Tuesday 29 October 2019

Turkey sheltered Al-Baghdadi and it is the Kurds who helped the US: Prof M D Nalapat (PGurus)

ISIS was aided, abetted and funded without realizing the setup, says Prof Nalapat. ISIS was an amorphous group where the soldiers went in and out of ISIS. How ISIS gained land in Iraq and then ran a.roaring crude oil business.

Saturday 26 October 2019

PM Modi, reverse Sonia’s police approach to economy (Sunday Guardian)

By M D Nalapat

Officials must be warned not to utilise coercive powers given by the Sonia system.

Narendra Modi was elected in 2014 and re-selected in 2019 because voters believed that he was the leader best able to ensure a better life for them. Not a Gandhian life of simplicity but a move upwards in terms of better housing, incomes, healthcare and education. The inability of North Block to shake itself free of the fetters that were used by the UPA to bind the millions active in trade, commerce, manufacturing and services has led to a decline in the rate of growth of the overall economy. Errors made by North Block and the RBI in demonetisation and the self-defeating (from the purpose of getting revenue) rate structure in GST have resulted in numerous units closing down. Taxpayers are faced with the prospect of persecution if not prosecution as a consequence of a confusing array of regulations that seem designed to collect bribes rather than to promote probity and efficiency. All this when ensuring double digit growth is key to the future success of India. This cannot take place unless the civil service understands that primacy in such an effort should be given to civil society and not the bureaucracy. Sardar Patel was instrumental in deciding that the civil service in India (as inherited from the British period) should in effect remain unchanged in ethos and activity. Colonial methods of recruitment and training were retained, as were the laws and regulations in force before 15 August 1947. Members of the Imperial Civil Service regarded “natives” as being unworthy of independence of action. Major decisions therefore went through the sieve of official approval, and individual independence and initiative were filtered out. Among the consequences was the shrinking of the Indian economy to a level much below even the limited levels that had been reached in the past. Money was drained out of the pockets of the “natives” so as to feed the bureaucratic machine and its (almost entirely self-serving) actions. Prime Minister Narendra Modi is among the most fervent admirers of Mahatma Gandhi. The Mahatma chose not one of the two best candidates, Bhimrao Ramji Ambedkar or Vallabhbhai Patel, but Jawaharlal Nehru, who never hid the fact that he was more English than the English themselves. Clearly the Mahatma believed that Nehru would ensure a modern India. As he himself said, “When I am gone, Jawaharlal will speak my language”. What the chosen Prime Minister spoke was the language of Gosplan, the Soviet planning agency. Acting on the axiom that government was always to be preferred over the people, the “commanding heights” of the economy were taken over by the state, which since the demise of Sardar Patel was controlled by Nehru and his acolytes.
At the same time as the powers of the bureaucracy were expanded to a level greater even than that enjoyed by that institution under British rule, Nehru sharply reduced the salaries of senior civil servants. This was a combination that was fatal to integrity, as discerned by Lee Kuan Yew, who ran his own country in a more practical manner after studying the errors made in India. The new Prime Minister moved into the grandest official residence in Lutyens Delhi after the Viceregal Palace, which was the residence of the Commander-in-Chief of the British Indian Army. His other Gandhian colleagues moved in to the luxurious bungalows vacated by the senior officials of the Raj, residences that their successors occupy to this day, even as they preach the virtues of simplicity to the rest of the population. It was only in 1992 that a Central government sought to expand the boundaries of empowerment of civil society (including private industry) and trimmed the discretionary powers of the state. The process begun by Narasimha Rao was continued by A.B. Vajpayee but reversed by Sonia Gandhi, acting through Manmohan Singh. After taking charge in 2014, Prime Minister Modi has sought an expansion in public empowerment, especially through the spread of digital systems that obviate the need for contact with officials in order to avail of a government service. However, thus far such pivotal reforms have been carried out mostly in micro fields. Overall, the powers of the bureaucracy have remained what they were during the UPA period, especially in some of the core ministries. Unsurprisingly, annual rates of growth have steadily declined, especially after North Block and the Reserve Bank of India botched up the 8 November 2016 Currency Reform by failing to ensure that liquidity remained unaffected by the changeover to different types of currencies. Had these been freely available in banks (whether cooperative or commercial) upon exchange of old notes, the economy would not have been as severely impacted as it was because of the manner of implementation of the currency reform. The small sector, in particular, has been crippled by the bureaucracy’s effort to get the sector to switch from cash to plastic in a context where the availability of the latter was severely insufficient. Rather than exempting enterprises that have an annual turnover of Rs 5 crore from GST, even much smaller enterprises have been brought under that straitjacket, with the result that compliance has become a nightmare while penalties for presumed breaches are grotesque in their severity. Doing business in India, or indeed doing any activity in India, has become hazardous to liberty and property, given both the immense rapacity of bureaucrats and the vast powers that they enjoy since the Sonia Gandhi era which began in 2004. However, this is what happens when implementation is left entirely to a bureaucracy out to destroy what they call the “informal” sector. This is a sector that has always been bled daily by miscellaneous petty officials, although making no direct contribution the way large industry does to the external deposits of the higher rungs of the bureaucracy.
Prime Minister Modi needs to revive the informal sector, for this is the foundation for enterprises higher up the food chain. They should be exempt from GST for a 5-year period, while those employing more labour should be given cuts in rates rather than brought under a higher rate structure. A flat GST rate of 8% irrespective of output should be levied on all enterprises that are below Rs 100 crore in annual turnover, with added incentives for units employing more labour. Businesspersons should be judged not on the basis of their net worth or turnover but on the quantum of labour that they employ, with privileged treatment given to those enterprises consciously adopting measures that expand employment. Such units should be protected from troublemakers seeking to close them down through recourse to legal stratagems, moves that have resulted in a horrendous volume of investment lying fallow in legal quicksand. Down the line, officials need to be warned by Prime Minister Modi not to utilise the vast coercive powers they have been given by the Sonia system save in exceptional circumstances. They need to focus almost entirely on a handful of major depredators and make an example of them. The Sonia reversal of the post-1992 rollback of regulations and penalties needs to be reversed once more. Only then can a climate conducive to growth get created, rather than a situation where (for many entrepreneurs) there is zero appetite to run a business in an India where there is still too much reliance on the police methods favoured by the Sonia regime.

‘Xi besting Trump in US-China struggle for supremacy’ (Sunday Guardian)

By M D Nalapat

‘Xi Jinping has shown a capacity to absorb short term reverses willingly and take a longer term view in his choice of options’. The Chinese leader ‘has met each US move with a countermove,’ say analysts.

