2ndlook

Indic Justice – rediscover or reinvent?

More like Amartya Sen has foot in mouth disease?

More like Amartya Sen has foot in mouth disease?

Indic Justice …

The on-going saga of the Ambani brothers’ dispute, brings home how deeply and completely Indic norms of justice and fair play have been lost. The Ambani brothers have approached the Prime Minister and are pressing their cases in the Supreme Court for justice. Such a form of dispute redressal is alien and remote to Indic thought.

The other apparently unrelated ‘event’ is the much promoted and publicised book, The Idea of Justice by Amartya Sen, has no clue about justice (at least on Indic thoughts on justice). Apart from a few token mentions about Ashoka Maurya and Akbar Moghul, he has very little to say about Indic thought on justice.

But he speaks very volubly on Western thinkers and thought on justice.

The wise king delivers justice

To bring out the contrast, one has only to read the Biblical story of King Solomon’s justice (where two prostitutes claimed the surviving baby as theirs). The point worth noting is that this paradigm of justice centralizes solutions and concentrates power in the hands of some central authorities.

So, whether it King Solomon or Caliph Haroun Al Rashid (the King in disguise), or the Turkish Çapanoglu Ahmet Pasha (of the bell of justice fame which even a donkey could ring to summon the king for justice) – the model was the all-knowing King. Variations of the Donkey /Horse and the Bell of Justice story is localized and retold in various cultures.

King Solomons Justice
King Solomon’s Justice

Going back earlier, the Desert Bloc model of seeking justice was captured in the story of Tehuti-nekht (the oppressive overseer); a sekhti’ (the poor salt-trader) the ‘clever’ Meruitensa (The Grand Vizier /Supreme Judge) and The Wise Pharoah Nebkanra.

The Duke of Venice perpetuates the myth of justice in Shakespeare’s Merchant of Venice. The more than 120 Doges of Venice who ruled Venice for nearly a 1000 years, preserved the myth of justice during the Middle Ages.

In modern times, as republican democracy made Emperors and Kings redundant, the Smart Lawyer took over the justice function, in the garb of legal thrillers.

Perry Mason replaced The Wise Emperor as the fount of justice. John Grisham keeps company with many writers about legal-eagles, who go out to save the innocent from the hangman- and send the guilty into the dock. Like John Buchan, GK Chesterton, Wilkie Collins, et al.

Hollywood used the legal thriller genre with assembly line regularity – with successes galore, like Billy Wilder’s Witness for the Prosecution (1957), with earlier instances like Charles Laughton and Marlene Dietrich, or the screen adaptation of Harper Lee’s To Kill a Mockingbird (1962), or the more modern Erin Brockovich (2000)and My Cousin Vinny (1992).

All quiet on the Indian front …

In more than 1000 Indic books, that record more than 10,000 years of history, there is no instance of any dispute reaching an Indic King.

The longest ancient epic in the world, The Mahabharata has no incident where a private dispute reached Yudhisthir (though a mongoose could lecture the King about sacrifices and yagnas). There was never any case of private dispute, recorded in the Ramayana, that reached Ramachandra (though a dhobi could ‘inform’ the king on bazaar talk about the Queen Sita). Even a poor Brahman, Kautsa, could reach King Raghu for help in the disbursal of guru-dakshina गुरु-दक्षिणा.

Kannagi and Devanthi - The Dream, from the epic Silappadhikaram

Kannagi and Devanthi - The Dream, from the epic Silappadhikaram

In yet another instance, rulers were warned against disproportionate punishment – through the Mandavya incident. Mandavya, was punished by Yama (the God of Death) for his ‘crimes’ as a child, of hurting insects. Through a chain events, Mandavya ended up, impaled on a trident /stake.  After best efforts to remove the offending weapon, a part remains inside  Mandavya’s body.

With a trident through his body, Mandavya confronted Yama. Mandavya, the sage, berates Yama for ‘criminalising’ children. Codifying the principle of juvenile justice, Mandavya exhorts “that no action committed by a human being till he is fourteen years of age shall be regarded as a sin  which it would thereafter.” In turn, Mandavya curses Yama to be born as a shudra child – to learn about the ‘reality’ of life. Yama, born to shudra woman, became Vidura, Dhritarashtra’s court.

In Buddha’s childhood, an injured swan becomes a point of legal dispute with his cousin, Devadatta. The injured swan, Devadatta’s hunting /archery practice target, was claimed by Siddhartha. Some minister’s preferred Prince Siddhartha’s claim, due to his position. Since the hunt was not for food, but for pleasure, Devadutta’s claim over the swan was seen as weak. Finally the claim of the saviour was seen as superior to the claim of the hunter /captor. Replace the swan, with a slave, and the legal principle for any dispute between a slave-owner versus slave-liberator, is established. The same principle is evidenced in Artha-shastra in many shlokas.

The Tamil classic, Silappadikaram, is ancient Tamil drama about the perils of royal justice.  Silappadhikaram is, a literary critic informs us is “a saga of the of the cult of the Goddess Pattini … the first ripe fruit of the Aryan-Dravidian synthesis in Tamil Nadu.” Who is Goddess Pattini? Once a widely worshipped Goddess in South India, now limited to modern Sri Lanka “Pattini was an angry deity, whose anger was directed at evil people and she is also associated with rational justice.” The destruction of the city by Pattini, the Goddess of ‘rational’ justice, is a warning against vengeful royal ‘justice’ – and instead move towards ameliorative Indic justice system.

Elango Adigal warns Indic kings from taking over and  interfering with dispute resolution mechanisms. The Pandyan King, Neduncheziyan, in  Silappadikaram, comes to grief, after royal intervention goes horribly wrong, resulting in miscarriage of justice.

It gets worse! No prisons …

Modern econometric modelling shows that for much of the last 1000 years, India has been a significant economic power – till the 1900. China and India, this analysis estimates, for the last 1000 years, accounted for 50% of the world economy. Statistical analyses showed India with a world trade share of 25% for much of the 500 years during 1400-1900. The interesting (historical) aspect of the criminal management story is the absence of any surviving mass jails in India prior to colonial India. Just how did pre-colonial India, one of the largest (and most prosperous) populations of the world, deal with crime and criminals?

Without prisons!

But then crime rate in India must be really high …

Cut to modern India. With such an inheritance, India has the lowest prison population in the world. How can India have such a low prison population, with a poor police-to-population ratio and a crime rate which is not above the average – in spite of a large civilian gun population.

All the 5 indices (below) create a bias for a lawless Indian society and rampant crime. With these five indices, namely: –

  1. Police to population ratio (‘increase police force’)
  2. Prison population (‘put more criminals behind bars’)
  3. Capital punishment (‘kill enough criminals to instill fear’)
  4. Poverty (‘it is poverty which the root of all crime’)
  5. Gun ownership (‘more guns means more crime’)

against a stable social system, how does current day India manage low-to-average crime rates. More than 2000 years ago, Megasthenes a Greek traveller to India wrote,

Theft is of very rare occurrence. Megasthenes says that those who were in the camp of Sandrakottos, wherein lay 400,000 men, found that the thefts reported on any one day did not exceed the value of two hundred drachmae, and this among a people who have no written laws

Historically, trade in India is governed by शुभ लाभ ‘shubh labh’ – and hence Indians have not been major players in drugs proliferation (unlike Japan, the West in which traded Opium in Korea and China) or in slave trade.

