South Asia

India: a perfect storm

Pollyannas had looked to“the emerging economies” – China, India, Brazil, etc. — for growth to help ward off worldwide economic recession, as the Western economies and Japan stumbled.

It’s clear that isn’t going to happen. China is trimming its sails to dampen inflation, braking unlimited infrastructure expansion at any cost to produce jobs while trying to meet increasing constraints on its subsidized exports. Brazil, with a new administration enmeshed in traditional corruption, faces a commodities export crash while fighting off devastating import competition for its domestic manufacturing from its major customer, China.

But largely ignored — what with the dramatic Euro crisis and a threat of double-dip American recession –   is the more important emerging economy, India, now slipping back into its traditional morass. At stake was the hope 1.5 billion people, almost a quarter of the human race, could move with democratic values into a modern society. That possibility was long seen as counter to “the Chinese model” which economically successful, possibly temporarily, is essentially oldstyle Oriental despotism.

Heading the list of New Delhi’s woes is a leadership deficit. Italy-born, 64-year-old Mme. Sonia Gandhi, widow of a former prime minister and backseat driver to the ruling Congress Party, has been secreted away to New York for cancer surgery [if by a noted Indian émigré physician]. She leaves behind a power vacuum, not only in her ruling Party but in government. Prime Minister Manmohan Singh, a technocrat, increasingly is drowning in massive corruption, growing inflation and a flight of capital escaping crippling bureaucracy.

Rahul Gandhi, Mme. Sonia’s 41-year-old son, has yet to prove he has the charisma of three generations of independence leader Pandit Jawaharlal Nehru’s family who imperiously have dominated politics – if, arguably, preserving national unity. Caught in India’s worship of priestly figures, a traditional hunger strike by an anti-corruption hero, Anna Hazare, was mishandled. [Mr. Singh has had to backtrack from Mr. Hazare’s arrest.] The government, correctly, is terrified Mr. Hazare’s high-minded tactics could be appropriated by mushrooming anti-government, anti-business campaigns, further paralyzing governance and the economy.

India’s international role, too, is in jeopardy. Naïve Washington hopes for a U.S.-India alliance against Beijing’s growing aggressiveness have been dashed. American forgive and forget efforts have dawdled in extending nuclear and other advanced technologies after New Delhi defied the world to build atomic weapons — matched by Pakistan with Chinese and North Korean assistance. American vendors recently were shockingly left off the short list for a $10 billion fighter plane bid. There’s suspicion stricter American anti-bribery laws than notorious European “incentives” played a role. A 25-year-old case against Mme. Sonia’s deceased husband, Prime Minister Rajiv Gandhi, for a Swedish purchase was recently shelved, more or less indecisively.

Meanwhile, decades of addiction to a Moscow alliance continues among India’s diplomats, illogical as it might be what with growing Russian arms delivery failures and Moscow’s massive military sales to China. Furthermore, India’s proposed huge overseas defense purchases may not meet its security requirements. Mr. Singh has called India’s greatest threat “Maoist” insurgencies in a dozen Indian states. New Delhi and state governments have passed responsibility for their suppression back and forth with little success. These social conflicts grew out of pro-Chinese proclivities of Bengal’s Communists whose 30-year hold on Calcutta, India’s second city, was recently broken, probably only temporarily.

After three and a half wars, negotiations continue fitfully to reach a compromise with Pakistan, the twin regime bloodily carved out of British India over half a century ago. With its own Muslim population as large as Pakistan’s, Indian leaders increasingly appreciate an implosion there would threaten its own breakup. But terrorists with tentacles leading from Pakistani military through the perennial dispute over Indian occupation of Kashmir are torturous, made even more dangerous by occasional clashes of regular forces such as took place in early September. Washington, after fitful attempts, has failed to mediate the feud, caught between aiding a bankrupt Islamabad and attempting to warm post-Soviet Cold War relations with India.

