The IMF needs to outgrow Europe (Sunday Guardian)

Union Minister of Commerce and Industry Anand Sharma with French Minister for Economy, Finance and Industry Christine Lagarde at a meeting in Paris last week. PTI fter the obligatory disapproving coughs, Dr Manmohan Singh is likely to accept the replacement of one French managing director of the IMF with another. When Christine Lagarde comes to Delhi, she will enter a city teeming with Francophiles, a species that is particularly strong within the Ministry of Defence. She will converse in French with Sonia Gandhi, and perhaps even find time for a celebrated import from her own country, NAC member Jean Dreze. Given the lack of unanimity within The Rest, it is almost certain The West will once again lead the IMF, the way it does every "international" institution set up after the 1944 Bretton Woods conference. And since the demise of the USSR in 1992, the UN system too has come under western tutelage, as evidenced by UN Security Council resolutions that give colonial-era powers to "Coalitions of the Willing" in countries in Asia and Africa. Of course, perhaps by coincidence, such "coalitions" invariably comprise members of Nato, or are dominated by them. However, allowing the top job at the IMF to remain the monopoly of Europe is a bad idea, one that is likely to prove expensive for Asia, as it watches the money it saves getting diverted into the bottomless pit that passes for public finance in at least a third of EU members. What Lagarde and the rest of her backers seek is money from Asia, and lots of it, to reduce the burden on the EU taxpayer, as the effort continues to make Spain, Portugal, Ireland and Greece borrow their way out of fiscal collapse. Lagarde's top nine priorities out of a total of ten will be Europe, hardly the mindset expected in the head of an "international" bank. While the IMF may function as a lender to these four economies, this needs to be done on a cold-blooded estimate of what they need to do to avoid default. Thus far, in contrast with the bitter medicine that it has forced economies in South America, Asia and Africa to swallow, the IMF has been noticeably kinder towards Greece and the rest of the PIGS, a policy that needs to change. The reality is that the expansion of the EU on the terms decided upon by the earlier members has proved too expensive to afford. This ruinous policy was initiated by Helmut Kohl two decades back, when he broke every canon of modern economic theory to treat the East German currency as equal to that of West Germany. Had Kohl fixed a more realistic exchange value, the eastern part of a reunited Germany would have developed much faster than it has. And as for the other countries of East Europe, the massive EU effort to enable parity between their social and other infrastructure and that of western Europe placed the tribal loyalty of ethnicity well above reason. Rather than concentrating solely on East Europe, had West Europe given attention to emerging economies in Asia and elsewhere, its returns would have been far higher. East Europe needed to come out of its backwardness at a pace dictated not by emotion but by the logic of economic reality, a process that would have taken about two decades, or the same time as elapsed between the World War II destruction of Japan and Germany and the re-emergence of the two powers. The attempt to telescope this essential process of economic evolution has weakened the financial sinews of the western members of the alliance, and has reduced their relative presence across the world, something that Nato bombs and missiles rained down on the recalcitrant seems unlikely to reverse. What the IMF under Lagarde will attempt would be for the EU to use this so-called "international" umbrella as a means for channelling savings from Asia and other locations towards the EU's stricken members. But the problems of Europe are too big to be eliminated by savings from Asia, a continent that has already been cheated of more than $2 trillion in savings and investments as a result of the 2008 financial crisis, a disaster in the making of which it had no role. Rather than repeat the mistake made by West Europe since the 1990s, of pumping investment funds into East Europe rather than into locations that have today emerged as the engines of international growth, investors in Asia need to focus on themselves and on markets in Africa and South America. If the Iraq and Afghanistan wars have bankrupted the US in a way that the Vietnam War could not, the reason lies in the fact that Bush-Cheney sought to funnel all procurement into US entities, rather than make use of production platforms in Asia. Since the 1990s, the EU has made the same mistake as the Pentagon, only on an even bigger scale. By looking only inwards, the EU has reached a stage when several countries within it are certain to default, even while the only hope that it has for economic stability lies in an Asia that has been ignored for too long. Madame Lagarde at the IMF would be more of the same. More of the same policies that have brought the EU to the edge of financial meltdown. Prime Minister Singh needs to do more than politely cough. India needs to throw its weight behind an "emerging economy" candidate, for it is the move away from a Europe-centric approach that is the best policy for the IMF to follow.