NEW YORK: Donald J. Trump has the distinction of being the first US President to openly acknowledge that China and the US are locked in a global battle for supremacy in the 21st century. However, growing personal unpredictability and an intensification of the pacifist sentiment that kept Trump out of participation in the Vietnam War during his youth are causing him to act in a manner that may lead to a US defeat by China in the multi-arena competition of both superpowers for the global top slot. This is a warning given on condition of anonymity by analysts within the US governance system working whole time on how the US can prevail in this conflict. They say that retention into the 21st century of the Number One status among world economies that has been held by the US for almost a century is crucial to ensuring that the Washington-controlled global architecture dominating geopolitics since 1945 continues into the present century. Whether it be KFC or McDonalds; Hollywood movies or pop and jazz music; or the goods and services produced by US companies, the top rank enjoyed by Washington has been instrumental in US entities fending off competition that may otherwise have prevailed over their US counterparts. “The soft power of the US is substantially based on the perceptions created by its Number One status. The day China takes over that slot, US soft power will begin melting away like ice cream”, a senior analyst dealing with China-related issues since 1995 warned. Among the first casualties will be the US dollar, which will thereafter be on a fast track towards losing its status as the global reserve currency, a colleague of his said, adding that “trust in the stability of the dollar is based on the preponderant power of the US, and it is global confidence in the US as Country No. 1 that keeps the dollar strong and stable”. This situation, in their view, may get impacted by President Trump going the way in kinetic (i.e. military) matters of Mikhail S. Gorbachev, who had an allergy to the use of the armed forces under any circumstances. It was General Secretary (of the Communist Party of the Soviet Union) Gorbachev who refused to attack Mujahideen bases in Pakistan, thereby handing over a victory in Afghanistan to the latter. In much the same way, President Trump recently has in substance “ordered the armed forces to retreat in a pell-mell fashion in Syria and Afghanistan”, an analyst focused on the military pointed out. In Afghanistan, “Trump has had no hesitation in following Bill Clinton, who handed over Kabul to the Taliban in 1996”. A colleague added that “given recent events, it would require a suspension of belief for Asian allies such as South Korea, Japan and Saudi Arabia to believe that the Commander-in-Chief (President Trump) would place thousands of US lives at risk by defending such countries kinetically against any possible attack by their foes. They are going to be on their own in such a situation, because of the Trump Doctrine of Zero Military Involvement”, he concluded. This would be to the benefit of China, which has been explicit about its desire to drive the US armed forces out of Asia and to prevent any country in the continent from becoming (or remaining) a US ally.
An expert pointed out that “China and Russia under Xi and Putin are closer than Moscow and Beijing ever were in the past, even during the Korean War”. The coming together of two countries that together comprise much of the population and land area of Eurasia has resulted in “a massive upgrade of weapons systems and offensive capabilities by the China-Russia alliance”. They claim that while in theatres such as in Syria, Russia appears to be acting independently of China, “the reality is that Beijing gives under the radar but decisive support to each such Russian initiative, so as to ensure that the Russian moves succeed over US countermoves”. A “Net Assessment” expert involved since the 1990s in analysis
of rival capabilities of the “struggle for supremacy in the international order between China and the US” enumerated five principal arenas of conflict. These are (a) banking and currency, (b) trade, (c) technology, (d) psychological operations and soft power challenges, as well as (e) physical challenges involving the use of kinetic assets, such as those taking place on the Taiwan Strait or in the South China Sea. Unlike the Chinese side, whose leadership is fully aware that the two countries are locked in a comprehensive battle, “many in USG (US Government) still believe that the dispute is only about trade and not about the future of the US-led global architecture that has been dominant since 1945”.
Unlike what was expected of him by President Trump, which was an early surrender by China to US pressure, “General Secretary Xi Jinping has shown a capacity to willingly absorb short term reverses and take a longer term view in his choice of options”. The Chinese leader “has met each US move with a countermove, despite a hand made weaker by the substantial imbalance (in China’s favour) of trade figures”. President Xi has also, in their view, factored in battle strategy influencers such as the nervousness of President Trump at any sign that US stock prices may move in a downward direction. It is therefore “not accidental that many of Beijing’s moves are designed to depress the stock market, a situation that quickly gets followed by a mellowing of the stance of Trump towards China” in the ongoing trade war between the two sides. Practically all the costs of the Trump tariffs on Chinese products are being borne by consumers in the US rather than producers in China, and while the Chinese political system can ignore public sentiment for considerable periods of time, now that he is just a year away from Presidential elections that may mean the difference between prison and comfort, this is a luxury President Trump cannot afford. As a consequence, Trump has been making substantial concessions to China ( such as holding back on tariff increases) just on a “vague promise of greater purchases of US farm products”, promises “not confirmed in any manner by the Chinese side”. Companies affected by the rising level of geopolitical rivalry between Beijing and Washington are finding it difficult to substitute smoothly functioning Chinese supply chains with new linkages in Vietnam,Thailand or Indonesia, countries that have emerged as options for re-location from China. In the field of technology, China is nudging ahead of the US in Artificial Intelligence (AI) and supercomputing, increasingly working in tandem with Russia. Vast amounts of meta data are being accessed and absorbed by Chinese-controlled entities in order to enhance the country’s AI capabilities. In contrast, India has watched its own meta data flow in an unrestricted manner to other countries, notably the US but also increasingly China as well. The backend operations for even such sensitive operations involving hundreds of millions of citizens as Aadhaar were handed over to US entities by those placed in charge of the operation.
Should India open itself to 5G from Huawei, the offerings of which are undoubtedly of better quality and more cost effective than those of any of its competitors, such a move would give an immediate advantage to the Chinese company in its bid to remain the world leader in a technology that can revolutionize the future. The meta data available from India once 5G begins to operate in the only other billion-plus population country in the world would give Huawei enough resilience to ride out the temporary storms it is facing as a result of the already leaky embargo sought to be imposed on it by President Trump. So far as India (the future Third Superpower) is concerned, the “silo structure” of decision making in government, where needs are looked at through a sectoral rather than a comprehensive lens, means that decisions get taken (especially in the matter of defence equipment) that may be optimum from the viewpoint of a single department or service, but which preclude the selection of available alternatives that yield far greater overall strategic returns to the country. In the US, “the propensity of Donald J. Trump to take decisions based on what he perceives to be his immediate (mostly political) exigencies is causing the overall US national interest to be short-changed”, according to the analysts spoken to. In contrast, Xi Jinping “takes the long view, which is often the harder option in the short run, but which guarantees success later on”. According to an expert, the Chinese side is optimistic that Joe Biden will emerge as the 46th President of the US, “as Biden is in the same mould as Bill Clinton, under whom China was given major concessions, such as a painless accession to the WTO”.
An example of the way in which the China-Russia alliance (CRA) is undercutting US interests relates to the Russian Federation’s export of its immensely capable S-400 missile defence system. Once this system gets installed in any particular country, the door to cutting edge technological defence cooperation with the US will get shut. Not merely that, but advanced aerial and other platforms (such as the F-35) will need to be kept away from those countries that have installed the S-400. President “Trump’s reluctance to impose CAATSA sanctions on Turkey now that Ankara has begun operationalising the S-400 system has opened the way for Russia to export S-400 to India and thereby wreck any future high-tech collaboration in the production and use of weapons platforms between India and the US”, a top policymaker warned. He added that such a stepping back from collaboration as a consequence of India buying the S-400 would take place in a context where involving India in the supply chain of such products is crucial to US producers being able to compete on price with high-quality substitutes offered by Russia and these days, even by China. External Affairs Minister S. Jaishankar has worked hard to get a CAATSA waiver for India in the S-400 matter. He may have succeeded in a way, because the fact that Turkey seems to have escaped even the lighter CAATSA sanctions despite having installed the S-400 system implies that India will get away as well. However, even without US sanctions, the entry of S-400 systems into India will remove the presently bright prospects for a shift in production lines to India of high-performance defence platforms by companies such as Boeing, Lockheed, Grumman and General Dynamics. The sources are emphatic that “only the passage by a veto-proof majority of the (Graham-Van Hollen) bill can rescue the basic interests of the US from the ditch into which Trump’s recent policy zigzags have led it”. Passage would also “ensure the defeat of Erdogan in subsequent elections”. Should the Graham-Van Hollen bill become law, India would need to reconsider its purchase of S-400 systems, in view of the impact of CAATSA sanctions on an economy that since the 2016 DeMo has been showing signs of strain. However, should President Trump and Senate Majority Leader Mitch McConnell do a favour to China and Russia by derailing the Graham-Van Hollen sanctions legislation, the way would be clear for India to buy the S-400 system. Of course, this would be on the assumption that sensitive operational data and secrets relating to the S-400 missile defence system will not get secretly revealed by Moscow to Beijing and thereafter get transferred from the People’s Liberation Army to Rawalpindi GHQ. It is clear that the Modi government believes that such a transfer of sensitive data on the inner workings of the S-400 system and its backend liabilities will not take place between Moscow and Beijing, and thence to Islamabad. Once India installs the S-400 system, both Qatar as well as Saudi Arabia are likely to follow suit, thereby severely diluting the US military alliance system in Asia to the benefit of China and Russia, which have substantially increased their clout in the Middle East since the 2011 Arab Spring. The President of the Russian Federation, Vladimir V. Putin, is a canny leader who has managed to overcome severe disadvantages to make the China-Russia Alliance a much more effective challenger to the global interests of the US and its allies than the Union of Soviet Socialist Republics (USSR) and its allies ever were during the Cold War period.