In modern times, India is not a big player in spamming or in software virusthough a power in computing industry. In August 2008, a hoax story alleged that an Indian hacker, had broken into a credit card database, and sold it to the European underworld. Some ‘experts’ feared that this would spark of a crime wave across Europe.

The Indic model of justice, crime and law

Evidence of a different Indic system goes far back in history. To Lipit Ishtar, Hittite laws, Hammurabi et al. At least as far back as 4000 years back in history. Indian kings did not deliver justice. It was done at the local level by panchayats पंचायत. Indian justice systems did not rely on imprisonment or executions or the police to control crime!

The answer – the world’s most stable marriage system and the extended family-social structures took care of the wayward.

Still from Breaker Morant - Edward Woodward, 3rd from left, portrayed Harry 'Breaker' Morant

Still from Breaker Morant - Edward Woodward, 3rd from left, portrayed Harry 'Breaker' Morant

A recent Hollywood film on the Desert Bloc system of justice was the schizophrenic Breaker Morant – by Bruce Beresford. In the closing lines of Breaker Morant, when asked about his religion, Harry ‘Breaker’ Morant declares that he is a pagan.

When the execution detail comes to get Morant and Handcock, the military chaplain asks their religious affiliation. “Pagan.” replies Morant. “What’s a pagan?” inquires Handcock. Morant replies, “Well, it’s somebody who doesn’t believe there’s a divine being dispensing justice to mankind.” Handcock nods and says to the chaplain, “I’m a pagan too.” (extract from Wikipedia; accessed on 25th January, 2010).

I have always wondered how much the writer knew – and understood the import of that statement.

Crumbling edifice

In India, under the onslaught of the Desert Bloc, Akbar-Birbal stories, Tenali Ram-Krishna Devaraya were used to create expectations of a Wise King. From then on, the Indic system of justice crumbled at a faster pace.

Is it that Indians were ‘saints’ and did not have private disputes? Were they so civilized that they could solve all disputes by talking to each other? Is it that Indian kings were not bothered about delivery of justice!

By Richard Brust

70 years later, RBI remains true to its DNA

Posted in Business, Current Affairs, Environment, European History, Gold Reserves, History, Media by Anuraag Sanghi on January 22, 2009
An bankrupt West is a bad economic model to follow. RBI in the last 3-5 years has shown some independence in policy matters - finally. (Cartoon courtesy - bhra.files.wordpress.com). Click for larger image.

An bankrupt West is a bad economic model to follow. RBI in the last 3-5 years has shown some independence in policy matters - finally. (Cartoon courtesy - bhra.files.wordpress.com). Click for larger image.

there is a curious aspect to the Indian economic System (defined as commentators, policy makers, and academicians). The System systematically thinks in a skewed fashion, and unlike any other System in the world. In particular, it is trigger happy to bring the economy to a screeching halt by raising interest rates, but asleep at the wheel when the economy is in desperate shape — e.g. confidence at historic lows, industrial growth at zero, and exports diving over a cliff. (via Surjit Bhalla: Lazy banking at its finest).

It is not so curious Mr.Bhalla. You only have to look at the history of RBI formation and its objective. Fact is RBI has not outgrown its colonial DNA.

April Fool Joke – The RBI

On April 1st, 1934, while the ‘Squeeze India’ campaign was under execution – and being choreographed by Montagu Norman, Neville Chamberlain, Winston Churchill and Lord Willingdon, RBI, India’s banking authority was set up. From that April Fool’s day till now, RBI character has not changed. It remains isolated, out of touch with the India – and looks at India through colonial viewing glasses.

First things, first …

RBI and the Colonial India Government initiated many reports on the ‘condition’ of the Indian economy. Based on these reports, they passed many of the laws restricting money lending activities. These reports – Central Banking Enquiry Committee (CBEC) report (1929) and its associated Provincial Banking Enquiry Committee reports (of Assam, Bombay, Burma, Ceylon, Central Provinces, Bengal, Punjab, et al) of which the Madras Provincial Banking Enquiry Committee (MPBEC) report is cited by lazy academics and out-moded bureaucratsas authoritative – even in post-colonial era.

Western economies have been hiding their economic stagnation for the last 10 years by handing out loans to voters, industry and banks. For how long can this system work? Cartoon by Michael Ramirez. Click for larger image.

Western economies have been hiding their economic stagnation for the last 10 years by handing out loans to voters, industry and banks. For how long can this system work? Cartoon by Michael Ramirez. Click for larger image.

Based on these reports co-ordinated by the RBI, Debt Conciliation Acts were passed between 1933 and 1936 by the governments of Assam, Bengal, Central Provinces and Berar, Madras and Punjab; the Punjab Regulation of Accounts Act (1930) and the Debtors Protection Acts of 1935 and other such burdensome laws buried the money lender in mountains of paperwork and licenses. These laws required money lenders to comply with extensive and prolonged compulsory licensing and registration – and extensive recording of transactions and accounts.

What these laws achieved was what was desired – a license for police and other ‘inspectors’ to start an extortion racket from money lenders (these days called corruption). A bureaucrat from colonial Punjab, Malcolm Darling (1925) shedding crocodile tears stated “the Indian peasant is born in debt, lives in debt and dies in debt” became a by line for tarring the money lender – while the cause was extractive, colonial revenue practices.

Options foreclosed

While the world was reeling under a crisis of the Great Depression, these restrictions on money lending foreclosed the liquidity option for the Indian peasant, which would have averted the gold outflow from India and the impoverishment of the Indian peasant. With this legalized persecution, money lenders’ activities were curtailed all over India.

RBI joined in this hounding of the money lenders – which continues to this day. The Bengal Burma link of the ages was broken. Chettiar money lenders were thrown out of Burma. From being a granary of Asia, Burma started declining – and there was no rice for exports. Result – The Bengal Famine of 1943. Tally – 40-50 lakh deaths. Similarly, the role of Chettiars in Singapore was wiped clean.

Subhash Chandra Bose's diplomatic initiatives left the British War efforts nervous and anxious. (Image sources - hindustantimes.com). Click for source image.

Subhash Chandra Bose's diplomatic initiatives left the British War efforts nervous and anxious. (Image sources - hindustantimes.com). Click for source image.

After the fall of Singapore, and the rapid Japanese advance, with Subhash Chandra Bose in the vicinity, a revolt by Bengal would have had catastrophic effect on the colonial administration. Howard Fast, in his novel ‘The Pledge’ believes that the Bengal Famine was deliberate creation – possibly to weaken the local population.