The Moon Doctrine: Colonials know best (Sunday Guardian)

By M. D. Nalapat

UN Secretary-General Ban Ki-moon (L) and French President Nicolas Sarkozy arrive for a family photo at the Elysee Palace, after international talks on Libya, in Paris on 19 March. Reuters hen Mikhail Gorbachev embraced the non-violent principles of Mahatma Gandhi to surrender Moscow's control over East Europe, Germany in particular gloated at its reunification with the East. So deep was the Teutonic belief in race within the European Union that it was decided to speedily incorporate most of Eastern Europe within the federation. They were, after all, Europeans. Since the middle of the 1990s, huge financial flows have gone from west to east of the globe's smallest continent (if we exclude the unique country of Russia), in the process weakening the ability of the older EU members to compete with emerging powerhouses such as South Korea, China and these days, even India. The pell-mell expansion of the EU is proving to be a poison pill that threatens to derail the social compact between state and citizen that has created one of the best social security systems in the world, barring that of a few underpopulated countries such as Canada. So long as the "Rest" were content with doing coolie work for the West, ensuring a constant supply of cheap factors of production coupled with a market for goods and services originating within the EU and its alliance partners in North America and in Australasia, the road ahead was smooth. Problems surfaced when India became a better software and services provider than EU members, and China began to take over markets for manufactured items that since the 1800s been the monopoly of the West. However, there were still a few bright spots. Almost all the financial surplus of the "Rest" was invested in the West, while the former colonial subjects developed a voracious appetite for "wampum". Baubles such as branded shirts, shoes, handbags and even toilet paper, not to speak of expensive corporate and military aircraft and automobiles. Even while agencies such as Transparency International continued the fiction of declaring them "corruption-free", and international rating agencies lavished Triple A ratings even on institutions that were hollowed out by speculation gone wrong, the 2008 financial collapse occurred. In months,investors in just the Gulf Cooperation Council lost more than $1.3 trillion because of the incompetence and chicanery of the financial institutions located in London, Zurich, New York and Frankfurt. Others in South and East Asia, as well as Russia, lost hundreds of billions more. All of a sudden, it became clear that the most unsafe location to park one's cash assets was a Western bank. After having given away to NATO all his chemical, nuclear and biological weapons, as well as all his state secrets, Libya's Muammar Gaddafi drew the line at watching his and his country's money end up the same way. He began making noises about diversifying investments from the West to "China, Russia and India". All three paid him back by standing supinely by as NATO began pounding his country, a show of Chinese, Indian and Russian cowardice that continues long after it has become clear that the objective of the alliance is not to "protect civilians" but to protect their primacy not just in Libya, but over the region as an entirety. The European Union is inches away from disaster. Once Greece defaults (as seems certain), the next to go will be Ireland, followed by Spain, Portugal and Greece. Next could be France. Now that the European Union is being ruled by schoolboys (David Cameron), cowboys (Nicolas Sarkozy), playboys (Silvio Berlusconi) and a schoolmistress (Angela Merkel), there is no appetite for facing the truth, which is that the EU is facing a long period of austerity after decades of spendthrift behaviour. Hence the Ban Ki-Moon option, which is to play the colonial game once again. The UN Secretary-General has legitimised the primacy of "former colonial powers" over vast areas of the globe. Thus, he has cheered on France's military intervention in the Ivory Coast and nodded approval at Italy's hosting of European conferences on Libya, its former colony. Each NATO bomb is a signal to Arab leaders to beware the consequences of shifting their assets away from the West to countries further east. As Syria has no money, bombs need not be wasted on Bashar Al-Assad. And as Bahrain is a reliable dependency of NATO, its royal family can batter civilians without any fear of referral to the Western (sorry, "International") Court of Justice at The Hague. Someone needs to remind Uncle Moon that he is the Secretary-General of the UN, not of NATO, and that Mr Moon's favourite group of countries needs to rely on productivity rather than on missiles, ethics rather than on bombs, to tempt investors and customers for its products. http://www.sunday-guardian.com/analysis/the-moon-doctrine-colonials-know-best

Has Carla Bruni’s charm worked in India? (PO)

M D Nalapat

The Obama administration has largely reverted to the Clinton presidency’s policy of looking at India as a lesser power, although unlike Clinton, who began mouthing praise on Delhi only when US business interests in the country reached critical mass, Barack Obama has been generous with “wampum”, showering sugary words and making insubstantial gestures, even while it seeks to lock India into a dependent relationship now that Pakistan is drifting apart from Washington and moving into Beijing’s orbit. In the nuclear field, the Obama administration is insisting on conditions that collectively negate the Singh-Bush nuclear accord, in effect continuing to force India off the path of nuclear capability. In Space, although a few token gestures have been made, none of these has been followed up by any intensification of cooperation between NASA and the Indian Space Research Organisation (ISRO). The grip of the Europeanist world view is too strong for President Obama to acknowledge that India is at least the equal of France, Britain or Germany, and needs to be so treated. Instead, the policymakers in the DC Beltway are still at work using their many friends in the Sonia Gandhi-led coalition to lock India into a one-sided relationship that would severely affect this country’s prospects for future growth and technological autonomy and excellence.

