changing. Anecdotal evidence over the last five years suggests a rise in “anger-venting” mass incidents – large scale, often violent, riots that erupt from seemingly minor incidents and reflect general discontent rather than specific rights violations. (via The accuracy of China’s ‘mass incidents’ – FT.com).

So, what makes the Chinese see red?

USA allowed Europe, Japan, Asian Tigers - and now China to use currency depreciation tool to export and grow their economies. | Cartoonist - Paresh Nath, from The Khaleej Times, UAE on 3/26/2010 12:00:00 AM; source & courtesy - caglecartoons.com | Click for larger source image.

Land grab by the State

A big reason for these protests – land grabbing by the State.

Most recently, was a ‘mass-incident’ at Wukan, Guangdong, that started after the death of a protestor and the arrest of three in September.

Land grabs and local corruption are serious challenges for China’s leaders, but Wukan demonstrates well why they are unlikely to prompt a revolution: the government is often ready to give protesters what they want. The villains in such stories are almost always local officials – low-level functionaries who have long since been passed over promotion and learned to spend their time selling favors to provide for their retirements. (via What Wukan Really Meant | The Diplomat).

Is Wukan an aberration, or a feature of Chinese administration?

a common scourge plaguing Chinese farmers: the theft of their land by local officials. Although farmers in China have, nominally at least, 30-year leases on their state-owned land, local officials often sell leases, for a huge profit, to commercial developers without bothering to consult the affected farmers. The lion’s share of proceeds from such illegal transactions go into the coffers of local governments and the pockets of corrupt officials, with the farmers, now landless and without income, receiving a pittance.

Estimates by Chinese scholars suggest they account for roughly 60 percent of the so-called “mass incidents” recorded by Chinese authorities. Majority of farmers whose land was stolen have received little help from the government.

In the short term, China is most likely entering another period of high social unrest. Indeed, the most senior party leader in charge of domestic security recently sounded a dark warning about rising social instability. The specific cause he cited was the expected economic slowdown in China, which faces falling export demands, a deteriorating real estate market, and mounting bad loans in the financial system. While it’s true that poor economic performance will dent the legitimacy of the party and rising unemployment will swell the ranks of the disaffected, the causes of social protest in China aren’t cyclical, but structural. In other words, ordinary Chinese citizens revolt against local authorities not because of temporary economic hardships, but because of systemic and pervasive abuse of power and petty despotism perpetrated by the agents of the one-party state.

To see why this is the case, one simply needs to plot the growth of the Chinese economy alongside the increase of reported mass protest incidents. The number of mass protest rises irrespective of China’s growth performance. In fact, the rate of growth in mass protest exceeds the rate of China’s GDP growth. What’s notable about this set of numbers is that, if anything, economic growth fuels social discontent in China. The size of the Chinese economy has more than doubled in the last decade. The number of mass incidents rose roughly four times in the same period.

This observation brings us to another question: why is economic growth making an increasing number of ordinary Chinese people upset? Three answers come to mind.

First, the benefits of economic growth in China aren’t being equitably shared, with the economic and political elites gaining the most. As in the West, inequality in China has risen dramatically in the last twenty years. Today, income disparity in China is approaching Latin American levels. More important, because political connections and corruption are critical to economic success in China’s crony-capitalist autocracy, most ordinary people view wealth amassed by the elites as illegitimate. This creates a social environment in which resentment against the rich and the powerful can readily find expression in protests and riots.

Second, China’s economic growth, impressive in number, is actually low in quality. Expansion of the economy is achieved by undercutting social services (such as healthcare, poverty reduction, and education) and neglecting the environment. Deteriorating social services can stoke discontent among ordinary people, who rely on them much more than the elites. Worse still, environmental degradation, a direct result of Beijing’s blind focus on GDP growth, has now become a major cause of social protest. The Ministry of Environmental Protection admits publicly that mass incidents triggered by environmental pollution have been growing at double-digit each year (although it has withheld the actual numbers).

Third, social protest is an inevitable response by ordinary people to systemic corruption, repression and petty despotism that defines a one-party regime. In such a system, the agents of the regime wield enormous power but are subject to little accountability. Their use of coercion and violence against defenseless citizens is routine and habitual. In the case of the Wukan protest, the spark that ignited the mass incident was the death of a representative sent by the villagers to negotiate with local authorities. He was believed to have been tortured by the police. Because this system produces innocent victims daily, it should at least expect its victims to rise up in self-defense.

It’s therefore clear that mass social protest has become a permanent feature of the Chinese political system. Although such protest, by itself, won’t dethrone the Communist Party, it does weaken the party’s rule in subtle ways. Trying to maintain control over a restive population is forcing the party to expend ever-more resources on domestic security. Letting such routine protest – amplified by the Internet and microblogs – occur makes the party look weak and incompetent. Having tens of millions of disgruntled citizens also means that potential opposition movement can find political allies among China’s down-trodden masses. Worst of all, in a political crisis, these enemies of the regime could all rise in revolt spontaneously.

Perhaps Chinese domestic security officials should be even more worried. Today it’s Wukan. Could Beijing be next? (via Occupy Beijing? | The Diplomat).

Interestingly, the ‘free’ West does not have the kind of data and statistics that the Chinese are releasing about China.

Popular image of China is a set of caricatures drawn by the State and media. | Cartoonist - Nate Beeler, from The Washington Examiner on 12/7/2009 12:00:00 AM; source & courtesy - caglecartoons.com | Click for larger source image.

Story so far

There are many other elements to the Chinese puzzle.

Earlier posts examined the Chinese economy without the support of a cheap yuan that boosted exports for the last nearly twenty years. Will China go the Japan way? The mysterious manner in which the Buddhist monk has disappeared from Chinese movies is an ominous feature. Especially when the Buddhist monk has been replaced by gangsters.

Tibetan protests in the form of self-immolation by priests and nuns have unnerved the Chinese administration. Even in the past, in the 1965 and the 1971 India Pakistan Wars, China had maintained a distant attitude towards Pakistan. Indian Navy in the South China Sea, in alliance with Vietnam, is a significant counter-measure to posturing in the Indian North East by China.

Catching on and catching up on the emerging China picture.

Related articles

• Are China and U.S. to be enemies? (cnn.com)
• Indian traders released after days of detention in Yiwu (thehindu.com)
• China Tells Police to Better Address Citizens’ Complaints (businessweek.com)
• “Rationally handling group incidents” in China (blogs.mcclatchydc.com)
• China Seeks to Boost Consumption Amid Global Slowdown, Chen Says (businessweek.com)
• Chinese News Agency Warns Against US Moves – New York Times (nytimes.com)
• ANALYSIS | Will America take the knife to military spending? (cbc.ca)
• Chinese Currency Reaches All-Time High (huffingtonpost.com)

Euro-bank Crisis. Is it over?

Will the rescue effort by the European Central Bank (ECB), the Longer-Term Refinancing Operation (LTRO) help?

Euro-zone countries, coming under a debt cloud, fall like nine pins. | Cartoonist - Bruce Beattie; on 24th Nov. 2010; source & courtesy - cagle.com| Click for larger source image.

Two years after

After The Great Recession hit the US economy with gale force, it was the turn of the Euro-Zone areas to face the brunt of this recessionary typhoon. Starting with Iceland and Ireland, it soon spread to Greece, Spain, Portugal, and ominously, Italy.

With European banks highly exposed to debt issued by distressed European Governments, it seemed that the European banks could go under. Needing about a trillion dollars, EU spent much time wrangling about the rescue plan – the who-and-how of the bailouts. Decisive Christmas actions by the European Central Bank (ECB), patterned on the lines of the US TARP and QE actions, the Longer-Term Refinancing Operation (LTRO)  …

created a buzz.

But questions remain

Will LTRO stabilize the European banking, even if it will not generate growth? Will it blow away the clouds hanging over the EU banking industry?

The first major development occurred on December 8. The European Central Bank (ECB) declared that it will offer unlimited liquidity to European banks for 36 months. To access that liquidity, the banks need to post appropriate collateral. The “appropriate collateral” by my reckoning includes the sovereign debt of Italy and Spain. This is important, because the large European banks — especially in France — are having very serious and possibly existential problems with their liquidity. Fears of potential default are making it unusually difficult for them to access overnight and other short-term lines of credit to finance their balance sheets. That constrains their abilities to provide credit to clients and meet their commitments.

Without the ECB’s new policy, euro-zone businesses face the prospect of grinding to a halt. Inventories are difficult to finance. Payrolls might not be met. Taxes might not be paid. Now, with unlimited liquidity available from the Central Bank, that credit crunch should be history. We saw the same relief from a very similar U.S. credit crisis in 2008 when the Federal Reserve Bank agreed to accept many kinds of collateral from its member banks for unlimited funding. The fact that the largest U.S. banks are still standing demonstrates that this policy can be effective.

Today, we had our first look at the results of that policy as this ECB financing operation was launched. It opened its window and loaned $641 million (errata: an alert 2ndlook reader points out that the correct figure is US$641 billions – and not millions) for three years at 1% annually to 523 European banks . The size of the refinancing was greater than expected. It is noteworthy that the program went smoothly. It demonstrated to the global financial community that the European banks not only have access to liquidity at very favorable interest rates — far better than the rates available on the private markets.

The second major development occurred on December 5. After months of being the “bad guys” to the rest of Europe on the issue of who should share the pain of the sovereign debt debacle, Angela Merkel, German Chancellor, agreed to align with the majority of the euro zone. Germany no longer insists that private sector investors bear the losses on their balance sheets as sovereign debt is written down. Instead, it appears that the governments will likely now shoulder the cost of buying bonds or doing what it takes to manage the problem.

Exactly how and when the sovereign debt issues will be resolved is still unclear. But at least a major impediment has been removed.

With these two major developments, I would expect the capital markets to breathe a sigh of relief. The liquidity and solvency issues surrounding the European financial system are finally seriously being addressed. Of course, the devil will be in the details. (via Is the euro-crisis over? – MarketWatch).

