2ndlook

Mumbai Massacre – The real blame and real culprits

Posted in Business, Current Affairs, Islamic Demonization, Media, Uncategorized by Anuraag Sanghi on November 30, 2008

Vital stats of the Mumbai siege operation

On 26th November, a Wednesday night, ten terrorists, (nine killed and one taken alive), mounted a terrorist strike in Mumbai. They attacked at least ten venues (Cama Hospital, Guru Tegh Bahadur Hospital, CST Train Terminus, Leopold Cafe, Girgaum Chowpatty, Metro Junction + the four buildings occupied) and later occupied four building complexes ((The Oberoi Trident Hotel; The old Taj Mahal Hotel and the new Taj;The Nariman Building), killed nearly 190 people over a space of nearly 60 hours. These terrorists came with machine guns, machine pistols, grenades, incendiary bombs, satellite phones, credit cards, Indian currency and US dollars, conflict rations of dry fruits like almonds, raisins, etc.

Indian commando On Nariman House, Mumbai

Indian commando On Nariman House, Mumbai

The assault on these terrorists, initially by local police and later by the elite NSG and MARCOS commando units spread over 60 hours, sanitized nearly a 1000 rooms, covered nearly 70 kilometres of passage ways, corridors, alcoves, enclosures, rooms and passages, in 4 building complexes, spread over nearly 1 square kilometre of dense urban population. Some 150 commandos were used – and final tally of defence personnel killed was 14 policemen and 3 commandos.

Jyoti Krishan Dutt

Jyoti Krishan Dutt

After this operation, crowds cheered and the commandos were surrounded by jubilant crowds. Indian media provided live coverage of this terrorist carnage with multiple cameras at multiple sites in a brilliant operation.

Israeli ‘experts’ were quick to condemn the Indian commando operation. Imagine the Israelis talking about collateral damage. ‘Experts’ carped about the total intelligence failure – whereas, it was clear that requisite intelligence information was drowned in the accompanying ‘noise’.

The aftermath

One day after the end of this operation, the Indian media and commentators are unanimous. Blame the politician.

The Times Of India, desperately somber, intones,

as heaps of bodies lie in morgues in a charred or decomposed state, and loved ones huddle outside to receive them one last time, it is time to ask our politicians: Are you going to go back to playing politics with our lives? Or are you going to do something worthwhile with yours? How many deaths will it take till you know that too many people have died?

Normally incisive, MJ Akbar, falls into the trap of blaming politicians.

The most significant part of the outrage should not be obscured by the drama of events hypnotized by attack, we should not become oblivious of defence. We have been defeated by incompetent governance, both in Mumbai and Delhi … Complacence and politics gave the terrorists more protection than silence or deception could. But ineffectual leadership turning a tough nation into a soft state. We should have been world leaders in the war against terrorists, for no nation has more experience Instead we are wallowing in the complacent despair of a continual victim. Some three years ago, Dr Manmohan Singh told George Bush that there were no terrorists among Indian Muslims. Perhaps he was unaware of the 1993 Mumbai bombings. Perhaps he want ed to please two constituencies: Bush, who needed a certificate for his view that democracy was the cure for all evil; and local Muslims, who were not being given jobs but could always be offered the consolation prize of a pat on the back. Dr Singh certainly did not fool any terrorists. The Lashkar-e-Taiba might even have interpreted such self-congratulation as a challenge.

Declares, Lord Baron Meghnad Desai,writing in the Indian Express,

It is a test of leadership.

Can India’s political parties, tested for 60 years in the crucible of democracy, rise to this occasion and save our country? Can we set aside partisanship of our politics and forge a united front? Can the two major parties set aside differences in their visions of India and weave a common narrative of why India is a nation, united and single?

Hindustan Times joins in with its own two bits. Inderji Hazra writes, in a very superior fashion,

Frankly, the ‘lack of form’ shown by our political class isn’t a big deal for me. The pre-poll mud-slinging looks bad. But so does the shit on our roads. What makes me break into a twitch is something beyond this beggar’s opera. When pundits talk about ‘asymmetrical warfare’, they never mean lathi-wielding policemen vs AK47-armed terrorists, do they? And aren’t patrols and security checks, whether along sea fronts or at the entries of malls too much of a drag to bother about day in, day out? As for bringing about more stringent anti-terror laws — or even following standard procedures of law and order and investigations — is it worth all that effort when only two things really determine how easy or hard it will be for future terrorists to attack us?

The two things: political meddling and the law of averages.