Elephants in the room

Firstly, the answer to your curiosity cannot come from the West. And since, the Indian English press (especially), depends on the West for cues, they miss out some vital elements. For instance, how the Indian economy was used to meet Britain’s Post WW1 liabilities. To ‘dampen’ gold demand for India, the Indian rupee was put on fixed overvalued rate vis-a-vis the sterling.

Indian exports crashed, imports ballooned. Indian accounts would be settled at ‘official’ silver prices, with inflated silver released by the US under the Pittman Act. Gold prices were deflated – and Indians would therefore have to pay more in gold. Thus with with a combination of inflated silver price, deflated gold price, high interest rates and an overvalued Indian rupee, the Indian economy was strangled. Few Western writers or books identify this – unwittingly, or deliberately.

RBI was a pawn in this game – and it remains true to its DNA.

India funded the post WW1 recovery

The mechanics and the development of this plan are laid out in a better book, John Bullion’s Empire by By G. Balachandran. This book traces how much of India’s poverty was a result of economic policies between the two World Wars co-ordinated by these four central bankers.

On October 27th, 1931, the Ramsey Macdonald led “National” Government (Conservatives and Liberals coalition, fearful of the rising Labour Party) in Britain won a huge majority of 554 MPs of 615. The economic crisis of September 1931 (misnamed as the Indian Currency Crisis) was a result of this economic policy which reduced Indian economic activity – resulting in bankruptcy of the Colonial India Government.

Parallel Great Depression era problems in the US, the Weimar Republic problems – and other issues pushed this ‘National’ government to ram through a series of measures (page 130-131) that inflated silver prices, depressed gold prices and raised interest rates in India. The Indian rupee was pegged at a high exchange rate vis-a-vis the sterling. Indian exports crashed. To ensure that Indian farmers had no options, Indian money lenders were regulated and licensed into paralysis. Further the Lees Mody Pact, gave few options to the Indian producers.

Indians were paid, with inflated and abundant silver stock, instead of gold. This silver was the same silver released by the Pittman Act. The silver buffer solution to the gold drain to India was seen as the “only buffer to protect Western gold reserves against the Indian drain (was) a silver buffer.” Of course, later the British Raj decided to settle Indian debts with promissory notes – and not even silver. It was this Indian ‘sacrifice’ which enabled the recovery of the West.

The yawning trench between talk and walk makes Western economiuc theory suspect.

The yawning trench between talk and walk makes Western economiuc theory suspect.

Crash in silver prices

New mines and increased silver production saw a crash in silver prices. US silver coinage was being depreciated due to increasing supplies of silver. On the other side, Britain had a large debt due to WW1. Britain and America stuck a deal at the cost of the Indian subjects of the British Raj. The US passed the Pittman Act which mandated silver sales at more than a dollar per ounce – double the 50c per ounce prevailing price of silver. Britain agreed to settle all Indian debts with silver. Gold prices were deflated. Interest rates in India were increased. Restrictions on gold imports on were placed and gold demand in India was ‘normalized.’

Impoverishment of India

With crashing exports and increased imports, the Indian citizenry had no option but to pay for all essentials and taxes with gold. As a quid pro quo, for this silver for gold scam, the US lent gold to Britain in 1926, which allowed Britain to revert back to the pre-War old standard.

Done over the protests by Gandhiji, trade bodies and merchants and threats of resignation by the Viceroy and his Executive Council , the resulting ‘money famine’ (page 155) had the Lord Willingdon ecstatically say ‘Indians are disgorging gold’ (page 156). Neville Chamberlain pitched in with his classic statement “The astonishing gold mine that we have discovered in India’s hordes has put us in clover.”

Looking back, it was clear that this achieved nothing but the impoverishment of India. In 1948, Montagu Norman had to admit that with these maneuvers “We achieved absolutely nothing, except that we collected a lot of money from a lot of poor devils and gave it to the four winds.”

The RBI was a vital element of this plan.

Ceterus paribus …

Today, in similar situation, the RBI, a colonial era body, continues with these colonial anti-Indian policies. They keep ever-greening and recycle colonial policies. Old laws with new labels and different wordings are made – with the same intent. Kill the money lender. While all this was happening, Indian agriculture and the peasant suffers.

The tragedy is that RBI is not alone. The IAS (a successor to the ICS) and the Planning Commission are the other two. Compare that with the brilliant track record of modern Indian regulators and organizations like the SEBI, TRAI.

RK Laxman’s 50 year old cartoon – relevant even today

Posted in Business, Current Affairs, Environment, European History, Feminist Issues, Gold Reserves, History, language, Media by Anuraag Sanghi on December 17, 2008
Cartoon published in Times Of India on 14th December 1958 - Fifty years earlier

Cartoon published in Times Of India on 14th December 1958 - Fifty years earlier

Fifty years earlier, RK Laxman’s cartoon made us smile. Today, the status remains as bad as 50 years ago. Today, it is no longer a smiling matter – it is tragic.

80% of India’s population

The Indian education system excludes a vast majority of Indians from higher education as Indian higher education system is predominantly in English. This puts a premium on English – and discounts Indian languages in the educational sweepstakes. The disadvantaged students who have studied in Indian languages ensure that their children get the ‘advantage’ of English education.

The negative effect this on Indian self esteem is not even a point of discussion here.

The principle of exclusion (a colonial idea), is a dominant marker of the entire Indian education system – rather than inclusion. British (and before that, Islamic rulers’) colonial-imperial practices supported foreign languages on the backs of the Indian taxpayers’ contribution – and actively worked on destruction of local cultures.

Hinglish humour?

Hinglish humour?

For instance, in the erstwhile State Of Hyderabad (equal to about 10%-12% of modern India), ruled by the Nizam, a large non-British kingdom, 2000 year old local languages like Telugu and Marathi were considered uncouth and barbaric languages – compared to a 700 year old language like Urdu, which was supported by the State. Paeans in praise Urdu can be heard even today – much like the ’emergence of Hinglish’ is being celebrated in contemporary India.

Thus anyone without the knowledge of Urdu was excluded from the system of governance, administration and interaction with public services and utilities. So it is now in India, with English.

The Huna (Ephthalite) Empires

The Huna (Ephthalite) Empires

Desert Bloc Colonialism

The centres of Indian thought, Takshashila, Nalanda, etc. were destroyed by Desert Bloc invaders. First was the destruction of Takshashila in 499 AD – by the Huna (Western history calls them White Huns, Romans called them Ephtalites; Arabs called them the Haytal;  The Chinese Ye Tha), who came,

sacking monasteries and works of art, and ruining the fine Greco-Buddhic civilization which by then was five centuries old. Persian and Chinese texts agree in their descriptions of the tyranny and vandalism of this horde.” (from The Empire of the Steppes By Rene Grousset, Naomi Walford).

The White Huns, was a Central Asian, nomadic tribe, roaming between Tibet to Tashkent, practicing polyandry. Takshashila lying at the cross roads of the Uttarapatha (West calls it The Silk Route) – from Tibet, China, Central Asia, Iran – and India. The destruction of Takshashila (Taxila) meant that students and scholars would need to travel for an extra 60 days to reach the other Indian Universities of the time.