This picture is clouded further by New Delhi’s fishing in troubled ethnic waters in Afghanistan, and Pakistan itself. The Pushtoon terrorist hotbed on the Afghan border is where Pakistani, Indian and Chinese interests conflict. China, meanwhile, continues a campaign of seduction of Pakistan, a massive Tibet buildup, including missiles and probably nuclear weapons, as well as infiltration in the Himalayan border states of Nepal and Bhutan and at both eastern and western ends of the 1500-mile frontier.

sws-09-02-11

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  A vicious circle tightens

The globalized economy’s undertow is ripping all around the world.

Even the economic optimists’ two darlings, China and India, are now troubled. Seen as the world’s growth machine [along with a now overheated Brazil] in a period of advanced economies’ stagnation, their downturn produces a universally grim world outlook.

India, now the world’s largest population, had promise to overtake China – perhaps more stable with its veteran private sector and representative government. But inflation threatens with food almost half its consumer index rising to more than 9 percent last month. Prime Minister Manmoham Singh, after all a graduate of Soviet-style Indian planning, has his foot on the brake and gas pedal at the same time. Reserve Bank of India rates force lending for preferred firms to 13 percent and notorious paper-shuffling babus [clerks] hobble initiative, sending Indian coal companies, for example, despite some of the world’s largest reserves, chasing projects from Australia to North America. A spate of influence peddling scandals, including $16-billion in telecommunications, further clouds the scene.

New Delhi’s geopolitical rival, China, has turned its back on its 25-year strategy to prevent destabilization of one-party dictatorship with maximum growth. With incipient inflation, Communist leadership enters a generational succession next year trimming its investment-led behemoth’s sails. Widespread civil violence – despite enormous expenditures for the most elaborate hi-tech suppression machine in the history of authoritarianism – jeopardizes any new tactics. In fact, all the Chinese boom’s contradictory chickens simultaneously are coming home to roost: vast overexpansion of infrastructure feeding the boom [along with subsidized exports] has produced marvels for photographers but a real estate bubble including, literally, empty new cities. There’s growing resentment over second class citizenship and lack of services among more than 200 million migrant labor from rural areas stampeded to coastal cities employment. Declining foreign markets, roaring imported commodity prices [ironically brought on in part by speculation on “unlimited” Chinese demand], wage pressure, competition from export-led cheap-wage producers, monumental corruption, all now threaten “the Chinese model”. Consumption continues to decline as a percentage of domestic product mocking talk of redirecting a growth strategy. A combination of nonconvertibility and hot money chasing an undervalued yuan demonstrates how empty talk of it as an international reserve currency is. Beijing’s capacity for foot in mouth disease is epitomized in its increasing hoard of dollars and Treasury debt [again on the upswing] while officials continuously publicly denigrate the dollar.

So much for “the emerging markets”.

Turning to the developed world, there, too, crises are escalating.

A bureaucratic hassle over the Euro with divergent views in Berlin, Paris, Brussels and Frankfurt is turning into a dragged out effort to save the 17 European Union members’ common currency. Meanwhile other integration efforts — a free labor market and common defense and foreign policy — are faltering. A Greek default could produce a European banking crisis [even contagion for North America]. In other words, a fiscal and monetary crisis is turning into a major political upheaval threatening accepted European patterns. Half-baked intervention in Libya, dragging in NATO and the U.S., was announced in idealistic terms by Europe’s leaders. But it encapsulates European concerns – unlike the increasingly hot American debate over Obama Administration’s opting for “a war of choice”. For Europe “Libya” is linked directly to falling birthrates and need for imported labor and unemployed North African, Middle Eastern and Black African youth almost literally swimming the Mediterranean at a time Muslim immigrant assimilation is increasingly questioned.

Europe faces, too, the fact the world’s window to the U.S. consumer maw which supplied the post-World War II economy not only with unlimited markets but revolutionary technology has a “closed for repairs” sign with no reopening time indicated. Whatever happens after decades of drunken sailor’s spending, there will be no substantial U.S. economic strategy in place until after November 2012. Current Washington debate, if it can be dignified with that title, over raising the debt limit and reducing government spending, is simply a foretaste of the pain necessary to get the U.S. economy – perhaps now sliding into a double-dip recession — back to its historic miraculous production of jobs and expanding markets.