Before coming to conclusions about this attack, let us also look at some other incidents across the world in the last few years.

Global Benchmarks

On 23rd October 2002, at a theater in Moscow, the Nord-Ost incident, some 40-50 Chechnyan separatist “Special Purpose Islamic Regiment” took an estimated 850 people hostage. An estimated 300 Russians died in an attempted rescue – and 39 terrorists were killed. This entire operation took was completed after 3 days by releasing a deadly poison gas – that killed many more hostages than the terrorists.

On September 1st, 1995, again in Russia, in the Beslan school tragedy, more than 360 people were killed in the 1995 raid, purportedly led by the Chechen warlord Shamil Basayev, who escaped during the botched rescue attempt by troops. Basayev’s claims of responsibility for this attack on Beslan School Number One, are disputed. Basayev used a gang which turned out to be bigger than what Russian authorities initially claimed. An investigator, Mr. Torshin disputed the claim, posted on a Chechen website, saying it “could be a hoax”. Of the 32 hostage-takers, one was captured alive, 30 died and one was blown apart. And the number of time taken to ‘resolve’ this crisis was again about 3 days.

On 5th May, 1980. the ‘famous’ SAS rescued hostages from the Iranian embassy in London. On April 30th, 1980, six Iranian Arab gunmen, opposed to Ayatollah Khomeni, took hostages, demanding release of some nearly 100 Iranian political prisoners. After 5 days of planning, some 30 ‘crack’ SAS troops overran the embassy. Of the six gunmen, five were killed and one arrested. Of the twenty two hostages, ninteen were set free, one died and two injured in the cross-fire. A film was later made on this operation.

In Peru, the siege of the Japanese embassy began on 17 December when the Marxist rebels stormed a diplomatic cocktail party, seizing more than 400 guests as hostages. The Peruvian forces, with the help of the British SAS, took two weeks to plan this assault.On April 22nd, 1997, the hostages were finally released – after some 4 months.American FBI pitched in, claiming some credit for this operation.

In India, the Akshardham Temple attack took four days to clear.

Let us get real, shall we?

The Indian Government (Central and State together) have an employee base of about 55 lakhs. The number of elected representatives total around 5,500. The Indian population totals 110 crores (1100 million). It makes no sense to make scapegoats of 5500 politicians.

Blaming politicians, who are temporary office bearers, is escapist and is a well tuned strategy by the entrenched bureaucracy which bears the full responsibility for this – the success of this operation and the lack of efforts to kill this problem at its root.

Future Actions

India needs to act differently. India must work on a three point agenda.

Pakistani tribesman makes a grenade launcher in the Darra Adam Khel tribal area, 47 km from Peshawar

Pakistani tribesman makes a grenade launcher in the Darra Adam Khel tribal area, 47 km from Peshawar

One – Close down the Peshawar arms bazaar. This small time bazaar became the sourcing centre for terrorists all over the world. Initially, stocked up with arms from the CIA funded jihad against the Soviets in Afghanistan, Peshawar, has become a problem that never ends. If required, there should be a UN mandate to send in a multinational force to surround, capture and destroy this centre for arms and armaments.

Two – Withdraw all technology from Pakistan for all arms and ammunition. No RDX, no tanks, no F-16s, no APCs. Pakistan must be put on strict diet of military technology blockade by the world. No less.

Three – Secure Pakistan‘s borders with a tripartite agreement between China, India and Pakistan which will guarantee Pakistan‘s current borders. No disputes, no claims from Pakistan have any legitimacy any more. Let Pakistan take care of its current territory and people.

These three actions will rid the sub-continent of all tensions and conflicts – no less. It has to be underpinned by India and China. The West, and Pakistan will protest, but must be made to follow this prescription.

Israel As A Country Model For India

Posted in Current Affairs, European History, India, Islamic Demonization by Anuraag Sanghi on October 25, 2008

Should India adopt a hard-line policy like Israel with ‘zero tolerance’ policy on ‘terrorism’.


Probably the best depiction of Israeli role in the world.  |  Cartoon by Jim Morin in Miami Herald  on February 17, 2012  |  Click for larger image.

Probably the best depiction of Israeli role in the world. | Cartoon by Jim Morin in Miami Herald on February 17, 2012 | Click for larger image.