Mohammed Bakhtiar Khilji destroyed the Universities and schools of Nalanda, Vikramshila, Odantapura and Jagddala around 1200 AD. This marked the destruction, persecution and decline in Indian education, thought and structure. 600 years later, the British further damaged the Indic system of education, with State subsidies and patronage of Western education – the watershed being Bentinck’s proclamation in 1835.

Thus, the reduced (quality and quantity) output from the ‘Indian thought factory’ led to stasis and the decline that we see today – through the prism of last 800 years of violence and destruction of Indic thought. This problem gets further magnified with the existing and continued subsidy to English language /Western education by the Indian Government.

Many centuries ago, Indians (under Islamic rulers) thought that Persian was the most important language in the world. And then it became Urdu. Now there are hosannas to English. Persian and Urdu were languages that the ruling class foisted on the Indians. As is English.

Colonial India’s English push was understandable. But, after 60 years of Independence, state patronage by the Indian Republic of English language is unwarranted – and illegitimate.

Access Control and opportunity loss

This restricts 80% of India’s population from contribution and access to opportunity. Without looking at it from ethical or social equity viewpoints, but purely as an economic question means, we should look at the cost of this policy.

How does this hinder India. India loses every year about 200,000 highly educated people to the West. These 200,000 people have been educated at subsidized Indian Universities at a considerable cost to the poor Indian taxpayer. What return does the tax payer get from this? Negative returns.

The make up of these 200,000 people that India loses. 100,000 are students who leave India, mostly never to return. Another 100,00o are ‘captured’ by the Western organizations and systems. The other aspect of this loss is that this loss of people, directly and disproportionately, supports Western dominance of economic and academic systems – by India.

Something’s gotta give

What happens when English stops being an important language in the global sphere? What use will India’s investment in English be at that time? And this will happen sooner than we imagine – at a greater cost than we believe.

The combined GDP of the English speaking world is 14.1 trillion (2003 figures) – of which the US contributions is more than 71%. By a similar comparison, the next largest bloc of multi-nation, same-language speakers is the Spanish whose combined GDP is US$ 3.20 trillion. The French speaking bloc comes a poor third at US$2.20 trillion. The English speaking bloc, in spite of their temporary dominance, is still worried about the French attempts to keep its Francophone flock safe. It is but a matter of time that the US contribution will decrease – and hence, trade denominated importance of English will decrease.

Will we become a nation that loses control over its future? The danger of becoming a South American clone is all too real. After, Spanish decolonization, the South American countries persisted with Spanish practices – and Spanish language. We all know how South American countries tracked the descent of Spain into dictatorships and instability.

The decline of the (Greco-Roman) Byzantine Empire, was similar. After the split of the Eastern Roman Empire from the Western, over the next 200-400 years, Greek language became the official language of the Byzantine Empire. Eastern Europe followed the lead of the Byzantine Empire and used Greek extensively – at a cost to their own language. After the fall of the Byzantine Empire, Eastern Europe lagged Western Europe.

The cost of switching from English

Assuming that a 100,000 essential books need to translated into local languages, at a cost of say Rs.100,000 per book, it still amounts to Rs.1000 crores. Is that a large sum of money for modern India. Hardly.

What is the loss to India? How much does this reduce India’s growth rate by? Hard numbers to quantify – but definitely big numbers.

Why persist?

So, why does contemporary India persist with this policy.

Because all the high and mighty, finally want their children to ‘escape to the West’, with a good education from India – at the cost of India’s poor. This vested interest makes this policy go around.

And a lot of propaganda.

Post script

The UK, in its death throes, is using English as a last prop – to remain standing. The British PM Gordon Brown has decided that

“In total, two billion people worldwide will be learning English by 2020. But there are millions more on every continent who are still denied the chance to learn English.

“So today I want Britain to make a new gift to the world: a commitment to help anyone – however impoverished and however far away – to access the tools they need to learn English.”

Also, the British are co-opting the US in this exercise. Gordon Brown made a visit to the US to

propose that together Britain and America strive to make the international language that happens to be our own far more freely available across the world. I am today asking the British Council to develop a new initiative with private-sector and NGO partners in America, to offer anyone in any part of the world help to learn English.

But, the most interesting, was this post by a Quebecois, where he makes a case with a question ‘Is the English Language Bubble About to Burst?’ Worth a read, this post.

The Greatest Crime Wave … Ever?

Seven time Prime Minister, Giulio Andreotti, 83

Seven time Prime Minister, Giulio Andreotti, 83

Crime in the last 50 years

From the 1960-1990, the Big Issue for people across large parts of the world was Big Crime. The 1960-1990 peak in organized crime, globally, is interesting due to the synchronized time frames – across USA, Europe and India.

The Godfather series was emblematic of this phenomenon. The Godfather trilogy of films remained popular amongst critics and viewers alike. For years, Mario Puzo’s books remained on best seller lists. When the freed slaves of Cuba, led by Fidel Castro, tried to overthrow American-foisted dictator Batista, the US used the American Mafia, to attempt assassination of Fidel Castro. The mafia controlled trucking in the US – and a company like UPS had to pay of mafia to continue its trucking operations across USA.

In India, the rise of the underworld was delayed by a decade – as was its decline. India’s underworld, centred in Mumbai, at its peak, intruded into trade unions, films and entertainment, gambling, real estate, extortion and smuggling. The specter of Dawood Ibrahim haunts India-Pakistan Governmental relations – even today.

American Mafia

Chief of Police Thomas Byrnes.

Chief of Police Thomas Byrnes.

In May 1950, Special Committee to Investigate Organized Crime in Interstate Commerce, was formed with Estes Kefauver and four other senators as members. Between 1950-51, the Kefauver Commission informed the American public that the American Mafia was synonymous with Union Siciliana. FBI finally admitted to the Mafia’s existence as La Cosa Nostra in the 1960s. The testimony of Detective Frank Serpico to the Knapp Commission opened to public view, how deep Mafia hooks were, into the US police.

A 130 years ago, the legendary New York police chief (and ex-detective), Thomas Byrnes had a simpler solution to the mafia problem, “Let them kill each other.”

From Publishers Weekly
During the 1920s the Gambinos, members of the New York Cosa Nostra “Five Families,” which also included the Colombo, Bonanno, Lucchese and Genovese families, controlled many businesses … Among their strongholds were private carting, garment industry trucking and construction. The mob also had … in the meat and supermarket businesses … loansharking, extortion and pornography. Additionally, the dons, having forbidden trafficking in drugs to subordinates, could not resist the vast profits and became involved themselves. Mafia founding fathers Vincent and Philip Mangano were succeeded by Albert Anastasia, who was murdered in 1957. The most effective leader, shows Davis, was Carlo Gambino, who emerged supreme in 1970, reigned for 19 years and was succeeded by his cousin Paul Castellano until he was killed at the behest of John Gotti, who was sentenced to life in prison in 1992.