It’s going to be a long hot summer and a grim fall — despite the American sideshow of political shenanigans with the curtain only temporarily coming down on the first [Weiner] scene.

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The Pakistan conundrum

Everything about Pakistan from its very beginning has been anomalous.

It was dreamed up by romantic poets but survival has depended on a stolid military drawing on British Indian Army professionalism. Its parameters were defined by Islam but its secularist elite sought a nation-state where none had ever existed. Its ethnic and linguistic diversity matches the Indian subcontinent’s endless array of races and cultures. Originally it grouped noncontiguous areas – East Bengal [Bangladesh], 1500 miles across India, seceded in 1971. From the beginning disputed borders included the world’s bitterest dispute, Kashmir.

Pakistan survived the first decade’s chaos after the 1947 British Indian Empire Partition with a million deaths and 25 million “population swaps” and began to modernize. Laissez-faire economics and signing on American anti-Soviet military pacts contrasted sharply with India’s Moscow alliance and catastrophic Soviet planning. But grasping feudal elites intertwined with repeated military takeovers brought on by near breakdowns — plus three and a half wars with India — generated a descending spiral.

Still, although among the world’s poorest, Pakistanis have produced brilliant entrepreneurs and talented professionals, many prospering in a 10-million diaspora [now suffering jihadist infiltration, particularly in Britain.] They remit more than $10 billion annually helping keep the country afloat.

But now, for all the U.S.’s satisfaction and strategic and tactical gain in ending Osama Ben Ladin’s career, one outcome is further erosion for Pakistan. Whatever your favorite conspiracy theory, Islamabad looks weak, incompetent and conflicted to its own people and the world. A fanatical jihadist minority had already been murdering its most popular secular politicians – including former prime minister Benazir Bhutto, wife of President Asaf Ali Zardari. Xenophobia arising from poverty and instability grows. [Only hours after the American raid, Karachi, Pakistan’s megapolis port-city of 20 million – and pivot for U.S. Afghanistan logistics — was paralyzed by political assassination only tangentially related to Ben Ladin.]

Nothing so characterizes these problems as “a victim syndrome” dominating Pakistan’s collective psyche — as it does the rest of the Muslim world. With some justification, Pakistanis see themselves used by Washington during the early Cold War [including as a base for U2 spy Soviet Union overflights], abandoned until time came to scotch Russia’s age-old drive to the Indian Ocean through Afghanistan, abandoned after the Soviet Union’s implosion until Islamabad’s cooperation again became essential to blowing al Qaeda’s Afghan Taliban sanctuary.

Current American withdrawal speculation feeds this old complaint and, although whispered, emphasizes Islamabad’s reliance on its “all weather” alliance with China. From Pakistan’s perspective, even the purportedly unofficial A.G. Khan nuclear proliferation network, a major friction point with Washington, bought Chinese missile technology [much of it “borrowed” from the U.S.]. That gives Pakistan at least a temporary advantage facing much larger, better armed India, always at the heart of Pakistan nightmares — and strategies. It’s reciprocated: before the Abottabad blood dried, Indian Chief of Army Staff V.K. Singh publicly claimed India could replicate the American raid. Pakistan’s Chief of General Staff Pervez Kayani’s immediate rejoiner: further American incursions would not be tolerated. Others threatened an Indian foray would be “catastrophic”; Pakistan recently talked of tactical nuclear weapons deployment.

Not only has Washington waffled, but it has fantasized. In the Bush II years, Sec. of State Condoleeza Rice announced henceforth Washington would treat each country separately without regard to their relationship. But when the Obama Administration named Amb. Richard Holbrooke as the essential coordinator for Afghanistan, Pakistan and India, Washington caved immediately after New Delhi demanded his purview exclude New Delhi.

