The War on Drugs – A 2ndlook

On one side the government promotes drug use - and on the other wages a 'war' on drugs. Click for larger image.

The drug surge

With 2 crore (20 million) drug users in the USA, prisons overflowing with more than 20 lakh (2 million) prisoners, the American policy establishment is stuck for answers.

In the past 40 years, the U.S. government has spent over $2.5 trillion dollars fighting the War on Drugs. Despite the ad campaigns, increased incarceration rates and a crackdown on smuggling, the number of illicit drug users in America has risen over the years and now sits at 19.9 million Americans. (via The War on Drugs).

In modern times

The 2 crore (20 million) figure is more than 16% of the working-age, labour population of the USA – which stands at 16 crores (160 million). The use of opium, heroin, morphine by armies created a core group of addicts, from where opium addiction increased. Used extensively during the Civil War, by 1900, the US had more than a 10 lakh (1 million addicts) – compared to nearly 2 crore (20 million) narcotic-users now.

The current wave of drug usage possibly started after the Vietnam War. It is estimated that as many as 40% of US soldiers, in Vietnam, were heroin users.

Although the U.S. government has battled drugs for decades — President Eisenhower assembled a 5-member Cabinet committee to “stamp out narcotic addiction” in 1954 — the term “War on Drugs” was not widely used until President Nixon created the Drug Enforcement Administration (DEA) in 1973 to announce “an all-out global war on the drug menace.” (via The War on Drugs).

Earlier, in the 19th century, the Opium trade with China siphoned out vast amounts of silver, under the logic of ‘free trade’, giving rise to some of the biggest Western fortunes (of the Roosevelts, for instance). Or the remarkable story of David Sassoon.

Indian labourers processing opium for the British Raj. (Image source - Wellcome Library; Image courtesy - bbc.co.uk). Click for a larger image.

The Sassoon opium saga

A Jewish trader, David Sassoon originally Daud ibn Sassoon, was born in Baghdad 1792 and died in Pune, 1864. The Jewish synagogue in Pune, Lal Deval, was set by up the Sassoon family; the Sassoon Library in Mumbai also, and above all the huge Sassoon Docks, from which their ships carried China’s destruction – opium from India.

Son of Sheikh Saleh ben Sassoon (1750–1830), David Sassoon came to Mumbai in 1832, after his father’s death in Bushehr, in modern Iran. His father, a rich Jew, well connected to the Ottomans rulers, chose Sassoon as the family name. This choice was possibly linked to the Persian royal origin, Sassan, grandfather of Ardashir-I, founder of the Persian-Zoroastrian Sassanian dynasty. Interestingly, Sason in Hebrew means joy, similar to the ancient Sumerian word for opium, hul gil.

David shifted from Baghdad-to-Persia-to-Bombay, after the Sassoon family fell out of favour with some powerful business interests in Baghdad. Meanwhile, the British branch of Sassoons cultivated the rising power – British royalty. Ferdinand Sassoon, Arthur and Philip Sassoon, hosted Prince Edwards, the future king and also Queen Victoria. Reuben Sassoon (1835-1905), part of the British branch of Sassoons, was especially close to the future king of England, Edward – to become ‘perhaps the Prince of Wales’s closest friend’. Not only British royalty, even big-name families in the USA, like

Franklin D. Roosevelt’s fortune was inherited from his maternal grandfather Warren Delano. In 1830 he was a senior partner of Russell & Company whose merchant fleet carried Sassoon’s opium to China.

Vietnam War created heroin addicts. (Book extract from - Drugs and society By Glen R. Hanson, Peter J. Venturelli, Annette E. Fleckenstein; page 256). Click to go to source.

British opium trading companies like Jardine Matheson, David Sassoon & Company and sundry traders set up The Hong Kong & Shanghai Banking Corporation for facilitating this misery.

Karl Marx’s commentary on the opium trade, written some 150 years ago, makes interesting reading even today. Much loved by the capitalists of his time, Karl Marx analyzed opium trade well.

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

After WWII, traditional opium supplies from (Greater) China, by Government granted opium monopolies of 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, after the start of Vietnam War.

For some time during the Vietnam War, the French intelligence also used drug money to funds its own operation. Like its British and American counterparts, French Government identified its intelligence agencies to manage drug trade.