… during Carlo’s reign the whole Mafia/all 5 Familys prospered more than they ever did … (ellipsis mine).

While the Italian-American involvement in crime has received wide publicity, the inclusion of African-Americans (much smaller in size and scale) in organized crime is less noticed. Similarly, the involvement of the African-Americans in crime peaked during the same 1960-1990 period.

roughly 1968 through 1984, organized crime also flourished in many of the city’s African-American neighborhoods, most of it under the average Philadelphian’s radar.

“The Black Mafia ran the heroin trade in the city,” says Sean Griffin, a former Philadelphia policeman and the author of Philadelphia’s ‘Black Mafia’, a new book that combines gritty street reporting with extensive scholarly research. “They were ruthless and ultra violent. They ruled major sections of the city, and yet somehow today it’s as if they never existed.”

The Black Mafia was “founded” in 1968 by Sam Christian, “a thick-necked 215-pound bully” and former Black Panther with an extensive rap sheet. Christian built his reputation holding up craps games and extorting drug dealers, numbers men and illegitimate businesses.

In the early days, the Black Mafia’s organized command structure consisted of 14 men, all with extensive records, most for violent crimes. As Griffin points out in Philadelphia’s ‘Black Mafia’, a book that grew out of the author’s Ph.D. dissertation, the nature of their crimes made them difficult criminals to prosecute because their victims and witnesses so feared retribution.

Of course, in terms of size and organization, it never matched or came even close to the American-Italian mafia.

The Rise & Fall of Organized Crime in America

Meyer Lansky character portrayed by Lee Strasberg in “Godfather II” told audiences, “We’re bigger than U.S. Steel.” It was during that era that Las Vegas was born, with millions of mob dollars invested in the ‘Bugsy’ Siegel’s Flamingo Hotel, and Havana became the greatest adult playground in the world due to huge amounts of bribes paid to President Batista and his cronies; when the Teamsters Union became king of the road and began using their pension fund millions to finance newer and bigger hotels in Vegas; and when everything from garbage collection, to juke box distribution, to construction projects large and small, to linen supplies for restaurants, to garment unions and the production companies under their thumbs, to illegal gambling…to all the ancillary businesses connected to those already mentioned…became mob cash cows.

In his book, former mob boss Joe Bonanno outlined a Commission of organized crime leaders around the country who settled arguments and set policy for all its underlings. That confession led United States Attorney for the Southern District of New York, Rudy Giuliani, to initiate a criminal case, under the R.I.C.O. Act, charging the alleged bosses (it was later proven that Anthony “Fat Tony” Salerno was NOT the head of the Genovese Family, as he was convicted of being) of New York’s five traditional organized crime families as Commission members of a criminal organization, commonly known as LCN, or La Cosa Nostra. Each was convicted and sentenced to more than one hundred years in federal prison. Bouncing off Giuliani’s success in the Commission Case, federal authorities brought more charges and convicted more top mobsters in Philadelphia, Boston, New York, and Chicago. More recently, in early 2008, sixty-two alleged members of the Gambino Crime Family were arrested both in the United States and Italy.

There is no more national strength.

Traditional organized crime families are well on the way toward total dissolution, as they probably would have six or seven decades ago.

Italian Mafia

Simultaneously, across the Atlantic, in Italy too, the mafia was very powerful. Mafia power peaked in Italy also at the same time. The death of numerous judges and police officials was emblematic of the power and means that the Italian Mafia used against opposition.

Popularly, it is believed that the killing of the police commander, Alberto Dalla Chiesa, in September 1982 marked a turning point in the battle against Italian mafia. Before that, it was the kidnap and death of Aldo Moro, initially by the suspected Red Brigade. Later, it was found, that the kidnapping and murder was done by the Italian mafia, allegedly, at the behest of Guilio Andreotti, the seven time Italian Prime Minister.

The iconic Post WW2 Italian politician, seven time Prime Minister, Giulio Andreotti was himself investigated (first acquitted, then convicted on appeal and then finally the conviction was annulled) of links with mafia. This year, (2008) this story led to a film -which detailed the long running Andreotti saga – with some liberties. The Vatican weighed in on the side of Guilio Andreotti, and Cardinal Fiorenzo Angelini said, “Also Jesus Christ was crucified before his resurrection.”

Nixon and Andreotti ...

Nixon and Andreotti ...

The Italian mafia also traced the rise of the Indian underworld.

Their ascendancy was followed, in the 1970s and 1980s, by that of Toto Riina, who strangled, shot, bombed and poisoned his way to the position of capo di tutti capi. Successive Italian governments either stood aside, embarrassed by the lawlessness of western and central Sicily, or actually connived in the corruption. But in the 1990s, the mafia, and the Corleone clan in particular, misread the end of the cold war. Their political cover in Palermo and Rome was removed by the collapse of the Christian Democrat and Socialist parties and several huge domestic political scandals.

This wave of crime affected Europe with crime, terror, extremism – much like India is today. But whether it was the US or Italy, the real roots of the Rise and Fall of the Mafia lay in India. As we will see.

Underworld and terror – The Indian face

On March 12, 1993, India woke up a new phase in terror. Urban terror of a type not previously known. In the space of less than 1 hour, 13 important places, including The Bombay Stock Exchange, Plaza Cinema, and some other prominent places were subjected to synchronized bombings – killing more than 250 people and injuring more than 700. For the first time, plastic explosives, of the RDX type, were used in India.

Who is responsible for Mumbai Bomb blasts?

Many, starting with Indian police and the Indian Government, blamed India’s premier underworld figure, the fugitive Dawood Ibrahim. Wrong! An accomplice, Tiger Memon was also suspected. Wrong again.

Gold policy in modern India

The answer is Late Morarjee Desai – India’s ex-Prime Minister and Finance Minister. And with Morarjee Desai, were a whole lot of RBI and GOI officials who were behind 40 years of legislation, which created India’s underworld, corrupted 4 generations of India Government officials and reduced the value of Indian savings by Rs.1,20,000 crores. 4000 tons of gold purchased by Indian consumers, during the 1965-1995 period, at a 30% premium at today’s value – do your numbers.

These laws corrupted four generations of Indians – Government and politicians. It made gold in India very expensive – and the Indian buyer remained in poverty longer. Many gold control laws were enacted which stopped all legal gold imports into India.

These laws were derived from two sources. One, the British colonial policy legacy (motivated by exploitative aims). Two, motivated policy recommendations by US sponsored institutions like IMF, World Bank, Western Universities and academics, was continued by Indian Government and RBI. Had it not been for this policy framework, Bretton Woods system would have collapsed within 12 years instead of 25 years. For which Morarjee Desai was allegedly rewarded by the CIA. But, before that it enabled the establishment of the Bretton Woods system itself.

Roosevelt had earlier in 1933, during his New Deal years, nationalized all gold. This restriction was finally eased only on December 31st, 1974, with Executive Order 11825 by Gerald Ford. It was Roosevelt’s gold nationalization which allowed the US to wage WW2 and create the Bretton Woods system.