These complications show why Capital Beltway blather about Pakistan is not only irrelevant but dangerous. Yes, it would be satisfying to end massive U.S. aid — $7 billion in non-military since 1951, $1 billion arms and training annually since 2005. But then what?

Conspiracy theories – ranging from top level Pakistanis having safehoused Osama Ben Ladin to complicity of those same officials in the raid – will continue to proliferate. Soon Pakistan’s vast population [250 million] could again retreat to the edge of the U.S.’s consciousness. Yet Pakistan would be sidelined only at the world’s peril as the long-arm of 9/11 and other terrorist events, many including Pakistanis, have proved. Washington policymakers must help formulate how to prevent a nuclear-armed Pakistan turning into a failed state, threatening everyone — not least India’s 1.3 billion and its own Pakistan-size Muslim minority.

sws-05-06-11

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Myrdal late to the party

Reading the current book review http://www.nytimes.com/2011/05/08/books/review/f-a-hayek-big-government-skeptic.html  and the uproar it has created among the chattering classes http://www.youtube.com/watch?v=GTQnarzmTOc  and others Click here: Hayek: Think for Yourself – Maggie’s Farm about the ideas of the libertarian economist Friedrich August von Hayek, I am reminded of a curious anecdote.

In the mid-1950s, I was touring India in hot [and was it ever!] pursuit of material for a special report [another hackneyed article] on the Indian economy for Business Week magazine where I was deputy foreign editor.

At virtually my every stop — Bombay, Madras, New Delhi, and then finally Calcutta, then the major center of Indian business and finance  — my path crossed that of the Swedish economist and politician Gunnar Myrdal.  Myrdal was visiting many of his former Indian students and talking to academic economists who were also often myown  sources for the study and article I was to write.

Contrary to the PC reference in Fukuyama’s book review, Myrdal was always a committed socialist. In fact, he had almost wrecked the Swedish postwar economy — something his reputation never recovered from in his native Sweden — when as trade minister, he signed a long-term trade pact with the Soviets, very much in Moscow’s favor, “insurance” against what he and other committed European and Soviet socialist/Communist ideologues were certain would be the coming capitalist crash in the West as a result of the end of World War II.

In fact, although his An American Dilemma: The Negro Problem and American Democracy [1944] http://en.wikipedia.org/wiki/An_American_Dilemma I had read and found superb as a youngster in North Carolina dedicated to ending legal segregation, Myrdal’s reputation far outdoes his real performance as an economist [or his wife’s as a sociologist].

Finally, in Calcutta I bearded the great man and teased him about the fact that he had joined a small and embattled Indian and foreign minority of economists and other observers who were critical and opposed to the Second Five Year Draft then about to be implemented which, in effect, committed India to Soviet planning.

The draft was the product of a scion of the Bengali elite which blossomed in the late 19th century,  Prasanta Chandra Mahalanobis, physician [MD, UK, failed, as the old British Indian nomenclature actually dubbed some colleagues at the time], had been given one of the new analog GE computers through the early days of the American aid plan and which landed in Mahalanobis’ college where he taught physiology.  [God help the patients of those surgeons who graduated under his auspices!].

Through the Brahmin network, Mahalanobhis had got to Indian Prime Minister Jawaharlal Nehru, himself a dilettante socialist convert from his British university days.  The Bengali’s line — and Bengalis are notorious for their rhetorical skills like some other politicians we know these days —  to the PM was simple, idiotically simple: “Panditji, we have the resources and we have the people. [Then as now more than 600,000 thousand villages — impoverished, isolated even with the new cell phones and TV — and socially backward.] All we have to do is to tie them together.”

With his new toy, Mahalanobhis was able to churn out statistical “constructs” by the thousands with numbers as phony as those now given us by the Chinese Communists. The few Indian economists, especially at Bombay University, who had the courage to oppose this obvious new path to modernization and utopia were called the usual names for those who argue against dreams and finally completely defeated. The Indian business community knuckled under; as one of the Tata and Sons executives was to tell me in the debris of the 1960s, “It’s all very well for you to dance in here and tell me what is wrong with the Plan, but I have built a cable factory based on their {New Delhi] projections and what am I to do with it now that there is no market!”