After abolition of the French Indochina opium monopoly in 1950, SDECE imposed centralized, covert controls over the illicit drug traffic that linked the Hmong poppy fields of Laos with the opium dens operating in Saigon. This generated profits that funded French covert operations in their Vietnam war.

With the advent of the Fifth Republic, and through 1962, the SDECE was used as a strategic intelligence service by the prime minister Michel Debre, and was particularly efficient in the struggle against the rebellion in Algeria. (via DGSE – General Directorate for External Security – Direction Generale de la Securite Exterieure – French Intelligence Agencies).

Drug flows from these new supply sources coincided with America’s Asian Wars in Cambodia, Thailand, Laos, Vietnam, Korea, etc. These wars were justified under Eisenhower’s Domino Theory – which made Communism an enemy ‘under-your-bed’. The subject of much research, many Hollywood films and significant evidence confirm that American armed forces and the CIA were behind drugs import into USA. The so-called Phoenix operation was run by CIA with some 200 Green Berets – whose major activity apart from killings, assassinations and torture, was narcotics.

Some 75 years later Jardine Matheson-David Sassoon’s bank for opium, CIA too set up banks in the Bahamas, like the Mercantile Bank and Trust and Castle Bank and Nugan Hand Bank (incorporated in Cayman Islands and operating from Australia) to handle heroin trade out of the Golden triangle.

While the Oil and Terror linkage is much talked about, the role of Saudi Arabian funding much discussed, the global footprint of the drug trade is overlooked. As controls on gold sparked a global crime wave, the war on drugs is sparking another crime wave – a wave of terror. When the West wanted they imposed Opium Trade in the name of open markets. When the West wanted they declared a war on drugs.

Either way, someone else is paying.

The world pays for the US war on drugs!

The Indian enigma

Some things strike me as interesting: –

• All the major drugs in the world came from India – opium is afeem, khus-khus, पोस्त; cannabis is charas, ganja, marijuana, hashish. Heroin is a derivative of opium.
• The Sanskrit word for opium is अहिफेनः, अहिफेनम् ahi-fenam – which also means venom. The Arabic word afeem, Chinese word ya-pien, come from this. Though modern history believes that Arabs introduced opium to India, it seems improbable.
• Most of the world’s drug production (based on opium and cannabis) still happens in India and neighbouring countries – Pakistan, Afghanistan, Iran, Burma, Thailand, Cambodia. In recent times, Indian gold smuggling was funded by carriage and export of drugs.
• Why has drugs never become a big problem in India. Even, as Indians are significant producers, Indians themselves are not high on consumption lists – or have significantly profited from it.
• Unlike in China, or in Medieval Middle East (when drug crazed criminals called hashishis became assassins). Or the West in the last 100 years.
• Till the 80′s, these substances were available in India, through ‘licensed’ outlets.

Nail them, jail them

The police actions against drug cartels have given little benefit. The heavy-handed legal approach of criminalizing possession of drugs too has yielded no results either.

in the past 40 years, the U.S. government has spent over $2.5 trillion dollars fighting the War on Drugs. Despite the ad campaigns, increased incarceration rates and a crackdown on smuggling, the number of illicit drug users in America has risen over the years and now sits at 19.9 million Americans.

Director of National Intelligence Dennis Blair declare(d) last week that the Mexican government had lost control of its own territory. President Felipe Calderón responded by pointing out that his nation shared a border with “the biggest consumer of drugs in the world and the largest supplier of weapons in the world.” (via The War on Drugs).

Gold and drugs .. and India

The world pays for the US war on drugs!

A major effect of US restrictions on gold ownership, sparked a global crime wave – in which drugs played a major part. The opening of the gold trade across the world during 1973-1993 (especially in India) damped down the power of the Indian Underworld. The other leg on which the Indian underworld stands, is drug trade.

Indian belief in gold is not a recent - but a centuries of trust and habit. Cartoon courtesy - indiauploads.wordpresscom. Click for larger image.

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.

The tobacco parallel

The complicity of governments is very similar to tobacco monopolies across the world. Or the modern expansion in prostitution – especially in the West.