Aware that a major component of US supremacy is the fact of the US dollar being the world’s reserve currency, Chinese Communist Party (CCP) General Secretary Xi Jinping is working at speed to displace the “Almighty Dollar” in this role with a combination in the first instance of either the Gold Standard or the Euro and the Ren Min Bi (RMB), the Chinese currency. Given the scale of protest in Hong Kong, it seems inevitable that such manifestations will be put down by the authorities so as to ensure that any separatist tendency does not spread to the Chinese mainland. At present, the central authorities are holding their fire, in the view of the analysts, because “Hong Kong serves as a door through which Chinese exports to the US can pass without attracting punitive tariffs”. It is known that several items produced within the Chinese mainland are being re-labelled in Hong Kong and exported to the US because of the trade preference given to the HK Special Administrative Region under US law. A crackdown would speed up the passage of legislation involving Hong Kong opposed by President Trump but promoted by the US Congress. Enactment would end Hong Kong’s special status, including vis-a-vis the dollar, the currency to which the Hong Kong dollar is pegged. Such a move would result in the collapse of the US dollar-HK dollar peg, and to its replacement with the RMB. Such a move would be the precursor to ongoing efforts at establishing the Chinese currency as the reserve currency of choice for a growing group of countries, so that over a period of time as short as feasible the role of the US dollar as the global reserve currency would end. This may result in a return to the Gold Standard, the system that was abandoned in 1971 with the US Dollar Standard by President Richard Nixon. Since then, the US dollar and not gold has dominated the reserves of central banks, but should a US dollar made weak by cleverly crafted measures become too volatile and weak to remain the global reserve currency, the most likely replacement would be gold. This seems to have been the calculation of President Xi, for over the past six years, immense quantities of gold amounting to 30-50 tonnes every month have been bought by China from the UK and the US. Should the Gold Standard return, Chinese policymakers will be hoping that India will once again shoot itself in the foot by its control-obsessed bureaucracy seeking to follow the disastrous example of Morarji Desai, whose 1962 and 1968 Gold Control Acts came as a boon to smugglers of the metal and devastated an entire industry on which more than two million families depended. High level officials in Beijing have a high level of confidence in the way policymakers in India regularly stunt the economy through inadequately thought out measures, such as the demonetisation at four hours’ notice of 86% of the country’s currency in 2016. The loss of liquidity caused by bungling by North Block and the Reserve Bank of India resulted in the loss of tens of millions of jobs within the economy. To date, those responsible for the way in which DeMo was implemented have not suffered any damage to their careers, but have almost all gone on to occupy even higher positions than they had in 2016. In particular, the war that North Block has been waging on the “informal” sector is ill considered, as this sector is crucial to the overall health of the economy and needs to be nurtured rather than weakened through ill-considered regulatory and other moves. The small sector in particular (which is largely informal) has yet to recover from the 8 November 2016 DeMo shock. The Chinese leadership is delighted at the manner in which President Trump has lately been scoring self-goals that are reducing the influence of Washington at the expense of the CRA, the Beijing-Moscow pairing that in many ways resembles in its depth what the US-UK partnership during its heyday. Trump’s policy missteps are leading several within the US Government (USG) to lose confidence in the 45th President of the US, and to join the expanding list of officials who almost daily plant damaging leaks about the Trump administration and about the Commander-in-Chief himself to a receptive media.
That the “China Effect” on democracies is already substantial can be gleaned from the fact that voters across the democratic world are choosing as their leaders those whom they believe to be “tough”, even if they very often follow their own rules rather than those accepted by convention. Looking at the speed with which the People’s Republic of China has developed, several voters in democratic countries ascribe such success to the strong leadership provided by successive General Secretaries of the CCP, and by powerful leaders such as Deng Xiaoping, who was the Paramount Leader of China during the final stage of his life. Whether it be India’s Narendra Modi (who was recently chosen in an election involving 600 million voters to once again lead his country), Jair Bolsonaro of Brazil, Vladimir Putin in Russia or R.T. Erdogan in Turkey, “strong” leaders have an electoral advantage over those seen as soft. The analysts spoken to pointed to a “soft power” sphere in which China is the dominant player, and this is the Metasphere. They point out that the e-sports industry is bigger than the total music and movie industry combined, and that Chinese companies largely control this huge field of public activity and interest, where more than two billion gamers individually spend a little more than an hour each day on average in the world of online gaming. Fortnite and League of Legends are just two of the entities that dominate the Metasphere. In the field of game development, the Matrix is way above the competition. Millennials in particular are daily absorbing narratives that are Made in China, with Chinese heroes and themes, including the display of maps that reflect Beijing’s perception of boundaries and the shutting off of narratives that conflict with core principles such as the One China policy. Any mention of Taiwan or Hong Kong independence, for example, gets quickly scrubbed out of the conversations taking place, leaving only those parts that are congruent with the view of the world from Beijing. Since Xi Jinping took over as the CCP General Secretary in 2012, there has been a systematic effort to gain control of entities that are involved in designing systems for the Metasphere, whether these be located in North America, Asia or Europe. The PRC state television channel CGTN is on the cusp of overtaking Al Jazeera as the most watched in the First World from a country outside the Atlantic Alliance, and a special effort is being made to attract viewers in segments such as the African-American population in the US or those in the European Union and in the US who have done badly out of the economy. All this is taking place at a time when much of US media is obsessed with domestic issues and is focussing its vitriol on President Trump. Whether it be the impeachment imbroglio in the US or the spectacle of Brexit in the UK, not only in China but across the world such issues have been projected so as to create a perception of instability that could soon degenerate into chaos. Both the Chinese as well as the Russians are working together not only in the matter of Hard Power (such as an increasingly common military outlook) but to jointly promote Soft Power as well, including by showing up perceived deficiencies in the main rival of both Beijing as well as Moscow, which is Washington. During the Cold War, it was the US that bombarded the Soviet bloc with information and perception-altering messaging. These days, it is the US itself that is being bombarded in a manner that may be described as a psychological offensive. At the same time, selected countries in Europe are being incentivised to ally with China, such as Greece and Italy, such that it is very unlikely that the EU will ever get the unanimous vote that will be needed, were the bloc to impose sanctions on China the way the EU has on Russia.
India is regarded as an essential ally for the US to have in order to succeed in the mission of preventing China from overtaking the US in the global leadership race. A combination of Indian manpower with US technologies and platforms would be “unbeatable” in any future conflict, the analysts say. A US-India defense and security partnership would be as effective as the US-Soviet Union combination was during the 1939-45 in defeating Germany, despite the differences in the chemistry of the two countries. However, many if not most policymakers in the US are yet to learn to deal with a country that is much bigger than other allies such as Germany, the UK or Japan and which reserves the right to itself of substantial degrees of freedom, such as over policy towards Iran. As a consequence, some key elements within the Trump administration deal with India in a manner not helpful to the development of a geopolitically essential comprehensive partnership between Washington and Delhi. Crude pressure tactics (such as those adopted by the US Trade Representative) and sometimes clumsy diplomacy by elements still wedded to the hyphenation of India and Pakistan weaken those in India who seek a close relationship between the two largest democracies. Lack of action by the Trump administration on issues such as the imposition of CAATSA on Turkey embolden those within the Lutyens Zone still loyal to Nehruvian foreign and security policy nostrums. Such sanctions would soon lead to the exit via the ballot box of Erdogan, who has clearly chosen the China-Russia alliance over the US, friendly gestures to President Trump notwithstanding. “Getting Erdogan out through the ballot box is the way to go, not live in hope that the man will change his spots”, a key policymaker stated, adding that “President Trump is the only man in his administration who still believes Erdogan is a friend of the US, but his is also the only vote that counts in many decisions”. Thus far, President Trump has not come forward with a comprehensive “what’s in it for India” pathway that would nudge the world’s likely Third Superpower to join hands with what is still the First Superpower. This is despite the fact that the Indian component in technology is significant, while the prospects for defence and security cooperation are multiplying. Economic growth would be assisted by the tailwind created by a close India-US relationship, while tensions would generate headwinds. The US is now engaged in a battle with China to retain its supremacy, a battle that “could go kinetic at any time”, according to the analysts spoken to. However, unless the US President “cleans up his game, adjusts his sights and aligns his objectives with US global geopolitical needs”, it is “Xi Jinping and not Donald J. Trump that is winning the battle”, despite the numerous potential and actual advantages of the US over China. The new Great Game is not between Russia and the British Empire as it was in the 19th century, but between a future 21st century US-India alliance network and the rising power of a China-Russia alliance that includes Iran, Turkey and Pakistan in its fold. India cannot join the China-Russia side, given the presence within it of Pakistan. But should it remain “non-aligned” as the Lutyens Zone favours, the economic and security advantages that would come with a robust security relationship with Washington would remain unexploited and indeed largely unexplored. Apart with walking around a stadium to cheers from the audience, President Trump and Prime Minister Modi will need to meet in private to explore and actualise a pathway towards jointly facing a new Comprehensive Struggle between two governance systems that are antithetical to each other, and where only one side can prevail, the way it happened in the case of the competition between the USSR and the US. While Win-Win is indeed a wonderful option, in the world of geopolitics, Zero Sum outcomes are far more likely, and India needs to choose its side rather than remain on the sidelines.