The adoption of Mahalanobhis’ scam as the notorious Second Five Year Plan  is what sent the roaring Indian economy of the immediate post-independence years [with its huge “Sterling reserves”, debts owed by Britain, the former imperial power] into the tailspin that resulted in a half century of “the Hindu [stagnation] rate of growth”.

To give the devil his due, wherever Myrdal went on the tour, he surreptitiously argued against the new direction of what had been Indian “perspective” planning — setting targets by estimates of what the market would produce and trying to make corrections in policy and incentives in the future — to the new top-down direction for every industry. I early had fallen into the same frame of mind about where the Indian leadership was headed and the disaster that awaited them. But as luck would have it, when I got back to New York, my decent but misguided editor, Howard Whidden, later to become the chief apparatchik with the Rockefeller Committee for Economic Development, insisted on a “do good” piece. [If you want to know what I really thought and my pretty good predictions of what would follow, read my sincere thoughts in The New Leader of the time.]

In Calcutta, over a drink, I told Myrdal, “Professor, when word gets back to Sweden that you are for free enterprise, there is going to be hell to pay!” Myrdal jovially quickly responded, “Brother! I am for any kind of enterprise as long as it is enterprising!”

But Myrdal never went public with his criticism, then or later when Alva, his wife, was ambassador to India. It was almost two decades later before he took up the cudgels against the so-called socialists with their allies, the babus [clerks left over the Raj] who had destroyed virtually all South Asia’s commodities rich economies with his own discarded theory. But by then, he had fallen off the cliff — screaming for American leaders to be tried for war crimes in Vietnam and demanding the Nobel prize be abolished as it had been given to “reactionaries” like von Hayek who jointly had received it with him for economics in 1974.

Seeing as how it has gone downhill ever since it was given to Robert Mundell [1999], a michigana as one colleage at BW once described him, but an original thinker, to the likes of Paul Krugman 2008], a sometime consultant to people in foreign governments he writes about, maybe Myrdal was right on this last count.

sws-05-07-11


 

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Crisis Numero Uno

A Washington mesmerized by entering a new domestic political era may not recognize it, but Pakistan should now be the major – certainly foreign — preoccupation for policymakers.
• U.S. security is directly tied to Pakistan, not only with the 9/11 example of possible sanctuaries for terrorist operations, but related to increasing recruitment of home-grown terrorists in the West.
• Islamic radicals, traditionally a tiny minority, are running amok, with the assassination of a high official, openly justifying and propagandizing it.
• Growing instability directly impinges not only on neighboring Afghanistan, but has enormous implications for the nuclear and missiles arms race with India, that country’s larger Muslim minority, and Islamabad’s “all weather” China alliance.
• Despite perennial, massive foreign assistance, one of the world’s poorest economies is failing basic needs of 180 million people.

The assassination Jan. 4 of Salman Taseer, governor of the Punjab where 60% of Pakistanis live, is epochal. Taseer, quintessential member of the ruling feudal elite since the 1947 bloody British Indian Partition, nevertheless represented “modernism”. He had campaigned against an anti-blasphemy law – originally part of the devil’s compact Saudi Arabia demanded for its financial and moral support. [Accommodation to Saudi Islamic fanaticism went so far as to outlaw dissident worldwide Islamic sects. That included ostracism of Pakistan’s — and the first Muslim — Nobel prizewinner in physics and founder of its nuclear weapons and missiles program!] But a frightening response to this murder has been widespread support for the murderer by lawyers while the government’s prosecuting attorney did not dare turn up for the preliminary hearing.