Six companies and sundry State monopolies drive global cigarette consumption. These six companies derive more than US$100 billion dollars in revenues, globally. For many years they were advertising industries largest customers.These six companies are headquartered at former European imperial powers (UK, France, Spain), USA and Japan. These six companies work at an arm’s length from the State, giving the State a luxury of ‘plausible deniability’.

After creating appetites and markets for narcotics, the State wants to control the same appetite.

During a 1984 appearance at an Oakland, Calif. school, then-First Lady Nancy Reagan was asked by 10-year-old Angel Wiltz what to do if someone offered her drugs. “Just say no,” replied Reagan. Within a year, 5,000 “Just Say No” clubs had formed around the country, with Soleli Moon Frye, (Punky Brewster) as honorary chairperson. The Los Angeles Police Department’s 1983 Drug Abuse Resistance Education (D.A.R.E.) school lecture program, grew into a national phenomenon that, by 2003, cost $230 million and involved 50,000 police officers. (via The War on Drugs).

British Cartoon on Opium (Source - Drugs and society By Glen R. Hanson, Peter J. Venturelli, Annette E. Fleckenstein; Page 253). Click to go to the source book.

Chinese State Tobacco monopoly

Or how China has replaced Western powers pushing opium in China in the nineteenth century.With a national tobacco monopoly.

Not expected after the opium experience of the Chinese, when Western trading houses, under State protection, using the garb of ‘free trade’, made China into the largest consumer of opium.

The Chinese Govt. has replaced opium with tobacco. In the 19th century, China became the largest grower of opium to stop the drain of wealth from Chinese addiction to opium. The Chinese opium crop of 1906, of more than 35,000 tons, remains the largest ever in recorded history. Compared to that the current crop in Afghanistan has varied between 5000-10000 tons at its peak.

The second secret of the tobacco business is to be dominant in purchasing and cornering tobacco stock. For cornering tobacco stocks, Big Tobacco depends on Central Banks’ support – aka State support. For instance, ITC (and other major global tobacco purchasers) in India has a major presence in Guntur, where Indian tobacco trade is headquartered. ITC’s over-sized chequebook buys it market dominance.

In India, such State policy on drugs and crime was a feat by Mughals and the British. Post-independence Indian State has partly patterned itself on Desert Bloc lines. Will it become a drug dealer?

Will the Indian government ‘learn’ from its counterparts?

Related Articles

• Panel Calls War on Drugs a Failure (online.wsj.com)
• Major panel: Drug war failed; legalize marijuana – eTaiwan News (news.google.com)
• War on drugs has failed, international commission says (theglobeandmail.com)
• Global war on drugs has ‘failed’ (telegraph.co.uk)
• Global Health Survey – Ghost In The Machine (quicktake.wordpress.com)
• War on drugs has failed, international panel says (news.nationalpost.com)
• Global war on drugs has ‘failed’ – Telegraph.co.uk (news.google.com)
• Major Panel: Drug War Failed; Legalize (abcnews.go.com)
• Jesse Jackson Wants to End the War on Drugs (reason.com)
• War on drugs continues south of the border (seattletimes.nwsource.com)
• Why “The War on Drugs” Has Failed (psychologytoday.com)
• The war on drugs war is lost. Now it’s time for a rational response | Ian Birrell (guardian.co.uk)
• Global drug body says “Legalize it, man” – no way, say Russia and US (rt.com)
• Global Commission on Drug Policy: Legalization, decriminalization, and the war on drugs (psychologytoday.com)
• Mexicans are uneasy about America’s outsourced war on drugs | Luis Hernández Navarro (guardian.co.uk)
• Was Nixon a Drug Warrior or a Reformer? (reason.com)
• At least 4 good reasons to end the war on drugs (sfgate.com)

The 2ndlook Gold Report – 2010

Buy gold … young man!

2ndlook has proposed to all and sundry, to buy gold for the last 20 months. Interestingly, a Chinese-blogger-online financial advisor, with some fan-following, going as Maoxian says, “I’d wager $20 that no one can show me an audited trading record for any system that has traded GLD since its inception that has beaten simply buying and holding GLD since then.”(errata – an American blogger, and not Chinese).

Now, 2ndlook is not a hedge fund, or a financial advisor! And will not pretend to be one either. But 2ndlook will take a 2ndlook, and put a context and perspective that others will not. And answer your question, “Is it the time to buy gold!”

How far and how high will gold go? Some history before that.