Friday 25 October 2019

Modi can protect Air India from vultures (Pakistan Observer)

By M D Nalapat

NOT for the first time, this columnist arrived in Washington from Delhi on a direct flight on Air India. The Airline has direct flights to as many as five destinations in the US, and is a pleasure to fly. Arriving on a weekend into Washington means that traffic into the town is light, and progress towards the destination rapid. Almost all the taxis are driven by immigrants, many from African countries such as Ethiopia or Somalia, as also from Pakistan and India. On 20 October Air India flight 103 from Delhi to Washington, Cabin In-charge Ketan Kishor and hostesses Aishwarya Vasist and Nazneen Shah were politeness and efficiency itself, making sure that the journey was comfortable. Certainly some of the aircraft are less than new, but the crew make a lot of difference on Air India flights.
This is an Airline that has systematically been hollowed out by politicians, beginning in 1989 when Prime Minister V P Singh grounded for an extended period of time the Airline’s new A-320 fleet even after it was clear than the crash of one such aircraft at Bangalore was due to pilot error. The Civil Aviation Minister most responsible for the decline of Air India has been Praful Patel, whose personal wealth has gone up even while the government departments in his charge languished. The “high flying” Minister brought Air India to the ground in a crash of its financials. The reasons why are clear. For example, Go Air, Indigo and Air India bought identical aircraft during the same period at different prices, the rate per aircraft paid by Air India being much higher than what was charged to Indigo and Go Air. Till now, none of those responsible have been brought to account for such an anomaly. There is a culture of impunity in India, where retired and serving bureaucrats get apoplectic with rage whenever one of their members is sought to be held accountable for patent misdeeds, and so it has been with Air India.
Prime Minister Narendra Modi has the capability of taking the decisions needed to rescue the national carrier and bring it back to health. He could write off much of the (anyway irrecoverable) debts of Air India and thereby bring the balance sheet back to health. He could enforce accountability o the top four individuals who are responsible for making the Airline almost a basket case, so that some other carriers get an advantage. The higher the status and power of the policymaker, the more severe the punishment needs to be. In contrast, the system in India has been to spare those at the top and punish only those at the bottom. Modi needs to change this, and the incarceration of former Union Finance Minister Chidambaram and the investigation into some of the decisions taken during the Manmohan Singh era by Praful Patel indicate that the Prime Minister has finally managed to get a recalcitrant bureaucracy to act in the matter of VVIP corruption.Especially in China but also in Pakistan, far more VVIPS are in jail than is the case in India, and Modi needs to bring the number of VVIP arrests up to the levels achieved by India’s neighbours.
Meanwhile, across the world a whispering campaign has been unleashed against Air India, that the Airline is on the edge of closure. Very recently, a travel agent refused to buy Air India tickets for this columnist from Delhi to Colombo and back, because he was convinced the Airline was days away from being shut down. The predators who are seeking to break up Air India into bits and pieces after buying the Airline at a low price are behind such a campaign of calumny. However, the tens of millions who voted for Modi believe that the Prime Minister will not allow the shame of the national career being handed over to corporate vultures who would pick at the very bones of the Airline. They are confident that he will revive Air India and keep the Maharajah flying high in the skies in the manner it deserves. Greed is what is causing a reaction against capitalism, even in the US. In Hong Kong, the fact that it is the most unequal high income territory on the globe has definitely played a part in the riots that are taking place there.
Land sharks have made housing unaffordable for most young people, and they are angry. Breaking up Air India would be an act surpassing even the misdeeds of the past, yet this is what a section of the bureaucracy (in league with corporate predators) is seeking to do. Such predators operate not with their own funds but with money borrowed from state owned banks. Such public cash is what funds their lavish lifestyles. Beginning with Vijay Mallya, they need to be made to pay back what they owe the banks, and if they do so, they should be pardoned while being banned permanently from accessing funds from state owned banks. The Maharajah has a worried expression, as vultures circle around a once proud Airline that is still in many ways among the best. The only way in which such predators can be sent away is for Prime Minister Modi to act to save the national carrier from those eager to kill it and feast on the remains.
—The writer is Vice-Chair, Manipal Advanced Research Group, UNESCO Peace Chair & Professor of Geopolitics, Manipal University, Haryana State, India.

Saturday 19 October 2019

US Congress must save Trump from himself (Sunday Guardian)

By M D Nalapat

Graham-Van Hollen sanctions bill against Turkey needs to be adopted at speed if Washington is to recover from the geopolitical effects of its Kurdish betrayal.

WASHINGTON: President Trump’s betrayal of the only US ally that was effective against ISIS needs to be countered speedily by a veto-proof passage in both Houses of the US Congress of the Graham-Van Hollen bill mandating sanctions against Turkey. Throughout 2012-18, President Erdogan armed, housed and trained “freedom fighters” who began cutting the throats of Christians, Druze, Yazidi, Shia and moderate Sunnis, as soon as they were inserted into Syria by a Turkish military that has had its anti-Wahhabi compass broken by Erdogan. Just as Hitler was not challenged in 1936 at the Rhineland, neither were those who over the past six years looked the other way as ISIS fighters massacred innocents. Just as the Pakistan army had got the US to fund the revival of the Taliban from 2005 onwards by certifying fanatics as “moderates”, the other members of NATO assisted Turkey while it let loose extremist killers on the Syrian people. Alzheimer’s is said to cause difficulties in cogent thought, and the most charitable statement that can be made about President Donald J. Trump’s decision to abandon the Kurdish allies of the US to the killing machine on the Turkish side is that the effects on thought of this ailment may explain his actions. What is being asked of the YPG—the only force on the US side that succeeded against ISIS rather than connived with it—is collective suicide of Kurdish security. The YPG already made a grievous error in surrendering some forward positions after the US assured them that this would keep the Turkish army from invading. It ought to have been clear to them that such a retreat would ensure an advance by Erdogan’s troops, which is what has happened. If the Kurds are to accept the Instrument of Surrender prepared on their behalf in Ankara by the US side, they would put to naught nearly two decades of fighting to win at least some elements of dignity through self-rule. They have no choice but to stay within their existing locations and do battle with the Turkish forces, together with Iran, Russia and the pro-Assad groups. Should the last three warn Erdogan against his plan of invading a broad strip of land inside Syria, it is unlikely that he would go ahead. The President of Turkey knows that the bluster of Donald J. Trump can be ignored, but that Vladimir Putin is serious about fulfilling his obligations to allies.
Vice-President Mike Pence surely knows that what he is proposing would place the Kurds at the mercy of the Turks, but loyalty to Trump apparently outweighs all other considerations, including the fact that the mistakes regarding Syria made by a befuddled US President are certain to revive ISIS, besides persuading multiple countries that the US has become an Ally from Hell under the 45th President of the US, ready to betray allies at whim. The 1,300 extra US troops inducted into Saudi Arabia offer no defence. Any systematic thrust by a foe such as Iran or even the Houthis would send Trump scurrying for the exit. The US President apparently believes that all relationships should be transactional, the way paid lovemaking is. The problem with lovemaking that is dictated by wallets is that a stable relationship is not possible under such circumstances. Some other power may come up with what is regarded as a better offer, and the existing alliance will crumble, just as that with the Kurds did. Small wonder that even Saudi Arabia is torn about whether to let go of the nearly two centuries of close security ties that the Kingdom has had with first Britain and later the successor to several British relationships, the US. Trump’s reluctance to follow the processes mandated by law and impose tough CAATSA sanctions on Turkey for inducting the S-400 system into its arsenal has opened the way for India, Qatar and Saudi Arabia to go in for what is undoubtedly a good system, although not worth the economic meltdown that would be caused by severe CAATSA sanctions, which Turkey at least believes to be a hollow threat. Unless the US Congress steps in to repair the damage to both US interests as well as to global security caused in Syria and Turkey by the US President, they would be less than faithful to their oaths of office. The surrender document he prepared in Ankara to transfer the security of US allies to their worst foes will haunt Mike Pence for the rest of his life.
Lindsey Graham seems to have broken loose of Wahhabi influence, and the Graham-Van Hollen sanctions bill against Turkey needs to be adopted at speed with veto-proof majorities in both Houses of the US Congress, if Washington is to recover from the geopolitical effects of its Kurdish betrayal. After the 1938 betrayal of Czechoslovakia, there was a brief period of joy in Britain and France because of the “Peace in our time” delusion. After the 2019 betrayal of the Kurds by Trump, there has not been even a few seconds of such false optimism. It is clear that confidence in the US as an ally has sharply diminished and that ISIS has been given a second chance at spreading its toxicity across the world, especially in Europe and the Middle East. The US Congress must be aware that after the 1993 collapse of the USSR, a new rival has risen to challenge US primacy, and this is China. There are those (though these days fewer in the Pentagon) who still consider Turkey to be a “NATO ally”, when under Erdogan that country has moved away from the alliance in a fundamental way, and is seeking to anchor itself within the China-Russia alliance. While Putin may make good use of the familiarity of the Turks with NATO and its weaponry and tactics, he is unlikely to bring Turkey into an alliance that regards Wahhabism as a threat to be eliminated. Another Wahhabi power, Pakistan, has been an ally of China since the 1970s, but it is only a matter of time before Beijing tots up the gains and losses of its alliance with Pakistan, and accepts that the losses are now far greater than the gains. The China-Russia alliance accepts Turkey not as a full ally but as a fellow traveller, useful to have around without getting overly close with. As for China, it is aware that the surest path to the desired China-Russia-India partnership is to abandon its hyper-expensive coddling of the Pakistan military.
Should the US Congress avoid passing the Graham-Van Hollen bill with veto-proof majorities, the Syria effect on present and future US alliances will be profound. Should he get his way on Syria, it will be Donald J. Trump who creates the conditions for India to consider joining up with China and Russia in a world where that alliance system is developing a far greater challenge to US primacy than the USSR ever did.