Pakistan’s history, beginning with its martyred first prime minister, is long on political violence. But that Taseer was gunned down by a member of his own bodyguard, a man ousted from other security posts for acknowledged fanaticism, with no return fire by other guards, will lead to endless conspiracy theorizing. The Taseer murder reflects loyalties and therefore allegiances crossing all lines. Just as there are virtually daily terrorist incidents throughout the country, U.S. drones almost as frequently take out targeted jihadists in the tribal areas abutting Afghanistan. Despite frequent government official denunciations of U.S. action, Pakistani intelligence helps pinpoint these “miscreants”.

But the ease with which the federal government’s chief Punjab representative [presiding over an opposition provincial government] was eliminated dramatizes a political system near paralysis. Unreality prevails: in the midst of continuing crisis, parasitic justices and lawyers are trying to wrest “judicial supremacy” from the inheritance of British “parliamentary supremacy”. A representative vignette: leader of one major party presides over political powwows digitally from London because he dare not reside in Karachi. But one of his leading deputies was recently murdered in the U.K.

All this takes place in the world’s 50th largest economy, where more than a quarter officially live “below the poverty line”. Corruption is an economic issue with only two million – mostly professionals and government workers – paying taxes. Rich landowners, who with the military are the regime’s backbone, are exempt from all agricultural taxes. The International Monetary Fund last year withheld $3.5 billion from its $11.3 billion loan to meet a balance of payments crisis to pressure for reforms. But when Islamabad moved last month, the shaky coalition collapsed and the decision to reduce petroleum subsidies immediately was rescinded. Most economists agree subsidies benefit the wealthier, not the vast subsistence economy hit hard last year in the worst floods ever.

U.S. policy is caught in this jumble. There has been a constant harangue by experts over not only size but the nature of American aid, what mix of “carrots and sticks”. Unfortunately, the transparent American system requires public discussion, informing the enemy and feeding the always present paranoid anti-Americanism.

Islamabad last fall increased its defense budget by about $1.28 billion, partly for flood relief with the U.S. pledging $150 million. But Washington also has been pressuring to get on with rooting out tribal area strongholds in the difficult Afghanistan border terrain. Failing that, strategists believe American/NATO success and earlier departure from that country will not be possible. Since 2005, Pakistan has received more than $1 billion a year in U.S. military aid — nearly $2 billion last fiscal year. A $7.5 billion package of civilian aid over five years was approved in 2009. But repayment of earlier assistance meant no real civilian aid transfers took place for 25 years. In 2008 net disbursement amounted to $204 million, or about $1.10 per Pakistani – in part explaining why 40 years of U.S. aid is pooh-poohed.

Washington’s headaches could get worse at any moment. The Bush Administration fatuously pushed for “a return to democracy”, helping oust the more able [if wily] Gen. Pervez Musharraf for the notoriously corrupt, incompetent but secularist Bhutto family, including martyred former prime minister Benazir Bhutto and her husband, the current president, Asif Ali Zandari [known locally as Mr. 10%]. Calls have begun again for martial law and military rule.

A largely irrelevant debate between human rights advocates and realists is in the cards, while more chaos, and possibly even disintegration, waits in the wings.
sws-01-07-11

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India & America: one big ball of contradictions