Nixon and Kissinger - 1972 (Courtesy - nytimes.com)

The Nixon Chop

On August 15th, 1971, ‘Tricky Dick’ Nixon emerged from Camp David, on an evening television show, and announced the end of dollar redemption against gold.

For the 10 years, France had been redeeming gold, even sent a French warship to escort gold from US to France. On August 13th, 1971, Britain also made an official request for dollar-redemption – and Nixon shut the door on that possibility.

And that was the end of Bretton Woods Agreement!

Dollar anchor shifts – from gold to oil

Over the next 10 years, the world saw severe stagflation (economic stagnation + price inflation). Gold prices zoomed from US$35 an ounce to US$800 an ounce.

Gold does not have any price-correlation is traditional wisdom! Correlation like inverse, perverse, reverse, positive!

From 1980, President Ronald Reagan, in the next 8 years, persuaded his Middle East allies to pump out more oil – cajoling, mixed with threats – ranging from the Iran to US-led increase in oil production. The resultant drop in oil prices cooled down inflation, strengthened the US dollar.

Surplus revenues from oil-sales by Middle East oil producers, were used to fund US deficit. By 1990, surplus petro-dollars vanished, with the drop in oil prices, and the increased cost of running welfare states in the Middle East.

In the last decade, it was the turn of the Chinese and the Japanese to prop up the dollar.

IN China, many people refer to the dollar as mei jin, or “American gold.” Government officials, businessmen and people on the street all use the term. So if a Chinese person tells you that he owes you 100 American gold, don’t expect a big fortune, because he’s planning to pay you $100.

US has been able to find lenders to bridge their deficit for more than 50 years. From the 1950s to 2010. Europe till the 70s, Middle East up to the 90s, Japan and China, till 2010!

Can the US find another target to fund their deficits.

The collapse of Soviet Union

In the 70s, with out-sized gains in oil, platinum and aluminum prices, the Soviet economy became a powerhouse, funding anti-US regimes across Africa, South America, Asia and the Middle East. Soviet Russia, one of the largest gold producers in the world, made windfall gains.

The expansion in subsidies by the USSR in the 1970-1990 period to its allies and sympathetic regimes created a huge pressure on Soviet finances. A simultaneous drop in oil and gold prices in the 1985-1995 period severely dented Soviet export earnings, leading to the economic collapse of the Soviet Union. In USSR’s economy, after WWII, commodities like oil, natural gas, metals (like gold, platinum, uranium) and timber accounted for 65%-80% of Russian exports.

Reagan managed to increase oil production, decrease Soviet earnings - and create an economic crisis in the USSR! (Cartoon by David Horsey from seattlepi.com).

Gold sales by central banks

The Central Bank Gold Sales Agreement, further dented gold prices, 1995 onwards. Gordon Brown, the then British Chancellor of the Exchequer, has been under pressure to ‘reveal’ details of British gold sales during this period.

The (British) bullion was sold in 17 auctions between 1999 and 2002, with dealers paying between $256 and $296 an ounce. Since then, the price has increased rapidly. Yesterday, it stood at $1,100 an ounce.

Dark stories are told that this was stolen gold during WWII, going around as the Yamashita gold, the Nazi gold, with marginal characters like Edmond Safra, playing an important role. It is suspected that the Soviet Union unloaded a lot of gold during the glasnost and perestroĭka period under Gorbachev.

The upshot of this was that for the first time in modern history (1800-2000), ‘declared’ gold reserves of governments across the world, reduced to a historic low of 20% of total global reserves.

The Great Collusion

By the end of The Great Depression, and the start of WWII, public sector (all the Governments of the world) owned some 50%-65% of the gold in the world. That is now reduced to less than 20%.

Will the State(s) sit back and allow the citizenry to become so independent – and the State to become ‘powerless’?

Improbable!

Global conclaves on economic matters (the G20 Summits, WTO Summits, the Copenhagen Summit) are getting organized easily and often. A global, mass nationalization of gold to ‘save the global economic system’ may be called for! Instead of warring with each other, Governments may decide to collude and jointly loot their respective citizens in a coördinated manner!

Was the US crackdown on Swiss banks a precursor to the global gold nationalization?