Friday 18 October 2019

Catalonia will not forgive the EU’s silence (Pakistan Observer)

M D Nalapat

DURING the period when the East India Company controlled much of the Indian subcontinent, it was permissible to wrest property and riches from a native. However, if a British-born “John Company” official took similar liberties with the assets of another Briton, he was swiftly punished. The natives were fair game for those hunting for treasure, but those who were citizens of the colonial power were out of bounds for thieving carpetbaggers belonging to the colonial authorities. In much the same way, the Supreme Court of Spain has legitimized a separation between the way in which others and those who regard themselves not as Spaniards but as Catalans get treated by a justice system in thrall to Madrid. The European Union claims to be a votary of freedom and self-determination, and is not slow to lecture countries across the globe on such matters. However, the convention has been to carve an exception to such a rule. Member countries of the NATO Alliance are exempt from consideration such as human rights.
The hundreds of thousands of Libyans, Syrians, Afghans and Iraqis who have been killed (through bullets or starvation) as a consequence of sanctions and attacks by NATO forces have been ignored by the Human Rights warriors in Europe. As Secretary of State, Madeleine Albright supervised the cruellest of sanctions on Iraq, measures that deprived even the very young of food and medicine, not to mention jobs for their parents. Since then, she has travelled the globe calling for human rights, although not of course for those her actions affected so fatally. What Europeans had done to other civilisations, Hitler did in Europe. He enslaved countries, murdered millions of inhabitants (including most of the Jewish people as well as Gypsies) and acted as though the Europeans were Asians, Africans or indigenous people in the Americas. Now the differential treatment seen in the case of the dealings of the officials of the East India Company has reached the shores of Europe. The Spanish Supreme Court has sought to assist the central police forces of Spain by handing down unjustly long sentences for Catalan leaders who were entirely non-violent and who simply wanted Barcelona to get freedom from Madrid.
During the British era, court after court in India found on behalf of the colonial authorities against the natives, and this was what was on display in Madrid where the Supreme Court sought to stifle the enthusiasm of the growing number of Catalans favouring independence by imposing the sort of sentences that the British imposed during their time on Mahatma Gandhi and his entirely non-violent associates. Unlike the Basques, the Catalans have never deviated from the Gandhian path of non-violence, but the severity of the sentences against 13 Catalan nationalists is likely to make some in the Free Catalonia movement consider whether this has indeed been the best policy. It must be said that non-violence is indeed the best policy, no matter how ferocious the police actions against Catalans.
Ultimately, a free Catalonia within the EU will emerge as a consequence of such self-discipline. Such a transfer of sovereignty from Madrid to Barcelona will make very little difference to the overall situations. Spaniards will continue to have the right to live and work freely in Catalonia, and vice versa. What will change is the money from the Catalonian taxpayer will no longer be available for the Spanish elite to live like royalty, enjoying perquisites such as comfortable sinecures and growing expenditure on mostly avoidable travel. It is because independence for the Catalonians will shrink the money at their disposal (including in maintaining the Spanish Royal Family with its links to former dictator Francisco Franco’s family ) that is providing the motivation for such an outsize reaction to the Catalonian independence movement.
British citizens enjoyed rights from the time of the Magna Carta, but democracy in Spain is barely a few decades old. This may explain the difference in attitude between London and Madrid to the desire of some within a province to break away. Those favouring Scottish independence are not sent to jail for sedition in the United Kingdom, nor are they prevented from entering into government. If only the EU President had urged her Spanish colleagues to follow the example of the UK in such matters. However, Ursula von der Leyen seems to have adopted a vow of silence in the face of the repression let loose by Madrid in Barcelona. This is reminiscent of the manner in which millions of her countrymen and women watched in silence as a former corporal in the Kaiser’s army took office with the support of the President of the Reich, Pual von Hindenburg, who was quickly converted into an admirer of Hitler by the latter’s promise (conveyed through Herman Goering) to gift the Hindenburg family an estate in East Prussia.
Unlike most of the other promises he made, Hitler kept this particular promise, giving away one of the largest estates in Prussia to the President of the nominally democratic German republic. Modern Spaniards are very different from ancestors who killed off entire populations in various parts of the world, and hopefully they will raise their voices in protest against the repression set loose on the Catalans. Just as the atrocities of the British colonial authorities made the handing over of power to the people of the subcontinent inevitable ( with even the military no longer being reliable as a way of putting down the population), the excesses against the Catalans will energize the freedom movement such that another referendum will become inevitable. Not just Catalans living within the boundaries of Catalonia but Catalans living throughout Spain and across the world should have the right to vote in such a referendum, the results of which should be respected by both sides.
Should the verdict go against independence yet again, Catalan nationalists ought to be content with a much higher degree of autonomy than previously. However, should those favouring independence succeed this time around, Catalonia should be given freedom within the EU. Across Europe, there is a strong case for breaking up some countries in order to better reflect cultural and other differences. An example is Bavaria in Germany, which was aghast at Chancellor Merkel’s decision to allow two million from North Africa and the Middle East to settle in the country, surely a move that merits a Nobel Peace Prize much more than has been the case of several winners of that award. Should there be a movement for a referendum in Bavaria, it is unlikely that the protagonists of such a move will be treated in the inhumane manner in which Catalonians are subjected to, most recently by the Madrid Supreme Court. The EU leadership needs to end its silence over the repression in Catalonia and prevail on Madrid to permit a new referendum. That is the only path to stability in Spain, for repression will only breed resentment that could explode into violence. The EU is big enough and flexible enough to accommodate the right of self-determination of the ancient Catalan people. There are moments when silence is shameful, and this is what is happening in the wake of the Madrid Court showing a contempt for the very “European values that Brussels prides itself on.

Sunday 13 October 2019

Trump freeing 40,000 hard-core ISIS fighters (Sunday Guardian)

By M D Nalapat

He gave the ‘go ahead’ in this destructive (to international security) operation.