Soft state … soft target

The Indian State has often been accused of being soft on terror‘soft on terror.’ We are frequently reminded how we should consider patterning India along hard lines like Israel – which has ‘zero tolerance’ policy on ‘terrorism’. As proof, the Israeli actions against the perpetrators of the Munich massacre. Or the capture of Eichmann. The air raid of Entebbe is another example that is referred to, with a glint in the eye.

Israel - The US Hatchet Man (Creative credit absent at source. Cartoon courtesy - http://www.science.co.il). Click for larger image.artoonist

Israel - The US Hatchet Man (Creative credit absent at source. Cartoon courtesy - http://www.science.co.il). Click for larger image.

Israel’s Tenuous Existence

The first disqualification against accepting the Israeli State model is the fact it is heavily dependent on America, for fiscal and military aid – “since 1974 totals roughly $80 billion” and an article from Daily Times Of Pakistan says enviously “The United States has poured $140 billion into Israel since its formation”. That is about a US$56,000 for every Israeli family.

After all, (as NYT says)

America has vital long-term strategic interests in the Middle East. The gulf has well over 60 percent of the world’s proven conventional oil reserves and nearly 40 percent of its natural gas.

To some it may look like a boon, but is surely the kiss of death.

American policymakers began regarding Israeli strength as an American asset in the Cold War, they supported significant aid as a matter of strategy, not charity. … American aid continues to flow to Israel. … critics on the opposite end of the political spectrum argue that while aid to Israel may be tied to the best of intentions, it does more harm than good to the Jewish State by propping up a big and inefficient government and making Israel dependent upon the U.S.

The Israel and USA tango - who is using whom!

The Israel and USA tango - who is using whom!

For how long can any country, society, individual survive on foreign largesse? Note how during the 1973, Arab Israeli War, the tide of battle finally turned when the massive US airlift of weapons, tanks, spares happened! Which itself, is self-serving – American assistance, emerging as a disjointed policy that urges a peaceful resolution to the conflict while boosting military aid to Israel.”

Another client state of US, Pakistan enviously records, that

Israel is the only country that receives all of its U.S. aid in a single package, while others only receive it in quarterly installments.” It continues, “Most recipients of military aid are obliged to spend it in the US but Israel is permitted to spend 25 percent of what it receives to subsidize its own defence industry,”…

Israel’s Future With Its Neighbours

The biggest Israeli failure is the state of permanent hostility it has engendered in the neighbourhood. Israel’s dysfunctional relationship with its neighbours has taken significant efforts from Israel – possibly, based on its superior ‘European’ extraction.

The Israel and USA tango - who is using whom!

The Israel and USA tango - who is using whom!

How long can Israel depend on US support which since

“1982, … has vetoed 32 Security Council resolutions which were critical of Tel Aviv, a number that exceeds the total number of vetoes exercised by all other permanent member states put together.”

American support may change (linked to American decline?) with time – but Israel’s neighbourhood is not changing!

The Persecution of Palestinians

The logic for the creation of Israel was persecution of Jews in Europe. Within 10 years, the same ‘persecuted’ Jews, allied themselves with their former persecutors and invaded Egypt – precipitating the Suez Crisis. Thus the very logic of the creation of the Israeli state was corrupted within 10 years.

The subsequent occupation of neighbouring territories was a continuation of this policy of aggressive expansionism based on European and later American support.

Israeli Style Of Justice

Israel’s population is less than Pune

Pune’s official population of 45 lakhs is close to Israel’s population of 72 lakhs.

The only logic for Israeli policy is the probable Israeli intention. Is it that they are not staying in the neighbourhood after (or when, if you prefer) American aid ceases?

India with a population of 110 crores, has no such option.


Western Political Concepts – End Of The Road

Posted in Business, Current Affairs, European History, Feminist Issues, Gold Reserves, History, Uncategorized by Anuraag Sanghi on October 9, 2008

Political Evolution In Europe

Europe, long used to slavery (as were other large parts of the world), has tried to invent political systems that give them the ‘benefits’ of slavery without the accompanying corollaries. Apart from linguistic and cultural factors, the significant factor in all these ‘different political’ systems is approach to labour.

Western political discourse stems from the fractured and fissured European history. As a comment on the 2ndlookblog said,

“Western notions of a nation evolved from their tribal roots, where linguistic and cultural identities eventually defined their political units as nations … Since the late twentieth century Europe is making an attempt to politically unite these disparate nations.” (comment by Parag Tope, 2ndlook blog reader).

Contemporary discussions on political systems centre around Western academic terms and theories. While, these are true (partly or completely) for most countries in the world, they are of little relevance in India.