That the Sonia Gandhi-led administration ( for let us face reality, rather than cling to the legal fiction that any minister other than - perhaps - himself sees Manmohan Singh as the boss) is uninterested in going the China route of technological self-sufficiency has been once again illustrated by the decision to award the 126-aircraft contract to the French or to a French-led consortium. A senior Indian politician, who seems to have been given information from a rival country’s sources once it was clear that France was in the driver’s seat on what is expected to balloon into a $18 billion contract, has publicly accused France’s First Lady Carla Bruni of having intervened with Italian-born Sonia Gandhi in order to ensure that the contract went to Paris in one form or the other, something that has now happened. For more than a year, reports have been swirling around Raisina Road that “Number Ten” ( the 10 Janpath residence of the all-powerful UPA chairperson, who was born in Orbassano in Italy but has made India her home for four decades) was in favour of the French option, although such reports were not accompanied by any proof. It may be that Sonia Gandhi is simply being made the target of a smear campaign, so hopefully both she as well as Bruni will clarify the nature of their contacts and discussions before gossip spreads about the relationship that she shares with the Maino family, who are frequent visitors to India. Of course, given the timidity of the Indian media on all negative matters relating to Sonia Gandhi, the allegation made by Dr Swamy, the Indian politician close to both China and the US, has gone almost totally unreported.

Comrades look to the 19th century, not the 21st (Organiser)

M.D. Nalapat

WITHIN the constellation of cultures that comprise the glory that is India, the people of Bengal have a special place. For centuries, they have been the trendsetters in societal reforms and in educational progress. From Vivekananda to Ramakrishna, RC Dutt to Rabindranath Tagore, from Aurobindo to Raja Ram Mohan Roy, this noble culture has been responsible for much of India's finest minds.

Even in the present century-which began less than a dozen years ago-it is historians from Bengal who have recently exposed the ugly underbelly of British rule, such as the famine in Bengal and Bihar caused by the genocidal reluctance of Winston Churchill to ensure that grain reached these provinces during World War II. Others from Bengal have written about the chicanery of the Mountbatten staff that resulted in the loss of more than a third of Kashmir to Pakistan. Together with recent gems, such as the diary of a survivor of the 1857 War of Liberation that has been translated into English from Marathi by an eminent journalist, the truth about the colonial era is getting known. Of course, because of the near-total control of Nehruvian ideology on school and college curricula, little of this knowledge is as yet taught to our young.

A new Sykes-Picot Agreement (PO)

M D Nalapat

Ninety-five years ago, Britain and France got together to divide the Arab world. The 1916 Sykes-Picot agreement formalised the division of the region into spheres of influence controlled by London and Paris. Gone were the promises of freedom that had been given to the Arab peoples at the start of the campaign against Turkey.

Watching the London Conference on the future of Libya, it becomes clear that very little has changed in the Arab world. Most of the countries of the region are under the tutelage of either Britain or France, with of course the US as the senior partner of both these powers. Any visitor to the Gulf Cooperation Council region will be struck by the influence of US and European “advisors”. Apart from minor decisions, such as whether to have pasta or hummus for dinner, all decisions get taken only after they have been vetted and approved by the ubiquitous “advisors”. Small wonder that even after losing more than $1 trillion in the 2008 financial collapse caused by the greed of financial institutions in London, Zurich, Chicago and New York, Arab investors still place more than 95% of their financial assets in the very same entities that have fleeced them

Ethnic dimension in Kashmir & Afghanistan (PO)

M D Nalapat

Together with Kashmir, a territory that divides the Pakistan establishment from its counterpart in India is Afghanistan, a land of great beauty that has suffered the cruelty of conflict since the Soviet invasion of 1979. Led by the Pakistan military, the key policymakers in Islamabad wish to see an end to Indian interest in Afghanistan. This preference that has been embraced by countries such as China, Germany and Turkey, which take care to ensure that their international initiatives for that country do not include participation by Delhi. As for the US and the UK, while both believe that Pakistan’s support would be boosted by India being kept out of Afghanistan, neither is willing to risk its warming ties with Delhi by openly saying so. Of course, every now and again,” experts” close to the Obama administration (and friendly to the Pakistan military) such as

Barnett Rubin prescribe both a reduction in India’s involvement in Kabul as well as US and EU diplomacy to get Delhi to move much beyond the status quo in the matter of Kashmir. None of these scholars have fought a democratic election, so they can be forgiven for failing to understand the public consequences of any such “surrender” over Afghanistan and certainly Kashmir.