Redemption is at the heart of the Christian faith, and some who are more devout (and trusting) than others believe that no human being is beyond redemption. Even those suffused with a Nazi-style approach to humanity may morph into good citizens, if only they were given a second chance. President Donald Trump obviously believes in giving such a second chance to those who just months ago were busy slitting the throats of Christians, Shia, Druze and moderate Sunnis in Syria. Many were part of the groups supported by Trump’s friend Turkish President Erdogan. The US President has acted to ensure that about 40,000 hard-core ISIS fighters (men, women and juveniles) will soon get freed through his decision to follow President George H.W. Bush in betraying the Kurds a second time, in an even more unforgivable way than in 1992-93. Just as Pakistan nourished Al Qaeda and its Taliban host, now Turkey is keeping the remnants of ISIS smouldering in the expectation that what are now just embers will once again burst into flame. Just to be certain that such a development actually takes place, Erdogan has poured gasoline on the embers by using the once secular Turkish military to search and destroy the only US-friendly fighting force in the region that has shown the capability to overcome ISIS on the battlefield. President Trump gave the “go ahead” to Erdogan in this hugely destructive (to international security) operation, but is seeking to cover up his complaisant attitude through disapproving tweets that are merely “sound and fury signifying nothing”. Over the decades, despite the excellent quality of the generals and troops in the US armed forces, politicians have sought to convert the world’s most deadly military into an expanded version of the Salvation Army, keeping them offside of even necessary risk in the field of combat in order to fulfil Mission Objectives 1 through 9 (out of 10) for US politicians, which is to reduce US combat casualties to as close to zero as feasible, no matter that such a strategy has resulted in the comeback of extremist armed groups in all—repeat all—the theatres that NATO has done battle with them in. The now dead Iranian nuclear deal was sent into the ICU by Donald Trump and later to the graveyard by the three EU powers involved in the negotiations not matching even 5% of their soothing rhetoric with action designed to fulfil the obligations they had pledged to keep. The West Europeans appear to have adopted the playbook of India in the Nehruvian era, which was to mask inaction by clouds of fruity rhetoric. Meanwhile, the UN Secretary General is suggesting one anodyne “solution” after the other to deal with the coming Trump-facilitated revival of ISIS, despite being aware that none of the solutions that he is advocating have any chance of being adopted. Silence rather than a succession of homilies that it is clear will not be backed by any tangible action would be a more honourable course for the well-respected UN Secretary General to follow.
Donald Trump seems to have adopted in Syria the sort of measures adopted by Mikhail Gorbachev in Afghanistan. A firm believer in the Gandhian credo of non-violence and turning the other cheek smilingly no matter how often and how hard the slaps landed on it, Gorbachev refused to even consider a limited military operation against Pakistan, as for example by the bombing of those locations where the forces being trained to battle the Soviet forces in Afghanistan were located. The man who was the architect of the collapse of the USSR believed that (as a consequence of making one concession after the other to Washington and to its allies) the US would rescue the Communist Party of the Soviet Union (CPSU) from the economic disaster caused by Soviet economic policy. President Reagan had no intention of rescuing the CPSU (or the USSR) from itself, but cleverly kept the carrot of massive future assistance dangling in front of the Soviet donkey. Even after the Soviet Union imploded, rather than integrate the successor Russian state into the EU, thereby reducing to secondary status Germany and France, Bill Clinton worked at speed to reduce Russia into a pastoral economy, and succeeded very substantially. Today, barring its arms sales (from a weapons manufacturing industry kept going by Indian and Chinese orders after 1993), all that Russia has to offer the world is raw materials, of which it of course has a surfeit. In Afghanistan, after first kneecapping the Soviet military in a war made hopeless by Gorbachev’s refusal to carry the conflict into Pakistan, the CPSU General Secretary abandoned armed post after armed post to allies that he knew lacked the strength (and in some cases, the will) to defeat mostly Wahhabi fighters who were being given more than $9 billion annually in cash and materiel during most years of the Soviet occupation of Afghanistan. Except that Trump has not handed over the US posts he ordered his military to abandon to US allies, but to the deadly foe of these allies, the very President Erdogan who had nourished ISIS and thereby helped turn much of Syria into a wasteland. Something seems to have snapped in President Trump after the unceasing pounding that he is getting from those intent on separating him from his job in a manner that has nothing to do with the ballot box. Trump seems to have begun suffering from some inner confusion that is affecting his decision-making abilities. This has most recently been shown by the way in which the 45th President of the US sought to do a Clinton and install the Taliban in Kabul, followed now by the action of forcing US forces to place their Kurdish allies (and the moderate populations protected by them) at the mercy of Erdogan and his Wahhabi allies.
Presidents Carter, Reagan and Clinton nurtured the forces that morphed into Al Qaeda and its numerous ideological cousins. They had the excuse that they did not realise the nature of the Frankenstein they were bringing into existence. This excuse is absent in the case of President Trump, who is following in their wake by being responsible for the impending escape of more than 40,000 dedicated and trained ISIS fighters (men, women and juveniles) from detention in Syria into freedom of action in Europe and the Middle East. A few may even head for New York’s Trump Tower, but not to thank the US President who has tossed a lifeline to ISIS through an action that converts the words “cowardly betrayal” into a compliment.

Saturday 12 October 2019

Modi 2.0 overcoming PC network’s sabotage of economy: Experts (Sunday Guardian)

By M D Nalapat

The fallout of Chidambaram’s arrest has been underwhelming. The effect on stock markets, investor sentiment as well as global financial hubs has been a collective yawn.