Feudalism

Rulers gave large land tracts to feudal lords – who in turn provided kings with tax revenues, soldiers and administered laws in their fiefdoms. With the rise of nationalism, authority became centralized. And the economy passed into the hands of land owners. Farm workers and tenants lived under paternalistic land owner-employers. Employer change was not allowed.

In return, the serfs and tenants received ‘protection’ from slave raiders, invaders, the king’s soldiers and the Church authorities. Extremely rigid social structures and static social status in feudal societies increased resentment among ‘farm’ workers. Increase in tithes, taxes, wreaked havoc in farming – reducing trade, farm productivity. Demand for labour was thus also fluctuating.

Primogeniture ensured that feudal titles passed from father to eldest son in most European societies. Primogeniture led to high unemployment among the upper classes with two options – employment with the Church or a mercenary soldier. This gave rise to an increase of members in the Church service and a large mercenary class of knight-soldiers, who fought for the spoils of war. The rich Roman Church gave lifelong employment and a comfortable standard of living – with prestige. Mercenaries were used in the crusades, for waging colonial wars, capture of slaves. The effects of primogeniture were widespread and a cause for concern.

…disinherited sons, victims of the law of primogeniture, victimised others in turn: they became, as we shall presently see, public robbers; … In our own time, much of the corruption in church and state, and not a little of the vice festering in the bosom of society, are traceable to the same cause (primogeniture). (Bold letters, ellipsis, brackets mine)

The decline in feudalism and primogeniture coincided with the rise of capitalism.

By the seventeenth century a number of factors have begun to undermine primogeniture as a system of inheritance. The most important is the development of capitalism and the concomitant rise of the bourgeoisie which challenges the hegemony of the landed aristocracy …

Russia provides an interesting case study. Due to its vibrant agricultural sector, lack of access to slaves and colonies, Russia’s industrialization was delayed. Post-slavery Europe, with a shortage of labour was a ready market for agricultural output. Russia used its agricultural output to finance Russian industrialization.

The abolition of feudal serfdom was designed to accelerate the industrialization of the economy by compelling the peasantry to raise crops on a commercial basis, the idea being that the profits from exporting grain would be used to import foreign technology and machinery. In many ways, the strategy seems to have been successful: grain exports increased fivefold between 1860 and 1900, while manufacturing activity expanded rapidly. Further measures in 1906, known as the Stolypin Agrarian Reform, helped to establish large, consolidated farms in place of some of the many small-scale peasant holdings.

As a NYT article notes,

Russia occupies an unusual niche in the global food chain. Before the Russian Revolution and the subsequent forced collectivization of farming under Stalin, it was the largest grain exporting nation in the world.

Wandering Gypsies increased discontent with ‘free’ lifestyle. Result – persecution of the Gypsies. This discontent paved the way for the communist ‘revolution’. Lenin happened to be there.

Capitalism

Feudal employers reacted to demands for greater labour freedom with increased imports of slaves. In turn, slavery created labour surplus – leading to depressed wages for labour. Free labour moved to cities where industry could absorb this low-cost labour. Capitalists wanted and got ‘laissez faire’ capitalism – which was a ‘coda’ for unlimited slavery. The restrictions on laissez faire were actually restrictions on slaves.

Decreasing demand for agricultural labour due to slavery led to depressed wages. Unemployed peasants entered the trades – and revolutions.

Slavery depressed wages and increased unemployment – giving rise to a new class of journeymen. Possibly, even freemasons cults were born in similar manner – where ‘free’ masons withheld knowledge to stay free from serfdom. This unified organization was the object of both envy and resentment – resulting in persecution by the Church and authorities.

This lessened responsibility for land-owner employers and increased the number of employers – with greater freedom to exploit foreign markets. Lowered entry barriers with lesser labour welfare responsibility increased competition levels among the employers.

Colonial loot from South America and India, Canada and Australia reduced cost of capital to hasten industrialization. Thus ‘zero’ cost capital from colonial loot and ‘zero’ cost slave labour drove the engines of industrial Europe. Patronage by large land owners, financial backing by emerging ‘industrialists’ gave the educated and qualified, the resources to focus on innovation and invention.

Marxist 'critque' of Capitalism!

Marxist 'critque' of Capitalism!

This was the ‘Golden Age of Capitalism.’ As slavery receded (due to many revolts and rebellions) in 19th century, Capitalism also faded. Slavery and colonialism allowed creation greater concentration of wealth – in exchange for greater perceived freedom. Two aspects led to decline of capitalism. One, was receding slavery, and secondly lack of new colonies and peoples to loot, pillage, and commit genocides.