Why should a democracy block Islamic banking? (PO)

M D Nalapat

Although efforts have been made over the past twenty years to bring Islamic banking into India — a country that has more Muslims than Pakistan — as yet the Reserve Bank of India and its master, the Union Finance Ministry, has not given permission for the same. The reason is simple. Across the financial establishment in India, the influence of US and EU financial interests is overpowering. Several senior civil servants have their close relatives working in such institutions, and therefore accept the advice given by them. Certainly, banks in foreign countries will not want the Indian government to clear the way for the establishment of Islamic banking centres, for that may result in funds flowing from Zurich, London, Frankfurt and New York (all major “Islamic” banking locations) to Mumbai or Kochi. Acting on cue, the monetary and finance authorities in India have continued to block access to Islamic banking avenues, thereby denying millions of observant Muslims in India a chance to keep their assets in safety.

As has been mentioned earlier in these columns, the “British” law that boosters of the Nehru family such as Amartya Sen and Sunil Khilnani are so proud of pointing to is in reality English law for colonial subjects, a construct very different from English law for Englishmen. The laws in India give overwhelming powers to the administrative machinery, and no redress to the citizen except through the goodwill of some other governmental agency.Over time, the duration of cases in India has lengthened in a way calculated to resemble the “yugas” of the ancient Indian epics (each of which lasts millions of years). Many civil cases take sixty to ninety years to finally get decided, while in a criminal matter, the final verdict usually comes after the convict has passed away due to old age. Days ago, there was a “superfast” judgment delivered in a Karnataka court against an individual accused of the murder of a software company employee. The time taken was five years, and this is only the first stage. Even at such a “superfast” pace, the appeals process can drag on for fifteen or more years before conclusion. India’s judicial system is now internationally known for the frequency of “stay orders” and the length of time that it takes for verdicts to get delivered.

Nirupama Rao comes calling in Pakistan (PO)

M D Nalapat

Unlike more conservative societies such as Saudi Arabia, which prize uniformity and discourage diversity, India prides itself on its mosaic of faiths and peoples. The food, dress and attitudes in an eastern state such as West Bengal is very different from that in the northern state of Rajasthan. The first has had a Communist government in power since the 1960s,while the latter still respects the Maharajas whose kingdoms were taken over in 1947 and who - despite having signed a binding covenant with the Government of India at the time – were deprived of their titles and much of their wealth in 1969 by then Prime Minister Indira Gandhi, to whom the only law that mattered was her personal whims.

Even nearby states are very different. Maharashtra (where Mumbai is situated) is one of the most poorly administered states in India, where even the police are more likely to side with lawbreakers than with law-abiders. This was on international display less than two years ago, when a few scruffy youngsters held the city to ransom for three days after having come ashore from Karachi. The reaction of the Mumbai police (except for a very few instances of personal courage) would have made Inspector Clouseau of Pink Panther fame look serious. That it took more than 72 hours to clear them away from just three buildings revealed the sorry state of preparedness of Mumbai against a terror attack, in contrast to Pakistan, where action against desperados has been swifter. In contrast, the next-door state of Gujarat has a super-efficient government that ensures one of the highest rates of economic growth in India.

Obama rejects high-tech cooperation with India (UPI Asia)

MD Nalapat


Manipal, India — Once in office, U.S. President Barack Obama apparently decided to abandon his own policy preferences in favor of those of Bill and Hillary Clinton. Given the reluctance of the former president and the current secretary of state to agree to an equal partnership with India, it is no surprise that the past year has seen the killing-off of the tiny shoots of U.S.-India high-tech cooperation promised by former President George W. Bush.This is despite the eagerness of NASA for joint projects with India. The U.S. space agency is aware that it will continue to be commercially outclassed by the European Union unless it ties up with India's Space Research Organization.

The Indians can undertake space launches that are 40 percent cheaper than the EU. Were NASA to outsource some of its hardware and software needs to India, the agency would outclass the Europeans in almost every segment of space research and exploration. This is why successive NASA administrators have – on record – pushed for closer cooperation with India.