BANGKOK: International experts eager to identify and punish high-level policymakers active in the massive flow of illegal funds through banking channels are heartened that early in Modi 2.0, after years of procrastination, both the Enforcement Directorate as well as the CBI have presented enough evidence to convince the judiciary to give custody of former Finance Minister P. Chidambaram. Over more than two decades, the former Finance Minister, who is fifth in importance in the Congress Party after Sonia Gandhi, Rahul Gandhi, Priyanka Gandhi and Ahmed Patel, has established a network of officials who have assisted him in operations not (in the view of such experts) congruent with his Oath of Office. Throughout Modi 1.0, sufficient action against Chidambaram and his associates was stymied by the “PC network”, including by a cleverly created misperception that such an action would destabilise stock markets and generate a negative impression among global investors. Also added was the warning that New York and London, among other key financial markets, would react negatively to the enforcing of accountability on Chidambaram. It is clear that Prime Minister Narendra Modi has himself given the green light to go forward on the matter of the former Finance Minister, no matter what the fallout. The fallout has been underwhelming. The effect on stock markets, investor sentiment as well as global financial hubs of the Chidambaram arrest has been a collective yawn. The Prime Minister has acted not a day too soon. Amidst the successes achieved by Modi since 26 May 2014, an area of worry has been the economy. North Block remained unchanged in mindset and functioning even after the 2014 Lok Sabha polls, and among the consequences has been the continued operation of the PC-backed Mumbai Financial Force (MMF) and their high level backers in the Lutyens Zone. Because of the scale of the misdeeds committed by the still active and influential “PC network”, it was expected in 2014 itself that swift action would be taken against the principal depredators who have hollowed out key elements of the economy, including from 2004 onwards. However, not only did North Block not initiate such justice, those active in the MMF continued to have rich pickings thanks to “PC network” contacts retained in key positions within North Block. Since the second term of President Barack Obama, the US and its West European allies have been willing—indeed, eager—to assist the Government of India in identifying those who have misused the banking system as well as stock exchanges in order to amass and siphon abroad an estimated $238 billion and counting (in present value) since 2001, according to international placeholders active in tracking illegal money flows from Asia to Europe and North America. Since the period when Jack Lew was Treasury Secretary under Obama (2013-17), the US Treasury has been willing to share software that is capable of tracking money flows with pinpoint accuracy in most locations, barring a few territories such as North Korea or parts of the Macau financial matrix. As yet, this offer (which is still standing) has not been taken up by North Block, according to the experts spoken to.
An expert made the disturbing claim that the list of illicit overseas bank accounts of citizens of India that was obtained from Germany during Modi 1.0 had several names that were removed by certain officials before the list was passed on to locations outside North Block. As the Germans still have the original list of Indian names, they say that it would be helpful in PM Modi’s battle against VVIP corruption to secure a fresh copy of the original list from Germany and check whether any names were subsequently deleted from the Indian side. If so, it would be a simple matter to identify the officials responsible for such an intentional lapse and to punish them. It is understood that among the names was that of a prominent member of the UPA government who is now being questioned in a location where both room and board are complimentary for actions committed while he was in office. The experts spoken too claimed that the German government was ready to provide additional lists (of Indian nationals holding illicit accounts in external tax havens) but that “this offer has not thus far been taken advantage of” by North Block. An investigation by the PMO would show whether such a claim is accurate or not, and if correct, those responsible for refusing to secure the additional names offered by the German side could be identified. There needs to be a comprehensive enquiry into the offers made by the US, Germany, Switzerland and other countries to share financial data on Indian nationals, and why such offers were not taken full advantage of, if that after enquiry be found to be the case. According to the experts in global illicit money flows spoken to, “complete details of such bank accounts can be made available, especially if the Government of India agrees to make such discoveries the subject not of criminal action but of tax recovery”. Identifying such resourceful individuals and their networks would be worth forgoing prosecution and going in for collection of back taxes, as what the country needs more is extra funds for development rather than more mouths to feed in Tihar. Officials responsible for deliberately introducing confiscatory tax rates and threats of prosecution even on those declaring overseas cash and assets in the Modi 1.0 external bank deposits amnesty scheme resulted in around $500 million of the $1.3 trillion in illicit cash and assets abroad of Indian nationals and their nominees coming back, rather than the $300 billion that would have the minimum received, had there not been such self-defeating confiscatory rates and the continuing threat of penal action based on the whim of officials.
Experts on illicit money flows, especially in the US, diligently track goings on in financial and administrative matters in India, which is seen as having great promise once governance issues get more comprehensively addressed. A worry is the corruption present within a few sections of the higher bureaucracy. Among the claims is that a very high official in the Enforcement Directorate (ED) has for decades been “exceptionally close” to a Congress politician from Gujarat known to be the closest aide of Sonia Gandhi, and that this official “routinely passes on information” (to the Congress politician). Among the examples cited was when some members of the “PC network” succeeded in initiating a criminal enquiry into a former ED Director as payback for this officer’s relentless pursuit of the former Union Minister for Finance. They say that the Congress bigwig informed the media of the secret enquiry in such a manner as to tarnish the name of the former ED Director in the public mind. Hopefully, since records of such conversations are available with overseas players, they will also be available in the archives of the agencies and departments coming under the supervision of National Security Advisor Ajit Doval, now elevated to Cabinet rank, or at the same level as External Affairs Minister S. Jaishankar. The sources who gave a confidential briefing claim that several important ED cases have been “deliberately slowed down almost to a stop” by the very senior officer concerned, on instructions from the Congress leader. Examples given were the enquiries into Sterling Biotech, Robert Vadra and the matter of FIBP approval for a private airline done on “instructions of then Union Minister for Finance” P. Chidambaram.
An important case referred to as an example of snail-speed progress involves Robert Vadra, who had bought land in Bikaner in Rajasthan that was originally acquired for an Army firing range by the government. The land was quickly resold to Alleghany at a price ten times higher than what was paid. The role of a certain Mr Mahendra Nagar in this and other transactions has yet to be seriously probed. The BJP government in Rajasthan equally seemed to show very little interest in looking into the Vadra matter, and the Central agencies did not protest. Properties in the Middle East were acquired by C.N. Thampi, an enterprising businessman based in the UAE, who is also reported by the sources spoken to of having helped secure land for Robert Vadra in Kerala and Haryana. With the coming of Modi 2.0, the chokehold of the “PC network” on various institutions of governance has been reduced. This opens the door for the charges made by the expert officials to be investigated without getting slowed down or diverted because of internal sabotage caused by “PC network” holdovers. Digital technology has made it possible to track all kinds of activity in a range of sectors, and hence those guilty of wrongdoing can be discovered. Good results are also possible because of the excellent relations that Prime Minister Modi has built over the past five years with top leaders of the GCC, the US and the EU. All such leaders will cooperate with PM Modi in uncovering illicit money flows. Expert sources spoken to say that some of the other matters needing investigation during Modi 2.0 include the matter of FIPB action in the matter of Katra Holdings, Nicholls Stein of South Africa and Diageo. The high-level experts from a very important country (that is transitioning towards becoming a security and defence ally of India) claim that P. Chidambaram played a significant role in these three matters. Also that “officials (within the investigative agencies) who are linked to the “PC network” as its accomplices “blocked serious investigation of them”, not to mention matters such as the Sesa Goa sale, that gave rise to suspicions of manipulation in valuation caused by budgetary and other Finance Ministry statements that seemed designed to affect the price of an ongoing sale to a business group to which Chidambaram was no stranger. None of these or other cases appear to have been seriously investigated during the previous five years, despite Prime Minister Modi’s call for a zero tolerance policy towards VVIP corruption. In this connection, it is difficult to believe that issues relating to certain loans made by ICICI stopped at the door of former Managing Director Chanda Kochar, but this is what the agencies seem to believe. Even in dealing with Kochar, the progress of the case against her resembles a trajectory slower than the onward progress of a snail. Modi 2.0 needs to encourage high-level whistle blowers by giving a call to those indicted to give full information about the higher-ups involved, and if this be done and those higher-up proceeded against, leniency needs to be shown to the whistleblowers. The degree of leniency would depend on the value of the information revealed. Corruption-inducing regulations such as the Manmohan Singh plan to make the bribe giver a bigger culprit than the bribe taker need to be revised. Bribe givers should be encouraged to get immunity by coming forward as whistleblowers, ideally with evidence about such transactions covertly gathered by them through electronic means. Devices for such interception and recording are freely and cheaply available, and should be extensively used in cases where bribes are demanded and paid. Unlike in India, where retired officials become livid when accountability for facilitating wrongdoing by politicians and businesspersons is placed at the door of serving officials, in Sri Lanka former Defence Secretary Hemasri Fernando was sent to prison and the country’s Inspector-General of Police Pujith Jayasundara placed on compulsory leave after the Easter Sunday terror attack that devastated the tourism industry in this picturesque and still reasonably safe island. No group of retired Sri Lankan officials have followed the example of their peers in India by sending a written protest at such an action. In India, security lapse after security lapse, terror attack after terror attack, has taken place with scarcely any effect on the officials involved with security during the relevant period. Indeed, many such officials have received further promotions even after such lapses, such is the culture of official impunity in India.
The systematic looting of millions of small investors by a few vulture operators trading in coordination with the management of exchanges has continued in India irrespective of the government in power. However, there is expectation in Modi 2.0 that such misdeeds will finally get punished. Finance Ministers have in the past deliberately talked markets up or down, while those close to them have booked huge profits as a consequence of the price swings caused. Worse, key policymakers have several times coordinated with brokers to take long or short positions in stocks they know will be affected by policies in their control. Some of the officials who assisted broker and other associates of Chidambaram in such transactions continue to hold high-level positions and need to be identified. Corrupt officials, especially those affecting the economic wellbeing of the country, are a national security risk who need to be the focus of detailed investigation and enquiry. It is unfortunate that the 71 well-meaning officials who were aghast at permission being given to prosecute serving officials have sought to create immunity for members of the civil service. If what they want gets continued, officials will have a 007-style licence to collect bribes. This they are attempting through decrying efforts at prosecuting those within the bureaucratic fraternity who knowingly and actively assisted Chidambaram and others in their suspicious transactions and operations, presumably for substantial personal profit. Attempting to promote a culture of immunity for senior officials in the name of efficient administration will only retard the battle against VVIP corruption that several of the highly respected 71 signatories otherwise support. The only way to prevent the connivance of officials in wrongdoing by businesspersons and politicians is to enforce accountability in such cases as a warning to those tempted to follow those few who connive at wrongdoing. In such a context, some of the orders passed by SEBI and SAT during the past 15 years need forensic scrutiny, according to the expert sources. Some of the orders passed by SEBI, including some that were reversed by SAT, need a closer look. Integrity within the financial system is core to the success of the economy. Matters such as the NSE co-location scam seem as yet not to be getting the attention they merit from the relevant agencies. “Procedural lapses” is hardly a valid explanation for what (according to the sources spoken to) amounted to “wilful fraud on the small investor” to enrich a few operators. Matters such as the MCX data scam, and the manner in which NSEL was gutted to benefit NSE need investigation by the PMO. Part of this operation involved an effort by the “PC network” to wrest NXDEX from the control of the Consumer Affairs Ministry to the Finance Ministry. An official who was the right hand man of Chidambaram in several operations still enjoys a high position within the government, and is even being backed for a still higher post by a senior ruling politician with whom he struck a friendship during the UPA period.
Only a comprehensive enquiry can ensure action (thus far absent) against those responsible for the goings on involving efforts at using influence to protect and further the interests of a private exchange against a competitor. In the view of the experts on global financial crime spoken to, unless the NSE co-location matter gets adequately probed and responsibility fixed, global investors will continue having doubts about the integrity of share and commodity markets in India. Any data on transactions that has been erased within an exchange can easily be recovered through the use of software available for the purpose. Only by bringing to book those guilty of insider trading and market manipulation can external and internal investors have the confidence to invest enough to fulfil Modi’s objective of a $5 trillion economy by 2024. The role of past heads of regulatory agencies need to be gone into and responsibility affixed, no matter that this may result in another “71 Letter” calling for the continuation of a zero guilt policy towards those belonging to the very services that are collectively more powerful than elected politicians in running the country. While most members of the IAS are honest, and many are indeed outstanding in their dedication and competence, the bad apples need to be removed from the basket before they infect others with the disease of self before service. At the same time, honest officials who were persecuted by the “PC network” need to be recognised for their services. An example is former SEBI member G. Anantaraman, who issued orders designed to prevent scams such as the 2003-4 IPO scam from being repeated. A series of financial scams affecting small investors was partly responsible for the wipe-out of the A.B. Vajpayee government in cities across India in the 2004 Lok Sabha polls. A few politicians, businesspersons, brokers and officials made billions while millions of middle class investors lost heavily as a consequence of their misdeeds. In the IPO scam, multiple applications were made by a few players under different names, so as to corner shares and make a killing through deliberately getting misleading signals passed by sections of the government, thereby boosting prices for the scrips, which were then sold to small investors as well as to captive public sector investors. Very soon the scrips declined in value, and hundreds of thousands of small investors, together with the public sector “bali ka bakra” institutions, lost much of their stake. Then SEBI Chairman Damodaran examined too carefully for the comfort of the guilty the role of NSDL, and some influential individuals reacted. Soon the SEBI committee order on NSDL was set aside by a new management in SEBI. An investigation into such reversals of policies and actions would be essential in any campaign against corruption, together with an examination of why both Damodaran and Anantaraman were refused extensions despite good work.
A startling disclosure by the experts spoken to relate to the daughter of a top politician (now deceased), who is aware of several of the benami assets of her parent and are seeking through contacts in the governance system to transfer such assets into entities that she is ultimately the beneficiary of. Prime Minister Modi has been clear that corruption will be fought to the close, no matter what political party the corrupt individual is from. Officials throughout the government are watching this effort of a deceased politician’s daughter to transfer to herself those benami assets of the parent that are known to her. The spirit of determination to eradicate VVIP corruption in Modi 2.0 is creating hurdles in her path to further riches, which the experts spoken to say is a good sign that change is on the way in North Block. Hopefully, such a change will translate into double digit growth in the economy. Till now, such growth has been held back by corruption and misfeasance, connived at by the “PC network” through the Lutyens Mafia and the Swiss Club. These ensure that the regulations and laws passed are so irksome and complex that it becomes easy to get targets into trouble and extract bribes from them. In particular, the vastly expanded list of (mainly technical or derisory) breaches that are potentially subject to prison time has proven to be invaluable in boosting the average bribes paid to corrupt officials, rather than serving as any check on wrongdoing. Among the routes most commonly used to bring unaccounted money back to India are Participatory Notes (PNs). These reached a peak in 2007, when more than half of Rs 4.5 lakh crore of foreign portfolio investments were through such instruments. The sources spoken to say that information should be gathered on a mysterious cartel that swept up shares that had fallen steeply in value because in October 2007 SEBI publicly sought greater transparency in the provenance of PNs. Soon after, Finance Minister Chidambaram (according to those tracking such activities) prodded SEBI to instead go in for a much looser and calibrated introduction of Know Your Customer (KYC) norms, and the same shares that had lost ground rose sharply in value, generating huge profits for a group of investors that it would be easy to identify, according to experts. According to them, the former Finance Minister used a similar gambit in 2012 of first talking down share values through warning of action against PNs and then changing his tune after a cartel close to him had cornered shares sold by nervous investors at a discount. They added that this PN scam was among several other such suspicious share transactions made during the period when P. Chidambaram was the Union Finance Minister that have been analysed by trackers of market manipulation in a major world capital to which Air India (itself the victim of a UPA Cabinet minister) has a direct flight from Delhi. There were numerous examples given of such fixing of the markets by cartels wired to top policymakers (in North Block), and the view was that Modi 2.0 needed a relook at share price swings caused by misleading North Block signalling from 2001 onwards that was followed by a reversal of course. Only punishment of the guilty individuals would ensure “order and integrity in the markets”.
Another matter awaiting attention in Modi 2.0 is the De La Rue matter. Why did an official bypass Finance Minister Chidambaram (despite being a favourite of his) and write to the Home Ministry to bypass the blacklisting of the company? Why were orders issued for the supply of paper from De La Rue even three years after the Sheelbhadra Banerjee report was ready for implementation and after Finance Minister Pranab Mukherjee had in 2012 ordered De La Rue to be blacklisted? When even Chidambaram as FM ordered the company to get blacklisted in 2010 itself, why did he stand by while an official close to him and who was known to always take his counsel allowed the contract with the company to continue? If the official, Arvind Mayaram, comes clean on the episode, the minister who gave the actual commands deserves to be booked and Mayaram treated with leniency. Why did Mayaram make it easy for Pakistan to produce counterfeit notes of Indian currency, and who is responsible for the fact that the old (and inadequate) security features of pre-demonetisation currency notes remain in the new notes? Why, despite his record during 2005-08, was Mayaram’s appointment as MD of APMCIL approved by the ACC in 2009? Was, as claimed by the sources spoken to, the hidden hand behind Mayaram’s approval that of Chidambaram? The fact that Prime Minister Modi has succeeded in overcoming the sabotage of the “PC network” in the matter of the kingpin himself, and ensured that key agencies enforced accountability in the case of the former Union Finance Minister, indicates that there are grounds for optimism that the battle against VVIP corruption could be a pivotal point in the second of what is likely to be three 5-year innings in power of PM Narendra Modi.