After the eclipse of Capitalism, the West needed a new economic model.

A popular writer waxing nostalgic for this ‘golden age’ was Ayn Rand. Her glossing over slavery, her token objections to segregation were reminiscent of an age gone by. Her disregard for family structures was her contribution to ‘modernizing’ capitalism. The economic contribution of slavery to the wealth of the West, the creation of patronage structures for ‘innovation and invention’ and the loot from the colonies were all absent from Ayn Rand’s hagiography on capitalism.

Communism

Faced with a crisis of labour due to abolition of slavery, Europe (specially England) started looking at alternatives for a new economic model. They selected a fugitive theorist, whose theories were creating unrest in mainland Europe.

Communism awarded a monopoly over slavery to one employer – the State. Single employer, total monopoly (on labour, political power, economic resources), impress the slaves with the glory and future – were the elements of the new political system that Europe devised. This was the only Western ideology that was born out of design. With the demise of slave trafficking, 1832 in Britain; slavery re-introduced in 1802 by France) Europe was concerned about labour and industry.

France, Brussels, Britain etc. took the lead and provided patronage to Karl Marx and Frederick Engels to devise another system – an alternate to slavery. In the next few years, their publications found eager publishers and sold well. Their books, Economic and Philosophical Manuscripts of 1844, The Communist Manifesto (published in) 1848 laid the basis for an alternative to capitalism. Marx and Engels received significant royalties from the sale of their books – and could survive on earnings from their writing careers.

Obviously, Communism could not besold’ to the designated victims, that they were the new slaves. It had to be ‘bought’ willingly by the ‘target audience’ as yet another ‘level of freedom’. Slavery sold as a promise of freedom – You have nothing to lose but your chains.

Socialism

Socialism

Socialism

Most European countries moved away from the slavery-capitalism-colonialism model during the 1900-1950 period. The new political construct was Socialism – which gave freedom to labor to change employers. This was a major improvement for labour – from earlier slavery and serfdom model, where employer change was not possible.

In turn, the number of employers was restricted, so that there was not too much competition for labour or markets. The burden of labour welfare was imposed on the limited number of employers – in return for limited competition for customers and employees. This resulted in a high tax burden on employers – in return for lesser competition, high trade barriers, non-tariff barriers.

A twist in this socialist model was the Bretton Woods mechanism. At one stroke this created ‘invisible’ reverse flows from the poor to the rich countries – with minuscule but ‘visible’ show of flows from the rich to the poor.

Same difference ...!

Same difference ...!

Individual Variations

There are individual variations in each country – based on its own history. Some countries, like Russia, China, Vietnam, Albania moved directly from feudal system to Communist State model. Japan, Germany and Italy managed to move faster to socialism, directly from feudalism – with a short period of capitalism.

Non European Models

These political structures were propagated very aggressively by their respective adherents. Modern academia touted these structures as the only matrix in which countries can be slotted.

All socialists now ...

All socialists now ...

India for instance is very different – where non-State reform has played a very major role in crime, policing (JP’s dacoit reform), land reform (Vinoba Bhave’s Bhoodan movement), political change (JP’s Sampoorna Kranti movement). After the economic buffer from Bombay High oil discovery in 1974, the Indian State has certainly, steadily shed various aspects of its colonial legacy. More importantly, India did not go through the slavery-colonialism-capitalism route at all.

It has instead inching towards a republican, (largely) market driven, democratic, declining role of State, multi-ethnic-religion-linguistic political model which is unique in modern history. What India needs to do is to one decrease the colonial inheritances further and two, give this country model a name. The lack of an academic name, slots India as a socialist country – where as it has been reducing the features of a socialist State.

China And India – 2 Books, Two Views, Take a 2ndlook

Posted in Current Affairs, Indo Pak Relations, Media, Uncategorized by Anuraag Sanghi on September 29, 2008

The India China Relationship

To most in India, China is possibly the biggest defence threat and is a ‘feared’ competitor.

However, the 2ndlook blog has discounted the ‘threat of the Chinese dragon’ based on an active engagement with China – and not benign neglect.

No less than Arun Shourie has weighed in on the ‘Chinese threat’ side of perception. This puts the 2ndlook blog in a minority. In the 2ndlook blog dated May 31st 2008, there was a significant analysis of the China-India face off. More on that later.