Central Banks own ≈20% of the world’s gold

Central banks the world over, claim to own something over 30,000 tonnes of gold – about 20% of the world’s total gold stocks. Officially, that is. Some of it is double counting. The most obvious example is IMF gold.

Most of IMF’s gold reserves are actually pledge papers by founder-member countries that they will pony up the gold. A book entry. This pledge was covered by a back-to-back with a reverse sale agreement by the IMF back to the pledgor -called ‘restitution agreement’ in IMF lingo.

The Bretton Woods agreement gave birth to IMF and World Bank (Pictured above: Treasury Secretary Henry Morgenthau speaking at the opening of the Bretton Woods conference on July 8, 1944.; picture credit - nytimes.com).

The hoax of IMF gold

Of the 3005 tons which is held by IMF at ‘designated’ depositories (meaning pledgor central banks), 2600 is covered by the restitution agreement. Of the balance, 403 tons, only some 191 tons remains with IMF. In fact, IMF does not have any gold – apart from 191 tons.

What it has, are pieces of paper that various central banks have given, ‘promising’ gold to the IMF – and this ‘promised’ gold was held in safe custody by the pledgor-central bank on behalf of the IMF.

Is this the right gold price

Estimated global economic output is some US$70 trillion. Gold is now ruling at some US$1200-1250 (per ounce). Total global reserves of gold (private, public, central banks, et al) are estimated at 130,000-140,000 tonnes. In dollar terms, the value of gold stock is US$5.0-5.5 trillion.

Gold futures (Image Source - Wall Street Journal).

If all the liquid capital in the world is measured in gold, then the total capital to output ratio turns out to be 1:14 ratio. For every 1 unit of gold, there are fourteen units of economic production (US$5 trillion of gold gives an output of US$70trillion). Of course, to make this liquid capital productive, other forms of capital are also required – namely land, buildings, factories, technology, education, healthcare, et al. Those could also be similarly valued – and added to the gold capital in the form of gold. Currency would become proxy for gold – and hence all currency units will be ignored as store of capital. Looking at the past, adjusting for inflation,

Gold is still at half the peak set in 1980, after adjusting for inflation. Then, prices rose to $US850, equal to $US2266 today.

If one were to measure gold as a proportion of global /national economy, it may give us a better idea about where gold is headed. Looking at it from this perspective, the upside for gold is definitely less than 100%. Based on current pace of liquidity creation – that is printing of Euros, dollars, yuan, yen, rupees, that various governments are printing. In Western markets, it is seen that

The yellow metal remains in a $1220-$1260 channel for the time being, and is still showing a Kilimanjaro-sized 975 tonne pile of long positions standing and casting a…long shadow in the market.

and … gold revealed some ‘disconcerting’ technical signals on the price charts and that in coming days ‘prices may not ‘necessarily strengthen.’

These weak signals, are largely due to some expected dampening in demand from India during June to September, in the generally slack monsoon season (though not quite so, last year).

Helicopter Ben is using his famous 'printing' technology!

Gold shortage!

There have been many reports about shortage of gold – in coins and bars form. Now this is strange.

In India, there is no such talk or shortage! The probable reason is that in India, gold lumps are also accepted by customers – without hallmarking! The jewellers, assayers and valuers are dime a dozen. Hence, gold fraud by the trade can be easily detected – especially in raw gold. Not to mention, that there are ‘dharam-kantas’ in every town and village across India – which does gold assaying for free.

In jewellery form, however, there is rampant mis-declaration of purity. So, buying gold in India is, as of now, not a problem!

Due to this ‘shortage’ in some Western markets, for sometime gold futures were cheaper than gold for physical delivery. The US mint and the Perth mint in Australia have suspended coin sales – supposedly, as they were swamped by orders, and demand.

Let us look at old mining and productions figures, to get some context.

All the gold in the world

Annual global gold production at some 2200 tons, is itself seen as an issue! Gold mining companies are “digging deeper to extract dwindling reserves, with mines in South Africa extending as far as 3.8km down” Apart from having to dig deeper, the other issue is “Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia.”

China, Australia and the 16 other largest mining nations averaged weekly output of 42.3 tonnes last year, researcher GFMS estimates. Even though prices have fallen 5.8 percent to $US1177.10 from a record $US1249.40 an ounce May 14, the median prediction in a Bloomberg survey of 23 traders, analysts and investors is that it will reach $US1500 by the end of the year.