Friday 11 October 2019

Xi-Modi Summit will change Sino-Indian ties (Pakistan Observer)

M D Nalapat

THE leaders of two countries that together have 2.7 billion people under their charge are holding their second informal summit meeting in the South Indian resort of Mahabalipuram. The first took place a year ago in the Chinese city of Wuhan. This columnist stayed at Wuhan some months ago and stayed at the guest house where both President Xi and Prime Minister Modi resided during their first summit. Photographs of both leaders were prominently displayed at both the guest house and on the shores of the lake that was the scene of a boat ride taken by the two leaders. The Wuhan Summit represented a conscious decision by the two top leaders of India and China respectively to take control of the relationship. The bureaucracies of both India as well as China have numerous elements that remain tethered to past mindsets that regard the other country as less than a friend.
Only if the top leadership of both countries takes charge of the relationship can it escape the quicksand of historical tensions and bureaucratic inertia. Rather than small steps, what is needed in Sino-Indian relations is a “Great Leap Forward”, the term used by the first leader of the Peoples Republic of China, Mao Zedong, to refer to his plans for rapid growth of the Chinese economy. Although there are many scholars who fault the Great Proletarian Cultural Revolution (GPCR) launched by Mao in the 1960s, the reality is that the immense changes within the Chinese Communist Party that were caused by the successive shocks to the leadership structure intentionally caused by Chairman Mao through the GPCR created conditions for the Chinese Communist Party (CCP) to adopt the far-sighted plans during the 1980s of Paramount Leader Deng Xiaoping to reform the Chinese economy. Without the changes caused by the Cultural Revolution, the top rungs of the CCP would not have allowed Deng to introduce reforms that were so different from the past policies of the state in matters relating to the economy.
President Xi Jinping, whose family was among those deeply affected by the Cultural Revolution, has emerged as the most powerful Chinese leader since Chairman Mao, and it can be expected that bold moves will be made by President Xi,including in economic matters and on the issue of relations with India. On the Indian side, Prime Minister Modi is similarly strong-willed,and ready to take actions that are unprecedented. As Chief Minister of Gujarat, he welcomed Chinese investment in the state, and also made a very successful visit to China, where he was given a very cordial reception. It helped that Modi understood the psychology of his hosts and had the visiting cards handed out ( of course in Mandarin) tinted in red, the colour of the Little Red Book containing Chairman Mao’s thoughts that has made a comeback in China under Xi.
The power point presentation made by (then Chief Minister) Modi was entirely in Mandarin, a first for a VIP visitor from India, whose presentations were usually in English or Hindi. As Prime Minister, Narendra Modi has shown a willingness to walk the extra mile for better relations with the Second Superpower, which is why he ignored the counsel of cautious bureaucrats and flew from Delhi to Wuhan last year for a ground-breaking “informal summit” between himself and Xi. This arrangement is unique to India and China and not adopted by the leadership of the two countries in relation to ties with any other country than themselves. With President Xi’s visit to meet Prime Minister Modi in India, the second Informal Summit has given depth and institutional foundations to this interaction between the leaders of China and India. It is expected that several decisions will be taken by the two leaders during their interaction that will have a substantial impact on the relationship between China and India.
Both Xi and Modi are very conscious of the 5000-year history and culture of their respective countries. It was after careful reflection that Mahabalipuram in Tamil Nadu state was chosen as the venue of the Second Informal Summit between Xi Jinping and Narendra Modi. More than a thousand years ago, the region was part of the Chola kingdom, which had extensive trade relations with China. Holding the summit in such a location reminds both sides of the long historical ties between India and China, and the common strands of culture and tradition that unite two civilisations that have lasted through the millenia. President Xi is known to be a keen student of history with an affinity for culture, as is Modi. The beauty of the format of the talks is precisely that there is no format.
The two leaders will meet and speak to each other as old friends, bringing up subjects that are often difficult and contentious but in a friendly way. Once an agreement gets reached, both leaders are powerful enough to see that those below them in the governance hierarchy carry out their instructions. An example is the return of the Bank of China to India, which closed its operations after the 1962 border war and never returned. The matter came up for discussion at Wuhan, and Prime Minister Modi saw to it that the bank was enabled to return to conduct business in India, a country with which China has nearly $ 100 billion in trade and a $ 60 billion trade surplus, with a potential of $ 300 billion within five years. Among the matters pending decision is on whether to permit Huawei to enter the 5G market in India, or to go by what the Trump Administration is seeking, which is to ban Huawei altogether despite the cost and technological advantages of the product.
Whether it be in Artificial Intelligence or in 5G, the Trump Administration is working on overdrive to try and restrict markets for Chinese products, so that the US retains the hi-tech lead that the world’s first superpower has established for so many decades. The US-China trade war is in essence a series of steps taken by Trump to choke off future competition from China in a manner that the European countries are unable to do. Germany, for example, has become a bystander while China moves forward to establish mastery over products such as machine tools and the automobile, that as of now Germany is leading in. In brief years, it is expected that China will produce civilian aircraft capable of challenging Airbus and Boeing, the way the country is producing military aircraft.
In such a process, access to the Indian market is of prime importance, and this will be a major undercurrent of discussions between the two leaders. In a show of independence from US dictates, as yet the authorities in India have not blocked Huawei from participating in the 5G auctions soon to take place. The final decision on this and other matters will come after the Xi-Modi summit. For decades to come, the US and China will be the two largest economies on the planet. India will be close behind. The relationship between the three will be crucial in determining the direction of geopolitical currents. Will India join the US and actively seek to block China from moving ahead? Or will it remain “non-aligned” between Washington and Beijing? This is the question that the second informal summit between Xi and Modi will help answer.