Two Books – Opposite Themes

In the meantime, Arun Shourie’s book has evoked scant interest – excerpted below.

… important parallels, as Shourie points out, between the situation pre-1962 and the situation now. Border talks are regressing, Chinese claims on Indian territories are becoming publicly assertive, Chinese cross-border incursions are rising, and India’s China policy is becoming feckless … India has always been on the defensive against a country that first moved its frontiers hundreds of miles south by annexing Tibet, then furtively nibbled at Indian territories before waging open war, and now lays claims to additional Indian territories. By contrast, on neuralgic subjects like Tibet, Beijing’s public language still matches the crudeness and callousness with which it sought in 1962, in Premier Zhou Enlai’s words, to “teach India a lesson”. (Stagecraft and Statecraft: Lessons for today’s India from the 1962 Chinese invasion).

The lack of coverage in Indian media for an important book like this is a matter of concern. At the same time, another book on a similar subject, from an American perspective is vastly different – and closer to the views of the 2ndlook blog.

This one, … (by) Ms Shirk (former deputy assistant secretary of state who dealt with China) … should become a must read for every Indian who cowers and cringes at the very mention of China. For, as Shirk shows, there is no reason to do so. The core of her message is that only one thing has changed over the last two decades: instead of being a paper tiger, China has become a cardboard tiger.

… recall how China responded to the Tibetan uprising just before the Olympics to get a sense of its vulnerabilities and the resultant paranoia. The Chinese embassy in New Delhi was surrounded by three rings of defence against attacks by Tibetan women. You don’t become a super power merely because you have some money and some guns.

the Chinese leadership no longer has to fear the foreign devil who speaks English; it has to fear the average Chinaman who does so. She also shows how there is no shortage in the variety of unrests in China: you name a type of discontent, and it is there. But unlike India, China has not had the sense to develop political outlets for the head of steam that is building up. The only way it knows of dealing with mass discontent is repression.

Shirk also deals with the aspect that the Chinese leadership is most anxious to hide: a split not in the ranks of the party, but in the highest echelons of the leadership. And the second- and third-level Chinese leadership knows this. The drive against corruption, for example, when mayors are hanged, is seen as just a tea leaf, a straw in the wind that the big boys are pulling in opposite directions.

contrary to popular belief, especially in India, China can’t get along with anyone. Japan, Taiwan, Korea, India all have difficulties with a neighbour whose word can’t be trusted and who tends to rely more on strong-arm tactics than diplomacy. This, too, seems to be a part of the Communist party repertoire, merely their way.

As we see in this book, when push comes to shove, China always backs down. Its leaders simply don’t have the stomach for a confrontation because they don’t know how it will turn out for them personally. That’s the key thing: the personal interests of the Chinese communist leaders. It now always comes before the country’s interests, or is at least seen as being coterminous with it. (Book Review of FRAGILE SUPERPOWER by Susan L Shirk).

The Chinese Paper Dragon

The Chinese success is similar story. Much like USSR’s break-up, the Chinese monolith is more fragile than apparent. Apart from the usual suspects of democracy, economic disparities, social upheavals, etc, there are 3 factors, which most Chinese analysts miss.

One, the Tibetan’s are held together by force – and no one imagines that this holding them together by force, can be in perpetuity. The Muslim provinces of Xinjiang (another one-third of China) is usually ignored. These issues are usually minimized by the current strength with which China holds these provinces together.

But possibly, the biggest issue is the share of revenues of the Chinese central governments.

Secondly, the Chinese Central Government commands less than 25% of the total tax revenues – and the 75% goes to provinces. This, possibly is why the Chinese Government cannot reduce cigarette usage in China. Most expenditures on health, education, pension, unemployment, housing etc. are borne by the local government – and hence there is patchwork of systems which run across China. Most of executions and imprisonments of bureaucrats (including the Mao’s Cultural Revolution) is to demonstrate central authority. The PLA is the only factor that keeps China together. A Chinese Lech Walesa or a Nelson Mandela could unwind China very quickly.

Significantly, and thirdly, the Chinese diaspora and Western MNCs are biggest investors in China – and also the main beneficiaries. This currently keeps resentments of the local Chinese under control – as the neighbour is not getting much richer. But at one stage the domestic Chinese will want to greater say and control over the Chinese economy. He may not be happy with just a well paying job and abundant, low quality goods.