From 1939, (the start of WW2), gold imports into India, the world’s largest market and also the largest private reserve of gold, were controlled or banned. Not only the largest, but Indian reserves of gold, are also the only significant reserve in the world without a history of war, genocide, slavery or loot, (unlike US, UK, Canada, Australia) or to due nature’s bounty (unlike South Africa, China, Peru, Ghana, etc.).

Gold imports restriction & history’s biggest crime wave

The first effect of restrictions on gold imports in India was on prices. Indian gold prices, on an average, were 30%-40% higher than international prices. The other thing that happened was that gold imports went underground. Gold imports (illegal), called smuggling, spawned the biggest criminals that India has seen.

The common threads in this were, of course, America, drugs, underworld, war, corruption, warlords – but what made all this possible was Indian appetite for gold.

All this was made possible by the Indian hawala system of money exchange. Hawala made money transfers safe, instantaneous, at a low cost. Traditional Indian ships from a thousand ports in Goa, Maharashtra and Gujarat sailed with this contraband and brought back gold.

The countries comprising these Golden Triangle /Crescent are India’s neighbours. The Indian underworld transported drugs through India. These drug shipments originated, were acquired, grown and traded from the Golden Crescent and the Golden Triangle.

Tentacles of the Indian Underworld

Like the American and Italian mafia, the Indian underworld, also spread its tentacles, wide and deep. In trade unions, film industry, politics and legitimate businesses.

In 1982, Dr.Datta Samant, a trade union leader, called for strike by the textile workers in Mumbai. He was the leader of Magar Aghadi (Workers’ Front), with more than 300,000 members. The strike went on for a year – with 250,000 workers abstaining from work for 20 months.

Mumbai’s textile industry, tethering on the brink of collapse, went bankrupt – and was nationalized. Hundreds of thousands of workers became unemployed – and Mumbai started rebuilding itself. Dr.Datta Samant was notionally affiliated to the Congress party – and INTUC. Since, his connections were tenuous, he had little political protection or patronage. A ‘supari’ (Indian underworld jargon for a contract) was ‘put’ out and Dr.Datta Samant was killed – on January 18th, 1997. Mumbai police listed sixteen people as accused, including underworld dons Chhota Rajan and Guru Satam, of which nine, are absconding.

Similarly, on May 7, 1994, businessman and industrialist, Sunit Khatau, was shot dead in broad daylight. Having used various underworld figures for getting his way with the labour unions, politicians, et al, Sunit Khatau paid the price for running with the hares and hunting with the hounds. The killing of Thakiyuddin A. Wahid, Managing Director of East-West Airlines, was yet another case where industry and underworld tried coming together with disastrous consequences.

The killing of Gulshan Kumar, the owner-founder of T-Series, was evidence of the underworld’s grip on India’s Mumbai-based Hindi film industry. A few years later, after the killing of Gulshan Kumar, the underworld was dictating star casts, release dates, projects, directors – and the Mumbai-Hindi film industry was in the grips of the underworld.

Indian underworld figures

One of the founder figures of the Indian (also Mumbai) underworld was Ayub Lala, who headed the Pakhtuk Jirga E Hind, an Afghani Pathan association in Mumbai. These were all small time figures – compared to the later times.

The new breed – bloodier and nastier than the previous, were represented by Karim Lala, Haji Mastan, Varadarajan Mudaliar, Yusuf Patel, Tiger Memmon, Chota Rajan, and of course, Dawood Ibrahim’s – a biological son of a police constable Sheikh Ibrahim Kaskar, was spawned by Morarjee Desai’s laws.

What’s common in the Golden Crescent & the Golden Triangle

After WW2, traditional opium supplies from (Greater) China, by Government granted opium monopolies, from Yugoslavia and Italy, were replaced by Iran, India, Pakistan, Afghanistan and Mexico. It was the Golden Triangle and the Golden Crescent which dominated opium supplies from 1960s-1990s.

The fact that flows from these new supply sources coincided with the American ‘domino theory’ wars, against ‘under-your-bed’ Communism (in Cambodia, Thailand, Laos, Vietnam, Korea, etc.) is the subject of much research, significant evidence and many Hollywood films – which have suggested that the American armed forces and the CIA were behind the start of the drugs import into USA.

Interestingly, this period is also the background to the other chain of events – now dubbed as Yamashita Gold. Involvement starts with Douglas MacArthur and the Who’s Who of American politics, bureaucracy and military. They purportedly, extracted information from Japanese warlords and crime bosses about the fabled loot of the Japanese bosses, who ruled over Korea, China between WW1-WW2. Some writers allege that the link goes from Prescott Bush right upto the soon-to-be-the-ex-President George ‘Dubya’ Bush.

Counterfeit Currency

The other interesting feature of this great crime wave was fake Indian currency. The counterfeiting of US dollars is understandable. It is the world’s largest currency – and most acceptable. The GBP or the Euro are also reasonable targets for counterfeiting activity. Even counterfeiting the Canadian dollar!

But, the most unlikely target is the Indian Rupee!

India is a small, poor economy, (at least, till about 5 years ago). India does not have capital convertibility either. So, this huge counterfeiting operation raises more questions. Is this counterfeiting related to India’s Gold reserves?

The entire currency and security-grade printing is dominated by less than a dozen companies. These companies will not dare to support ‘counterfeiting’ operations – unless there is official cover or support given to them, by their respective Governments.

The invisible Indian connection

The US eliminated gold ownership restrictions in 1975. India followed. 20 years later. In 1992, India took its first hesitant steps towards legalizing gold imports. By 1995, these import control laws had been diluted to near non-existence.

Much like the fading away of the mafia in the US and Italy, in India too, after the gold trade was legalized, the mafia’s source of power, liquidity, earnings, profit were taken away. With it came the underworld’s loss of power and influence – globally. And that coincided with the reduction and control of organized crime from the US and Europe and India. And an end to the greatest crime wave in the modern history.

Today, the abatement in organized crime is ascribed to vigourous efforts by the police and legal systems. The earlier lack of success is conveniently forgotten. In India, many ‘encounter’ specialists claimed credit for the reduction in the power of the India’s underworld.

A paperback by Penguin, The Complete Idiot’s Guide to the Mafia By Jerry Capeci does not mention India even once. Another book, Cops Across Borders By Ethan Avram Nadelmann which details global, cross-border police co-operation, mentions India only 11 times – in more than 500 pages. These books are symptomatic of the world’s non-recognition of the genesis of the greatest crime wave in history.

Indian social system itself does not see organized crime having any logical existential reason. It is these values that gives India one of the lowest prison populations in the world – and practically very few positions in the Forbes ‘Most Wanted’ List. With the lowest police to population ratio.