V.K.Krishna Menon, a Communist fellow-traveling firebrand in India’s half century of post-independence anti-Americanism, did say one thing worth recalling: “You can say almost anything about India and it would be true.” He was referring to an incredible kaleidoscope of races, ethnicities, religions, languages, wealth, poverty, lifestyles, freedom and repression that characterize what will soon surpass China’s 1.3 billion as the world’s largest population.
It’s worth trotting out Menon’s old bromide for the visit of Pres. Barrack Hussein Obama with an accompanying huge business delegation in early November. They hope to consolidate a two-decades-long stuttering U.S.-India realignment. But they likely will be stymied, at least temporarily, by these contradictions.
When, almost 20 years after Menon’s death, the Soviet Union’s implosion weaned New Delhi away from Marxist economic modeling, long frustrated workers in the vineyard of Indian-American understanding thought a revolutionary turn was at hand. But the Soviet ghost along with 50 centuries of cultural overload, including 350 years of British colonialism, throttles policy turns.
Indeed, there has been a repositioning of U.S.-Indian relations. Not least, it’s due to the American Indian community, now approaching three million, doubling in the last decade. With the highest median income of any ethnic group, almost half have graduate degrees. One in three engineers in Silicon Valley is Indian. That the ties run deep is evidenced by recent gifts totaling $60 million by two Indian industrialists to Harvard’s endowment.
This relationship helped treble in the last decade the exchange of U.S.-Indian goods and services. But at $50 billion, it’s only a tenth of American trade with China, though far less troublesome than Beijing’s huge and growing payments surpluses. Ironically, 2010 trade with China will surpass $60 billion making Beijing New Delhi’s largest partner. An Indian billionaire industrialist’s $10 billion purchase of Chinese electrical generating equipment just capped it. No wonder an avalanche of cheap Chinese imports is raising New Delhi’s protectionist hackles.
Optimists hope new agreements will boost the U.S. prospects. Washington, swallowing hard, pushed through a detour around nonproliferation constraints permitting India access to worldwide nuclear technology — although the Europeans and the Russians may take the biggest bite out of the new market. The Bush Administration moved despite New Delhi refusing to sign the nonproliferation treaty and fuzzy promises of voluntary compliance.
Washington won’t offer the same deal to Pakistan, its critical ally against terrorism, because of Islamabad’s history of nuclear transgressions, an outgrowth of an arsenal that matches India’s weapons. That’s opened the door for China to complete a second power plant there and sign for two more despite Washington’s 5-year, $10 billion aid program. But for the moment, everyone publicly will ignore the 800-pound gorilla in the Subcontinent: Pakistan’s “all weather” alliance with China targeted at India.
Yet it’s certainly no secret the Obama Durbar is linked to increasing Washington-Beijing friction. Geopoliticians the world over speculate on the U.S. with China’s Asian neighbors – led by Japan and India — collaborating to contain Beijing’s growing economic and military assertiveness.
India’s near double-digit GDP growth is important to any such strategy. Although far from matching gains of China’s state capitalism, some hope New Delhi’s increasingly free market policies would produce steadier long-term development. But this month’s long awaited sale of only 10% of India Coal — even at $3.4 billion – typifies the “babu” [government clerk] mentality and protectionist drag on government disinvestment from giant, corrupt and inefficient dinosaurs from the earlier “permit-license raj”.
India waffles, too, over China relations, engaged in endless “make nice” negotiations. That’s despite a half century after having its nose bloodied in a short war in the Himalayas, border conflicts still fester. India deploys aircraft at both ends of the 1500-mile border. But China continues Tibetan colonization and [nuclear] military buildup, bringing roads [and perhaps railroads] right up to India’s border, hovering over unstable Nepal and Bhutan, former British Indian Himalayan protectorates. New Delhi also sees China’s construction of Indian Ocean ports – notably Pakistan’s Gaidar at the Persian Gulf entrance – as a growing backyard threat.
Nor does India lack for other problems. Side by side with Mumbai’s gleaming new skyscrapers are some of the world’s most horific slums. Its 600,000 villages – even though now invaded by cellphones and TV – still lack safe drinking water. A wave of suicides by debt-ridden farmers has just been compounded with a freeze in the $133 million a week micro-finance lending. While a dozen Indian billionaire businessmen have become international stars, poverty, particularly among tribals at the bottom of the still rigid caste system, is exploited in a dozen states by self-proclaimed Maoist guerrillas. Prime Minister Manmohan Singh characterized them as the country’s principal security threat. And in New Delhi, demoting Pakistan as No. 1 concern, with whom New Delhi wrestles over disputed Muslim-majority Kashmir where half a million security forces can barely keep the lid on, takes courage. A $32 billion armaments program – Mr. Obama will sign now for $3.2 billion for 10 C-17 transports, hoping for $11 billion fighters later against European and Russian bidders – is part of this mix.
Yep, Menon got that one right!
sws-10-29-10

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