However, the death-grip between Washington and Islamabad has thus far sabotaged all such efforts, even though NASA and ISRO have numerous complementarities, such as in hardware and software.

The Hypocrisy of the Wahabbis (UPIASIA)

M.D. Nalapat

Manipal, India — Although the U.S. State Department considers the Wahabbi sect to be engaged in "purifying" the Muslim faith, in fact what Mohammad ibn Abdul Wahab created three centuries ago was an entirely new faith, used thereafter to uproot the Sufi-suffused Islam that had gifted scholarship and success to the Muslims. Neither of his two biographies is credible, both being the work of admirers of the al-Sauds, the family later installed as the titular masters of the Arabian Peninsula.

Abdul Wahab developed his teachings to protect the absolutist rule of the al-Sauds, wrapping them in a cloak of piety that concealed personal conduct the opposite of the example set by the Prophet Mohammed. The founder of Wahabbism was an individual who sought to uproot traditional Islam from the land where it was revealed.

Early in his career as a preacher, Abdul Wahab formed a partnership with Muhammad ibn Saud, whereby the desert chieftain's dynasty was declared by the preacher to be the legitimate rulers of the lands where Islam first took root. A grateful ruler promptly anointed Abdul Wahab as the only correct teacher of the tenets of Islam. That the Muslim faith, democratic in its chemistry, explicitly rejects kingship, or that the Prophet Mohammed is the only transmitter of the Word of Allah, were seen as inconsequential.

Almost from the start of their sojourn into fortune, the al-Sauds fastened themselves to the flanks of the British, thereby gaining assistance in their battles with other chieftains, until their presumed loyalty finally earned them installation in 1932 as masters of the land they called "Saudi Arabia." But for British and later U.S. help, the al-Sauds would have remained just another of several tribal families, very possibly made extinct by those angered at their incessant aggression.

Emergent Eurasian Colossus (UPI)

M.D. Nalapat

MANIPUR, India, July 15 (UPI) -- "East is east, and west is west, and ne'er the twain shall meet." Rudyard Kipling's words appear to be the motto of the leaders of Europe, who are trying to insulate themselves from Asia.

The European Union is attempting to create a political community by uniting the different peoples of Europe. Rather than import human talent from wherever it is plentiful -- South India and East Asia, for example -- the core of the EU, France and Germany, are pouring lavish resources into attempting to make the people of former Soviet satellites leapfrog away from their statist past to the era of modern economies.

However, this "Look only at Europeans" policy may boomerang on the West, especially because Eastern Europe is demanding the same social infrastructure as the West has, a wish that would, if fulfilled drain even West European countries of their international competitiveness because of the huge financial costs involved. This will be especially harmful in a context where the "Made in Europe" label is losing its premium.

Genetically, even discounting the prevalent theory that the 6 billion human beings on the planet evolved from a handful of prehistoric human beings in Africa, the reality is that social conditioning and education can make productive the people of any part of the world. Rather than retard progress, an admixture of ethnicities has -- most visibly in the case of the United States -- resulted in an increase in productivity rather than the degeneration feared by Adolf Hitler, Jean-Marie Le Pen and Enoch Powell.

Ending 'Bootleg' Immigration (UPI)

M.D. Nalapat

WASHINGTON, India, Aug. 3 (UPI) -- What is inevitable cannot be prevented. It can only be redirected in ways either less harmful or actually helpful.

In the 1920s, several moralistic U.S. politicians enacted The Volsted Act, making the production and sale of alcohol illegal everywhere in American. Predictably, that prohibition led to the rise of nationwide organized crime and the proliferation of bootleg alcohol.

Three decades later, several states in newly independent India attempted the same experiment, only to lose hundreds of citizens through the consumption of illicit brew, and to watch crime syndicates multiply to meet the demand.

Modern demographic trends mandate significant migration into the European Union. Thanks to laws and procedures as unrealistic as Prohibition, traffickers in human beings, as opposed to bootleg hooch, are not in large part supplying the demands for labor, operating mainly out of North Africa, East Europe and the China coast

None of these three regions has institutions and societal habits that compare favorably to those found in western democracy. While most countries in East Europe are now democracies, at least partly, habits of the past five decades continue to infect the elites and the rest of the population -- further effecting their re-adjustment to societies where free choice is taken for granted.

It is not accidental, for instance, that the largely Italian "Mafia" that rule the criminal underworld in the United States and Europe from the 1920's on has, by the late-1990s, been replaced in several key European cities by their "Romanian"," Russian" and "Albanian" counterparts.