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Related articles

• Bini Smaghi Says ECB Should Use QE If Deflation Risk Arises (businessweek.com)
• ECB Lends Banks $645B for Three Years, Exceeding Forecast – Bloomberg (bloomberg.com)
• Gold Is Money (lewrockwell.com)
• EU ministers look to boost IMF’s arsenal (theglobeandmail.com)
• Demand for E.C.B. Loans Surpasses Expectations (nytimes.com)
• ECB Official Hints At More Help If Economy Worsens (huffingtonpost.com)
• $641 billion to European banks from ECB – Santanomics (2ndlook.wordpress.com)
• ECB loans highlight funding pressure on eurozone banks (guardian.co.uk)
• Banks Stash Money With European Central Bank (foxnews.com)
• How a Huge Infusion of Cheap Money will Help European Banks But Not Europeans (globalspin.blogs.time.com)
• European Central Bank pumps $639B cash into banking system (usatoday.com)
• David Miles: Europe’s Dance of Death (huffingtonpost.com)
• Yes, the Market is Getting What it Wants. The ECB is Easing. (blogs.wsj.com)
• The Thinly-Veiled Fed Bailout Of Europe (businessinsider.com)

$641 billion to European banks from ECB – Santanomics

European Central Bank (ECB) keeping the festive spirit alive, announces a $641 billion effort to keep Euro-banks standing.

The State saves the banks, so that the banks can save us. This 'logic' now suffers from a problem of credibility. It is looking like the Big Guys look after their own. As for the Rest of Us ... | Cartoonist - Joel Petit; source & courtesy - about.com/d/politicalhumor | Click for larger image.

It is Christmas season

And it is every Christian’s right, to expect freebies and goodies from Santa Claus.

This year

Since appearances must be kept, the European Central Bank (ECB)  decided to become Santa Claus this year.

The ECB decided to match the US$700 billion bailout package (TARP).

The European Central Bank on Wednesday attempted to send a strong signal to financial markets by offering to loan $641 billion to 523 euro-area banks in a massive three-year funding operation.

The bank-funding move by the region’s central bank, known as a longer-term refinancing operation, or LTRO, is open to lenders across the euro zone. The figure came in well above a Reuters forecast for $408 billion. The loans run for three years.

The loans expand the central bank’s balance sheet by 20%, according to Louise Cooper, analyst at BCG Partners.

A breakdown of which financial institutions were among the bidders for the funding was not immediately available.

A representative from the European Central Bank‘s press office said that the central bank would not be releasing the names of the banks that applied for loans. Nor would it provide a breakdown of loans by euro-zone nation.

The LTRO operation was the first three-year funding operation undertaken by the central bank. The funds are borrowed at its average benchmark interest rate, which stands at 1%.

Ahead of the auction some media reports and analysts suggested that the drive to increase liquidity across the region was part of an effort to encourage banks to purchase government debt. (via ECB lends $641 billion to European banks – MarketWatch).

If the US can come out with a US$700 TARP to save their Big Corporations, Europe can do better. The LTRO is a full US$100 billion bigger than the TARP. Jai Ho! | Cartoonist - RJ Matson; source and courtesy - rjmatson.com | Click for source image.

Bigger than expected, the LTRO has been received with mixed feelings by analysts.

The ECB said 523 banks requested €489 billion ($641 billion) in funding from the central bank in a bid to boost liquidity.

A Reuters consensus had predicted funding requests worth €310 billion.

“The good news is a lot more banks will be well funded throughout the next three years. They need to place the money short term and will be buying bonds in European sovereign countries, obviously,” said Christian Tegllund Blaabjerg, chief Economist at FIH Erhvervsbank.

“But on the flip side of the coin, it also signals a lot more banks than originally thought need capital and that is negative news,” he said. “It sort of implies the banking sector is far worse off than originally expected.” (via ECB funding boost short-lived in Europe – Europe Markets – MarketWatch).

Coming back to the Christmas season.

Some analysts decided to run old number through their computers. What they found is that there is some kind of ‘season’ in the market also – around Christmas.

The stock market, at long last, is about to enter the seasonally favorable period that honestly can use the name “Santa Claus Rally.” It begins at the close this coming Friday, the last trading day before Christmas, and lasts until the end of the year.

It’s not a very long period of favorable seasonality — just one week, after all — but the historical odds are quite impressive.

Consider the performance of the Dow Jones Industrial Average DJIA -0.49% during this period. Since 1896, when this benchmark was created, it has produced an average gain between Christmas and New Years of 1.07%. On an annualized basis, that works out to a gain of more than 80%.

The market’s performance during this period has been relatively consistent, turning in a gain 78% of the time. That compares to a gain rate of 54% for all other weeks of the year.

What accounts for this seasonal strength? A fascinating research study suggests that it has something to do with Christmas. Click here to read their study. (via Here comes good old Santa Claus – Mark Hulbert – MarketWatch).

In the meantime, let us also remember how gold prices in the first 2 weeks of December 2011 have been soft. And probably it is Arab gold that is being dumped into the markets.

Also remember that more noise works better than censorship.

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Related articles

• ECB loans highlight funding pressure on eurozone banks (guardian.co.uk)
• ECB Update: Not Clear Record LTRO Will Boost Sovereign Bonds (forexlive.com)
• ECB lending: What the analysts say (business.financialpost.com)
• ECB: Concerned About Independence Of Hungarian Central Bank (forexlive.com)
• NY Fed: Foreign Central Banks Borrowed $9.89 Billion in Latest Week (blogs.wsj.com)
• Bini Smaghi Says ECB Should Use QE If Deflation Danger Arises (businessweek.com)
• Treasurys turn up after ECB lends a lot (marketwatch.com)
• Banks Stash Money With European Central Bank (foxnews.com)
• Nervous banks stash billions with ECB (guardian.co.uk)
• Overnight deposits at European Central Bank hit year high in sign of mistrust (thestar.com)

Why are gold prices going down?

The story behind the gut-wrenching US$300 drop in gold prices.

Many ways to skin a cat

In the last 50 years under the guise of ‘modern’ economics, some fundamental truths have been forgotten. Importance of gold in the world monetary system is one of these ‘forgotten’ truths.

This has damped down gold prices – and printing presses have been busy printing money. Especially in the last 40 years – after the Nixon Chop.

24 hour coverage of financial markets has also created an impression that financial cycles play out in a matter of hours and days. So also, the the drop in gold prices of the last two weeks.

Many people have been puzzled over the last few months by gold’s (GC2G -0.19%) behavior. It has tumbled since the start of September from around $1,900 an ounce to below $1,600. This has happened even while a financial crisis has erupted in Europe which, says traditional analysis, should be bullish for gold.

But there are a couple of other factors at play.

First: Gold hasn’t fallen as far as it looks. The gold price is typically quoted in U.S. dollars. Yet in the past four months the dollar has rallied.

At the start of September, when gold touched $1,900 an ounce, the dollar was $1.45 to the euro. Since then the euro has slumped to $1.30.

Net result? Gold, which traded at around 1,300 euros per ounce back then, has declined to 1,200 euros per ounce now.

The second factor: Sentiment.

Four months ago, sentiment was massively bullish on gold. It had just skyrocketed, in the wake of the U.S. debt ceiling debacle. According to data published by the Commodities and Futures Trading Commission, speculators and traders had taken nearly record speculative bets that it would rise further.

This usually precedes a backlash, and so it has been.

Today? Sentiment is pretty bearish. The CFTC says the number of speculative bets on higher gold have collapsed by more than a third. (via Will the Europeans have to sell their gold? – Portfolio Insights by Brett Arends – MarketWatch).

A bump on the road

The first 15 days of December, 2011, has seen weakness in gold prices – falling from roughly US$1900 to US$1600. The biggest drop, after ‘gold dropped 25 percent in the fall of 2008 — from over $1,000 an ounce to about $750′. Broad parameters of the situation were similar then – as now.

In 2008, the US economy was tanking, and gold was at psychological barrier of US$1000. This time around gold is at US$2000 psychological mark. And it is feared that the Euro-zone may collapse.

“The worst case scenario (a euro zone break-up) was pretty much ridiculous a year ago but it is now becoming more and more possible, to say the least,” Juan Valencia, credit analyst at Societe Generale, said.

This time around

So, what are the specifics now.

First are the European banks. It is reported

banks face about 320 billion euros in senior and government guaranteed debt redemptions next year. By comparison, they had issued just 12 billion euros of debt in the past six months.

With no solution to the euro zone debt crisis in sight, interbank market players say they are reducing credit lines to an ever increasing number of banks.

“It is utter madness … When we see big names paying 300 basis points over overnight rates for dollars you know something is wrong,” said the head of money markets at a bank in London, who asked not to be named.

“Credit lines have already been reduced, we are seeing the big names paying through the nose for cash from corporates as wholesale is pretty much dead. The focus now is for the core banks to raise cash through the retail/corporate space. Central banks may be called upon.”

French banks’ borrowing from the ECB topped 100 billion euros in the maintenance period ending November 8, compared to 87 billion euros the month before. French banks are more exposed than any those of any other euro zone country to Italian, Spanish and Greek debt, with holdings in excess of 600 billion euros, according to Bank for International Settlements data.

Of the contributors to daily Libor rates, French banks BNP Paribas, Credit Agricole and Societe Generale say they pay the most for three-month dollars, around 0.6 percent. But dollar rates have recently been on the rise for other core country banks as well.

In such an environment liquidity is at a premium. Some investors are even taking money out of banks and paying to keep it in short-term German or Dutch government paper, which is trading with negative yields.

Where has all that yellow stuff gone? Buried under a mound of silence? | Cartoonist - Dave Simonds on 18-6-2011 in guim.co.uk | Click for larger image.

Where is gold coming from

Negative yield brings us to another grey area.

Gold lending at negative rates. Europe has an organized market where gold owners can lend gold to borrowers – at rates varying between 0.5% to 2%. There are ominous whisper-reports.