The Third Currency Option – Junk the Dollar and the Euro

Europe’s Been Onto Something … While the US gently weeps

The EU region calling for a ‘G8 + India & China’ conference to thrash out this global monetary issue – and has been twisting the knife in the reluctant US side. The US has been dragging its feet. While the EU has been going gung-ho on this, the US has been floating many trial balloons.

Warren Buffet, Paul Volcker and Lawrence Summers have been co-opted by the President-elect of the US – Barack Obama. There has been talk of a manipulation in bullion prices – which may be required for re-anchoring currencies. Interesting deals – considered impossible till a few years, are being done in a tearing hurry.

Europe would obviously like to break the dollar hegemony – and muscle into the racket. They know the Third World-Russia-China are not prepared.

And what do Europeans want – some seats at the global regulatory table, to force US moneybags (for now) and others to seek approvals, which will come at a cost … or is it that the approvals will come at a price …

Which will solve no one’s problems … back to square one …

The US Gameplan

US analysts, led by Paul Krugman, have been calling for Barack Obama to emulate Roosevelt – who waded into WW2, with 25,000 tons of nationalized gold. If gold is nationalized, it may depress demand in the short term – giving rise to huge volatility in gold prices. But Warren Buffett has been on the silver bandwagon for a while – and that is making the gold-silver equation hazy. What if Warren Buffet becomes the new US Treasury Chief? There is the real risk of another fraud like the gold standard happening all over again.

The US has been making its moves – differently. Paul Krugman’s Nobel Prize is an indication of this. Will the US use Paul Krugman as the Keynes of the Bretton Woods. The background of Bretton Woods itself, is of course, something that the US and Europe do not want the world at large to know.

The financial stimulus plan hasn’t even a snow flakes chance in hell – as there are no targets left who can be funded. Industrial corporations are lip deep in debt. The housing sector is knackered. The tech sector has over capacity. No go, no show.

What Has Been India upto? Either … or …

India seems to completely lack direction on how to move independently in times like these. After, all why should India even look at IMF and World Bank – which are fig leaf organizations of the West, as transfer mechanisms of wealth from the Third World to the rich.

Interestingly, Manmohan Singh has done some huge work in the last 60 days – the nuclear deal with the USA and NSG, the IBSA Summit, the ASEAN free trade agreement – and now his three Asian nation visits. India’s Trade and Commerce Minister, Kamal Nath, has been talking about a multi-lateral set up. The UN was made to issue a statement on this. While the US has been resisting calls for action, busy doing post-mortem, Asia and Europe have been moving.

India is unlikely to get seriously affected by the current crisis – which is possibly creating complacency in India about what needs to be done.Or India is working on a different plan, of which we know nothing. After all, India does believe in moving steadily (even, if slowly).

Are we reading too much into this? At times, India has seemed clueless.

Russia and China – The DragoBear Dance

The big issue is of course, China and Russia. China has 2 trillion of US dollars – and what does China do with this? This crisis seems to have made the Chinese Premier shaky. Russia has come out from a default about a decade ago – with a nearly US$400 billion reserves – flexing its muscles in Georgia and dependent on a high oil prices. What happens to Russia if a new Pacific Republic (Cuba, Haiti, West Indies, etc) were to start drilling for oil? In 5 years, the world would be awash with oil – and Russia’s mineral earnings could evaporate.

So, the world may not trust China and Russia too much. Russia and China can be the party poopers – but they cannot be the life of the party. Russia and China as significant military powers as well as a part of P5, will want their pound of flesh. They will, of course, be afraid of being left out!

Among the P5, US and EU have their own reserve currencies – leaving Russia and China out in the open. Russia and China (as full P5 powers) will want a ‘lion’s share’ of influence in any new architecture. Which any Third World grouping will not give.

The US will not have them and the EU does not want them!

Stalemate.

Russia and China play blame-the-US game

The US has been evading transparency by not revealing M3 figures (on dubious grounds), printing money 24×7×365 and creating toxic assets. Now when the muck has hit the fan, they are acting coy. And this made the Chinese very angry.

China has alleged that the US has plundered the world – and is is now looking after its own. China alleges that the US is not bothered about the problems the US has created for other countries.

Late In the day, Mr.Hu … This is something that the world has been talking about for a long time. China has been a major supporter (and victim) of this scam – by allowing US companies unlimited access and support. Chinese citizens have been duped with low paying jobs at these enterprises.

Is China forgetting history … Mr.Hu – Today it is the US – but yesterday, it was Europe, Mr.Hu. Europe was blockaded by the US for the last 100 years – and hence, European loot is possibly forgotten in China. European loot was accompanied by a lot of bloodshed and killing also, Mr.Hu.

Has the Leopard Changed its spots Possibly, you dont know, Mr.Hu, because China has very little wildlife left. Leopards dont change their spots. Europe behaves today, because it has no options.

China is making common cause with EU over the dollar crisis. While Chinese disappointment is understandable, their actions are beyond comprehension. Just why will Europeans be bothered about Chinese welfare? Just look at their history!!

For that matter why in the world would anyone be interested in Chinese welfare – except the Chinese, of course. The Chinese Government is looking at all options – except Chinese welfare, unfortunately.

The answers A new currency floated by the five major economies who are most affected today – China, Russia, India, Brazil, South Africa. Maybe Japan will also join in. But, the answer, Mr.Hu is with these 5 – and not Europe.

OK … join the gang

Sometime back, Medvedev joined China in blaming the US. Now that the blame game is over, is it finished. Over. Satisfied with blaming the US, Mr.Medvedev.

Now what

Mr.Medvedev, now that you have blamed the US, are you better off. Apart from some (dubious) satisfaction, what else have you got.

Russia has a lot to feel bad about, I agree. US$400 billion is a lot of money – and to see it being printed out of existence, cannot be good. Sometime back China started the blame game – and now Russia has joined in. However, I am yet to see any constructive action. Especially from China and Russia.

Russia, China should join up with with Brazil, South Africa and India to present an alternative to the world community. With this grouping and backing, at least a 100 countries will sign up within 30 days.

Wakey, wakey, Mr.Medvedev. Let us get to work. Blaming the US gets us no where.

Japan + ASEAN

China-leaning Lee Kuan Yew with an Islamic Malaysia may not be very hot about ‘giving so much influence’ to a ‘new member’ like India for an ASEAN initiative. Any action which hurts the US, their largest market and patron, will be something that will make Japan and ASEAN hesitate. The very economic model of ASEAN + Japan is undervalued currency + exports to the USA. Hence, they will be wary of any initiative that affects the USA – and the West.

Status Quo …

And that is why South Africa and Brazil are essential for India. China and Russia must join in. The benefits are too obvious – and the fallout is non-existent!

The New 5 – Three Horsemen Of Apocalypse

The real action will be 5 countries – Russia and China on one hand – and India, South Africa and Brazil on the other.

The G3 (i.e. India, South Africa and Brazil) have functioning democracies, decent regulatory systems (which can be ramped up), the technology platforms, the trading systems, a vibrant entrepreneurial class – all of which is powering their economies forward. What they don’t have is P5 status – which is useful, though not essential.