India vs China

On these three counts India scores significantly better than China. India’s problems with Kashmir are a British legacy, an external creation – as is the North East problem, to a degree. India’s significant issue (probably temporary) is the Naxalite problem. India’s central Government has greater control and share over total revenues – than the Chinese. India’s recent economic and political successes are entirely home bred – with the exception of remittances from the expat workers in the Middle East.

2ndlook blog proposes a different way out of this India-China stalemate.

The Detritus

As various colonial powers were forced out of various colonies, left behind was the garbage of colonialism. This post-colonial debris has become the ballast, that is dragging down many newly de-colonized countries. And it is the stereotypes and images of each other that seem to be determining the relationships between the two countries.

India

Vietnam suffered from a prolonged war (1956-1976) – and finally peace had a chance after 20 years of war. Korea remains divided. The Cyprus problem between Turkey, Greece and the Cypriots has been simmering for nearly 100 years. The role of the Anglo Saxon Bloc, in Indonesia, the overthrow of Sukarno, installation of Suharto and finally the secession of East Timor is another excellent example. The Israeli-Palestinian conflict (1935 onwards) will soon enter its 75th year. The entire Arab-Israeli-Palestinian conflict is a creation of the Anglo-French-American axis. The many other issues in the West Asia and Africa are living testimony of the Western gift to the modern world.

Closer home is the Kashmir problem. After 60 years of negotiations, India-Pakistan relations have remained hostage to the Kashmir issue. Similarly, between China and India, the border issues remain 60 years after the eviction of Britain from India.

We Hereby Resolve

Let us (India and China) decide that for the next 60 years, these legacy border issues will remain in cold storage! There are far more pressing issues that need our attention. Let us focus on those issues. We have a lot of catching up to do.

Nixon Chop And Bush Whack

Posted in Business, Current Affairs, European History, Gold Reserves, History, Indo Pak Relations by Anuraag Sanghi on September 24, 2008
The Bush Era Balanced Score Card

The Bush Era Balanced Score Card

The Dollar-Oil Tango

From the Nixon Chop to the Bush Whack, in the final months of Dubya’s Presidency, the Bush Family has been in the Presidency for 12 years of the 37 years. And in positions of lesser power for the entire period. George Bush Sr. was the US representative to the UN during the Nixon era – when Nixon made his infamous remarks to Kissinger about the ‘sanctimonious Indians’ who had pissed on us (the US) on the Vietnam War’. George Bush Sr. was also with the CIA and the US Vice President during the 8 years of Reagan Presidency.

During these 37 years – between the Nixon Chop (1971) and the Bush Whack (2008), the world has changed significantly.

Every Few Years

Every 10-25 years, the world seems to go from one financial crisis to another. Trucks full of economic analysis follow each crisis – and everyone agrees after each meltdown, that there will not be another catastrophe. What the poor (and not so poor) economists don’t see is that the Anglo Saxon bloc with 80% of the world’s gold production in a choke-hold does what it wants. And the second element – they also control and influence 80% of the Oil production.

Why has this system been such a failure? Simple!

Oil & Dollars

After the Nixon Chop, the OPEC went into a huddle. After all they were selling a limited resource against payment through pieces of paper. After the Nixon Chop, the chain of events, post 1970 developments were as follows: –

The international monetary developments as of 15 August 1971 prompted OPEC, in its meeting in Beirut on 22 September 1971, to call for negotiations with the oil companies holding concessions in member countries. By 14 January 1972 there was no progress in negotiations. OPEC, in spite of a total loss of more than 11.5%, was asking for a hike of only 8.57% –- which was the loss in value of the US dollar relative to gold. In fact, what OPEC was asking for was very close to what the International Maritime Conference had, at the time, announced: a minimum increase in the dollar freight rates of 8.6%. Finally, an agreement was reached in Geneva on 20 January 1972 that provided an immediate increase in the posted prices by 8.49%. The settlement also included provisions for further adjustments until 1975 based on an index that reflected changes in the dollar and other key currencies.

Concurrently, on October 17th 1973, OAPEC members (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced embargo against shipping oil to all countries supporting Israel in the the ongoing Yom Kippur War against Syria, Egypt and Iraq – i.e. the United States, Western Europe, and Japan. Non Arab OPEC members decided to leverage their power to raise world oil prices, after the failure of negotiations with the Oil Companies (then popularly called “Seven Sisters”).

The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency. Europe tied with Russia for the trans-Europe gas pipeline. North Sea Oil production was ramped up. Norway and other countries also increased their output. Thus while not fully dependent on the OPEC, this served an important purpose – to demonstrate that the West and OPEC were on opposite sides, whereas the truth was opposite.