Investment, including bars and coins, almost doubled to 1901 tonnes last year, exceeding jewellery demand for the first time in three decades, according to GFMS. Jewellery will jump 19 per cent to 2100 tonnes this year and industrial use 8 per cent to 398 tonnes, Sydney-based Macquarie Group says.

The gap in demand and supply is being met by scrap sales.

In Southeast Asia, scrap sales, which are routed through Australia and sold on to India, are already up.

“When gold gets to these sorts of levels, Southeast Asia gets interested in dishoarding,” said Nigel Moffatt, treasurer at the Perth Mint in Australia. “We’ve been seeing it now for some weeks.”

Which way the wind blows?

With the world’s largest private reserves of gold, and as the world’s largest consumer of gold, India has a significant role to play in gold prices.

The Bloomberg poll of 23 traders (linked and extracted above), gives a consensus estimate of some US$1500 an ounce.(31.1034768 grams). Which translates to about Rs.21000-23000 per tola (10 gm) range. Dollar rupee exchange rate will also make a difference. That is an appreciation of about Rs.3000-5000 – some 15%-25% from current prices (Rs.18,100-18,500 range). A strong and stable gold price during July-September period could easily see gold cross 21,000 by October. A weak 3 quarter, will corner gold to the 20,000 barrier.

In another post, Maoxian remarks,

Two years ago when I wrote the post, Jim Sinclair’s Crazy Bet, I annoyed the tinfoil hatters. One commenter wondered where a pajama blogger dude sitting in a crappy little Third World apartment would get the money to take a million dollar bet.

I thought it was time for an updated post/chart given the Greek drama and Euro crisis. Recall that Sinclair’s wager was: “Gold will trade at USD $1650 before the second week of January 2011.” Price could still make it there, but looking at the chart, it seems as improbable to me now as it did back in 2008.

Will Government’s scam people out of gold

Let us deconstruct this price upmove.

A US$1650 gold price @Rs.50 to a USD price means some Rs.26,500 per tola. At that rate, in Jan 2ndweek, we are talking about a 45% appreciation in 6 months. Take gold at US$1650 @Rs.42 to a USD, translates to about Rs.22,300 per tola.

At about 21,000-23,000, Indian consumer buying is likely to be anemic – and investment demand from OECD+China will have to make up for weak Indian demand. At Rs.26500 per tola, the Indian consumer may start selling gold – and we may see a small replay of the Hunt Brother’s silver saga in gold. Scrap sales of gold out of India may dampen prices much.

The third scenario may see gold at about 33000-36000 per tola. To do this the Indian rupee must trade at Rs.60 to a dollar, to get Indian consumers to part with their gold. Like the successful scam by Winston Churchill-Montagu Norman between 1929-1939 to loot the Indian peasant of his gold.

We may see a variation on that play!

Related articles

• The gold rush is on – and the clock is ticking (independent.co.uk)
• Gold standard (bbc.co.uk)
• Gold reaches all-time high of $1,457 per ounce (telegraph.co.uk)
• Mexico bolsters its gold reserves (bbc.co.uk)
• Factbox: Gold milestones on the road to record highs (reuters.com)

Country Model Of The West

The Myth Of Western Technology

In the last 50 years, after WW2, the rise of Japan, Korea and China in manufacturing and technology and the Indian software success, have taken away the sheen from the myth of Western technological prowess. Post colonial revisions in history are eroding the euro-centric version of biased history.

Failed Westernisations

For some time, the easy way out seemed to be ‘copycat’ westernisation. One of the first ‘copycat’ states was China. China, led by Sun Yat Sen, (original name Sun Wen and started calling himself Yat-sen; Chinese call him Sun Zhongshan), was the first major power which tried going down the western path. The Japanese invasion of Manchuria sounded the death knell of the Chinese Republic and Monarchy.

China – Mao & Sun

Sun Yat Sen decided to westernise and make China into a Republican democracy. Chinese were made to cut their queue – pleated hair braids. This diktat was enforced in 20 days time. Sun Yatsen and later Mao Ze Dong made the Chinese change their dress styles too. The effect of this westernisation – an enduring sense of being followers. The Chinese add a western name to their Chinese one – Michael Tang, Bruce Lee, Jerry Yang, Tommy Tang, Tommy Chi.