The partnership between the Federal Reserve and European Central Bank to provide hundreds of billions of relatively low-cost dollars for euro-area banks should have relieved the pressure to come up with greenbacks. Yet gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks. There’s not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks or by gold exchange-traded funds.

There is also a third source of gold that is being lent in the market.  Gold that does not belong to any European Governments or to any ETF.

But obtained from deposed Middle East rulers of Egypt, Tunisia, and Libya.

Cash is king

Regardless of the source of gold, the cash situation at European banks remains a trigger for this gold sell-off.

The need for cash has overwhelmed gold’s traditional status as a safe haven in past few months, putting the metal on course for its first quarterly fall since end-September 2008 when the global credit crunch was at its worst.

“With access to liquidity being constrained, market participants have increasing problems to refinance,” Credit Suisse said in a research note. “As a result they have to sell their assets – including precious metals – to raise the much needed cash. This is the main reason why gold prices fall on days of increasing funding stress.”

This has obviously raised concerns in the Asian markets – the main buyers of gold. This extra supply of gold from European banks has led to a sell-off – led by Asian markets.

In recent weeks the gold price has fallen significantly from around $1900 to $1535 (intraday). Gold is now trading near Q3 target of $1650. The size of the move was far more significant compared to other recent unwinds, like those in May or August. One of the key factors for  long-term bullish view on gold is Asian demand – the majority of end-user demand for gold is from Asia. From an Asian valuation perspective, gold is also relatively cheap.

One way to proxy Asian demand for gold is to look at how gold performs during Asian trade. Over the past few years, gold has generally appreciated during Asian hours, reflecting strong demand for the metal. However, recent weeks have shown weakness in Asian hours. On previous occasions when gold traded poorly, such as in May and August, it remained relatively robust during Asian hours, with any sell-off tending to come in London and New York hours, suggesting that Asian investors were supporting an unwind of Western investors’ long gold positions.

This contrasts with the recent fall, noticeable across multiple time zones. In the very short term, we believe a reversal would need to be led by appreciation in Asia. Although a few data points do not constitute a trend, on Tuesday and Thursday gold rose by 2%, its largest moves higher during Asian hours since October 2008 and perhaps a signal that it could be turning back up.

Gold often trades like a risky asset. This has been evident in recent weeks where we have seen a strong positive correlation between gold and the S&P500, which we use as a proxy for risky assets. The rationale is that heavy losses in risky assets forces investors to unwind other positions to free up cash. As a liquid asset and also with heavily extended net long speculative positioning heading into this episode, gold has suffered.

The price-drop also generated sell-orders based on stop-loss triggers at US$1700. For the time being the stampede has abated. Asian markets were at the forefront of some investment demand.

Gold rebounded in thin trading during the Asian session Friday, paring some of this week’s losses with traders expecting gains to hold in the near-term with some dip buying likely amid a modest bounce in stock markets.  The yellow metal rose more than 1% in the session to a high of $1,589.90 a troy ounce after falling for four consecutive days this week.

A Hong Kong-based trader said there is some investment demand, which is driving up prices. Some speculators have also returned to the market after prices fell sharply this week.  Despite the slight improvement in sentiment, however, investors continued to be wary of the European sovereign debt crisis.

There is hardly any dissonance between various reports – which supports a belief that this may have a momentary technical correction before gold breaks the US$2000 per ounce barrier. In a year, where most asset classes have performed badly and market volatility took away whatever little was left on the table, fund managers may have locked in their profits on gold for the year. Remember, this is also the time of the year, when bonuses get calculated. The long-term fundamentals of the gold remain beyond argument.

Even in the short-term, this maybe a buying-opportunity one may regret having missed.

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And forgive us for our ignorant protests

Markandey Katju is a reall bull in real china-shop - breaking down valuable stuff based on his imagined nightmares. | Artist: Sudhir Tailang, The Asian Age, November 2 2011; courtesy - http://searchingforlaugh.blogspot.com | Click for source image.

Dim wits like us

All those who disagree or doubt with Markandey Katju and his wisdom are backward people with dim understanding of Katju-saheb’s vision.

For instance, Katju-saheb wisely informs us that modern societies are the only ‘scientific’ societies. All traditional or ancient societies were either superstitious, backward – or lucky.

Like India.

One of Mr.Katju’s pearls of wisdom starts with ‘for industrialization, science is necessary’. And India does not have either any science nor industry! But my deficient understanding could not fathom, Shri Katju-saheb, how traditional India became the largest producer of gunpowder ingredients (till 1900), without science or industry?

Must have been luck.

Is there a God Of Luck?

Of course, Indians were plain lucky to build the best ships that British Navy could buy? Katju-saheb reminds us that we must be grateful to God(s) with whose kindness to Indians made cupro-nickel alloys at Mohenjodaro and Lothal – plus cupre-nickel coins later in the Takshashila region. Plus refined Zinc.

Thousands of years before the Western science and industry could. Gods have been kind to us Indians.

In modern times, instead of God, we must be grateful to the British (and the West) for civilizing, enlightening and improving the lot of us backward Indians.

There is an age-old advice, that applies in this case, “If people think you are a fool, don’t open your mouth and prove it.’ We backward Indians instead of learning science, that Mr.Katju-saheb suggests, waste time in protests.

The automotive engineering world is plain silly talking of India’s ‘frugal engineering’.

Why can we not appreciate ‘royal’ children?

Katju-saheb’s ideas of what I must read or write are right for me – and us backward Indians.

It is more important for us backward Indians to know more about Rajiv Nehru-Gandhi children than about Bachchan’s children. Katju-saheb has decided that it is ‘modern’ and ‘scientific’.

Katju-Saheb’s contempt for the those who are not State-schooled or educated is very topical – breath taking. Shri Katju-saheb seems to think that he (or some nominee of the State) has a right to force the media into joining the State in educating Indians – which backward people like Indians is brainwashing.

The State does not want have anyone outside the reach of its ideological regimentation.

In my small little mind

Though I must admit, a difficult question comes into my mind. If India is not a facing the problem of an aging population, that the West and Japan has no solution for, it is because of unschooled and unlettered Indians. India is not a demographic disaster zone, due to the healthy contempt that these unschooled and unlettered Indians have, for such anti-family population control policies of the Indian State.

I wonder what the august Shri Katju-saheb has to say to this thought from my backward mind.

Katju is in the vanguard of this ‘progress’.

But then I am not surprised

Mr.Katju is from the sort that wants ‘respect in world community’. So, Mr.Katju wants to impose all such ideas and policies and ideas on Indians that will get him ‘respect in world community’. Since, when has it become a part of State agenda that India’s policies will be dictated by the objective of ‘respect in world community’.

But can Mr.Katju be wrong about ‘pluralism, tolerance, individual freedom, and free flow of information’.

On pluralism and democracy, maybe Shri-Katju-saheb should talk to Catholics in USA, the world’s oldest Republican democracy – suggested another small Indian mind. Why has there been only one Catholic President in US history – who was assassinated before completing his term? We will not talk of impossible ideas like a woman President of the US.

But surely Muslim women banned from wearing hijab, in France can talk to Shri Katju-saheb about tolerance and democracy. On individual freedom, Katju-Saheb can check out in the citadel of individual freedom and democracy, Europe. All the Roma Gypsies in Europe will surely give a ringing endorsement of individual freedom and democracy in Europe. On ‘free flow of information’ who better to talk than Julian Assange.

I must admit

People like me, who know very little about ‘progress’, ‘development’ are the problem in this country of India – unlike Shri.Katju-saheb.

Backward people like me, cannot appreciate that Shri Katju-saheb has a noble idea of ‘spreading scientific ideas amongst the vast masses and raising their cultural level’ – and therefore wants to control media.

Can any one doubt Mr.Katju?

Is he not a ‘strong votary of liberty and have been misunderstood.’ He is against astrology. After all, who can deny that complex mathematical calculations of 27 nakshatras, 9 planets, sun and moon, multiple constellations are all superstition? How can we equate statistics with science?

I am now convinced

Mr.Katju is not the problem. Anyway, media cannot be the problem. Both Shri Katju-saheb and media are right.

We the backward people of this under-developed country are the problem. Lead us, O Great Shri Katju, the kicking and screaming backward masses to ‘progress’ and ‘development’.

And deliver us from our actors and actresses.

Related articles

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Prince Charles related to Impaler Vlad – Surprised?

How Prince Charles is linked to Indian gunpowder ingredients that reached Roma Gypsies in early 15th century, giving them victory over the armies of royal Europe and the Church.

Where is the home of Count Dracula? Map showing Transylvania, home of Count Dracula. | Image source and courtesy - dailymail.co.uk | Click for larger image.

Central European newspapers yesterday were alight with speculation that the Prince of Wales could be anointed the next King of Romania if the country’s monarchy is restored.

The last royal ruler, King Michael was forced to abdicate by the country’s new Communist leaders.

Romania went on (for) decades of communist government, most notably under dictatorial party leader Nicolae Ceausescu who ruled the country with an iron fist from 1965 until 1989.

The deposed King, Prince Michael, is still alive – albeit rather elderly at 90 – and has family of his own.

Despite the reintroduction of democracy, in recent years there have been increasing calls for the monarchy to be restored. (via Prince Charles could become king… of ROMANIA after revealing he is related to Vlad the Impaler | Mail Online, parts excised for brevity).

But … naturellement

Prince Charles claims descent from Vlad the Impaler (1431–1476); popularly and more famously known as Dracula was intermittently the ruler (between 1456-1462) of Wallachia.

Coming from a dynasty that has spilled the most blood in the history of the world, it is not surprising if Prince Charles is related to Impaler Vlad, the Dracula. Responsible for two world wars, many wars in Europe, genocides in Australia and America, millions of deaths in colonies (like India, Kenya, Malaysia), it is no surprise that House of Windsor (Prince Charles’ family) is related to Vlad the Impaler. Can it be forgotten that a little more than a decade ago, Prince Phillip (father of Prince Charles), contested the number of people dead at the Jallianwala Bagh firing?