OPEC and West – Partners In Loot

Actually, the West saw a transfer of wealth, all over again from the Third World, via the OPEC Petro Dollars. The dollar regime was significantly beneficial to the Western World in general – and US in particular. The Oil dollar linkage allowed the US to create global reserves with other countries of US$6 trillion in just foreign exchange reserves. Other debt and trade add upto another US$14 trillion.

Approx US$20 trillion is the amount of dollars that the OPEC has managed to transfer from the Third World to the West. But the unhappy outcome of the Oil Crisis of the ’73 (for the West) was the riches and power of the Arab countries. What followed was a rising crescendo of Islamic Demonization for the last 37 years.

Oil output is currently over-valued as Western producers and OPEC jointly rig up prices. The Rest of the world pays (recently its is largely India and China) – and pays in dollars which again benefits the West.

The West limits its own output to keep up the prices. OPEC has the advantage of high oil prices. The petro dollars are reinvested back in the West. Finally, OPEC gained – and so did the West.

Who paid!

Mostly poor Indians and Chinese. And even poorer Africans.

Bush Whacked

Bush Whacked

War, Oil , Dollars & The Middle East

The justifications for invading Iraq given by the USA, were finally found to be false. The invasion was finally not related to 9/11. Iraq did not have any WMDs either. So, what was were the reasons for Iraqi invasion?

A ring side observer, former Indian Ambassador to Iraq, Ranjit Singh Kalha’s book, ‘The Ultimate Prize’ makes some interesting observations on the genesis of the Iraq invasion.

“The first mistake Saddam made was when he decided in October 2000 to move away from using US dollars as the currency for oil exports, …under the UN ‘oil-for-food’ programme.” Saddam also converted Iraq’s USD 10 billion reserve fund from US dollars to Euros. “Although this act of Saddam was not of very great economic significance in overall terms, it represented for the United States a direct challenge to the use of the dollar as a currency for transactions,” … in his just-released book, “The Ultimate Prize”. Iran followed Saddam’s move and Venezuela started initiating barter deals outside the dollar system. “If most other Organisation of Petroleum Exporting Countries (OPEC) followed the Iraqi and Iranian example, the stability of the US dollar would be at stake,” Kalha, who was posted in Baghdad during the tumultuous 1992-94 period, says.

Sidelined to the (Indian) National Human Rights Commission, Kalha’s book was also buried under a mound of silence, not reviewed and made no impression in the popular media. One press release by PTI was recycled by The Economic Times, Outlook, Sahara Samay, The Hindu, India Today, and NDTV. Google and Live Search hardly turned up anything. Yahoo.co.in showed some these links.

Bush Whacking Iraq

Bush Whacking Iraq

Iran and Venezuela followed Iraq and also moved away from designating oil sales in US dollars. After the Bretton Woods-I collapse, instead of gold, it was oil that anchored the US currency. West Asian Oil producers agreed to denominate oil in dollars after the Nixon Chop – and in turn there was no real resistance by the West to OPEC oil cartel increase oil prices by a factor of 10.

Western Oil companies also acted in concert with OPEC by limiting their own oil production. From around 4 dollars a barrel to US$40. The West was relatively unscathed – as these petro-dollars were re-invested back in the West. Europe managed to insulate itself with the North Sea Oil (Britain, Norway were the main producers along with Germany and Denmark. Europe also concluded a deal with Russia for a pipeline into Europe. North Sea Oil Production peaked in 1999-2000 with a 6 million barrels per day.

India was also not highly impacted as Bombay High started production in 1974. It was the rest of the Third World which paid this bill.

Bretton Woods – I & II

As Ron Paul noted,

“The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year.”

The Bretton Woods-I system worked for from 1945-1971 (26 years) years because Indians were not allowed to buy gold. India’s finance minster during that crucial period, Morarji Desai, (allegedly on CIA payroll during Lyndon Johnson’s Presidency 1963-1968), presented a record 10 budgets, between February 1958, up to 1967.

Bretton Woods-II, based on oil-dollar anchor, worked for another 35 years (1973-2008) till now. Oil exploration is a 5-10 year investment. Oil should be made another commodity. An easy option is to create a Republic of Pacific Islands – Haiti, Cuba, Grenada, and other West Indies. These islands can become vast oil production centres – that will help them raise their economies and can feed Asia with oil, peacefully.

The third currency bloc is essential – and it can happen only if India and South Africa decide to make it happen.

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