This Washington meeting – Contours Of The Deal

During the con-fab, ‘committees will be set up’ which will create mechanisms for this management. The EU-USA-Asia may agree (for the time being) on a broad a global regulatory and oversight body to monitor and maintain oversight over a Dollar-Euro currency regime. Some of Asia may want to cling to this Dollar-Euro skirt.

But what the BRICS must work on is a Third reserve currency for the Third World.

The new currency may an Asian-Developing world currency. The big issue for the developing world will be obtaining assurances against predatory raids by the dollar bloc and the Euro-zone to dismantle any new system – like the alleged plot of 1997 Asian crisis.The lesser issues will also be inter-bank settlements, anchoring currencies (the role of gold or bullion).

Following is a 2ndlook at the how the Third currency option will work.

The Organization for the 3rd currency option

Q: Who will handle this currency?

A: The BRIX Reserve Organization will be a the global body which will manage the operations of the BRIX currency. This organization will have initially shareholding by the BRICS countries – equally.

Q: What will happen when new shareholders come in?

A: The promoter shareholders will (later) offer shareholding to other countries to the extent of minimum 1% of total capital and not exceeding 5%. The promoter countries will gradually reduce their shareholding proportionately and equally by inducting other shareholders or selling existing shareholding to new shareholders.

Q: What will be the capital contribution by member countries?

Member countries will contribute to capital equal to 4000 tons of gold (but not gold). Capital will be increased by addition of new members and/or existing members. In case of exchange rate fluctuations, exchange rate will be based on 90 days average. In case of any significant decline in exchange value, concerned member country to make good the shortfall in capital contribution or face shift in member status.

Q: What will be the role of gold in BRIX-BRO system?

A: All citizens of member countries will be allowed to own and trade in gold – within and outside the country during peacetime. In cases of national emergencies, countries may impose export restrictions for a limited defined period.

Governments will not be required to maintain any gold balances at all.

Q: What will be the role of BRO?

A: Firstly to provide and maintain Realtime Settlement System (RSS) – a on line, real time, trading platform – for all the national currencies of member banks and countries. Additionally, there can be ‘permitted’ currencies’ – like the Dollar and the Euro, for trading in non-member currencies.

The RSS will enable participating members will be allowed to nett off transactions.Th BRO will also approve ‘standard packages’ for over-the-counter (OTC) trading of derivative products.

Q: How will BRO make money?

A: The RSS will earn fees through transaction fees and earnings from float – which currently is used by the US and ECB. Individual countries based on trade and production patterns can expand or contract currency supply. Based on supply and demand for individual currency, the RSS will aid the price discovery and setting. National Central Banks will be able to borrow or lend BRIX through the BRO.

Q: Who will man the BRO?

A: Banking specialists will be deputed from (initially, founder) member countries in equal proportion at each level in the organization. Over a period of time, the BRO will build it own cadre of banking specialists – starting with entry level candidates.

The Currency

Q: What will the currency be called?

A: Initially, the start up name of the currency unit can be BRIX.

Q: How will the BRIX currency look like?

A: The BRIX currency will only exist in bank accounts. It will not be printed, circulated physically or stored in vaults.

Q: What will happen to current US$-Euro reserves?

A: Initially all dollar reserves will be used to facilitate trade between member and non-member countries. The BRO will maintain Dollar /Euro reserves equal to 3 months requirements for member countries. Excess dollar reserves of member countries will drawn down gradually over 12-36 months based on market developments.

Q: How will monetary expansion of the BRIX be handled?

A: All monetary expansion of the BRO will happen through trade volumes and capital infusions. The BRO cannot print, monetize, expand money supply.

The Mechanics and Operations

Q: How will exchange rates be determined?

A: Demand and supply for currencies will determine exchange rates. Output of products, services, will create supply and demand for various currencies.

Q: Who will be allowed to trade on the RSS?

A: National currencies will be traded on electronic platforms with accredited traders, backed by institutional settlement system, trade guarantee – based on demand and supply for various national currencies.

Member Benefits

Q: What changes will countries need to make?

A: Very few. All transactions must be linked to the index currency – the BRIX. No country will be required to change from their current currency system. As trades happen, a BRIX amount will be created. As the payout happens, that many BRIX will be extinguished.

Q: What reserve requirements will be imposed on member countries?

A: All countries will be required to maintain a reserve of 1 month’s BRIX usage with the BRO. This amount will earn interest rate at market determined rates.

Q: What happens when countries go through emergencies, catastrophes or calamities?

A: In case of extreme volatility in any currency due to currency /economic /natural disaster, the BRO Board of Governors may approve loans – which will be guaranteed by the donor central banks. Loans by BRO will at all times will be covered by guarantees.

The benefit of this that any country can raise loans from BRO by finding sponsors. Thus hegemony by a few powerful country will not be possible. Thus a small economy (like say) Iceland can raise a loan by finding a consortium of guarantor (say African) countries.

National central banks may guarantee ‘interest’ payments or ‘interest+principal’ amounts. In case of normal commercial loans, the principal and interest repayments can be a commercial credit decision by the BRO.

Q: How will countries maintain their foreign currency reserves?

A: Countries will need to maintain minimal BRIX reserves. BRIX will be fully convertible into other currencies. However, since all national currencies will be convertible, the need will be minimal.

Q: What will be the disclosures and information requirements?

A: BRO will collate, circulate and publish information given by all member Governments regarding M3, currency, etc.

Safety, Checks & Balances

Q: What will happen when a ‘rogue’ Government prints too much money?

A: Whenever, exchange rate volatility exceeds the prescribed bands, BRO will impose trade restrictions after due inquiry.

Q: What about predatory currency traders?

A: Since, BRIX cannot be bought except by creating business trade, there cannot be large holdings of BRIX which can be used for predatory activities. National currencies of member countries can be at risk if excessive monetization happens. But, since, trading in all currencies will happen continuously, excessive monetization will first come to light in terms of excess supply and deterioration in exchange rates.

Q: What about fake currency?

A: The BRO will have its own mint and currency printing units which will print currencies for member countries. This will ensure that mala fide, fake currency by foreign agencies, criminal elements will be eliminated. The BRO may also insist that weak economies print their currency at the BRO mint to ensure that there is transparency in money supply.

Q: What about trade in Government debt and securities?

A: All member countries will be required to intimate and route transactions of Government debt, securities through the RSS. This will ensure that there will be complete transparency in debt, M3, etc.

End game

With a BRICS grouping behind an initiative outlined above, a 100 countries will join this system within 30 days. Japan will defect – as will some poorer European countries. OPEC countries will dither – and then join. Singapore and Malaysia may also dither for some time – but will finally join. Most of Africa, South America and Asia will sign up.

With US$6 trillion amongst the BRICS, Japan, ASEAN and Africa, the Third currency Bloc can give a huge financial stimulus to the global economy. Poorer countries can jump start industrialization – and massive orders for high tech equipment can be placed with Japan, EU and USA to jump start their economies.

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