After years of academic suppression and Hollywood misdirection, the story of the true Dracula is obscured. So, why did Vlad, the Impaler, give such gruesome deaths, impaling tens of thousands of people? Who were these ‘victims’ and how many such people died?

Impaler Vlad is being rehabilitated as an sworn enemy and ruthless killer of of Islamic Turks. Modern medal featuring Vlad Tepes "The Impaler." Metal plated with 24-karat gold | Image source, courtesy - ancientresource.com | Click for larger image.

Dark Ages – that never went away

For answers, we need to go back a hundred years (1409) before Vlad the Impaler.

After centuries of persecution by the Vatican, people in Eastern Europe, proposed changes in Church and its systems.

The mass-movement for Church reform was led by a University rector, Jan Hus (1369 – 6 July 1415), from Bohemia. Between the King and the Church, Jan Huss was tricked into ‘peace-talks’ with the Church, where he was captured and burnt at the stake (1415).

Large parts of Czechoslovakia, Romania, Eastern Germany rose in revolt against the killing of Jan Hus – till war broke out.

Time for War

Led by a brilliant military commander and diplomat, Jan Zizka.

Zizka was able to ensure an alliance between the two main reform factions – the Calyxtenes and the Taborites. This alliance defeated the combined armies of royal Europe and the Church, in many battles, and waged war for nearly 15 years (Hussite Wars-1419-1434). These battles, collectively known as Hussite Wars cracked open the authority of the Church.

The role of the Taborites in the Hussite Wars was of great importance. Taborites were migratory camp-people, who moved their camps in wagons and roamed Europe. The Taborites turned their wagons into armoured vehicles – and fought behind massed wagons. These Wagonbergs, made of armoured wagons, had one major element that gave them superiority. The Taborites using gunpowder, pounded the Church forces with fire.

Gunpowder it was

Gunpowder was a rare and mostly unknown element in the poor and backward Europe of 15th century.

India was the largest manufactory of gunpowder elements. And a major element of the commercial chain were the Banjaras. In 1656 British traders based at Surat, ‘inquired from Anthony Smith at Ahmedabad about the possibility of getting saltpetre from the Banjaras’. While the governor of Gujarat, Prince Murad Baksh, ‘oppressed the Banjaras so much that they gave up their trade in saltpetre’.

Banjaras are known as Roma Gypsies in Europe. The Roma Gypsies brought gunpowder to battle – and with their wagonbergs, ensured defeat of the combined Church and royal forces of Europe.

It was the the Hussite Wars that started Europe’s lurching movement over 400 years to end Church persecution and limit Church authority. From the death of Jan Hus in 1415 to the end of Napoleonic Wars (at Waterloo, in 1815), who had earlier enforced ‘secularization’of Europe.

Jan Hus being burnt at the stake | Image via Wikipedia

Taborites defeated

The Taborites were finally defeated after they were sold out by their allies, the Calyxtenes.

With Jan Zizka dead (October 11, 1424), the Calyxtenes  stuck a ‘secret’ deal with the Church, and betrayed the Taborites.

The unsuspecting Taborites, were slayed by the thousands in a surprise raid, by the combined forces of the Clayxtenes, royal armies and the ‘soldiers’ of the Church.

Soon after this massacre of the Taborites, the persecution of the Roma Gypsies started in full earnest across Europe.

Laws were passed, legalizing slavery of the Roma Gypsy, capture of Roma Gypsy children (which was allowed in Switzerland till early 1970s).

Vlad’s killing spree

Vlad the Impaler, killed thousands of people, foremost being the Roma Gypsy, who opposed the Church and its appointed rulers. The others that Vlad The Impaler killed were the Turkic captives (partly Roma Gypsies serving in Ottoman armies) of the Ottoman Empire. Europe has expunged this history from their books – and the Roma Gypsy contribution to the building of ‘modern’ Europe.

But is this ‘censorship’ by a State-supported academia, surprising?

Gold … and silver

Bohemia, a small kingdom, (now a part of Czechoslovakia) discovered major silver deposits. The King Of Bohemia, Charles-I, invited Germans from nearby areas to expand trade and commerce. In 1419 King Wenceslas of Bohemia died. Emperor Sigismund, of Germany, a staunch Catholic of the Holy Roman Empire, inherited the Kingdom.

The first major successful revolt against the Church were the Hussite wars – a 100 years before the Martin Luther’s Ninety Five Theses (in 1517). Led by Jan Zizka. A small Czech Army, repeatedly defeated the Catholic Army from Germany. After 20 years of defeats, the Church was forced to negotiate.

The trigger for this war was a University rector.

The Rector Of Prague

At the Charles University of Prague. The rector went by the name of Jan Hus. Pope Alexander V issued orders on 20 December 1409, instructing Archbishop Zajic (also spelt Zbynek, with diacritics), his representative to proceed against reformers – led by John Hus. A supporter of Church Reform, John Hus opposed many practices of the Roman Church.

Hus was persuaded to attend the Council Of Konstanz (Constance) under the protection of the Emperor Sigismund. The Emperor refused to honour his promise of safe conduct and allowed Hus to be tried and then executed as a heretic. In 1415 John Hus was arrested and condemned to death by the members of the Council of Konstanz (Constance).

Bohemia was in uproar. Supporters of Hus made their displeasure plain. The protestors organised themselves , took the Chalice (Calyx) as their symbol and came to be known as Calyxtines.

More than 500,000 died in the following unrest.

Woodcut from the title page of a 1499 pamphlet published by Markus Ayrer in Nuremberg. It depicts Vlad III "the Impaler" (identified as Dracole wyade = Draculea voivode) dining among the impaled corpses of his victims. | Image fi.wikipedia

Jan Zizka

In 1420, a 60 year old man, blind in one eye took charge – and took on the might of the Roman Church and Roman Emperors.

Jan Zizka.

Over the next 12 months, he became completely blind. In the next 15 years, Zizka (and other Czech generals) defeated, many times, the combined armies of Germany, The Roman Church and others. His military strategy was studied for the next 500 years. Thereafter, the myth of military might of the Church was broken forever.

Jan Zizka allied himself with the Taborites (the radical Hussite wing). Zizka made Tábor in Bohemia into an armored and mobile fortress – the Wagenburgs.

Sigismund tasted defeat at Visehrad (now a part of Prague) at the hands of Zizka (July, 1420) and the Taborite troops. Many anti-Hussite crusades were launched unsuccessfully against Zizka. One Catholic stronghold after another, fell. Zizka continued to command in person, though he had become totally blind in 1421.

In 1423 Zizka formed his own Hussite wing, while remaining in close alliance with the Taborites. In 1424, Zizka used his army, to lower tensions between the radical Taborites and the moderate Utraquists, whose stronghold was at Prague. He sent his armies to Prague to force the city to adhere to the anti-Rome /German policy.

A negotiated armistice averted a civil war between the two Hussite factions. The outcome – a united attack on Moravia. The commander – Jan Zizka. On his death bed, Zizka, asked that his skin be used to make a drum that would lead his armies into battle.

Military success

Zizka’s army, made up of untrained soldiers, (peasants and burghers-townspeople) using gunpowder, defeated trained and well-paid armies of Royal Europe and the Church. He did not have the time or resources to train these fighters in armament and tactics of the time. Instead they used weapons like iron-tipped pikes and flails, armored farm wagons, mounted with small, howitzer type cannons.

His armored wagons, led by the Taborites, in offensive movements, broke through the enemy lines, firing as they rolled, cutting superior forces into pieces. For defense, the wagons were arranged into a tight, impregnable barrier surrounding the foot soldiers – the Wagonberg (the wagon fort), as they came to be known. The wagons also served to transport his men – forerunner of modern tank warfare. Zizka’s experience under various commanders was useful. At the battle of Tannenberg (1410), Zizka fought on the Polish side , in which the famed German Teutonic Knights were defeated.

The Gypsy secret weapon

And gunpowder was the secret weapon that the Taborite Gypsy armies of Jan Zizka used, mounted on top of the wagons that cut enemy troops to size?

Gunpowder. And Gypsies?

At the end of the 19th century, this was still known. And an extract from that books goes onto trace the introduction of gunpowder to Europe.

Now, Mons is the capital of Hainault ; and the first people known to have used firearms in England were the Hainaulters. “In 1327 the English employed some Hainaulters, who used cannon for King Edward III against the Scotch.” Do these facts not suggest very strongly that the artillerymen among the Hainaulters were procured from one or other of the ” quartiers des Sarrazins ” of that province ? The connection between Edward III and Hainault was very close, for in the year following the arrival of the gunpowder-using Hainaulters, he married Philippa of Hainault. And, since he imported artillerymen from Hainault, it is quite likely that those “foreign traders,” who came to St. Giles’ Fair. Winchester, during his reign, selling ” brazen vessels of all kinds,” were really from Dinant, near Namur, as has been suggested. These people are cited by Mr. Groome {Gypsy Lore Journal, i. 50), as possible Gypsies ; if one grants that there were Gypsies in Belgium in the fourteenth century. For, of course, both of these suggestions are based upon that assumption. (from Journal of the Gypsy Lore Society by FRANZ VON MIKLOSICH).

But do Gypsies and war ever mix?

They have often been employed in military expeditions, but never as regular soldiers. In the Thirty Years’ War the Swedes had a body of them in the army ;  and the Danes had three companies of them at the siege of Hamburg, in 1686. They were chiefly employed in flying parties, to burn, plunder, or lay waste the enemy’s country. In two Hungarian regiments nearly every eighth man is a Gypsy. (from Journal of the Gypsy Lore Society by FRANZ VON MIKLOSICH).

Post Hussite Wars and the ‘Reformation’, establishing the CRER-principle (cuius regio, eius religio, meaning whose land, his religion) to settle Germany, giving rise to the logic of ‘ubi unus dominus, ibi una sit religio’ (One ruler, one religion). Just in case someone had religious disagreement, the logic was they could well emigrate – (ius emigrandi).