In Hong Kong and Macao, white tourists are royalty. Chinese companies routinely parade White, Western investors – and the Chinese investors follow. Western marriage ceremony, Chinese couples think, is very romantic. The Christian Church wedding is common in China.

Not that Indians are too far behind – consider Steve Sanghi, Paul Parmar, or the best of them all, Bobby Jindal.

Ataturk’s Turkey

Turkey – led by Mustafa Kemal Ataturk was the next ‘copycat’ attempt at westernisation. After WW1, the victorious allied powers dismantled the Ottoman Empire. Turkey was reduced to a rump state.

Mustafa Kemal Atatürk was ‘installed’ by Western powers. Thereafter, Turkey has lurched from crisis to another. Post WW2, it has mostly been ruled by military dictatorships. From an arbiter in Europe, it has become a supplicant, begging for entry into EU. Instead of the queue in China – it was beards in Turkey. Atatürk enforced a new dress code on the hapless Turks – and the traditional fez was banned. Stop wearing the fez or else …

Russia – Westernising Since Peter The Great

Peter the Great, (of the Naryshkin family) co-ruler of Russia, (along with Ivan of the Miloslavsky family) ruled from 1682-1725. For more than 40 years, his agenda was to create Russia in the Western mould. His travels to Germany, Britain, Sweden (before becoming a Tsar) shaped this agenda.

One of the first things he did after becoming a Tsar was to ask his boyars (Russian nobility) to shave their beards! Catherine The Great continued this during her reign from 1762-1796. For the next 125 years, Russia vacillated between a medieval country and modern western country.

Now, the imprisoned oil tycoon Mikhail Khodorkovsky takes pains to show how Russia is a western nation and should be democracy. Khodorkovsky, who at one time nursed political ambition, says, “…I’m convinced that Russia is a European country, it’s a country with democratic traditions …”

The Anglo-Saxon Country Business Model

These Turkish and Chinese failures down the western garden path is to mistake the trees for the forest. There are five major features of the Anglo-Saxon country model which these countries did not copy. Not that I am recommending that they be copied.

The Use Of Corporations

The use of the British East India Company was an eye opener for the rest of the West. After Vasco da Gama’s discovery of trade route to India (for Europeans) round Africa, the British were the first of the block – with the English East India Company formed in the 1600.

The Dutch started soon after with the Vereenigde Oostindische Compagnie (Dutch East India Co.) in 1602. The Danish Opperhoved initially started in 1616 and was reborn in 1732, as Asiatisk Kompagni. The Portuguese organised themselves as chartered company in 1628. The French came with the French East India Co. in 1664. The Swedes joined the rat race in 1731 with Svenska Ostindiska Companiet. The Italians came in as the Genoa East India companies. The Hanseatic League had its own operations.

In North America, the Hudson Bay Company (Compagnie de la Baie d’Hudson in French) was given a Royal Charter in 1670 by Charles II. It practically owned Canada when the Dominion of Canada was formed – and is the oldest surviving company in North America. It monopoly ended only in 1870 – a few years after the Indian Independence War of 1857.

Anglo-American Oil Company (subsidiary of Standard Oil) of Iran plotted the the assassination of Iran’s Prime Minister Haj Ali Razmara and the overthrow of the Mohammed Mossadegh regime. Thereafter, it was the puppet regime of Shah Of Iran which terrorised Iran for 30 years that paved the way for return of Ayatollah Khomeini – and Iran’s regression to medieval times. And who was leading this campaign – Kermit Roosevelt (Teddy Roosevelt’s grandson).

In South America

In 1997, the CIA de-classified papers which admitted it planned and executed the coup in Guatemala – something that was known all along. This was done to protect the interests of the United Fruit Company – which owned large tracts of agricultural land in South America, used South American labour and shipped out fruit to America. Guatemalan farmers were run out of the market.

When Guatemala proposed land reforms so that Guatemalans could prosper in Guatemala, the Government of Jacobo Arbenz was overthrown. By the way, the term Banana republics came into being from the frequent intervention of the US into South American countries – and then ridiculing these countries for instability. To obtain US Governmental intervention, the United Fruit Company engaged services of Edward Louis Bernays (Sigmund Freud’s nephew) as PR front man.