In 1887, Bram Stoker, an Irish writer published his Dracula. The character of Dracula is based on the descendants of Emperor Sigismund and his Order of the Dragon, who waged war against the Hussites – led by Jan Zizka. Infamous for his betrayal of Jan Hus, Emperor Sigismund sparked of the Hussite Wars, in which the Taborites (the Roma Gypsies) used wagons and gun powder for the first time in Europe. He founded a secret sect,  the “Dracul” called the Order of the Dragon.

A very interesting play by Calderon was La vida es sueño (Life is a dream). It tells the story of Segismundo, the Prince Of Poland, who was destined to be a monster. To forestall the prophecy, Segismundo was imprisoned by his father from the time of his birth. John Hunyadi’s son, Matthias Corvinus, the voevod or warlord of Transylvania region actually kept Vlad, The Impaler, another candidate for Dracula imprisoned, dates vary, but seemingly, from 1462-1474. In adulthood, released from prison to test the prediction, Segismundo fulfills the prophecy. As a analyst of Calderon’s work summarizes,

Affirming a “better reality,” Segismundo’s message speaks as well to all of Europe: the “new European man” is the real monster. (from The subject in question By C. Christopher Soufas).

Related articles

• Prince Charles reveals his connection to Vlad the Impaler (ctv.ca)
• Prince Charles Related To Vlad The Impaler? (huffingtonpost.com)
• Prince Charles claims Vlad the Impaler as ancestor (seattletimes.nwsource.com)
• Vlad the Impaler: Prince Charles a descendant of Dracula? (csmonitor.com)
• Vlad the Impaler: How is Prince Charles, Queen Elizabeth related to him? (cbsnews.com)
• Prince Charles claims Vlad the Impaler as ancestor (sfgate.com)
• Vlad the Impaler Related to Prince Charles: Royal Has ‘Stake’ in Transylvania (ibtimes.com)
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No Prisoners! Survivors? None

No prisoners ... No survivors | Extract from 'NATO as the Left Hand of God' By Slavoj Zizek; from an anthology of essays - Law, justice, and power: between reason and will By Sinkwan Cheng. | Pages 25-45

Neither fish … nor fowl

Slávoj Zizek, the writer of this extract above, cannot support the narrow Right-Wing Christian Democrat political constructs. The empty cupboard of Leftist ideology, leaves him with little choice. A status quo-ist like Gandhiji, is unacceptable to Slávoj Zizek. The ‘success’ of the Anglo-Saxon model of governance, has left no survivors or even prisoners.

His dilemma!

Having to choose between two दुरातन्त्रिक duratantrik systems (like socialism or communism), Slávoj Zizek’s is having a difficult time.

And Slávoj Zizek is not alone.

Staring down the barrel

With a global recession staring at the world, unemployment at record levels, gold prices in the stratosphere, there is need to understand where nations – and their country-models are going.

Communism has failed, Capitalism died with end of African slavery – and in a world made of socialist flavours, it may be worthwhile to understand what works – and for how long.

Does empty rage count as a reason to expose nations to unknown rulers and uncertainty? Unknown devils instead of known devils? Does a change in government without modifying governance-model make any difference?

Without a viable ‘reason’ for revolt, what made so many people come out in the open? Occupying Wall Street, in India at Ram Lila Maidan, at Tahrir Square in Egypt. And sometime back, at Tiananmen Square in China.

Global Problems … in a Globalized World

In the post-globalized world, political ideology, lack of leadership, economic crisis are all global problems – respecting no boundaries or territories.

Not just multinationals that have globalized. People living with a globalized form of socialistic governments also face the same globalized problems. Corruption is one of them.

From Wall Street to RamLila Grounds, from Tahrir Square to Athens, people are displaying a lack of faith in political leadership. Mainstream media is speculating if there is a global crisis of leadership. An end to political models. There is a crisis of leadership.

After having invested to much power in the hands of polity, after having moved in a linear direction – with Desert Bloc systems that progressively need more laws, more powers that limit freedom, there is global disaffection with current political and economic models.

What we need is less political power – and more intellectual leaders.

Post-British Raj, India had a difficult choice. Which political system to choose? (Cartoon by RK Laxman; courtesy - timesofindia.com). Click for larger image.

Many Disguises – One Result

It is worth remembering that the concepts of political Right and Left were defined, when European economies struggled with the end of slavery (1830-1860) and serfdom (1830-1910). Faced with a restive labour force, Europe adopted two distinct paths. Left and Right.

In both cases the end results were the same – concentration of wealth, power and land in the hands of the elite. To European citizenry, it finally was a choice between two elites – a Leftist coterie and Rightist cliques. These European concepts never worked well in India, where polity changes followed a different trajectory.

But Indian leaders are trying …

India’s ruling elite and the oligarchs ‘helping’ Indians to ‘integrate’ India with global system. Deliver us bound, gagged and powerless to international cartels. Oil, food, retail, entertainment, banking & currency, technology cartels.

Bankruptcy of ideology – ism, cracy and archy

Modern nation-States based on various ‘isms’ (Capitalism, Communism, Socialism) combine with various ‘archy’ (monarchy, oligarchy) and ‘cracy’ (democracy, plutocracy, bureaucracy) continue to ensure that power and wealth remains in the hands of very few. The Rest of Us have to be happy with illusion of being equal, of having power over leaders, etc.

In the last 250 years, just 4 countries succeeded with Republican democracy without a significant breakdown in their first 50 years. Of the four, Switzerland (pop. 80 lakhs), Israel (pop. 75 lakhs) are tiny countries to generate any valuable data, models, norms or precedents.

That leaves the world with just USA and India.

Democracy oversold

The West scorns the Chinese one party rule.

How does one more, collusive party in the national polity, in a ‘democratic set-up, become the paragon of political virtue. Two-party democratic polity is just a more polished and conniving way of exercising the same authority – in a more invisible manner? Instead of focusing on the behavior of rulers and politicians, democracy diverts our minds to replace one bad ruler with another. It creates a collusive polity where bad rulers conspire with each other, against us.

In India, with more than 70 crore voters, the winning party got less than 13 crore votes and the final difference between the winning party and the second largest party. Approximately 5 crore voters. This leaves people with little or no choice – much like the choice between one-party ‘dictatorship’ and two-party ‘democracy’.

Given a choice of two candidates, selected from some 2,000 collusive politicians, we have been lulled into believing that democracy is greatest thing since sliced bread. Can’t stand either.

Both give me indigestion.

Hoot – and ROFL

In any other day, age and society, the Republican-Democracy model would have been laughed off – and not studied by millions.

The political constructs of the West have hit a wall – and there is no way, but down! Since the West is busy hiding elephants in the room, the need for a different political ideology remains unaddressed. The development of the four Western political systems – i.e. Feudalism, Capitalism, Socialism and Communism, is related to two factors. Property (and loot of property) and slavery – the two elephants in the room of Western history.

Indians needs is start working on a exit route of this quagmire of Desert Bloc polity.

Thin Is In

A system that works on more freedom - not increased governance, as the solution.

India must work on more freedom, less governance model of polity – unlike Desert Bloc systems that need more laws, more powers that limit freedom. This thin governance model has been progressively diluted over the last 800 years of regression from भारत-तंत्र Bharat-tantra.

Instead we are stuck with a bloated State, an over-sized bureaucracy that controls every aspect of our life.

How 'isms' work. A popular cartoon on the internet. | Artist attribution missing at source. | Image source and courtesy - sodahead.com | Click for larger image.

Geometry of a Pyramid

Globally four major companies and government monopolies control a US$400 billion trade in cigarettes. These cigarette monopolies, directly or indirectly controlled by governments, take away US$1 from every US$175 that people earn. China and USA are leaders in this extortion game.

This concentration of power at the top, creates a collusive system, where Big People help each other – and the rest of us are statistics. This pattern has been seen in Communist China and Russia, Socialist countries everywhere (everyone is a socialist now) – and in Capitalist England and America earlier. Small business failures is statistics – but big business failure is in ‘national interest’.

Way out of this? Onward to भारत-तंत्र Bharat-tantra.

Crime and corruption

On one side, these States speak of freedom, liberty, human rights.

The reality is increasing prison populations and an expanding police State. With 2 crore (20 million) drug users in the USA, prisons overflowing with more than 70 lakh (7 million) people in prison, on parole or under prosecution, the American policy establishment is stuck for answers. If bullets or swords could solve problems, Saudi Arabia would have been free of crime. And China free of corruption.

Both these miracles have not happened.

The answer is less – and even less, power to the Government.

In India

We have these ‘thought-leaders’ who are saying that killing and shooting is the answer.

Any example where it is working?

Anna Hazare leads with an agenda that is thin – very thin. Clueless on why Indians expect corruption free governance, or how India’s traditional rulers using भारत-तंत्र Bharat-tantra delivered corruption-free regimes, these movements are trying failed Western solutions on a successful India. Has thirty years of killings in record numbers solved China corruption problem?

The industrialization model will fail the moment when 'clean-up' and recycling costs are imposed. 'Polluter cleans' principle must to apply | Cartoon by David Horsey; courtesy - indianinthemachine.wordpress.com. | Click for larger image.

Does Propaganda Work

Western propaganda has made us aware of atrocities, genocides, massacres in Islamic and Marxist regimes.

Strangely, writers like Arun Shourie have no objections to non-communist and non-Islamic atrocities, genocides, massacres – in India and the world. For instance, Shourie, in his book, Eminent Historians talks of 1400 years of Islamic atrocities, genocides, massacres, (page 222). But, not a word of Christian atrocities, genocides, massacres.

Is it ignorance – or just plain infatuation with the West, Arunbhai?

Arun Shourie effectively brings out how Indian-Leftist political parties looked towards Soviet Russia and China now, for direction, inspiration – and even instructions (Chapter 9). How different is that from Shourie’s own loyalty to ‘capitalist-Western’ ideology. His rose-tinted view of capitalist ideologues makes his thesis brittle (Chapter 18).

Indian Think Tanks, based on working out solutions based Desert Bloc constructs and systems, are proposing such bad ideas – that the only debate seems to be whether they are shallow tanks or empty tanks. The Indic model, has the solution. One Vighneswara, sitting in a small town in Karnataka, wrote a legal text. Later, the Mitakshara, Vighneswara’s treatise became the law of the land of Bharat-ah.

What we need is less political power – and more intellectual leaders.

Emperor’s Clothes

Fundamentally, the country model of the West has failed. The answer to this crisis in leadership is Indic polity – भारत-तंत्र Bharat-tantra.

The answer – from India

India has been a rich country for most of recorded history. Yet, after 1500 years of recorded history, Indian kings have not left behind fortunes, palaces or monuments. Unlike Rome, Greece, Egypt, China, Babylon, Persia – and everywhere else. Now that is clean administration. How did India get clean administration for 1500 years?

भारत-तंत्र Bharat-tantra gives you that. It was भारत-तंत्रwhich made Buddhist priests a force in the entire SE Asia.

But then, that begs a question

Is भारत-तंत्र Bharat-tantra alive? Even in India? Do Indians follow भारत-तंत्र Bharat-tantra? Modern Indian State has acquired Desert-Bloc-Platonic-Confucian authoritarian principles of State as parens patriae. The time for भारत-तंत्र Bharat-tantra draws near. In the last 200 years, भारत-तंत्र Bharat-tantra has gone into regression. But, in this period, the world has also learnt more about the limitations of the Desert Bloc ideology.

People get ready!

Go for भारत-तंत्र Bharat-tantra.

Related articles

• Occupy first. Demands come later | Slavoj Žižek (guardian.co.uk)
• Slavoj Zizek: ‘Now the field is open’ (alwaysquestionauthority.wordpress.com)
• Self-described communist, Slavoj Zizek: “Capitalism is the most productive social order in the history of humanity.” (fauxcapitalist.com)
• Slavoj Žižek: ‘What will replace capitalism?’ (dangerousminds.net)

Pakistan and the Mumbai Attacks: The Untold Story

This is an extract from ProPublica’s post on the 26/11 attacks on Mumbai. Not very new or revealing -but useful, as it a rare case, where most of the information in the public domain is presented as a single narrative.

This extract is about the role of David Headley. It is 2ndlook’s opinion, that David Headley’s role is a window to the smokescreen – and ISI-Pakistani State involvement, if it is, is a small part of a bigger story.

The bigger story is Oil.

Hundreds of miles away in Pakistan, a youthful terrorist chief named Sajid Mir was preparing a different sort of religious mission. With the support of Pakistan’s intelligence service, Mir had spent two years using a Pakistani-American businessman named David Coleman Headley to conduct meticulous reconnaissance on Mumbai, according to investigators and court documents. He had selected iconic targets and the Chabad House, a seemingly obscure choice, but one that ensured that Jews and Americans would be casualties.

His name at the time was Daood Gilani, but he would become known to the world as David Coleman Headley.

Headley, now 50, differed from Sajid Mir’s other protégés. He was older, a ladies’ man, a globe-trotter at ease among American and Pakistani elites. Born in Washington, D.C. to a prominent Pakistani broadcaster and a Philadelphia socialite, he moved to Pakistan as an infant and grew up in a conservative, devout household, attending a top military school.

Returning to the United States at 17 with his mother, he lived in Philadelphia and then New York and slid into a wild lifestyle of heroin dealing and addiction. In 1988, the DEA busted him at the Frankfurt Airport trying to smuggle drugs from Pakistan to the United States. According to court documents he promptly betrayed his accomplices, cooperated with investigators and won a reduced sentence.

After a bust in New York in 1997, Headley became a prized informant of the Drug Enforcement Administration. At the same time, he radicalized after years of a casual attitude toward Islam, according to associates. While spying on drug traffickers in Pakistan and participating in undercover DEA stings in New York, he began raising funds and recruiting for Lashkar. During a visit to his father’s home in Lahore in 2000, he became friends with Saeed, the Lashkar spiritual chief who draws tens of thousands to his rallies, and embraced the group’s ideology.

Headley juggled women as well as allegiances. He entered into an arranged marriage with a Pakistani in 1999 and now has four children with her. But he continued a longtime relationship in New York with a blonde make-up artist whom he married in 2002, according to court documents and interviews.

After the Sept. 11 attacks, U.S. authorities decided Headley’s unique profile would help them respond to a dire need for intelligence from South Asia. Prosecutors and DEA agents went to a federal judge and won an unusual decision ending Headley’s probation three years early, according to court documents and anti-terror officials. Weeks after the December 2001 ruling, Headley headed for Pakistan. U.S. officials say he was still a DEA informant when he began training in the Lashkar camps in early 2002 and may have remained an informant until 2005 or later.

Although the Pakistani instructors in the camps decided Headley was too old and too slow for combat in Kashmir, the charming American hit it off with Sajid Mir, the coordinator of foreign recruits. The two bonded because they both had smooth, aggressive con-man personalities, investigators say. Mir decided to cultivate this man of many worlds as a clandestine operative, according to documents and officials.

Later that year, Sajid Mir’s experience in international operations and his skills as a handler of Western recruits paid off. Lashkar chose him to develop its most ambitious plot to date, a strike on Mumbai, India’s economic and cultural capital. Mir turned to Headley, his prize American recruit.

Headley was eager to put his talents to use. He had studied ideology, weapons, hand-to-hand-combat and survival skills during five extended stints in the Lashkar camps. He had become friendly with Lashkar bosses, some of whom were his neighbors in Lahore. Mir, his friend and protector, lived near the airport and a golf club in that city, according to Headley’s interrogation.

During a trip to New York in August 2005, Headley survived a close call with his wife there. New York police arrested him for assault after he allegedly slapped her in a domestic dispute, according to investigators and an investigative document. The wife reported his activities with Lashkar to a federal terrorism task force, describing in three interviews his radicalization, his training in the Pakistani camps and his claims that he was working as a U.S informant. Nonetheless, the FBI decided Headley did not pose a threat and closed the inquiry. His travels around the world continued, unimpeded.

Soon afterward, Headley met in Pakistan with Mir and other Lashkar bosses. They told him he had been chosen to do reconnaissance for a big job in Mumbai. He went to Philadelphia in November and legally changed his name from Daood Gilani to David Coleman Headley to conceal his Pakistani heritage. He also arranged to use the consulting firm of a Pakistani friend in Chicago, First World Immigration Services, as a cover for his terrorist reconnaissance.

“The change of name, establishment of an immigration office in India …use of an American passport and so on were my ideas,” Headley later told interrogators. “Lashkar appreciated these ideas.”

Headley had learned by now that Lashkar had an almost symbiotic relationship with the ISI, according to his confession.

The spy agency has “control over the most important operatives” of Lashkar, and every chief “is handled by some ISI official,” he told investigators, according to the Indian report. An ISI brigadier general served as handler for Zaki-ur-Rehmane Lakhvi, Lashkar’s military chief, who also “is close to the [Director General] of ISI,” he said. The ISI funded Lashkar and shielded Saeed, the spiritual leader, from interference, Headley said.

Saeed “is very close to ISI,” Headley said. “He is well protected.”

Headley’s confession confirms the assessment of foreign intelligence agencies, according to officials and experts: In exchange for ISI funding and direction, Lashkar has steadfastly avoided attacking the Pakistani state.

Pakistani officials deny such allegations. But U.S. and Indian investigators say Headley was more than a terrorist: He became a Pakistani spy.

“I don’t know of any other cases in which ISI has used and worked with Americans,” said Faddis, the former CIA counter-terror chief. “Having a guy like this would be great for LeT and ISI. The Indians are working off a profile of what they think enemy operatives look like. This guy does not fit that profile. He can walk through the screen without being seen.”

Headley’s relationship with the ISI began in January 2006 after Pakistani authorities briefly detained him for trying to smuggle arms into India. An ISI officer named Major Samir Ali interviewed the American, then referred him to a Major Iqbal, who became his main handler in Lahore, according to Headley’s account.

Major Iqbal, described as a fat, deep-voiced cigarette-smoker in his mid-thirties, brought Headley to a meeting with a man identified as Lieutenant Colonel Shah. The two officers promised Headley financial support for terrorist operations against India, according to the interrogation report.

At subsequent meetings in safe houses, Major Iqbal gave Headley secret documents on India. He assigned a noncommissioned officer to give the American standard intelligence training. Headley learned techniques for detecting surveillance, developing sources and other skills, then practiced with the lower-ranking officer on the streets of Lahore. The specialized training lasted several months and continued intermittently as Major Iqbal taught Headley how to use cameras and other devices for missions, the report says.

“I became close to Major Iqbal,” Headley said. “The training given by this NCO under the guidance of Major Iqbal was much more scientific and effective than the trainings I did in the LeT camps.”

Phone and e-mail evidence have corroborated Headley’s contact with Major Iqbal and other suspected ISI officers, U.S. and Indian officials say. Major Iqbal has been detected directing intelligence and terror operations in other cases, officials say.

Because Lashkar keeps the spy agency informed about its foreign militants, Headley’s arrest near the Pakistani border may have been part of a plan to recruit a promising American operative, an Indian counter-terror official said.

Pakistani officials say they haven’t been able to identify Major Iqbal. They deny that any serving military officers were involved in the plot.

“It’s possible people impersonate the ISI or the army,” the Pakistani official said. “Uniforms have been stolen in the past for this kind of thing.”

In the summer of 2006, according to U.S. court documents and investigators, Major Iqbal gave Headley $25,000 to pay for expenses and to establish his cover, a new office of the U.S. immigration consulting firm in the city that was his target: Mumbai.

Reconnaissance

Headley seemed like a gregarious, high-rolling American businessman when he set up shop in Mumbai in September 2006.

He hired a secretary and opened an office of First World Immigration Services, which brought hundreds of clients to the United States. He partied at swank locales such as the ornate Taj Mahal Hotel, a 1903 landmark favored by Westerners and the Indian elite. He joined an upscale gym, where he befriended a Bollywood actor. He roamed the booming, squalid city taking photos and shooting video.