The last 100 years saw the use of these companies as a means to economic dominance. ITT was used in South America for installing and removing dictators

“… ITT papers published by Jack Anderson in March 1972, and in the hearings on these papers conducted by the Senate Foreign Relations Committee a year later. This material establishes that offers of financial aid aimed at stopping Allende were made by ITT president Harold S. Geneen to the CIA in July 1970 and to Henry Kissinger’s office in September” (Foreign Affairs; January 1974).

Had Richard Nixon and Henry Kissinger not responded to International Telephone & Telegraph and Pepsi-Cola by overthrowing Salvador Allende, Chile “would have found a less violent, more constitutional way out of its conundrum.” writes Stephen Kinzer in his book Overthrow: America’s Century of Regime Change From Hawaii to Iraq.

To gain control of the Panama Canal Company, the operator of the Panama Canal, US engineered the secession of Panama from Colombia. With a puppet Government in place, The Hay-Bunau-Varilla Treaty allowed the U.S. to build the Panama Canal. Subsequent interventions to advance Western oil interests in Colombia and the Canal interests in Panama have reduced Governmental authority in these countries. Drug cartels, kidnapping and ransom now control the economy of these countries.

Nearer home, of course, the next ruler of Pakistan (military or otherwise) is decided by US – at least for now.

The Cornering Of Gold Supplies

For the last 150 years, the ABC countries (America, Australia, Britain, Canada) comprising the Anglo-Saxon bloc (countries, colonies and companies) have controlled 90% of the world’s gold production. Till (a large part of) India was a British Colony, they also controlled more than 50% of the above-the-ground gold reserves. This gave them absolute liberty to print depreciating currency and flood the world pieces of paper(called dollars and pounds), manipulate the world financial system and keep other populations poor and backward.

Enslavement & Annihilation Of The Natives

They could capture gold supplies by the annihilation of native populations in America and Canada (‘Red Indians’ are tourist attractions now), killed the aborigines in Australia (and apologise now).

Till the middle of 19th century, raw slavery continued. By mid 19th century new forms of slavery was introduced – indentured labour, share cropping, etc. They re-invented slavery (in the 20th century again) and renamed it as apartheid which made native populations into slaves. They could, of course, truthfully claim that great Anglo-Saxon frontiersmen discovered gold and settled empty continents – in ‘hostile conditions’.

The Creation Of Client Sates

Japan, Korea, Indonesia, Pakistan, Afghanistan, Iraq, Kuwait, most of South America – have been reduced to the situation of client states. The basic position is Uncle Sam knows best – or else! These states have become production centres for the USA, cheap labour will be given an ‘opportunity’ to serve the ‘master’ states.

All these states also have significant military presence of the Anglo-Saxon Bloc which is a matter of concern for India.

Elephants in the room

Western models, which have evolved through the prism of slavery, colonialism, genocide, concentration of power are an end-of-life model. To use end-of-life products may seem like a low cost solution in the short run. The bigger issue in most cases is the  lock-in effect that these legacy systems impose on the ‘buyers’ – e.g. Singapore.

The western model of (natural and people) exploitation has runs its course – for instance, in India even salt was made into a high-tax commodity. It is a dead-end model. Parts of this model, have been used successfully by other countries – Japan with its keiretsus and Koreans with their chaebol. But obviously, this is a model that the West is an expert in – and what others copy, the West has finished with. Copycat models allow the west to predict the next steps easily and taken competitive actions with certainty. The answer for others is to create another country model. The only country which has tried this is India.

The Alternate Model

Bharat-tantra, the Indic political system that depends on local justice, low-policing, non-state free-coinage /gold-as-currency, absence of religion, property rights for all, low-tax systems, free-labour (as opposed to slave labour), enterprise instead of employment, wealth-and-property distribution instead of concentration, is the model that has a future – and a record of past success.

India, 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. Deliberate amnesia by historians, has obscured Bharat-tantra. India is today slotted as a socialist country – where as it has been reducing the features of a socialist State.

The underestimated and undermined political leadership in India, has worked at renewing  the Indian model – which is non-exploitative, stable and can bring equity and growth. It is this model that before others, India (and Indians) should believe in – and beat a modern path for the world to follow.

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