But it was all a front. Headley was busy gathering intelligence, taking photos and shooting video of potential terrorist targets. When he returned to Pakistan, he reported to Major Iqbal in Lahore and Mir in Muzaffarabad, according to court documents.

Mir and Major Iqbal were both keenly interested in the iconic Taj, the centerpiece of the plan, according to U.S. and Indian court documents. Mir told Headley he needed more images and also schedules for the hotel’s conference rooms and ballroom, which often hosted high-powered events, according to investigators and court documents.

“They thought it would be a good place to get valuable hostages,” the Indian anti-terrorism official said.

Headley did more reconnaissance missions over the next two years, reporting to Mir and Major Iqbal before and after each trip. His Lashkar and ISI handlers met him separately, but they coordinated with each other, according to court documents and investigators.

In addition, Major Iqbal sent Headley on separate spying missions to scout an atomic research center and military sites around India. The ISI officer called Headley from a phone number with a 646 area code (one used in the New York area). This could have been a technique to conceal the origin of the calls in Pakistan and avoid eavesdropping by American and Indian intelligence agencies.

“The whole thing feels like ISI is trying to maintain plausible deniability,” said Faddis, using the intelligence term for operating through an intermediary who can be disavowed. “They are running in parallel with LeT and clearly leveraging sources for their own purposes, but they are still trying to avoid being directly tied to the attack planning, most of the time.”

In 2007 he and Major Iqbal sent Headley to assess several dozen targets in Mumbai and other Indian cities. Headley even befriended aides to a Hindu political strongman, a potential first step for an assassination plot, according to his confession.

Both Mir and Headley got married during this period, although Headley was still married to his Pakistani and New York wives, according to court documents. Mir wed the daughter of a former Pakistani navy chaplain. Headley’s new wife was a Moroccan medical student in Lahore.

Headley’s bride, Faiza Outalha, was a devout Muslim who covered her head with the traditional hijab. But she was also strong-willed. Soon after the wedding, she demanded that Headley take her with him on what she thought were his business trips to Mumbai. Headley did not want to blow his cover as a non-Muslim American, so he kept her at a distance from acquaintances and hotel staff and tried to avoid registering her at the Taj, according to his confession.

“It was very difficult to conceal her Muslim identity as she was wearing a hijab,” Headley told Indian interrogators. “Two persons had seen me with Faiza when I was with her in the lobby of the hotel….I managed to convince both of them by telling them that she was a client of mine.”

In September, Mir showed Headley a Styrofoam model of the Taj that was constructed using his photos, videos and reports. They talked about attacking a conference of software engineers at the hotel. The plan resembled previous Lashkar strikes in India: a bold but limited shooting attack on a single target by gunmen who escaped afterward.

But soon Mir began working on a more ambitious project involving multiple targets, including Western ones. The shift resulted from conflict in the ranks of Lashkar and the ISI, according to investigators and Headley’s account. Disillusioned militants who wanted a bigger role in fighting in Afghanistan and in the global jihad were defecting to al-Qaeda and the Taliban, because Lashkar and the ISI were keeping the main focus on Kashmir.

Lashkar’s leadership responded to this dangerous internal rift by deciding to carry out a spectacular al-Qaeda-style strike on Western targets in Mumbai. The ISI approved the shift in tactics, Headley explained.

“The ISI I believe had no ambiguity of understanding the necessity to strike India [and] …shifting and minimizing the theater of violence from the domestic soil of Pakistan,” he said.

The analysis rings true, according to officials and experts.

“Lashkar’s senior leaders are sometimes pulled between adherence to the ISI and their dedication to pan-Islamist jihad,” Tankel said. “Meanwhile, the ISI is trying to pressure the group enough to keep it in line and not so much that it fragments. That becomes more difficult as LeT integrates further with other outfits and a segment of its members agitate for breaking free of ISI control.”

Warning Signs

Headley’s tangled personal life soon caused trouble again. His quarrels with his new wife spurred her, like the wife in New York two years earlier, to report him to U.S. authorities.

During walk-in visits to the U.S. Embassy in Islamabad in December 2007 and January 2008, Outalha told federal agents that she believed her husband was a terrorist. She mentioned militant training and suicide bombings and described his travels to Mumbai, including her stay at the Taj hotel, U.S. law enforcement officials say.

But U.S. agents at the embassy decided the woman’s account lacked specifics. Headley continued to roam free.

In early 2008, the FBI and CIA began hearing chatter about Mumbai as a Lashkar target. The intelligence may have come from communications intercepts or sources in Pakistan. But privately, some U.S and Indian anti-terrorism officials suspect that U.S. agencies were tracking Headley’s movements and communications and picking up bits and pieces about the plot-without realizing he was deeply involved.

U.S. intelligence officials alerted their Indian counterparts in early 2008 that they had general information about a Lashkar plot against Mumbai. Officials insist that they didn’t warn the Indians specifically about Headley because they didn’t know about his involvement. Although U.S. officials say Headley was no longer working as a DEA informant by early 2008, it isn’t clear when that relationship ended or whether it evolved into wider intelligence-gathering. The CIA and the FBI say Headley never worked for them.

Meanwhile, Pakistani security forces stepped up their support of the plot. In March 2008, Mir brought Headley to an important planning session in Muzaffarabad hosted by Lakhvi, Lashkar’s military chief. They were joined by Abu Qahafa, a training specialist, and Muzzammil Bhatt, one Lashkar’s most feared bosses. The guest of honor was a frogman in the Pakistani navy.

The crew-cut, clean-shaven frogman, identified as Abdur-Rehman, was in his mid-thirties. He spread a maritime chart on the table. For two days the plotters discussed options for sending an attack team to Mumbai by sea and using a hijacked Indian boat for the clandestine journey.

“They had discussed various landing options along the coast of Mumbai,” Headley recalled. “The frogman told them that the sea became rough after the month of June. … [He] told me to check the position of the naval vessels on the Indian side so as to avoid a gunfight.”

Soon afterward, Headley met with Major Iqbal in Lahore. The ISI officer already knew about the maritime strategy, Headley said. In that meeting and other conversations, he said, Major Iqbal offered tactical advice: escape routes for the gunmen, setting up a safe house, the hijacking at sea.

In April 2008, Headley’s Moroccan wife returned to the U.S. embassy in Islamabad with another, more specific tip. She warned that her husband was on “a special mission.” She also linked him to a 2007 train bombing in India that had killed 68 people and that India and the United States blamed on Lashkar at the time, U.S. officials say. Authorities haven’t implicated Headley in that still-unsolved attack, however. It is not known how the U.S. Embassy personnel responded to the wife’s allegations, but officials say the tip didn’t reach the FBI until after the Mumbai attacks.

Headley returned to Mumbai in April. He went on a series of boat tours, using a GPS device that Mir had given him to assess landing sites for the amphibious attack, U.S. court documents say.

In May, U.S. agencies alerted India that new intelligence suggested Lashkar was planning to attack the Taj and other sites frequented by foreigners and Americans, according to U.S. and Indian anti-terrorism officials. A map identifying the U.S. consulate and other targets in Mumbai was found when Indian authorities arrested an accused Lashkar scout.

Despite the pressure of planning his biggest project ever, Mir took time during this period for a rather odd personal enterprise. He underwent plastic surgery on his face, apparently for esthetic reasons rather than to disguise his appearance. Mir’s fellow militant chiefs made fun of him afterward, according to the report.

“In my assessment, his face has not changed much,” Headley told interrogators. “Zaki ridiculed Sajid by telling him that plastic surgery had widened [his] eyes.”

The Stronghold Option

Mir and the other Pakistani masterminds decided on a classic Lashkar “fedayeen raid” in which fighters inflict maximum chaos and casualties.

“Fedayeen” is an Arabic word for guerrilla fighters and means “one who sacrifices himself,” but the concept is not the same as a suicide attack. Mir and Major Iqbal still envisioned a scenario in which the attackers would escape in the confusion, according to investigators and documents.

Over the summer, Mir oversaw the work of Abu Qahafa, the veteran Lashkar trainer, who prepared 32 recruits during months of drills in mountain camps and at the group’s headquarters outside Lahore, according to investigators and court documents.

Fifteen candidates were sent to Karachi for swimming and nautical instruction. But the youthful country boys had little experience with water. Some got seasick. Some ran away from swim training. Trainers had to bring in eight replacements, Indian and U.S. anti-terrorism officials say.

In June, Mir discussed targets with Headley. For the first time, Mir said he wanted to attack the Chabad House, thereby singling out Jews, Israel and-because the rabbi was American-the United States.

“I was very impressed to know that Chabad House had been put as a target,” Headley told interrogators. “Sajid, as I understand is a ‘Saudi Salafi.’ They consider the Jewish people as the number one target.”

Headley then met with Major Iqbal, who “was very happy to know that Chabad House had been chosen,” according to the interrogation report.

Headley’s final reconnaissance trip lasted the month of July. When he returned, the planning gathered steam. The leaders of Lashkar held a special meeting to discuss the plot. Mir had Headley wait nearby, coming out of the meeting to consult with him about details.

The chiefs decided the attack would be too complex for the fighters to escape. Instead, they would barricade themselves and fight to the death. The planners called this “the stronghold option.”

In September, the anti-terrorism chief of the Mumbai police visited the Taj Hotel to discuss new warnings from U.S. intelligence about a Lashkar plot. Hotel management beefed up security, Indian officials say.

At about the same time, Headley’s Moroccan wife complained about her husband to “senior police officials” in Lahore. Headley said Pakistani police jailed him for eight days, but his account doesn’t specify the charges. His Pakistani father-in-law put up bail and the ISI intervened as well, the interrogation report says.

“Major Iqbal also helped me [in] this case,” Headley said.

A Pakistani official denied the story. He blamed U.S. officials for failing to tell Pakistan about the intelligence the United States had shared with India in 2008.

“Perhaps with Pakistan alerted, the plots could have been avoided,” the Pakistani official said.

In November, Headley went to Karachi to meet with Mir, who updated him on the status of the operation. Headley had no contact with the attack team, though Mir showed him photos of the youthful gunmen, according to documents and officials.

The attack squad set sail for Mumbai in the fishing trawler. On the evening of Nov. 26, they reached a point about five miles offshore and transferred to an 11-seat dinghy. They landed in Cuffe Parade, a slum scouted by Headley where lights, phones and police were scarce.

At the Karachi command post, Mir took a moment to send a telephone text message to Headley at home in Lahore. The message told Headley to turn on his TV.

As the bloodshed intensified, Indian intelligence officers frantically checked known phone numbers associated with Lashkar. They were able to intercept and record nearly 300 calls. Mir’s voice dominated the conversations, according to officials and documents. Thanks to Headley, he knew the targets inside-out.

Although the recorded conversations between handlers and gunmen were broadcast worldwide, Mir did not appear concerned that the notoriety would expose him to arrest. During a visit to Headley’s home, he looked tired but was boastful and talkative.

“Sajid made me hear the audios of the Mumbai attack,” Headley recalled. “Sajid played…the Mumbai video where along with others Sajid was instructing the attackers from the Karachi control room. I heard Sajid’s voice and he was instructing the attacker in the Chabad House to kill the women.”

Mir and Headley were already at work on their next target: a Danish newspaper that in 2005 had published cartoons of the Prophet Muhammad. The planning had begun before Mumbai, at a crucial meeting in November 2008. After maintaining a careful distance from each other for almost two years, Headley’s handlers from the ISI and Lashkar, Mir and Major Iqbal, paid him a joint visit in Lahore, the report says.

“This is the first time Major Iqbal and Sajid came together to my home,” the American said. “We discussed about the Denmark project.”

Mir directed and funded Headley’s subsequent reconnaissance on the newspaper’s offices in Denmark, according to the report and U.S. court papers. Major Iqbal’s previously undisclosed involvement in the high-stakes meeting to launch an attack in the heart of Europe is a “pretty seismic” revelation, said Sajjan Gohel of the Asia-Pacific Foundation, a London-based security consulting firm.

“They take it to the next phase,” Gohel said. “Either the hierarchy was aware or there was no accountability.”

Experts say Iqbal’s visit alongside Mir sent a message of trust to Headley. But the extent to which the major approved of the Danish plot, and the degree to which he was acting on his own, remain unclear.

“I think this was a particularly sensitive discussion, and somebody above Iqbal’s pay-grade told him to sit in and be present for the conversation between Headley and Mir,” said Faddis, the CIA counter-terror veteran.

Indian anti-terror officials think the ISI gave the operation its blessing, even if it did not participate directly. There is no record that Pakistani intelligence ever warned Denmark about Headley or the plot.

Mir gave Headley a thumb drive with information about Denmark and the Jyllands Posten newspaper, according to U.S. court documents and officials. They christened the new plot “The Mickey Mouse Project.”

In December, Headley suggested killing only the cartoonist and an editor. Mir disagreed. Despite the uproar over Mumbai, he seemed eager to take an audacious terrorism campaign into Europe, according to documents and investigators.

“All Danes are responsible,” Mir declared, according to U.S. officials and documents.

Across the ocean, the FBI was pursuing yet another tip about Headley. A friend of Headley’s mother in Philadelphia had come forward after seeing news about the Mumbai attacks. She told agents that she believed Headley had been fighting alongside Pakistani militants for years. Agents conducted an inquiry in December but then put it on hold because they thought Headley was out of the country, U.S. officials said.

Weeks later, Headley traveled from Chicago to Denmark. Using his business cover again, he visited the newspaper’s offices in Copenhagen and Aarhus and inquired about advertising his immigration firm. He shot video of the area and – because Mir mistakenly believed the editor was Jewish – of a nearby synagogue. He took careful notes, just as he had done when scouting in Mumbai, according to U.S. court documents.

But a few weeks later, Mir put the Denmark operation on hold. Pakistani authorities had finally arrested a big fish: Lakhvi, Lashkar’s military chief. The ISI also arrested Abu Al Qama, a Lashkar boss who had allegedly worked the phones with Mir at the command post for the Mumbai attacks, along with some low-level henchmen.

The ISI Reacts

The way the ISI handled the arrests deepens the mystery and ambiguity surrounding its role in the Mumbai case.

The agency held Lakhvi in a safe house for some time before putting him in jail, according to investigators. And Headley said Gen. Ahmed Suja Pasha, the ISI’s director general, met with Lakhvi after he was jailed.

“Pasha had visited him to understand the Mumbai attack conspiracy,” the report quotes Headley as saying, without further elaboration.

Pakistani officials deny that Pasha, one of the most powerful men in Pakistan, made the jailhouse visit. U.S. and Indian officials and experts are more willing to believe the story. Headley’s language suggests that Pasha, who had become director only two months before Mumbai, was surprised by the attack or at least by its dimensions. This reinforces the U.S. view that top ISI brass weren’t involved in the plot.

Meanwhile, Major Iqbal cut off contact with Headley and told him to get rid of compromising evidence, according to U.S. court documents and investigators. The ISI handler said, “the Mumbai investigation was getting bigger and hotter,” and a suspect had revealed “ISI cooperation” in the plot, the Indian interrogation report says.

But Headley did not sever all his links to the ISI. He remained in touch with Ali, the ISI major who had first recruited him, until June 2009, even during trips back to the United States, he said.

As for Mir, he stayed cool. Despite the evidence implicating him in the attacks, he visited Lakhvi, his Lashkar boss, in jail, according to the Indian interrogation report. If true, this reinforces suspicions that Mir was either an ISI officer or had powerful protectors, investigators say.

Headley’s Final Months

Despite Lashkar’s decision to hold off, Headley remained fixated on the plot against the Danish newspaper. In the spring of 2009, he gravitated increasingly toward al-Qaeda, according to U.S. and Indian court documents.

Lashkar veterans who had defected to al-Qaeda connected him with al-Qaeda’s chief of operations, Ilyas Kashmiri. At a sit-down in May, the veteran Pakistani militant offered to provide Headley with operatives in Europe for the attack. Kashmiri envisioned them decapitating hostages and throwing heads out of the newspaper office windows, U.S. court documents say.

In August Headley returned to Denmark for more reconnaissance. He also went to Britain and Sweden to discuss the newspaper plot with Kashmiri’s operatives, according to U.S. and Indian documents.

Despite occasional tensions, Headley stayed in touch with Mir. They discussed new reconnaissance in India as well as personal matters. The American asked about Mir’s baby son, referring to the boy in e-mails as “polar cub.” Headley also urged Mir to return to the Denmark plot, according to U.S. documents and officials.

In an e-mail, Headley described his trip to Copenhagen. He jokingly complimented Mir about his “music videos” – code for a TV program about Mumbai that had featured Mir’s voice directing the attacks.

With affectionate exasperation, Mir warned his operative to be careful, according to documents and officials.

“Your skin is dear to me, more than my own,” Mir wrote.

In September 2009, documents show that Headley again discussed joining forces with Mir for the Denmark attack, a sign that Mir was still operating freely. But Headley’s luck was running out. His contact with two known al-Qaeda suspects in the English town of Derby had put him on the radar of British intelligence, who alerted their U.S. counterparts. In October, the FBI arrested Headley in Chicago, where he had moved his Pakistani wife and children.

The FBI had been investigating Mumbai since a team rushed there right after the attacks. FBI leads- phone analysis, forensics, money trails – had been instrumental in the Indian and Pakistani investigations.

Now Headley gave U.S. agents a treasure trove of evidence and intelligence. He quickly confessed and spent days describing his exploits, according to U.S. officials.

In March he pleaded guilty to helping organize the Mumbai attacks and the Denmark plot. As part of the plea deal to avoid the death penalty, he agreed to cooperate. Officials say his confession and the contents of his computer showed he had scouted scores of targets, including American ones, around the world. They say he did not do reconnaissance in the United States, but they noted a chilling detail: His immigration consulting firm had offices in the Empire State Building.

Headley helped investigators overcome a basic problem. American agencies lacked data on Lashkar: photo books, organizational charts, profiles.

It seems clear, however, that the government did underestimate Headley. A recent review by the director of national intelligence found that U.S. agencies had received six warnings about Headley from his wives and associates from October 2001 to December 2008. Yet federal agents didn’t place him on a terrorist watch list or open a full investigation until July 2009, eight months after the Mumbai attacks.

Between June 3 and June 9, investigators with India’s National Investigation Agency questioned Headley for 34 hours in Chicago in the presence of U.S. prosecutors, FBI agents and his lawyers. Headley’s account, contained in the interrogation report obtained by ProPublica, opened a rare door into a secretive underworld of spies and militants.

A Pakistani official said the Indian version was “totally distorted and fabricated.”

“There was no involvement of the ISI whatsoever,” the official said. “Nor did any serving official interact with Headley or any of the perpetrators.”

But U.S. investigators say much of Headley’s account is credible and essentially repeats his account in the federal case in Chicago. The investigators believe Major Iqbal was a serving member of the ISI and that several other officers also had contact with Headley.

FBI agents and their Indian counterparts have spent more than a year checking Headley’s story against other evidence: witness testimony, phone and e-mail intercepts, travel and credit card records.

“Most of the Headley statement is consistent with what we know about the ISI and its operations,” the Indian counter-terrorism official said. “And it’s consistent with what he told the FBI and what they told us.”

Physical evidence backs up Headley’s confession. The FBI identified a phone number that investigators believe connects the American, Mir and ISI officers. Headley called Pakistani officers at that number. It was also called by an accused ISI spy who went on the secret mission with Mir in India in 2005, investigators say. (via Pakistan and the Mumbai Attacks: The Untold Story – ProPublica).

Related articles

• India Ink: Overlooked and Unheard, Ahead of the Mumbai Attacks (india.blogs.nytimes.com)
• “The Perfect Terrorist” Investigation Debuts Tomorrow (propublica.org)
• Mumbai blasts renew scrutiny of Pakistan’s crackdown on militants (guardian.co.uk)
• Mumbai Attacks Renew Questions About Pakistan’s Crackdown on Militants (propublica.org)